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