Exhibit 10.12
FLUOR CORPORATION AND SUBSIDIARIES
MANAGEMENT MANUAL
Section: Human Resources Directive: 460
Page 1 of 8
Subject: EXECUTIVE SEVERANCE PLAN Effective: 10/27/03
Applies To: Fluor Corporation Supersedes: 12/31/02
OBJECTIVE
To provide severance compensation to eligible executives of Fluor Corporation
and designated subsidiaries collectively, the "company", who leave the company,
depending on the circumstances and conditions leading to termination.
ELIGIBILITY
Executives of Fluor Corporation and designated subsidiaries actively at work who
are participants in the Fluor Corporation and Subsidiaries Executive Incentive
Compensation Plan and who execute the required settlement and release agreement
in exchange for the severance.
DEFINITIONS
For the purpose of the Plan, the following definitions apply:
A. VOLUNTARY SEPARATION
Action taken by an executive for personal reasons, to seek
other employment, to accept another position, for failure to
return at conclusion of leave, or to voluntarily retire.
B. INVOLUNTARY SEPARATION
1. Action taken by the company due to reduction in force
resulting from reorganization or reduced workload or
other similar circumstances whereby the executive's
services are no longer required on the job.
Executives involuntarily separated who meet the
retirement criteria may elect retirement.
2. Action taken by the company when an executive has a
qualifying disability under the Americans with
Disabilities Act, or a similar disability statute,
and is unable to perform his/her essential job
functions with or without reasonable accommodation.
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This Fluor Corporation policy is subject to modification or revision in part or
in its entirety to reflect changes in conditions subsequent to the effective
date of this policy.
Exhibit 10.12
FLUOR CORPORATION AND SUBSIDIARIES
MANAGEMENT MANUAL
Section: Human Resources Directive: 460
Page 2 of 8
Subject: EXECUTIVE SEVERANCE PLAN Effective: 10/27/03
Applies To: Fluor Corporation Supersedes: 12/31/02
C. INVOLUNTARY DISCHARGE
Action taken by the company for reasons other than stated in
Paragraph B. above including but not limited to absenteeism,
misconduct, insubordination, appearing at work under the
influence of a controlled substance or alcohol, unethical
behavior, disclosure of confidential information, sexual
harassment, employment discrimination, unsatisfactory
performance, or violation of any company policy.
D. OFFICER
An executive who is a vice president or above of Fluor
Corporation, Fluor Enterprises Inc., or Fluor Constructors,
Inc., who participates in the Fluor Corporation and
subsidiaries Executive Incentive Compensation Plan.
E. COMPLETED YEARS OF ACCUMULATED SERVICE
A period of accumulated service with the company, subject to
the limitation set forth under Procedure, A.4.c.
F. BENEFICIARY
The beneficiary designated by the executive under the Fluor
Corporation Employee's Retirement Plan, or, if no such
designation has been made, then as designated under the Group
Life/Health Insurance Plan unless the executive otherwise
makes a beneficiary designation on the form provided by the
executive's corporate employer, or, in the absence of any
designation, the administrator or executor of the executive's
estate.
PROCEDURE
A. SEVERANCE PAY
1. Voluntary Separation
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This Fluor Corporation policy is subject to modification or revision in part or
in its entirety to reflect changes in conditions subsequent to the effective
date of this policy.
Exhibit 10.12
FLUOR CORPORATION AND SUBSIDIARIES
MANAGEMENT MANUAL
The company will not provide severance pay nor prorated Incentive
Compensation (Paragraph A under "Definitions").
Section: Human Resources Directive: 460
Page 3 of 8
Subject: EXECUTIVE SEVERANCE PLAN Effective: 10/27/03
Applies To: Fluor Corporation Supersedes: 12/31/02
2. Involuntary Separation
Severance pay will be based on current base salary
and total completed years of accumulated service as
follows:
a. Officers
1. Two weeks' severance pay for each
completed year of accumulated
service up to 52 weeks.
2. Minimum eight weeks' severance.
b. Non-Officer Executives
1. Two weeks' severance pay for each
completed year of accumulated
service up to 26 weeks.
2. Minimum four weeks' severance.
3. Involuntary Discharge
a. The company will not provide severance pay
nor consider proration of Incentive
Compensation (Paragraph C, Definitions).
4. Limitations
a. Maximum severance pay will be 52 weeks for
officers, 26 weeks for non-officer
executives.
b. Minimum severance pay will be eight weeks
for officers, four weeks for non-officer
executives.
c. The total completed years of accumulated
service calculated for a severance payment
may only be used one time in severance
calculations.
d. For executives involuntarily separated and
placed on Leave of Absence in Lieu of
Layoff, severance pay will be based on
completed years of accumulated service up to
the effective date of the Leave of Absence.
e. Officers in policy making positions who meet
retirement criteria will receive severance
pay as follows:
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This Fluor Corporation policy is subject to modification or revision in part or
in its entirety to reflect changes in conditions subsequent to the effective
date of this policy.
Exhibit 10.12
FLUOR CORPORATION AND SUBSIDIARIES
MANAGEMENT MANUAL
Section: Human Resources Directive: 460
Page 4 of 8
Subject: EXECUTIVE SEVERANCE PLAN Effective: 10/27/03
Applies To: Fluor Corporation Supersedes: 12/31/02
1. Officers who meet the minimum
retirement income requirement set
forth by federal law, excluding any
amount payable under this Plan,
will receive severance pay for only
the period from the date of
termination until January 2
following the officer's 65th
birthday subject to the limitation
set forth under Procedure, A.2.a.
2. Officers who do not meet the
minimum retirement income
requirement set forth by federal
law, computed excluding any amount
payable under this Plan, will
receive severance pay as determined
under Procedure, A.2.a.
f. In the case of involuntary separation due to
an executive's inability to perform his/her
essential job functions with reasonable
accommodation, the executive's severance pay
amount will be reduced by the expected
entitlements under Fluor's short-term and
long-term disability for the number of weeks
determined under Procedure A.2.a and b. If
the actual entitlements received by the
employee are less than that deducted from
severance pay, the employee will be paid the
difference for the period of weeks for which
the employee received severance. This
provision is not intended to affect any
state or federal benefits to which the
executive may be entitled.
g. In cases where the executive is entitled to
legislated severance pay in non-U.S.
countries, executive's severance pay amount
will be reduced by any legislated severance
payments required of the company that are
calculated with reference to the number of
weeks determined under Procedure A.2.a and
b.
5. Severance pay will be paid in a lump sum, or at the
discretion of the company, annual installments over a
period not to exceed the total number of weeks
determined under Paragraph A.2.a. and b. above.
6. In event of an executive's death prior to payment of
the entire entitlement, payment may be made to the
designated beneficiary in one lump sum or by
continuation of installments at the discretion of the
executive's corporate employer.
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This Fluor Corporation policy is subject to modification or revision in part or
in its entirety to reflect changes in conditions subsequent to the effective
date of this policy.
Exhibit 10.12
FLUOR CORPORATION AND SUBSIDIARIES
MANAGEMENT MANUAL
Section: Human Resources Directive: 460
Page 5 of 8
Subject: EXECUTIVE SEVERANCE PLAN Effective: 10/27/03
Applies To: Fluor Corporation Supersedes: 12/31/02
B. INCENTIVE COMPENSATION
(As defined in the Executive Incentive Compensation Plan,
Fluor Corporation and Subsidiaries Management Manual)
1. Voluntary Separation
The company will not provide a prorated incentive
award.
2. Involuntary Separation
Incentive Compensation may be considered based on the
number of completed months of service during the
current fiscal year prior to termination and
consistent with the administration of the Plan during
the year of termination.
3. Involuntary Discharge
The company will not provide a prorated incentive award.
C. COMPANY AUTOMOBILES
In company locations where officers/directors may be
assigned company-owned automobiles, the following will
apply:
a. Voluntary Separation
Officers/directors who voluntarily retire will be
presented with the automobile that is currently
assigned as a gift.
b. Involuntary Separation
Officers/directors who are requested to take early
retirement will be presented with the automobile
which is currently assigned as a gift.
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This Fluor Corporation policy is subject to modification or revision in part or
in its entirety to reflect changes in conditions subsequent to the effective
date of this policy.
Exhibit 10.12
FLUOR CORPORATION AND SUBSIDIARIES
MANAGEMENT MANUAL
Section: Human Resources Directive: 460
Page 6 of 8
Subject: EXECUTIVE SEVERANCE PLAN Effective: 10/27/03
Applies To: Fluor Corporation Supersedes: 12/31/02
c. Involuntary Discharge
Officers/directors will not be given an automobile,
and it will not be available for purchase.
D. CLUB MEMBERSHIP
Company memberships will not be awarded to an executive
regardless of reason for termination.
E. AUTOMOBILE ALLOWANCE
1. In locations where executives receive a car
allowance/insurance, the following will apply:
a. Voluntary Separation
The company will not provide a car
allowance/insurance.
b. Involuntary Separation
The company will not provide a car
allowance/insurance.
c. Involuntary Discharge
The company will not provide a car
allowance/insurance.
F. INSURANCE COVERAGE
Applicable insurance coverage, i.e., group health, long-term
disability, executive health, etc., will cease on date of
termination. Where applicable, departing executive may elect
continued coverage through the Consolidated Omnibus Budget
Reconciliation Act (COBRA).
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This Fluor Corporation policy is subject to modification or revision in part or
in its entirety to reflect changes in conditions subsequent to the effective
date of this policy.
Exhibit 10.12
FLUOR CORPORATION AND SUBSIDIARIES
MANAGEMENT MANUAL
Section: Human Resources Directive: 460
Page 7 of 8
Subject: EXECUTIVE SEVERANCE PLAN Effective: 10/27/03
Applies To: Fluor Corporation Supersedes: 12/31/02
G. TIME OFF WITH PAY (TOWP) PROGRAM
Balance will be paid at time of termination.
H. STOCK BASED AWARDS
1. Voluntary Separation
Upon qualified retirement, awards may become 100
percent vested.
2. Involuntary Separation
Upon qualified retirement, awards may become 100
percent vested.
3. Involuntary Discharge
Vested portion may be exercised.
I. LONG TERM INCENTIVE (LTI) PROGRAM
Applicable cash awards under the long-term incentive program
will not be prorated for any reason, except death or total and
permanent disability.
J. WAIVERS
A settlement agreement and release form must be obtained from
employees in exchange for severance benefits. No severance
benefit will be due employees unless a settlement and release
agreement provided by the company has been properly and timely
executed.
K. OUTPLACEMENT
In-house outplacement services are available.
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This Fluor Corporation policy is subject to modification or revision in part or
in its entirety to reflect changes in conditions subsequent to the effective
date of this policy.
Exhibit 10.12
FLUOR CORPORATION AND SUBSIDIARIES
MANAGEMENT MANUAL
Section: Human Resources Directive: 460
Page 8 of 8
Subject: EXECUTIVE SEVERANCE PLAN Effective: 10/27/03
Applies To: Fluor Corporation Supersedes: 12/31/02
L. PLAN TERMINATION
This Plan will expire December 31, 2006. Any executive whose
employment terminates after the Plan expires, will not be
eligible for participation in the Plan. Further, no benefits
will accrue or be payable under the Plan after Plan
Termination.
M. EXCEPTION
Approved by the Chief Executive Officer of Fluor Corporation.
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This Fluor Corporation policy is subject to modification or revision in part or
in its entirety to reflect changes in conditions subsequent to the effective
date of this policy.