UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-16129
FLUOR CORPORATION
| Delaware | 33-0927079 | |
|
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer I.D. No.) | |
One Enterprise Drive, Aliso Viejo, CA 92656
(949) 349-2000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
As of April 30, 2005, there were 86,584,542 shares of common stock outstanding.
FLUOR CORPORATION
FORM 10-Q
March 31, 2005
| TABLE OF CONTENTS | PAGE | |||||||
|
|
||||||||
|
|
||||||||
| 2 | ||||||||
|
|
||||||||
| 3 | ||||||||
|
|
||||||||
| 4 | ||||||||
|
|
||||||||
| 5 | ||||||||
|
|
||||||||
| 13 | ||||||||
|
|
||||||||
| 22 | ||||||||
|
|
||||||||
| 22 | ||||||||
|
|
||||||||
| 23 | ||||||||
|
|
||||||||
|
|
||||||||
| 24 | ||||||||
|
|
||||||||
| 24 | ||||||||
|
|
||||||||
| 25 | ||||||||
|
|
||||||||
| 25 | ||||||||
|
|
||||||||
| 26 | ||||||||
|
|
||||||||
| 28 | ||||||||
| EXHIBIT 3.2 | ||||||||
| EXHIBIT 10.5 | ||||||||
| EXHIBIT 10.13 | ||||||||
| EXHIBIT 10.15 | ||||||||
| EXHIBIT 31.1 | ||||||||
| EXHIBIT 31.2 | ||||||||
| EXHIBIT 32.1 | ||||||||
| EXHIBIT 32.2 | ||||||||
1
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
FLUOR CORPORATION
UNAUDITED
See Accompanying Notes
2
FLUOR CORPORATION
UNAUDITED
See Accompanying Notes
3
FLUOR CORPORATION
UNAUDITED
See Accompanying Notes
4
FLUOR CORPORATION
UNAUDITED
5
FLUOR CORPORATION
UNAUDITED
6
FLUOR CORPORATION
UNAUDITED
7
FLUOR CORPORATION
UNAUDITED
The following table summarizes non-operating (income) and expense items reported in
corporate administrative and general expense:
8
FLUOR CORPORATION
UNAUDITED
9
FLUOR CORPORATION
UNAUDITED
10
FLUOR CORPORATION
UNAUDITED
11
FLUOR CORPORATION
UNAUDITED
12
FLUOR CORPORATION
Item 2. Management’s Discussion and Analysis of
The following discussion and analysis is provided to increase understanding of, and should be read
in conjunction with, the Condensed Consolidated Financial Statements and accompanying notes and the
company’s December 31, 2004 annual report on Form 10-K. For purposes of reviewing this document,
“operating profit” is calculated as revenues less cost of revenues.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made herein, including statements regarding the company’s projected revenues and
earnings levels, new awards and backlog levels and the implementation of strategic initiatives and
organizational changes are forward-looking in nature. These forward-looking statements reflect
current analysis of existing information and are subject to various risks and uncertainties. As a
result, caution must be exercised in relying on forward-looking statements. Due to known and
unknown risks, the company’s actual results may differ materially from its expectations or
projections. Factors potentially contributing to such differences include, among others:
While most risks affect only future costs or revenues anticipated by the company, some risks may
relate to accruals that have already been reflected in earnings. The company’s failure to receive
payments of accrued amounts or if liabilities are incurred in excess of amounts previously
recognized, a charge against future earnings could result.
Additional information concerning these and other factors can be found in our press releases as
well as our periodic filings with the Securities and Exchange Commission, including the discussion
under the heading “Item 1. Business-Company Risk Factors” in the company’s Form 10-K filed March 4,
2005. These filings are available publicly on the SEC’s website at http://www.sec.gov, on Fluor’s
website at http://investor.fluor.com or upon request from Fluor’s Investor Relations Department:
(949) 349-3909. The company disclaims any intent or obligation to update its forward-looking
statements, whether as a result of new information, future events or otherwise.
13
RESULTS OF OPERATIONS
Net earnings in the three months ended March 31, 2005 were $47.4 million or $0.56 per diluted
share. These results compare with net earnings of $46.7 million or $0.57 per diluted share for the
corresponding period of 2004. The results in 2004 included an after-tax gain of $5.1 million
($0.06 per diluted share) from the sale of two real estate assets.
Revenues for the three months ended March 31, 2005 were $2.9 billion compared with $2.1 billion for
the 2004 comparison period. The current year increase was primarily in the Oil & Gas and
Industrial & Infrastructure segments, reflecting the work performed on the higher level of new
awards received over the last two years.
Consolidated new awards for the three months ended March 31, 2005 were $3.4 billion compared with
$3.1 billion in the comparable 2004 period. The Oil & Gas and Global Services segments had
significant increases in new awards, partially offset by lower new awards in the Industrial &
Infrastructure segment.
Consolidated backlog at March 31, 2005 increased 30 percent to $15.4 billion from $11.9 billion at
March 31, 2004. Approximately 80 percent of consolidated new awards for the three months ended
March 31, 2005 were for projects located outside of the United States. As of March 31, 2005,
approximately 67 percent of consolidated backlog relates to international projects. Although
backlog reflects business which is considered to be firm, cancellations or scope adjustments may
occur. Backlog is adjusted to reflect any known project cancellations, deferrals and revised
project scope and cost, both upward and downward. Based on the strength of first quarter revenues,
the company has reevaluated the amount of 2005 work performed that is expected to be derived from
beginning backlog of $14.8 billion and now expects to perform approximately 60 percent of that
backlog in 2005.
OIL & GAS
Revenues and operating profit for the Oil & Gas segment are summarized as follows:
Commencing in the third quarter of 2004, as the result of a shift in the markets served by and the
types of projects awarded to ICA Fluor Daniel (“ICA Fluor”), its operating results, new awards and
backlog are included in the Oil & Gas segment. ICA Fluor was previously included in the Power
segment. Prior periods have not been restated for the change in segment classification of ICA
Fluor.
In the first quarter of 2005, the chemicals business, which had previously been part of the
Industrial & Infrastructure segment, was realigned under the Oil & Gas segment. This change was
made to better match the needs for the large number of petrochemical projects anticipated over the
next few years with the Oil & Gas segment’s project support infrastructure. All prior periods have
been restated to reflect this change.
Revenues increased by 91 percent during 2005 due to the continued increase in global activities
that has been experienced over the past two years. The operating profit margin has remained
consistent at 4.6 percent.
A major project that has reached mechanical completion in the Oil & Gas segment is the Hamaca Crude
Upgrader Project (“Hamaca”) located in Jose, Venezuela. Hamaca is a $1.1 billion lump sum project
(including $92 million of approved change orders) of Grupo Alvica (“GA”), a joint venture including
Fluor Daniel (80 percent) and Inelectra C.A. (20 percent), to design and build a petroleum upgrader
for a
14
consortium of owners called Petrolera Ameriven (“PA”) including Petroleos de Venezuela S.A.,
ChevronTexaco and ConocoPhillips.
The GA joint venture is pursuing cost and schedule relief through arbitration proceedings for the
following three issues:
Arbitration proceedings were commenced by GA in late 2001. The site soil conditions issue was the
subject of arbitration hearings in November 2002. There are no monetary cross-claims by PA in the
arbitration. The amount of the claim for site soil conditions of $159 million includes the direct
costs as well as significant delay-related and indirect costs. In April 2004, the arbitration panel
awarded GA $36 million for direct cost of the site soil conditions remediation work, virtually all
of the amounts sought by GA for this issue. The client had previously conditionally accepted
responsibility relating to the soil conditions matter and $28 million had been paid. The balance of
the award amount was received in April 2004. The award confirmed GA’s methodology for computing the
amount of all change orders arising under the contract. In addition, the award also granted GA
approximately 14 weeks of schedule relief. The delay and indirect costs were the subject of
hearings in June 2004 and a decision is expected shortly.
The hearings on the fundamental cost differences between the earlier 1998 labor agreement and the
2000 Acta Convenio were held in April 2003 and a decision on this issue is also expected shortly.
The amount of the claim for Acta Convenio is $210 million and no payments have been made by the
client relating to this matter.
In accordance with the contract, the joint venture is entitled to cost and schedule relief for the
impact of the national strike in Venezuela. A change order relating to the national strike in the
approximate amount of $340 million was submitted by GA. This action was followed by the filing of
an arbitration claim relating to this issue in January 2004. Hearings on this issue are now
tentatively scheduled for August and October 2005. Other force majeure incidents occurring prior to
the national strike also were the subject of arbitration hearings in October 2003.
Incurred costs associated with delay and indirect costs related to the soil conditions, Acta
Convenio, the national strike and other claims are probable of being recovered and thus are being
deferred. These costs will be recognized in revenue when a change order is approved or payment is
received. As of March 31, 2005, incurred costs amounting to $263 million have been deferred.
Additional costs will be incurred as subcontractor close-outs are settled and remaining contract
completion activities are concluded. The company believes that schedule relief awarded in
connection with the direct costs of the site soil conditions, along with other delay days requested
on the other issues, will be sufficient to avoid the imposition of liquidated damages. If costs
relating to Acta Convenio, soil conditions, the national strike or other claims are determined to
be not recoverable or liquidated damages are assessed, the company could face materially reduced
profits or losses on this project, along with lower levels of cash and additional borrowings.
Total assets for the Oil & Gas segment at March 31, 2005 were $791.0 million compared with $731.2
million at December 31, 2004. The current year increase is primarily the result of the substantial
increase in working capital that supports project activities.
New awards for the three months ended March 31, 2005 were $1.5 billion compared with $1.1 billion
in the comparable period of 2004. Significant new awards in 2005 included an oil processing
facility in Canada and a petrochemical complex in Kuwait.
Backlog at March 31, 2005 increased 26 percent to $5.9 billion compared with $4.7 billion at March
31, 2004, reflecting the continued strength of new awards.
15
INDUSTRIAL & INFRASTRUCTURE
Revenues and operating profit for the Industrial & Infrastructure segment are summarized as
follows:
In the first quarter of 2005, the chemicals business, which had previously been part of the
Industrial & Infrastructure segment, was realigned under the Oil & Gas segment. This change was
made to better match the needs for the large number of petrochemical projects anticipated over the
next few years with the Oil & Gas segment’s project support infrastructure. All prior periods have
been restated to reflect this change.
Revenues for the three months ended March 31, 2005 increased 45 percent compared with the same
period in 2004. This improvement resulted primarily from increased activity on mining projects
during the current year.
Operating profit margin in the three months ended March 31, 2005 was 3.1 percent compared with 2.0
percent in the comparable period of the prior year. The 2005 increase has resulted from the
substantial increase in revenue combined with a fairly constant level of overhead cost, partly
offset by charges totaling approximately $10 million, primarily arising from three claim
settlements.
New awards for the three months ended March 31, 2005 were $0.6 billion compared with an extremely
strong $1.2 billion for the 2004 comparison period. Backlog increased to $4.9 billion at March 31,
2005 compared with $3.5 billion at March 31, 2004. The increase resulted from the substantial
level of new awards over the past year, partially offset by the cancellation of a $282 million life
sciences project in Puerto Rico.
GOVERNMENT
Revenues and operating profit for the Government segment are summarized as follows:
The modest decrease in revenues in the three months ended March 31, 2005 compared with the same
period in the prior year was primarily the result of a decline in the level of work performed on
projects in
Iraq. Work performed in Iraq contributed approximately $141 million in revenue in the three months
ended March 31, 2005 compared with $154 million in the comparable 2004 period.
The decline in operating profit during the current year includes the impact of provisions totaling
$31 million recognized on four embassy projects which were adversely impacted by higher costs due
to scope changes, unexpected execution problems and subcontractor difficulties. Total estimated
cost overruns of $50 million on these projects were reduced by $19 million of recognized claim
recoveries. Additional claim recoveries are currently being evaluated. The impact of the embassy provisions was partially offset by increased margin on the
Fernald project. The segment has recognized unbilled fees totaling $110 million related to this
project at March 31, 2005, including $19
16
million during the first quarter of 2005, compared with
$6 million in the same period of 2004. Fees recognized in the 2005 period include the favorable
impact of accelerated completion. These fees will be billed upon project completion in late 2006.
New awards of $0.4 billion in the three months ended March 31, 2005 were consistent with new awards
in the 2004 comparison period.
Backlog at March 31, 2005 increased to $1.5 billion from $1.2 billion at the end of the first
quarter last year.
GLOBAL SERVICES
Revenues and operating profit for the Global Services segment are summarized as follows:
Revenue and operating profit increased 16 percent and 56 percent, respectively, in the first
quarter of 2005 compared with the same period in 2004. The increases resulted from improved
performance in all sectors, led by the operations and maintenance and equipment services sectors.
New awards and backlog for Global Services reflect operations and maintenance activities only. The
equipment, temporary staffing and global procurement operations do not report backlog due to the
short turnaround between the receipt of new awards and the recognition of revenue. New awards for
the three months ended March 31, 2005 were $754 million compared with $399 million for the 2004
comparison period, reflecting the addition of three significant new client sites. Backlog for
Global Services at March 31, 2005 was $2.7 billion compared with $1.9 billion at March 31, 2004.
POWER
Revenues and operating profit for the Power segment are summarized as follows:
As the result of a shift in the markets served by and the types of projects awarded to ICA Fluor,
commencing in the third quarter of 2004, its operating results, new awards and backlog are included
in the Oil & Gas segment rather than the Power segment where it was previously reported.
The reduced revenues for 2005 reflect the impact of lower levels of project execution activity,
which are in the relatively early stages, where profit recognition is generally lower. Operating
margin in 2004 reflects performance on projects that were either completed or nearing completion
where profit recognition is strongest. Operating profit in the first quarter of 2004 also
benefited from the receipt of a settlement for a dispute relating to a project that was completed
in 2002.
New project awards in the first quarter of 2005 were $82 million compared with $21 million in the
prior year comparison period. Demand for new power generation has increased modestly in recent
months following
17
a downturn in power plant construction activity. Backlog at March 31, 2005 was
$483 million compared with $549 million at March 31, 2004.
In July 2003, the company jointly announced with Duke Energy Corporation the decision to dissolve
the Duke/Fluor Daniel partnership (“D/FD”) as a result of the significant decline in the
construction of new power plants. The dissolution is not expected to have a material impact on
results of operations or financial position of the company. The dissolution is in progress and is
expected to be completed in 2005 as remaining project activities are concluded. The company has
continued to identify and pursue power generation opportunities and future projects that will be
performed 100 percent by Fluor.
OTHER
Corporate general and administrative expense for the three months ended March 31, 2005 was $38.1
million, reflecting a 37 percent increase compared with $27.8 million in the same period of 2004.
This increase was the combined result of the impact of the $7.7 million pre-tax gain from the sale
of two real estate assets which reduced 2004 results and higher overhead expenses in 2005 due to the timing of recognition of certain costs
when compared with the same period in 2004.
During the first quarter of 2005, net interest income was $0.1 million, compared with $0.8 million
net interest expense reported in the same period of 2004.
The effective tax rate on the company’s operations for the three months ended March 31, 2005 was
41.2 percent compared with 33.5 percent in the 2004 comparison period. The increase is
attributable to the international embassy contract provisions discussed under Government above.
Such foreign losses reduce the company’s ability to absorb excess foreign taxes incurred in high
tax jurisdictions. The effective tax rate for the current year is projected to between 35 and 37
percent compared with 33.6 percent for 2004.
ACCOUNTING PRONOUNCEMENTS
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment” (SFAS 123-R), which is a revision
of SFAS 123, “Accounting for Stock-Based Compensation.” SFAS 123-R supersedes Accounting
Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and
amends SFAS 95, “Statement of Cash Flows.” Generally, the approach in SFAS 123-R is similar to the
approach described in SFAS 123. However, SFAS 123-R requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the income statement
based on their fair values. Upon adoption of SFAS 123-R, pro forma disclosure of the impact of
share-based payments to employees is no longer permitted.
The provisions of SFAS 123-R apply to awards granted after the required effective date of the
statement, which is no later than January 1, 2006 for the company, with early adoption permitted in
periods for which financial statements have not yet been issued. Initial application to existing
unvested awards may be
based on either a modified prospective method or a modified retrospective method. The method of
application selected by the company will determine which, if any, previously reported operating
results will be restated. The company will adopt SFAS 123-R on January 1, 2006.
As permitted by SFAS 123, the company currently accounts for share-based payments to employees
using the intrinsic value method pursuant to APB 25 and, as such, recognizes no compensation cost
for employee stock options. Accordingly, the adoption of SFAS 123-R’s fair value method will have
an impact on results of operations, although it will have no impact on overall financial position.
The impact of adoption of SFAS 123-R will not be material based on unvested options outstanding at
March 31, 2005. Had SFAS 123-R been adopted in prior periods, the impact would be as presented in
the disclosure of pro forma earnings and earnings per share in Note 5 in the Condensed Consolidated
Financial Statements. SFAS 123-R also requires the benefits of tax deductions in excess of
recognized compensation cost to be reported as a financing cash flow, rather than as an operating
cash flow as currently required. This requirement will generally impact cash provided or utilized
by operating activities with equal offset in cash flows from financing activities in periods after
adoption. While the company cannot estimate what those
18
amounts will be in the future (because they depend on, among other things, when employees
exercise stock options), the amount of operating cash flows recognized for such excess tax
deductions were $8.1 million and $1.9 million in the first quarter of 2005 and 2004, respectively.
LITIGATION
Securities Class Action Litigation
The company has reached an agreement to settle an action without any admission of company liability
in which the plaintiffs alleged that certain Fluor officers and directors violated the Securities
Exchange Act of 1934 by providing false or misleading statements about the company’s business and
prospects. These complaints purported to be class action complaints brought on behalf of purchasers
of the company’s stock during the period from May 22, 1996 through February 18, 1997. The company’s
initial motion to dismiss the action was granted by the court with leave to amend. The plaintiffs
filed their amended complaint and the company moved the court to dismiss the new amended complaint.
The Court granted the company’s motion and dismissed plaintiff’s action without leave to amend on
July 10, 2002. Plaintiffs appealed the dismissal and the Ninth Circuit Court of Appeals remanded
the motion to the trial court with instructions to allow plaintiff an additional chance to plead
additional claims. During the first quarter of 2005 the company, its insurer and the plaintiffs
reached an agreement to settle this proceeding for $18 million without any admission of company
liability, of which $16 million was paid by the company’s insurers. The remaining $2 million had
been previously provided, and therefore, did not affect operating results for the first quarter of
2005.
MATTERS IN DISPUTE RESOLUTION
As of March 31, 2005, several matters relating to completed and in progress projects are in the
dispute resolution process. The following discussion provides a background and current status of
certain of these matters:
Fluor Daniel International and Fluor Arabia Ltd. v. General Electric Company, et al
In October 1998, Fluor Daniel International and Fluor Arabia Ltd. filed a complaint in the United
States District Court for the Southern District of New York against General Electric Company and
certain operating subsidiaries as well as Saudi American General Electric, a Saudi Arabian
corporation. The complaint seeks damages in connection with the procurement, engineering and
construction of the Rabigh Combined Cycle Power Plant in Saudi Arabia. Subsequent to a motion to
compel arbitration of the matter, the company initiated arbitration proceedings in New York under
the American Arbitration Association international rules. The evidentiary phase of the arbitration
has been concluded. In January 2005 the arbitration panel indicated that it would be
rendering its decision in two phases; the first to be a decision on entitlement and second, a decision
on damages. On May 4, 2005 the arbitration panel issued a partial award on entitlement issues which
confirmed Fluor’s entitlement to recovery of certain of its claims for costs incurred in
construction of the plant. A decision determining the amount recoverable is expected later in 2005.
Dearborn Industrial Project
The Dearborn Industrial Project (the “Project”) started as a co-generation combined cycle power
plant project in Dearborn, Michigan. The initial Turnkey Agreement, dated November 24, 1998,
consisted of three phases. Commencing shortly after Notice to Proceed, the owner/operator, Dearborn
Industrial Generation (“DIG”), issued substantial change orders enlarging the scope of the project.
The Project was severely delayed with completion of Phase II. DIG unilaterally took over completion
and operation of Phase II and commissioned that portion of the plant. Shortly thereafter, DIG drew
upon a $30 million letter of credit which Duke/Fluor Daniel (“D/FD”) expects to recover upon
resolution of the dispute. D/FD retains lien rights (in fee) against the project. In October 2001,
D/FD commenced an action in Michigan State Court to foreclose on the lien interest.
In December 2001, DIG filed a responsive pleading denying liability and simultaneously served a
demand for arbitration to D/FD claiming, among other things, that D/FD is liable to DIG for alleged
construction delays and defective engineering and construction work at the Dearborn plant. The
court has ordered the
19
matter to arbitration. The lien action remains stayed pending completion of the arbitration of
D/FD’s claims against DIG and DIG’s claims against D/FD. An arbitration panel has been appointed
and the arbitration is scheduled to begin in October 2005.
Hamaca Crude Upgrader
Discussion of the status of the Hamaca project is included above under Oil & Gas.
London Connect Project
The company filed for arbitration proceedings in
February 2005 in connection with its London Connect Project, a $500 million lump
sum project to design and install a telecommunications network that allows reception and transmissions
throughout the London Underground system. The company is seeking relief through arbitration proceedings
for two issues. The first is the overall delay and disruption related to the contract, which has
hearings scheduled to commence in May 2006. The second is for scope disputes concerning the enabling
of the various train stock to accept the new telecommunications network equipment. The company has
not received a procedural order indicating when hearings will begin on the second issue.
Claims are being recognized as costs are incurred in accordance with the American Institute of Certified Public Accountants Statement of Position 81-1, “Accounting for Performance of Construction Type and Certain Production Type Contracts.”
FINANCIAL POSITION AND LIQUIDITY
During the first quarter of 2005, cash was generated from operations, the issuance of common stock
and the exercise of stock options.
In the three months ended March 31, 2005, cash provided by operating activities was $36.9 million
and primarily attributable to earnings sources, partially offset by an increase in operating assets
and liabilities. The Oil & Gas segment has experienced a significant increase in working capital
due to the higher project execution activity levels during 2005, and costs incurred related to
contract performance on the Hamaca project in Venezuela that has reached mechanical completion. At
March 31, 2005, the company had deferred its share of these costs amounting to $263.4 million, of
which $13.6 million was funded in the first quarter of 2005.
Cash utilized by investing activities was $31.5 million in the first quarter of 2005 compared with
$10.7 million in the 2004 comparable period. Investing cash flows in the three months ended March
31, 2004 included $38.4 million in proceeds from the sale of two real estate properties, which was
partially offset by $33.0 million used to acquire Trend Western Technical Corporation. Capital
expenditures, primarily for ongoing renewal and replacement in the construction equipment
operations, including operations in Iraq, were $33.2 million in the three months ended March 31,
2005 compared with $19.3 million in the same period of 2004.
Cash provided by financing activities in the first three months of 2005 included the issuance of
758,367 shares of common stock, resulting in net proceeds of $41.8 million. During the first
quarter of 2004, net proceeds of $323.1 million were realized from the issuance of convertible
senior notes. A portion of the proceeds from this issuance was used to repay $100 million of
outstanding debt on the company’s Aliso Viejo, California facilities and $121.5 million of
commercial paper. Also impacting cash flows in the first quarter of both 2005 and 2004 was $31.0
million and $11.9 million, respectively, in cash received from the exercise of stock options. Cash
utilized for the payment of dividends ($0.16 per share) in the three months ended March 31, 2005
and 2004 was $13.7 million and $13.3 million, respectively. The company’s total debt to total
capitalization (“debt-to-capital”) ratio at March 31, 2005 is 24.6 percent compared with 26.3
percent at December 31, 2004.
Liquidity is provided by cash generated from operations, advance billings on contracts in progress
and access to financial markets. As customer advances are reduced through use in project execution
and if not replaced by advances on new projects, the company’s cash position would be reduced. The
requirements for operating liquidity could result in the need for short-term borrowings. For the
next 12 months, cash generated from operations supplemented by borrowings under credit facilities
and the issuance of debt or equity securities are expected to be sufficient to fund operations.
Off-Balance Sheet Arrangements
The company maintains a variety of commercial commitments that are generally made available to
provide support for various commercial provisions in its engineering and construction contracts.
The company has $821 million in committed and uncommitted lines of credit to support letters of
credit. Letters of credit are provided to clients in the ordinary course of business in lieu of
retention or for performance and completion guarantees on engineering and construction contracts.
The company also posts surety bonds primarily on state and local government projects to guarantee
its performance on contracts.
20
In the ordinary course of business, the company enters into various agreements providing financial
or performance assurances to clients on behalf of certain unconsolidated subsidiaries, joint
ventures and other jointly executed contracts. These agreements are entered into primarily to
support the project execution commitments of these entities. The guarantees have various expiration
dates ranging from mechanical completion of the facilities being constructed to a period extending
beyond contract completion in certain circumstances. The maximum potential payment amount of an
outstanding performance guarantee is the remaining cost of work to be performed by or on behalf of
third parties under engineering and construction contracts. In most cases any amounts expended on
behalf of a partner or joint venture participant pursuant to performance guarantees would be
recovered from the client or other third party for work performed in the ordinary course of
contract execution. As of March 31, 2005, no material changes to financial or performance
assurances to clients have occurred since the filing of the company’s December 31, 2004 annual
report on Form 10-K.
The company has a joint venture arrangement that will design, build, finance and maintain an
aircraft refueling facility at a United States Air Force base in Qatar for the Defense Energy
Support Center, an agency of the Department of Defense. The company has a 27.5 percent interest in
the joint venture company. On April 29, 2005, the joint venture entered into an agreement for
project financing which includes a joint and several project completion guarantee by the members of
the joint venture. The maximum potential amount of future payments that could be required under
the guarantee is $76.5 million, the maximum principal amount available under the financing
arrangement, plus any accrued interest.
Financial guarantees, made in the ordinary course of business on behalf of clients and others in
certain limited circumstances, are entered into with financial institutions and other credit
grantors and generally obligate the company to make payment in the event of a default by the
borrower. Most arrangements require the borrower to pledge collateral in the form of property,
plant and equipment which is deemed adequate to recover amounts the company might be required to
pay. As of March 31, 2005, no material changes to financial guarantees of the debt of third
parties had occurred since the filing of the company’s December 31, 2004 annual report on Form
10-K.
Financial Instruments
The company utilizes forward exchange contracts to hedge foreign currency transactions entered into
in the ordinary course of business and not to engage in currency speculation. At March 31, 2005,
the company had forward foreign exchange contracts of less than 23 months duration to exchange
major world currencies for U.S. dollars. The total gross notional amount of these contracts at
March 31, 2005 was $86 million.
21
22
FLUOR CORPORATION
UNAUDITED
23
$ in thousands, except per share amounts
2005
2004
$
2,859,767
$
2,063,254
2,741,199
1,964,433
38,109
27,798
4,819
4,468
(4,949
)
(3,709
)
2,779,178
1,992,990
80,589
70,264
33,196
23,538
$
47,393
$
46,726
$
0.57
$
0.58
$
0.56
$
0.57
83,698
80,918
84,934
82,149
$
0.16
$
0.16
Table of Contents
*
Amounts at December 31, 2004 have been derived from audited financial statements.
Table of Contents
Table of Contents
(1)
The Condensed Consolidated Financial Statements do not include footnotes and
certain financial information normally presented annually under accounting principles
generally accepted in the United States, and therefore should be read in conjunction with
the company’s December 31, 2004 annual report on Form 10-K. Accounting measurements at
interim dates inherently involve greater reliance on estimates than at year-end. The
results of operations for the three months ended March 31, 2005 are not necessarily
indicative of results that can be expected for the full year.
The Condensed Consolidated Financial Statements included herein are unaudited; however, they
contain all adjustments (consisting of normal recurring accruals including certain contract
loss provisions during the quarter ended March 31, 2005) which, in the opinion of the
company, are necessary to present fairly its consolidated financial position at March 31,
2005 and its consolidated results of operations and cash flows for the three months ended
March 31, 2005 and 2004.
Certain 2004 amounts have been reclassified to conform with the 2005 presentation.
(2)
The components of comprehensive income, net of related tax, are as follows:
Three Months Ended
March 31
$ in thousands
2005
2004
$
47,393
$
46,726
(16,459
)
960
$
30,934
$
47,686
(3)
The effective tax rate on the company’s operations for the three months ended March 31, 2005
was 41.2 percent compared with 33.5 percent in the 2004 comparison period. The increase is
attributable to international embassy contract provisions recorded in the 2005 period. Such
foreign losses reduce the company’s ability to absorb excess foreign taxes incurred in high
tax jurisdictions.
(4)
Cash paid for interest was $5.5 million and $4.8 million for the three months ended March 31,
2005 and 2004, respectively. Income tax payments, net of receipts, were $24.9 million and
$11.1 million during the three-month periods ended March 31, 2005 and 2004, respectively.
(5)
The company accounts for stock-based compensation using the intrinsic value method prescribed
by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and
related Interpretations (“APB 25”), as permitted by Statement of Financial Accounting
Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”).
Accordingly, compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the company’s stock at the date of the grant over the amount an
employee must pay to acquire the stock. All unvested options outstanding under the company’s
option plans have grant prices equal to the market price of the company’s stock on the date of
grant. Compensation cost for stock appreciation rights and performance equity units is
recorded based on the quoted market price of the company’s stock at the end of the period.
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS 123-R,
“Share-Based Payment” (SFAS 123-R), which is a revision of SFAS 123. SFAS 123-R supersedes
APB 25 and amends SFAS 95, “Statement of Cash Flows.” Generally, the approach in SFAS 123-R
is similar to the approach described in SFAS 123. However, SFAS 123-R requires all
share-based payments to employees, including grants of employee stock options to be
recognized in the income statement based on their fair values. Pro forma disclosure is no
longer an alternative.
The provisions of SFAS 123-R apply to awards granted after the required effective date of
the statement, which is no later than January 1, 2006 for the company, with early adoption
permitted in periods for which financial statements have not yet been issued. Initial
application to existing unvested awards may be based on either a modified prospective method
or a modified retrospective method. The method of application selected by the company will
determine which, if any, previously reported operating results will be restated. The
company will adopt SFAS 123-R on January 1, 2006. Based on unvested options outstanding at
March 31, 2005, the adoption of SFAS 123-R’s fair value method will not have a material
impact on results of operations and will have no impact on overall financial position.
Currently under APB 25, no compensation cost is recognized for unvested stock options where
the grant price is equal to the market price on the date of grant and the vesting provisions
are based only on the passage of time. Had the company recorded compensation expense using
the accounting method recommended by SFAS 123, net earnings and earnings per share would
have been reduced to the pro forma amounts as follows:
Three Months Ended
March 31
$ in thousands, except per share amounts
2005
2004
$
47,393
$
46,726
(919
)
(1,342
)
$
46,474
$
45,384
$
0.57
$
0.58
$
0.56
$
0.56
$
0.56
$
0.57
$
0.55
$
0.55
(6)
Operations are organized in five industry segments: Oil & Gas, Industrial & Infrastructure,
Government, Global Services and Power. The Oil & Gas segment provides engineering and
construction professional services for upstream oil and gas production, downstream refining,
chemicals and petrochemicals markets. The Industrial & Infrastructure segment provides
engineering and construction professional services for manufacturing and life sciences
facilities, commercial and institutional buildings, mining, microelectronics,
telecommunications and transportation projects and other facilities. The Government segment
provides project management, engineering, construction, and contingency response services to
the United States government, which represents a significant customer. The Global Services
segment includes operations and maintenance, equipment and temporary staffing services and the
company’s
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
global procurement services business. The Power segment provides professional services to
engineer, construct and maintain power generation facilities.
Through the second quarter of 2004, services provided by the Power segment were primarily
conducted through two jointly owned groups; Duke/Fluor Daniel, 50 percent owned partnerships
with Duke Energy, and ICA Fluor Daniel (“ICA Fluor”), 49 percent jointly owned companies
with Grupo ICA, a Mexican company. As the result of a shift in the markets served by and
the types of projects awarded to ICA Fluor, commencing in the third quarter of 2004, its
operating results and assets are included in the Oil & Gas segment. Prior periods have not
been restated for the change in segment classification of ICA Fluor.
In July 2003, the company jointly announced with Duke Energy Corporation the decision to
dissolve the Duke/Fluor Daniel partnership as a result of the significant decline in the
construction of new power plants. The dissolution is not expected to have a material impact
on results of operations or financial position of the company. The dissolution is in
progress and is expected to be completed in 2005 as remaining project activities are
concluded. The company will continue to identify and pursue power generation opportunities
and future projects will be performed 100 percent by Fluor.
In the first quarter of 2005, the company realigned its chemicals business line, which had
been part of the Industrial & Infrastructure segment, under the Oil & Gas segment. This
change was made to better match the needs for the large number of petrochemical projects
anticipated over the next few years with the Oil & Gas segment’s project support
infrastructure. All prior periods have been restated to reflect this change.
Operating information by segment is as follows for the three months ended March 31, 2005 and
2004:
Three Months Ended
March 31
External Revenue
($ in millions)
2005
2004
$
1,183.9
$
618.9
670.3
461.8
561.1
577.6
365.4
314.1
79.1
90.9
$
2,859.8
$
2,063.3
Three Months Ended
March 31
Operating Profit
($ in millions)
2005
2004
$
54.3
$
28.2
20.8
9.1
9.1
27.5
31.3
20.1
3.1
14.0
$
118.6
$
98.9
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
A reconciliation of the segment information to consolidated amounts for the three months
ended March 31, 2005 and 2004 is as follows:
Three Months Ended
March 31
$ in millions
2005
2004
$
118.6
$
98.9
38.1
27.8
(0.1
)
0.8
$
80.6
$
70.3
Three Months Ended
March 31
$ in millions
2005
2004
$
—
$
(7.7
)
1.7
2.4
$
1.7
$
(5.3
)
Total assets for the Oil & Gas segment at March 31, 2005 were $791.0 million compared with
$731.2 million at December 31, 2004. The current year increase is principally the result of
the substantial increase in working capital that supports project activities. Total assets
for the Power segment at March 31, 2005 were $84.3 million compared with $61.1 million at
December 31, 2004. This increase resulted from costs incurred on project execution of
recent new awards. Total assets for the Government segment increased to $691.7 million at
March 31, 2005 from $654.3 million at December 31, 2004. This increase includes $19 million
of unbilled fees that will be billed upon project completion in late 2006.
(7)
In December 2004, the company filed a “shelf” registration statement for the issuance of up
to $500 million of any combination of debt securities or common stock, the proceeds from which
could be used for debt retirement, the funding of working capital requirements or other
corporate purposes. The company has entered into a distribution agreement for up to 2,000,000
shares of common stock. During the quarter ended March 31, 2005, the company sold 758,367
shares under this distribution agreement, realizing net proceeds of $41.8 million.
(8)
Net periodic pension expense for defined benefit pension plans includes the following
components:
Three Months Ended
March 31
$ in thousands
2005
2004
$
9,127
$
8,897
11,033
9,987
(13,455
)
(12,046
)
3
(120
)
(28
)
(27
)
4,404
4,421
$
11,084
$
11,112
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The company currently expects to fund approximately $35 million to $70 million during 2005
compared with $30 million funded in 2004. During the three months ended March 31, 2005,
contributions of approximately $7 million were made to the company’s non-U.S. defined
benefit pension plans.
Net periodic postretirement benefit cost includes the following components:
Three Months Ended
March 31
$ in thousands
2005
2004
$
—
$
—
400
484
—
—
—
—
225
231
$
625
$
715
The preceding information does not include amounts related to benefit plans applicable to
employees associated with certain contracts with the U.S. Department of Energy because the
company is not responsible for the current or future funded status of these plans.
(9)
The company and certain of its subsidiaries are involved in litigation in the ordinary course
of business. The company and certain of its subsidiaries are contingently liable for
commitments and performance guarantees arising in the ordinary course of business. Clients
have made claims arising from engineering and construction contracts against the company, and
the company has made claims against clients for costs incurred in excess of the current
contract provisions. The company recognizes certain significant claims for recovery of
incurred costs when it is probable that the claim will result in additional contract revenue
and when the amount of the claim can be reliably estimated. Recognized claims against clients
amounted to $128 million and $105 million at March 31, 2005 and December 31, 2004,
respectively. The company does not expect that failure to realize claim recoveries will have
a material adverse effect on its consolidated financial position or results of operations.
Securities Class Action Litigation
U.S.D.C., Central District, Southern Division, California
The company has reached an agreement to settle an action without any admission of company
liability in which the plaintiffs alleged that certain Fluor officers and directors violated
the Securities Exchange Act of 1934 by providing false or misleading statements about the
company’s business and prospects. These complaints purported to be class action complaints
brought on behalf of purchasers of the company’s stock during the period from May 22, 1996
through February 18, 1997. The company’s initial motion to dismiss the action was granted by
the court with leave to amend. The plaintiffs filed their amended complaint and the company
moved the court to dismiss the new amended complaint. The Court granted the company’s motion
and dismissed plaintiff’s action without leave to amend on July 10, 2002. Plaintiffs
appealed the dismissal and the Ninth Circuit Court of Appeals remanded the motion to the
trial court with instructions to allow plaintiff an additional chance to plead additional
claims. During the first quarter of 2005 the company, its insurer and the plaintiffs reached
an agreement to settle this proceeding for $18 million without any admission of company
liability, of which $16 million was paid by the company’s insurers. The remaining $2
million had been previously provided, and therefore, did not affect operating results for
the first quarter of 2005. A hearing to confirm the settlement has been scheduled for June
27, 2005.
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
As of March 31, 2005, several matters relating to completed and in-progress projects are in
the dispute resolution process. The following discussion provides a background and current
status of certain of these matters:
Fluor Daniel International and Fluor Arabia Ltd. v. General Electric Company, et al
In October 1998, Fluor Daniel International and Fluor Arabia Ltd. filed a complaint in the
United States District Court for the Southern District of New York against General Electric
Company and certain operating subsidiaries as well as Saudi American General Electric, a
Saudi Arabian corporation. The complaint seeks damages in connection with the procurement,
engineering and construction of the Rabigh Combined Cycle Power Plant in Saudi Arabia.
Subsequent to a motion to compel arbitration of the matter, the company initiated
arbitration proceedings in New York under the American Arbitration Association international
rules. The evidentiary phase of the arbitration has been concluded. In January 2005 the
arbitration panel indicated that it would be rendering its decision in two phases; the first
to be a decision on entitlement and second, a decision on damages. On May 4, 2005 the
arbitration panel issued a partial award on entitlement issues which confirmed Fluor’s
entitlement to recovery of certain of its claims for costs incurred in construction of the plant.
A decision determining the amount recoverable is expected later in 2005.
Dearborn Industrial Project
The Dearborn Industrial Project (the “Project”) started as a co-generation combined cycle
power plant project in Dearborn, Michigan. The initial Turnkey Agreement, dated November 24,
1998, consisted of three phases. Commencing shortly after Notice to Proceed, the
owner/operator, Dearborn Industrial Generation (“DIG”), issued substantial change orders
enlarging the scope of the project.
The Project was severely delayed with completion of Phase II. DIG unilaterally took over
completion and operation of Phase II and commissioned that portion of the plant. Shortly
thereafter, DIG drew upon a $30 million letter of credit which Duke/Fluor Daniel (“D/FD”)
expects to recover upon resolution of the dispute. D/FD retains lien rights (in fee) against
the project. In October 2001, D/FD commenced an action in Michigan State Court to foreclose
on the lien interest.
In December 2001, DIG filed a responsive pleading denying liability and simultaneously
served a demand for arbitration to D/FD claiming, among other things, that D/FD is liable to
DIG for alleged construction delays and defective engineering and construction work at the
Dearborn plant. The court has ordered the matter to arbitration. The lien action remains
stayed pending completion of the arbitration of D/FD’s claims against DIG and DIG’s claims
against D/FD. An arbitration panel has been appointed and the arbitration is scheduled to
begin in October 2005.
Hamaca Crude Upgrader
A major project that has reached mechanical completion in the Oil & Gas segment is the
Hamaca Crude Upgrader Project (“Hamaca”) located in Jose, Venezuela. Hamaca is a $1.1
billion lump sum project (including $92 million of approved change orders) of Grupo Alvica
(“GA”), a joint venture including Fluor Daniel (80 percent) and Inelectra C.A. (20 percent),
to design and build a petroleum upgrader for a consortium of owners called Petrolera
Ameriven (“PA”) including Petroleos de Venezuela S.A., ChevronTexaco and ConocoPhillips.
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The GA joint venture is pursuing cost and schedule relief through arbitration proceedings
for the following three issues:
•
modifications and extra work arising from differing site soil conditions,
•
costs arising from the site labor agreement for 2000 called “Acta Convenio” and
•
events in Venezuela in early 2003, including a national strike and other force
majeure incidents.
Arbitration proceedings were commenced by GA in late 2001. The site soil conditions issue
was the subject of arbitration hearings in November 2002. There are no monetary cross-claims
by PA in the arbitration. The amount of the claim for site soil conditions of $159 million
includes the direct costs as well as significant delay-related and indirect costs. In April
2004, the arbitration panel awarded GA $36 million for direct cost of the site soil
conditions remediation work, virtually all of the amounts sought by GA for this issue. The
client had previously conditionally accepted responsibility relating to the soil conditions
matter and $28 million had been paid. The balance of the award amount was received in April
2004. The award confirmed GA’s methodology for computing the amount of all change orders
arising under the contract. In addition, the award also granted GA approximately 14 weeks of
schedule relief. The delay and indirect costs were the subject of hearings in June 2004 and
a decision is expected shortly.
The hearings on the fundamental cost differences between the earlier 1998 labor agreement
and the 2000 Acta Convenio were held in April 2003 and a decision on this issue is also
expected shortly. The amount of the claim for Acta Convenio is $210 million and no payments
have been made by the client relating to this matter.
In accordance with the contract, the joint venture is entitled to cost and schedule relief
for the impact of the national strike in Venezuela. A change order relating to the national
strike in the approximate amount of $340 million was submitted by GA. This action was
followed by the filing of an arbitration claim relating to this issue in January 2004.
Hearings on this issue are now tentatively scheduled for August and October 2005. Other
force majeure incidents occurring prior to the national strike also were the subject of
arbitration hearings in October 2003.
Incurred costs associated with delay and indirect costs related to the soil conditions, Acta
Convenio, the national strike and other claims are probable of being recovered and thus are
being deferred. These costs will be recognized in revenue when a change order is approved or
payment is received. As of March 31, 2005, incurred costs amounting to $263 million have
been deferred. Additional costs will be incurred as subcontractor close-outs are settled and
remaining contract completion activities are concluded. The company believes that schedule
relief awarded in connection with the direct costs of the site soil conditions, along with
other delay days requested on the other issues, will be sufficient to avoid the imposition
of liquidated damages. If costs relating to Acta Convenio, soil conditions, the national
strike or other claims are determined to be not recoverable or liquidated damages are
assessed, the company could face materially reduced profits or losses on this project, along
with lower levels of cash and additional borrowings.
London Connect Project
The company filed for arbitration proceedings in
February 2005 in connection with its London Connect Project, a $500 million lump
sum project to design and install a telecommunications network that allows reception and transmissions
throughout the London Underground system. The company is seeking relief through arbitration proceedings
for two issues. The first is the overall delay and disruption related to the contract, which has
hearings scheduled to commence in May 2006. The second is for scope disputes concerning the enabling
of the various train stock to accept the new telecommunications network equipment. The company has
not received a procedural order indicating when hearings will begin on the second issue.
Claims are being recognized as costs are incurred in accordance with the American Institute of Certified Public Accountants Statement of Position 81-1, “Accounting for Performance of Construction Type and Certain Production Type Contracts.”
(10)
In the ordinary course of business, the company enters into various agreements providing
financial or performance assurances to clients on behalf of certain unconsolidated
subsidiaries, joint ventures and other jointly executed contracts. These agreements are
entered into primarily to support the project execution commitments of these entities. The
guarantees have various expiration dates ranging from mechanical completion of the facilities
being constructed to a period extending beyond contract completion in certain circumstances.
The maximum potential payment amount of an outstanding performance guarantee is the remaining
cost of work to be performed
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
by or on behalf of third parties under engineering and construction contracts. Amounts that
may be required to be paid in excess of estimated costs to complete contracts in progress
are not estimable. For cost reimbursable contracts amounts that may become payable pursuant
to guarantee provisions are normally recoverable from the client for work performed under
the contract. For lump sum or fixed price contracts, this amount is the cost to complete the
contracted work less amounts remaining to be billed to the client under the contract.
Remaining billable amounts could be greater or less than the cost to complete. In those
cases where costs exceed the remaining amounts payable under the contract, the company may
have recourse to third parties, such as owners, co-venturers, subcontractors or vendors for
claims. As of March 31, 2005, no material changes to financial or performance assurances to
clients had occurred since the filing of the company’s December 31, 2004 annual report on
Form 10-K.
The company has a joint venture arrangement that will design, build, finance and maintain an
aircraft refueling facility at a United States Air Force base in Qatar for the Defense
Energy Support Center, an agency of the Department of Defense. The company has a 27.5
percent interest in the joint venture company. On April 29, 2005, the joint venture entered
into an agreement for project financing which includes a joint and several project
completion guarantee by the members of the joint venture. The maximum potential amount of
future payments that could be required under the guarantee is $76.5 million, the maximum
principal amount available under the financing arrangement, plus any accrued interest.
Financial guarantees, made in the ordinary course of business on behalf of clients and
others in certain limited circumstances, are entered into with financial institutions and
other credit grantors and generally obligate the company to make payment in the event of a
default by the borrower. Most arrangements require the borrower to pledge collateral in the
form of property, plant and equipment which is deemed adequate to recover amounts the
company might be required to pay. As of March 31, 2005, no material changes to financial
guarantees of the debt of third parties had occurred since the filing of the company’s
December 31, 2004 annual report on Form 10-K.
Table of Contents
Financial Condition and Results of Operations
•
Changes in global business, economic (including currency risk), political and social conditions;
•
The company’s failure to receive anticipated new contract awards and the related impacts on staffing levels and costs;
•
Customer cancellations of, or scope adjustments to, existing contracts, including our government contracts that may be
terminated at any time;
•
The cyclical nature of many of the markets the company serves and its vulnerability to downturns;
•
Difficulties or delays incurred in the execution of construction contracts, including performance by our joint venture
partners, resulting in cost overruns or liabilities;
•
Failure to meet timely completion or performance standards could result in higher costs and reduced profits or, in some
cases losses on projects;
•
A failure to obtain favorable results in existing or future litigation or dispute resolution proceedings;
•
Customer delays or defaults in making payments;
•
The potential impact of certain tax matters including, but not limited to, those resulting from the company’s reverse
spin-off transaction consummated November 30, 2000 involving Massey Energy Company;
•
Possible limitations of bonding capacity;
•
Restrictions imposed by credit facilities;
•
Limitations on cash transfers from subsidiaries may restrict the company’s ability to satisfy financial obligations, or
to pay interest or principal when due on outstanding debt;
•
Competition in the global engineering, procurement and construction industry;
•
The company’s ability to identify and successfully integrate acquisitions;
•
The impact of past and future environmental, health and safety regulations; and
•
Restrictions on possible transactions imposed by Delaware law.
Table of Contents
Three Months Ended
March 31
$ in millions
2005
2004
$
1,183.9
$
618.9
54.3
28.2
Table of Contents
•
modifications and extra work arising from differing site soil conditions,
•
costs arising from the site labor agreement for 2000 called “Acta Convenio” and
•
events in Venezuela in early 2003, including a national strike and other force majeure incidents.
Table of Contents
Three Months Ended
March 31
$ in millions
2005
2004
$
670.3
$
461.8
20.8
9.1
Three Months Ended
March 31
$ in millions
2005
2004
$
561.1
$
577.6
9.1
27.5
Table of Contents
Three Months Ended
March 31
$ in millions
2005
2004
$
365.4
$
314.1
31.3
20.1
Three Months Ended
March 31
$ in millions
2005
2004
$
79.1
$
90.9
3.1
14.0
Table of Contents
Table of Contents
U.S.D.C., Central District, Southern Division, California
Table of Contents
Table of Contents
Table of Contents
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes on this matter in the first quarter of 2005.
Accordingly, the disclosures provided in the Annual Report on Form 10-K for the year ended
December 31, 2004 remain current.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, under the supervision and with the
participation of our management, including our chief executive officer and chief financial
officer, we conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures. Based on this evaluation, our chief executive
officer and chief financial officer concluded that, as of the end of the period covered by
this report, our disclosure controls and procedures were effective in alerting them on a
timely basis to information relating to the company that is required to be included in our
periodic reports filed with the SEC.
To maintain a cost-effective controls structure, management necessarily applied its
judgment in assessing the costs and benefits of such controls and procedures, which, by
their nature, can only provide reasonable assurance that our management’s control
objectives are met. In addition, the design of any system of control is based upon
certain assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all future events, no
matter how remote.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting that occurred
during the three months ended on the date of this report that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
Table of Contents
Three Months Ended March 31, 2005 and 2004
Three Months Ended
March 31
$ in millions
2005
2004
$
14,765.8
$
10,607.1
3,350.7
3,127.7
106.0
148.6
(2,806.5
)
(2,018.8
)
$
15,416.0
$
11,864.6
Table of Contents
PART II: OTHER INFORMATION
Issuer Purchases of Equity Securities
24
In addition, the shareholders approved the following proposal:
Finally, the following proposal presented by a shareholder was not approved:
25
26
27
Item 1. Legal Proceedings
Fluor and its subsidiaries, incidental to their normal business activities, are parties
to a number of legal proceedings and other matters in various stages of development.
While we cannot predict the outcome of these proceedings, in our opinion and based on
reports of counsel, any liability arising from these matters individually and in the
aggregate are not expected to have a material adverse effect upon the consolidated
financial position, or the results of operations of the company, after giving effect to
provisions already recorded.
In addition to the matters described above, we are involved in disputes with respect to
the Hamaca Crude Upgrader project located in Jose, Venezuela. We are part of a joint
venture which is actively proceeding on a number of issues under binding arbitration to
recover amounts that are due as change orders to the project. For additional information
on the Hamaca dispute, see the section entitled “Results of Operations – Oil & Gas” in
Part I, Item 2 in Management’s Discussion and Analysis of Financial Condition and
Results of Operations, above.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c)
The following table provides information about purchases by the company
during the quarter ended March 31, 2005 of equity securities that are registered by
the company pursuant to Section 12 of the Exchange Act:
(in thousands, except per share data)
Total
Number of
Maximum
Shares
Number of
Purchased
Shares that
as Part of
May Yet Be
Total
Average
Publicly
Purchased
Number of
Price
Announced
Under the
Shares
Paid per
Plans or
Plans or
Period
Purchased
(1)
Share
Programs
Program
(2)
32
$
54.66
N/A
4,141
111
57.64
N/A
4,141
2
61.69
N/A
4,141
(1)
Shares cancelled as payment for statutory withholding taxes upon the
vesting of restricted stock issued pursuant to equity based employee benefit plans.
(2)
On September 20, 2001, the company announced that the Board of Directors
had approved the repurchase of up to five million shares of our common stock. That
authorization is ongoing and does not have an expiration date.
Table of Contents
Item 4. Submission of Matters to a Vote of Security Holders
(a)
The annual meeting of shareholders of Fluor Corporation was held on
April 27, 2005.
(b)
Four Class III directors were elected to serve for a term of three
years, ending at the 2008 annual meeting of shareholders. The four Class III
directors are Peter J. Fluor, David P. Gardner, Joseph W. Prueher and Suzanne H.
Woolsey. Continuing directors include three Class I directors, Alan L. Boeckmann,
Vilma S. Martinez and Dean R. O’Hare, and three Class II directors, James T.
Hackett, Kent Kresa and Robin W. Renwick. Martha R. Seger, who was serving as a
Class II director, retired from the Board on December 31, 2004.
(c)
The following four Class III directors were elected to serve a term of
three years, ending at the 2008 annual meeting:
Votes For
Votes Withheld
59,952,843
16,102,256
72,909,720
3,145,379
75,112,799
942,300
75,098,853
956,246
Broker
For
Against
Abstain
Non-Votes
75,306,444
238,846
509,809
0
Broker
For
Against
Abstain
Non-Votes
19,573,298
48,598,565
1,174,768
6,708,468
Item 5. Other Information
See the discussion regarding financing guarantee for aircraft refueling facility in the
section entitled “Off-Balance Sheet Arrangements” in Part 1, Item 2 in Management’s
Discussion and Analysis of Financial Condition and Results of Operations above.
Table of Contents
Item 6. Exhibits
Exhibit
Description
Amended and Restated Certificate of Incorporation of the registrant
(1)
Amended and Restated Bylaws of the registrant *
Indenture between Fluor Corporation and Bank of New York, as trustee dated as of
February 17, 2004
(2)
Distribution Agreement between the registrant and Fluor Corporation (renamed Massey
Energy Company)
(3)
Tax Sharing Agreement between Fluor Corporation and A.T. Massey Coal Company,
Inc.
(4)
Special Retention Program, dated March 7, 2000, between Fluor Corporation and Alan L.
Boeckmann
(1)
Special Retention Program, dated September 12, 2000, between Fluor Corporation and
Mark A. Stevens
(5)
Fluor Corporation 2000 Executive Performance Incentive Plan as amended and restated
as of March 30, 2005 *
Fluor Corporation 2000 Restricted Stock Plan for Non-Employee Directors
(6)
Fluor Corporation Executive Deferred Compensation Plan, as amended and restated
effective January 1, 2002
(7)
Fluor Corporation Deferred Director’s Fees Program, as amended and restated effective
January 1, 2002
(5)
Directors’ Life Insurance Summary
(1)
Fluor Executives’ Supplemental Benefit Plan
(1)
Fluor Corporation Retirement Plan for Outside Directors
(1)
Executive Severance Plan
(9)
2001 Key Employee Performance Incentive Plan as amended and restated as of March 30,
2005 *
2001 Fluor Stock Appreciation Rights Plan
(7)
Fluor Corporation 2003 Executive Performance Incentive Plan as amended and restated
as of March 30, 2005 *
Form of Compensation Award Agreements for grants under the Fluor Corporation 2003
Executive Performance Incentive Plan
(10)
Code of Ethics and Business Conduct, as amended and restated
(11)
Offer of Employment Letter dated May 7, 2001 from Fluor Corporation to D. Michael
Steuert
(11)
Credit Agreement dated as of July 28, 2004 among Fluor Corporation, the lenders party
thereto from time to time, BNP Paribas, as Administrative Agent and an Issuing
Lender, and Bank of America, N.A. and Citicorp USA, Inc., as Co-Syndication Agents
(8)
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)
of the Securities Exchange Act of 1934 *
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)
of the Securities Exchange Act of 1934 *
Table of Contents
Exhibit
Description
Certification of Chief Executive Officer pursuant to Rule
13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350 *
Certification of Chief Financial Officer pursuant to Rule
13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350 *
*
New exhibit filed with this report.
(1)
Filed as the same numbered exhibit to the Registrant’s Registration
Statement on Form 10/A (Amendment No. 1) filed on November 22, 2000 and
incorporated herein by reference.
(2)
Filed as an exhibit to the Registrant’s report on Form 8-K filed on
February 17, 2004 incorporated herein by reference.
(3)
Filed as Exhibit 10.1 to the Registrant’s report on Form 8-K dated
December 7, 2000 and incorporated herein by reference.
(4)
Filed as Exhibit 10.2 to the Registrant’s report on Form 8-K dated
December 7, 2000 and incorporated herein by reference.
(5)
Filed as an exhibit to the Registrant’s report on Form 10-K filed on
March 31, 2003 and incorporated herein by reference.
(6)
Filed as Exhibit 10.2 to the Registrant’s report on Form 8-K dated
December 29, 2000 and incorporated herein by reference.
(7)
Filed as an exhibit to the Registrant’s report on Form 10-K filed on
March 21, 2002 and incorporated herein by reference.
(8)
Filed as Exhibit 10.18 to the Registrant’s report on Form 10-Q dated
August 9, 2004 and incorporated herein by reference.
(9)
Filed as an exhibit to the Registrant’s report on Form 8-K filed on
August 9, 2004 and incorporated herein by reference.
(10)
Filed as an exhibit to the Registrant’s report on Form 8-K filed on
November 9, 2004 and incorporated herein by reference.
(11)
Filed as an exhibit to the Registrant’s report on Form 10-K filed on
March 15, 2004 and incorporated herein by reference.
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
28
FLUOR CORPORATION
Date: May 5, 2005
/s/ D. Michael Steuert
D. Michael Steuert
Senior Vice President and Chief Financial Officer
Date: May 5, 2005
/s/ V.L. Prechtl
V. L. Prechtl
Vice President and Controller
Table of Contents
EXHIBIT INDEX
29
30
Exhibit
Description
Amended and Restated Certificate of Incorporation of the registrant
(1)
Amended and Restated Bylaws of the registrant *
Indenture between Fluor Corporation and Bank of New York, as trustee dated as of February 17,
2004
(2)
Distribution Agreement between the registrant and Fluor Corporation (renamed Massey Energy
Company)
(3)
Tax Sharing Agreement between Fluor Corporation and A.T. Massey Coal Company, Inc.
(4)
Special Retention Program, dated March 7, 2000, between Fluor Corporation and Alan L. Boeckmann
(1)
Special Retention Program, dated September 12, 2000, between Fluor Corporation and Mark A.
Stevens
(5)
Fluor Corporation 2000 Executive Performance Incentive Plan as amended and restated as of March
30, 2005 *
Fluor Corporation 2000 Restricted Stock Plan for Non-Employee Directors
(6)
Fluor Corporation Executive Deferred Compensation Plan, as amended and restated effective
January 1, 2002
(7)
Fluor Corporation Deferred Director’s Fees Program, as amended and restated effective January
1, 2002
(5)
Directors’ Life Insurance
Summary
(1)
Fluor Executives’ Supplemental Benefit Plan
(1)
Fluor Corporation Retirement Plan for Outside Directors
(1)
Executive Severance Plan
(9)
2001 Key Employee Performance Incentive Plan as amended and restated as of March 30, 2005 *
2001 Fluor Stock Appreciation Rights Plan
(7)
Fluor Corporation 2003 Executive Performance Incentive Plan as amended and restated as of March
30, 2005 *
Form of Compensation Award Agreements for grants under the Fluor Corporation 2003 Executive
Performance Incentive Plan
(10)
Code of Ethics and Business Conduct, as amended and restated
(11)
Offer of Employment Letter dated May 7, 2001 from Fluor Corporation to D. Michael Steuert
(11)
Credit Agreement dated as of July 28, 2004 among Fluor Corporation, the lenders party thereto
from time to time, BNP Paribas, as Administrative Agent and an Issuing Lender, and Bank of
America, N.A. and Citicorp USA, Inc., as Co-Syndication Agents
(8)
Table of Contents
Exhibit
Description
Certification of Chief Executive Officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
*
Certification of Chief Financial Officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
*
Certification of Chief Executive Officer pursuant to Rule
13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350 *
Certification of Chief Financial Officer pursuant to Rule
13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934
and 18 U.S.C. Section 1350 *
*
New exhibit filed with this report.
(1)
Filed as the same numbered exhibit to the Registrant’s Registration Statement on
Form 10/A (Amendment No. 1) filed on November 22, 2000 and incorporated herein by
reference.
(2)
Filed as an exhibit to the Registrant’s report on Form 8-K filed on February 17,
2004 incorporated herein by reference.
(3)
Filed as Exhibit 10.1 to the Registrant’s report on Form 8-K dated December 7, 2000
and incorporated herein by reference.
(4)
Filed as Exhibit 10.2 to the Registrant’s report on Form 8-K dated December 7, 2000
and incorporated herein by reference.
(5)
Filed as an exhibit to the Registrant’s report on Form 10-K filed on March 31, 2003
and incorporated herein by reference.
(6)
Filed as Exhibit 10.2 to the Registrant’s report on Form 8-K dated December 29, 2000
and incorporated herein by reference.
(7)
Filed as an exhibit to the Registrant’s report on Form 10-K filed on March 21, 2002
and incorporated herein by reference.
(8)
Filed as Exhibit 10.18 to the Registrant’s report on Form 10-Q dated August 9, 2004
and incorporated herein by reference.
(9)
Filed as an exhibit to the Registrant’s report on Form 8-K filed on August 9, 2004
incorporated herein by reference.
(10)
Filed as an exhibit to the Registrant’s report on Form 8-K filed on November 9,
2004 incorporated herein by reference.
(11)
Filed as an exhibit to the Registrant’s report on Form 10-K filed on March 15, 2004
and incorporated herein by reference.
EXHIBIT 3.2
Amended and Restated
BYLAWS
(as amended April 27, 2005)
OF
FLUOR CORPORATION
(a Delaware corporation)
ARTICLE I
OFFICES
Section 1.01 Registered Office. The registered office of FLUOR CORPORATION (hereinafter called the "Corporation") in the State of Delaware shall be at 9 East Loockerman Street, City of Dover, County of Kent, 19901 and the name of the registered agent at that address shall be National Registered Agents, Inc.
Section 1.02 Principal Office. The principal office for the transaction of the business of the Corporation shall be at One Enterprise Drive, Aliso Viejo, California 92656. The Board of Directors (hereinafter called the "Board") is hereby granted full power and authority to change said principal office from one location to another.
Section 1.03 Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board may from time to time determine or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01 Annual Meetings. Annual meetings of the stockholders of the Corporation for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings may be held at such time, date and place as the Board shall determine by resolution.
Section 2.02 Special Meetings. Special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time by the Board or by a committee of the Board which has been duly created by the Board and whose powers and authority, as provided in a resolution of the Board or in the Bylaws of the Corporation, include the power to call such meetings, but such special meetings may not be called by any other person or persons; provided, however, that if and to the extent that any special meeting of stockholders may be called by any other person or persons specified in any provisions of the Certificate of Incorporation or any amendment thereto or any certificate filed under Section 151(g) of the General Corporation Law of the State of Delaware (or its successor statute as in effect from time to time hereafter), then
such special meeting may also be called by the person or persons, in the manner, at the times and for the purposes so specified.
Section 2.03 Place of Meetings. All meetings of the stockholders shall be held at such places, within or without the State of Delaware, as may from time to time be designated by the person or persons calling the respective meeting and specified in the respective notices or waivers of notice thereof.
Section 2.04 Notice of Stockholder Business and Nominations.
(A) Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (a) pursuant to the Corporation's notice of meeting (or any supplement thereto), (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record of the Corporation at the time the notice provided for in this Section 2.04 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 5.
(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this Section 2.04, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business other than the nominations of persons for election to the Board of Directors must constitute a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth day nor earlier than the close of business on the one hundred twentieth day prior to the first anniversary of the preceding year's annual meeting (provided, however, that in the event that the date of the annual meeting is more than thirty days before or more than seventy days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth day prior to such annual meeting and not later than the close of business on the later of the ninetieth day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the Corporation). In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth: (a) as to each person whom the stockholder proposes to nominate for election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder (and such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material
interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner, (ii) the class and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, and (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation's outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (b) otherwise to solicit proxies from stockholders in support of such proposal or nomination. The foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the Corporation of his or her intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act and such stockholder's proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section 2.04 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 2.04 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting (1) by or at the direction of the Board of Directors or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.04 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 2.04. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation's notice of meeting, if the stockholder's notice required by paragraph (A)(2) of this Section 2.04 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the
close of business on the one hundred twentieth day prior to such special meeting and not later than the close of business on the later of the ninetieth day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder's notice as described above.
(C) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 2.04 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.04. Except as otherwise provided by law, the chairman of the meeting shall have the power and duty (a) to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.04 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder's nominee or proposal in compliance with such stockholder's representation as required by clause (A)(2)(c)(iv) of this Section 2.04) and (b) if any proposed nomination or business was not made or proposed in compliance with this Section 2.04, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 5, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.
(2) For purposes of this Section 2.04, "public announcement" shall
include disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 2.04, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.04. Nothing in this Section 2.04 shall be deemed to
affect any rights (a) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(b) of the holders of any series of Preferred Stock to elect directors pursuant
to any applicable provisions of the certificate of incorporation.
Section 2.05 Notice of Meetings. Except as otherwise required by law, the certificate of incorporation or the Bylaws, notice of each meeting of the stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder of record entitled to vote at such meeting by delivering a notice thereof to him or her personally, or by depositing such notice in the United States mail, in a postage prepaid
envelope, directed to him or her at his or her post office address furnished by him or her to the Secretary of the Corporation for such purpose or, if he or she shall not have furnished to the Secretary his or her address for such purposes or if otherwise consented to by such stockholder, then at his or her post office address last known to the Secretary, or by transmitting a notice thereof to him or her at such address by means of electronic transmission. Except as otherwise expressly required by law, no publication of any notice of a meeting of the stockholders shall be required. Every notice of a meeting of the stockholders shall state the place, date and hour of the meeting, and, in the case of a special meeting, shall also state the purpose or purposes for which the meeting is called. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall have waived such notice and such notice shall be deemed waived by any stockholder who shall attend such meeting in person or by proxy, except a stockholder who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise expressly required by law, notice of any adjourned meeting of the stockholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken.
Section 2.06 Quorum. Except in the case of any meeting for the election of directors summarily ordered as provided by law, the holders of record of a majority of the voting power of the shares of stock of the Corporation entitled to be voted thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of the stockholders of the Corporation or any adjournment thereof. In the absence of a quorum at any meeting or any adjournment thereof, the holders of a majority of the voting power of the stockholders present in person or by proxy and entitled to vote thereat or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting from time to time. At any such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called.
Section 2.07 Voting.
(a) Except as otherwise provided by or pursuant to the provisions of the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder shall, at each meeting of the stockholders, be entitled to vote in person or by proxy each share or fractional share of the stock of the Corporation having voting rights on the matter in question and which shall have been held by him or her and registered in his or her name on the books of the Corporation:
(i) on the date fixed pursuant to Section 6.05 of the Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a) at the close of business on the day next preceding the day on which notice of the meeting shall be given or (b) if notice of the meeting shall be waived, at the close of business on the day next preceding the day on which meeting shall be held.
(b) Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the corporation or any subsidiary of the corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. Persons holding stock of the Corporation in a fiduciary capacity shall be entitled to vote such stock. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation such person has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or such person's proxy, may represent such stock and vote thereon. Stock having voting power standing of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, shall be voted in accordance with the provisions of the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the stockholder entitled thereto in person or by his or her proxy or by his or her attorney thereunto authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date unless said proxy shall provide for a longer period. The attendance at any meeting by a stockholder who may theretofore have given a proxy shall not have the effect of revoking the same unless he or she shall in writing so notify the secretary of the meeting prior to the voting of the proxy. At all meetings of stockholders for the election of directors a plurality of the votes cast shall be sufficient to elect. All other elections and questions shall, unless otherwise provided by the certificate of incorporation, these by-laws, the rules or regulations of any stock exchange applicable to the corporation, or applicable law or pursuant to any regulation applicable to the corporation or its securities, be decided by the affirmative vote of the holders of a majority in voting power of the shares of stock of the corporation which are present in person or by proxy and entitled to vote thereon. The vote at any meeting of the stockholders on any question need not be by ballot, unless so directed by the chairman of the meeting. On a vote by ballot each ballot shall be signed by the stockholder voting, or by his or her proxy, if there be such proxy, and it shall state the number of shares voted.
Section 2.08 List of Stockholders. The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, as required by applicable law. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 2.09 Inspectors of Election. The corporation may, and shall if required by law, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of the corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The corporation may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the corporation represented at the meeting and such inspectors' count of all votes and ballots. Such certification and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 General Powers. The property, business and affairs of the Corporation shall be managed by the Board.
Section 3.02 Number. The authorized number of Directors of the Corporation shall be eleven and such authorized number shall not be changed except by a Bylaw or amendment thereof duly adopted by the stockholders in accordance with the Certificate of Incorporation or by the Board amending this Section 3.02.
Section 3.03 Election of Directors. The directors shall be elected by the stockholders of the Corporation, and at each election the persons receiving the greatest number of votes, up to the number of directors then to be elected, shall be the persons then elected. The election of directors is subject to any provisions contained in the Certificate of Incorporation relating thereto, including any provisions for a classified board.
Section 3.04 Mandatory Retirement. The Chairman of the Board and the President and any former Chairman of the Board and any former President, if serving as a director of the Corporation at age 72, shall retire from the Board at the end of the calendar year in which his or her 72nd birthday occurs. Each other employee or former employee of the Corporation or its subsidiaries serving as a director of the Corporation at age 65 shall retire from the Board at the end of the calendar year in which his or her 65th birthday occurs unless the Chairman of the Board recommends and the Board approves his or her continued service as a non-employee director. Each other employee of the Corporation or its subsidiaries under age 65 serving as a director of the Corporation who elects to take early retirement or who for any other reason is no longer an officer of the Corporation or its subsidiaries shall retire from the Board as of the date he or she ceases to be an officer unless the Chairman of the Board recommends and the Board
approves his or her continued directorship. Each non-employee director of the Corporation serving at age 72 shall retire from the Board at the end of the calendar year in which his or her 72nd birthday occurs. For purposes of this Section, "end of the calendar year" shall include the period ending with the seventh day of January next following.
Section 3.05 Resignations. Any director of the Corporation may resign at any time by giving written notice to the Board or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, it shall take effect immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 3.06 Vacancies. Except as otherwise provided in the Certificate of Incorporation, any vacancy in the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause, shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board. Any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until such director's successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director.
Section 3.07 Place of Meeting, etc. The Board may hold any of its meetings at such place or places within or without the State of Delaware and at such times as the Board may from time to time determine. Directors may participate in any regular or special meeting of the Board by means of conference telephone or other communications equipment pursuant to which all persons participating in the meeting of the Board can hear each other, and such participation shall constitute presence in person at such meeting.
Section 3.08 First Meeting. The Board shall meet as soon as practicable after each annual election of directors and notice of such first meeting shall not be required.
Section 3.09 Regular Meetings. Regular meetings of the Board may be held at such times as the Board shall from time to time by resolution determine. If any day fixed for a meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting shall be held at the same hour and place on the next succeeding business day not a legal holiday. Except as provided by law, notice of regular meetings need not be given.
Section 3.10 Special Meetings. Special meetings of the Board may be called at any time by the Chairman of the Board or the President or by any two directors, to be held at the principal office of the Corporation, or at such other place or places, within or without the State of Delaware, as the person or persons calling the meeting may designate. Notice of all special meetings of the Board shall be given to each director by two days' service of the same by telegram, by letter, or personally. Such notice may be waived by any director and any meeting shall be a legal meeting without notice having been given if all the directors shall be present thereat or if those not present shall, either before or after the meeting, sign a written waiver of notice of, or a consent to, such meeting or shall after the meeting sign the approval of the
minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or be made a part of the minutes of the meeting.
Section 3.11 Quorum and Manner of Acting. Except as otherwise provided in the Bylaws or by law, the presence of a majority of the whole Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present. In the absence of a quorum, a majority of directors present at any meeting may adjourn the same from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. The directors shall act only as a Board, and the individual directors shall have no power as such.
Section 3.12 Action by Consent. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic means, and such consents are filed with the minutes of proceedings of the Board of Directors or such committee.
Section 3.13 Compensation. No stated salary need be paid directors, as such, for their services, but, by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board or an annual directors' fee may be paid; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefore. Members of special or standing committees may be allowed like compensation for attending committee meetings.
Section 3.14 Committees. The Board may, by resolution passed by the Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Former employees of the Corporation or its subsidiaries who are no longer officers of the Corporation or its subsidiaries, if serving as a director of the Corporation, shall not be eligible to serve as a member of any committee of the Board. Except as otherwise provided in the Board resolution designating a committee, the presence of a majority of the authorized number of members of such committee shall be required to constitute a quorum for the transaction of business at any meeting of such committee. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have any power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of the dissolution, or amending the Bylaws of the Corporation; and unless the resolution of the Board expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Any such committee shall keep written minutes of its meetings and report the same to the Board at the next regular meeting of the Board.
Section 3.15 Officers of the Board. The Board shall have a Chairman of the Board and may, at the discretion of the Board, have a Vice Chairman and other officers. The Chairman of the Board and the Vice Chairman shall be appointed from time to time by the Board, unless such positions are elected offices of the Corporation, currently filled, and shall have such powers and duties as shall be designated by the Board.
ARTICLE IV
OFFICERS
Section 4.01 Officers. The officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a Secretary, a Treasurer and such other officers as may be appointed by the Board as the business of the Corporation may require. Officers shall have such powers and duties as are permitted or required by law or as may be specified by or in accordance with resolutions of the Board. Any number of offices may be held by the same person. Unless the Board shall otherwise determine, the Chairman of the Board shall be the Chief Executive Officer of the Corporation. In the absence of any contrary determination by the Board, the Chief Executive Officer shall, subject to the power and authority of the Board, have general supervision, direction and control of the officers, employees, business and affairs of the Corporation.
Section 4.02 Election and Term. The officers of the Corporation shall be elected annually by the Board. The Board may at any time and from time to time elect such additional officers as the business of the Corporation may require. Each officer shall hold his or her office until his or her successor is elected and qualified or until his or her earlier resignation or removal.
Section 4.03 Removal and Resignation. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board. Any officer may resign at any time by giving notice to the Board. Such resignation shall take effect at the time specified in such notice or, in the absence of such specification, at the date of the receipt by the Board of such notice. Unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective.
Section 4.04 Vacancies. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled in the manner prescribed in these Bylaws for the regular appointment to such office.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 5.01 Execution of Contracts. The Board, except as in the Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name and on behalf of the Corporation, and such authority may be
general or confined to specific instances; and unless so authorized by the Board or by the Bylaws, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount.
Section 5.02 Checks, Drafts, etc. All checks, drafts or other orders for payment of money, notes or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board. Each such person shall give such bond, if any, as the Board may require.
Section 5.03 Deposit. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the Chief Executive Officer, the President or the Treasurer (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation.
Section 5.04 General and Special Bank Accounts. The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of the Bylaws, as it may deem expedient.
ARTICLE VI
SHARES AND THEIR TRANSFER
Section 6.01 Certificates for Stock. Every owner of stock of the Corporation shall be entitled to have a certificate or certificates, to be in such form as the Board shall prescribe, certifying the number and class of shares of the stock of the Corporation owned by him or her. The certificates representing shares of such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation by the President and by the Secretary. Any or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any such certificate shall thereafter have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue. A record shall be kept of the respective names of the persons, firms or corporations owning the
stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation the respective dates of cancellation. Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.04 of the Bylaws.
Section 6.02 Transfers of Stock. Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his or her attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, or with a transfer clerk or a transfer agent appointed as provided in Section 6.03 of the Bylaws, and upon surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact shall be stated expressly in the entry of transfer if, when the certificate or certificates shall be presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so.
Section 6.03 Regulations. The Board may make such rules and regulations as it may deem expedient, not inconsistent with the Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.
Section 6.04 Lost, Stolen, Destroyed, And Mutilated Certificates. In any case of loss, theft, destruction, or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction, or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; provided, however, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do.
Section 6.05 Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any other change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. If, in any case involving the determination of stockholders for any purpose other than notice of or voting at a meeting of stockholders, the Board shall not fix such a record date, the record date for determining stockholders for such purpose shall be the close of business on the day on which the Board shall adopt the resolution relating thereto. A determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Seal. The Board shall provide a corporate seal, which shall be in the form of a circle and shall bear the name of the Corporation and words and figures showing that the Corporation was incorporated in the State of Delaware and the year of incorporation.
Section 7.02 Waiver of Notices. Whenever notice is required to be given by the Bylaws or the Certificate of Incorporation or by law, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein, and such waiver shall be deemed equivalent to notice.
Section 7.03 Fiscal Year. The fiscal year of the Corporation shall end on the 31st day of December of each year.
Section 7.04 Amendments. The Bylaws, or any of them, may be rescinded, altered, amended or repealed, and new Bylaws may be made, (i) by the Board, by vote of a majority of the number of directors then in office as directors, acting at any meeting of the Board, or (ii) by the vote of the holders of not less than 80% of the total voting power of all outstanding shares of voting stock of the Corporation, at any annual meeting of stockholders, without previous notice, or at any special meeting of stockholders, provided that notice of such proposed amendment, modification, repeal or adoption is given in the notice of special meeting. Any Bylaws made or altered by the stockholders may be altered or repealed by the Board or may be altered or repealed by the stockholders.
EXHIBIT 10.5
2000 EXECUTIVE PERFORMANCE INCENTIVE PLAN
(Amended and Restated as of March 30, 2005)
SECTION 1. Purpose of Plan
The purpose of this "Fluor Corporation 2000 Executive Performance Incentive Plan" ("Plan") of Fluor Corporation, a Delaware corporation, is to enable the Company, as defined in Section 2.2(a)(ii) hereof, to attract, retain and motivate its officers, management and other key personnel, and to further align the interests of such persons with those of the shareholders of the Company, by providing for or increasing their proprietary interest in the Company. The Plan also permits Shares to be issuable upon exercise, vesting or satisfaction of stock-based awards that were assumed by the Company in connection with the distribution of the Company's common stock (the "Distribution") to the stockholders of Massey Energy Company, which prior to the distribution was known as Fluor Corporation ("Old Fluor").
SECTION 2. Administration of the Plan
2.1 Composition of Committee. The Plan shall be administered by the Organization and Compensation Committee of the Board of Directors, and/or by the Board of Directors or another committee of the Board of Directors of the Company, as appointed from time to time by the Board of Directors (any such administrative body, the "Committee"). The Board of Directors shall fill vacancies on, and from time to time may remove or add members to, the Committee. The Committee shall act pursuant to a majority vote or unanimous written consent. Notwithstanding the foregoing, with respect to any Award that is not intended to satisfy the conditions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the "Code"), the Committee may appoint one or more separate committees (any such committee, a "Subcommittee") composed of one or more directors of the Company (who may but need not be members of the Committee) and may delegate to any such Subcommittee(s) the authority to grant Awards, as defined in Section 5.1 hereof, under the Plan to Employees, to determine all terms of such Awards, and/or to administer the Plan or any aspect of it. Any action by any such Subcommittee within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee. The Committee may designate the Secretary of the Company or other Company employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to execute agreements evidencing Awards made under this Plan or other documents entered into under this Plan on behalf of the Committee or the Company.
2.2 Powers of the Committee. Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to do all things necessary or desirable in connection with the administration of this Plan with respect to the Awards over which such Committee has authority, including, without limitation, the following:
(a) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; provided that, unless the Committee shall specify otherwise, for purposes of this Plan (i) the term "fair market value" shall mean, as of any date, the average of the highest price and the lowest price per share at which the Shares (as defined in Section 3.1 hereof) are sold in the regular way on the New
York Stock Exchange or, if no Shares traded on the New York Stock Exchange on the date in question, then for the next preceding date for which Shares traded on the New York Stock Exchange; and (ii) the term "Company" shall mean Fluor Corporation and its subsidiaries and affiliates, unless the context otherwise requires.
(b) to determine which persons are Eligible Employees (as defined in
Section 4 hereof), to which of such Eligible Employees, if any, Awards
shall be granted hereunder, to make Awards under the Plan and to determine
the terms of such Awards and the timing of any such Awards;
(c) to determine the number of Shares subject to Awards and the exercise or purchase price of such Shares;
(d) to establish and verify the extent of satisfaction of any performance goals applicable to Awards;
(e) to prescribe and amend the terms of the agreements or other documents evidencing Awards made under this Plan (which need not be identical);
(f) to determine whether, and the extent to which, adjustments are required pursuant to Section 11 hereof;
(g) to interpret and construe this Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; and
(h) to make all other determinations deemed necessary or advisable for the administration of the Plan.
2.3 Determinations of the Committee. All decisions, determinations and interpretations by the Committee or the Board regarding the Plan shall be final and binding on all Eligible Employees and Participants, as defined in Section 4 hereof. The Committee or the Board, as applicable, shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer of the Company or Eligible Employee and such attorneys, consultants and accountants as it may select.
SECTION 3. Stock Subject to Plan
3.1 Aggregate Limits. Subject to adjustment as provided in Section 11, at any time, the aggregate number of shares of the Company's common stock, $0.01 par value ("Shares"), issued pursuant to all Awards (including all ISOs (as defined in Section 5.1 hereof)) granted under this Plan shall not exceed 12,000,000; provided that no more than 4,500,000 of such Shares may be issued pursuant to all Restricted Stock Awards, Incentive Awards, and Stock Units (other than Stock Units issued upon exercise of Options and any such awards issued as Assumed Awards) granted under the Plan. The Shares subject to the Plan may be either Shares reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares.
3.2 Code Section 162(m) Limits. The aggregate number of Shares subject to Options granted under this Plan during any calendar year to any one Eligible Employee shall not exceed 750,000. The aggregate number of Shares issued or issuable under any Restricted Stock Awards, Incentive Awards or Stock Unit Awards (other than Stock Units issued or issuable upon exercise of Options) granted under this Plan during any calendar year to any one Eligible Employee shall not exceed 150,000. Notwithstanding anything to the contrary in the Plan, the foregoing limitations (i) shall not apply to Assumed Awards, (ii) shall not include the number of shares subject to Assumed Awards, and (iii) shall be subject to adjustment under Section 11 only to the extent that such adjustment will not affect the status of any Award intended to qualify as "performance based compensation" under Code Section 162(m).
3.3 Issuance of Shares. For purposes of Section 3.1, the aggregate number of Shares issued under this Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award and not returned to the Company upon cancellation, expiration or forfeiture of an Award or delivered (either actually or by attestation) in payment or satisfaction of the purchase price, exercise price or tax obligation of an Award.
SECTION 4. Persons Eligible Under Plan
Any person who is an (i) employee and who also is an officer, key employee or
member of the Executive Management Team ("EMT"), (ii) prospective employee who
is to be an officer, key employee or member of the EMT, (iii) consultant, or
(iv) advisor of the Company (an "Eligible Employee") shall be eligible to be
considered for the grant of Awards hereunder. For purposes of this Plan, the
Chairman of the Board's status as an Employee shall be determined by the Board.
For purposes of the administration of Awards, the term "Eligible Employee" shall
also include a former Eligible Employee or any person (including any estate) who
is a beneficiary of a former Eligible Employee. A "Participant" is any Eligible
Employee to whom an Award has been made and any person (including any estate) to
whom an Award has been assigned or transferred pursuant to Section 10.1.
SECTION 5. Plan Awards
5.1 Award Types. The Committee, on behalf of the Company, is authorized under this Plan to enter into certain types of arrangements with Eligible Employees and to confer certain benefits on them. The following such arrangements or benefits are authorized under the Plan if their terms and conditions are not inconsistent with the provisions of the Plan: Stock Options, Restricted Stock, Incentive Awards, Stock Units and Assumed Awards. Such arrangements and benefits are sometimes referred to herein as "Awards." The authorized types of arrangements and benefits for which Awards may be granted are defined as follows:
Stock Option Awards: A Stock Option is a right granted under Section 6 to
purchase a number of Shares at such exercise price, at such times, and on
such other terms and conditions as are specified in or determined pursuant
to the document(s) evidencing the Award (the "Option Agreement"). Options
intended to qualify as Incentive Stock Options ("ISOs") pursuant to Code
Section 422 and Options which are not intended to qualify as ISOs ("Non-
qualified Options") may be granted under Section 6 as the Committee in its
sole discretion shall determine.
Restricted Stock Awards: Restricted Stock is an award of Shares made under
Section 7, the grant, issuance, retention and/or vesting of which is
subject to such performance and other conditions as are expressed in the
document(s) evidencing the Award (the "Restricted Stock Agreement").
Incentive Awards: An Incentive Award is a bonus opportunity awarded under
Section 8 pursuant to which a Participant may become entitled to receive an
amount (which may be payable in cash, Shares or other property) based on
satisfaction of such performance criteria as are specified in the
document(s) evidencing the Award (the "Incentive Bonus Agreement").
Stock Unit Awards: A Stock Unit Award is an award of a right to receive the fair market value of one share of Common Stock made under Section 9, the grant, issuance, retention and/or vesting of which is subject to such performance and other conditions as are expressed in the document(s) evidencing the Award (the "Stock Unit Agreement").
Assumed Awards: An Assumed Award is a stock option, stock appreciation right, restricted stock grant, restricted stock unit or other equity-based arrangement that was granted by Old Fluor and assumed by the Company in connection with the Distribution, as adjusted or amended pursuant to the terms thereof. Notwithstanding any provision to the contrary in this Plan and except as provided in this sentence, the terms of Assumed Awards shall be subject to the terms and conditions set forth in the grant agreement and/or other document(s) evidencing such Award and, to the extent provided therein, to terms equivalent to the terms of the plan under which such Award was originally granted; provided, however, that all Assumed Awards shall be administered by the Committee, which shall have the power and authority provided for in Section 2 of this Plan.
5.2 Grants of Awards. An Award may consist of one such arrangement or benefit or two or more of them in tandem or in the alternative.
SECTION 6. Stock Option Awards
The Committee may grant an Option or provide for the grant of an Option, either from time-to-time in the discretion of the Committee or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the satisfaction of an event or condition within the control of the recipient of the Award, within the control of others or not within any person's control.
6.1 Option Agreement. Each Option Agreement shall contain provisions regarding
(a) the number of Shares which may be issued upon exercise of the Option, (b)
the purchase price of the Shares and the means of payment for the Shares, (c)
the term of the Option, (d) such terms and conditions of exercisability as may
be determined from time to time by the Committee, (e) restrictions on the
transfer of the Option and forfeiture provisions, and (f) such further terms and
conditions, in each case not inconsistent with the Plan as may be determined
from time to time by the Committee. Option Agreements evidencing ISOs shall
contain such terms and conditions as may be necessary to comply with the
applicable provisions of Section 422 of the Code.
6.2 Option Price. The purchase price per Share of the Shares subject to each Option granted under the Plan shall equal or exceed 100% of the fair market value of such Stock on the date the Option is granted, except that (i) the Committee may specifically provide that the exercise price of an Option may be higher or lower in the case of an Option granted to employees of a company acquired by the Company in assumption and substitution of options held by such employees at the time such company is acquired, and (ii) in the event an Eligible Employee is required to pay or forego the receipt of any cash amount in consideration of receipt of an Option, the exercise price plus such cash amount shall equal or exceed 100% of the fair market value of such Stock on the date the Option is granted.
6.3 Option Term. The "Term" of each Option granted under the Plan, including any ISOs, shall not exceed ten (10) years from the date of its grant.
6.4 Option Vesting. Options granted under the Plan shall be exercisable at such time and in such installments during the period prior to the expiration of the Option's Term as determined by the Committee in its sole discretion. The Committee shall have the right to make the timing of the ability to exercise any Option granted under the Plan subject to such performance requirements as deemed appropriate by the Committee. At any time after the grant of an Option the Committee may, in its sole discretion, reduce or eliminate any restrictions surrounding any Participant's right to exercise all or part of the Option, except that no Option shall first become exercisable within one (1) year from its date of grant, other than upon death, disability, a Change of Control (as defined in Section 12.2 hereof) or upon satisfaction of such performance requirements as deemed appropriate by the Committee.
6.5 Option Exercise.
(a) Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional Shares and the Committee may require, by the terms of the Option Agreement, a partial exercise to include a minimum number of Shares.
(b) Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery to the representative of the Company
designated for such purpose by the Committee all of the following: (i)
notice of exercise in such form as the Committee authorizes specifying the
number of Shares to be purchased by the Participant, (ii) payment or
provision for payment of the exercise price for such number of Shares,
(iii) such representations and documents as the Committee, in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any
other federal, state or foreign securities laws or regulations, (iv) in the
event that the Option shall be exercised pursuant to Section 10.1 by any
person or persons other than the Eligible Employee, appropriate proof of
the right of such person or persons to exercise the Option, and (v) such
representations and documents as the Committee, in its sole discretion,
deems necessary or advisable to provide for the tax withholding pursuant to
Section 13. Unless provided otherwise by the Committee, no Participant
shall have any right as a shareholder with respect to any Shares purchased
pursuant to any Option until the registration of Shares in the name of such
person, and no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property)
or distributions or other rights for which the record date is prior to the
date such Shares are so registered.
(c) Payment of Exercise Price. To the extent authorized by the Committee,
the exercise price of an Option may be paid in the form of one of more of
the following, either through the terms of the Option Agreement or at the
time of exercise of an Option: (i) cash or certified or cashiers' check,
(ii) shares of capital stock of the Company that have been held by the
Participant for such period of time as the Committee may specify, (iii)
other property deemed acceptable by the Committee, (iv) a reduction in the
number of Shares or other property otherwise issuable pursuant to such
Option, or (v) any combination of (i) through (iv).
SECTION 7. Restricted Stock Awards
Restricted Stock consists of an award of Shares, the grant, issuance, retention and/or vesting of which shall be subject to such performance conditions and to such further terms and conditions as the Committee deems appropriate.
7.1 Restricted Stock Award. Each Restricted Stock Award shall reflect, to the extent applicable (a) the number of Shares subject to such Award or a formula for determining such, (b) the time or times at which Shares shall be granted or issued and/or become retainable or vested, and the conditions or restrictions on such Shares, (c) the performance criteria and level of achievement versus these criteria which shall determine the number of Shares granted, issued, retainable and/or vested, (d) the period as to which performance shall be measured for determining achievement of performance, (e) forfeiture provisions, and (f) such further terms and conditions, in each case not inconsistent with the Plan as may be determined from time to time by the Committee.
7.2 Restrictions and Performance Criteria. The grant, issuance, retention and/or vesting of each Restricted Stock Award may be subject to such performance criteria and level of achievement versus these criteria as the Committee shall determine, which criteria may be based on financial performance, personal performance evaluations and/or completion of service by the Participant; provided, however, that no Restricted Stock Award shall first vest within one year from its date of grant, other than upon death, disability, a Change of Control (as defined in Section 12.2 hereof) or upon satisfaction of such performance requirements as deemed appropriate by the Committee. Notwithstanding anything to the contrary herein, the performance criteria for any Restricted Stock Award that is intended by the Committee to satisfy the requirements for "performance-based compensation" under Code Section 162(m) shall be a measure based on one or more Qualifying Performance Criteria (as defined in Section 10.2 hereof) selected by the Committee.
7.3 Timing and Form of Award. The Committee shall determine the timing of award of any Restricted Stock Award. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the award or vesting of any Restricted Stock to be deferred to a specified date or event. The Committee may
provide for a Participant to have the option for his or her Restricted Stock, or such portion thereof as the Committee may specify, to be granted in whole or in part in Stock Units.
7.4 Discretionary Adjustments. Notwithstanding satisfaction of any completion of service or performance goals, the number of Shares granted, issued, retainable and/or vested under a Restricted Stock Award on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 8. Incentive Awards
Each Incentive Award will confer upon the Eligible Employee the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a performance period of not less than one year.
8.1 Incentive Award. Each Incentive Award shall contain provisions regarding (a)
the target and maximum amount payable to the Participant as an Incentive Award,
(b) the performance criteria and level of achievement versus these criteria
which shall determine the amount of such payment, (c) the period as to which
performance shall be measured for establishing the amount of any payment, (d)
the timing of any payment earned by virtue of performance, (e) restrictions on
the alienation or transfer of the Incentive Award prior to actual payment, (f)
forfeiture provisions, and (g) such further terms and conditions, in each case
not inconsistent with the Plan as may be determined from time to time by the
Committee. In establishing the provisions of Incentive Awards, the Committee may
refer to categories of such Awards as parts of "Programs" or "Plans", which
names will not affect the applicability of this Plan. The maximum amount payable
as an Incentive Award may be a multiple of the target amount payable, but the
maximum amount payable pursuant to that portion of an Incentive Award granted
under this Plan for any fiscal year to any Participant that is intended to
satisfy the requirements for "performance based compensation" under Code Section
162(m) shall not exceed Three million dollars ($3,000,000).
8.2 Performance Criteria. The Committee shall establish the performance criteria and level of achievement versus these criteria which shall determine the target and the minimum and maximum amount payable under an Incentive Award, which criteria may be based on financial performance and/or personal performance evaluations. The Committee may specify the percentage of the target Incentive Award that is intended to satisfy the requirements for "performance-based compensation" under Code Section 162(m). Notwithstanding anything to the contrary herein, the performance criteria for any portion of an Incentive Award that is intended by the Committee to satisfy the requirements for "performance- based compensation" under Code Section 162(m) shall be a measure based on one or more Qualifying Performance Criteria (as defined in Section 10.2 hereof) selected by the Committee and specified at the time required under Code Section 162(m).
8.3 Timing and Form of Payment. The Committee shall determine the timing of payment of any Incentive Award. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the payment of any Incentive Award to be deferred to a specified date or event. The Committee may specify the form of
payment of Incentive Awards, which may be cash, shares or other property, or may provide for a Participant to have the option for his or her Incentive Award, or such portion thereof as the Committee may specify, to be paid in whole or in part in Shares or Stock Units.
8.4 Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an Incentive Award on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 9. Stock Units
9.1 Stock Units. A "Stock Unit" is a bookkeeping entry representing an amount equivalent to the fair market value of one share of Common Stock, also sometimes referred to as a "restricted unit" or "shadow stock". Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise provided for by the Committee.
9.2 Stock Unit Awards. Each Stock Unit Award shall reflect, to the extent applicable (a) the number of Stock Units subject to such Award or a formula for determining such, (b) the time or times at which Stock Units shall be granted or issued and/or become retainable or vested, and the conditions or restrictions on such Stock Units, (c) the performance criteria and level of achievement versus these criteria which shall determine the number of Stock Units granted, issued, retainable and/or vested, (d) the period as to which performance shall be measured for determining achievement of performance, (e) forfeiture provisions, and (f) such further terms and conditions, in each case not inconsistent with the Plan as may be determined from time to time by the Committee. Stock Units may also be issued upon exercise of Options, may be granted in payment and satisfaction of Incentive Awards and may be issued in lieu of Restricted Stock or any other Award that the Committee elects to be paid in the form of Stock Units.
9.3 Performance Criteria. The grant, issuance, retention and or vesting of each Stock Unit may be subject to such performance criteria and level of achievement versus these criteria as the Committee shall determine, which criteria may be based on financial performance, personal performance evaluations and/or completion of service by the Participant; provided, however, that no Stock Unit shall first vest within one (1) year from its date of grant, other than upon death, disability, a Change of Control (as defined in Section 12.2 hereof) or upon satisfaction of such performance requirements as deemed appropriate by the Committee. Notwithstanding anything to the contrary herein, the performance criteria for any Stock Unit that is intended by the Committee to satisfy the requirements for "performance-based compensation" under Code Section 162(m) shall be a measure based on one or more Qualifying Performance Criteria (as defined in Section 10.2 hereof) selected by the Committee and specified at the time the Stock Unit is granted.
9.4 Timing and Form of Award. The Committee shall determine the timing of award of any Stock Unit. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the award or vesting of any Stock Unit to be deferred to a specified date or event. The Committee may provide for a Participant to have the option for his or her Stock Unit, or such portion thereof as the Committee may specify, to be granted in whole or in part in Shares.
9.5 Settlement of Stock Units. The Committee may provide for Stock Units to be
settled in cash or Shares (at the election of the Company or the Participant, as
specified by the Committee) and to be made at such other times as it determines
appropriate or as it permits a Participant to choose. The amount of cash or
Shares, or other settlement medium, to be so distributed may be increased by an
interest factor or by dividend equivalents, as the case may be, which may be
valued as if reinvested in Shares. Until a Stock Unit is settled, the number of
Shares represented by a Stock Unit shall be subject to adjustment pursuant to
Section 11.
9.6 Discretionary Adjustments. Notwithstanding satisfaction of any completion of service or performance goals, the number of Stock Units granted, issued, retainable and/or vested under a Stock Unit Award on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 10. Other Provisions Applicable to Awards
10.1 Transferability. Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly states that it is transferable as provided hereunder, no Award granted under the Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner, other than by will or the laws of descent and distribution, prior to the vesting or lapse of any and all restrictions applicable to any Shares issued under an Award. The Committee may in its sole discretion grant an Award or amend an outstanding Award to provide that the Award is transferable or assignable to a member or members of the Eligible Employee's "immediate family", as such term is defined under Exchange Act Rule 16a-1(e), or to a trust for the benefit solely of a member or members of the Eligible Employee's immediate family, or to a partnership or other entity whose only owners are members of the Eligible Employee's family, provided that following any such transfer or assignment the Award will remain subject to substantially the same terms applicable to the Award while held by the Eligible Employee, as modified as the Committee in its sole discretion shall determine appropriate, and the Participant shall execute an agreement agreeing to be bound by such terms.
10.2 Qualifying Performance Criteria. For purposes of this Plan, the term
"Qualifying Performance Criteria" shall mean any one or more of the following
performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit, subsidiary or
business segment, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years' results or to
a designated comparison group, in each case as specified by the Committee in the
Award: (a) cash flow, (b) earnings (including gross margin, earnings before
interest and taxes ("EBIT"), earnings before taxes ("EBT"), and net earnings),
(c) earnings per share, (d) growth in earnings or earnings per share, (e) stock
price, (f) return on equity or average stockholders' equity, (g) total
stockholder return, (h) return on capital, (i) return on assets or net assets,
(j) return on investment, (k) revenue, (l) income or net income, (m) operating
income or net operating income, (n) operating profit or net operating profit,
(o) operating margin, (p) return on operating revenue, (q) market share, (r)
contract awards or backlog, (s) overhead or other expense reduction, (t) growth
in stockholder value relative to the two-year moving average of the S&P 500
Index, (u) growth in
stockholder value relative to the two-year moving average of the Dow Jones Heavy Construction Index, (v) credit rating, (w) strategic plan development and implementation, (x) succession plan development and implementation, (y) retention of executive talent, (z) improvement in workforce diversity, (aa) return on average stockholders' equity relative to the Ten Year Treasury Yield (as hereinafter defined), (bb) improvement in safety records, (cc) capital resource management plan development and implementation, (dd) improved internal financial controls plan development and implementation, (ee) corporate tax savings, (ff) corporate cost of capital reduction, (gg) investor relations program development and implementation, (hh) corporate relations program development and implementation, (ii) executive performance plan development and implementation, and (jj) tax provision rate for financial statement purposes. The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs, and (v) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management's discussion and analysis of financial condition and results of operations appearing in the Company's annual report to stockholders for the applicable year. The term "Ten Year Treasury Yield" shall mean, for any fiscal period, the daily average percent per annum yield for U.S. Government Securities -- 10 year Treasury constant maturities, as published in the Federal Reserve statistical release or any successor publication. Prior to the payment of any compensation under an Award intended to qualify as "performance-based compensation" under Code Section 162(m) the Committee shall certify the extent to which any Qualifying Performance Criteria and any other material terms under such Award have been satisfied (other than in cases where such relate solely to the increase in the value of the Company's Common Stock).
10.3 Dividends. Unless otherwise provided by the Committee, no adjustment shall be made in Shares issuable under Awards on account of cash dividends which may be paid or other rights which may be issued to the holders of Shares prior to their issuance under any Award. The Committee shall specify whether dividends or dividend equivalent amounts shall be paid to any Participant with respect to the Shares subject to any Award that have not vested or been issued or that are subject to any restrictions or conditions on the record date for dividends.
10.4 Agreements Evidencing Awards. The Committee shall, subject to applicable law, determine the date an Award is deemed to be granted, which for purposes of this Plan shall not be affected by the fact that an Award is contingent on subsequent stockholder approval of the Plan. The Committee or, except to the extent prohibited under applicable law, its delegate(s) may establish the terms of agreements evidencing Awards under this Plan and may, but need not, require as a condition to any such agreement's effectiveness that such agreement be executed by the Participant and that such Participant agree to such further terms and conditions as specified in such agreement. The grant of an Award under this Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in this Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the Agreement evidencing such Award.
10.5 Tandem Stock or Cash Rights. Either at the time an Award is granted or by
subsequent action, the Committee may, but need not, provide that an Award shall
contain as a term thereof, a right, either in tandem with the other rights under
the Award or as an alternative thereto, of the Participant to receive, without
payment to the Company, a number of Shares, cash or a combination thereof, the
amount of which is determined by reference to the value of the Award; provided,
however, that the number of such rights granted under any Award shall not exceed
the per Eligible Employee share limitation for such Award as set forth in
Section 3.2.
SECTION 11. Changes in Capital Structure
If the outstanding securities of the class then subject to this Plan are increased, decreased or exchanged for or converted into cash, property or a different number or kind of shares or securities, or if cash, property or shares or securities are distributed in respect of such outstanding securities, in either case as a result of a reorganization, merger, consolidation, recapitalization, restructuring, reclassification, dividend (other than a regular, quarterly cash dividend) or other distribution, stock split, reverse stock split, spin-off or the like, or if substantially all of the property and assets of the Company are sold, then, unless the terms of such transaction shall provide otherwise, the Committee may make appropriate and proportionate adjustments in (i) the number and type of shares or other securities or cash or other property that may be acquired pursuant to Awards theretofore granted under this Plan and the exercise or settlement price of such Awards, provided, however, that any such adjustment shall be made in such a manner that will not affect the status of any Award intended to qualify as an ISO under Code Section 422 or as "performance based compensation" under Code Section 162(m), and (ii) the maximum number and type of shares or other securities that may be issued pursuant to such Awards thereafter granted under this Plan.
SECTION 12. Change of Control
12.1 Effect of Change of Control. The Committee may through the terms of the Award or otherwise provide that any or all of the following shall occur, either immediately upon the Change of Control or a Change of Control Transaction, or upon termination of the Eligible Employee's employment within twenty-four (24) months following a Change of Control or a Change of Control Transaction: (a) in the case of an Option, the Participant's ability to exercise any portion of the Option not previously exercisable, (b) in the case of an Incentive Award, the right to receive a payment equal to the target amount payable or, if greater, a payment based on performance through a date determined by the Committee prior to the Change of Control, and (c) in the case of Shares issued in payment of any Incentive Award, and/or in the case of Restricted Stock or Stock Units, the lapse and expiration of any conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award. The Committee also may, through the terms of the Award or otherwise, provide for an absolute or conditional
exercise, payment or lapse of conditions or restrictions on an Award which shall only be effective if, upon the announcement of a Change of Control Transaction, no provision is made in such Change of Control Transaction for the exercise, payment or lapse of conditions or restrictions on the Award, or other procedure whereby the Participant may realize the full benefit of the Award.
12.2 Definitions. Unless the Committee or the Board shall provide otherwise, "Change of Control" shall mean an occurrence of any of the following events (a) a third person, including a "group" as defined in Section 13(d)(3) of the Exchange Act, 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, (b) as the 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 the Company or any successor to the Company; or (c) such other events as the Committee or the Board from time to time may specify. "Change of Control Transaction" shall include any tender offer, offer, exchange offer, solicitation, merger, consolidation, reorganization or other transaction which is intended to or reasonably expected to result in a Change of Control.
SECTION 13. Taxes
13.1 Withholding Requirements. The Committee may make such provisions or impose such conditions as it may deem appropriate for the withholding or payment by the Employee or Participant, as appropriate, of any taxes which it determines are required in connection with any Awards granted under this Plan, and a Participant's rights in any Award are subject to satisfaction of such conditions.
13.2 Payment of Withholding Taxes. Notwithstanding the terms of Section 13.1 hereof, the Committee may provide in the agreement evidencing an Award or otherwise that all or any portion of the taxes required to be withheld by the Company or, if permitted by the Committee, desired to be paid by the Participant, in connection with the exercise of a Non-qualified Option or the exercise, vesting, settlement or transfer of any other Award shall be paid or, at the election of the Participant, may be paid by the Company withholding shares of the Company's capital stock otherwise issuable or subject to such Award, or by the Participant delivering previously owned shares of the Company's capital stock, in each case having a fair market value equal to the amount required or elected to be withheld or paid. Any such elections are subject to such conditions or procedures as may be established by the Committee and may be subject to disapproval by the Committee.
SECTION 14. Amendments or Termination
The Board may amend, alter or discontinue the Plan or any agreement evidencing an Award made under the Plan, but no such amendment shall, without the approval of the shareholders of the Company:
(a) materially increase the maximum number of shares of Common Stock for which Awards may be granted under the Plan;
(b) reduce the price at which Options may be granted below the price provided for in Section 6.2;
(c) reduce the exercise price of outstanding Options;
(d) after the date of a Change of Control, impair the rights of any Award holder, without such holder's consent, under any Award granted prior to the date of any Change of Control;
(e) extend the term of the Plan; or
(f) change the class of persons eligible to be Participants.
SECTION 15. Compliance With Other Laws and Regulations
The Plan, the grant and exercise of Awards thereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to all applicable federal, state and foreign laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant's name or deliver any Shares prior to the completion of any registration or qualification of such Shares under any federal, state or foreign law or any ruling or regulation of any government body which the Committee shall, in its sole discretion, determine to be necessary or advisable. This Plan is intended to constitute an unfunded arrangement for a select group of management or other key employees.
No Option shall be exercisable unless a registration statement with respect to the Option is effective or the Company has determined that such registration is unnecessary. Unless the Awards and Shares covered by this Plan have been registered under the Securities Act of 1933, as amended, or the Company has determined that such registration is unnecessary, each person receiving an Award and/or Shares pursuant to any Award may be required by the Company to give a representation in writing that such person is acquiring such Shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.
SECTION 16. Option Grants by Subsidiaries
In the case of a grant of an Option to any Eligible Employee employed by a
subsidiary or affiliate, such grant may, if the Committee so directs, be
implemented by the Company issuing any subject Shares to the subsidiary or
affiliate, for such lawful consideration as the Committee may determine, upon
the condition or understanding that the subsidiary or affiliate will transfer
the Shares to the optionholder in accordance with the terms of the Option
specified by the Committee pursuant to the provisions of the Plan.
Notwithstanding any other provision hereof, such Option may be issued by and in
the name of the subsidiary or affiliate and shall be deemed granted on such date
as the Committee shall determine.
SECTION 17. No Right to Company Employment
Nothing in this Plan or as a result of any Award granted pursuant to this Plan shall confer on any individual any right to continue in the employ of the Company or interfere in any way with the right of the Company to terminate an individual's employment at any time. The Award agreements may contain such provisions as the Committee may approve with reference to the effect of approved leaves of absence.
SECTION 18. Effectiveness and Expiration of Plan
The Plan shall be effective on the date the Board adopts the Plan and Old Fluor approves the Plan as sole stockholder of the Company. No Stock Option Award, Restricted Stock Award or Incentive Award shall be granted pursuant to the Plan more than ten (10) years after the effective date of the Plan.
SECTION 19. Non-Exclusivity of the Plan
Neither the adoption of the Plan by the Board nor the submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
SECTION 20. Governing Law
This Plan and any agreements hereunder shall be interpreted and construed in accordance with the laws of the State of Delaware and applicable federal law. The Committee may provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration. Any reference in this Plan or in the agreement evidencing any Award to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.
EXHIBIT 10.13
2001 KEY EMPLOYEE PERFORMANCE INCENTIVE PLAN
(Amended and Restated as of March 30, 2005)
SECTION 1. Purpose of Plan
The purpose of this "2001 Key Employee Performance Incentive Plan" ("Plan") of Fluor Corporation, a Delaware corporation, is to enable the Company, as defined in Section 2.2(a)(ii) hereof, to attract, retain and motivate its officers, management and other key personnel, and to further align the interests of such persons with those of the shareholders of the Company, by providing for or increasing their proprietary interest in the Company.
SECTION 2. Administration of the Plan
2.1 Composition of Committee. The Plan shall be administered by the Organization and Compensation Committee of the Board of Directors, and/or by the Board of Directors or another committee of the Board of Directors of the Company, as appointed from time to time by the Board of Directors (any such administrative body, the "Committee"). The Board of Directors shall fill vacancies on, and from time to time may remove or add members to, the Committee. The Committee shall act pursuant to a majority vote or unanimous written consent. Notwithstanding the foregoing, the Committee may appoint one or more separate committees (any such committee, a "Subcommittee") composed of one or more directors of the Company (who may but need not be members of the Committee) and may delegate to any such Subcommittee(s) the authority to grant Awards, as defined in Section 5.1 hereof, under the Plan to Employees, to determine all terms of such Awards, and/or to administer the Plan or any aspect of it. Any action by any such Subcommittee within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee. The Committee may designate the Secretary of the Company or other Company employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to execute agreements evidencing Awards made under this Plan or other documents entered into under this Plan on behalf of the Committee or the Company.
2.2 Powers of the Committee. Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to do all things necessary or desirable in connection with the administration of this Plan with respect to the Awards over which such Committee has authority, including, without limitation, the following:
(a) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; provided that, unless the Committee shall specify otherwise, for purposes of this Plan (i) the term "fair market value" shall mean, as of any date, the average of the highest price and the lowest price per share at which the Shares (as defined in Section 3.1 hereof) are sold in the regular way on the New York Stock Exchange or, if no Shares traded on the New York Stock Exchange on the date in question, then for the next preceding date for which Shares traded on the New York Stock Exchange; and (ii) the term "Company" shall mean Fluor Corporation and its subsidiaries and affiliates, unless the context otherwise requires.
(b) to determine which persons are Eligible Employees (as defined in
Section 4 hereof), to which of such Eligible Employees, if any, Awards
shall be granted hereunder, to make
Awards under the Plan and to determine the terms of such Awards and the timing of any such Awards;
(c) to determine the number of Shares subject to Awards and the exercise or purchase price of such Shares;
(d) to establish and verify the extent of satisfaction of any performance goals applicable to Awards;
(e) to prescribe and amend the terms of the agreements or other documents evidencing Awards made under this Plan (which need not be identical);
(f) to determine whether, and the extent to which, adjustments are required pursuant to Section 11 hereof;
(g) to interpret and construe this Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; and
(h) to make all other determinations deemed necessary or advisable for the administration of the Plan.
2.3 Determinations of the Committee. All decisions, determinations and interpretations by the Committee or the Board regarding the Plan shall be final and binding on all Eligible Employees and Participants, as defined in Section 4 hereof. The Committee or the Board, as applicable, shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer of the Company or Eligible Employee and such attorneys, consultants and accountants as it may select.
SECTION 3. Stock Subject to Plan
3.1 Aggregate Limits. Subject to adjustment as provided in Section 11, at any time, the aggregate number of shares of the Company's common stock, $0.01 par value ("Shares"), issued pursuant to all Awards granted under this Plan shall not exceed 3,600,000; provided that no more than 500,000 of such Shares may be issued pursuant to all Restricted Stock Awards, Incentive Awards, and Stock Units (other than Stock Units issued upon exercise of Options and any such awards issued as Assumed Awards) granted under the Plan. The Shares subject to the Plan may be either Shares reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares.
3.2 Issuance of Shares. For purposes of Section 3.1, the aggregate number of Shares issued under this Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award and not returned to the Company upon cancellation, expiration or forfeiture of an Award or delivered (either actually or by attestation) in payment or satisfaction of the purchase price, exercise price or tax obligation of an Award.
SECTION 4. Persons Eligible Under Plan
Any "Eligible Employee" shall be eligible to be considered for the grant of Awards under the Plan. For purposes of the Plan, an "Eligible Employees" is (i) any full-time employee in the United States who is an "exempt employee," as defined under Fair Labor Standards Act of 1938, (ii) any prospective full-time "exempt employee" of the Company, (iii) any key employee of any joint venture in which the Company or its subsidiaries is an equity participant, (iv) any consultant, and (v) any advisor of the Company. Notwithstanding the foregoing, if any Awards are granted to executive officers or directors of the Company, then at least a majority of the shares of stock or shares of stock underlying Options awarded under the Plan during any three year period must be awarded to employees who are not executive officers or directors of the Company. For purposes of this Plan, the Chairman of the Board's status as an Employee shall be determined by the Board. For purposes of the administration of Awards, the term "Eligible Employee" shall also include a former Eligible Employee or any person (including any estate) who is a beneficiary of a former Eligible Employee. A "Participant" is any Eligible Employee to whom an Award has been made and any person (including any estate) to whom an Award has been assigned or transferred pursuant to Section 10.1.
SECTION 5. Plan Awards
5.1 Award Types. The Committee, on behalf of the Company, is authorized under this Plan to enter into certain types of arrangements with Eligible Employees and to confer certain benefits on them. The following such arrangements or benefits are authorized under the Plan if their terms and conditions are not inconsistent with the provisions of the Plan: Stock Options, Restricted Stock, Incentive Awards, Stock Units and Assumed Awards. Such arrangements and benefits are sometimes referred to herein as "Awards." The authorized types of arrangements and benefits for which Awards may be granted are defined as follows:
Stock Option Awards: A Stock Option is a right granted under Section 6 to purchase a number of Shares at such exercise price, at such times, and on such other terms and conditions as are specified in or determined pursuant to the document(s) evidencing the Award (the "Option Agreement"). Only Options which are not intended to qualify as Incentive Stock Options pursuant to Section 422 of the Internal Revenue Code (i.e., only "Non-qualified Options") may be granted under the Plan.
Restricted Stock Awards: Restricted Stock is an award of Shares made under
Section 7, the grant, issuance, retention and/or vesting of which is
subject to such performance and other conditions as are expressed in the
document(s) evidencing the Award (the "Restricted Stock Agreement").
Incentive Awards: An Incentive Award is a bonus opportunity awarded under
Section 8 pursuant to which a Participant may become entitled to receive an
amount (which may be payable in cash, Shares or other property) based on
satisfaction of such performance criteria as are specified in the
document(s) evidencing the Award (the "Incentive Bonus Agreement").
Stock Unit Awards: A Stock Unit Award is an award of a right to receive the fair market value of one share of Common Stock made under Section 9, the grant, issuance,
retention and/or vesting of which is subject to such performance and other conditions as are expressed in the document(s) evidencing the Award (the "Stock Unit Agreement").
5.2 Grants of Awards. An Award may consist of one such arrangement or benefit or two or more of them in tandem or in the alternative.
SECTION 6. Stock Option Awards
The Committee may grant an Option or provide for the grant of an Option, either from time-to-time in the discretion of the Committee or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the satisfaction of an event or condition within the control of the recipient of the Award, within the control of others or not within any person's control.
6.1 Option Agreement. Each Option Agreement shall contain provisions regarding
(a) the number of Shares which may be issued upon exercise of the Option, (b)
the purchase price of the Shares and the means of payment for the Shares, (c)
the term of the Option, (d) such terms and conditions of exercisability as may
be determined from time to time by the Committee, (e) restrictions on the
transfer of the Option and forfeiture provisions, and (f) such further terms and
conditions, in each case not inconsistent with the Plan as may be determined
from time to time by the Committee.
6.2 Option Price. The purchase price per Share of the Shares subject to each Option granted under the Plan shall equal or exceed 100% of the fair market value of such Stock on the date the Option is granted, except that (i) the Committee may specifically provide that the exercise price of an Option may be higher or lower in the case of an Option granted to employees of a company acquired by the Company in assumption and substitution of options held by such employees at the time such company is acquired, and (ii) in the event an Eligible Employee is required to pay or forego the receipt of any cash amount in consideration of receipt of an Option, the exercise price plus such cash amount shall equal or exceed 100% of the fair market value of such Stock on the date the Option is granted.
6.3 Option Term. The "Term" of each Option granted under the Plan, including any ISOs, shall not exceed ten (10) years from the date of its grant.
6.4 Option Vesting. Options granted under the Plan shall be exercisable at such time and in such installments during the period prior to the expiration of the Option's Term as determined by the Committee in its sole discretion. The Committee shall have the right to make the timing of the ability to exercise any Option granted under the Plan subject to such performance requirements as deemed appropriate by the Committee. At any time after the grant of an Option the Committee may, in its sole discretion, reduce or eliminate any restrictions surrounding any Participant's right to exercise all or part of the Option.
6.5 Option Exercise.
(a) Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional Shares and the
Committee may require, by the terms of the Option Agreement, a partial exercise to include a minimum number of Shares.
(b) Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery to the representative of the Company
designated for such purpose by the Committee all of the following: (i)
notice of exercise in such form as the Committee authorizes specifying the
number of Shares to be purchased by the Participant, (ii) payment or
provision for payment of the exercise price for such number of Shares,
(iii) such representations and documents as the Committee, in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any
other federal, state or foreign securities laws or regulations, (iv) in the
event that the Option shall be exercised pursuant to Section 10.1 by any
person or persons other than the Eligible Employee, appropriate proof of
the right of such person or persons to exercise the Option, and (v) such
representations and documents as the Committee, in its sole discretion,
deems necessary or advisable to provide for the tax withholding pursuant to
Section 13. Unless provided otherwise by the Committee, no Participant
shall have any right as a shareholder with respect to any Shares purchased
pursuant to any Option until the registration of Shares in the name of such
person, and no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the
date such Shares are so registered.
(c) Payment of Exercise Price. To the extent authorized by the Committee,
the exercise price of an Option may be paid in the form of one of more of
the following, either through the terms of the Option Agreement or at the
time of exercise of an Option: (i) cash or certified or cashiers' check,
(ii) shares of capital stock of the Company that have been held by the
Participant for such period of time as the Committee may specify, (iii)
other property deemed acceptable by the Committee, (iv) a reduction in the
number of Shares or other property otherwise issuable pursuant to such
Option, or (v) any combination of (i) through (iv).
SECTION 7. Restricted Stock Awards
Restricted Stock consists of an award of Shares, the grant, issuance, retention and/or vesting of which shall be subject to such performance conditions and to such further terms and conditions as the Committee deems appropriate.
7.1 Restricted Stock Award. Each Restricted Stock Award shall reflect, to the extent applicable (a) the number of Shares subject to such Award or a formula for determining such, (b) the time or times at which Shares shall be granted or issued and/or become retainable or vested, and the conditions or restrictions on such Shares, (c) the performance criteria and level of achievement versus these criteria which shall determine the number of Shares granted, issued, retainable and/or vested, (d) the period as to which performance shall be measured for determining achievement of performance, (e) forfeiture provisions, and (f) such further terms and conditions,
in each case not inconsistent with the Plan as may be determined from time to time by the Committee.
7.2 Restrictions and Performance Criteria. The grant, issuance, retention and/or vesting of each Restricted Stock Award may be subject to such performance criteria and level of achievement versus these criteria as the Committee shall determine, which criteria may be based on financial performance, personal performance evaluations and/or completion of service by the Participant.
7.3 Timing and Form of Award. The Committee shall determine the timing of award of any Restricted Stock Award. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the award or vesting of any Restricted Stock to be deferred to a specified date or event. The Committee may provide for a Participant to have the option for his or her Restricted Stock, or such portion thereof as the Committee may specify, to be granted in whole or in part in Stock Units.
7.4 Discretionary Adjustments. Notwithstanding satisfaction of any completion of service or performance goals, the number of Shares granted, issued, retainable and/or vested under a Restricted Stock Award on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 8. Incentive Awards
Each Incentive Award will confer upon the Eligible Employee the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a performance period of not less than one year.
8.1 Incentive Award. Each Incentive Award shall contain provisions regarding (a)
the target and maximum amount payable to the Participant as an Incentive Award,
(b) the performance criteria and level of achievement versus these criteria
which shall determine the amount of such payment, (c) the period as to which
performance shall be measured for establishing the amount of any payment, (d)
the timing of any payment earned by virtue of performance, (e) restrictions on
the alienation or transfer of the Incentive Award prior to actual payment, (f)
forfeiture provisions, and (g) such further terms and conditions, in each case
not inconsistent with the Plan as may be determined from time to time by the
Committee. In establishing the provisions of Incentive Awards, the Committee may
refer to categories of such Awards as parts of "Programs" or "Plans", which
names will not affect the applicability of this Plan.
8.2 Performance Criteria. The Committee shall establish the performance criteria and level of achievement versus these criteria which shall determine the target and the minimum and maximum amount payable under an Incentive Award, which criteria may be based on financial performance and/or personal performance evaluations.
8.3 Timing and Form of Payment. The Committee shall determine the timing of payment of any Incentive Award. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the payment of any Incentive Award to be deferred to a specified date or event. The Committee may specify the form of payment of Incentive Awards, which may be cash, shares or other property, or may provide for a
Participant to have the option for his or her Incentive Award, or such portion thereof as the Committee may specify, to be paid in whole or in part in Shares or Stock Units.
8.4 Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an Incentive Award on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 9. Stock Units
9.1 Stock Units. A "Stock Unit" is a bookkeeping entry representing an amount equivalent to the fair market value of one share of Common Stock, also sometimes referred to as a "restricted unit" or "shadow stock". Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise provided for by the Committee.
9.2 Stock Unit Awards. Each Stock Unit Award shall reflect, to the extent applicable (a) the number of Stock Units subject to such Award or a formula for determining such, (b) the time or times at which Stock Units shall be granted or issued and/or become retainable or vested, and the conditions or restrictions on such Stock Units, (c) the performance criteria and level of achievement versus these criteria which shall determine the number of Stock Units granted, issued, retainable and/or vested, (d) the period as to which performance shall be measured for determining achievement of performance, (e) forfeiture provisions, and (f) such further terms and conditions, in each case not inconsistent with the Plan as may be determined from time to time by the Committee. Stock Units may also be issued upon exercise of Options, may be granted in payment and satisfaction of Incentive Awards and may be issued in lieu of Restricted Stock or any other Award that the Committee elects to be paid in the form of Stock Units.
9.3 Performance Criteria. The grant, issuance, retention and or vesting of each Stock Unit may be subject to such performance criteria and level of achievement versus these criteria as the Committee shall determine, which criteria may be based on financial performance, personal performance evaluations and/or completion of service by the Participant; provided, however, that no Stock Unit shall first vest within one (1) year from its date of grant, other than upon death, disability, a Change of Control (as defined in Section 12.2 hereof) or upon satisfaction of such performance requirements as deemed appropriate by the Committee.
9.4 Timing and Form of Award. The Committee shall determine the timing of award of any Stock Unit. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the award or vesting of any Stock Unit to be deferred to a specified date or event. The Committee may provide for a Participant to have the option for his or her Stock Unit, or such portion thereof as the Committee may specify, to be granted in whole or in part in Shares.
9.5 Settlement of Stock Units. The Committee may provide for Stock Units to be settled in cash or Shares (at the election of the Company or the Participant, as specified by the Committee) and to be made at such other times as it determines appropriate or as it permits a Participant to choose. The amount of cash or Shares, or other settlement medium, to be so distributed may be increased by an interest factor or by dividend equivalents, as the case may be, which may be
valued as if reinvested in Shares. Until a Stock Unit is settled, the number of
Shares represented by a Stock Unit shall be subject to adjustment pursuant to
Section 11.
9.6 Discretionary Adjustments. Notwithstanding satisfaction of any completion of service or performance goals, the number of Stock Units granted, issued, retainable and/or vested under a Stock Unit Award on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 10. Other Provisions Applicable to Awards
10.1 Transferability. During an Eligible Employee's lifetime, Options may be exercised only by the Participant. Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly states that it is transferable as provided hereunder, no Award granted under the Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner, other than by will or the laws of descent and distribution, prior to the vesting or lapse of any and all restrictions applicable to any Shares issued under an Award. The Committee may in its sole discretion grant an Award or amend an outstanding Award to provide that the Award is transferable or assignable to a member or members of the Eligible Employee's "immediate family", as such term is defined under Rule 16a-1(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), or to a trust for the benefit solely of a member or members of the Eligible Employee's immediate family, or to a partnership or other entity whose only owners are members of the Eligible Employee's family, provided that following any such transfer or assignment the Award will remain subject to substantially the same terms applicable to the Award while held by the Eligible Employee, as modified as the Committee in its sole discretion shall determine appropriate, and the Participant shall execute an agreement agreeing to be bound by such terms.
10.2 Qualifying Performance Criteria. For purposes of this Plan, the term
"Qualifying Performance Criteria" shall mean any one or more of the following
performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit, subsidiary or
business segment, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years' results or to
a designated comparison group, in each case as specified by the Committee in the
Award: (a) cash flow, (b) earnings (including gross margin, earnings before
interest and taxes ("EBIT"), earnings before taxes ("EBT"), and net earnings),
(c) earnings per share, (d) growth in earnings or earnings per share, (e) stock
price, (f) return on equity or average stockholders' equity, (g) total
stockholder return, (h) return on capital, (i) return on assets or net assets,
(j) return on investment, (k) revenue, (l) income or net income, (m) operating
income or net operating income, (n) operating profit or net operating profit,
(o) operating margin, (p) return on operating revenue, (q) market share, (r)
contract awards or backlog, (s) overhead or other expense reduction, (t) growth
in stockholder value relative to the two-year moving average of the S&P 500
Index, (u) growth in stockholder value relative to the two-year moving average
of the Dow Jones Heavy Construction Index, (v) credit rating, (w) strategic plan
development and implementation, (x) succession plan development and
implementation, (y) retention of executive talent, (z) improvement in workforce
diversity, (aa) return on average stockholders' equity relative to the Ten Year
Treasury
Yield (as hereinafter defined), (bb) improvement in safety records, (cc) capital resource management plan development and implementation, (dd) improved internal financial controls plan development and implementation, (ee) corporate tax savings, (ff) corporate cost of capital reduction, (gg) investor relations program development and implementation, (hh) corporate relations program development and implementation, (ii) executive performance plan development and implementation, and (jj) tax provision rate for financial statement purposes. The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs, and (v) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management's discussion and analysis of financial condition and results of operations appearing in the Company's annual report to stockholders for the applicable year. The term "Ten Year Treasury Yield" shall mean, for any fiscal period, the daily average percent per annum yield for U.S. Government Securities -- 10 year Treasury constant maturities, as published in the Federal Reserve statistical release or any successor publication.
10.3 Dividends. Unless otherwise provided by the Committee, no adjustment shall be made in Shares issuable under Awards on account of cash dividends which may be paid or other rights which may be issued to the holders of Shares prior to their issuance under any Award. The Committee shall specify whether dividends or dividend equivalent amounts shall be paid to any Participant with respect to the Shares subject to any Award that have not vested or been issued or that are subject to any restrictions or conditions on the record date for dividends.
10.4 Agreements Evidencing Awards. The Committee shall, subject to applicable law, determine the date an Award is deemed to be granted, which for purposes of this Plan shall not be affected by the fact that an Award is contingent on subsequent stockholder approval of the Plan. The Committee or, except to the extent prohibited under applicable law, its delegate(s) may establish the terms of agreements evidencing Awards under this Plan and may, but need not, require as a condition to any such agreement's effectiveness that such agreement be executed by the Participant and that such Participant agree to such further terms and conditions as specified in such agreement. The grant of an Award under this Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in this Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the Agreement evidencing such Award.
10.5 Tandem Stock or Cash Rights. Either at the time an Award is granted or by subsequent action, the Committee may, but need not, provide that an Award shall contain as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is determined by reference to the value of the Award.
SECTION 11. Changes in Capital Structure
If the outstanding securities of the class then subject to this Plan are increased, decreased or exchanged for or converted into cash, property or a different number or kind of shares or securities, or if cash, property or shares or securities are distributed in respect of such outstanding securities, in either case as a result of a reorganization, merger, consolidation, recapitalization, restructuring, reclassification, dividend (other than a regular, quarterly cash dividend) or other distribution, stock split, reverse stock split, spin-off or the like, or if substantially all of the property and assets of the Company are sold, then, unless the terms of such transaction shall provide otherwise, the Committee may make appropriate and proportionate adjustments in (i) the number and type of shares or other securities or cash or other property that may be acquired pursuant to Awards theretofore granted under this Plan and the exercise or settlement price of such Awards, and (ii) the maximum number and type of shares or other securities that may be issued pursuant to such Awards thereafter granted under this Plan.
SECTION 12. Change of Control
12.1 Effect of Change of Control. The Committee may through the terms of the Award or otherwise provide that any or all of the following shall occur, either immediately upon the Change of Control or a Change of Control Transaction, or upon termination of the Eligible Employee's employment within twenty-four (24) months following a Change of Control or a Change of Control Transaction: (a) in the case of an Option, the Participant's ability to exercise any portion of the Option not previously exercisable, (b) in the case of an Incentive Award, the right to receive a payment equal to the target amount payable or, if greater, a payment based on performance through a date determined by the Committee prior to the Change of Control, and (c) in the case of Shares issued in payment of any Incentive Award, and/or in the case of Restricted Stock or Stock Units, the lapse and expiration of any conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award. The Committee also may, through the terms of the Award or otherwise, provide for an absolute or conditional exercise, payment or lapse of conditions or restrictions on an Award which shall only be effective if, upon the announcement of a Change of Control Transaction, no provision is made in such Change of Control Transaction for the exercise, payment or lapse of conditions or restrictions on the Award, or other procedure whereby the Participant may realize the full benefit of the Award.
12.2 Definitions. Unless the Committee or the Board shall provide otherwise, "Change of Control" shall mean an occurrence of any of the following events (a) a third person, including a "group" as defined in Section 13(d)(3) of the Exchange Act, 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, (b) as the 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 the Company or any successor to the Company; or (c) such other events as the Committee or the Board from time to time may specify. "Change of Control Transaction"
shall include any tender offer, offer, exchange offer, solicitation, merger, consolidation, reorganization or other transaction which is intended to or reasonably expected to result in a Change of Control.
SECTION 13. Taxes
13.1 Withholding Requirements. The Committee may make such provisions or impose such conditions as it may deem appropriate for the withholding or payment by the Employee or Participant, as appropriate, of any taxes which it determines are required in connection with any Awards granted under this Plan, and a Participant's rights in any Award are subject to satisfaction of such conditions.
13.2 Payment of Withholding Taxes. Notwithstanding the terms of Section 13.1 hereof, the Committee may provide in the agreement evidencing an Award or otherwise that all or any portion of the taxes required to be withheld by the Company or, if permitted by the Committee, desired to be paid by the Participant, in connection with the exercise of a Non-qualified Option or the exercise, vesting, settlement or transfer of any other Award shall be paid or, at the election of the Participant, may be paid by the Company withholding shares of the Company's capital stock otherwise issuable or subject to such Award, or by the Participant delivering previously owned shares of the Company's capital stock, in each case having a fair market value equal to the amount required or elected to be withheld or paid. Any such elections are subject to such conditions or procedures as may be established by the Committee and may be subject to disapproval by the Committee.
SECTION 14. Amendments or Termination
The Board may amend, alter or discontinue the Plan or any agreement evidencing an Award made under the Plan at such time and for such purposes as it determines appropriate, except that after the date of a Change of Control, no such action may impair the rights of any Award holder, without such holder's consent, under any Award granted prior to the date of any Change of Control. Any amendment or alteration of the Plan shall be subject to approval of the Company's stockholders only to the extent required by applicable law:
(e) extend the term of the Plan; or
(f) change the class of persons eligible to be Participants.
SECTION 15. Compliance With Other Laws and Regulations
The Plan, the grant and exercise of Awards thereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to all applicable federal, state and foreign laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant's name or deliver any Shares prior to the completion of any registration or qualification of such Shares under any federal, state or foreign law or any ruling or regulation of any government body which the Committee shall, in its sole discretion, determine to be necessary or advisable. This Plan is intended to constitute an unfunded arrangement for a select group of management or other key employees.
No Option shall be exercisable unless a registration statement with respect to the Option is effective or the Company has determined that such registration is unnecessary. Unless the Awards and Shares covered by this Plan have been registered under the Securities Act of 1933, as amended, or the Company has determined that such registration is unnecessary, each person receiving an Award and/or Shares pursuant to any Award may be required by the Company to give a representation in writing that such person is acquiring such Shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.
SECTION 16. Option Grants by Subsidiaries
In the case of a grant of an Option to any Eligible Employee employed by a
subsidiary or affiliate, such grant may, if the Committee so directs, be
implemented by the Company issuing any subject Shares to the subsidiary or
affiliate, for such lawful consideration as the Committee may determine, upon
the condition or understanding that the subsidiary or affiliate will transfer
the Shares to the optionholder in accordance with the terms of the Option
specified by the Committee pursuant to the provisions of the Plan.
Notwithstanding any other provision hereof, such Option may be issued by and in
the name of the subsidiary or affiliate and shall be deemed granted on such date
as the Committee shall determine.
SECTION 17. No Right to Company Employment
Nothing in this Plan or as a result of any Award granted pursuant to this Plan shall confer on any individual any right to continue in the employ of the Company or interfere in any way with the right of the Company to terminate an individual's employment at any time. The Award agreements may contain such provisions as the Committee may approve with reference to the effect of approved leaves of absence.
SECTION 18. Effectiveness and Expiration of Plan
The Plan shall be effective on the date the Board adopts the Plan and Old Fluor approves the Plan as sole stockholder of the Company. No Stock Option Award, Restricted Stock Award or Incentive Award shall be granted pursuant to the Plan more than ten (10) years after the effective date of the Plan.
SECTION 19. Non-Exclusivity of the Plan
Neither the adoption of the Plan by the Board nor the submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
SECTION 20. Governing Law
This Plan and any agreements hereunder shall be interpreted and construed in accordance with the laws of the State of Delaware and applicable federal law. The Committee may provide that
any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration. Any reference in this Plan or in the agreement evidencing any Award to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.
Exhibit 10.15
2003 EXECUTIVE PERFORMANCE
INCENTIVE PLAN
(Amended and Restated as of March 30, 2005)
SECTION 1. Purpose of Plan
The purpose of this “Fluor Corporation 2003 Executive Performance Incentive Plan” (the “Plan”) of Fluor Corporation, a Delaware corporation, is to enable the Company, as defined in Section 2.2(a)(ii) hereof, to attract, retain and motivate its officers, management and other key personnel, and to further align the interests of such persons with those of the shareholders of the Company, by providing for or increasing their proprietary interest in the Company.
SECTION 2. Administration of the Plan
2.1 Composition of Committee. The Plan shall be administered by the Organization and Compensation Committee of the Board of Directors, and/or by the Board of Directors or another committee of the Board of Directors of the Company, as appointed from time to time by the Board of Directors (any such administrative body, the “Committee”). The Board of Directors shall fill vacancies on, and from time to time may remove or add members to, the Committee. The Committee shall act pursuant to a majority vote or unanimous written consent. If an award granted under the Plan (an “Award”) is intended to satisfy the conditions of Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the “Code”), then each of the Committee members approving such grant shall be an “outside director” as described in the Treasury regulations under Section 162(m). Notwithstanding the foregoing, with respect to any Award that is not intended to satisfy the conditions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or Code Section 162(m)(4)(C), the Committee may appoint one or more separate committees (any such committee, a “Subcommittee”) composed of one or more directors of the Company (who may but need not be members of the Committee) and may delegate to any such Subcommittee(s) the authority to grant Awards, as defined in Section 5.1 hereof, under the Plan to Employees, to determine all terms of such Awards, and/or to administer the Plan or any aspect of it. Any action by any such Subcommittee within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee. The Committee may designate the Secretary of the Company or other Company employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to execute agreements evidencing Awards made under this Plan or other documents entered into under this Plan on behalf of the Committee or the Company.
2.2 Powers of the Committee. Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to do all things necessary or desirable in connection with the administration of this Plan with respect to the Awards over which such Committee has authority, including, without limitation, the following:
| (a) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; provided that, unless the Committee shall specify otherwise, for purposes of this Plan: (i) the term “fair market value” shall mean, as of any date, the average of the highest price and the lowest price per share at which the Shares (as defined in Section 3.1 hereof) are sold in the regular way on the New York Stock Exchange or, if no Shares are traded on the New York Stock Exchange on |
| the date in question, then for the next preceding date for which Shares are traded on the New York Stock Exchange; and (ii) the term “Company” shall mean Fluor Corporation and its subsidiaries and affiliates, unless the context otherwise requires. | ||
| (b) to determine which persons are Eligible Employees (as defined in Section 4 hereof), to which of such Eligible Employees, if any, Awards shall be granted hereunder, to make Awards under the Plan and to determine the terms of such Awards and the timing of any such Awards; | ||
| (c) to determine the number of Shares subject to Awards and the exercise or purchase price of such Shares; | ||
| (d) to establish and verify the extent of satisfaction of any performance goals applicable to Awards; | ||
| (e) to prescribe and amend the terms of the agreements or other documents evidencing Awards made under this Plan (which need not be identical); | ||
| (f) to determine whether, and the extent to which, adjustments are required pursuant to Section 11 hereof; | ||
| (g) to interpret and construe this Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; and | ||
| (h) to make all other determinations deemed necessary or advisable for the administration of the Plan. |
2.3 Determinations of the Committee. All decisions, determinations and interpretations by the Committee or the Board regarding the Plan shall be final and binding on all Eligible Employees and Participants, as defined in Section 4 hereof. The Committee or the Board, as applicable, shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer of the Company or Eligible Employee and such attorneys, consultants and accountants as it may select.
SECTION 3. Stock Subject to Plan
3.1 Aggregate Limits. Subject to adjustment as provided in Section 11, at any time, the aggregate number of shares of the Company’s common stock, $0.01 par value (“Shares”), issued pursuant to all Awards (including all ISOs (as defined in Section 5.1 hereof)) granted under this Plan shall not exceed 4,900,000, plus the number of Shares subject to awards outstanding as of February 5, 2003 under the Company’s 2000 Executive Performance Incentive Plan or the Company’s 2001 Key Employee Performance Incentive Plan but which are not thereafter issued upon exercise or settlement of such awards or are returned or delivered to the Company under such plans; provided that the total number of Shares that may be issued under this Plan shall be reduced by an additional three-quarters (3/4) of a Share for each Share issued upon settlement of an Award granted under the Plan other than a Stock Option. The Shares subject to the Plan may
2
be either Shares reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares.
3.2 Code Section 162(m) Limits. The aggregate number of Shares subject to Options granted under this Plan during any calendar year to any one Eligible Employee shall not exceed 750,000. The aggregate number of Shares issued, issuable or underlying any Restricted Stock Awards, Incentive Awards denominated in shares or Stock Unit Awards (other than Stock Units issued or issuable upon exercise of Options) granted under this Plan during any calendar year to any one Eligible Employee shall not exceed 250,000. Notwithstanding anything to the contrary in the Plan, the foregoing limitations shall be subject to adjustment under Section 11 only to the extent that such adjustment will not affect the status of any Award intended to qualify as “performance based compensation” under Code Section 162(m).
3.3 Issuance of Shares. For purposes of Section 3.1, the aggregate number of Shares issued under this Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award and not returned to the Company upon cancellation, expiration or forfeiture of an Award or delivered (either actually or by attestation) in payment or satisfaction of the purchase price, exercise price or tax obligation of an Award.
SECTION 4. Persons Eligible Under Plan
Any person who is (i) an employee of the Company and who also is an officer, key employee or member of the Executive Management Team (“EMT”), (ii) a prospective employee of the Company who is to be an officer, key employee or member of the EMT, (iii) a consultant to the Company, or (iv) an advisor of the Company (each, an “Eligible Employee”) shall be eligible to be considered for the grant of Awards hereunder. For purposes of this Plan, the Chairman of the Board’s status as an Employee shall be determined by the Board. For purposes of the administration of Awards, the term “Eligible Employee” shall also include a former Eligible Employee or any person (including any estate) who is a beneficiary of a former Eligible Employee. A “Participant” is any Eligible Employee to whom an Award has been made and any person (including any estate) to whom an Award has been assigned or transferred pursuant to Section 10.1.
SECTION 5. Plan Awards
5.1 Award Types. The Committee, on behalf of the Company, is authorized under this Plan to enter into certain types of arrangements with Eligible Employees and to confer certain benefits on them. The following such arrangements or benefits are authorized under the Plan if their terms and conditions are not inconsistent with the provisions of the Plan: Stock Options, Restricted Stock, Incentive Awards and Stock Units. Such arrangements and benefits are sometimes referred to herein as “Awards.” The authorized types of arrangements and benefits for which Awards may be granted are defined as follows:
| Stock Option Awards: A Stock Option is a right granted under Section 6 to purchase a number of Shares at such exercise price, at such times, and on such other terms and conditions as are specified in or determined pursuant to the document(s) evidencing the Award (the “Option Agreement”). Options intended to qualify as Incentive Stock |
3
| Options (“ISOs”) pursuant to Code Section 422 and Options that are not intended to qualify as ISOs (“Non-qualified Options”) may be granted under Section 6 as the Committee in its sole discretion shall determine. | ||
| Restricted Stock Awards: Restricted Stock is an award of Shares made under Section 7, the grant, issuance, retention and/or vesting of which is subject to such performance and other conditions as are expressed in the document(s) evidencing the Award (the “Restricted Stock Agreement”). | ||
| Incentive Awards: An Incentive Award is a bonus opportunity awarded under Section 8 pursuant to which a Participant may become entitled to receive an amount (which may be payable in cash, Shares or other property) based on satisfaction of such performance criteria as are specified in the document(s) evidencing the Award (the “Incentive Bonus Agreement”). | ||
| Stock Unit Awards: A Stock Unit Award is an award of a right to receive the fair market value of one Share made under Section 9, the grant, issuance, retention and/or vesting of which is subject to such performance and other conditions as are expressed in the document(s) evidencing the Award (the “Stock Unit Agreement”). |
5.2 Grants of Awards. An Award may consist of one such arrangement or benefit or two or more of them in tandem or in the alternative.
SECTION 6. Stock Option Awards
The Committee may grant an Option or provide for the grant of an Option, either from time-to-time in the discretion of the Committee or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the satisfaction of an event or condition within the control of the recipient of the Award, within the control of others or not within any person’s control.
6.1 Option Agreement. Each Option Agreement shall contain provisions regarding (a) the number of Shares which may be issued upon exercise of the Option, (b) the purchase price of the Shares and the means of payment for the Shares, (c) the term of the Option, (d) such terms and conditions of exercisability as may be determined from time to time by the Committee, (e) restrictions on the transfer of the Option and forfeiture provisions, and (f) such further terms and conditions, in each case not inconsistent with the Plan as may be determined from time to time by the Committee. Option Agreements evidencing ISOs shall contain such terms and conditions as may be necessary to comply with the applicable provisions of Section 422 of the Code.
6.2 Option Price. The purchase price per Share of the Shares subject to each Option granted under the Plan shall equal or exceed 100% of the fair market value of such Stock on the date the Option is granted, except that (a) the Committee may specifically provide that the exercise price of an Option may be higher or lower in the case of an Option granted to employees of a company acquired by the Company in assumption and substitution of options held by such employees at the time such company is acquired, and (b) in the event an Eligible Employee is required to pay or forego the receipt of any cash amount in consideration of receipt of an Option, the exercise
4
price plus such cash amount shall equal or exceed 100% of the fair market value of such Stock on the date the Option is granted.
6.3 Option Term. The “term” of each Option granted under the Plan, including any ISOs, shall not exceed ten (10) years from the date of its grant.
6.4 Option Vesting. Options granted under the Plan shall be exercisable at such time and in such installments during the period prior to the expiration of the Option’s Term as determined by the Committee in its sole discretion. The Committee shall have the right to make the timing of the ability to exercise any Option granted under the Plan subject to such performance requirements as deemed appropriate by the Committee. At any time after the grant of an Option the Committee may, in its sole discretion, reduce or eliminate any restrictions surrounding any Participant’s right to exercise all or part of the Option, except that no Option shall first become exercisable within one (1) year from its date of grant, other than upon death, disability, retirement, a Change of Control (as defined in Section 12.2 hereof) or upon satisfaction of such performance requirements as deemed appropriate by the Committee.
6.5 Option Exercise.
| (a) Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional Shares and the Committee may require, by the terms of the Option Agreement, a partial exercise to include a minimum number of Shares. | ||
| (b) Manner of Exercise. All or a portion of an exercisable Option shall be deemed exercised upon delivery to the representative of the Company designated for such purpose by the Committee all of the following: (i) notice of exercise in such form as the Committee authorizes specifying the number of Shares to be purchased by the Participant, (ii) payment or provision for payment of the exercise price for such number of Shares, (iii) such representations and documents as the Committee, in its sole discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act of 1933, as amended, and any other federal, state or foreign securities laws or regulations, (iv) in the event that the Option shall be exercised pursuant to Section 10.1 by any person or persons other than the Eligible Employee, appropriate proof of the right of such person or persons to exercise the Option, and (v) such representations and documents as the Committee, in its sole discretion, deems necessary or advisable to provide for the tax withholding pursuant to Section 13. Unless provided otherwise by the Committee, no Participant shall have any right as a shareholder with respect to any Shares purchased pursuant to any Option until the registration of Shares in the name of such person, and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such Shares are so registered. | ||
| (c) Payment of Exercise Price. To the extent authorized by the Committee, the exercise price of an Option may be paid in the form of one of more of the following, either through the terms of the Option Agreement or at the time of exercise of an Option: (i) cash or certified or cashiers’ check, (ii) shares of capital stock of the Company that |
5
| have been held by the Participant for such period of time as the Committee may specify, (iii) other property deemed acceptable by the Committee, (iv) a reduction in the number of Shares or other property otherwise issuable pursuant to such Option or (v) any combination of (i) through (iv). |
SECTION 7. Restricted Stock Awards
Restricted Stock consists of an award of Shares, the grant, issuance, retention and/or vesting of which shall be subject to such performance conditions and to such further terms and conditions as the Committee deems appropriate.
7.1 Restricted Stock Award. Each Restricted Stock Award shall reflect, to the extent applicable (a) the number of Shares subject to such Award or a formula for determining such, (b) the time or times at which Shares shall be granted or issued and/or become retainable or vested, and the conditions or restrictions on such Shares, (c) the performance criteria and level of achievement versus these criteria which shall determine the number of Shares granted, issued, retainable and/or vested, (d) the period as to which performance shall be measured for determining achievement of performance, (e) forfeiture provisions, and (f) such further terms and conditions, in each case not inconsistent with the Plan as may be determined from time to time by the Committee.
7.2 Restrictions and Performance Criteria. The grant, issuance, retention and/or vesting of each Restricted Stock Award may be subject to such performance criteria and level of achievement versus these criteria as the Committee shall determine, which criteria may be based on financial performance, personal performance evaluations and/or completion of service by the Participant; provided, however, that no Restricted Stock Award shall fully vest within three years from its date of grant, other than (a) upon death, disability, retirement, a Change of Control (as defined in Section 12.2 hereof) or (b) upon satisfaction of such performance requirements as deemed appropriate by the Committee, and provided further that no portion of a Restricted Stock Award shall vest based upon the satisfaction of performance requirements within one year from its date of grant. Notwithstanding anything to the contrary herein, the performance criteria for any Restricted Stock Award that is intended by the Committee to satisfy the requirements for “performance-based compensation” under Code Section 162(m) shall be a measure based on one or more Qualifying Performance Criteria (as defined in Section 10.2 hereof) selected by the Committee.
7.3 Timing and Form of Award. The Committee shall determine the timing of award of any Restricted Stock Award. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the award or vesting of any Restricted Stock to be deferred to a specified date or event. The Committee may provide for a Participant to have the option for his or her Restricted Stock, or such portion thereof as the Committee may specify, to be granted in whole or in part in Stock Units.
7.4 Discretionary Adjustments. Notwithstanding satisfaction of any completion of service or performance goals, the number of Shares granted, issued, retainable and/or vested under a Restricted Stock Award on account of either financial performance or personal performance
6
evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 8. Incentive Awards
Each Incentive Award will confer upon the Eligible Employee the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a performance period of not less than one year.
8.1 Incentive Award. Each Incentive Award shall contain provisions regarding (a) the target and maximum amount payable to the Participant as an Incentive Award, (b) the performance criteria and level of achievement versus these criteria which shall determine the amount of such payment, (c) the period as to which performance shall be measured for establishing the amount of any payment, (d) the timing of any payment earned by virtue of performance, (e) restrictions on the alienation or transfer of the Incentive Award prior to actual payment, (f) forfeiture provisions, and (g) such further terms and conditions, in each case not inconsistent with the Plan as may be determined from time to time by the Committee. In establishing the provisions of Incentive Awards, the Committee may refer to categories of such Awards as parts of “Programs” or “Plans”, which names will not affect the applicability of this Plan. The maximum amount payable as an Incentive Award that is settled for cash may be a multiple of the target amount payable, but the maximum amount payable pursuant to that portion of an Incentive Award granted under this Plan for any fiscal year to any Participant that is intended to satisfy the requirements for “performance based compensation” under Code Section 162(m) shall not exceed Five Million Dollars ($5,000,000).
8.2 Performance Criteria. The Committee shall establish the performance criteria and level of achievement versus these criteria which shall determine the target and the minimum and maximum amount payable under an Incentive Award, which criteria may be based on financial performance and/or personal performance evaluations. The Committee may specify the percentage of the target Incentive Award that is intended to satisfy the requirements for “performance-based compensation” under Code Section 162(m). Notwithstanding anything to the contrary herein, the performance criteria for any portion of an Incentive Award that is intended by the Committee to satisfy the requirements for “performance-based compensation” under Code Section 162(m) shall be a measure based on one or more Qualifying Performance Criteria (as defined in Section 10.2 hereof) selected by the Committee and specified at the time required under Code Section 162(m).
8.3 Timing and Form of Payment. The Committee shall determine the timing of payment of any Incentive Award. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the payment of any Incentive Award to be deferred to a specified date or event. The Committee may specify the form of payment of Incentive Awards, which may be cash, shares or other property, or may provide for a Participant to have the option for his or her Incentive Award, or such portion thereof as the Committee may specify, to be paid in whole or in part in Shares or Stock Units.
8.4 Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an Incentive Award on account of either financial performance or personal
7
performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 9. Stock Units
9.1 Stock Units. A “Stock Unit” is a bookkeeping entry representing an amount equivalent to the fair market value of one Share, also sometimes referred to as a “restricted unit” or “shadow stock”. Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise provided for by the Committee.
9.2 Stock Unit Awards. Each Stock Unit Award shall reflect, to the extent applicable (a) the number of Stock Units subject to such Award or a formula for determining such, (b) the time or times at which Stock Units shall be granted or issued and/or become retainable or vested, and the conditions or restrictions on such Stock Units, (c) the performance criteria and level of achievement versus these criteria which shall determine the number of Stock Units granted, issued, retainable and/or vested, (d) the period as to which performance shall be measured for determining achievement of performance, (e) forfeiture provisions, and (f) such further terms and conditions, in each case not inconsistent with the Plan as may be determined from time to time by the Committee. Stock Units may also be issued upon exercise of Options, may be granted in payment and satisfaction of Incentive Awards and may be issued in lieu of Restricted Stock or any other Award that the Committee elects to be paid in the form of Stock Units.
9.3 Performance Criteria. The grant, issuance, retention and or vesting of each Stock Unit may be subject to such performance criteria and level of achievement versus these criteria as the Committee shall determine, which criteria may be based on financial performance, personal performance evaluations and/or completion of service by the Participant; provided, however, that no Stock Unit shall first vest within one (1) year from its date of grant, other than upon death, disability, retirement, a Change of Control (as defined in Section 12.2 hereof) or upon satisfaction of such performance requirements as deemed appropriate by the Committee. Notwithstanding anything to the contrary herein, the performance criteria for any Stock Unit that is intended by the Committee to satisfy the requirements for “performance-based compensation” under Code Section 162(m) shall be a measure based on one or more Qualifying Performance Criteria (as defined in Section 10.2 hereof) selected by the Committee and specified at the time the Stock Unit is granted.
9.4 Timing and Form of Award. The Committee shall determine the timing of award of any Stock Unit. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Participant to elect for the award or vesting of any Stock Unit to be deferred to a specified date or event. The Committee may provide for a Participant to have the option for his or her Stock Unit, or such portion thereof as the Committee may specify, to be granted in whole or in part in Shares.
9.5 Settlement of Stock Units. The Committee may provide for Stock Units to be settled in cash or Shares (at the election of the Company or the Participant, as specified by the Committee) and to be made at such other times as it determines appropriate or as it permits a Participant to choose. The amount of cash or Shares, or other settlement medium, to be so distributed may be increased by an interest factor or by dividend equivalents, as the case may be, which may be
8
valued as if reinvested in Shares. Until a Stock Unit is settled, the number of Shares represented by a Stock Unit shall be subject to adjustment pursuant to Section 11.
9.6 Discretionary Adjustments. Notwithstanding satisfaction of any completion of service or performance goals, the number of Stock Units granted, issued, retainable and/or vested under a Stock Unit Award on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
SECTION 10. Other Provisions Applicable to Awards
10.1 Transferability. During an Eligible Employee’s lifetime, Options may be exercised only by the Participant. Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly states that it is transferable as provided hereunder, no Award granted under the Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner, other than by will or the laws of descent and distribution, prior to the vesting or lapse of any and all restrictions applicable to any Shares issued under an Award. The Committee may in its sole discretion grant an Award or amend an outstanding Award to provide that the Award is transferable or assignable to a member or members of the Eligible Employee’s “immediate family”, as such term is defined under Exchange Act Rule 16a-1(e), or to a trust for the benefit solely of a member or members of the Eligible Employee’s immediate family, or to a partnership or other entity whose only owners are members of the Eligible Employee’s family, provided that following any such transfer or assignment the Award will remain subject to substantially the same terms applicable to the Award while held by the Eligible Employee, as modified as the Committee in its sole discretion shall determine appropriate, and the Participant shall execute an agreement agreeing to be bound by such terms.
10.2 Qualifying Performance Criteria. For purposes of this Plan, the term “Qualifying Performance Criteria” shall mean any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit, subsidiary or business segment, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee in the Award: (a) cash flow; (b) earnings (including gross margin, earnings before interest and taxes (“EBIT”), earnings before taxes (“EBT”), and net earnings); (c) earnings per share; (d) growth in earnings or earnings per share; (e) stock price; (f) return on equity or average stockholders’ equity; (g) total stockholder return; (h) return on capital; (i) return on assets or net assets; (j) return on investment; (k) revenue; (l) income or net income; (m) operating income or net operating income; (n) operating profit or net operating profit; (o) operating margin; (p) return on operating revenue; (q) market share; (r) contract awards or backlog; (s) overhead or other expense reduction; (t) growth in stockholder value relative to the two-year moving average of the S&P 500 Index; (u) growth in stockholder value relative to the two-year moving average of the Dow Jones Heavy Construction Index; (v) credit rating; (w) strategic plan development and implementation; (x) succession plan development and implementation; (y) retention of executive talent; (z) improvement in workforce diversity; (aa) return on average stockholders’ equity
9
relative to the Ten Year Treasury Yield (as hereinafter defined); (bb) improvement in safety records; (cc) capital resource management plan development and implementation; (dd) improved internal financial controls plan development and implementation; (ee) corporate tax savings; (ff) corporate cost of capital reduction; (gg) investor relations program development and implementation; (hh) corporate relations program development and implementation; (ii) executive performance plan development and implementation; and (jj) tax provision rate for financial statement purposes. The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (iv) accruals for reorganization and restructuring programs; and (v) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year. The term “Ten Year Treasury Yield” shall mean, for any fiscal period, the daily average percent per annum yield for U.S. Government Securities — 10 year Treasury constant maturities, as published in the Federal Reserve statistical release or any successor publication. Prior to the payment of any compensation under an Award intended to qualify as “performance-based compensation” under Code Section 162(m) the Committee shall certify the extent to which any Qualifying Performance Criteria and any other material terms under such Award have been satisfied (other than in cases where such relate solely to the increase in the value of the Company’s Common Stock).
10.3 Dividends. Unless otherwise provided by the Committee, no adjustment shall be made in Shares issuable under Awards on account of cash dividends which may be paid or other rights which may be issued to the holders of Shares prior to their issuance under any Award. The Committee shall specify whether dividends or dividend equivalent amounts shall be paid to any Participant with respect to the Shares subject to any Award that have not vested or been issued or that are subject to any restrictions or conditions on the record date for dividends.
10.4 Agreements Evidencing Awards. The Committee shall, subject to applicable law, determine the date an Award is deemed to be granted, which for purposes of this Plan shall not be affected by the fact that an Award is contingent on subsequent stockholder approval of the Plan. The Committee or, except to the extent prohibited under applicable law, its delegate(s) may establish the terms of agreements evidencing Awards under this Plan and may, but need not, require as a condition to any such agreement’s effectiveness that such agreement be executed by the Participant and that such Participant agree to such further terms and conditions as specified in such agreement. The grant of an Award under this Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in this Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the Agreement evidencing such Award.
10.5 Tandem Stock or Cash Rights. Either at the time an Award is granted or by subsequent action, the Committee may, but need not, provide that an Award shall contain as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is determined by reference to the value of the Award;
10
provided, however, that the number of such rights granted under any Award shall not exceed the per Eligible Employee share limitation for such Award as set forth in Section 3.2.
SECTION 11. Changes in Capital Structure
If the outstanding securities of the class then subject to this Plan are increased, decreased or exchanged for or converted into cash, property or a different number or kind of shares or securities, or if cash, property or shares or securities are distributed in respect of such outstanding securities, in either case as a result of a reorganization, merger, consolidation, recapitalization, restructuring, reclassification, dividend (other than a regular, quarterly cash dividend) or other distribution, stock split, reverse stock split, spin-off or the like, or if substantially all of the property and assets of the Company are sold, then, unless the terms of such transaction shall provide otherwise, the Committee may make appropriate and proportionate adjustments in (i) the number and type of shares or other securities or cash or other property that may be acquired pursuant to Awards theretofore granted under this Plan and the exercise or settlement price of such Awards, provided, however, that any such adjustment shall be made in such a manner that will not affect the status of any Award intended to qualify as an ISO under Code Section 422 or as “performance based compensation” under Code Section 162(m), and (ii) the maximum number and type of shares or other securities that may be issued pursuant to such Awards thereafter granted under this Plan.
SECTION 12. Change of Control
12.1 Effect of Change of Control. The Committee may through the terms of the Award or otherwise provide that any or all of the following shall occur, either immediately upon the Change of Control or a Change of Control Transaction, or upon termination of the Eligible Employee’s employment within twenty-four (24) months following a Change of Control or a Change of Control Transaction: (a) in the case of an Option, the Participant’s ability to exercise any portion of the Option not previously exercisable; (b) in the case of an Incentive Award, the right to receive a payment equal to the target amount payable or, if greater, a payment based on performance through a date determined by the Committee prior to the Change of Control; and (c) in the case of Shares issued in payment of any Incentive Award, and/or in the case of Restricted Stock or Stock Units, the lapse and expiration of any conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award. The Committee also may, through the terms of the Award or otherwise, provide for an absolute or conditional exercise, payment or lapse of conditions or restrictions on an Award which shall only be effective if, upon the announcement of a Change of Control Transaction, no provision is made in such Change of Control Transaction for the exercise, payment or lapse of conditions or restrictions on the Award, or other procedure whereby the Participant may realize the full benefit of the Award.
11
12.2 Definitions. Unless the Committee or the Board shall provide otherwise, “Change of Control” shall mean an occurrence of any of the following events: (a) a third person, including a “group” as defined in Section 13(d)(3) of the Exchange Act, 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; (b) as the 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 the Company or any successor to the Company; or (c) such other events as the Committee or the Board from time to time may specify. “Change of Control Transaction” shall include any tender offer, offer, exchange offer, solicitation, merger, consolidation, reorganization or other transaction that is intended to or reasonably expected to result in a Change of Control.
SECTION 13. Taxes
13.1 Withholding Requirements. The Committee may make such provisions or impose such conditions as it may deem appropriate for the withholding or payment by the Employee or Participant, as appropriate, of any taxes which it determines are required in connection with any Awards granted under this Plan, and a Participant’s rights in any Award are subject to satisfaction of such conditions.
13.2 Payment of Withholding Taxes. Notwithstanding the terms of Section 13.1 hereof, the Committee may provide in the agreement evidencing an Award or otherwise that all or any portion of the taxes required to be withheld by the Company or, if permitted by the Committee, desired to be paid by the Participant, in connection with the exercise of a Non-qualified Option or the exercise, vesting, settlement or transfer of any other Award shall be paid or, at the election of the Participant, may be paid by the Company withholding shares of the Company’s capital stock otherwise issuable or subject to such Award, or by the Participant delivering previously owned shares of the Company’s capital stock, in each case having a fair market value equal to the amount required or elected to be withheld or paid. Any such elections are subject to such conditions or procedures as may be established by the Committee and may be subject to disapproval by the Committee.
SECTION 14. Amendments or Termination
The Board may amend, alter or discontinue the Plan or any agreement evidencing an Award made under the Plan, but any such amendment shall be subject to approval of the shareholders of the Company to the extent required by law or by any applicable listing standard of the New York Stock Exchange or other securities exchange or stock market where the Company has listed the Shares. In addition, unless approved by a majority of the shareholders of the Company present in person or by proxy and actually voting, no such amendment shall be made that would:
| (a) | materially increase the maximum number of Shares for which Awards may be granted under the Plan, other than an increase pursuant to Section 11 (“Changes in Capital Structure”); | ||
| (b) | reduce the price at which Options may be granted, as described in Section 6.2; |
12
| (c) | reduce the exercise price of outstanding Options; | ||
| (d) | extend the term of the Plan; or | ||
| (e) | change the class of persons eligible to be Participants. |
After the date of a Change of Control, no amendment to the Plan or any agreement evidencing an Award made under the Plan shall be effected that impairs the rights of any Award holder, without such holder’s consent, under any Award granted prior to the date of any Change of Control.
SECTION 15. Compliance With Other Laws and Regulations
The Plan, the grant and exercise of Awards thereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to all applicable federal, state and foreign laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant’s name or deliver any Shares prior to the completion of any registration or qualification of such Shares under any federal, state or foreign law or any ruling or regulation of any government body which the Committee shall, in its sole discretion, determine to be necessary or advisable. This Plan is intended to constitute an unfunded arrangement for a select group of management or other key employees.
No Option shall be exercisable unless a registration statement with respect to the Option is effective or the Company has determined that such registration is unnecessary. Unless the Awards and Shares covered by this Plan have been registered under the Securities Act of 1933, as amended, or the Company has determined that such registration is unnecessary, each person receiving an Award and/or Shares pursuant to any Award may be required by the Company to give a representation in writing that such person is acquiring such Shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.
SECTION 16. Option Grants by Subsidiaries
In the case of a grant of an Option to any Eligible Employee employed by a subsidiary or affiliate, such grant may, if the Committee so directs, be implemented by the Company issuing any subject Shares to the subsidiary or affiliate, for such lawful consideration as the Committee may determine, upon the condition or understanding that the subsidiary or affiliate will transfer the Shares to the optionholder in accordance with the terms of the Option specified by the Committee pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such Option may be issued by and in the name of the subsidiary or affiliate and shall be deemed granted on such date as the Committee shall determine.
SECTION 17. No Right to Company Employment
Nothing in this Plan or as a result of any Award granted pursuant to this Plan shall confer on any individual any right to continue in the employ of the Company or interfere in any way with the right of the Company to terminate an individual’s employment at any time. The Award
13
agreements may contain such provisions as the Committee may approve with reference to the effect of approved leaves of absence.
SECTION 18. Effectiveness and Expiration of Plan
The Plan shall be effective on the date the Board adopts the Plan. No Stock Option Award, Restricted Stock Award or Incentive Award shall be granted pursuant to the Plan more than ten (10) years after the effective date of the Plan.
SECTION 19. Non-Exclusivity of the Plan
Neither the adoption of the Plan by the Board nor the submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
SECTION 20. Governing Law
This Plan and any agreements hereunder shall be interpreted and construed in accordance with the laws of the State of Delaware and applicable federal law. The Committee may provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration. Any reference in this Plan or in the agreement evidencing any Award to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.
14
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Alan L. Boeckmann, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Fluor Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant’s auditors and
the audit committee of registrant’s board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date: May 5, 2005
By:
/s/ Alan L. Boeckmann
Alan L. Boeckmann,
Chairman of the Board and
Chief Executive Officer
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, D. Michael Steuert, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Fluor Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant’s auditors and
the audit committee of registrant’s board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date: May 5, 2005
By:
/s/ D. Michael Steuert
D. Michael Steuert,
Senior Vice President and
Chief Financial Officer
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
In connection with the Quarterly Report of Fluor Corporation (the “Company”) on Form 10-Q for
the period ended March 31, 2005, as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Alan L. Boeckmann, Chairman and Chief Executive Officer of the Company,
certify, for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:
A signed original of this written statement required by 18 U.S.C. Section 1350 has been provided to
the Company and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.
PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND 18 U.S.C. SECTION 1350
•
the Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and
•
the information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.
Date: May 5, 2005
By:
/s/ Alan L. Boeckmann
Alan L. Boeckmann,
Chairman of the Board and
Chief Executive Officer
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
In connection with the Quarterly Report of Fluor Corporation (the “Company”) on Form 10-Q for
the period ended March 31, 2005, as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, D. Michael Steuert, Senior Vice President and Chief Financial Officer of
the Company, certify, for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that to my knowledge:
A signed original of this written statement required by 18 U.S.C. Section 1350 has been provided to
the Company and will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.
PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND 18 U.S.C. SECTION 1350
•
the Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and
•
the information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.
Date: May 5, 2005
By:
/s/ D. Michael Steuert
D. Michael Steuert,
Senior Vice President and
Chief Financial Officer