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
-1-
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.
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.
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
-2-
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.
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.
-3-