<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
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] Fee not required.
[ ] 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:
------------------------------------------------------------------------
<PAGE> 2
[FLUOR LOGO]
Fluor Corporation
3353 Michelson Drive
Irvine, California 92698
January 30, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
which will be held on Tuesday, March 10, 1998, beginning at 9:00 a.m. at The
Sutton Place Hotel, 4500 MacArthur Boulevard, Newport Beach, California. 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
shareholders 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/ PETER J. FLUOR
---------------------------
PETER J. FLUOR
Chairman of the Board
<PAGE> 3
[FLUOR LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 10, 1998
The annual meeting of shareholders of Fluor Corporation will be held at The
Sutton Place Hotel, 4500 MacArthur Boulevard, Newport Beach, California, on
Tuesday, March 10, 1998, at 9:00 a.m. Pacific Standard Time, for the following
purposes:
1. To elect four Class II 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 four persons
identified in the attached 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, 1998.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof. The Board of Directors knows of one
shareholder proposal that may be presented at the meeting and that is
described in the attached Proxy Statement.
The Board of Directors has fixed January 13, 1998, as the record date for
determining the shareholders entitled to receive notice of and to vote at the
meeting.
SHAREHOLDERS 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/ LAWRENCE N. FISHER
-----------------------------------
LAWRENCE N. FISHER
Senior Vice President-Law and
Secretary
January 30, 1998
Irvine, California
<PAGE> 4
[FLUOR LOGO]
------------------------
PROXY STATEMENT
JANUARY 30, 1998
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Fluor Corporation, 3353 Michelson Drive, Irvine,
California 92698 (the "Company" or "Fluor"), of your proxy for use at the annual
meeting of shareholders to be held March 10, 1998, or at any adjournment thereof
(the "Annual Meeting"). This proxy statement and the accompanying proxy/voting
instruction card are being mailed to all shareholders on or about January 30,
1998. 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 13, 1998, the record date fixed by the Board of Directors, the
Company had outstanding 83,115,266 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 shareholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved. Shareholders have one vote for
each share on all business of the meeting, except that shareholders have
cumulative voting rights with respect to the election at the meeting of four
directors. Cumulative voting rights entitle a shareholder 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 shareholder, or to distribute his or her votes
on the same principle among two or more nominees as the shareholder sees fit.
The four 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. A shareholder proposal
regarding the tabulation of votes may be presented at the Annual Meeting and is
discussed under the heading "Proposal 3".
Unless otherwise directed in the accompanying proxy/voting instruction
card, the persons named therein will vote FOR the election of the four director
nominees listed below, FOR the proposal to ratify the appointment of Ernst &
Young LLP as auditors for the fiscal year ending October 31, 1998, and AGAINST
the proposal relating to the tabulation of votes on proposals presented to
shareholders. 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.
ELECTION OF DIRECTORS
PROPOSAL 1
Under the Company's Certificate of Incorporation and Bylaws, which provide
for a "classified" Board, four Class II directors have been nominated for
election at the Annual Meeting to serve a three year term expiring at the annual
meeting in 2001 and until their respective successors are elected and qualified.
The Bylaws, as most recently amended by the Board on January 7, 1998, provide
for thirteen directors, five serving as Class I directors, four serving as Class
II directors, and four serving as Class III directors.
Each of the four nominees listed below presently serves as a Class II
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 four 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.
1
<PAGE> 5
BIOGRAPHICAL
The following biographical information is furnished with respect to each of
the four nominees for election at the Annual Meeting as Class II directors and
each of the other Class I and Class III directors whose terms will continue,
except as indicated, after the Annual Meeting.
Class II Director Nominees(1):
CARROLL A. CAMPBELL, JR., age 57.
Director since 1995; member of the Audit and Finance Committees.
President and Chief Executive Officer of the American Council of
Life Insurance, Washington, D.C.; formerly two-term Governor of
[PHOTO] 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; Norfolk Southern Corporation, Norfolk,
Virginia, and Wackenhut Corporation, West Palm Beach, Florida.
LORD ROBIN W. RENWICK, age 60.
Director since September 9, 1997; member of Finance and
Governance Committees; Chairman of Fluor Daniel Limited(2)
[PHOTO] since March 27, 1996.
Former British Ambassador to the United States from 1991 to
1995.
Lord Renwick also is a director of Robert Fleming Holdings,
Ltd., London, England; and British Airways, London, England.
MARTHA R. SEGER, age 65.
Director since 1991; Chairman of Finance Committee and member of
Executive and Governance Committees.
Economic consultant and principal of M.R. Seger & Associates, a
financial and economic consulting firm, since 1994.
Distinguished Visiting Professor of Finance, Northern Arizona
University, commencing 1998. Formerly Visiting Professor,
[PHOTO] Hillsdale College, from 1996; Distinguished Visiting Professor
of Finance, Central Michigan University, from 1995 and American
Graduate School of International Management, from 1993;
formerly Member, Board of Governors of the Federal Reserve
System from 1984. Dr. Seger also is a director of Amoco,
Chicago, Illinois; Kroger Company, Cincinnati, Ohio; Tucson
Electric Power Company, Tucson, Arizona; and Xerox Corporation,
Stamford, Connecticut.
JAMES C. STEIN, age 54.
Director since December 9, 1997.
Member of Office of the Chairman, since January 1, 1998;
President and Chief Operating Officer of Fluor Daniel, Inc.(3)
[PHOTO] since March 10, 1997; formerly Group President, Diversified
Services, of that company from 1994; formerly President,
Business Units, of that company from 1993; formerly President,
Industrial Sector, of that company from 1986; joined the
Company in 1964.
2
<PAGE> 6
Class III Directors -- Term Expires 1999(1):
DON L. BLANKENSHIP, age 47.
Director since 1996; member of Finance Committee.
Member of Office of the Chairman, since January 1, 1998; President, Chief
Executive Officer and Chairman of the Board of A. T. Massey Coal Company,
Inc.(4) since 1992; formerly President and Chief Operating Officer of that
subsidiary from 1990; formerly President of Massey Coal Services, Inc.(5) from
1989; joined Rawl Sales & Processing Co.(6) in 1982.
PETER J. FLUOR, age 50.
Non-executive Chairman of the Board since January 1, 1998; Director since 1984;
Chairman of Audit and Executive Committees and member of Organization and
Compensation Committee. Member of Office of the Chairman, since January 1,
1998.
President and CEO of Texas Crude Energy, Inc., Houston, Texas since 1980; joined
that company in 1972.
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 66.
Director since 1985; Chairman of Organization and Compensation Committee and
member of Executive and Governance Committees.
Admiral, U.S. Navy (Retired).
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.
JAMES O. ROLLANS, age 55.
Director since December 9, 1997.
Member of Office of the Chairman, since January 1, 1998; Chief Administrative
Officer since 1994; Senior Vice President since 1992; formerly Chief Financial
Officer from 1992; formerly Vice President, Corporate Communications from
1982; joined the Company in 1982.
Mr. Rollans also is a director of Flowserve Corporation, Dallas, Texas.
Class I Directors -- Term Expires 2000(1):
DAVID P. GARDNER, age 64.
Director since 1988; Chairman of Governance Committee; member of Executive 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.
3
<PAGE> 7
THOMAS L. GOSSAGE, age 63.
Director since 1997; member of Finance and Organization and Compensation
Committees.
Retired Chairman and Chief Executive Officer of Hercules Incorporated,
Wilmington, Delaware, since January 1, 1997; formerly in such positions from
1991.
Mr. Gossage also is a director of The Dial Corporation, Phoenix, Arizona; and
Alliant Techsystems, Inc., Hopkins, Minnesota.
VILMA S. MARTINEZ, age 54.
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; Sanwa Bank California, Los Angeles, California; and Shell Oil
Company, Houston, Texas.
LESLIE G. MCCRAW, age 63.(7)
Director since 1984; member of Governance Committee.
Retired January 1, 1998, as Chairman and Chief Executive Officer of the Company;
formerly in such positions from 1991; 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.
DEAN R. O'HARE, age 55.
Director since August 13, 1997; member of Audit and Organization and
Compensation Committees.
Chairman and Chief Executive Officer of The Chubb Corporation, Warren, New
Jersey, since 1988.
- ---------------
(1) Except as otherwise indicated, all positions are with the Company.
(2) Fluor Daniel Limited, which provides engineering, procurement and
construction services in the United Kingdom of Great Britain, is an
indirectly wholly-owned subsidiary of the Company.
(3) Fluor Daniel, Inc., 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, is an indirectly wholly-owned subsidiary of the
Company.
(4) A. T. Massey Coal Company, Inc. ("A. T. Massey") is an indirectly
wholly-owned subsidiary of the Company, which, along with A. T. Massey's
subsidiaries, conducts A. T. Massey's coal-related businesses.
(5) Massey Coal Services, Inc. is a wholly-owned subsidiary of A. T. Massey.
(6) Rawl Sales & Processing Co. is a wholly-owned subsidiary of A. T. Massey.
(7) Mr. McCraw has announced he will not stand for re-election at the Annual
Meeting.
4
<PAGE> 8
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 for the last completed fiscal year (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 13,
1998.
<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 II Director Nominees:
Carroll A. Campbell, Jr.......................... 1,820 -- 1,820 --
Lord Robin W. Renwick............................ 1,700 -- 1,700 --
Martha R. Seger.................................. 2,956 -- 2,956 --
James C. Stein(3)................................ 72,358 48,186 24,172 --
Class III Directors:
Don L. Blankenship(3)............................ 56,141 31,377 24,764 --
Peter J. Fluor................................... 21,549 -- 21,549 --
Bobby R. Inman................................... 4,560 -- 4,560 --
James O. Rollans(3).............................. 94,832 64,565 30,267 --
Class I Directors:
David P. Gardner................................. 3,730 -- 3,730 --
Thomas L. Gossage................................ 2,500 -- 2,500 --
Vilma S. Martinez................................ 1,970 -- 1,970 --
Leslie G. McCraw(3).............................. 391,121 252,390 138,731 --
Dean R. O'Hare................................... 2,500 -- 2,500 --
Other Named Executive Officers:
J. Michal Conaway................................ 28,144 14,440 13,704 --
All directors and executive officers as a group (19
persons) including the above..................... 842,203 500,796 339,989 1,418
</TABLE>
- ---------------
(1) Each individual owns less than .5% and the group owns approximately 1% 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 15 hereof) and, as of December 31, 1997, 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............................ 2,987
Peter J. Fluor..................................... 14,747
David P. Gardner................................... 3,660
Vilma S. Martinez.................................. 4,712
Dean R. O'Hare..................................... 295
Martha R. Seger.................................... 569
</TABLE>
(3) This individual is also a Named Executive Officer.
5
<PAGE> 9
COMMITTEES OF THE BOARD
The standing committees of the Board consist of an Audit Committee,
Executive Committee, Finance Committee, Governance Committee and Organization
and Compensation Committee.
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 Peter J. Fluor (Chairman),
Carroll A. Campbell, Jr., Vilma S. Martinez and Dean R. O'Hare, 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 1997,
four regular meetings and a special meeting to review and approve the Company's
1996 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.
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 shareholders the sale, lease or exchange of all or
substantially all of the Company's property and assets; recommending to the
shareholders 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 Peter J. Fluor (Chairman), David P.
Gardner, Bobby R. Inman and Martha R. Seger. The Executive Committee held no
meetings, and took action by unanimous written consent on four occasions, during
fiscal year 1997.
Finance Committee
The function of the Finance Committee is to review and make recommendations
to the Board regarding the Company's financing needs and plans and dividend
policy, to review and, where delegated by the Board, approve new debt
financings, acquisitions and dispositions of business units and major capital
assets, to review the financial performance of acquisitions and equity
investments and to monitor the investment policy and performance of the
Company's employment and other benefit trust funds, and to review the Company's
risk management activities, including insurance coverage. The members of the
Finance Committee are Martha R. Seger (Chairman), Don L. Blankenship, Carroll A.
Campbell, Jr., Thomas L. Gossage and Lord Robin W. Renwick. The Finance
Committee was initially formed on March 11, 1997, and held one meeting during
fiscal year 1997.
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 David P. Gardner (Chairman), Bobby R. Inman, Vilma S.
Martinez, Leslie G. McCraw, Lord Robin W. Renwick and Martha R. Seger. During
fiscal year 1997, the Governance Committee held four meetings. The Governance
Committee will give appropriate consideration to qualified persons recommended
by shareholders for nomination as directors of the
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Company provided that such recommendations are accompanied by information
sufficient to enable the Governance Committee to evaluate the qualifications of
the nominee.
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 Bobby R. Inman
(Chairman), Peter J. Fluor, David P. Gardner, Thomas L. Gossage and Dean R.
O'Hare, none of whom is a current or former officer or employee of the Company
or any subsidiary. The Organization and Compensation Committee held four
meetings, and took action by unanimous written consent on seven occasions,
during fiscal year 1997.
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 shareholder's name and address, and the number of
shares of Common Stock beneficially owned by such shareholder, (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 1997, the Board held four regular meetings, one of which
was followed by an extensive strategic planning session, and held two meetings
via teleconference. The Board took action by unanimous written consent on three
occasions. 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 1997 and have continued to retain the firm in fiscal
1998. The amount of fees paid to the firm in fiscal 1997 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, a former 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, 1997, $50,000 was
outstanding on this loan. The remaining balance of the loan is due on February
1, 1998.
In March 1996, the Company made an interest-free loan in the amount of
$247,942 to Richard M. Teater, a former executive officer of the Company, to be
used to defray expenses associated with Mr. Teater's relocation from Irvine,
California to Dallas, Texas. As of October 31, 1997, $185,957 was outstanding on
this loan. The remaining balance of the loan is due in three equal annual
installments on February 1 of each year.
SECTION 16(b) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
The Legal Services Group of the Company has ongoing responsibility for
filing reports required by Section 16(b) of the Securities Exchange Act of 1934
("Section 16") on behalf of executive officers and directors. Based upon a
review of forms received by the Company during and with respect to the Company's
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<PAGE> 11
most recent fiscal year, the Company is not aware of any executive officer,
director or beneficial owner of more than 10% of the Company's stock that failed
to file on a timely basis any Forms 3, 4 or 5, except as follows: One Form 4 for
Mr. Richard A. Flinton was not filed on a timely basis to report one
transaction; One Form 3 for Mr. Thomas Gossage was amended to add additional
shares which were inadvertently omitted from the original Form 3, and
accordingly, the amended Form 3 was not timely; and, one Form 4 for each of the
following persons was not filed on a timely basis to report one transaction that
consisted in each case of the settlement in cash on September 10, 1997, of
certain restricted units previously awarded in exempt transactions under the
Company's employee stock plans: Dennis W. Benner, Don L. Blankenship, Charles J.
Bradley, Lila J. Churney, J. Michal Conaway, Jake Easton III, Lawrence N.
Fisher, Leslie G. McCraw, Charles R. Oliver, James O. Rollans, James C. Stein,
and Lee C. Tashjian. This filing was occasioned by an interpretation by the
staff of the Securities and Exchange Commission issued during the fiscal year,
of the regulations under Section 16, which interpretation represented a position
contrary to the position previously taken by the Company.
ORGANIZATION AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
As you are undoubtedly aware, fiscal 1997 was a disappointing year from an
earnings perspective for Fluor Corporation and its major operating unit Fluor
Daniel. On the other hand, A.T. Massey continued to perform above expectations,
with a 15% increase in earnings over fiscal 1996. Consistent with the Company's
pay for performance philosophy, fiscal 1997 compensation levels for senior
executives of the Company were impacted accordingly.
The Company's compensation programs are designed to attract, motivate and
retain key employees with incentives that are linked to specific performance
measures in order 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 and
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. 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.
The philosophy for establishing specific compensation levels for members of
senior management 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 Associates LLC and Towers Perrin, as
reference points. The general policy of the Committee is to position executive
base salaries 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.
BONUSES
Under the Company's Executive Incentive Compensation Plan, a minimum rate
of return on average shareholders' 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,
- ---------------
(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 15 hereof.
8
<PAGE> 12
excluding extraordinary, unusual or infrequently occurring items, exceed a
return on average shareholders' 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 shareholders' 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. Based upon fiscal 1997 financial performance, no
bonus awards were granted to the twenty most senior Fluor and Fluor Daniel
executives, including the CEO and all of the Named Executive Officers other than
Mr. Blankenship.
Long Term Incentive Program
Approximately 600 management employees, including all of the Named
Executive Officers 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 shareholder
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.
Under the long-term incentive program, the Committee may make grants of the
following: (a) cash incentive awards which are based upon meeting earnings
targets established by the Committee; (b) stock options which become exercisable
on terms established by the Committee 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. To achieve higher than mid-range
compensation up to the 75th percentile range would require performance in excess
of the established targets. Shortly after the close of fiscal 1997,
participating executives, including the CEO and all of the Named Executive
Officers received a payout of a previously granted cash incentive award which
was based upon earnings targets previously established for the fiscal 1995
through 1997 period. These awards were materially impacted by fiscal 1997
earnings performance. The awards paid to Fluor and Fluor Daniel executives were
46% below the prior year's payout for the 1994-1996 three year period and the
awards paid to A.T. Massey executives were 19% above the amounts paid for the
1994-1996 three year period. Cash incentive awards for the fiscal 1996-1998 and
fiscal 1997-1999 periods will be likewise affected. In addition, all stock
options granted to senior executives as far back as 1991 now have an exercise
price which is higher than the current stock price.
Directors' Achievement Award Program
Early in fiscal 1995, a Directors' Achievement Award Program was
recommended by this Committee and approved by the Board. The purpose of this
program was to focus the senior executives on maximizing overall Company
financial performance and achieving substantial increases in shareholder value.
The program provided for performance-contingent cash and stock-based awards for
senior executives which would become payable only if the very aggressive
earnings growth and stock price performance goals established by this Committee
were achieved within a limited time frame. The time frame for the achievement of
the stock price performance goals has now expired. Accordingly the ability to
earn the awards based on stock price performance has ended.
- ---------------
(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.
9
<PAGE> 13
Conclusion
As a consequence of the fiscal 1997 financial performance of Fluor and its
two main operating units, Fluor Daniel and A.T. Massey, the "at risk"
compensation shown in the Summary Compensation Table for the Fluor and Fluor
Daniel Named Executive Officers as a group was $2,030,295, a reduction of
$2,135,828 (51%) from the prior year. The "at risk" compensation shown in the
Summary Compensation Table for Mr. Blankenship, the A.T. Massey Named Executive
Officer, was $839,285, an increase of $60,967 (8%) over the prior year. All
amounts paid or accrued during fiscal year 1997 under the above-described plans
and programs are included in the tables which follow. No member of this
Committee is a former or current officer or employee of the Company or any of
its subsidiaries.
ORGANIZATION AND COMPENSATION COMMITTEE
Bobby R. Inman David P. Gardner Dean R. O'Hare
Thomas L. Gossage Peter J. Fluor
January 30, 1998
10
<PAGE> 14
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended October 31, 1995,
1996 and 1997, the cash compensation paid by the Company and its subsidiaries,
as well as certain other compensation paid or accrued for those years, to each
of the Named Executive Officers in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS
-------------------------------- ----------------------- PAYOUTS
OTHER RESTRICTED SECURITIES -------
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR ($)(A) ($)(A) ($)(B) ($)(C) SARS(#) ($) ($)(D)
- ------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L. G. McCraw............. 1997 875,040 0 227,024 974,063 0 138,336 739,759
Chairman and Chief 1996 830,040 975,000 219,133 877,719 115,880 464,160 321,009
Executive Officer 1995 754,800 840,000 161,281 159,794 77,800 348,400 280,340
D. L. Blankenship........ 1997 425,040 425,000 60,365 177,520 0 176,400 91,984
Chairman and Chief 1996 375,000 380,000 57,009 204,069 16,260 137,240 76,295
Executive Officer, 1995 325,020 320,000 44,381 382,588 42,100 0 142,930
A. T. Massey Coal
Company, Inc.
J. C. Stein.............. 1997 378,565 0 33,880 177,520 0 50,867 663,843
President and Chief 1996 325,020 235,000 32,638 110,081 8,700 154,334 264,237
Operating Officer, 1995 305,040 220,000 23,952 382,588 42,100 145,109 159,028
Fluor Daniel, Inc.
J. O. Rollans............ 1997 375,000 0 59,248 177,520 0 38,878 96,063
Senior Vice President/ 1996 360,000 295,000 56,393 204,069 16,260 130,259 197,594
Chief Administrative 1995 335,040 280,000 40,642 468,089 49,590 74,558 90,212
Officer
J. M. Conaway............ 1997 342,342 0 16,016 95,760 0 41,183 69,713
Senior Vice President
and 1996 300,000 200,000 13,261 88,838 7,100 110,238 41,077
Chief Financial 1995 270,000 185,000 7,379 269,114 7,100 108,875 35,700
Officer
</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 1995, 1996 and 1997, the Company
awarded 22,970, 24,430 and 26,220 shares to all Named Executive Officers as
a group. With respect to shares granted in fiscal year 1995, 19,270 shares
of restricted stock awarded vest at 10% per year and 3,700 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. With respect to shares granted in
fiscal year 1996, 20,730 shares of restricted stock awarded vest at 10% per
year and 3,700 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. With
respect to shares granted in fiscal year 1997, 22,520 shares of restricted
stock awarded vest at 10% per year and 3,700 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 1997 fiscal
year, the aggregate
11
<PAGE> 15
restricted stock holdings for each of the above Named Executive Officers
consisted of the following: (i) Mr. McCraw: 72,188 shares with a value of
$3,027,384; (ii) Mr. Blankenship: 22,966 shares with a value of $963,137;
(iii) Mr. Stein: 18,602 shares with a value of $780,121; (iv) Mr. Rollans:
26,001 shares with a value of $1,090,417; and (v) Mr. Conaway: 9,909 shares
with a value of $415,559. As of the end of fiscal year 1997, aggregate
restricted stock holdings for the Company consisted of 758,338 shares with a
value of $31,802,802 at the then current market value, without giving effect
to the diminution of value attributable to the restrictions on such stock.
Quarterly dividends of $.20 per share are currently paid to all shareholders
of record.
(D) The total amounts shown in this column for the last fiscal year consist of
the following: (i) Mr. McCraw: $143,192 -- Company contributions and other
allocations to defined contribution plans and related excess benefit plans;
$168,078 -- Benefit attributable to Company-owned life insurance policy;
$421,415 -- Residential equity loss reimbursement occasioned by relocation;
$7,074 -- Miscellaneous expenses; (ii) Mr. Blankenship: $51,012 -- Benefit
attributable to Company-owned life insurance policy; $30,200 -- A.T. Massey
contributions and other allocations to defined contribution plans and
related excess benefit plans; $10,772 -- Miscellaneous expenses; (iii) Mr.
Stein: $60,039 -- Company contributions and other allocations to defined
contribution plans and related excess benefit plans; $24,342 -- Benefit
attributable to Company-owned life insurance policy; $535,257 -- Residential
equity loss reimbursement occasioned by relocation; $39,523 -- Relocation
expenses; $4,233 -- Miscellaneous relocation expenses; $449 -- Miscellaneous
expenses; (iv) Mr. Rollans: $58,305 -- 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. Conaway: $43,835--Company contributions and other allocations to
defined contribution plans and related excess benefit plans;
$25,878 -- Benefit attributable to Company-owned life insurance policy.
STOCK OPTIONS
There were no stock options granted to the Named Executive Officers during
the last fiscal year.
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers, concerning the exercise of options during the last fiscal
year and unexercised options and SARs held as of the end of fiscal 1997:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS
SHARES VALUE AT FISCAL YEAR END(#) AT FISCAL YEAR END($)(A)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. G. McCraw.................. 24,000 890,628 223,420 193,680 179,558 0
D. L. Blankenship............. 0 0 31,377 52,103 0 0
J. C. Stein................... 3,896 221,351 51,244 48,678 223,033 0
J. O. Rollans................. 0 0 60,500 61,785 43,360 0
J. M. Conaway................. 0 0 12,665 34,625 850 0
</TABLE>
- ---------------
(A) Market value of underlying securities at fiscal year-end, minus the exercise
price.
12
<PAGE> 16
LONG-TERM AWARDS
The following table provides information with respect to the Named
Executive Officers concerning cash incentive awards made during fiscal 1997
under the Company's Long-Term Incentive Award Program. Each award under the
Company's Long-Term Incentive Award Program represents the right to receive an
amount in cash if earnings targets for a specified period, as established by the
Organization and Compensation Committee, are achieved. If earnings fall below
the threshold amount, no award is payable. If earnings fall between the
threshold amount and the target amount or between the target amount and the
maximum amount then the amount of the award is prorated accordingly. Payments
made under the Long-Term Incentive Program are reported in the Summary
Compensation Table in the year of payout, if any. There were no cash incentive
awards to the Named Executive Officers under the Directors' Achievement Award
Program during fiscal 1997.
LONG-TERM INCENTIVE PROGRAM-AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED
PERFORMANCE OR PLANS($)(A)
OTHER PERIOD -----------------------------
UNTIL MATURATION MIDDLE
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
----------------------------------- ---------------- --------- ------- -------
<S> <C> <C> <C> <C>
L. G. McCraw....................... 1 year 0 240,000 480,000
D. L. Blankenship.................. 3 years 16,900 67,400 134,700
J. C. Stein........................ 1 year 0 67,400 134,800
J. O. Rollans...................... 1 year 0 67,400 134,800
J. M. Conaway...................... 1 year 0 88,200 176,400
</TABLE>
- ---------------
(A) Mr. Blankenship's award is payable if certain thresholds are met based on
consolidated earnings before interest, taxes, depreciation and amortization
of A.T. Massey rather than Fluor Daniel earnings.
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 plans (the "A.T. Massey Pension Plans"),
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 Plans.
A participant's remuneration covered by the A.T. Massey Pension Plans is
his average salary and bonus (as reported in the Summary Compensation Table) for
the highest 60 consecutive months in the 120-month period immediately preceding
the determination date. As of the end of the last calendar year, Mr.
Blankenship's covered compensation under the A.T. Massey Pension Plans was
$160,000, his covered compensation under the non-qualified supplemental pension
was $516,795, for a combined covered compensation average of $676,795. He had
been credited with sixteen years of service as of the end of the last calendar
year. Benefits shown are computed as a ten year certain and life annuity
beginning at age 65 with no deduction for Social Security or other offset
amounts.
13
<PAGE> 17
PENSION PLAN TABLE
YEARS OF SERVICE
<TABLE>
<CAPTION>
REMUNERATION 10 15 20 25 30 35 OR MORE
------------ -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
$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
$525,000 $ 78,750 $118,125 $157,500 $196,875 $236,250 $275,625
$550,000 $ 82,500 $123,750 $165,000 $206,250 $247,500 $288,750
$575,000 $ 86,250 $129,375 $172,500 $215,625 $258,750 $301,875
$600,000 $ 90,000 $135,000 $180,000 $225,000 $270,000 $315,000
$625,000 $ 93,750 $140,625 $187,500 $234,375 $281,250 $328,125
$650,000 $ 97,500 $146,250 $195,000 $243,750 $292,500 $341,250
$675,000 $101,250 $151,875 $202,500 $253,125 $303,750 $354,375
$700,000 $105,000 $157,500 $210,000 $262,500 $315,000 $367,500
$725,000 $108,750 $163,125 $217,500 $271,875 $326,250 $380,625
$750,000 $112,500 $168,750 $225,000 $281,250 $337,500 $393,750
$775,000 $116,250 $174,375 $232,500 $290,625 $348,750 $406,875
$800,000 $120,000 $180,000 $240,000 $300,000 $360,000 $420,000
</TABLE>
14
<PAGE> 18
PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG FLUOR CORPORATION,
S&P 500 AND DJ HEAVY CONSTRUCTION GROUP
[GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fluor Corporation(1)(2) 100.00 92.36 113.42 131.06 153.50 97.69
S&P 500 100.00 114.95 119.40 150.97 187.35 247.52
DJ Heavy Construction Group 100.00 96.45 118.05 85.56 98.67 88.58
</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, 1992 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
Ten of the thirteen 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 Chairmen of Board
Committees, $34,000, plus a fee of $2,000 per day for each day upon which one or
more Board or Board Committee meetings are attended. Each such director also
receives a $2,000 annual California tax allowance.
15
<PAGE> 19
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 1997, Carroll A. Campbell, Jr.,
Peter J. Fluor, David P. Gardner, and Vilma S. Martinez chose to defer all of
their directors' fees and each elected the common stock valuation method. Dean
R. O'Hare and Martha R. Seger chose to defer 50% of their retainer fees and
elected the common stock valuation method.
Under the Stock Plan for Non-Employee Directors (the "1995 Director Stock
Plan"), Directors who are not, and have never been, employees of the Company or
its subsidiaries are eligible to receive, when they become Directors, 1,000
shares of restricted common stock and restricted units in an amount determined
by the Organization and Compensation Committee which are payable in cash to
assist in satisfying related income tax liabilities. The 1995 Director Stock
Plan was approved by the shareholders of the Company at the Annual Meeting on
March 14, 1995. Under the 1995 Director Stock Plan, 1,000 shares of restricted
stock and 570 restricted units were granted on the date of such approval to each
of Carroll A. Campbell, Jr., Peter J. Fluor, David P. Gardner, Bobby R. Inman,
Vilma S. Martinez and Martha R. Seger. 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.
Also under such plan, 1,000 shares of restricted stock and 570 restricted units
were granted to Thomas L. Gossage, Dean R. O'Hare and Lord Robin W. Renwick in
fiscal 1997. Awards are made on a date determined by the Committee following
appointment. Restrictions lapse on 20% of the shares on March 14 next following
the date of the initial award. Restrictions 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, 1997, was $58,688. This does not take into account the
diminution in value attributable to the restrictions on such stock under the
1995 Director Stock Plan.
In addition to benefits available under the 1995 Director Stock Plan,
directors who are not, and have never been, employees of the Company or its
subsidiaries are eligible to receive grants of restricted common stock under the
1997 Fluor Restricted Stock Plan for Non-Employee Directors (the "1997 Director
Stock Plan"). The 1997 Director Stock Plan was approved by the shareholders of
the Company at the Annual Meeting on March 11, 1997. The 1997 Director Stock
Plan provides for two types of restricted stock grants. First, it provided for
one-time grants to eligible directors serving on the Board on date of approval
by the shareholders. Such grants were made in consideration of cancellation of
retirement benefits accrued under the Fluor Corporation Retirement Plan for
Outside Directors, which was canceled concurrently with the approval of the 1997
Director Stock Plan. The estimated aggregate present value of accrued retirement
benefits under the Fluor Corporation Retirement Plan for Outside Directors at
October 31, 1996, was approximately $850,632. Outside directors then serving on
the Board, who held accrued retirement benefits, 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, received such one time grants of
restricted shares. The second type of grant provided under the 1997 Director
Stock Plan consists of annual grants of 500 shares of restricted stock to each
eligible director, which grants are made as of the first Board meeting in any
calendar year during which such director serves as a member of the Board.
Restrictions on all stock granted under this plan lapse once such stock has been
held for at least six months, the applicable director has served on the Board
for at least six years and the director either attains the age for mandatory
retirement (72 years) or becomes permanently and totally disabled. As of March
11, 1997, the value of 500 shares of stock was $32,188. This does not take into
account the diminution in value attributable to the restrictions on such stock
under the 1997 Director Stock Plan.
16
<PAGE> 20
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, 1997, to
audit the financial statements of the Company for the fiscal year ending October
31, 1998. A proposal to ratify this appointment is being presented to the
shareholders 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.
SHAREHOLDER PROPOSAL: REGARDING THE TABULATION OF VOTES ON PROPOSALS WHICH ARE
PRESENTED TO SHAREHOLDERS
PROPOSAL 3
The New York City Employees Retirement System ("NYCERS"), 1 Centre Street,
New York, NY 10007, has given the Company notice that it intends to present the
following proposal (the "Proposal") for action at the Annual Meeting. NYCERS did
not furnish a statement in support of the Proposal. Information concerning the
number of shares of stock of the Company owned by NYCERS will be furnished by
the Company to any person, orally or in writing as requested, promptly upon the
receipt of any oral or written request therefor.
TEXT OF THE SHAREHOLDER'S PROPOSAL
RESOLVED, that the shareholders of FLUOR CORPORATION request that the
Board of Directors amend the By-Law provisions which describe how voted
shares, non-voted shares and abstentions are counted, to ensure, for the
purpose of determining whether a proposal has been approved, that only the
shares voted for and the shares voted against any proposal, which is
presented in the company's proxy statement or introduced from the floor at
an annual or special meeting of the company, shall be counted. Accordingly,
we request that such By-Law provisions be amended to provide that shares
considered present at the annual or any special meeting that are NOT voted
for or against a particular proposal, including broker non-votes and
abstentions, not be counted for or against the approval of the proposal.
STATEMENT BY THE COMPANY IN OPPOSITION TO THE PROPOSAL
In the opinion of the Company, the effect of the Proposal would be to ask
the Company to disregard the actions of shareholders who abstain from voting on
a matter at the Company's meetings of shareholders. The Company opposes the
Proposal because the Company believes that it should give effect to the wishes
of a shareholder who abstains on a matter presented for a shareholder vote, and
because the Company believes that implementation of the Proposal could confuse
shareholders.
As disclosed in the Company's annual proxy statement pursuant to rules of
the Securities and Exchange Commission, currently "Abstentions are counted in
tabulations of the votes cast on proposals presented to shareholders." (The
Proposal would not affect the Company's treatment of broker non-votes, which as
disclosed in the proxy statement currently "are not counted for purposes of
determining whether a proposal has been approved.") Thus, the effect of an
abstention is to raise the number of "for" votes needed in order for a matter to
be approved by shareholders. The Company believes that shareholders often prefer
to abstain on a matter as to which they have no opinion or which they do not
support but, for policy reasons, do not wish to vote against. Implementation of
the Proposal would require the Company to not count the proxy of a shareholder
who abstains. As a result, if the Proposal were implemented, any matter
presented for a shareholder vote by the Company, such as adoption of a new
compensation plan, and any matter presented by a shareholder, could be approved
even if a majority of shareholders abstained on the vote. The Company believes
that a decision to abstain is a conscious and legitimate voting decision and
should not be disregarded.
17
<PAGE> 21
Further, the Company believes that implementation of the Proposal could
confuse shareholders. Under regulations of the Securities and Exchange
Commission, the Company is required to provide a space on its proxy cards where
shareholders can abstain as to any matter being voted on (other than an election
to office). The Company believes that most shareholders would expect that their
decision to check the "abstain" box on their proxy card would be given effect,
and that in fact most public companies count abstentions in the tabulation of
votes cast on a matter. As a result of the Securities and Exchange Commission
requirements and the treatment most companies afford abstentions, the Proposal
could result in shareholders voting to abstain with the expectation that their
vote would be recognized. However, their expectation would not be fulfilled if
the Proposal were implemented. In order to avoid such confusion, the Company
believes that the Proposal should not be implemented.
For these reasons, the Company urges you to vote "AGAINST" the Proposal.
OTHER BUSINESS
The Company does not intend to present any other business for action at the
Annual 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 shareholder, 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 shareholder's name and address, and the number
of shares of Common Stock beneficially owned by the shareholder, and (c) any
material interest of the shareholder in such business.
SHAREHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's
1999 annual meeting of shareholders must be received by the Company for
inclusion in the proxy statement and form of proxy/voting instruction card for
that meeting no later than October 1, 1998.
/s/ LAWRENCE N. FISHER
-----------------------------
LAWRENCE N. FISHER
Senior Vice President-Law and
Secretary
January 30, 1998
Irvine, California
18
<PAGE> 22
map
<PAGE> 23
[LOGO] FLUOR CORPORATION
PROXY/VOTING INSTRUCTION CARD SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING MARCH 10, 1998
The undersigned, a shareholder of FLUOR CORPORATION, a Delaware
corporation, acknowledges receipt of a Notice of Annual Meeting of
Shareholders, the accompanying Proxy Statement and the Annual Report to
Shareholders for the year ended October 31, 1997; and, revoking any proxy
previously given, hereby constitutes and appoints J.C. Stein, J.O. Rollans and
L.N. Fisher, 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 Shareholders of FLUOR CORPORATION, on Tuesday, March 10, 1998
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 SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY/VOTING INSTRUCTION CARD WILL BE VOTED FOR THE NOMINEES LISTED
ON THE REVERSE, FOR PROPOSAL 2 AND AGAINST PROPOSAL 3. IF YOU HAVE A BENEFICIAL
INTEREST IN SHARES HELD BY A 401(K) PLAN SPONSORED BY FLUOR CORPORATION OR A
SUBSIDIARY, SUCH AS THE FLUOR CORPORATION SALARIED EMPLOYEES' SAVINGS INVESTMENT
PLAN, THEN THIS CARD ALSO CONSTITUTES YOUR VOTING INSTRUCTIONS TO THE TRUSTEE OF
SUCH PLAN AND IF YOU DO NOT SIGN AND RETURN THIS CARD, OR ATTEND THE MEETING AND
VOTE BY BALLOT, SUCH SHARES WILL BE VOTED BY THE TRUSTEE IN THE SAME MANNER AND
IN THE SAME PROPORTION AS THE SHARES FOR WHICH THE TRUSTEE RECEIVES VALID VOTING
INSTRUCTIONS.
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COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE.
(continued and to be signed on reverse side)
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*FOLD AND DETACH HERE*
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THIS PROXY/VOTING INSTRUCTION CARD WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS Please mark
PROXY/VOTING INSTRUCTION CARD WILL BE VOTED FOR THE ELECTION OF THE FOUR NOMINEES AND FOR your votes as [X]
PROPOSAL 2 AND AGAINST PROPOSAL 3. indicated in
this sample
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The Board of Directors recommends that you vote FOR the nominees on Proposal 1 and FOR Proposal 2 and AGAINST Proposal 3.
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1. Election of Class II Directors: Carroll A. Campbell, Jr., Robin W. Renwick, Martha R. Seger and James C. Stein
FOR all nominees listed WITHHOLD AUTHORITY INSTRUCTIONS: To withhold authority to vote
(except as marked to to vote for all for any individual nominee, strike a line
the contrary) nominees listed) through the nominee's name in the list above.
[ ] [ ]
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2. Ratification of the appointment of Ernst & Young LLP as auditors for 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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3. Approval of Shareholder Proposal Relating to 4. In their discretion the Proxies are authorized to
Tabulation of Votes. vote upon such other business as may properly come
before the meeting and any and all postponements or
FOR AGAINST ABSTAIN adjournments thereof.
[ ] [ ] [ ]
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COMMENTS/ADDRESS CHANGE I Plan to
Please mark the box if you have [ ] Attend [ ]
written comments or an address Meeting
change on the reverse side
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***IF YOU WISH TO VOTE BY TELEPHONE,
PLEASE READ THE INSTRUCTIONS BELOW***
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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.
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*FOLD AND DETACH HERE*
*VOTE BY TELEPHONE*
QUICK *** EASY *** IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and
returned your proxy card.
* You will be asked to enter a Control Number which is located in the box in the lower right hand corner of this form.
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OPTION #1: To vote as the Board of Directors recommends on ALL proposals: Press 1.
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When asked, please confirm your vote by Pressing 1.
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OPTION #2: If you choose to vote on each proposal separately, press 0. You will hear these instructions:
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Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees, press 9.
To withhold FOR AN INDIVIDUAL nominee, press 0 and listen to the instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same for all remaining proposals.
When asked, please confirm your vote by Pressing 1.
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PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF VOTED BY PHONE.
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Thank you for voting.
-------------------------------- 3" --------------------------------
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CONTROL NUMBER
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Call ** Toll Free ** On a Touch Tone Telephone 123 456 789 12
1-800-840-1208 - ANYTIME 1 1/2" -----------------------------------
There is NO CHARGE to you for this call.
THIS AREA TO BE LEFT BLANK
CMSS TO IMPRINT CONTROL NUMBER
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