<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
FLUOR CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF FLUOR CORPORATION]
Fluor Corporation
3333 Michelson Drive
Irvine, California 92730
February 12, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
which will be held on Tuesday, March 12, 1996, beginning at 9:00 a.m. at Fluor
Daniel Centre I, 100 Fluor Daniel Drive, Greenville, South Carolina. A map
showing the meeting location is included for your convenience on the back page
of this booklet.
Information about the meeting and the various matters on which the
stockholders will act is included in the Notice of Meeting and Proxy Statement
which follow. Also included is a Proxy/Voting Instruction Card and postage
paid return envelope.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend, we hope that you will complete and return your
Proxy/Voting Instruction Card in the enclosed envelope as promptly as
possible.
Sincerely,
/s/ L. G. McCRAW
------------------------------------
L. G. McCRAW
Chairman and Chief Executive Officer
<PAGE>
[LOGO FLUOR CORPORATION]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 12, 1996
The annual meeting of stockholders of Fluor Corporation will be held at
Fluor Daniel Centre I, 100 Fluor Daniel Drive, Greenville, South Carolina, on
Tuesday, March 12, 1996, at 9:00 a.m. Eastern Standard Time, for the following
purposes:
1. To elect three Class III directors to hold office for three years and
until their respective successors are elected and qualified. The
Board of Directors intends to nominate as directors the three persons
identified in the accompanying Proxy Statement.
2. To consider and act upon a proposal to ratify the appointment of
Ernst & Young LLP as auditors for the fiscal year ending October 31,
1996.
3. To consider and act upon a proposal to approve the 1996 Fluor
Executive Stock Plan.
4. To consider and act upon a proposal to approve the material terms of
certain executive compensation performance goals established by the
Organization and Compensation Committee of the Board of Directors.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed January 16, 1996, as the record date for
determining the stockholders entitled to receive notice of and to vote at the
meeting.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
PLEASE COMPLETE, SIGN, AND DATE THE ACCOMPANYING PROXY/VOTING INSTRUCTION
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ P. J. TRIMBLE
---------------------------------------
P. J. TRIMBLE
Senior Vice President-Law and Secretary
February 12, 1996
Irvine, California
<PAGE>
[LOGO OF FLUOR CORPORATION]
------------
PROXY STATEMENT
JANUARY 30, 1996
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Fluor Corporation, 3333 Michelson Drive, Irvine,
California 92730 (the "Company" or "Fluor"), of your proxy for use at the
annual meeting of stockholders to be held March 12, 1996 or at any adjournment
thereof. This proxy statement and the accompanying proxy/voting instruction
card are being mailed to all stockholders on or about February 12, 1996. The
expense of the solicitation will be paid by the Company. Some officers and
regular employees may solicit proxies personally and by telephone. Georgeson &
Company Inc. has been engaged to assist in the solicitation for which it will
receive approximately $14,000 from the Company. Your proxy is revocable by
written notice to the Secretary of the Company at any time prior to exercise,
and it shall be suspended if you are present at the meeting and elect to vote
in person.
On January 16, 1996, the record date fixed by the Board of Directors, the
Company had outstanding 83,448,167 shares of Common Stock. A majority of the
outstanding shares of Common Stock will constitute a quorum at the Annual
Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business. Abstentions are counted in tabulations of the votes cast on
proposals presented to stockholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved. Stockholders
have one vote for each share on all business of the meeting, except that
stockholders have cumulative voting rights with respect to the election at the
meeting of three directors. Cumulative voting rights entitle a stockholder to
give one nominee as many votes as is equal to the number of directors to be
elected multiplied by the number of shares owned by the stockholder, or to
distribute his or her votes on the same principle among two or more nominees
as the stockholder sees fit. The three nominees for director receiving the
highest number of votes at the meeting will be elected. With respect to the
other proposals, the affirmative vote of the majority of shares represented in
person or by proxy at the annual meeting and entitled to vote is required for
approval.
Unless otherwise directed in the accompanying proxy, the persons named
therein will vote FOR the election of the three director nominees listed
below, FOR the proposal to ratify the appointment of Ernst & Young LLP as
auditors for the fiscal year ending October 31, 1996, FOR the proposal to
approve the 1996 Fluor Executive Stock Plan, and FOR the proposal to approve
the material terms of certain executive compensation performance goals. As to
any other business which may properly come before the meeting, they will vote
in accordance with their best judgment, although the Company does not
presently know of any other business.
<PAGE>
ELECTION OF DIRECTORS
PROPOSAL 1
Under the Company's Certificate of Incorporation and Bylaws, which provide
for a "classified" Board, three directors have been nominated for election at
the annual meeting to serve a three year term expiring at the annual meeting
in 1999 and until their respective successors are elected and qualified. The
Bylaws presently provide for eleven directors, four each serving as Class I
and Class II directors and three serving as Class III directors.
Each of the three nominees listed below presently serves as a Class III
director of the Company. If any of the nominees should decline or be unable to
act as a director, the persons named in the proxy will vote in accordance with
their best judgment. The Company knows of no reason why the nominees would not
be available for election or, if elected, would not be able to serve.
In the event anyone other than the three nominees listed below should be
nominated for election as a director, the persons named in the proxy may vote
cumulatively for less than all the nominees.
BIOGRAPHICAL
The following biographical information is furnished with respect to each of
the three nominees for election at the annual meeting as Class III directors
and each of the other Class I and Class II directors whose terms will continue
after the annual meeting.
Class III Director Nominees(/1/):
PETER J. FLUOR, age 48.
Director since 1984; member of Audit and Organization and
Compensation Committees.
President and CEO of Texas Crude Energy, Inc., Houston, Texas
since 1980; joined that company in 1972.
[ART] Mr. Fluor also is a director of Seagull Energy Corporation,
Houston, Texas; and a member of the advisory board of Texas
Commerce Bank National Association, Houston, Texas.
BOBBY R. INMAN, age 64.
Director since 1985; Chairperson of Governance Committee and
member of Executive and Organization and Compensation
Committees.
Admiral, U.S. Navy (Retired).
[ART] Admiral Inman also is a director of Science Applications
International Corporation, La Jolla, California; SBC
Communications Inc. (formerly Southwestern Bell Corporation),
San Antonio, Texas; Temple-Inland Inc., Diboll, Texas; and
Xerox Corporation, Stamford, Connecticut.
BUCK MICKEL, age 70.
Director since 1977; member of the Governance Committee.
Retired 1987 as Vice Chairman of the Board; formerly President
from 1984.
Mr. Mickel also is a director of Delta Woodside Industries,
[ART] Greenville, South Carolina; Duke Power Company, Charlotte,
North Carolina; Emergent Group, Inc., Greenville, South
Carolina; Insignia Financial Corporation, Greenville, South
Carolina; Liberty Corporation, Greenville, South Carolina;
Monsanto Company, St. Louis, Missouri; Nations Bank
Corporation, Atlanta, Georgia; and RSI Holdings, Inc.,
Greenville, South Carolina.
2
<PAGE>
Class I Directors--Term Expires 1997(/1/):
HUGH K. COBLE, age 61.
Director since 1984.
Vice Chairman since April, 1994; formerly Group President of Fluor Daniel,
Inc.(/2/) from 1986; joined the Company in 1966.
Mr. Coble is also a director of The Duriron Company, Inc., Dayton, Ohio.
DAVID P. GARDNER, age 62.
Director since 1988; member of Governance and Organization and Compensation
Committees.
President of the William and Flora Hewlett Foundation since 1993; formerly
President of the University of California from 1983; and formerly President
of the University of Utah from 1973.
Dr. Gardner also is a director of the John Alden Financial Corporation, Miami,
Florida; and the First Security Corporation, Salt Lake City, Utah.
WILLIAM R. GRANT, age 71.
Director since 1982; Chairperson of Organization and Compensation Committee
and member of Executive and Audit Committees.
Chairman of the Board of Galen Associates, Inc., New York, New York, since
1989; formerly Chairman of the Board of New York Life International
Investment Inc. from 1987.
Mr. Grant also is a director of Allergan, Inc., Irvine, California; New York
Life Insurance Company, New York, New York; Seagull Energy Corporation,
Houston, Texas; SmithKline Beecham PLC, London, England; and Witco
Corporation, New York, New York.
VILMA S. MARTINEZ, age 52.
Director since 1993; member of Audit and Governance Committees.
Partner in Munger, Tolles & Olson, Los Angeles, California since 1982.
Ms. Martinez also is a director of Anheuser-Busch Companies, Inc., St. Louis,
Missouri; and Sanwa Bank California, Los Angeles, California.
Class II Directors -- Term Expires 1998(/1/):
CARROLL A. CAMPBELL, JR., age 55.
Director since January 19, 1995; member of the Audit and Governance
Committees.
President and Chief Executive Officer of the American Council of Life
Insurance, Washington, D.C.; formerly two-term Governor of South Carolina
from 1986; formerly four-term member of the U.S. House of Representatives
from 1978.
Mr. Campbell also is a director of AVX Corporation, Myrtle Beach, South
Carolina.
ROBERT V. LINDSAY, age 70.
Director since 1982; Chairperson of Audit Committee and member of Executive
and Organization and Compensation Committees.
Retired President of J. P. Morgan & Co. Incorporated, a bank holding company,
and its wholly owned subsidiary, Morgan Guaranty Trust Company of New York,
New York.
Mr. Lindsay also is a director of The Chubb Corporation, New York, New York;
Hudson Chartered Bancorp, Inc., La Grange, New York; Russell Reynolds
Associates, Inc., New York, New York; United Meridian Corp., Dallas, Texas;
and is senior advisor to Unibank Denmark A/S, Copenhagen, Denmark.
3
<PAGE>
LESLIE G. McCRAW, age 61.
Director since 1984; Chairperson of Executive Committee and member of
Governance Committee. Chairman of the Board since 1991; Chief Executive
Officer since 1990; formerly Vice Chairman of the Board from 1990; formerly
President from 1988; joined the Company in 1975.
Mr. McCraw also is a director of Allergan, Inc., Irvine, California; and New
York Life Insurance Company, New York, New York.
MARTHA R. SEGER, age 63.
Director since 1991; member of Audit and Governance Committees.
Distinguished Visiting Professor of Finance, Central Michigan University, Mt.
Pleasant, Michigan; formerly Distinguished Visiting Professor of Finance,
American Graduate School of International Management, Glendale, Arizona from
1993; formerly John M. Olin Distinguished Fellow, University of Arizona from
1991; formerly Member, Board of Governors of the Federal Reserve System from
1984.
Dr. Seger also is a director of Amoco, Chicago, Illinois; Providian Corp.,
Louisville, Kentucky; Johnson Controls, Milwaukee, Wisconsin; Kroger Company,
Cincinnati, Ohio; Tucson Electric Power Company, Tucson, Arizona; and Xerox
Corporation, Stamford, Connecticut.
- - --------
(/1/) Except as otherwise indicated, all positions are with the Company.
(/2/) Fluor Daniel, Inc. is an indirect, wholly owned subsidiary of the Company
which provides design, engineering, procurement, construction management,
maintenance and other diversified services to a wide range of industrial,
commercial, utility, natural resources, energy and governmental clients.
4
<PAGE>
STOCK OWNERSHIP
The following information is furnished with respect to each director and
nominee for director, each of the five most highly compensated executive
officers of the Company (the "Named Executive Officers") and all current
directors and executive officers of the Company as a group as to ownership of
shares of Common Stock of the Company as of January 16, 1996.
<TABLE>
<CAPTION>
CONSISTING IN PART OF SHARES
UNDER/WITH
----------------------------
VOTING AND
SHARES EXERCISABLE INVESTMENT POWER
BENEFICIALLY STOCK -------------------
OWNED(/1/)(/2/) OPTIONS SOLE SHARED
--------------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Class III Director Nominees:
Peter J. Fluor................. 19,838 19,838
Bobby R. Inman................. 2,000 2,000
Buck Mickel.................... 5,000 5,000
Class I Directors;
Hugh K. Coble(/3/)............. 71,927 19,289 52,638
David P. Gardener.............. 1,600 1,600
William R. Grant............... 1,481 1,001 480
Vilma S. Martinez.............. 1,101 1,101
Class II Directors:
Carroll A. Campbell, Jr........ 1,001 1,001
Robert V. Lindsay.............. 2,000 2,000
Leslie G. McCraw(/3/).......... 289,167 165,587 123,580
Martha R. Seger................ 1,102 1,102
Other Named Executive Officers:
Donald L. Blankenship.......... 38,422 13,072 25,350
James O. Rollans............... 57,847 34,095 23,752
P. Joseph Trimble.............. 13,248 13,248
All directors and executive of-
ficers as a group (28)
including the above............ 893,130 405,989 485,311 1,830
</TABLE>
- - ------------------
(/1/) Each individual owns less than .4% and the group owns approximately 1.0%
of the outstanding shares of Common Stock of the Company.
(/2/) In addition to the foregoing beneficial ownership amounts, the Directors
listed below have elected the Common Stock valuation method for valuing
all or a portion of their deferred directors' fees (see section entitled
"Directors' Fees" at page 14 hereof) and, as of January 16, 1996, such
amounts constitute the economic equivalent of the following numbers of
shares of Common Stock:
<TABLE>
<CAPTION>
ECONOMIC EQUIVALENT
NUMBER OF SHARES
-------------------
<S> <C>
Carroll A. Campbell, Jr................................. 951
Peter J. Fluor.......................................... 12,438
David P. Gardner........................................ 1,448
William R. Grant........................................ 18,207
Robert V. Lindsay....................................... 12,827
Vilma S. Martinez....................................... 2,639
</TABLE>
(/3/) This individual is also a Named Executive Officer.
5
<PAGE>
COMMITTEES OF THE BOARD
The standing committees of the Board consist of an Executive Committee, an
Audit Committee, an Organization and Compensation Committee and a Governance
Committee.
Executive Committee
When the Board is not in session, the Executive Committee has all of the
power and authority of the Board except with respect to amending the Restated
Certificate of Incorporation; adopting an agreement of merger or
consolidation; recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Company's property and assets; recommending to
the stockholders a dissolution of the Company or a revocation of the
dissolution; amending the Bylaws; the declaration of a dividend; or the
issuance of stock. The members of the Executive Committee are Leslie G. McCraw
(Chairperson), William R. Grant, Bobby R. Inman and Robert V. Lindsay. The
Executive Committee held three meetings, and took action by unanimous written
consent on two occasions, during fiscal year 1995.
Audit Committee
The principal duties of the Audit Committee are to nominate the firm of
independent auditors for appointment by the Board; to meet with the
independent auditors to review and approve the scope of their audit engagement
and the fees related to such work; to meet with the Company's financial
management, internal audit management and independent auditors to review
matters relating to internal accounting controls, the internal audit program,
the Company's accounting practices and procedures and other matters relating
to the financial condition of the Company and its subsidiaries; and to report
to the Board periodically any conclusions or recommendations the Audit
Committee may have with respect to such matters. The members of the Audit
Committee are Robert V. Lindsay (Chairperson), Carroll A. Campbell, Jr., Peter
J. Fluor, William R. Grant, Vilma S. Martinez and Martha R. Seger, none of
whom is a current or former officer or employee of the Company or any of its
subsidiaries. The Audit Committee held five meetings during fiscal year 1995,
four regular meetings and a special meeting to review and approve the
Company's 1994 Annual Report, Form 10-K and proxy materials. At the end of
each of the regular meetings, the members met privately with the Company's
independent auditors without any Company officers or other personnel present.
Organization and Compensation Committee
The principal duties of the Organization and Compensation Committee are to
review corporate organizational structures; to review key employee
compensation policies, plans and programs; to monitor performance and
compensation of employee-directors and officers of the Company and other key
employees; to prepare recommendations and periodic reports to the Board
concerning such matters; and to function as the Committee which administers
the long-term incentive programs referred to in the Executive Compensation
section hereof. The members of the Organization and Compensation Committee are
William R. Grant (Chairperson), Peter J. Fluor, David P. Gardner, Bobby R.
Inman and Robert V. Lindsay, none of whom is a current or former officer or
employee of the Company or any subsidiary. The Organization and Compensation
Committee held five meetings, and took action by unanimous written consent on
one occasion during fiscal year 1995.
Governance Committee
The function of the Governance Committee is to seek out, evaluate and
recommend to the Board qualified nominees for election as directors of the
Company; to recommend directors of the Company for election as members of
Committees of the Board; to recommend new Committees to the Board; and to
consider other matters including the size and composition of the Board and
Committees and other issues of corporate governance. The members of the
Governance Committee are Bobby R. Inman (Chairperson), Carroll A. Campbell,
Jr., David P. Gardner, Vilma S. Martinez, Leslie G. McCraw, Buck Mickel and
Martha R. Seger. During fiscal year 1995, the Governance Committee held four
meetings. The Governance Committee will give appropriate consideration to
qualified persons recommended by stockholders for nomination as directors of
the Company provided that such recommendations are accompanied by information
sufficient to enable the Governance Committee to evaluate the qualifications
of the nominee.
6
<PAGE>
NOTICE OF DIRECTOR NOMINATIONS
The Company's Bylaws also require that the Secretary must receive written
notice of all persons to be nominated as a director at an annual meeting,
other than nominations made at the direction of the Board of Directors, not
less than 30 nor more than 60 days prior to the annual meeting at which the
election will take place (or not later than 10 days after public disclosure of
such meeting if such disclosure occurs less than 40 days prior to the date of
such meeting). The notice must set forth (a) the stockholder's name and
address, and the number of shares of Common Stock beneficially owned by such
stockholder, (b) such information with respect to the nominee as would have to
be included in the Proxy Statement if such person were a nominee included in
that Statement and (c) a consent to serve as director signed by such nominee.
BOARD AND COMMITTEE ATTENDANCE
During fiscal year 1995, the Board held four regular meetings, one of which
was followed by an extensive strategic planning session. The Board took action
by unanimous written consent on one occasion. Each of the directors attended
at least 75% of the aggregate number of meetings of the Board and of the Board
Committees on which he or she served.
OTHER MATTERS
Vilma S. Martinez, a director of the Company, is a partner in the law firm
of Munger, Tolles and Olson. Certain subsidiaries of the Company retained the
law firm during fiscal year 1995 and have continued to retain the firm in
fiscal 1996. The amount of fees paid to the firm in fiscal 1995 did not exceed
five percent of the law firm's gross revenues for the firm's last full fiscal
year.
In fiscal 1994, the Company made an interest-free loan in the amount of
$200,000 to Charles R. Cox, an executive officer of the Company, to be used to
defray expenses associated with Mr. Cox's relocation to Fluor Daniel's
Greenville, South Carolina office. As of October 31, 1995, $150,000 was
outstanding on this loan. The remaining balance of the loan is due in three
equal annual installments on February 1 of each year.
In December 1994, the Company made an interest-free loan in the amount of
$321,553 to Richard M. Teater, an executive officer of the Company, to defray
expenses associated with Mr. Teater's relocation to Fluor Daniel's Irvine,
California headquarters. The loan is due in five equal annual installments
beginning January 31, 1996.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
As reported last year, the Company made substantial changes in its
management and organizational structure during fiscal 1994, as part of its
ongoing reengineering effort. Two senior levels of management structure were
eliminated. The Executive Committee of the Board was restructured to include
only the CEO and the other non-employee Board committee chairpersons. More
authority and responsibility, with attendant accountability, were delegated to
the operating levels of the organization. A Leadership Team, which consists of
all of the Company's executive officers, is focused on overall Company
performance and monitors the progress of the operating units in relation to
their strategic and operating objectives. The Company's reengineering effort
is continuing.
The Company's compensation programs are designed to attract, motivate and
retain key employees with incentives that are linked to various performance
measures and to enhance shareholder value. The Company's executive
compensation program consists of three main components: (1) base salary; (2)
potential for an annual bonus based on overall Company performance as well as
individual performance; and (3) the opportunity to earn long-term cash and
stock-based incentives which are intended to encourage the achievement of
superior results over time and to align executive officer and shareholder
interests. The second and third elements constitute the "at-risk" portion of
the compensation program with the CEO's "at risk" compensation targeted at
73%. For
7
<PAGE>
fiscal year 1995, the percentage of total compensation earned by the Named
Executive Officers which was of the "at risk" type was approximately 67%. The
nature of the long-term programs as well as the extended vesting and exercise
periods for stock options mean that executives may realize their incentive
awards at a substantially later time than when the shareholders benefit from
stock price appreciation. To further align management's interests with those
of the shareholders, the Company, on the recommendation of this Committee, has
adopted stock ownership targets for its officers. These target guidelines are
intended to encourage stock ownership by the company's management group. In
the case of the CEO, the targeted stock ownership guideline is 700% of base
salary.
The philosophy for establishing specific compensation levels for members of
the Leadership Team and other key employees is to link total compensation to
achievement of the Company's business goals and to measure total compensation
against that of a broad group of general industry companies of similar
size(/1/). For this purpose, this Committee uses the surveys of two of the
major compensation consulting firms, Hewitt and Associates and Towers Perrin,
as reference points. The general policy of the Committee is to position
executive base salaries, including that of the CEO, at approximately the 50th
percentile of the general industry group, with salary plus bonus at the 50th
to 60th percentile when targeted performance is attained. Total compensation
is positioned at the 75th percentile range based upon stock price appreciation
and achievement of earnings exceeding target levels, with the potential for
additional compensation up to the 90th percentile in total compensation for
extraordinary performance as measured by the achievement of specific earnings
growth and/or stock price objectives set by this Committee.
Under the Company's Executive Incentive Compensation Plan, a minimum rate of
return on average stockholders' equity must be achieved before bonuses can be
paid and further limits are placed on the maximum amount of earnings that can
be paid out as bonuses. Bonuses may not be paid unless net earnings, excluding
extraordinary, unusual or infrequently occurring items, exceed a return on
average stockholders' equity that is calculated on the basis of average yield
for the year on one year United States Treasury Bills. Further, the total
amount of bonuses paid together with accruals for the year under the Company's
long-term incentive program, may not exceed either (a) 20% of pre-tax earnings
(excluding extraordinary, unusual or infrequently occurring items and the
award fund itself) or (b) 10% of average stockholders' equity. The plan covers
approximately 800 management employees, including all Named Executive Officers
other than Mr. Blankenship(/2/). The target amount payable out of the fund to
each executive is based on the executive's target bonus, with the actual
amount paid based upon a combination of various company performance criteria,
and upon individual performance. The bonus award for the CEO is determined by
this Committee and the bonus award of each other executive officer is reviewed
and approved by this Committee. For fiscal 1995, bonus awards to the Named
Executive Officers as a group placed salary plus bonus above the 50th to 60th
percentile range based upon our appraisal of their and the Company's
outstanding performance. The salary level and bonus award for Mr. McCraw was
determined by reference to the target levels for the general industry group
discussed above, and were above the target percentiles on the basis of
achievement of superior operating results by both Fluor Daniel and Massey and
on achievement of objectives in the following key results areas: strategic
planning, overall leadership, quality of external relations, internal
teamwork, ethics and management succession.
All Leadership Team members participate in the Company's long-term incentive
program. This program's primary purpose is to offer an incentive for the
achievement of superior operating results, to align executive officer and
stockholder interests, and to foster the retention of key management
personnel. It is the Committee's intent that all amounts to be awarded under
this program qualify as performance-based compensation under IRS definitions.
- - --------
(/1/) This group covers a broad range of industries and is not limited to
companies in the Dow Jones Heavy Construction Group that is used for the
Performance Graph set forth on page 14 hereof.
(/2/) Mr. Blankenship participates in the A.T. Massey Bonus Plan which covers
management employees of A.T. Massey and provides annual bonus awards based
on individual and company performance. Mr. Blankenship's awards under the
A.T. Massey Bonus Plan are reviewed and approved by this Committee.
8
<PAGE>
Under the long-term incentive program, the Committee each year may make
grants of the following: (a) cash incentive awards which are based upon
meeting three-year earnings targets established by the Committee; (b) stock
options which become exercisable over a four year period and which have value
only if shareholder value is increased and (c) restricted stock which may be
awarded only if return on equity targets are achieved. The weighting of awards
between the earnings-based cash portion and the stock portion is primarily a
function of responsibility with the more senior executives having a greater
portion of their awards dependent on stock performance. The 1995 awards to Mr.
McCraw and other Leadership Team members were based on placing each of their
total compensation levels in the mid-range of the general industry group if
target performance was achieved. To achieve higher than mid-range compensation
up to the 75th percentile range would require performance in excess of the
established targets. Also for 1995, participating Leadership Team members
received a payout of a previously granted cash incentive award which was based
upon achieving 108% of the target amount for fiscal 1993 through 1995 earnings
performance.
As discussed last year, early in fiscal 1995, a new Directors' Achievement
Award Program was recommended by this Committee and approved by the Board. The
purpose of this program is to focus the Leadership Team members on maximizing
overall Company financial performance and achieving substantial increases in
shareholder value. The program provides for performance-contingent cash and
stock-based awards for members of the Leadership Team which become payable
only if the very aggressive earnings growth and stock price performance goals
established by this Committee are achieved within a limited time frame. The
Committee intends that all awards under this program will qualify as
performance-based compensation under IRS definitions and therefore the
performance goals under these programs are being presented for stockholders'
approval at this meeting.
At the recommendation of this Committee, certain conforming amendments to
the performance goals under the Executive Incentive Compensation Plan are
being presented for shareholder approval at this meeting. Such performance
goals apply to the CEO and certain executive officers as may be designated by
this Committee. Shareholder approval of these goals will conform them to the
IRS definitions of performance compensation and should help to assure full
deductibility for the Company of future awards. For full conformity, this
Committee must later verify that the pre-established performance goals have
actually been attained. This Committee will continue to monitor future
developments in this area and to bring forth any further changes required to
keep the Company's programs in conformity with these guidelines.
Also upon the recommendation of this Committee, the Board has approved, and
there is being presented for shareholder approval, the 1996 Fluor Executive
Stock Plan. The reasons for this recommendation are set forth under the
heading "Proposal 3" on page 15 hereof.
All amounts paid or accrued during fiscal year 1995 under the above
described plans and programs are included in the tables which follow. No
member of this Committee is a former or current officer or employee of the
Company or any of its subsidiaries.
ORGANIZATION AND COMPENSATION COMMITTEE
William R. Grant David P. Gardner Robert V. Lindsay
Peter J. Fluor Bobby R. Inman
February 12, 1996
9
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended October 31, 1993, 1994
and 1995, the cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to each of
the Named Executive Officers in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------- --------------------- -------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR ($)(A) ($)(A) ($)(B) ($)(C) SARS(#) ($) ($)(D)
------------------ ------ ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L. G. McCraw--Chairman 1995 754,800 840,000 161,281 159,794 77,800 348,400 280,340
and Chief Executive 1994 710,061 700,000 106,252 488,019 57,940 239,000 272,279
Officer 1993 680,040 610,000 63,431 492,963 57,940 185,604 142,416
H. K. Coble--Vice 1995 400,020 320,000 74,023 379,427 44,690 162,006 161,728
Chairman 1994 400,020 290,000 49,793 209,028 24,810 111,135 148,275
1993 377,580 290,000 30,887 211,145 24,810 100,943 237,373
D. L. Blankenship-- 1995 325,020 320,000 44,381 382,588 42,100 0 140,158
Chairman and Chief 1994 308,340 270,000 34,269 337,993 8,770 0 163,948
Executive Officer, 1993 275,032 230,000 13,310 74,599 8,770 0 94,646
A. T. Massey Coal
Company, Inc.
J. O. Rollans--Senior 1995 335,040 280,000 40,642 468,089 49,590 74,558 90,212
Vice President/Chief 1994 322,707 250,000 25,856 136,904 16,260 51,146 88,594
Administrative Officer 1993 250,020 200,000 14,396 138,291 16,260 46,456 37,691
P. J. Trimble--Senior 1995 315,000 250,000 17,335 269,114 29,300 144,586 119,752
Vice President, Law 1994 300,000 200,000 10,908 59,599 7,100 99,185 117,728
& Secretary 1993 285,000 165,000 9,423 0 0 90,089 118,283
</TABLE>
- - -------
(A) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers.
(B) Amounts shown as Other Annual Compensation represent restricted unit
payments for the benefit of each Named Executive Officer to compensate for
federal and state withholding taxes arising from the lapse of restrictions
on restricted stock held by such Named Executive Officer.
(C) The amount reported in the table represents the market value at the date
of grant, without giving effect to the diminution in value attributable to
the restrictions on such stock. In fiscal years 1993, 1994, and 1995, the
Company awarded 21,020, 27,310 and 35,830 shares to all Named Executive
Officers as a group. The restricted stock awarded in fiscal years 1993 and
1994 vests at the rate of 10% per year. In fiscal year 1995, 6,260 shares
of restricted stock awarded vest at 10% per year and 29,570 shares of
restricted stock awarded under the Directors' Achievement Award Program
vest only if the Company achieves a certain level of annual net earnings
in the four year period ending October 31, 1998. If the Company achieves
the target, the restrictions on the stock lapse one-third upon the
announcement of such earnings, and one-third on each of the next two
yearly anniversaries thereof. (This amount is reduced by 50% if a certain
lower net earnings target is achieved during the same period). As of the
end of the 1995 fiscal year, the aggregate restricted stock holdings for
each of the above Named Executive Officers consisted of the following: (i)
Mr. McCraw: 57,944 shares with a value of $3,273,069; (ii) Mr. Coble:
42,524 shares with a value of $2,401,306; (iii) Mr. Blankenship: 20,705
shares with a value of $1,169,833; (iv) Mr. Rollans: 23,638 shares with a
value of $1,335,547; and (v) Mr. Trimble: 13,216 shares with a value of
$746,037. As of the end of fiscal year 1995, aggregate restricted stock
holdings for the Company consisted of 770,694 shares with a value of
$43,533,178 at the then current market value, without giving effect to the
diminution of value attributable to the restrictions on such stock.
Quarterly dividends of $.17 per share are currently paid to all
stockholders of record.
(D) The total amounts shown in this column for the last fiscal year consist of
the following: (i) Mr. McCraw: $111,762--Company contributions and other
allocations to defined contribution plans and related excess benefit
plans; $168,078--Benefit attributable to Company-owned life insurance
policy; $500--Service award; (ii) Mr. Coble: $50,217--Company
contributions and other allocations to defined contribution plans and
related excess benefit plans; $111,511--Benefit attributable to Company-
owned life insurance policy; (iii) Mr. Blankenship: $32,070 --Benefit
attributable to company-owned life insurance policy; $8,088--Miscellaneous
expenses; $102,000 --Replacement amount for former A. T. Massey Retention
Plan; (iv) Mr. Rollans: $52,454--Company contributions and other
allocations to defined contribution plans and related excess benefit
plans; $37,758--Benefit attributable to Company-owned life insurance
policy; and (v) Mr. Trimble: $44,096--Company contributions and other
allocations to defined contribution plans and related excess benefit
plans; $75,656--Benefit attributable to Company-owned life insurance
policy.
10
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options made during fiscal 1995 under the Company's long-term incentive
program to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(A)
-------------------------------------------
NUMBER OF % OF TOTAL GRANT
SECURITIES OPTIONS EXERCISE DATE
UNDERLYING GRANTED TO PRICE PRESENT
OPTIONS EMPLOYEES IN ($/SH) EXPIRATION VALUE
NAME GRANTED FISCAL YEAR (B) DATE ($)(C)
---- ---------- ------------ -------- ---------- -------
<S> <C> <C> <C> <C> <C>
L. G. McCraw................ 77,800(D) 5.5% 43.1875 12/06/04 739,878
H. K. Coble................. 33,330(D) 2.4% 43.1875 12/06/04 316,968
11,360(E) 0.8% 51.3125 06/12/05 118,826
D. L. Blankenship........... 33,330(D) 2.4% 43.1875 12/06/04 316,968
8,770(F) 0.6% 59.0625 09/11/05 147,775
J. O. Rollans............... 33,330(D) 2.4% 43.1875 12/06/04 316,968
16,260(F) 1.1% 59.0625 09/11/05 273,981
P. J. Trimble............... 22,200(D) 1.6% 43.1875 12/06/04 211,122
7,100(F) 0.5% 59.0625 09/11/05 119,635
</TABLE>
- - --------
(A) As a matter of policy, no SARs were granted to any of the Named Executive
Officers.
(B) Options were granted with an exercise price equal to the fair market value
of the underlying common stock on the date of grant. The exercise price
and tax withholding obligations related to exercise may be paid by
delivery of already owned shares or by offset of the underlying shares,
subject to certain conditions.
(C) The Grant Date Present Value is computed using the Black-Scholes option
pricing model based on the following general assumptions: (a) an Expected
Option Term of six years which reflects a reduction of the actual 10-year
life of the option based on historical data regarding the average length
of time an executive holds an option before exercising; (b) a Risk-Free
Interest Rate that represents the interest rate on a U.S. Treasury Strip
with a maturity date corresponding to that of the Expected Option Term;
(c) Stock Price Volatility is calculated using daily stock prices over a
three-year period preceding the grant date; and (d) Dividend Yield is
calculated using yields over a three-year period preceding the grant date.
Notwithstanding the fact that these options are non-transferable, no
discount for lack of marketability was taken. The option value was
discounted for risk of forfeiture during the vesting period. Options
granted under the Directors' Achievement Award Program were adjusted to
reflect the probability of accomplishing the target stock price objective.
The actual value, if any, an executive may realize will depend upon the
excess of the stock price over the exercise price on the date the option
is exercised, so there is no assurance that the value realized by the
executive will be at or near the amount shown.
(D) Options granted under the Directors' Achievement Award Program. Options
were for a term of 10 years, subject to earlier termination in certain
events related to termination of employment, and become exercisable if,
and only if, for a 30 consecutive calendar day period ending prior to
December 31, 1997, the average daily price of the Company's common stock
equals or exceeds a target price per share which is significantly higher
than the price on the date of grant. The options vest in three equal
annual installments commencing on the date such requirement is first met,
but in no event sooner than the one year anniversary of the date of grant.
The specific option pricing model assumptions for this grant were as
follows: $43.1875 Exercise Price; 7.5% Risk-Free Interest Rate; 23.7%
Stock Price Volatility; and 1.1% Dividend Yield.
11
<PAGE>
(E) Options granted under the Directors' Achievement Award Program. Options
were for a term of 10 years, subject to earlier termination in certain
events related to termination of employment, and become exercisable if,
and only if, for a 30 consecutive calendar day period ending prior to
December 31, 1997, the average daily price of the Company's common stock
equals or exceeds a target price per share which is significantly higher
than the price on the date of grant. The options vest in three equal
annual installments commencing on the date such requirement is first met,
but in no event sooner than the one year anniversary of the date of grant.
The specific option pricing model assumptions for this grant were as
follows: $51.3125 Exercise Price; 6.4% Risk Free Interest Rate; 20.6%
Stock Price Volatility; and 1.1% Dividend Yield.
(F) Options were for a term of 10 years, subject to earlier termination in
certain events related to termination of employment, and vest in four
equal annual installments commencing 12 months after the date of grant.
The specific option pricing model assumptions for this grant were as
follows: $59.0625 Exercise Price; 6.3% Risk Free Interest Rate; 20.5%
Stock Price Volatility; and 1.1% Dividend Yield.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers, concerning the exercise of options during the last fiscal
year and unexercised options and SARs held as of the end of the fiscal year:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED ON VALUE AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(A)
EXERCISE REALISED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. G. McCraw ........... 0 0 151,102 174,118 2,723,969 2,298,850
H. K. Coble............. 0 0 47,305 86,268 628,099 1,047,673
D. L. Blankenship....... 0 0 13,072 54,148 150,254 552,166
J. O. Rollans........... 0 0 30,295 75,995 442,820 790,410
P. J. Trimble........... 0 0 10,520 37,715 140,952 406,412
</TABLE>
- - --------
(A) Market value of underlying securities at fiscal year-end, minus the grant
price.
LONG-TERM AWARDS
The following table provides information with respect to the Named Executive
Officers concerning cash-incentive awards made during fiscal 1995 under the
Company's long-term incentive programs.
Long-Term Incentive Awards. Each award under the Company's Long-Term
Incentive Award Program represents the right to receive an amount in cash if,
and only if, consolidated earnings before interest and taxes ("EBIT") of the
Company's principal operating subsidiary, Fluor Daniel, Inc., for the three
year period ending October 31, 1998, achieves certain levels which have been
set by the Organization and Compensation Committee. Mr. Blankenship's award is
payable if certain thresholds are met based on consolidated earnings before
interest, taxes, depreciation and amortization ("EBITDA") of A. T. Massey
rather than Fluor Daniel EBIT. If EBIT falls below the threshold amount, no
award is payable. If EBIT falls between the threshold amount and the target
amount or between the target amount and the maximum amount then the amount of
the award is prorated accordingly. If EBIT is above the maximum amount, no
additional award is payable. Payments made under the Long-Term Incentive
Program are reported in the Summary Compensation Table in the year of payout,
if any.
Directors' Achievement Awards. Cash awards under the Directors' Achievement
Award Program represent the right to receive an amount of cash if, and only
if, consolidated net earnings of the Company for
12
<PAGE>
any of the four fiscal years beginning with the year in which the grant is
made achieve either of two target amounts which have been set by the
Organization and Compensation Committee. If consolidated net earnings for each
year during the period falls below the lower of the target amounts, no award
is payable. If consolidated net earnings for any year during the period are
above the higher of the target amounts, the maximum award is payable. If the
higher net earnings amount is not achieved during the period but the lower
amount is achieved, then one half of the maximum award is payable. Payments
made under the Directors' Achievement Award Program are reported in the
Summary Compensation Table in the year of payout, if any.
LONG-TERM INCENTIVE PROGRAM-AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK
PERFORMANCE OR PRICE BASED PLANS($)
OTHER PERIOD ---------------------------
UNTIL MATURATION MIDDLE
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
---- ---------------- --------- ------- ---------
<S> <C> <C> <C> <C>
L. G. McCraw....................... 3 years(A) 60,000 240,000 480,000
4 years(B) 1,205,000 N.A. 2,410,000
H. K. Coble........................ 3 years(A) 25,700 102,800 205,500
4 years(B) 642,650 N.A. 1,285,300
D. L. Blankenship.................. 3 years(A) 22,100 88,200 176,400
4 years(B) 500,000 N.A. 1,000,000
J. O. Rollans...................... 3 years(A) 16,900 67,400 134,700
4 years(B) 500,000 N.A. 1,000,000
P. J. Trimble...................... 3 years(A) 17,900 71,400 142,800
4 years(B) 333,500 N.A. 667,000
</TABLE>
- - --------
(A) This award was made pursuant to the Long Term Incentive Award Program.
(B) This award was made pursuant to the Directors' Achievement Award Program.
PENSION PLANS
The following table shows the estimated annual pension benefits payable to a
covered participant at normal retirement age under the A.T. Massey Coal
Company, Inc. Defined Benefit Pension Plan (the "A.T. Massey Pension Plan"),
as well as a non-qualified supplemental pension that provides benefits that
would otherwise be denied participants by reason of certain Internal Revenue
Code limitations on qualified plan benefits, based on remuneration that is
covered under the plans and years of service with A.T. Massey and its
subsidiaries. Mr. Blankenship is the only Named Executive Officer
participating in the A.T. Massey Pension Plan.
A participant's remuneration covered by the A.T. Massey Pension Plan is
their average base salary and bonus (as reported in the Summary Compensation
Table) for the five of the last ten calendar plan years of the participant's
career for which such average is the highest or, in the case of a participant
who has been employed for less than five full calendar years, the period of
their employment with A.T. Massey and its subsidiaries. As of the end of the
last calendar year, Mr. Blankenship's covered compensation under the A.T.
Massey Pension Plan was $150,000 and he has been credited with thirteen years
of service. Benefits shown are computed as a straight line annuity beginning
at age 65 with no deduction for Social Security or other offset amounts.
PENSION PLAN TABLE
YEARS OF SERVICE
<TABLE>
<CAPTION>
REMUNERATION 10 15 20 25 30 35 OR MORE
- - ------------ ------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $18,750 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
$150,000 $22,500 $ 33,750 $ 45,000 $ 56,250 $ 67,500 $ 78,750
$175,000 $26,250 $ 39,375 $ 52,500 $ 65,625 $ 78,750 $ 91,875
$200,000 $30,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 $105,000
$225,000 $33,750 $ 50,625 $ 67,500 $ 84,375 $101,250 $118,125
$250,000 $37,500 $ 56,250 $ 75,000 $ 93,750 $112,500 $131,250
$300,000 $45,000 $ 67,500 $ 90,000 $112,500 $135,000 $157,500
$400,000 $60,000 $ 90,000 $120,000 $150,000 $180,000 $210,000
$450,000 $67,500 $101,250 $135,000 $168,750 $202,500 $236,250
$500,000 $75,000 $112,500 $150,000 $187,500 $225,000 $262,500
</TABLE>
13
<PAGE>
PERFORMANCE GRAPH
[PERFORMANCE GRAPH HERE]
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
Among Fluor Corporation,
S&P 500 and DJ Heavy Construction Group
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fluor Corporation(/1/)(/2/) 100.0 141.97 140.21 129.51 159.06 183.77
- - ----------------------------------------------------------------------------------------
S&P 500 100.0 133.50 146.79 168.72 175.25 221.44
- - ----------------------------------------------------------------------------------------
DJ Heavy Construction Group 100.0 134.99 140.79 139.93 174.28 136.61
- - ----------------------------------------------------------------------------------------
</TABLE>
(/1/) The above graph compares the performance of Fluor Corporation with that of
the S&P 500 Composite Index and the Dow Jones Heavy Construction Industry
Group Index, which is a published industry index.
(/2/) The comparison of total return on investment (change in year end stock
price plus reinvested dividends) for each of the periods assumes that $100
was invested on October 31, 1990 in each of Fluor Corporation, the S&P 500
Composite Group and the Dow Jones Heavy Construction Industry Group, with
investment weighted on the basis of market capitalization.
CHANGE OF CONTROL PROVISIONS IN CERTAIN PLANS
Under the Company's "Stock Plans," which provide for stock options,
restricted stock and SARs, restrictions on exercisability and transferability
which are premised on continued service with the Company or its subsidiaries
lapse if the holder's employment is terminated for any reason within two years
following a change of control of the Company. A change of control of the
Company shall be deemed to have occurred if (1) a third person, including a
"group," as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
acquires shares of the Company having twenty-five percent or more of the total
number of votes that may be cast for the election of directors of the Company
or (2) as a result of any cash tender or exchange offer, merger or other
business combination, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company.
DIRECTORS' FEES
Nine of the eleven present directors are not salaried employees of the
Company or its subsidiaries. For their services, those directors are paid a
retainer at the annual rate of $30,000 or, in the case of Chairpersons of Board
Committees, $34,000, plus a fee of $2,000 per day for each day upon which one
or more Board or Board
14
<PAGE>
Committee meetings are attended. Each such director also receives a $2,000
annual California tax allowance. Salaried employees receive no additional
compensation for their services as directors. Directors are permitted to defer
receipt of directors' fees until their retirement or other termination of
status as a director. Deferred amounts (at the election of the director)
either accrue interest at rates fixed from time to time by the Executive
Committee or are valued as if having been invested in Common Stock of the
Company. In calendar 1995, Carroll A. Campbell, Jr., Peter J. Fluor, David P.
Gardner, William R. Grant, Robert V. Lindsay and Vilma S. Martinez chose to
defer all of their directors' fees and each elected the Common Stock valuation
method. Martha R. Seger chose to defer 50% of her retainer fees.
Under the Company's Retirement Plan for Outside Directors, those directors
who have not previously served in the management of the Company or a
subsidiary and who have served as a director for at least six years are
entitled to annual retirement payments in an amount equal to their retainer at
retirement. Payments continue for the life of the director but do not exceed
the number of years of the director's prior board service.
Directors who are not, and have never been, employees of the Company or its
subsidiaries are eligible to receive 1,000 shares of Restricted Common Stock
and related restricted cash units when they become Directors, under the Stock
Plan for Non-Employee Directors (the "Director Stock Plan"). The Director
Stock Plan was approved by the stockholders of the Company at the 1995 Annual
Meeting on March 14, 1995. Under the Director Stock Plan, 1,000 shares of
restricted stock were granted on the date of such approval to each of Carroll
A. Campbell, Jr., Peter J. Fluor, David P. Gardner, William R. Grant, Bobby R.
Inman, Robert V. Lindsay, Vilma S. Martinez and Martha R. Seger. Each of such
directors received 1,000 restricted units payable in cash to assist in
satisfying income tax liabilities. Restrictions on the sale or transfer of
such restricted shares lapsed 20% on the date of grant and will lapse in four
equal increments on each of the four succeeding anniversaries of the award
date. For non-employee directors appointed in the future, the award will be
made on a date determined by the Committee following such appointment, and
restrictions will lapse on 20% of the shares on March 14 next following the
date of the initial award. Restrictions will lapse on the balance of the
shares in four equal increments on each succeeding March 14. The value of
1,000 shares of stock on March 14, 1995, was $47,688. This does not take into
account the diminution in value attributable to the restrictions on such stock
under the Director Stock Plan.
RATIFICATION OF APPOINTMENT OF AUDITORS
PROPOSAL 2
The Board has appointed the firm of Ernst & Young LLP, which firm was
engaged as independent auditors for the fiscal year ended October 31, 1995, to
audit the financial statements of the Company for the fiscal year ending
October 31, 1996. A proposal to ratify this appointment is being presented to
the stockholders at the annual meeting. A representative of Ernst & Young LLP
is expected to be present at the meeting and available to respond to
appropriate questions and, although that firm has indicated that no statement
will be made, an opportunity for a statement will be provided.
APPROVAL OF 1996 FLUOR EXECUTIVE STOCK PLAN
PROPOSAL 3
The Board has adopted, subject to approval by the stockholders of the
Company, a stock incentive plan entitled the 1996 Fluor Executive Stock Plan
(the "Stock Plan"), the full text of which is set forth in Exhibit A hereto.
The Stock Plan will become effective upon its approval by the stockholders.
The Stock Plan replaces the 1988 Fluor Executive Stock Plan (the "1988
Plan"), which was adopted with stockholder approval in 1989. Like the 1988
Plan, the Stock Plan is intended to constitute a key element of the
15
<PAGE>
Company's long-term incentive program which is designed to attract, retain and
motivate key employees of the Company and to align key employee and
stockholder interests.
As a result of the prior grant of stock options and restricted stock under
the 1988 Plan, the number of shares available as of December 31, 1995, for
grant of stock options or restricted stock awards was 109,608 shares. The
Board of Directors, and the Organization and Compensation Committee, has
determined that this amount is insufficient to continue to meet the Company's
needs under its long-term incentive program. As a result, the Board proposes
that the stockholders approve the Stock Plan, which makes available an
additional 4,000,000 shares for the exercise of options or the award of
restricted stock.
The Stock Plan allows grants of stock options, awards of restricted stock
and stock payments. The number of shares of stock which may be issued under
the Stock Plan may not exceed 4,000,000 shares of Common Stock plus that
number of the 4,784,042 shares of Common Stock outstanding or reserved for
issuance as of December 31, 1995, as stock options, restricted stock awards or
rights with respect to shares under previously approved Company stock plans
which subsequently expire or are otherwise terminated. The foregoing amounts
are subject to customary anti-dilution provisions for stock splits, stock
dividends, and other capital changes. The Stock Plan is administered by the
Organization and Compensation Committee of the Board (the "Committee"), no
member of which is eligible to participate in the Stock Plan. Those employees
eligible to participate are Company or subsidiary officers or other members of
the Executive Management Team of the Company (currently a group of
approximately 800 employees). The Committee has sole discretion to determine
from among eligible employees those to whom, and the time or times at which,
grants or awards are made, the number of shares of stock subject to each grant
or award and the period for the exercise of options.
The average per share market value of the Company Common Stock on January
16, 1996, on The New York Stock Exchange was $62.875. Grants or awards must be
made within ten years from the effective date of the Stock Plan and the period
for the exercise of each option cannot exceed ten years from the date of
grant. The change of control provisions of the Stock Plan are the same as
those set forth in the section entitled "Change of Control Provisions in
Certain Plans", located at page 14 hereof.
The Stock Plan may be amended from time to time by the Board of Directors
except that no amendment to increase the total number of shares of Common
Stock subject to the Stock Plan by more than 10%, to materially increase the
benefits accruing to participants under the Stock Plan, to withdraw Stock Plan
administration from the Committee, or to permit any person while a member of
the Committee to receive grants or awards under the Stock Plan, may be adopted
without the approval of the stockholders of the Company.
STOCK OPTIONS
Under the Stock Plan, the Committee may grant non-qualified and incentive
stock options to eligible employees to purchase shares of Common Stock from
the Company. The Stock Plan confers on the Committee discretion, with respect
to any such stock option, to determine the number and purchase price of the
shares subject to the option, the term of each option and the time or times
during its term when the option becomes exercisable. No one individual may
receive in any year stock options to purchase more than five percent (5%) of
the total shares authorized under the Stock Plan. The purchase price for any
stock option may not be less than the fair market value of the shares subject
to the option on the date of grant. The Committee may not accelerate the
exercisability of any option or determine to cancel stock options in order to
make a participant eligible for the grant of an option at a lower price.
The option price may be paid in cash or by delivery of shares of Common
Stock valued at their fair market value at the time of purchase or any
combination of cash and Common Stock.
Except as otherwise determined by the Committee in its sole discretion at
the time of grant, no option may be exercised unless and until the holder has
remained in the employ of the Company or its subsidiaries for one year from
the date of grant, except in the case of death, retirement or disability as
described below. No option
16
<PAGE>
will be transferable by a holder other than by will or the laws of descent and
distribution, and during the lifetime of a holder, the option will be
exercisable only by the holder. In the event of termination of employment,
other than by death, retirement or disability, of a holder whose option has
been in effect one year, the holder will have three months after such
termination within which to exercise the option to the extent it was
exercisable at the date of such termination. The option of a holder who dies,
retires or becomes permanently and totally disabled before it has been in
effect for one year becomes fully exercisable on the date of death, retirement
or disability. Upon termination of employment of a holder by reason of
retirement, death or permanent and total disability, the holder's option
remains exercisable for three years thereafter to the extent it was
exercisable on the date of such termination.
RESTRICTED STOCK
Restricted stock consists of the transfer by the Company to an eligible
employee of one or more shares of Common Stock which are subject to
restrictions on their sale or other transfer by the employee. The specific
nature of the restrictions and the circumstances of their lapse will be
determined by the Committee at the time of grant. Subject to the specified
restrictions and the other requirements of the Stock Plan, a participant
receiving restricted stock shall have all of the rights of a stockholder as to
those shares. Moreover, no eligible employee may be awarded restricted stock
during any fiscal year unless, for the preceding fiscal year, average return
on equity to Fluor's common stockholders exceeded the yield for ten-year U.S.
Treasury notes by more than three percent. The Committee is authorized to
establish award grade levels and to determine the number of shares which may
be annually awarded to the participants in each grade level if the return on
equity requirement is met. The maximum number of shares which may be awarded
annually to any participant is 15,000. The Committee has the discretion to
award any employee less than the number of shares applicable to his or her
assigned award grade level.
STOCK PAYMENTS
The Stock Plan confers on the Committee the discretion to approve payment in
the form of Common Stock in an amount based on its then fair market value for
all or any portion of the cash compensation (other than base salary) that
would otherwise be payable to an employee.
FEDERAL INCOME TAX CONSEQUENCES
Under existing federal income tax provisions, an employee who receives a
stock option or shares of restricted stock under the Stock Plan which are
subject to restrictions which create a "substantial risk of forfeiture"
(within the meaning of Section 83 of the Internal Revenue Code) will not
normally realize any income, nor will the Company normally receive any
deduction for federal income tax purposes, in the year of the grant or award.
When a non-qualified stock option granted pursuant to the Stock Plan is
exercised, the employee will realize ordinary income measured by the
difference between the aggregate purchase price of the shares of Common Stock
as to which the option is exercised and the aggregate fair market value of
shares of the Common Stock on the exercise date, and the Company will be
entitled to a deduction equal to the amount the employee is required to treat
as ordinary income.
Options which qualify as incentive stock options are entitled to special tax
treatment. If shares purchased pursuant to the exercise of such an option are
not disposed of by the optionee within two years from the date of granting of
the option or within one year after the issue of the shares to the optionee
upon exercise of the incentive option, whichever is longer, then (i) no income
will be recognized to the optionee upon the exercise of the option; (ii) any
gain or loss will be recognized to the optionee only upon ultimate disposition
of the shares; (iii) the optionee's basis in the shares purchased will be
equal to the amount paid for such shares; and the Company will not be entitled
to a federal income tax deduction in connection with the exercise of the
option. In addition, incentive stock options exercised more than three months
after termination of employment, other than by reason of death, are treated as
non-qualified options.
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If the optionee disposes of the shares acquired by exercise of an incentive
stock option before the expiration of the holding period described above, the
optionee must treat as ordinary income in the year of that disposition an
amount equal to the difference between the optionee's basis in the shares and
the lesser of the fair market value of the shares on the date of exercise or
the selling price. In addition, the Company will be entitled to a deduction
equal to the amount the employee is required to treat as ordinary income.
If the exercise price of an option is paid by surrender of previously owned
shares, the basis of the previously owned shares of Common Stock is generally
carried over to some of the newly issued shares. If, however, the option is an
incentive stock option, the optionee will recognize gain if the shares
surrendered were acquired through the exercise of an incentive stock option
and have not been held for the applicable holding period. This gain will be
added to the basis of the shares received in replacement of the previously
owned shares.
The difference between the option price and the fair market value of the
shares acquired upon exercise of an incentive stock option will generally be
included in income for alternative minimum tax purposes at the time of
exercise. The amount of such inclusion may be reduced, however, if the
optionee disposes of the shares in the year of exercise for an amount which is
less than the fair market value of the shares at the time of exercise.
An employee who receives restricted stock subject to restrictions which
create a "substantial risk of forfeiture" (within the meaning of Section 83 of
the Internal Revenue Code) will normally realize taxable income on the date
the shares become transferable or no longer subject to substantial risk of
forfeiture or on the date of their earlier disposition. The amount of such
taxable income will be equal to the amount by which the fair market value of
the shares of Common Stock on the date such restrictions lapse (or any earlier
date on which the shares become transferable or are disposed of) exceeds their
purchase price, if any. An employee may elect, however, to include in income
in the year of grant the excess of the fair market value of the shares of
Common Stock (without regard to any restrictions) over their purchase price,
if any, on the date of grant.
Upon accelerated exercisability of options and accelerated lapsing of
restrictions upon restricted stock in connection with a change of control of
the Company, certain amounts associated with such awards could, depending upon
the individual circumstances of the recipient participant, constitute "excess
parachute payments" under the golden parachute provisions of the Internal
Revenue Code. Pursuant to these provisions a participant will be subject to a
20% excise tax on any excess parachute payment and the Company will be denied
any deduction with respect to such excess parachute payment. The limit on the
deductibility of compensation under Section 162(m) of the Internal Revenue
Code is also reduced by the amount of any excess parachute payments. Whether
amounts constitute excess parachute payments depends upon, among other things,
the value of the awards accelerated and the past compensation of the
participant.
Taxable compensation earned by an employee in respect of stock options or
restricted stock under the Stock Plan is intended to constitute qualified
"performance-based compensation" and the Company should therefore be entitled
to a deduction for compensation paid in the same amount as income is realized
by the employee without any reduction under the limitations on the deduction
of compensation paid to certain named executive officers which are set forth
in Section 162(m) of the Internal Revenue Code.
MANAGEMENT RECOMMENDATION
By affording key management employees of the Company and its subsidiaries an
opportunity to acquire or increase their proprietary interest in the Company
and by thus encouraging such employees to become owners of the Company's
Common Stock, the Company seeks to motivate, retain and attract those highly
competent individuals upon whose judgment, initiative, leadership and
continued efforts the success of the Company in large measure depends. For
this reason, the management of the Company recommends that the Company's
stockholders vote FOR approval of the Stock Plan.
The foregoing summary of the Plan is qualified in its entirety by reference
to the full text of the Plan set forth in Exhibit A.
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APPROVAL OF EXECUTIVE COMPENSATION PERFORMANCE GOALS
PROPOSAL 4
Under the Internal Revenue Code, restrictions apply to the deductibility of
executive compensation paid by public companies. Under these restrictions, the
Company is not able to deduct compensation paid to each of its five Named
Executive Officers in excess of $1,000,000 unless the compensation meets the
definition of "performance-based compensation" set forth in the Internal
Revenue Code. Non-deductibility would result in additional tax costs to the
Company and its shareholders. The stockholder approval requested by this
proposal will assist in enabling awards made under the Company's Executive
Incentive Compensation Plan, as amended and restated effective November 1,
1995 (the "Incentive Plan"), and under the Directors' Achievement Award
Program, to meet the requirements to qualify as "performance-based
compensation", thereby enabling the Company to achieve maximum tax
deductibility of such compensation costs.
EXECUTIVE INCENTIVE COMPENSATION PLAN
Under the Incentive Plan, a minimum rate of return on average stockholders'
equity must be achieved before bonuses can be paid and further limits are
placed on the maximum amount of earnings that can be paid out as bonuses.
Bonuses may not be paid unless net earnings, excluding extraordinary, unusual
or infrequently occurring items, exceed a return on average stockholders'
equity calculated on the basis of the average yield for the year of one year
United States Treasury Bills. Further, the total amount of bonuses paid
together with accruals for the year under the Company's long-term incentive
program, may not exceed either (a) 20% of pre-tax earnings (excluding
extraordinary, unusual or infrequently occurring items and the award fund
itself) or (b) 10% of average stockholders' equity. The plan covers
approximately 800 management employees, including all Named Executive Officers
other than Mr. Blankenship. The target amount payable out of the fund to each
executive is based upon a combination of various Company performance criteria,
and upon individual performance. The bonus award for the CEO and the other
Named Executive Officers is determined by the Organization and Compensation
Committee based on the performance goals discussed below and the bonus award
of each other executive officer is reviewed and approved by the Committee.
To qualify as "performance-based compensation", the tax rules require, for
performance plans involving cash awards, that the performance goals under
which the compensation is to be paid be disclosed to, and approved by, the
Company's stockholders. Accordingly, approval of the following eligibility
criteria and performance goals for awards made to the CEO and certain
executive officers to be named by the Committee ("Designated Executives")
under the Incentive Plan is hereby requested:
For Designated Executives the amount of 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. The performance
objectives for the fiscal year and directly related payment schedules for
each Designated Executive shall be established not later than ninety (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.
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The maximum amount of an 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 full text of the Incentive Plan is set forth in Exhibit B attached
hereto.
DIRECTORS' ACHIEVEMENT AWARD PROGRAM.
Stockholder approval is also requested of the following performance goals
under the Directors' Achievement Award Program:
These awards may be made to employees who are members of the Company's
Leadership Team as determined from time to time by the CEO of the Company.
Each award represents the right to receive cash compensation if certain
earnings levels are attained over an extended period. The Committee will
establish the specific earnings level or levels (which may be characterized
either in terms of net earnings or earnings excluding certain items such as
interest, taxes, depreciation or amortization) which must be attained
within a specified period in order for such award (or portion thereof) to
become earned by the grantee and payable by the Company; and establish a
graded series of award levels which will designate the amount to be paid to
grantees at each such level if the earnings level is achieved during the
specified period, and assign an award grade level for each grantee. If the
earnings level is not achieved during the specified period, no award will
be payable to the grantee. Grantees forfeit their right to awards if their
employment terminates during the specified period of earnings measurement,
other than by reason of death, retirement at the initiation of the Company
or permanent and total disability, and other than where such termination
occurs within two years after a Change of Control of the Company (as
defined in the plan). In such events, the award is still payable if the
earnings levels are attained, except that in the event of retirement at the
initiation of the Company, any award will be adjusted proportionately based
on the period of employment during the specified period of earnings
measurement. In the event of an increase in a grantee's responsibilities
subsequent to the date of the award, the Committee may, in its discretion,
make an additional award to a grantee. In the event of a reduction in a
grantee's responsibilities subsequent to the grant of an award, the
Committee will have discretion at any time prior to the earning of the
award to reduce such grantee's assigned award grade level or to discontinue
such grantee's further participation in such award. In the event of any
such reduction or discontinuance, the amount of the eligible employee's
award will be adjusted proportionately based on the number of months during
the specified period that the employee is assigned by the Committee to each
of the various award levels, and to reflect the portion of the specified
period that the grantee's participation in the award has been discontinued.
The maximum amount of any award shall be $2,500,000.
The full text of the Directors' Achievement Award Program is set forth in
Exhibit C attached hereto.
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OTHER BUSINESS
The Company does not intend to present any other business for action at the
meeting and does not know of any other business intended to be presented by
others.
The Company's Bylaws require that, for other business to be properly brought
before an annual meeting by a stockholder, the Company must have received
written notice thereof not less than 30 nor more than 60 days prior to the
annual meeting (or not later than 10 days after public disclosure of the
annual meeting). The Notice must set forth (a) a brief description of the
business proposed to be brought before the annual meeting and the reasons for
conducting such business, (b) the stockholder's name and address, and the
number of shares of Common Stock beneficially owned by the stockholder, and
(c) any material interest of the stockholder in such business.
STOCKHOLDERS' PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's 1997
annual meeting of stockholders must be received by the Company for inclusion
in the proxy statement and form of proxy for that meeting no later than
October 15, 1996.
/s/ P. J. TRIMBLE
---------------------------------------
P. J. TRIMBLE
Senior Vice President-Law and Secretary
February 12, 1996
Irvine, California
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EXHIBIT A
1996 FLUOR EXECUTIVE STOCK PLAN
ARTICLE I
DEFINITIONS
SEC. 1.1 DEFINITIONS
As used herein, the following terms shall have the meanings hereinafter set
forth unless the context clearly indicates to the contrary:
(a) "Award" shall mean an award of Restricted Stock pursuant to the
provisions of Article VI hereof.
(b) "Awardee" shall mean an Eligible Employee to whom Restricted Stock
has been awarded hereunder.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Change of Control" of the Company shall be deemed to have occurred
if, (i) a third person, including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, acquires shares of the Company
having twenty-five percent or more of the total number of votes that may be
cast for the election of directors of the Company, or (ii) as the result of
any cash tender or exchange offer, merger or other business combination, or
any combination of the foregoing transactions (a "Transaction"), the
persons who were directors of the Company before the Transaction shall
cease to constitute a majority of the Board of the Company or any successor
to the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the Organization and Compensation Committee of
the Board.
(g) "Company" shall mean Fluor Corporation.
(h) "Eligible Employee" shall mean an employee who is an officer of the
Company or any Subsidiary or who is a member of the Executive Management
Team of the Company and its Subsidiaries.
(i) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(j) "Executive Management Team" shall mean those employees who have been
determined to be eligible to participate in the Fluor Corporation and
Subsidiaries Executive Incentive Compensation Program or in other similar
management incentive compensation programs of any Subsidiary.
(k) "Fair Market Value" shall mean the average of the highest price and
the lowest price per share at which the Stock is sold in the regular way on
the New York Stock Exchange on the day an Option is granted hereunder or,
in the absence of any reported sales on such day, the first preceding day
on which there were such sales.
(l) "Incentive Stock Option" shall mean an incentive stock option, as
defined under Section 422 of the Code and the regulations thereunder, to
purchase Stock.
(m) "Nonqualified Stock Option" shall mean a stock option other than an
Incentive Stock Option to purchase Stock.
(n) "Option" shall mean an option to purchase Stock granted pursuant to
the provisions of Article V hereof and refers to both Incentive Stock
Options and Nonqualified Stock Options.
(o) "Optionee" shall mean an Eligible Employee to whom an Option has been
granted hereunder.
(p) "Plan" shall mean the 1996 Fluor Executive Stock Plan, the current
terms of which are set forth herein.
(q) "Prior Plans" shall mean the 1971 Fluor Stock Option Plan, the 1977
Fluor Executive Stock Plan, the 1981 Fluor Executive Stock Plan, the 1982
Fluor Executive Stock Option Plan and the 1988 Fluor Executive Stock Plan.
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(r) "Restricted Stock" shall mean Stock that may be awarded to an
Eligible Employee by the Committee pursuant to Article VI hereof, which is
nontransferable and subject to a substantial risk of forfeiture until
specific conditions are met. Conditions may be based on continuing
employment or achievement of preestablished performance objectives.
(s) "Return on Average Shareholders' Equity" shall mean, for any fiscal
year, the percentage amount reported as "Return on Average Shareholders
Equity" in the "Highlights" section of the Company's Annual Report to
Stockholders for such fiscal year.
(t) "Restricted Stock Agreement" shall mean the agreement between the
Company and the Awardee with respect to Restricted Stock awarded hereunder.
(u) "Stock" shall mean the Common Stock of the Company or, in the event
that the outstanding shares of Stock are hereafter changed into or
exchanged for shares of a different stock or securities of the Company or
some other corporation, such other stock or securities.
(v) "Stock Option Agreement" shall mean the agreement between the Company
and the Optionee under which the Optionee may purchase Stock hereunder.
(w) "Stock Payment" shall mean a payment in shares of Stock to replace
all or any portion of the compensation (other than base salary) that would
otherwise become payable to any Eligible Employee of the Company.
(x) "Subsidiary" shall mean any corporation, the majority of the
outstanding capital stock of which is owned, directly or indirectly, by the
Company or any partnership or joint venture in which either the Company or
such a corporation is at least a twenty percent (20%) equity participant.
(y) "Ten Year Treasury Yield" shall mean, for any fiscal period, the
daily average percent per annum yield for U.S. Government Securities--10
year Treasury constant maturities, as published in the Federal Reserve
statistical release or any successor publication.
ARTICLE II
GENERAL
SEC. 2.1 NAME
This Plan shall be known as the "1996 Fluor Executive Stock Plan".
SEC. 2.2 PURPOSE
The purpose of the Plan is to advance the interests of the Company and its
stockholders by affording to Eligible Employees of the Company and its
Subsidiaries an opportunity to acquire or increase their proprietary interest
in the Company by the grant to such employees of Options or Awards under the
terms set forth herein. By thus encouraging such employees to become owners of
Company shares, the Company seeks to motivate, retain and attract those highly
competent individuals upon whose judgment, initiative, leadership and
continued efforts the success of the Company in large measure depends.
SEC. 2.3 EFFECTIVE DATE
The Plan shall become effective upon its approval by the holders of a
majority of the shares of Stock of the Company represented at an annual or
special meeting of the stockholders of the Company.
SEC. 2.4. LIMITATIONS
Subject to adjustment pursuant to the provisions of Section 10.1 hereof, the
aggregate number of shares of Stock which may either be issued as Awards,
subject to Options or issued pursuant to the exercise of Options shall not
exceed the sum of (a) 4,000,000 plus (b) that number of shares represented by
options, awards or rights under Prior Plans which expire or are otherwise
terminated at any time after the original effective date of this Plan. Any
such shares may be either authorized and unissued shares or shares issued and
thereafter acquired by the Company.
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SEC. 2.5 OPTIONS AND AWARDS GRANTED UNDER PLAN
Shares of Stock with respect to which an Option granted hereunder shall have
been exercised, and shares of Stock received pursuant to a Restricted Stock
Agreement executed hereunder with respect to which the restrictions provided
for in Section 6.3 hereof shall have lapsed, shall not again be available for
Option or Award grant hereunder. If Options granted hereunder shall expire or
terminate for any reason without being wholly exercised, or if Restricted
Stock is acquired by the Company pursuant to the provisions of paragraph (c)
of Section 6.3 hereof, new Options or Awards may be granted hereunder covering
the number of shares to which such Option expiration or termination or
Restricted Stock acquisition relates.
ARTICLE III
PARTICIPANTS
SEC. 3.1 ELIGIBILITY
Any Eligible Employee shall be eligible to participate in the Plan;
provided, however, that no member of the Committee shall be eligible to
participate while a member of the Committee. The Committee may grant Options
or Awards to any Eligible Employee in accordance with such determinations as
the Committee from time to time in its sole discretion shall make.
ARTICLE IV
ADMINISTRATION
SEC. 4.1 DUTIES AND POWERS OF COMMITTEE
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have sole discretion and authority
to determine from among Eligible Employees those to whom and the time or times
at which Options or Awards may be granted, the number of shares of Stock to be
subject to each Option or Award and the period for the exercise of such Option
which need not be the same for each grant hereunder. Subject to the express
provisions of the Plan, the Committee shall also have complete authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the details and provisions of each Stock Option
Agreement and Restricted Stock Agreement, and to make all other determinations
necessary or advisable in the administration of the Plan.
SEC. 4.2 MAJORITY RULE
A majority of the members of the Committee shall constitute a quorum, and
any action taken by a majority present at a meeting at which a quorum is
present or any action taken without a meeting evidenced by a writing executed
by a majority of the whole Committee shall constitute the action of the
Committee.
SEC. 4.3 COMPANY ASSISTANCE
The Company shall supply full and timely information to the Committee on all
matters relating to eligible employees, their employment, death, retirement,
disability or other termination of employment, and such other pertinent facts
as the Committee may require. The Company shall furnish the Committee with
such clerical and other assistance as is necessary in the performance of its
duties.
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ARTICLE V
OPTIONS
SEC. 5.1 OPTION GRANT AND AGREEMENT
Each Option granted hereunder shall be evidenced by minutes of a meeting or
the written consent of the Committee and by a written Stock Option Agreement
dated as of the date of grant and executed by the Company and the Optionee,
which Agreement shall set forth such terms and conditions as may be determined
by the Committee consistent with the Plan. In no event shall the total number
of shares of Stock subject to Options granted hereunder to any Eligible
Employee in any fiscal year exceed five percent (5%) of the total number of
shares authorized to be issued under the Plan on the effective date of the
Plan.
SEC. 5.2 PARTICIPATION LIMITATION
The Committee shall not grant an Incentive Stock Option to any employee for
such number of shares of Stock that, immediately after the grant, the total
number of shares of Stock owned or subject to Options exercisable by and/or
Awards outstanding in the hands of such employee (or by such persons whose
shares such employee is considered as owning pursuant to the provisions of the
second succeeding sentence) exceed ten percent of the total combined voting
power of all classes of stock of the Company. This restriction does not apply
if, at the time such Incentive Stock Option is granted, the Incentive Stock
Option purchase price is at least 110% of the Fair Market Value on the date of
grant and the Incentive Stock Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant. For purposes of this
Section 5.2, an employee shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers and sisters (whether by the
whole or half blood), spouse, ancestors and lineal descendants; and the stock
owned, directly or indirectly, by or for a corporation, partnership, estate or
trust shall be considered as being owned proportionately by or for its
shareholders, partners or beneficiaries.
SEC. 5.3 OPTION PRICE
The purchase price of Stock under each Option will be determined by the
Committee but may not be less than the Fair Market Value on the date of grant.
SEC. 5.4 OPTION PERIOD
Each Option granted hereunder must be granted within ten years from the
effective date of the Plan. The period for the exercise of each Option shall
be determined by the Committee, but in no instance shall such period exceed
ten years from the date of grant of the Option.
SEC. 5.5 OPTION EXERCISE
(a) Options granted hereunder may not be exercised unless and until the
Optionee shall have been or remained in the employ of the Company or its
Subsidiaries for one year from and after the date such Option was granted,
except as otherwise provided in Section 5.7 hereof.
(b) Options may be exercised with respect to whole shares only, for such
shares of Stock and within the period permitted for the exercise thereof as
determined by the Committee, and shall be exercised by written notice of
intent to exercise the Option with respect to a specified number of shares
delivered to the Company at its principal office in the State of
California, and payment in full to the Company at said office of the amount
of the Option price for the number of shares of Stock with respect to which
the Option is then being exercised. The purchase price may be paid by the
assignment and delivery to the Company of shares of Stock or a combination
of cash and shares of Stock equal in value to the exercise price. Any
shares assigned and delivered to the Company in payment or partial payment
of the purchase price will be valued at their Fair Market Value on the
exercise date.
(c) The Fair Market Value of the Stock at the date of grant for which any
employee may exercise Incentive Stock Options in any calendar year under
the Plan (or any other stock option plan of the Company adopted after
December 31, 1986) may not exceed $100,000.
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SEC. 5.6 NONTRANSFERABILITY OF OPTION
No Option shall be transferred by an Optionee otherwise than by a will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code or Title I of ERISA. During the
lifetime of an Optionee, the Option shall be exercisable only by him.
SEC. 5.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT
(a) If, prior to a date one year from the date on which an Option shall
have been granted, the Optionee's employment with the Company or its
Subsidiaries shall be terminated by the Company or Subsidiary with or
without cause, or by the act of the Optionee, the Optionee's right to
exercise such Option shall terminate and all rights thereunder shall cease;
provided, however, that if the Optionee shall die, retire or become
permanently and totally disabled, as determined in accordance with
applicable Company personnel policies, or if the Optionee's employment with
the Company or its Subsidiaries shall be terminated within two years after
a Change of Control of the Company and such termination occurs prior to a
date one year from the date on which an Option shall have been granted,
such Option shall become exercisable in full on the date of such death,
retirement, disability or termination of employment.
(b) If, on or after one year from the date on which an Option shall have
been granted, an Optionee's employment with the Company or its Subsidiaries
shall be terminated for any reason other than death, retirement or
permanent total disability, or within two years following a Change of
Control of the Company, the Optionee shall have the right, during the
period ending three months after such termination, to exercise such Option
to the extent that it was exercisable at the date of such termination and
shall not have been exercised, subject, however, to the provisions of
Section 5.4 hereof.
(c) Upon termination of an Optionee's employment with the Company or its
Subsidiaries by reason of retirement or permanent total disability, as
determined in accordance with applicable Company personnel policies, or
within two years following a Change of Control of the Company, such
Optionee shall have the right, during the period ending three years after
such termination, to exercise his Option in full, without regard to any
installment exercise provisions, to the extent that it shall not have been
exercised, subject, however, to the provisions of Section 5.4 hereof.
(d) If an Optionee shall die (i) while in the employ of the Company or
its Subsidiaries, or (ii) within three months after termination of
employment where such termination did not occur either by reason of
retirement or permanent total disability or within two years following a
Change of Control of the Company, or (iii) within three years after
termination of employment where such termination occurred either by reason
of retirement or permanent total disability or within two years following a
Change of Control of the Company, the executor or administrator of the
state of the decedent or the person or persons to whom an Option granted
hereunder shall have been validly transferred by the executor or the
administrator pursuant to a will or the laws of descent and distribution
shall have the right, during the period ending three years after the date
of the Optionee's death, to exercise the Optionee's Option (A) in full,
without regard to any installment exercise provisions, to the extent that
it shall not have been exercised, if the Optionee shall have died while in
the employ of the Company or its Subsidiaries or within three years after
termination of employment where such termination occurred either by reason
of retirement or permanent total disability or within two years following a
Change of Control of the Company, or (B), to the extent that it was
exercisable at the date of the Optionee's death and shall not have been
exercised, if the Optionee shall have died within three months after
termination of employment where such termination did not occur by reason of
either retirement or permanent total disability or within two years
following a Change of Control of the Company, subject, however, to the
provisions of Section 5.4 hereof.
(e) No transfer of an Option by the Optionee by a will or by the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee
may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of
such Option.
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(f) The foregoing notwithstanding, the Committee may elect, in its sole
discretion, to make grants of Options which have provisions regarding the
effect of death or other termination of employment which are different than
those set forth in paragraphs (a) through (d) of this Section 5.7, provided
that such provisions do not materially increase the benefits that would
otherwise accrue to an Optionee under paragraphs (a) through (d) of this
Section 5.7.
SEC. 5.8 RIGHTS AS STOCKHOLDER
An Optionee or a transferee of an Option shall have no rights as a
stockholder with respect to any shares subject to such Option prior to the
purchase of such shares by exercise of such Option as provided herein.
ARTICLE VI
AWARDS
SEC. 6.1 AWARD GRANT AND RESTRICTED STOCK AGREEMENT
The Committee may grant Awards of Restricted Stock to Awardees. No Awards
may be made during any fiscal year unless, for the preceding fiscal year,
Return on Average Shareholders' Equity exceeded the Ten Year Treasury Yield by
more than three percentage points. Each Award granted hereunder must be
granted within ten years from the effective date of the Plan and shall be
evidenced by minutes of a meeting or the written consent of the Committee. The
Committee shall from time to time establish various Award grade levels which
shall set forth the maximum number of shares which may be awarded annually to
each Eligible Employee in each grade level. The Committee shall have the sole
discretion and authority to make an Award to an Eligible Employee of less than
the maximum number of shares applicable to his assigned grade level or to make
no Award at all to any such Eligible Employee. In no event shall the total
number of shares of Restricted Stock awarded to an Eligible Employee in any
fiscal year exceed 15,000. The Awardee shall be entitled to receive the Stock
subject to such Award only if the Company and the Awardee, within 30 days
after the date of the Award, enter into a written Restricted Stock Agreement
dated as of the date of the Award, which Agreement shall set forth such terms
and conditions as may be determined by the Committee consistent with the Plan.
SEC. 6.2 CONSIDERATION FOR ISSUANCE
No shares of Restricted Stock shall be issued to an Awardee hereunder unless
and until the Committee shall have determined that consideration has been
received by the Company, in the form of labor performed for or services
actually rendered to the Company by the Awardee, having a fair value of not
less than the then fair market value of a like number of shares of Stock
subject to all of the herein provided conditions and restrictions applicable
to Restricted Stock, but in no event less than the par value of such shares.
SEC. 6.3 RESTRICTIONS ON SALE OR OTHER TRANSFER
Each share of Stock received pursuant to each Restricted Stock Agreement
shall be subject to acquisition by Fluor Corporation, and may not be sold or
otherwise transferred except pursuant to the following provisions:
(a) The shares of Stock represented by the Restricted Stock Agreement
shall be held in book entry form with the Company's transfer agent until
the restrictions lapse in accordance with the conditions established by the
Committee pursuant to Section 6.4 hereof, or until the shares of stock are
forfeited pursuant to paragraph (c) of this Section 6.3. Notwithstanding
the foregoing, the Awardee may request that, prior to the lapse of the
restrictions or forfeiture of the shares, certificates evidencing such
shares be issued in his name and delivered to him, and each such
certificate shall bear the following legend:
"The shares of Fluor Corporation common stock evidenced by this
certificate are subject to acquisition by Fluor Corporation, and such
shares may not be sold or otherwise transferred except pursuant to the
provisions of the Restricted Stock Agreement by and between Fluor
Corporation and the registered owner of such shares."
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<PAGE>
(b) No such shares may be sold, transferred or otherwise alienated or
hypothecated so long as such shares are subject to the restriction provided
for in this Section 6.3.
(c) Unless the Committee in its discretion determines otherwise, upon an
Awardee's termination of employment for any reason, all of the Awardee's
Restricted Stock remaining subject to restriction shall be acquired by the
Company effective as of the date of such termination of employment. Upon
the occurrence or non-occurrence of such other events as shall be
determined by the Committee and specified in the Awardee's Restricted Stock
Agreement relating to any such Restricted Stock, all of such Restricted
Stock remaining subject to restriction shall be acquired by the Company
upon the occurrence or non-occurrence of such event.
SEC. 6.4 LAPSE OF RESTRICTIONS
The restrictions imposed upon Restricted Stock under Section 6.3 above will
lapse in accordance with such conditions as are determined by the Committee
and set forth in the Restricted Stock Agreement.
SEC. 6.5 RIGHTS AS STOCKHOLDER
Subject to the provisions of Section 6.3 hereof, upon the issuance to the
Awardee of Restricted Stock hereunder, the Awardee shall have all the rights
of a stockholder with respect to such Stock, including the right to vote the
shares and receive all dividends and other distributions paid or made with
respect thereto.
ARTICLE VII
STOCK CERTIFICATES
SEC. 7.1 STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, or received as Restricted Stock pursuant to a Restricted
Stock Agreement executed hereunder, prior to fulfillment of all of the
following conditions:
(a) the admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) the completion of any registration or other qualification of such
shares under any federal or state law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall in its sole discretion deem
necessary or advisable;
(c) the obtaining of any approval or other clearance from any federal or
state governmental agency which the Committee shall in its sole discretion
determine to be necessary or advisable; and
(d) the lapse of such reasonable period of time following the exercise of
the Option or the execution of the Restricted Stock Agreement as the
Committee from time to time may establish for reasons of administrative
convenience.
ARTICLE VIII
STOCK PAYMENT
SEC. 8.1 STOCK PAYMENT
The Committee may approve payments of Stock to any Eligible Employee for all
or any portion of the compensation (other than base salary) that would
otherwise become payable to such Eligible Employee in cash.
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ARTICLE IX
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
SEC. 9.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, upon recommendation of the Committee, terminate,
and may at any time from time to time and in any respect amend or modify, the
Plan, provided, however, that no such action of the Board without approval of
the stockholders of the Company may:
(a) increase the total number of shares of Stock subject to the Plan by
more than 10%, except as contemplated in Section 10.1 hereof;
(b) materially increase the benefits accruing to participants under the
Plan;
(c) withdraw the administration of the Plan from the Committee; or
(d) permit any person while a member of the Committee to receive an
Option or Restricted Stock under the Plan; and provided further, that no
termination, amendment or modification of the Plan shall in any manner
affect any Stock Option Agreement or Restricted Stock Agreement theretofore
executed pursuant to the Plan without the consent of such Optionee or
Awardee.
ARTICLE X
MISCELLANEOUS
SEC. 10.1 ADJUSTMENT PROVISIONS
(a) Subject to Section 10.1(b) below, if the outstanding shares of Stock
of the Company are increased, decreased, or exchanged for a different
number or kind of shares or other securities, or if additional shares or
new or different shares or other securities are distributed with respect to
such shares of Stock or other securities, through merger, consolidation,
sale of all or substantially all of the property of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other distribution with respect to such
shares of Stock or other securities, an appropriate and proportionate
adjustment may be made in (i) the maximum number and kind of shares
provided in Section 2.4, (ii) the number and kind of shares or other
securities subject to the outstanding Options and Awards, and (iii) the
price for each share or other unit of any other securities subject to
outstanding Options without change in the aggregate purchase price or value
as to which such Options remain exercisable.
(b) Adjustments under Section 10.1(a) will be made by the Committee,
whose determination as to what adjustments will be made and the extent
thereof will be final, binding, and conclusive. No fractional interests
will be issued under the Plan resulting from any such adjustments.
SEC. 10.2 CONTINUATION OF EMPLOYMENT
Nothing in the Plan or in any instrument executed pursuant to the Plan will
confer upon any Eligible Employee any right to continue in the employ of the
Company or any Subsidiary or affect the right of the Company or any Subsidiary
to terminate the employment of any Eligible Employee at any time with or
without cause.
SEC. 10.3 COMPLIANCE WITH GOVERNMENT REGULATIONS
No shares of Stock will be issued hereunder unless and until all applicable
requirements imposed by federal and state securities and other laws, rules,
and regulations and by any regulatory agencies have jurisdiction and by any
stock exchanges upon which the Stock may be listed have been fully met. As a
condition precedent to the issuance of shares of Stock pursuant hereto, the
Company may require the employee to take any reasonable action to comply with
such requirements.
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<PAGE>
SEC. 10.4 PRIVILEGES OF STOCK OWNERSHIP
No employee and no beneficiary or other person claiming under or through
such employee will have any right, title, or interest in or to any shares of
Stock allocated or reserved under the Plan or subject to any Option or Award
except as to such shares of Stock, if any, that have been issued to such
employee.
SEC. 10.5 WITHHOLDING
The Company may make such provisions as it deems appropriate to withhold any
taxes the Company determines it is required to withhold in connection with any
Option or Award. The Company may require the employee to satisfy any relevant
tax requirements before authorizing any issuance of Stock to the employee.
Such settlement may be made in cash or Stock.
SEC. 10.6 NONTRANSFERABILITY
An Option or Award may be exercised during the life of the employee solely
by the employee or the employee's duly appointed guardian or personal
representative. No Option or Award and no other right under the Plan,
contingent or otherwise, will be assignable or subject to any encumbrance,
pledge, or charge of any nature.
SEC. 10.7 OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option or
incentive or other compensation plans in effect for the Company or any
Subsidiary, nor shall the Plan preclude the Company from establishing any
other forms of incentive or other compensation for employees of the Company or
any Subsidiary.
SEC. 10.8 PLAN BINDING ON SUCCESSORS
The Plan shall be binding upon the successors and assigns of the Company.
SEC. 10.9 SINGULAR, PLURAL; GENDER
Whenever used herein, nouns in the singular shall include the plural, and
the masculine pronoun shall include the feminine gender.
SEC. 10.10 HEADINGS, ETC., NO PART OF PLAN
Headings of Articles and Sections hereof are inserted for convenience and
reference; they constitute no part of the Plan.
A-9
<PAGE>
EXHIBIT B
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
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.
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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
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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<PAGE>
EXHIBIT C
DIRECTORS' ACHIEVEMENT AWARD PROGRAM
ADOPTED AS OF DECEMBER 6, 1994
ARTICLE I
DEFINITIONS
SEC. 1.1 DEFINITIONS
As used herein, the following terms shall have the meanings hereinafter set
forth unless the context clearly indicates to the contrary:
(a) "Awards" shall mean amounts awarded pursuant to Article V hereof.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Change of Control" of the Company shall be deemed to have occurred
if, (i) a third person, including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, acquires shares of the Company
having twenty-five percent or more of the total number of votes that may be
cast for the election of directors of the Company; or (ii) as the result of
any cash tender or exchange offer, merger or other business combination, or
any combination of the foregoing transactions (a "Transaction"), the
persons who were directors of the Company before the Transaction shall
cease to constitute a majority of the Board of the Company or any successor
to the Company.
(d) "Committee" shall mean the Organization and Compensation Committee of
the Board.
(e) "Company" shall mean Fluor Corporation.
(f) "Eligible Employee" shall mean an employee who is a member of the
Company's leadership team as determined from time to time by the Chief
Executive Officer of the Company.
(g) "Grantee" shall mean an Eligible Employee to whom Awards have been
granted hereunder.
(h) "Incentive Plan" shall mean the Fluor Special Executive Incentive
Plan.
(i) "Plan" shall mean the Directors' Achievement Award Program, the terms
of which are set forth herein.
(j) "Subsidiary" shall mean any corporation, the majority of the
outstanding capital stock of which is owned, directly or indirectly, by the
Company.
(k) "Stock Plan" shall mean the 1988 Executive Stock Plan and any
successor stock plan which is adopted by the Board and approved by a vote
of shareholders of the Company.
ARTICLE II
THE PLAN
SEC. 2.1 NAME
This plan shall be known as the "Directors' Achievement Award Program."
SEC. 2.2 PURPOSE
The purpose of the Plan is to advance the interests of the Company and its
shareholders by providing Eligible Employees who can directly and
significantly influence the profits of the Company and therefore the market
value of its Stock with a form of cash incentive compensation ("Awards") which
becomes payable upon the attainment of specified performance objectives. As
part of the program, Eligible Employees may also be granted shares of
restricted stock under the Stock Plan, related restricted units under the
Incentive Plan, and stock options under the Stock Plan, all on such terms and
conditions as the Committee shall determine.
C-1
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SEC. 2.3 EFFECTIVE DATE AND DURATION
The Plan shall become effective as of December 6, 1994. The Awards granted
hereunder must be awarded on or before October 31, 2000.
ARTICLE III
PARTICIPANTS
SEC. 3.1 ELIGIBILITY
Any Eligible Employee of the Company or its Subsidiaries shall be eligible
to participate in the Plan; provided, however, that no member of the Committee
shall be eligible to participate.
ARTICLE IV
ADMINISTRATION
SEC. 4.1 DUTIES AND POWERS OF COMMITTEE
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have sole discretion and authority
to determine from among Eligible Employees those to whom and the time or times
at which Awards may be granted, the amount of such Awards and the terms and
conditions upon which such Awards shall become earned and payable. Subject to
the express provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, and to make all other determinations necessary or
advisable in the administration of the Plan.
SEC. 4.2 MAJORITY RULE
A majority of the members of the Committee shall constitute a quorum, and
any action taken by a majority present at a meeting at which a quorum is
present or any action taken without a meeting evidenced by a writing executed
by a majority of the whole Committee shall constitute the action of the
Committee.
SEC. 4.3 COMPANY ASSISTANCE
The Company shall supply full and timely information to the Committee on all
matters relating to Eligible Employees, their employment, death, retirement,
disability or other termination of employment, and such other pertinent facts
as the Committee may require. The Company shall furnish the Committee with
such clerical and other assistance as is necessary in the performance of its
duties.
ARTICLE V
AWARDS
SEC. 5.1 AWARD GRANT AND AGREEMENT
Each Award to be made hereunder shall be evidenced by minutes of a meeting
or the written consent of the Committee and by a written Agreement dated as of
the date of grant and executed by the Company and the Grantee which Agreement
shall set forth such terms and conditions as may be determined by the
Committee consistent with the Plan.
C-2
<PAGE>
SEC. 5.2 DETERMINATION OF AWARDS
In advance of the granting each Award hereunder the Committee shall:
(a) Establish the specific earnings level or levels (which may be
characterized either in terms of net earnings or earnings excluding certain
items such as interest, taxes, depreciation or amortization) which must be
attained within a specified period in order for such Award (or portion
thereof) to become earned by the Grantee and payable by the Company; and
(b) Establish a graded series of Award levels which shall designate the
amount to be paid to Grantees at each such level if the earnings level is
achieved during the specific period, and assign an Award grade level for
each Grantee. If the earnings level is not achieved during the specified
period, no Award will be payable to the Grantee. In the event of a
reduction in a Grantee's responsibilities subsequent to the grant of an
Award, the Committee shall have sole discretion and authority at any time
prior to the earning of the Award to reduce such Grantee's assigned Award
grade level or to discontinue such Grantee's further participation in such
Award. In the event of any such reduction or discontinuance, the amount of
the Eligible Employee's Award shall be adjusted proportionately based on
the number of months during the specified period that the Eligible Employee
is assigned by the Committee to each of the various Award Levels, and to
reflect the portion of the specified period that the Grantee's
participation in the Award has been discontinued. The maximum amount of any
Award shall be $2,500,000.
SEC. 5.3 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT
Except as otherwise established by the Committee in determining the terms
and conditions of a particular Award, if, prior to the date on which an Award
(or applicable portion thereof) becomes earned and payable, the Grantee's
employment with the Company or its Subsidiaries shall be terminated by the
Company or Subsidiary with or without cause, or by the act of the Grantee,
then the Grantee's rights with respect to any Award which has not become
earned and payable as of the date of such termination shall immediately
terminate and all rights thereunder shall cease.
ARTICLE VI
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
SEC. 6.1 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, upon recommendation of the Committee, terminate,
and may at any time and from time to time and in any respect amend or modify,
the Plan; provided, however, that except as otherwise provided herein, no
termination, amendment or modification of the Plan shall in any manner affect
any Awards theretofore granted under the Plan without the consent of the
Grantee.
ARTICLE VII
MISCELLANEOUS
SEC. 7.1 NONTRANSFERABILITY OF AWARDS
No Awards granted hereunder shall be transferred by a Grantee otherwise than
by will or the laws of descent and distribution. During the lifetime of a
Grantee, such Awards shall be payable only to the Grantee.
SEC. 7.2 EMPLOYMENT
Nothing in the Plan or in any Awards granted hereunder shall confer upon any
employee the right to continue in the employ of the Company or any Subsidiary.
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SEC. 7.3 OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any stock option or incentive or
other compensation plans in effect for the Company or any Subsidiary, nor
shall the Plan preclude the Company from establishing any other forms of
incentive or other compensation for employees of the Company or any
Subsidiary.
SEC. 7.4 PLAN BINDING ON SUCCESSORS
The Plan shall be binding upon the successors and assigns of the Company.
SEC. 7.5 SINGULAR, PLURAL GENDER
Whenever used herein, nouns in the singular shall include the plural, and
the masculine pronoun shall include the feminine gender.
SEC 7.6 HEADINGS, ETC., NOT PART OF PLAN
Headings of Articles and Sections hereof are inserted for convenience and
reference; they constitute no part of the Plan.
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<PAGE>
[CRC MAP]
STOCKHOLDERS MEETING - FLUOR CORPORATION
9:00 A.M., Tuesday, March 12, 1996
FLUOR DANIEL CENTRE I
100 Fluor Daniel Drive
Greenville, South Carolina
<PAGE>
[LOGO OF FLUOR CORPORATION]
PROXY/VOTING INSTRUCTION CARD SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING MARCH 12, 1996
The undersigned, a stockholder of FLUOR CORPORATION, a Delaware corporation,
acknowledges receipt of a Notice of Annual Meeting of Stockholders, the
accompanying Proxy Statement and the Annual Report to Stockholders for the year
ended October 31, 1995; and, revoking any proxy previously given, hereby
constitutes and appoints L. G. McCraw, H. K. Coble and P. J. Trimble, and each
of them, the true and lawful agents and proxies of the undersigned with full
power of substitution in each, to vote the shares of Common Stock of FLUOR
CORPORATION standing in the name of the undersigned at the Annual Meeting of
Stockholders of FLUOR CORPORATION, on Tuesday, March 12, 1996 at 9:00 A.M., and
at any adjournment or postponement thereof with respect to the proposals listed
on the reverse side.
THIS PROXY/VOTING INSTRUCTION CARD WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREBY BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY/VOTING INSTRUCTION CARD WILL BE VOTED FOR THE NOMINEES LISTED ON THE
REVERSE, FOR PROPOSAL 2, FOR PROPOSAL 3 AND FOR PROPOSAL 4.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(continued and to be signed on reverse side)
- FOLD AND DETACH HERE -
<PAGE>
CARD WILL BE VOTED FOR THE ELECTION OF THE THREE NOMINEES AND FOR PROPOSALS 2, 3
AND 4.
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE [X]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES ON PROPOSAL 1
AND FOR PROPOSALS 2, 3 AND 4.
1. ELECTION OF CLASS III DIRECTORS: PETER J. FLUOR, BOBBY R. INMAN AND BUCK
MICKEL
FOR ALL NOMINEES LISTED (EXCEPT
AS MARKED TO THE CONTRARY) [_]
WITHHOLD AUTHORITY TO VOTE FOR
ALL NOMINEES LISTED [_]
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
2. RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS AUDITORS FOR 1996.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. APPROVAL OF THE 1996 FLUOR EXECUTIVE STOCK PLAN.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. APPROVAL OF CERTAIN EXECUTIVE COMPENSATION PERFORMANCE GOALS.
FOR AGAINST ABSTAIN
[_] [_] [_]
5. IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY AND ALL
POSTPONEMENTS OR ADJOURNMENTS THEREOF.
I PLAN TO ATTEND MEETING [_]
COMMENTS/ADDRESS CHANGE [_]
PLEASE MARK THE BOX IF YOU HAVE
WRITTEN COMMENTS OR AN ADDRESS
CHANGE ON THE REVERSE SIDE
SIGNATURE__________________SIGNATURE__________________________DATE______________
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH. CORPORATIONS AND PARTNERSHIPS SHOULD SIGN IN FULL CORPORATE
OR PARTNERSHIP NAME BY AN AUTHORIZED OFFICER.
- FOLD AND DETACH HERE -
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE COMPLETE, SIGN AND DATE YOUR PROXY/VOTING INSTRUCTION CARD, DETACH IT AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
