FLUOR CORPORATION
DEFERRED DIRECTORS' FEES PROGRAM
(as amended through July 31, 1992)
PURPOSE
To provide non-employee directors of Fluor Corporation with a means of
minimizing their current tax burden, while providing funds for
expenses subsequent to retirement.
ELIGIBILITY
Directors of Fluor Corporation entitled to directors' fees.
LIMITATIONS
The amount of directors' fees for meetings in any calendar year to be
deferred must be specified by the director in writing to Fluor
Corporation no later than December 31 of the prior calendar year,
either as a fixed dollar amount or as a percentage of (i) such fees or
of (ii) the retainer portion or (iii) the meeting portion of such
fees. The amount or percentage so specified is irrevocable for that
calendar year, and will be effective for all subsequent calendar years
unless and until a new amount or percentage is similarly specified to
be effective prospectively. The amount so deferred is an offset
against, and in any event cannot exceed the amount of, the directors'
fees, if any, for that calendar year otherwise payable to the
director.
ADJUSTMENT FACTOR
Amounts deferred under this Program will be subject to an Adjustment
Factor in accordance with the
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provisions of the Deferred Directors' Fees Program Financial Procedure,
a copy of which is attached hereto and made a part hereof.
PAYMENT
Payment of amounts deferred under this Program will be made in
accordance with the provisions of said Deferred Directors' Fees
Program Financial Procedure.
CLAIMS PROCEDURE
The Executive Compensation Committee of Fluor Corporation shall
establish and maintain procedures for the filing of claims for
benefits under this Program and for the review of the denial of any
such claims and said Committee is hereby designated as the fiduciary
of this Program to which appeals of claim denials shall be submitted
for review.
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DEFERRED DIRECTORS' FEES PROGRAM
FINANCIAL PROCEDURE
PURPOSE
To provide guidelines for accounting for amounts deferred under the
Fluor Corporation Deferred Directors' Fees Program, including the
calculation and recording of applicable Adjustment Factors and
determination of the time and manner of payment of Participant's
Accounts.
DEFINITIONS
1. "Adjustment Factor" - The Interest Factor or the Stock Value
Factor, as applicable.
2. "Interest Factor" - For deferred amounts otherwise payable prior
to January 1, 1986, the higher of either the weighted average
interest rate paid by Fluor Corporation on its average borrowings
or the weighted average interest rate earned by Fluor Corporation
on its investments of excess cash in short term investments. For
deferred amounts otherwise payable on or after January 1, 1986,
the rate to be used in calculating the Interest Factor shall be
established from time to time by resolution of the Executive
Committee of Fluor Corporation. The applicable Interest Factor
will be calculated quarterly and maintained by and will be
available from Corporate Finance.
3. "Beneficiary" - The beneficiary designated by the Participant on
the form provided by Fluor Corporation or, in the absence of any
designation, the administrator or executor of the Participant's
estate. To the extent required by applicable state law, such
beneficiary designation
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shall require the written consent of the Participant's spouse.
4. "Fiscal Year" - The twelve month period ending October 31.
5. "Participant" - Each Director electing to participate under the
Program.
6. "Participant's Account" - The account to which each amount
originally deferred in a Fiscal Year shall be credited and which
reflects each Participant's aggregate deferred amounts and
Adjustment Factors.
7. "Stock Value Factor" - The Adjustment Factor provided for in
Procedure paragraph 3.
8. "Termination of Service" - Termination of the status of director
of Fluor Corporation for any reason.
PROCEDURE
1. General -
(a) The amount of directors' fees for meetings in any calendar
year to be deferred must be specified by the Participant in
writing to Fluor Corporation no later than December 31 of
the prior calendar year, either as a fixed dollar amount or
as a percentage of (i) such fees or of (ii) the retainer portion
or (iii) the meeting portion of such fees. The amount or
percentage so specified is irrevocable for that calendar year,
and shall be effective for all subsequent calendar years unless
and until a new amount or percentage is similarly
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specified to be effective prospectively. The amount so deferred
is an offset against, and in any event cannot exceed the amount
of the directors' fees, if any, for that calendar year otherwise
payable to the Participant.
(b) Each Participant shall, at the time of first electing
deferral under the Program, indicate in writing to Fluor
Corporation his election to have his Participant's Account
adjusted either by the Interest Factor or the Stock Value
Factor. A Participant may at any time, but not more than
once during any fiscal quarter, change his election as to
the Adjustment Factor to be applied to all or any portion of
his Participant's Account. Such change in election shall be
effective as of the beginning of the first fiscal quarter
commencing after written notice of such change of election
is received from the Participant.
(c) With respect to a Participant electing the Interest Factor,
his Participant's Account shall be adjusted as set forth in
Procedure paragraph 2.
(d) With respect to a Participant electing the Stock Value
Factor, each amount originally deferred in a Fiscal Year
shall be treated as having been invested in shares of Fluor
common stock, calculated to the nearest one ten-thousandth
of a share, at the per share closing price of Fluor common
stock on the New York Stock Exchange on the day in which
payment in cash otherwise (but for the election to defer)
would have been made, and his Participant's Account shall be
adjusted as set forth in Procedure paragraph 3. Each such
Participant's Account shall be expressed in dollar amounts
and the "shadow" Fluor common shares as calculated above.
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(e) In January of each year, a statement, expressed in dollar
amounts and in "shadow" shares, if applicable, of the status
of his Participant's Account shall be furnished to each
Participant.
2. With respect to Participants electing the Interest Factor, said
Factor shall be calculated in the following manner:
(a) Interest will be accrued annually at the applicable Interest
Factor. Interest will be calculated on each Participant's
balance of principal and interest as of the preceding Fiscal
Year end. Each amount deferred in a Fiscal Year will begin
to accrue interest from the first day of the month in which
payment of the director's fees otherwise (but for the
election to defer) would have been made. Where the
Participant changes his election of Adjustment Factor from
the Stock Value Factor to the Interest Factor during the
Fiscal Year then the amount of his Participant's Account as
to which such a change in selection has been made shall
begin to accrue interest from the date of such change.
Where the Participant changes his election of Adjustment
Factor from Interest Factor to the Stock Value Factor during
any Fiscal Year, the interest will be accrued at the
applicable Interest Factor up to the effective date of such
change.
(b) In the event of a full or partial payment, the amount paid
will bear interest through the last day of the preceding
month at the applicable Interest Factor as determined on a
year-to-date basis from the prior Fiscal Year end through
the most recent fiscal quarter (i.e., a payment made in
September will include accrued interest through August 31
calculated using the applicable Interest Factor for the
period October 31 through July 31).
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3. With respect to Participants electing the Stock Value Factor,
said Factor shall be calculated in the following manner:
(a) There shall be credited to each Participant's account an
amount equal, or shares or other property equivalent, as the
case may be, to dividends or other distributions with
respect to Fluor common stock at the time such dividends or
other distributions are paid or made. With respect to cash
amounts so paid, such amounts shall be treated as having
been invested in shares of Fluor common stock in accordance
with the provisions of Procedure paragraph 1 (d).
(b) The aggregate number of "shadow" shares standing to a
Participant's credit shall be valued at each Fiscal Year end
at the per share closing price of Fluor common stock on the
New York Stock Exchange ("Share Price") at such Fiscal Year
end, and the dollar amount of each Participant's Account
shall be adjusted at each Fiscal Year end to reflect such
valuation. Where the Participant changes his Adjustment
Factor from the Interest Factor to the Stock Value Factor
during the Fiscal Year, the aggregate number of "shadow"
shares shall be increased as of the date of such change
based upon the amount of his Participant's Account as to
which such change in election has been made and the per
Share Price as of the effective date of such change. Where
the Participant changes his Adjustment Factor from the Stock
Value Factor to the Interest Factor, the aggregate number of
"shadow" shares to be deducted from his credit and the
corresponding amount to be credited to the Interest Factor
portion of his Participant's Account shall be determined on
the basis of the Share Price on the effective date of the
change.
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(c) In the event of installment payments as set forth in
Procedure paragraph 4, the Participant's entitlement
remaining after the first installment payment shall be
treated as having been invested in such shares of Fluor
common stock as set forth in Procedure paragraph 1 (d).
Such "shadow" shares shall be valued at the per share
closing price of Fluor common stock on the New York Stock
Exchange on the date of that installment payment. The
remaining entitlement after each succeeding installment
payment shall likewise be treated as having been so invested
and shall be valued in accordance with the foregoing
provisions.
4. Payments under the Program shall be made as follows:
(a) Payment in cash in one lump sum or in annual installments
will be at the sole discretion of Fluor Corporation. The
number of installments will not exceed the lesser of ten or
twice the number of years for which the Participant has
participated in the Program.
(b) If Termination of Service occurs from January 1 through June
30, the lump sum payment or the first installment will be
paid no later than December 31 of the year of termination.
(c) If Termination of Service occurs from July 1 through
December 31, the lump sum payment or the first installment,
may be deferred at the discretion of Fluor Corporation until
the January immediately following termination.
(d) If a Participant's entitlement is paid in installments, the
second installment payment will be paid during January of the
year following the year in which the first installment was
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paid and all remaining installments will be paid
annually in the month of January.
(e) In the event of the death of a Participant prior to
commencement of any payments hereunder, payments will be
made to his Beneficiary in accordance with the foregoing
provisions. In the event of the death of the Participant
after commencement of benefit payments in installments but
prior to payment of his entire entitlement, payment may be
made to his Beneficiary in one lump sum or by continuation
of the installments at the discretion of Fluor Corporation.
In the event installments continue to the Beneficiary, they
will be subject to the appropriate Adjustment Factor as set
forth in Procedure paragraphs 2 and 3.
5. The Corporate Accounting Department of Fluor Corporation is
responsible for developing adequate internal accounting
procedures for:
(a) Estimating the aggregate directors' fees required for each
Fiscal Year and accruing that amount periodically during the
year by charging directors' fees expense and crediting a
directors' fees liability account.
(b) Transferring the deferred directors' fees (if directors have
made a timely election to defer some or all of the fees)
from the directors' fees expense and liability accounts to
deferred directors' fees expense and liability accounts.
(c) Maintaining individual Participant's Accounts for each
director who has elected deferral under the Program. Each
such account shall reflect amounts deferred, the applicable
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Adjustment Factor, and payment to each Participant or
Beneficiary and shall thereby provide detail to support the
total deferred directors' fees liability reflected in the
general ledger.
(d) Accounting for the Adjustment Factors by charging or
crediting interest expense and charging or crediting the
appropriate Participant's Account.
(e) Forwarding to each Participant in January of each year a
statement of the status of his Participant's Account.
(f) Ensuring that payments to Participants under the Program are
properly reported to the U.S. Internal Revenue Service (Form
1099-NEC-Statement for Recipients of Nonemployee
Compensation).
NOTES FOR TAX ACCOUNTING
1. The total amount of deferred directors' fees (including the
Adjustment Factors) under the Program is deductible by Fluor
Corporation, for income tax purposes, only upon payment to the
Participant or Beneficiary.
2. Prior to distribution, the total deferred directors' fees are
carried as a prepaid tax item and are netted with deferred
liabilities on the balance sheet.
3. The liability for deferred income tax is developed from information
provided in the quarterly tax
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kits supplied by Corporate Tax. Tax Form 3 contains an
analysis of the transactions (amounts accrued, Adjustment Factor
and payments) affecting the deferred directors' fees liability
account for the period.
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