PROPOSAL 2 ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
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We
are asking stockholders to vote on an advisory resolution to approve the company's executive compensation as reported in this proxy statement. As described below in the "Compensation Discussion and
Analysis" section of this proxy statement, the Organization and Compensation Committee has structured our executive compensation program to achieve the following key objectives that contribute to the
company's long-term success:
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Key Objective
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Achievement of the Objective
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Align Interests of Named Executives with Stockholders
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Annual and long-term
incentive programs reward named executives for achievement of short- and long-term goals that enhance stockholder value.
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Between 55% and 73% of
named executive target total direct compensation is equity-based.
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Named executives are
expected to hold company shares or units with a value between two and six times their base salary and are prohibited from hedging or pledging company securities.
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Pay for Performance
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85% to 90% of the annual
incentive for named executives is tied to company performance, including corporate measures such as net earnings, cash flow from operations and business segment performance.
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Long-term incentive
payouts under our 2017 Value Driver Incentive Program are tied to the company's new awards and return on assets employed, and also are directly related to the stock price.
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Attract and Retain Top Talent
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Total compensation for
named executives is targeted at the 50
th
percentile of the peer group.
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We
urge stockholders to read the "Compensation Discussion and Analysis" beginning on page 23, which describes in more detail how our executive compensation policies and procedures operate and
are designed to achieve our compensation objectives, as well as the Summary Compensation Table and related compensation tables and narrative appearing on pages 44 through 60, which provide
detailed information on the compensation of our named executives. The Organization and
Compensation Committee and the Board of Directors believe that the policies and procedures articulated in the "Compensation Discussion and Analysis" are effective in achieving our goals and that the
compensation of our named executives reported in this proxy statement has supported and contributed to the company's success.
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FLUOR
CORPORATION
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STATEMENT
21
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Table of Contents
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PROPOSAL
2 EXECUTIVE
COMPENSATION
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In
accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as a matter of good corporate governance, we are asking stockholders to approve the
following advisory resolution at the annual meeting:
RESOLVED,
that the stockholders of Fluor Corporation (the "Company") approve, on an advisory basis, the compensation of the Company's named executives as disclosed pursuant to the compensation
disclosure rules of the Securities and Exchange Commission in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables and narrative in the Proxy
Statement for the Company's 2018 annual meeting of stockholders.
This
advisory resolution, commonly referred to as a "say on pay" resolution, is non-binding on the Board. Although non-binding, the Board and the Organization and Compensation Committee will review
and consider the voting results when evaluating our executive compensation program. An advisory stockholder vote on the frequency of stockholder votes to approve executive compensation is required to
be held at least once every six years. The company last held an advisory vote on frequency in 2017. After consideration of the vote of stockholders at the 2017 annual meeting of stockholders and other
factors, the Board decided to hold advisory votes to approve executive compensation annually until the next advisory vote on frequency. Accordingly, the next advisory vote to approve executive
compensation will be held at the 2019 annual meeting of stockholders.
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PROXY
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the principles, objectives and features of the compensation program, as well as the
decisions made under this program for 2017, for our named executive officers (referred to herein as the "named executives"). For 2017, our named executives were:
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Name
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Position
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David T. Seaton
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Chairman and Chief Executive Officer
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Bruce A Stanski
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Executive Vice President & Chief Financial Officer (effective August 4, 2017)
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Biggs C. Porter
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Former Executive Vice President & Chief Financial Officer (through August 3, 2017)
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Carlos M. Hernandez
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Executive Vice President, Chief Legal Officer & Secretary
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Garry W. Flowers
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Executive Vice President
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Jose L. Bustamante
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Executive Vice President, Business Development & Strategy
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Executive Summary
Our executive compensation program is designed to motivate excellent performance and to create alignment with company performance. In 2017,
many of our clients continued to evaluate their capital expenditure needs and remained selective in how they allocated capital. This resulted in fewer projects on which we could bid and win. We
continued to generate
positive cash flow and earnings but, due to the business environment and execution challenges on several projects, our performance did not meet our targets for the year. This is reflected in the
payouts for the named executives' annual incentive awards, averaging 49% of target, and the 2015 Value Driver Incentive ("VDI") awards (for which the performance period ended on December 31,
2017), under which payouts were zero. This performance will also negatively impact future payments for the 2016 and 2017 VDI awards (which include fiscal year 2017 in the performance period) when
payouts for those awards are determined at the end of the applicable three-year performance period. These actual and potential payouts, as well as our realizable pay analysis on pages 25-26
demonstrate our pay-for-performance alignment and commitment. We believe we have the right business strategy and incentive compensation programs to deliver better results for our stockholders.
Over the past few years, clients reduced their capital expenditure budgets and were increasingly constrained in approving new projects as a
reaction to low commodity prices, political uncertainties, currency devaluations and a challenging competitive environment. Through this difficult business environment, we remained focused on becoming
the integrated solutions provider of choice for our clients and continued to prepare our company for an expected multi-year recovery in the energy and commodities markets and improvements in the other
markets we serve.
New Awards and Backlog.
In 2017, we received $12.6 billion in new awards across the entire asset life cycle, from
front-end engineering and design (FEED) to full engineering, procurement, fabrication and construction, as well as operations and maintenance services. We ended 2017 with a consolidated backlog of
approximately $31.0 billion.
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23
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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Process Improvements.
More than ever, clients are demanding cost and schedule certainty and that facilities be designed and
built for capital efficiency, allowing them to thrive in any commodity price environment. In 2017, we took significant steps to prepare our company for the future by making changes in our systems and
processes to improve on project delivery. We also invested in a new data-centric execution platform that will use historical, standardized data to help us more accurately analyze and predict project
outcomes. We believe these initiatives will help us drive execution excellence and the cost and schedule certainty required by our clients.
Safety.
Safety continued to be a major area of emphasis in 2017. Our total case incidence rate and health, safety and
environmental scores improved over our 2016 performance, as we continue our uncompromising focus on safety and promoting a caring, preventive culture.
Cash Flow From Operations and Earnings.
In 2017, we remained focused on generating positive cash flow from operations and
maintaining our strong balance sheet. At the end of 2017, we had $2.1 billion in cash and marketable securities, after returning $118 million in dividends to stockholders. Despite
challenges throughout the year, net earnings attributable to Fluor from continuing operations were $191 million, or $1.36 per diluted share, in 2017. Earnings results include a charge of
$37 million, or $0.27 per diluted share, related to the implementation of the recently enacted U.S. Tax Cuts and Jobs Act.
Our overriding objective is to pay for performance. As shown in the charts below, for 2017, 89% of our Chief Executive Officer's target total
direct compensation ("TDC") and approximately 81% (on average) of the other named executives' target TDC was in the form of annual or long-term incentives, the value of which is variable (depending on
either performance and/or the price of the company's stock).
For
2017, our long-term incentives included a mix of restricted stock units ("RSUs"), stock options and stock-based performance awards under our VDI program. The VDI awards are paid in stock and have
performance targets calculated over a three-year period tied to average annual new award gross margin dollars and percentage, and average annual return on operating assets employed. The number of
earned VDI units is further adjusted based on the company's total shareholder return relative to a select group of peers. These measures focus named executives on the creation of long-term company
value for the benefit of our stockholders.
Our
annual incentives are paid in cash and are based primarily on the achievement of pre-established financial and operational performance goals for each year.
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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CEO Target TDC
(1)
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Other Named Executives' Average Target TDC
(1)
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-
(1)
-
Target
TDC consists of actual base pay, target annual incentive and the value of all long-term incentives on the date of grant.
The chart below illustrates our Chief Executive Officer's "realizable" compensation as compared to his target TDC, averaged over the last
three fiscal years. We believe that it is important to show realizable compensation because it provides valuable supplemental information to assist our stockholders in understanding our executive
compensation program. Realizable compensation shows the value of the compensation our Chief Executive Officer actually earned or could expect to earn as of the end of 2017, while target TDC represents
his target compensation opportunity at the time of grant.
While
both target TDC and realizable compensation include actual base salaries, realizable compensation reflects both (i) actual performance against goals that impacts annual incentives and VDI
awards and (ii) stock price. On average, over the last three years, our annual incentives have paid out below target as a result of our pay-for-performance alignment in a challenging business
environment. In addition, the realizable value of our long-term incentives is significantly below the target opportunity due to a combination of both performance and stock price. As of
December 31, 2017, none of the options granted to named executives in the last three years were in-the-money. Further, the three-year performance for the 2015 VDI (which performance period
ended on December 31, 2017) was below the threshold performance target, resulting in a zero payout to named executives under such grants. As shown in the graph below, average realizable
compensation for our Chief Executive Officer for the three-year period was 30% lower than his target TDC, which we believe demonstrates strong alignment between our named executive officer and
stockholder interests and our commitment to pay for performance.
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FLUOR
CORPORATION
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2018
PROXY
STATEMENT
25
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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CEO Target TDC and Realizable Pay
3-Year Average (2015 - 2017)
-
(1)
-
Target
TDC consists of actual base salary, target annual incentive and the value of all long-term incentives on the date of grant.
-
(2)
-
Realizable
pay includes: (i) actual base salary; (ii) actual annual incentive paid; (iii) the value of options on the date of
exercise (if exercised), or on December 31, 2017 (if unexercised); and (iv) the value of other long-term incentive awards on the vesting date (if vested) or on December 31, 2017
(if unvested), as further discussed in the Outstanding Equity Awards at 2017 Fiscal Year End table on pages 51-52.
In making decisions regarding the compensation opportunities for the named executives in 2017, the Committee took into account market
conditions and performance, and also considered market data for our compensation peer group (as described on pages 39-40, the "Compensation Peer Group") and general industry peers. The
Committee took the following specific actions with respect to named executive compensation for 2017 in order to motivate our named executives and align their interests with
stockholders:
-
-
Approved 2017 base salaries that were the same as 2016 base salaries (except with respect to Mr. Stanski whose salary was increased by
16.7% in 2017, primarily to reflect his promotion to Chief Financial Officer, and Mr. Bustamante whose salary was increased by 5.6% to bring his base salary closer to the median among those
with similar positions in our Compensation Peer Group);
-
-
Approved 2017 target bonus percentages that were the same as 2016 target bonus percentages (except with respect to Mr. Seaton whose
bonus was increased by 5% to bring his target total direct compensation closer to the median among those with similar positions in our Compensation Peer Group), while maintaining the design of the
annual incentive program;
-
-
Set the long-term incentive award mix to include 50% performance-based VDI awards, 25% RSUs and 25% stock options;
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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-
-
For the 2017 VDI awards, changed the performance measures to return on operating assets employed, new awards gross margin dollars and new
awards gross margin percentage, measures that the Committee believes drive long-term stockholder value; and
-
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Added a modifier to the 2017 VDI awards that is based on the company's three-year cumulative total shareholder return relative to the
engineering and construction peers included in the Compensation Peer Group.
Our executive compensation policies reflect our strong focus on sound corporate governance. As in prior years, the following practices and
policies were in effect during 2017:
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What we do
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What we do not do
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✓
We maintain robust stock ownership guidelines, including a 6x base salary requirement for the Chief Executive Officer.
✓
We maintain a clawback policy for performance-based compensation.
✓
We design compensation programs that do not encourage behavior that could create material adverse risks to our business; and the Committee conducts an annual compensation risk
assessment.
✓
We engage an independent compensation consultant for our fully independent Committee.
✓
We prohibit hedging, pledging and short-term trading of company stock.
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✗
We do not provide single trigger change in control agreements.
✗
We do not have excise tax gross-ups for change in control agreements.
✗
We do not allow repricing of stock options without stockholder approval.
✗
We do not allow the payment of dividends or dividend equivalents on any unvested stock awards.
✗
We do not have individual employment agreements for our executive officers.
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How Named Executive Compensation is Tied to Performance
We use a balanced approach to compensation with a variety of pay elements to reward the achievement of both short-term and long-term goals,
the majority of which are directly linked to performance as described in the table below:
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Component
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Primary Purpose
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Linkage to Performance
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Base Salaries
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Provide a market competitive, stable level of income to attract and retain top talent
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Individual responsibility,
performance and contributions to the company, overall salary movements in the Compensation Peer Group and the company's salary budget are considered by the Board or the Committee, as applicable, in determining an appropriate salary adjustment each
year
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FLUOR
CORPORATION
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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Component
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Primary Purpose
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Linkage to Performance
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Annual Incentive Awards
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Provide annual cash compensation for achievement of performance goals that drive near-term objectives and support long-term company value:
Net earnings
Cash flow from
operations
Safety
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Annual forecasts of net
earnings and other factors are made at the beginning of each fiscal year, and are used to set the target achievement levels for the annual incentive awards
The annual incentive awards are
completely at-risk, depending on the level of performance against the criteria
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Long-Term Incentives
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Value Driver Incentive Performance Units
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Provide a stock-based incentive and retention vehicle that is linked to performance measures that focus named executives on the creation of
long-term company value
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Forecasts for the
performance measures are made at the beginning of each year, and performance units are earned to the extent those expectations are met, on average, over a three-year period, as modified based on the company's three-year cumulative total shareholder
return relative to engineering and construction peers
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VDI awards are earned and
vest at the end of a three-year performance period, aligning the interests of executives with those of our stockholders by focusing the executives on the company's financial performance over a multi-year period
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The units are completely
at-risk, depending on our performance against the relevant measures (and our stock price)
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Stock Options
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Provide a long-term retention vehicle that is directly linked to stockholder value creation over time
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Stock options vest in
equal thirds over three years and have a ten-year term, aligning the interests of executives with those of our stockholders by focusing the executives on long-term stockholder value creation
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The options are completely
at-risk, attaining value only if our stock price grows over the initial grant price
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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Component
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Primary Purpose
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Linkage to Performance
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Restricted Stock Units
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Provide a long-term equity ownership and retention vehicle that is directly linked to stockholder value creation over time
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RSUs vest in equal thirds
over three years, aligning the interests of executives with those of our stockholders by focusing the executives on the company's financial performance over a multi-year period
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The value of the RSUs is
at-risk, increasing or decreasing with our stock price over the vesting period
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Components of 2017 Named Executive Compensation
The company provides named executives with base salaries that provide a competitive, stable level of income, since most other elements of
their compensation are at-risk based on company performance. In determining base salaries for positions held by named executives, the Committee generally targets the
50
th
percentile (i.e., the median) for similar types of executives within the Compensation Peer Group. Base salaries may deviate from the median to attract key talent and
for named executives with varying levels of experience or specialized duties or skill sets. The Committee reviews base salaries for named executives annually and upon a change in responsibilities.
In
evaluating the Chief Executive Officer's base salary and his recommendations for the base salaries of the other named executives, the Committee considered the following factors during its 2017
annual review:
-
-
the Compensation Peer Group data and other general industry survey data for comparable positions;
-
-
individual level of responsibility, performance and contributions to the company;
-
-
internal pay equity based on relative duties and responsibilities; and
-
-
the company's 2017 salary budget.
The
2017 base salaries for the named executives did not change from 2016 (except with respect to Mr. Stanski whose salary was increased by 16.7% in 2017, primarily to reflect his promotion to
Chief Financial Officer, and Mr. Bustamante whose salary was increased by 5.6% to bring his base salary closer to the median of those with similar positions in our Compensation Peer Group) and
were as follows:
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Named Executive
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2017 Base
Salary
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David T. Seaton
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$1,295,000
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Bruce A. Stanski
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$700,000
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Biggs C. Porter
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$841,300
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Carlos M. Hernandez
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$630,000
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Garry W. Flowers
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$530,000
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Jose L. Bustamante
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$475,000
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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For
2017, the base salaries for Messrs. Seaton, Stanski, Hernandez, Flowers and Bustamante approximated or were lower than the median of the Compensation Peer Group. Mr. Porter's base
salary was in the top quartile of chief financial officers within the Compensation Peer Group, reflecting his years of experience in numerous finance positions (including chief financial officer) and
the salary we originally offered to recruit him to the company.
Cash-based annual incentives are provided to motivate and reward named executives for achieving annual performance objectives. In 2017, each
named executive participated in the Fluor Corporation Amended and Restated 2008 Executive Performance Incentive Plan (the "Performance Plan") and had a target annual incentive amount, established as a
percentage of annual base salary. This percentage reflects each executive's respective organizational level, position and responsibility for achievement of the company's strategic goals, and aligns
with market practice.
For
2017, target bonus percentages for Messrs. Seaton, Bustamante and Flowers approximated the median target bonus percentages for executives with similar job responsibilities within the
Compensation Peer Group, while the target bonus percentages for Messrs. Stanski and Hernandez were below the median. For 2017, Mr. Seaton's target bonus percentage was increased from
145% to 150% in order to bring his target bonus percentage to the median.
The
target annual incentives for 2017 for each named executive, other than Mr. Porter (who was no longer employed by the company at the time the annual incentives were paid), were as follows:
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Named Executive
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Percentage
of
Base Salary
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Target Annual
Incentive
Amount
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David T. Seaton
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150%
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$1,943,000
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Bruce A. Stanski
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85%
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$595,000
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Carlos M. Hernandez
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85%
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$535,500
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Garry W. Flowers
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85%
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$450,500
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Jose L. Bustamante
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85%
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$403,800
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A
named executive may receive from zero to 200% of the target annual incentive amount, depending on the extent to which the company and the named executive meet, fail to meet or exceed certain
performance measures relating to overall company performance and the individual's own performance. The types of measures and relative weightings of those measures are determined by the Committee each
year and are tailored to the named executive's position and organizational responsibility. The performance measures have remained fairly consistent over the past five years, but, in 2015, the
Committee replaced return on operating assets employed with cash flow from operations in light of its determination to include return on operating assets employed as a performance measure under the
VDI program. The Committee has also adjusted the relative weightings of each measure from time to time to reflect the Committee's emphasis on particular goals.
When
determining the performance measures, the Committee considers the company's annual operating plan and strategic priorities for the upcoming year, as well as the company's performance in the
previous year. The performance measures are all objective except for the individual performance measure, which is not tied to specific targets. The use of multiple financial goals prevents an
overemphasis on any one financial metric and focuses the named executives on key
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COMPENSATION
DISCUSSION
AND
ANALYSIS
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areas
of importance to the company. The measures, along with their respective weightings, for each named executive who received an annual incentive for 2017 were as follows:
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2017 Measure
|
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David T.
Seaton
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Bruce A.
Stanski
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Carlos M.
Hernandez
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Garry W.
Flowers
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Jose L.
Bustamante
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Corporate Net Earnings
|
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60%
|
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55%
|
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55%
|
|
55%
|
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55%
|
|
Cash Flow from Operations
|
|
20%
|
|
20%
|
|
20%
|
|
20%
|
|
20%
|
|
Safety
|
|
|
|
|
|
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|
|
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Days Away, Restricted and Transfer Incidence Rate
|
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3%
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3%
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3%
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3%
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3%
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Total Case Incidence Rate
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3%
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3%
|
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3%
|
|
3%
|
|
3%
|
|
HSE Audit Score
|
|
4%
|
|
4%
|
|
4%
|
|
4%
|
|
4%
|
|
Individual Performance
|
|
10%
|
|
15%
|
|
15%
|
|
15%
|
|
15%
|
|
Performance Measures for 2017
The performance measures for the 2017 annual incentive awards for the named executives are described below.
Corporate net earnings.
Corporate net earnings is defined as the amount of net earnings attributable to Fluor from continuing
operations set forth in our financial statements. When establishing corporate net earnings targets for 2017, the Committee determined that the following items would be excluded from net earnings for
purposes of determining achievement of the target: expenses related to discontinued operations, the financial impact of any acquisition activity (including integration costs and other expenses),
expenses associated with restructuring programs and unusual expenses outside the normal course of business. As a result, certain expenses associated with a discontinued business, integrating Stork
Holding B.V. and company restructuring activities, as well as the impact from implementation of the recently enacted U.S. tax reform legislation have been excluded from the earnings
calculation.
Cash Flow From Operations.
Cash flow from operations is defined as total segment profit plus the fiscal year change in the
business unit project working capital accounts (accounts receivable, work in progress, advance billings and accounts payable).
Safety.
Safety consists of three distinct measures: (i) days away, restricted and transfer ("DART") incidence rate,
(ii) total case incidence rate ("TCIR") and (iii) health, safety and environmental ("HSE") audit score. Fluor's DART incidence rate is defined as a work-related injury or illness that
involves days away from work beyond the day of injury or onset of the illness or otherwise results in a work restriction or work transfer. Fluor's TCIR is defined as a work-related injury or illness
that results in one or more of the following: days away from work, restricted work or transfer to another job, medical treatment beyond first aid, loss of consciousness, a significant injury or
illness diagnosed by a physician or other licensed health care professional, or death. Incidence rates for both measures represent the number of recordable cases per 100 full-time workers (working
40 hours per week, 50 weeks per year), and are calculated using the following equation:
Fluor's
HSE audit score measures our performance against approximately 60 leading indicators in the critical areas that drive performance and safety on our projects. Each indicator
is given a score by the HSE corporate audit team based on project performance, with the
overall score being the average of the scores for all indicators across a sampling of projects and joint ventures in all
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COMPENSATION
DISCUSSION
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ANALYSIS
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business
lines. The company audits only those joint ventures for which the company has sole or joint HSE responsibilities for program development and work control.
Individual Performance.
For all named executives other than the Chief Executive Officer, the individual performance measure is
given a rating based on subjective evaluations and recommendations by the Chief Executive Officer, although ultimately approved by the Committee. In the case of the Chief Executive Officer, individual
performance is assessed by the independent directors of the Board after consideration of a recommendation from the Committee.
The performance ranges for each of the measures applicable to our named executives, together with the actual achievement of the measures, are
presented in the table below. Based on performance, annual incentive award cash payouts averaged 49% of target for named executives, which is lower than the 2016 payout percentage.
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2017 Performance Ranges (dollars in millions)
|
Measure
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2017 Actual
Achievement
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Min
|
|
Target
|
|
Max
|
|
|
|
|
(.25 rating)
(1)
|
|
(1.0 rating)
|
|
(2.0 rating)
|
Corporate Net Earnings
|
|
$252.8
(2)
|
|
$212.6
|
|
$361.3 - $488.9
|
|
$637.7
|
Cash Flow from Operations
|
|
$505.1
|
|
$464.8
|
|
$790.1 - $1,068.9
|
|
$1,394.3
|
Safety
|
|
|
|
|
|
|
|
|
Days Away, Restricted and Transfer Incidence Rate
|
|
.21
|
|
.19
|
|
.16
|
|
.07
|
Total Case Incidence Rate
|
|
.42
|
|
.50
|
|
.40
|
|
.20
|
HSE Audit Scores
|
|
86%
|
|
75%
|
|
85%
|
|
95%
|
-
(1)
-
The
minimum rating level for each goal is required to be satisfied before there is any payout for that specific, performance measure.
-
(2)
-
The
amount shown is for net earnings attributable to Fluor from continuing operations, excluding certain expenses associated with discontinued
operations, the integration of Stork Holding B.V. and company restructuring activities, as well as the impact from implementation of the recently enacted U.S. tax reform legislation.
Achievement
of the individual performance measure varied among the named executives because of the differences in responsibilities and individual accomplishments. The Committee determined the
achievement of the individual performance measure for the named executives other than the Chief
Executive Officer, after taking into account the Chief Executive Officer's recommendations with regard to those named executives, and also recommended to the Board the achievement level for the Chief
Executive Officer. Qualitative evaluations made by the Chief Executive Officer were based on each named executive's leadership and group accomplishments. The individual performance measure was not a
significant factor in determining compensation, and no named executive's aggregate compensation was materially affected by the level of achievement of this measure.
Once
the level of achievement for each measure is determined, each named executive's overall performance rating is calculated by multiplying each measure's rating (which can range
from 0.00 to 2.00) by its relative weighting, and then aggregating those amounts. The aggregate amount (the overall performance rating) is then multiplied by the individual's target annual incentive
amount to determine the annual incentive payment for each named executive.
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COMPENSATION
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ANALYSIS
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The
2017 annual incentive amounts for each named executive, other than Mr. Porter (who retired from the company in January 2018 and was no longer employed by the company on
the date annual incentives were paid), were determined as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive
|
|
Target Annual
Incentive
Amount
|
|
X
|
|
Overall
Performance
Rating
|
|
=
|
|
Annual
Incentive
Amount
|
|
David T. Seaton
|
|
$1,943,000
|
|
X
|
|
0.43
|
|
=
|
|
$836,000
|
|
Bruce A. Stanski
|
|
$595,000
|
|
X
|
|
0.49
|
|
=
|
|
$291,600
|
|
Carlos M. Hernandez
|
|
$535,500
|
|
X
|
|
0.52
|
|
=
|
|
$278,500
|
|
Garry W. Flowers
|
|
$450,500
|
|
X
|
|
0.54
|
|
=
|
|
$243,300
|
|
Jose L. Bustamante
|
|
$403,800
|
|
X
|
|
0.49
|
|
=
|
|
$197,900
|
|
The
2017 annual incentive rating and payout for each named executive was lower than his 2016 rating and payout, primarily due to the lower achievement level of the cash flow from operations measure.
Effective for 2018, the individual performance metric is being replaced with a strategic measure that will be weighted at 25% for all named
executives. Specific strategic goals will be defined and approved for each named executive. The rating for the strategic metric will be capped at 125% of target if none of the financial performance
measures achieve target performance. If at least one of the financial measures achieves target performance, the cap will be 200% of target. In addition, the Safety metric will be one qualitative
metric rather than three stand-alone metrics. Safety performance will be assessed based on overall safety performance including, but not limited to, DART, TCIR and the HSE Audit Score. These changes
were made to better allow the Committee to reward executives for strategic outcomes and to balance corporate and business line goals.
The stockholder-approved Performance Plan and its successor, the 2017 Performance Incentive Plan, allow the Committee to grant various forms
of long-term equity incentives. The Committee's objectives in granting long-term equity awards are to motivate and reward the achievement of superior operating results and stock price appreciation,
facilitate the attraction and retention of key management personnel and align the interests of management and stockholders through equity ownership.
As
discussed earlier, our compensation program is designed to align pay with performance. Named executives receive long-term incentive grants that reflect potential pay, based on market considerations
as well as individual contributions, experience, advancement potential and internal pay equity. For 2017, long-term incentive awards for our Chief Executive Officer approximated the
50
th
percentile of the Compensation Peer Group, while the value of such awards for other named executives (other than Mr. Porter) ranged from the
42
nd
percentile to the 67
th
percentile. In 2017, the Committee determined to maintain performance-based VDI awards as 50% of the long-term incentive grant to
named executives, and to provide the remainder in equal proportions of options and RSUs. Shares issued under RSUs and VDI awards granted to named executives in 2017 are subject to a three-year
post-vest holding period. During the post-vest holding period, named executives may not sell or otherwise transfer the underlying shares of company common stock (except in the case of death).
The
Committee believes that the mix of long-term incentive components aligns the interests of named executives with those of stockholders by encouraging named executives to focus on
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DISCUSSION
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ANALYSIS
|
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long-term
growth of the company, while also providing named executives with a balanced pay package similar to many of our peers. In determining the relevant allocations, VDI awards were valued at the
target performance level (and converted into performance units based on the closing stock price on the date of grant); RSUs were valued at the fair market value (closing stock price) on the date of
grant; and stock options were valued using the Black-Scholes option pricing model.
The
Committee determines the dollar value of long-term incentive awards for named executives at the first regularly scheduled meeting of the Committee each year, which is typically
held in January or February. The determinations are made at that time to coincide with the annual performance review (when prior year performance information is available). The equity awards are then
granted on the third business day following the publication of our annual results, based on the closing stock price on that date. RSUs and stock options vest one-third per year in each of the years
following the grant date.
The VDI awards granted to the named executives in 2017 are subject to a three-year performance period, which started on January 1, 2017
and ends on December 31, 2019. The awards will be earned based upon actual performance over the three-year performance period and will vest (and be payable in shares) in March 2020. Upon
vesting, the named executive will also receive additional shares equal to the amount of any accrued dividends paid by the company with respect to shares actually earned. The vested shares must be held
for an additional three years beyond vesting, as described above.
The
Committee established the following performance criteria and relative weightings for the 2017 VDI awards for named executives, which are all evaluated over a three-year
period:
-
-
40% of the total award is based on average annual new awards gross margin percentage ("NAGM %");
-
-
30% of the total award is based on average annual new awards gross margin dollars ("NAGM $"); and
-
-
30% of the total award is based on average annual return on operating assets employed ("ROAE").
Starting
with the 2017 VDI awards, the number of earned shares is modified based on the company's three-year cumulative total shareholder return relative to the engineering and construction peers
included in the Compensation Peer Group ("Relative TSR"). If the company's Relative TSR is in the bottom third of the group, the earned shares will be decreased by 25%. If the company's Relative TSR
is in the top third of the group, the earned shares will be increased by 25%. No adjustment will be made if the company's Relative TSR is in the middle third. In no event will the earned shares exceed
two times the target number of shares.
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COMPENSATION
DISCUSSION
AND
ANALYSIS
|
|
|
|
The
calculation of the target number of units, as well as the eventual determination of the payout of VDI awards, is illustrated below:
New
awards gross margin dollars measures the total amount of project gross margin that the company expects to receive as a result of projects awarded within the performance period.
New awards gross margin percentage is the total amount of gross margin the company expects to receive as a result of projects awarded within the performance period as a percentage of expected revenue
from those projects. Return on operating assets employed is calculated by dividing full-year corporate net earnings (excluding the items noted above under "Annual Incentive Awards
Performance Measures for 2017" and after-tax interest expense) by net assets employed. Net assets employed is defined as total assets (excluding excess cash and current and non-current marketable
securities) minus current liabilities (excluding non-recourse debt) and is calculated based on average net assets reported for the previous five quarters.
The
Committee selected the new awards performance criteria because, although measured over a relatively short period, such metrics relate to contracts that typically will extend a
number of years into the future and, thus, are expected to generate, and position the company for, increased future earnings. These measures are not reported in our financial statements or this proxy
statement, as disclosure of the new awards gross margin targets would result in competitive harm to the company, but are set each year at levels intended to challenge our executives to achieve
business goals established as part of the annual strategic plan. When determining whether the new awards performance goals have been met, the Committee takes into account any changes affecting project
gross margin backlog (e.g., scope changes, adjustments or cancellations) that occurred during the year. The Committee believes the inclusion of the return on operating assets employed measure
focuses management on value creation and asset utilization and rewards named executives for strategic investing and disciplined maintenance of working capital. The performance measures and relative
weightings are determined based on the company's relative business priorities and may be changed for future year grants as determined necessary and appropriate to drive the company's achievement of
its long-term objectives.
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Table of Contents
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COMPENSATION
DISCUSSION
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ANALYSIS
|
|
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In
the first quarter of 2017, the Committee set minimum (paid at 25% of target), target (paid at 100% of target) and maximum (paid at 200% of target) levels for the portion of the 2017 VDI awards that
were subject to the 2017 new awards gross margin percentage, new awards gross margin dollars and return on operating assets employed performance goals. This first tranche of the 2017 VDI awards
represents one-third of the number of shares subject to those VDI awards. The second and
third tranches of the 2017 VDI awards will be subject to performance goals for 2018 and 2019, respectively, which will be set in the first quarter of the respective year. The Committee believes that
using three annual performance goals instead of a single three-year goal best orients executives to focus on long-term achievements, while avoiding disincentives or windfalls due to volatile economic
factors such as commodity prices and currency rates that are difficult to forecast and impact our operating margins and growth. When setting these performance goals, the Committee considers the
company's past performance, current business outlook and other corporate financial measures. The Committee also considers how likely it will be for the company to achieve the goals. We believe that
the target goals have been established at levels that should be appropriately difficult to attain. Goals above target are stretch goals and will require an increasingly challenging level of
performance in order to be achieved.
In
the first quarter of the year following each of the three annual performance periods, the Committee determines the actual achievement of the performance measures for that year. At the end of the
three-year period, the Committee will average the annual performance and determine the number of earned performance units by multiplying the number of performance units by the average of the three
annual performance ratings (ranging from 0.00 to 2.00). The Committee will then apply the Relative TSR modifier, which may increase or decrease the number of earned shares; however, the final number
of earned shares may not exceed two times the target number of shares. The final number of units earned and related dividends vest in full after such determination, approximately three-years from the
date of grant, and are required to be held an additional three years. The three-year performance period and vesting are intended to facilitate retention of the participating executives and to link
long-term value of the awards to stock price. A named executive's unvested award is subject to risk of forfeiture if, prior to settlement, the named executive's employment with the company is
terminated for any reason other than retirement, death, disability or a qualifying termination within two years after a change in control of the company. The post-vest holding period lapses only upon
the named executive's death.
VDI awards granted in 2015 had a three-year performance period, ending December 31, 2017. The performance rating for such awards was
based in equal parts on three-year cumulative earnings per share and three-year average annual return on operating assets employed. The performance targets for the awards are set forth below. However,
the company did not meet the minimum performance criteria for these awards, so no units were earned by any named executives. This performance is reflected in the Outstanding Equity Awards at 2017
Fiscal Year End table on page 51.
|
|
|
|
|
|
|
|
|
Performance Ranges
|
Measure (dollars in millions)
|
|
Min
|
|
Target
|
|
Max
|
2015 - 2017 Earnings per Share
|
|
$14.60
|
|
$15.38
|
|
$16.47
|
Average Annual ROAE
|
|
14.7%
|
|
20.0% - 22.1%
|
|
24.2%
|
Effective for 2018, the Committee determined to maintain performance-based VDI awards as 50% of the long-term incentive grant to named
executives, but to increase the allocation of RSUs from 25%
|
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COMPENSATION
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ANALYSIS
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|
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to
50%. No options will be granted in 2018. The Committee will continue to review the effectiveness of our equity mix for future grants to ensure that we are incentivizing our executives
appropriately. In addition, VDI awards and RSUs granted in 2018 will not be subject to a post-vest holding period.
Other Compensation Decisions
We pay hiring bonuses when necessary or appropriate to attract top executive talent from other companies. Executives we recruit must often
forfeit unrealized value in the form of unvested equity and other forgone compensation opportunities provided by their former employers. We may provide hiring bonuses to compensate them for this lost
opportunity; but we may also include service requirements for retention purposes. No hiring bonuses were made to named executives in 2017. We also periodically grant cash or equity retention awards to
reflect competitive market situations, address specific project objectives or reinforce succession planning objectives. In 2017, Mr. Flowers received a cash retention award in order to retain
his services for key projects; and Mr. Stanski received a relocation payment in connection with his relocation from Arlington, Virginia to our headquarters in Irving, Texas. For further details
on these arrangements, see footnotes 8 and 9 of the Summary Compensation Table on page 46.
In
addition, in August 2017, Mr. Porter stepped down as Chief Financial Officer. He remained employed by the company until January 2018. At that time, the company entered into an agreement with
Mr. Porter, pursuant to which he received a lump sum payment of $1,591,300, which amount is in lieu of any 2017 bonus and other payments from the company to which he may have been entitled.
Mr. Porter's previously awarded, but unvested, stock options and restricted stock units will become vested on the vesting dates set forth in the grant agreements; and unvested VDI awards will
continue to vest based on the performance conditions and other terms of the grant agreements. The agreement also includes confidentiality covenants and a release of claims by Mr. Porter, as
well as non-compete restrictions.
Other Elements of Named Executive Compensation
In 2017, named executives were paid a taxable monthly allowance as set forth in the All Other Compensation table on page 46. The
Committee believes that these allowances are reasonable costs, and are justified by the perceived value to the named executives. The allowances can be used to cover items such as automobile leasing,
tax and financial planning, and club membership dues. When determining the allowance amounts, the Committee considered the value of perquisites provided to similarly situated executives in our
Compensation Peer Group. In addition, named executives are required to have a physical examination each year that is paid for by the company. Named executives may have spousal travel paid for by the
company only when it is for an approved business purpose, in which case a related tax gross-up is provided. In 2017, the company did not provide any tax gross-ups other than for spousal business
travel. Named executives can make personal use of charter aircraft in conjunction with a business purpose, but the named executive is required to reimburse the company for the incremental operational
cost. Our 2017 perquisite costs, which are relatively small in relation to total direct compensation, approximated the median of the Compensation Peer Group.
The named executives are eligible to participate in Fluor's Executive Deferred Compensation Program. The company offers this program to
provide retirement and tax planning flexibility and to remain competitive with other companies within our Compensation Peer Group and general industry.
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Table of Contents
|
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|
COMPENSATION
DISCUSSION
AND
ANALYSIS
|
|
|
|
In
addition, named executives may choose to defer RSUs and VDI awards granted in 2016 and 2017, which awards are subject to a post-vest holding period. Please refer to the discussion in the
Nonqualified Deferred Compensation section on pages 54-55 for a more detailed discussion of these arrangements.
The company provides each of the named executives with cash severance in the event of a termination of employment by the company without
cause. The company believes its severance policy assists in attracting and retaining qualified executives. The level of any cash severance payment is based upon base salary and years of service at the
time of separation. In addition, each named executive has a change in control agreement that provides additional payments and other benefits if the executive is terminated without cause or if the
named executive terminates employment for good reason within two years following a change in control of the company. The change in control agreements are designed to reinforce and encourage the
continued attention and dedication of the executives without distraction in the face of potentially disruptive circumstances arising from the possibility of a change in control and to serve as an
incentive to their
continued commitment to, and employment with, the company. None of the potential change in control payments are "single trigger," meaning a named executive must incur a qualifying termination of
employment following a change in control in order to be eligible for these payments. In addition, if any excise taxes are triggered in connection with a change in control, our change in control
agreements do not provide for a tax gross-up. The company will, instead, automatically reduce any payments under the agreement to the extent necessary to prevent payments from being subject to those
excise taxes, but only if by reason of the reduction, the executive's after-tax benefit of the reduced payments exceeds the after-tax benefit if such reduction were not made.
Please
refer to the discussion under "Potential Payments Upon Termination or Change in Control" below for a more detailed discussion of these arrangements. Severance and change in control benefits are
provided to be competitive with the Compensation Peer Group.
Establishing Executive Compensation
Compensation Philosophy, Objectives and Risk Assessment
The Committee has responsibility for establishing and implementing the company's executive compensation philosophy. The Committee reviews and
determines all components of named executives' compensation (other than with respect to our Chief Executive Officer's compensation, which the Committee reviews and recommends for approval by our
independent directors), including making individual compensation decisions and reviewing and revising the company's compensation plans, programs and other arrangements.
The
Committee has established the following compensation philosophy and objectives for the company's named executives:
-
-
Align the interests of named executives with those of the
stockholders.
The Committee believes it is appropriate to tie a significant portion of executive compensation to the value of the company's stock
in order to closely align the interests of named executives with the interests of our stockholders. The Committee also believes that executives should have a meaningful ownership interest in the
company and as such maintains and regularly reviews executive stock ownership guidelines.
-
-
Have a significant portion of pay that is
performance-based.
Fluor expects superior performance. Our executive compensation programs are designed to reward executives
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COMPENSATION
DISCUSSION
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ANALYSIS
|
|
|
|
The
Committee reviews the company's compensation philosophy and objectives each year to determine if revisions are necessary in light of market conditions, the company's strategic goals or other
relevant factors. In each of the last five years, the Committee determined that no revisions to the executive compensation philosophy and objectives were necessary, although the Committee has adjusted
the specific elements of compensation used to implement its philosophy as compensation practices have evolved.
In
addition, the Committee reviewed the incentive compensation we provide to our employees, including our named executives, and evaluated the mix of programs and performance criteria, the Committee's
ability to exercise discretion over certain components of compensation and our risk management practices generally. Based on this review, the Committee believes that our compensation programs are
designed to appropriately align compensation with our business strategy and not to encourage behavior that could create material adverse risks to our business.
In making compensation decisions, the Committee looks at the practices of our Compensation Peer Group. The Committee annually reviews with its
independent compensation consultant the composition of the Compensation Peer Group and makes refinements if necessary based on objective criteria established by the Committee.
Since
2009, the Committee has applied a generally consistent process and set of criteria for selection of the Compensation Peer Group. Potential peer companies were identified by applying the
following objective selection criteria:
-
-
Standard & Poor's Global Industry Classification Standard (GICS) codes for the company, our direct competitors and key customers
(2010 capital goods, 101010 energy equipment and services, and 101020 oil, gas and consumable fuels);
-
-
Companies commonly identified as peers of direct engineering and construction peers (based on disclosures in their most recent proxy
statements);
-
-
Companies with generally comparable pay models; and
-
-
Companies with revenues, number of employees and market capitalization ranging from 0.25x to 4.0x on all three measures, subject to exception
for direct competitors and other engineering and construction peers.
As
part of its compensation review for 2017, the Committee reviewed the Compensation Peer Group and determined that the peer group and its selection criteria should remain unchanged. The
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2018
PROXY
STATEMENT
39
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Table of Contents
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COMPENSATION
DISCUSSION
AND
ANALYSIS
|
|
|
|
companies
comprising Fluor's Compensation Peer Group for purposes of establishing 2017 compensation were:
|
|
|
AECOM Technology
Corporation*
|
|
Illinois Tool
Works Inc.
|
Chicago Bridge &
Iron Company*
|
|
Ingersoll-Rand Company
Limited
|
Cummins Inc.
|
|
Jacobs Engineering
Group Inc.*
|
Deere &
Company
|
|
KBR,
Inc.*
|
Dover
Corporation
|
|
L-3 Communications
Corporation
|
Eaton
Corporation
|
|
Northrop Grumman
Corporation
|
EMCOR Group*
|
|
PACCAR Inc.
|
Emerson
Electric Co.
|
|
Parker-Hannifin
Corporation
|
General Dynamics
Corporation
|
|
Quanta Services,
Inc.*
|
Halliburton
Company
|
|
Raytheon
Company
|
Hess
Corporation
|
|
W.W. Grainger,
Inc.
|
-
*
Direct
competitors and other engineering and construction peers.
For
purposes of 2018 compensation, the peer group selection criteria remained the same, except the market capitalization guideline was changed slightly to include companies from 0.2x to 5.0x Fluor's
size (versus 0.25x to 4.0x). The expanded guideline resulted in no changes to the Compensation Peer Group.
The
Committee reviews benchmarking comparisons for each named executive against the Compensation Peer Group. All job titles that appear to contain similar responsibilities are included in the
benchmarking comparisons for each of the named executives.
The
Committee sets target compensation levels for the named executives as follows. Individuals vary from the target market positioning primarily based on performance, experience, advancement potential
and internal pay equity.
-
-
Base salary compensation is targeted at the 50
th
percentile for similar job titles, experience and tenure of executives
within the Compensation Peer Group. The Committee believes targeting compensation at this level helps the company attract and retain executives. However, from time to time, the Committee may approve
compensation at levels outside the 50
th
percentile depending on a number of factors, including the named executive's experience, skill sets, industry knowledge and other similar
attributes.
-
-
Base salary plus annual incentive (
i.e.
, cash) compensation is similarly targeted at the
50
th
percentile of the Compensation Peer Group for attainment of target-level company and individual performance objectives applicable to annual incentive awards. Annual incentive
payments may be made above the 50
th
percentile if above-target company and individual performance is attained. If company and individual objectives are not met, annual incentive
compensation may be below the 50
th
percentile or not paid at all.
-
-
Total direct compensation, or base salary plus annual and long-term incentive awards, is also targeted at the
50
th
percentile of the Compensation Peer Group for attainment of target-level company performance. Achievement of superior company performance and continued stock
|
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COMPENSATION
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ANALYSIS
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|
|
price
appreciation will result in growth of actual total direct compensation over time. Below-target company performance and stock price depreciation will decrease actual total direct compensation.
Role of Company Management in Compensation Decisions
Before the Committee makes decisions on executive compensation, the Chief Executive Officer reviews compensation for the other named
executives and makes recommendations to the Committee based on their individual and group performance. At the beginning of the year, the Chief Executive Officer proposes to the Committee base salary
adjustments for the current year, annual incentive award payments for the previous year and current-year long-term incentive grants for each of the other named executives. The Committee reviews and
approves the compensation actually paid to the named executives after consideration of the recommendations made by the Chief Executive Officer. The Committee may exercise discretion to modify named
executives' compensation from that recommended by the Chief Executive Officer, but did not exercise that discretion for the named executives with respect to 2017 compensation.
Other Aspects of Our Executive Compensation Programs
We hold an annual "say on pay" advisory vote to approve our executive compensation. At our 2017 annual meeting of stockholders, stockholders
approved the compensation of our named executives, with approximately 93% of the votes cast for approval of the company's executive compensation. The Committee evaluated the results of the 2017
advisory vote at its May meeting and then again in February 2018 when determining executive compensation. The Committee also considered many other factors in evaluating our executive compensation
program,
including the Committee's assessment of the interaction of our compensation programs with our corporate business objectives, evaluations of our program by the Committee's independent compensation
consultant, including with respect to "best practices," and a review of data of our Compensation Peer Group. Taking all of this information into account, the Committee did not make any changes to our
executive compensation program and policies as a result of the 2017 "say on pay" advisory vote. However, in response to an evaluation of market practices, the Committee approved changes to the
company's annual incentive and VDI programs as discussed above.
Pursuant to the company's clawback policy, if the Board determines that any key executive or employee, including any named executive, has
engaged in fraud or willful misconduct that caused or otherwise contributed to a need for a material restatement of the company's financial results, the Board will review all performance-based
compensation earned by that employee during the fiscal periods materially affected by the restatement. If the Board determines that any such compensation would have been lower if it had been based on
the restated results, the Board will, to the extent permitted by applicable law, seek recoupment of such compensation as it deems appropriate. To date, the Board has not encountered a situation where
a review of compensation pursuant to the policy was necessary.
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COMPENSATION
DISCUSSION
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ANALYSIS
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Executive officers are encouraged to hold Fluor common stock to align their financial interests with those of our stockholders. The company
maintains stock ownership guidelines for named executives as follows:
|
|
|
Role
|
|
Value of Shares or Share
Units to be Owned
|
Chief Executive Officer
|
|
6 times base salary
|
Chief Financial Officer and Chief Legal Officer
|
|
3.5 times base salary
|
Executive Vice President
|
|
2 times base salary
|
A
named executive is required to settle VDI awards in stock and to retain all company common stock, including 100% of the net shares acquired from the exercise of stock options or the vesting of RSUs,
to the extent he has not satisfied the guidelines. Unvested RSUs and earned but unvested VDI units are considered as owned by the named executive in determining whether the named executive has met his
ownership guidelines. As of the date of this report, all named executives were in compliance with these stock ownership guidelines, except Mr. Stanski who was recently promoted to Chief
Financial Officer and is expected to fulfill his stock ownership requirement in 2018.
Our insider trading policy for executive officers and non-management directors prohibits transactions involving short-term or speculative
trading in, or any hedging or monetization transactions involving, company securities. In addition, our policy prohibits pledging company securities or holding company securities in a margin account.
The Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code
("Section 162(m)"), which, for fiscal 2017, generally prohibited the company from deducting compensation in excess of $1,000,000 that was paid to named executives other than the Chief Financial
Officer unless the compensation qualified as "performance based compensation" as defined under Section 162(m). In February 2017, the Committee set and approved performance hurdles designed to
allow named executives' long-term incentive awards granted in fiscal 2017 to potentially qualify as "performance based compensation." Historically, stock option proceeds were intended to be deductible
under the provisions of the stock plans and the structure of the related grant agreements. For fiscal 2017 and prior years, we have claimed a deduction for a significant percentage of our covered
executives' taxable income. However, because there are uncertainties as to the application of regulations under Section 162(m), as with most tax matters, it is possible that our historical
deductions may be challenged or disallowed. Accordingly, there is no certainty that elements of compensation discussed in this proxy statement will in fact be deductible by the company. In addition,
the Committee historically has retained discretion to provide payments not intended to be deductible under Section 162(m).
The
exemption from Section 162(m)'s deduction limit for performance based compensation has been repealed, effective for taxable years beginning after December 31, 2017.
The $1,000,000 compensation limit was also expanded to apply to a public company's chief financial officer and to certain individuals who were covered employees in years other than the then-current
taxable year. Thus, for fiscal 2018 and future years, compensation paid to covered employees in excess of $1,000,000 will not be deductible unless it qualifies for transition relief applicable to
certain "grandfathered" arrangements in place as of November 2, 2017.
|
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42
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
|
Table of Contents
|
|
|
ORGANIZATION
AND
COMPENSATION
COMMITTEE
REPORT
|
|
|
|
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
Management of the company has prepared the Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K,
and the Organization and Compensation Committee has reviewed and discussed it with management. Based on this review and discussion, the Committee recommended that the Compensation Discussion and
Analysis be included in the proxy statement for the company's 2018 annual meeting of stockholders.
|
|
|
|
|
The Organization and Compensation Committee
|
|
|
Peter J. Fluor,
Chairman
Peter K. Barker
James T. Hackett
Deborah D. McWhinney
Armando J. Olivera
Joseph W. Prueher
Matthew K. Rose
|
|
|
|
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
43
|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation earned by or granted to each of the 2017 named executives in the relevant years. The 2017
named executives are the principal executive officer, two executives who held the position of principal financial officer in 2017, and the three other highest paid executives. Effective
August 4, 2017, Mr. Porter stepped down from his position as Chief Financial Officer and Mr. Stanski was appointed to the position. Mr. Porter remained employed by the
company to assist with the transition until January 2018.
The
grant date fair value of long-term incentive awards granted in 2017 (i.e., stock awards and option awards) increased over the grant date fair value of those awards in 2016 (which consisted
only of stock awards) due primarily to the fact that the 2016 and 2017 VDI awards have three one-year performance goals that are averaged over the performance period. Under Securities and Exchange
Commission reporting rules, the grant date fair value of equity awards is reported in the year in which performance goals are set. In 2016, only the first tranche of the 2016 VDI award was included in
the Summary Compensation Table; however, in 2017, both the second tranche of the 2016 VDI award and the first tranche of the 2017 VDI award are included. Therefore, the value of 2017 long-term
incentive awards and, correspondingly, total compensation (as required to be disclosed in this table), increased over 2016 awards and compensation, despite lower annual incentive payouts for 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
Name and
Principal Position
|
|
Year
|
|
Salary
($)
(1)
|
|
Bonus
($)
|
|
Stock
Awards
($)
(2)
|
|
Option
Awards
($)
(3)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(4)
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
(5)
|
|
Total
($)
(6)
|
|
David T. Seaton
|
|
2017
|
|
$1,295,029
|
|
|
|
$5,626,512
|
|
$2,200,021
|
|
$836,000
|
|
|
|
$296,225
|
|
$10,253,787
|
(7)
|
Chairman and
|
|
2016
|
|
$1,295,029
|
|
|
|
$5,866,758
|
|
|
|
$1,150,000
|
|
|
|
$357,004
|
|
$8,668,791
|
(7)
|
Chief Executive Officer
|
|
2015
|
|
$1,333,302
|
|
|
|
$5,896,024
|
|
$2,904,033
|
|
$1,900,000
|
|
|
|
$253,085
|
|
$12,286,444
|
(7)
|
Bruce A Stanski
|
|
2017
|
|
$647,111
|
|
$220,000
|
(8)
|
$1,007,390
|
|
$401,257
|
|
$291,600
|
|
|
|
$106,183
|
|
$2,673,541
|
|
Executive Vice President & Chief
|
|
2016
|
|
$600,018
|
|
|
|
$1,010,108
|
|
|
|
$520,200
|
|
|
|
$87,067
|
|
$2,217,393
|
|
Financial Officer (effective August 4,
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biggs C. Porter
|
|
2017
|
|
$841,318
|
|
|
|
$1,824,711
|
|
$746,290
|
|
|
(10)
|
|
|
$131,508
|
|
$3,543,827
|
|
Executive Vice President & Chief
|
|
2016
|
|
$841,318
|
|
|
|
$1,723,396
|
|
|
|
$450,600
|
|
|
|
$133,572
|
|
$3,148,886
|
|
Financial Officer (through August 3,
|
|
2015
|
|
$868,965
|
|
|
|
$1,340,081
|
|
$660,023
|
|
$751,000
|
|
|
|
$128,330
|
|
$3,748,399
|
|
2017)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carlos M. Hernandez
|
|
2017
|
|
$630,032
|
|
|
|
$1,588,728
|
|
$643,788
|
|
$278,500
|
|
|
|
$117,117
|
|
$3,258,165
|
|
Executive Vice President,
|
|
2016
|
|
$630,032
|
|
|
|
$1,533,437
|
|
|
|
$380,300
|
|
|
|
$120,558
|
|
$2,664,327
|
|
Chief Legal Officer & Secretary
|
|
2015
|
|
$650,724
|
|
|
|
$1,474,183
|
|
$726,046
|
|
$562,300
|
|
|
|
$116,370
|
|
$3,529,623
|
|
Garry W. Flowers
|
|
2017
|
|
$530,026
|
|
$100,000
|
(9)
|
$1,044,424
|
|
$411,290
|
|
$243,300
|
|
|
|
$108,113
|
|
$2,437,153
|
|
Executive Vice President
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jose L. Bustamante
|
|
2017
|
|
$471,166
|
|
|
|
$1,120,181
|
|
$468,753
|
|
$197,900
|
|
|
|
$97,246
|
|
$2,355,246
|
|
Executive Vice President,
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Development & Strategy
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amounts in column (c) include salary paid, and any time off with pay utilized, during the year.
-
(2)
-
The
amounts in column (e) represent the aggregate grant date fair value of the RSUs and VDI awards granted in each year, calculated based on the
closing price of the company's common stock on the New York Stock Exchange on the date of grant in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718
("ASC 718"). For 2017, this amount includes the value of the shares subject to the second tranche of the 2016
|
|
|
44
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
VDI
award and the first tranche of the 2017 VDI award, for both of which the performance objectives were set in 2017. The performance objectives for the first tranche of the 2016 VDI award were set,
and reported, in 2016. Under SEC rules, tranches for which performance objectives have not been set do not have a reportable grant date fair value under ASC 718 and, therefore, are not included in the
table above. The performance objective for the third tranche of the 2016 VDI award will be established in 2018, and the performance objectives for the second and third tranches of the 2017 VDI award
will be established in 2018 and 2019, respectively. Compensation for the remaining tranches of the 2016 and 2017 VDI awards will be reported in the Summary Compensation Table as compensation for the
year in which the performance objectives are established.
The
grant date fair value of the RSU and VDI award tranches described above reflects a liquidity discount of 10.46%, as a result of the three-year post-vest transfer restrictions (the "Post-Vest
Holding Period") imposed by the company on the common stock issued upon settlement of those awards. Beginning in 2017, the grant date fair value of the VDI awards was further adjusted upward by 7.64%,
based on the Monte Carlo valuation method, to reflect the impact of the Relative TSR modifier on the VDI awards.
The
chart below details the grant date fair value of the RSUs granted in 2017, the second tranche of the 2016 VDI awards, and the first tranche of the 2017 VDI awards, based on target level
performance and the assumptions described above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T.
Seaton
|
|
Bruce A.
Stanski
|
|
Biggs C.
Porter
|
|
Carlos M.
Hernandez
|
|
Garry W.
Flowers
|
|
Jose L.
Bustamante
|
RSUs
|
|
$2,200,036
|
|
$401,291
|
|
$746,380
|
|
$643,790
|
|
$411,252
|
|
$468,792
|
2016 VDI
|
|
$1,847,731
|
|
$318,133
|
|
$542,782
|
|
$482,955
|
|
$338,058
|
|
$314,984
|
2017 VDI
|
|
$1,578,745
|
|
$287,966
|
|
$535,549
|
|
$461,983
|
|
$295,114
|
|
$336,405
|
Total
|
|
$5,626,512
|
|
$1,007,390
|
|
$1,824,711
|
|
$1,588,728
|
|
$1,044,424
|
|
$1,120,181
|
The
grant date fair value of the second tranche of the 2016 VDI awards, assuming the highest level of performance is achieved, is two times the grant date fair value that was determined on
February 21, 2017, which was the date on which the performance objectives for that particular tranche of the 2016 award were approved by the Compensation Committee, or: $3,695,462 for
Mr. Seaton; $636,266 for Mr. Stanski; $1,085,564 for Mr. Porter; $965,910 for Mr. Hernandez; $676,116 for Mr. Flowers; and $629,968 for Mr. Bustamante.
The
grant date fair value of the first tranche of the 2017 VDI awards, assuming the highest level of performance is achieved, is two times the grant date fair value reported in the Summary
Compensation Table, or: $3,157,490 for Mr. Seaton; $575,932 for Mr. Stanski; $1,071,098 for Mr. Porter; $923,966 for Mr. Hernandez; $590,228 for Mr. Flowers; and
$672,810 for Mr. Bustamante.
-
(3)
-
The
amounts in column (f) represent the aggregate grant date fair value of options granted in each year. The fair value of these awards is based
on the Black-Scholes option pricing model on the date of grant in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in the "Stock-Based Plans" footnote to the
company's audited financial statements for the fiscal years ended December 31, 2017 and 2015, included in the company's Annual Reports on Form 10-K filed with the Securities and Exchange
Commission on February 20, 2018 and February 18, 2016, respectively.
-
(4)
-
The
amounts in column (g) represent amounts earned as annual incentive in each year.
-
(5)
-
The
amounts in column (i) are detailed in a separate All Other Compensation table below.
-
(6)
-
The
amounts in column (j) represent the total of columns (c) through (i).
|
|
|
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
45
|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
-
(7)
-
Assuming
the VDI awards granted in 2016 and 2017 had a cumulative three-year performance period similar to the one for 2015 VDI awards (as opposed to
multiple performance periods requiring accounting for only certain tranches), and eliminating the other accounting adjustments discussed in the second paragraph of footnote 2 above,
Mr. Seaton's compensation for the last three years would be as set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non Equity
Incentive
Plan
Compensation
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
2017
|
|
$1,295,029
|
|
$6,600,107
|
|
$2,200,021
|
|
$836,000
|
|
$296,225
|
|
$11,227,382
|
2016
|
|
$1,295,029
|
|
$8,800,136
|
|
$0
|
|
$1,150,000
|
|
$357,004
|
|
$11,602,169
|
2015
|
|
$1,333,302
|
|
$5,896,024
|
|
$2,904,033
|
|
$1,900,000
|
|
$253,085
|
|
$12,286,444
|
-
(8)
-
This amount represents a $220,000 relocation bonus paid to Mr. Stanski in connection with his transfer
from Arlington, Virginia to the corporate headquarters in Irving, Texas in 2017. Annual incentive payments appear in column (g).
-
(9)
-
This amount represents $100,000 paid to Mr. Flowers in 2017 pursuant to a retention award. Under the
terms and conditions of the retention agreement, an additional $250,000 was deposited in Mr. Flowers' deferred compensation account. The first $100,000 of that amount will vest if
Mr. Flowers remains employed until March 31, 2018; and the remainder will vest if he remains employed until March 31, 2019 (or has an earlier, eligible retirement after
March 31, 2018). Annual incentive payments appear in column (g).
-
(10)
-
Mr. Porter was not employed by the company on the date annual incentives were paid. For a description
of the amounts paid in connection with Mr. Porter's retirement, see "Other Compensation Decisions" on page 37.
ALL OTHER COMPENSATION
The following table and related footnotes describe each component of the All Other Compensation column (i) of the Summary Compensation
Table for 2017.
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
Name
|
|
Company
Contributions
to Qualified and
Nonqualified
Defined
Contribution Plans
($)(1)
|
|
Tax
Gross-up
($)(2)
|
|
Perquisite
Allowances
($)(3)
|
|
Other
Perquisites
($)(4)
|
|
Total All Other
Compensation
($)(5)
|
David T. Seaton
|
|
$155,654
|
|
$24,199
|
|
$71,100
|
|
$45,272
|
|
$296,225
|
Bruce A. Stanski
|
|
$56,606
|
|
$64
|
|
$39,525
|
|
$9,988
|
|
$106,183
|
Biggs C. Porter
|
|
$75,969
|
|
$0
|
|
$49,500
|
|
$6,039
|
|
$131,508
|
Carlos M. Hernandez
|
|
$56,953
|
|
$2,751
|
|
$49,500
|
|
$7,913
|
|
$117,117
|
Garry W. Flowers
|
|
$63,852
|
|
$2,615
|
|
$32,400
|
|
$9,246
|
|
$108,113
|
Jose L. Bustamante
|
|
$50,181
|
|
$3,257
|
|
$32,400
|
|
$11,408
|
|
$97,246
|
-
(1)
-
The
amounts in column (b) represent amounts contributed by the company to each named executive's account in the 401(k) plan, pursuant to the
company's 5% match, and amounts credited by the company into each named executive's account in the non-qualified deferred compensation plan for matching or
|
|
|
46
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
discretionary
contributions that would have been credited to each named executive's account in the 401(k) plan for contributions in excess of Internal Revenue Code ("IRC") limitations.
-
(2)
-
The
amounts in column (c) represent the tax gross-up provided for (i) business-related spousal travel and (ii) business-related
spousal air charter usage.
-
(3)
-
The
amounts in column (d) represent the aggregate annual perquisite allowance, which is paid monthly as a substitute for the company reimbursing
or paying for perquisites such as an automobile allowance, tax and financial planning, and club membership dues. Not more than $25,000 of the allowance was used by any named executive for any single
type of perquisite.
-
(4)
-
The
amounts in column (e) represent the incremental cost for business-related spousal travel and business-related spousal air charter usage, the
cost of business-related physical examinations, and, for Mr. Stanski, the cost associated with the sale of a home in connection with his relocation to Irving, Texas that was paid by the
company, each of which was less than $25,000.
-
(5)
-
The
amounts in column (f) represent the totals of columns (b) through (e).
|
|
|
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
47
|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
GRANTS OF PLAN-BASED AWARDS IN 2017
The table below provides information about equity and non-equity awards granted to the named executives in 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
(k)
|
|
(l)
|
|
|
|
|
|
|
|
|
|
Estimated Future
Payouts Under
Equity Incentive
Plan Awards
(2)
|
|
Estimated Future
Payouts Under
Non-Equity Incentive
Plan Awards
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
|
|
Exercise or
Base Price
of Option
Awards
|
|
Grant Date
Fair Value of
Stock and
Option
|
|
Name
|
|
Type of
Award
(1)
|
|
Grant
Date
|
|
Approval
Date
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Target
($)
|
|
Maximum
($)
|
|
Units
(#)
(4)
|
|
Options
(#)
(5)
|
|
Per Share
($/sh)
(6)
|
|
Awards
($)
|
|
David T. Seaton
|
|
2017 RSU
|
|
2/23/2017
|
|
2/2/2017
|
|
|
|
|
|
|
|
|
|
44,391
|
|
|
|
|
|
$2,200,036
|
(7)
|
|
|
2017 SO
|
|
2/23/2017
|
|
2/2/2017
|
|
|
|
|
|
|
|
|
|
|
|
154,599
|
|
$55.35
|
|
$2,200,021
|
(8)
|
|
|
2016 VDI
|
|
2/21/2017
|
|
2/21/2017
|
|
35,795
|
|
71,590
|
|
|
|
|
|
|
|
|
|
|
|
$1,847,731
|
(9)
|
|
|
2017 VDI
|
|
2/23/2017
|
|
2/2/2017
|
|
29,594
|
|
59,188
|
|
|
|
|
|
|
|
|
|
|
|
$1,578,745
|
(10)
|
|
|
2017 AI
|
|
N/A
|
|
N/A
|
|
|
|
|
|
$1,943,000
|
|
$3,886,000
|
|
|
|
|
|
|
|
|
|
Bruce A. Stanski
|
|
2017 RSU
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
8,097
|
|
|
|
|
|
$401,291
|
(7)
|
|
|
2017 SO
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
28,197
|
|
$55.35
|
|
$401,257
|
(8)
|
|
|
2016 VDI
|
|
2/21/2017
|
|
2/21/2017
|
|
6,163
|
|
12,326
|
|
|
|
|
|
|
|
|
|
|
|
$318,133
|
(9)
|
|
|
2017 VDI
|
|
2/23/2017
|
|
2/1/2017
|
|
5,398
|
|
10,796
|
|
|
|
|
|
|
|
|
|
|
|
$287,966
|
(10)
|
|
|
2017 AI
|
|
N/A
|
|
N/A
|
|
|
|
|
|
$595,000
|
|
$1,190,000
|
|
|
|
|
|
|
|
|
|
Biggs C. Porter
|
|
2017 RSU
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
15,060
|
|
|
|
|
|
$746,380
|
(7)
|
|
|
2017 SO
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
52,443
|
|
$55.35
|
|
$746,290
|
(8)
|
|
|
2016 VDI
|
|
2/21/2017
|
|
2/21/2017
|
|
10,515
|
|
21,030
|
|
|
|
|
|
|
|
|
|
|
|
$542,782
|
(9)
|
|
|
2017 VDI
|
|
2/23/2017
|
|
2/1/2017
|
|
10,039
|
|
20,078
|
|
|
|
|
|
|
|
|
|
|
|
$535,549
|
(10)
|
|
|
2017 AI
|
|
N/A
|
|
N/A
|
|
|
|
|
|
$715,200
|
|
$1,430,400
|
|
|
|
|
|
|
|
|
|
Carlos M. Hernandez
|
|
2017 RSU
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
12,990
|
|
|
|
|
|
$643,790
|
(7)
|
|
|
2017 SO
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
45,240
|
|
$55.35
|
|
$643,788
|
(8)
|
|
|
2016 VDI
|
|
2/21/2017
|
|
2/21/2017
|
|
9,356
|
|
18,712
|
|
|
|
|
|
|
|
|
|
|
|
$482,955
|
(9)
|
|
|
2017 VDI
|
|
2/23/2017
|
|
2/1/2017
|
|
8,660
|
|
17,320
|
|
|
|
|
|
|
|
|
|
|
|
$461,983
|
(10)
|
|
|
2017 AI
|
|
N/A
|
|
N/A
|
|
|
|
|
|
$535,500
|
|
$1,071,000
|
|
|
|
|
|
|
|
|
|
Garry W. Flowers
|
|
2017 RSU
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
8,298
|
|
|
|
|
|
$411,252
|
(7)
|
|
|
2017 SO
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
28,902
|
|
$55.35
|
|
$411,290
|
(8)
|
|
|
2016 VDI
|
|
2/21/2017
|
|
2/21/2017
|
|
6,549
|
|
13,098
|
|
|
|
|
|
|
|
|
|
|
|
$338,058
|
(9)
|
|
|
2017 VDI
|
|
2/23/2017
|
|
2/1/2017
|
|
5,532
|
|
11,064
|
|
|
|
|
|
|
|
|
|
|
|
$295,114
|
(10)
|
|
|
2017 AI
|
|
N/A
|
|
N/A
|
|
|
|
|
|
$450,500
|
|
$901,000
|
|
|
|
|
|
|
|
|
|
Jose L. Bustamante
|
|
2017 RSU
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
9,459
|
|
|
|
|
|
$468,792
|
(7)
|
|
|
2017 SO
|
|
2/23/2017
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
32,940
|
|
$55.35
|
|
$468,753
|
(8)
|
|
|
2016 VDI
|
|
2/21/2017
|
|
2/21/2017
|
|
6,102
|
|
12,204
|
|
|
|
|
|
|
|
|
|
|
|
$314,984
|
(9)
|
|
|
2017 VDI
|
|
2/23/2017
|
|
2/1/2017
|
|
6,306
|
|
12,612
|
|
|
|
|
|
|
|
|
|
|
|
$336,405
|
(10)
|
|
|
2017 AI
|
|
N/A
|
|
N/A
|
|
|
|
|
|
$403,800
|
|
$807,600
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
types of awards reported in this table are as follows: Restricted Stock Units (RSU), Stock Options (SO), the second tranche of the 2016 Value
Driver Incentive (VDI) Awards, the first tranche of the 2017 VDI Awards, and Annual Incentive (AI).
-
(2)
-
Columns
(e) and (f) show the target and maximum number of units for each named executive under the second tranche of their 2016 VDI
awards and the first tranche of their 2017 VDI awards. The Committee has established threshold levels for the 2017 performance goals for each award, but not for the overall award. All potential
payouts are performance driven, and can be earned from 0 to 200% of target. The performance goals are described in the Compensation Discussion and Analysis on page 35. The third tranche of the
2016 VDI award will be presented in the table in 2018, and the second and third tranches of the 2017 VDI award will be presented in the table in 2018 and 2019, respectively. All three tranches of the
2016 and 2017 VDI award, if earned, will vest in full on March 6, 2019 and March 6, 2020, respectively.
|
|
|
48
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
-
(3)
-
Columns
(g) and (h) show the target and maximum payouts for each named executive of their 2017 annual incentive award. The Committee has
established threshold levels for each of the performance goals, but not for the overall award. All potential payouts are performance driven, and can be earned from 0 to 200% of target. The performance
goals are described in the Compensation Discussion and Analysis on pages 31-32.
-
(4)
-
The
amounts in column (i) represent the number of RSUs granted on February 23, 2017 as part of the 2017 long-term incentive awards. These
RSUs vest one-third per year on March 6
th
in each of the three years following the grant date.
-
(5)
-
The
amounts in column (j) represent the number of nonqualified stock options granted on February 23, 2017 as part of the 2017 long-term
incentive awards. These options vest one-third per year on March 6
th
in each of the three years following the grant date.
-
(6)
-
The
amounts in column (k) represent the exercise price of the nonqualified stock options, which was the closing price of the company's common
stock on the New York Stock Exchange on the date of grant.
-
(7)
-
This
amount represents the grant date fair value of the RSUs granted on February 23, 2017 as part of the 2017 long-term incentive awards. The
value is computed in accordance with ASC 718, using the grant price of $55.35 per share, which was the closing price of the company's common stock on the New York Stock Exchange on the date of
grant, less a liquidity discount of 10.46% related to the Post-Vest Holding Period on the common stock that may be earned under these awards.
-
(8)
-
This
amount represents the grant date fair value of the nonqualified stock options granted on February 23, 2017 as part of the 2017 long-term
incentive awards. The value is computed in accordance with ASC 718, using a Black Scholes option pricing model value of $14.23 per option.
-
(9)
-
This
amount represents the grant date fair value of the target number of shares subject to the second tranche of the 2016 VDI awards granted on
February 21, 2017, using the grant price of $57.65 per unit, which was the closing price of the company's common stock on the New York Stock Exchange on February 21, 2017, the date the
2017 performance goals were approved, less a liquidity discount of 10.46% related to the Post-Vest Holding Period on the common stock underlying these awards.
As
described in footnote 2 of the Summary Compensation Table on pages 44-45, one-third of the shares subject to the 2016 VDI awards have a grant date fair value under applicable accounting
standards in 2017 and, therefore, are reported as 2017 compensation in the Summary Compensation Table and this Grants of Plans Based Awards Table. The grant date fair value of the first tranche of the
2016 VDI award was presented in the tables in 2016; and the grant date fair value of the remaining tranche of the 2016 VDI award will be presented in the tables in 2018, based on the closing price of
the company's common stock on the New York
|
|
|
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
49
|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
Stock
Exchange on the approval date of the performance goals. The total target value approved by the Committee for the 2016 VDI awards for each named executive is as follows:
|
|
|
Name
|
|
2016 VDI Award
Approved Target
Value
|
David T. Seaton
|
|
$4,400,067
|
Bruce A. Stanski
|
|
$757,581
|
Biggs C. Porter
|
|
$1,292,547
|
Carlos M. Hernandez
|
|
$1,150,077
|
Garry W. Flowers
|
|
$805,030
|
Jose L. Bustamante
|
|
$750,083
|
-
(10)
-
This
amount represents the grant date fair value of the target number of shares subject to the first tranche of the 2017 VDI awards granted on
February 23, 2017, using the grant price of $55.35 per unit, which was the closing price of the company's common stock on the New York Stock Exchange on the date of grant, less a liquidity
discount of 10.46% related to the Post-Vest Holding Period on the common stock underlying these awards, plus an adjustment upward by 7.64% for the Relative TSR modifier derived using a Monte Carlo
Simulation approach.
As
noted above, only one-third of the shares subject to the 2017 VDI awards have a grant date fair value under applicable accounting standards in 2017 and, therefore, are reported as 2017 compensation
in the Summary Compensation Table and this Grants of Plans Based Awards Table. The grant date fair value of the remaining two tranches of 2017 VDI award will be presented in the tables in 2018 and
2019, respectively, based on the closing price of the company's common stock on the New York Stock Exchange on the respective approval date of the performance goals. The total target value approved by
the Committee for the 2017 VDI awards for each named executive is as follows:
|
|
|
Name
|
|
2017 VDI Award
Approved Target
Value
|
David T. Seaton
|
|
$4,400,071
|
Bruce A. Stanski
|
|
$802,581
|
Biggs C. Porter
|
|
$1,492,611
|
Carlos M. Hernandez
|
|
$1,287,579
|
Garry W. Flowers
|
|
$822,504
|
Jose L. Bustamante
|
|
$937,584
|
|
|
|
50
FLUOR
CORPORATION
|
2018
PROXY
STATEMENT
|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
OUTSTANDING EQUITY AWARDS AT
2017 FISCAL YEAR END
The following table provides information on the holdings of stock options, RSUs and VDI units by the named executives as of
December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
|
Option Awards
(1)
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Grant
Date
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
(2)(3)
|
|
Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)
(4)
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
(5)
|
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
(6)
|
David T. Seaton
|
|
29,363
|
|
0
|
|
$70.76
|
|
02/28/2011
|
|
02/28/2021
|
|
132,374
|
|
$6,837,117
|
|
59,490
|
|
$3,072,659
|
|
|
39,492
|
|
0
|
|
$62.50
|
|
02/27/2012
|
|
02/27/2022
|
|
|
|
|
|
|
|
|
|
|
105,784
|
|
0
|
|
$61.45
|
|
02/25/2013
|
|
02/25/2023
|
|
|
|
|
|
|
|
|
|
|
120,333
|
|
0
|
|
$79.19
|
|
02/21/2014
|
|
02/21/2024
|
|
|
|
|
|
|
|
|
|
|
115,770
|
|
57,885
|
|
$59.05
|
|
02/23/2015
|
|
02/23/2025
|
|
|
|
|
|
|
|
|
|
|
0
|
|
154,599
|
|
$55.35
|
|
02/23/2017
|
|
02/23/2027
|
|
|
|
|
|
|
|
|
Bruce A. Stanski
|
|
13,515
|
|
0
|
|
$70.76
|
|
02/28/2011
|
|
02/28/2021
|
|
23,125
|
|
$1,194,406
|
|
10,536
|
|
$544,184
|
|
|
16,689
|
|
0
|
|
$62.50
|
|
02/27/2012
|
|
02/27/2022
|
|
|
|
|
|
|
|
|
|
|
23,706
|
|
0
|
|
$61.45
|
|
02/25/2013
|
|
02/25/2023
|
|
|
|
|
|
|
|
|
|
|
18,624
|
|
0
|
|
$79.19
|
|
02/21/2014
|
|
02/21/2024
|
|
|
|
|
|
|
|
|
|
|
19,076
|
|
9,538
|
|
$59.05
|
|
02/23/2015
|
|
02/23/2025
|
|
|
|
|
|
|
|
|
|
|
0
|
|
28,197
|
|
$55.35
|
|
02/23/2017
|
|
02/23/2027
|
|
|
|
|
|
|
|
|
Biggs C. Porter
|
|
36,891
|
|
0
|
|
$56.54
|
|
05/03/2012
|
|
05/03/2022
|
|
39,816
|
|
$2,056,496
|
|
18,781
|
|
$970,039
|
|
|
42,573
|
|
0
|
|
$61.45
|
|
02/25/2013
|
|
02/25/2023
|
|
|
|
|
|
|
|
|
|
|
28,653
|
|
0
|
|
$79.19
|
|
02/21/2014
|
|
02/21/2024
|
|
|
|
|
|
|
|
|
|
|
26,312
|
|
13,156
|
|
$59.05
|
|
02/23/2015
|
|
02/23/2025
|
|
|
|
|
|
|
|
|
|
|
0
|
|
52,443
|
|
$55.35
|
|
02/23/2017
|
|
02/23/2027
|
|
|
|
|
|
|
|
|
Carlos M. Hernandez
|
|
13,608
|
|
0
|
|
$68.36
|
|
03/04/2008
|
|
03/04/2018
|
|
35,801
|
|
$1,849,122
|
|
16,446
|
|
$849,436
|
|
|
17,067
|
|
0
|
|
$70.76
|
|
02/28/2011
|
|
02/28/2021
|
|
|
|
|
|
|
|
|
|
|
23,364
|
|
0
|
|
$62.50
|
|
02/27/2012
|
|
02/27/2022
|
|
|
|
|
|
|
|
|
|
|
29,028
|
|
0
|
|
$61.45
|
|
02/25/2013
|
|
02/25/2023
|
|
|
|
|
|
|
|
|
|
|
28,653
|
|
0
|
|
$79.19
|
|
02/21/2014
|
|
02/21/2024
|
|
|
|
|
|
|
|
|
|
|
28,944
|
|
14,472
|
|
$59.05
|
|
02/23/2015
|
|
02/23/2025
|
|
|
|
|
|
|
|
|
|
|
0
|
|
45,240
|
|
$55.35
|
|
02/23/2017
|
|
02/23/2027
|
|
|
|
|
|
|
|
|
Garry W. Flowers
|
|
4,536
|
|
0
|
|
$68.36
|
|
03/04/2008
|
|
03/04/2018
|
|
23,911
|
|
$1,235,003
|
|
10,998
|
|
$568,047
|
|
|
5,640
|
|
0
|
|
$70.76
|
|
02/28/2011
|
|
02/28/2021
|
|
|
|
|
|
|
|
|
|
|
13,350
|
|
0
|
|
$62.50
|
|
02/27/2012
|
|
02/27/2022
|
|
|
|
|
|
|
|
|
|
|
20,319
|
|
0
|
|
$61.45
|
|
02/25/2013
|
|
02/25/2023
|
|
|
|
|
|
|
|
|
|
|
18,624
|
|
0
|
|
$79.19
|
|
02/21/2014
|
|
02/21/2024
|
|
|
|
|
|
|
|
|
|
|
17,760
|
|
8,880
|
|
$59.05
|
|
02/23/2015
|
|
02/23/2025
|
|
|
|
|
|
|
|
|
|
|
0
|
|
28,902
|
|
$55.35
|
|
02/23/2017
|
|
02/23/2027
|
|
|
|
|
|
|
|
|
Jose L. Bustamante
|
|
1,476
|
|
0
|
|
$68.36
|
|
03/04/2008
|
|
03/04/2018
|
|
23,526
|
|
$1,215,118
|
|
11,365
|
|
$587,002
|
|
|
1,389
|
|
0
|
|
$70.76
|
|
02/28/2011
|
|
02/28/2021
|
|
|
|
|
|
|
|
|
|
|
2,508
|
|
0
|
|
$62.50
|
|
02/27/2012
|
|
02/27/2022
|
|
|
|
|
|
|
|
|
|
|
3,774
|
|
0
|
|
$61.45
|
|
02/25/2013
|
|
02/25/2023
|
|
|
|
|
|
|
|
|
|
|
2,823
|
|
0
|
|
$79.19
|
|
02/21/2014
|
|
02/21/2024
|
|
|
|
|
|
|
|
|
|
|
13,156
|
|
6,578
|
|
$59.05
|
|
02/23/2015
|
|
02/23/2025
|
|
|
|
|
|
|
|
|
|
|
0
|
|
32,940
|
|
$55.35
|
|
02/23/2017
|
|
02/23/2027
|
|
|
|
|
|
|
|
|
-
(1)
-
All
options expire ten years from the grant date and, if unvested, vest one-third per year on March 6th in each of the three years
following the grant date.
-
(2)
-
The
amounts in column (g) include RSUs that remain subject to vesting based on continued service. The RSUs vest one-third per year on
March 6th in each of the three years following the grant date. This column does not include any shares attributable to the 2015 VDI awards (which
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TABLES
|
|
|
|
had
a performance period ending on December 31, 2017) because the company did not meet the minimum performance criteria for these awards.
-
(3)
-
The
following table provides the number of unvested RSUs by vesting date for each named executive as of December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Date
|
|
David T.
Seaton
|
|
Bruce A.
Stanski
|
|
Biggs C.
Porter
|
|
Carlos M.
Hernandez
|
|
Garry W.
Flowers
|
|
Jose L.
Bustamante
|
March 6, 2018
|
|
66,985
|
|
11,564
|
|
19,261
|
|
17,785
|
|
11,830
|
|
11,118
|
March 6, 2019
|
|
50,592
|
|
8,862
|
|
15,535
|
|
13,686
|
|
9,315
|
|
9,255
|
March 6, 2020
|
|
14,797
|
|
2,699
|
|
5,020
|
|
4,330
|
|
2,766
|
|
3,153
|
Total
|
|
132,374
|
|
23,125
|
|
39,816
|
|
35,801
|
|
23,911
|
|
23,526
|
-
(4)
-
The
amounts in column (h) are determined by multiplying the number of shares by the closing price ($51.65) of the company's common stock on the
New York Stock Exchange on December 29, 2017, the last trading day of the fiscal year.
-
(5)
-
The
amounts in column (i) include (1) the first and second tranches of the 2016 VDI units, reflecting below target performance for 2016
and 2017 and target performance for 2018, and (2) the first tranche of the 2017 VDI units, reflecting below target performance for 2017 and target performance for 2018 and 2019. The 2016 and
2017 VDI units will be adjusted for actual performance at the end of the corresponding performance period (December 31, 2018 and December 31, 2019, respectively) and will vest in full
the following March 6
th
.
The
following table provides the number of unvested VDI units granted in 2016 and 2017, as adjusted for performance to date:
|
|
|
|
|
|
|
|
|
Unvested VDI Units
|
Name
|
|
2016
|
|
2017
|
|
Total
|
David T. Seaton
|
|
30,784
|
|
28,706
|
|
59,490
|
Bruce A. Stanski
|
|
5,300
|
|
5,236
|
|
10,536
|
Biggs C. Porter
|
|
9,043
|
|
9,738
|
|
18,781
|
Carlos M. Hernandez
|
|
8,046
|
|
8,400
|
|
16,446
|
Garry W. Flowers
|
|
5,632
|
|
5,366
|
|
10,998
|
Jose L. Bustamante
|
|
5,248
|
|
6,117
|
|
11,365
|
-
(6)
-
The
amounts in column (j) are determined by multiplying the number of VDI units by the closing price ($51.65) of the company's common stock on
the New York Stock Exchange on December 29, 2017, the last trading day of the fiscal year.
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|
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|
OPTION EXERCISES AND STOCK VESTED IN 2017
The following table provides information on the option exercises by, and RSU and VDI award vestings for, the named executives in 2017.
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
Value
Realized
on Exercise
($)
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
Value Realized
on Vesting
($)
|
David T. Seaton
|
|
0
|
|
$0
|
|
135,989
|
|
$7,506,474
|
Bruce A. Stanski
|
|
0
|
|
$0
|
|
21,835
|
|
$1,205,148
|
Biggs C. Porter
|
|
0
|
|
$0
|
|
34,194
|
|
$1,887,190
|
Carlos M. Hernandez
|
|
0
|
|
$0
|
|
33,408
|
|
$1,843,929
|
Garry W. Flowers
|
|
0
|
|
$0
|
|
22,034
|
|
$1,216,101
|
Jose L. Bustamante
|
|
0
|
|
$0
|
|
11,523
|
|
$635,211
|
A
portion of the shares reported under Number of Shares Acquired on Exercise and Number of Shares Acquired on Vesting are withheld or sold on behalf of the named executive upon exercise or vesting to
satisfy exercise costs and tax withholding obligations, and are included in the Value Realized on Exercise and Value Realized on Vesting columns.
|
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53
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|
|
COMPENSATION
TABLES
|
|
|
|
NONQUALIFIED DEFERRED COMPENSATION
All U.S. executives, including named executives, are eligible to defer compensation into the Executive Deferred Compensation Program ("EDCP"),
which has a number of components. Executives may defer up to 100% of base salary, annual incentive awards and VDI payments that are paid in cash. The EDCP also allows executives to contribute between
1% and 20% of base salary to the Excess 401(k) portion of the plan, which allows contributions in excess of the IRC contribution limits for qualified retirement plans (which was $18,000 or $24,000,
depending on the participant's age, in 2017).
In
addition, the company contributes to the Excess 401(k) portion of the plan any amounts that would have been contributed by the company to the 401(k) plan as matching or discretionary retirement
contributions that are in excess of the IRC compensation limit on contributions ($270,000 in 2017) or were lessened by an election to defer base salary. In 2017, the company matched the first 5% of
base salary deferred to the 401(k) Plan or Excess 401(k) Plan and made a discretionary contribution of 4% to 7% of base salary depending on years of service. Most U.S. salaried employees were eligible
for the 5% match and most received the 4% to 7% discretionary retirement contribution in 2017. Annual enrollment for the EDCP is in November, and elections are made with respect to compensation to be
earned in the following year.
Amounts
deferred are adjusted upward or downward based upon the performance of deemed investment choices available to the executives in the EDCP. The company does not guarantee the rates of return.
Executives may change their deemed investment selections on a daily basis.
For
amounts deferred on or after January 1, 2005, distribution elections are made in conjunction with the plan year deferral elections. Distributions can be elected as a lump sum payment or in
up to ten annual installments. Distribution payments are made in the month following retirement or termination, with the exception of officers of the company, for whom no distributions will be made
prior to six months after retirement or termination. In addition, executives can elect to receive a scheduled in-service distribution as a lump sum or in up to ten annual installments, with the
payments commencing no sooner than one year following the end of the plan year of the deferral.
Distributions
related to amounts deferred prior to January 1, 2005 are made at the time of retirement or termination and can be elected as a lump sum payment or in up to twenty annual
installments. Distributions commence the January following retirement or termination.
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|
The
table below shows executive and company contributions made to the EDCP for each named executive, as well as the aggregate earnings and aggregate balance for amounts deferred under the EDCP.
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
Name
|
|
Executive
Contributions
in Last Fiscal
Year
($)
(1)
|
|
Registrant
Contributions
in Last Fiscal
Year
($)
(2)
|
|
Aggregate
Earnings (Loss)
in Last Fiscal
Year
($)
(3)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
December 31,
2017
($)
(4)
|
David T. Seaton
|
|
$164,369
|
|
$121,344
|
|
$1,070,845
|
|
$0
|
|
$5,627,740
|
Bruce A. Stanski
|
|
$20,609
|
|
$32,040
|
|
$1,909
|
|
$0
|
|
$268,204
|
Biggs C. Porter
|
|
$29,123
|
|
$51,146
|
|
$65,161
|
|
$0
|
|
$454,483
|
Carlos M. Hernandez
|
|
$94,505
|
|
$32,395
|
|
$577,805
|
|
$0
|
|
$3,982,193
|
Garry W. Flowers
|
|
$34,592
|
|
$281,221
|
|
$268,166
|
|
$0
|
|
$1,580,203
|
Jose L. Bustamante
|
|
$20,390
|
|
$20,444
|
|
$415
|
|
$0
|
|
$70,521
|
-
(1)
-
The
amounts in column (b) represent contributions by each named executive in 2017 to the Excess 401(k) portion of the EDCP. All amounts in
column (b) are included in the Summary Compensation Table on page 44 in the Salary column (c) for 2017, except deferred dividends in the amount of $16,041 for Mr. Flowers
and $10,342 for Mr. Bustamante.
-
(2)
-
The
amounts in column (c) represent contributions by the company in 2017 for the named executives and include matching and discretionary
contributions into the Excess 401(k) portion of the plan for the portion of base salary that was in excess of the IRC compensation limit on contributions. For Mr. Flowers, it also includes
$250,000 deposited into his account in connection with a retention award that vests as described in footnote 9 of the Summary Compensation Table on page 46. All amounts in column (c), excluding
the retention award granted to Mr. Flowers, are reported in the All Other Compensation column (i) of the Summary Compensation Table on page 44 and in the Company Contributions to
Qualified and Nonqualified Defined Contribution Plans column (b) of the All Other Compensation table on page 46.
-
(3)
-
None
of the deemed investment earnings on vested or unvested deferred compensation, represented in column (d), are reflected in the Summary
Compensation Table because the company does not provide above market or preferential returns on nonqualified deferred compensation.
-
(4)
-
The
amounts in column (f) represent the fully vested EDCP balance as of December 31, 2017 for each of the named executives and include
amounts deferred and aggregate earnings from previous years. These amounts include contributions reported in the summary compensation tables from 2015 and 2016 as follows: Mr. Seaton, $562,370;
Mr. Stanski, $48,800; Mr. Porter, $168,168; and Mr. Hernandez, $258,046.
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|
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TABLES
|
|
|
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The tables below reflect the amount of compensation that would become payable to each of the named executives under existing plans and
arrangements if the named executive's employment had terminated on December 31, 2017, given their compensation and service levels as of such date and, if applicable, based on the company's
closing stock price on December 29, 2017. These benefits are in addition to amounts previously earned and to which they are entitled, regardless of the occurrence of any termination of
employment, including then-exercisable stock options and vested amounts contributed or credited under the EDCP, as well as benefits generally available to all salaried employees, such as amounts
accrued and vested through the company's retirement plans and payout of any accrued time off with pay (collectively, the "Pre-Termination Benefits"). Named executives are entitled to receive the
Pre-Termination Benefits regardless of the manner by which their employment is terminated. As described under the scenarios set forth below, additional amounts may be received upon termination, except
a termination for cause, in which case no additional amounts would be received.
The
actual amounts that would be paid upon a named executive's termination of employment can only be determined at the time of such executive's separation from the company. Due to the number of
factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be higher or lower than reported below. Factors that
could affect these amounts include the timing during the year of any such event, the company's stock price and the executive's age. In addition, in connection with any actual termination of
employment, the company may determine to enter into an agreement or to establish an arrangement providing additional benefits or amounts, or to alter the terms of benefits described below, as the
Committee determines appropriate.
Payments Made Upon Voluntary Termination/Retirement
As of December 31, 2017, Messrs. Seaton, Porter, Hernandez and Flowers were eligible for retirement based on the company's age
and years of service requirements. For these named executives, it was assumed that in the case of voluntary termination, they would elect retirement from the company. Messrs. Stanski and
Bustamante were not eligible for retirement and would not be entitled to compensation upon voluntary termination, other than their Pre-Termination Benefits.
In
the event of the voluntary termination of a named executive who is eligible for retirement, in addition to the Pre-Termination Benefits, upon the named executive signing a non-competition agreement
and assuming the named executive has held the award for at least one year from the date of grant, unvested RSUs, options and VDI units will continue to vest on the dates set forth in the agreements.
Amounts
reported in the tables below assume that the above requirements have been met.
Payments Made Upon Not for Cause Termination
In the event of the termination without cause of a named executive, in addition to the Pre-Termination Benefits and, for retirement eligible
named executives, the items identified above under the heading "Payments Made Upon Voluntary Termination/Retirement," the named executive will receive a cash severance benefit calculated as two weeks
of base pay per year of service, with a minimum severance benefit of eight weeks and a maximum severance benefit of fifty-two weeks.
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In
addition, upon Committee approval, the named executive may receive any annual incentive award earned during the fiscal year.
Amounts
reported in the tables below assume that the Committee has approved the annual incentive payment at target, although the Committee retains discretion not to do so.
Payments Made Upon a Termination in Connection with a Change in Control
In the event of a qualifying termination of a named executive within two years following a Change in Control, in addition to the
Pre-Termination Benefits:
-
-
named executives will receive a lump sum cash payment equal to the sum of the named executive's highest annual base salary during the three
years immediately preceding termination plus target annual incentive for the year, determined immediately prior to the date of the change in control or date of termination, whichever yields the higher
amount, multiplied by 3.0 in the case of Mr. Seaton and 2.0 for other named executives;
-
-
the named executives will receive the annual incentive earned during the fiscal year in which the termination occurs, prorated through the last
full month worked by the named executive during the year of termination;
-
-
any equity-based compensation awards, other than performance-based equity awards, will become fully vested and exercisable or settled; and
-
-
any remaining unvested 2016 and 2017 VDI awards will immediately vest at target performance levels.
A
qualifying termination, generally, is a termination of the named executive without cause or a resignation by the named executive for good reason. "Cause" means the named executive's
(i) fraud, (ii) conviction of a felony, (iii) material failure or refusal to perform his job duties in accordance with company policies or (iv) a material violation of
company policy that causes substantial harm to the company or its subsidiaries. "Good reason" includes a material diminution of the named executive's aggregate compensation or his authority, duties or
responsibilities (including as a result of a material diminution of the budget over which he retains authority), and a material diminution in the authority, duties or responsibilities of the named
executive's supervisor, but may also be triggered by a material breach of any agreement (including the change in control agreement) under which he provides services to the company.
No
gross-up for excise taxes, if any, is payable under the change in control agreements. The company will, however, automatically reduce any payments under the agreement to the extent necessary to
prevent payments being subject to the excise tax, but only if by reason of the reduction, the after-tax benefit of the reduced payments to the named executive exceeds the after-tax benefit if such
reduction were not made.
Payments Made Upon Death or Termination in Connection with Disability
In the event of death of a named executive or termination of employment of a named executive as a result of total and permanent disability,
the payments would be the same as the Payments Made Upon a Termination in Connection with a Change in Control, with the exception of the lump sum cash payment outlined in the first bullet above, any
long-term incentive awards held less than one year (which would be forfeited) and the vesting of 2016 and 2017 VDI awards, which would vest and be paid at actual performance if held more than one
year.
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57
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TABLES
|
|
|
|
The
following tables show the potential payments that would be due to each named executive, in addition to the Pre-Termination Benefits, upon a voluntary termination; a termination without cause; a
termination in connection with a change in control; and death or termination in connection with a disability occurring on December 31, 2017, under then-existing plans and arrangements.
|
|
|
|
|
|
|
|
|
|
David T. Seaton
Eligible for retirement
|
|
Voluntary Termination
of
Employment/Retirement
|
|
Not for Cause
Termination of
Employment
|
|
Termination of
Employment in
Connection with a
Change in Control
|
|
Death or Termination
due to Disability
|
|
Cash Severance Benefit
|
|
$0
|
(1)
|
$1,295,000
|
(2)
|
$9,714,000
|
(3)
|
$0
|
(1)
|
Annual Incentive Award
|
|
$0
|
(4)
|
$1,943,000
|
(5)
|
$1,943,000
|
(6)
|
$1,943,000
|
(7)
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$0
|
(8)
|
$0
|
(8)
|
$0
|
(9)
|
$0
|
(10)
|
Restricted Stock Units
|
|
$4,544,322
|
(8)
|
$4,544,322
|
(8)
|
$6,837,117
|
(9)
|
$4,544,322
|
(10)
|
Value Driver Incentive (VDI)
|
|
$5,546,435
|
(8)
|
$5,546,435
|
(8)
|
$10,132,026
|
(9)
|
$5,546,435
|
(10)
|
Total Value of Payments
|
|
$10,090,757
|
|
$13,328,757
|
|
$28,626,143
|
|
$12,033,757
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A. Stanski
Not eligible for retirement
|
|
Voluntary Termination
of
Employment/Retirement
|
|
Not for Cause
Termination of
Employment
|
|
Termination of
Employment in
Connection with a
Change in Control
|
|
Death or Termination
due to Disability
|
|
Cash Severance Benefit
|
|
$0
|
(1)
|
$215,385
|
(2)
|
$2,590,000
|
(3)
|
$0
|
(1)
|
Annual Incentive Award
|
|
$0
|
(4)
|
$595,000
|
(5)
|
$595,000
|
(6)
|
$595,000
|
(7)
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$0
|
(8)
|
$0
|
(8)
|
$0
|
(9)
|
$0
|
(10)
|
Restricted Stock Units
|
|
$0
|
(8)
|
$0
|
(8)
|
$1,194,406
|
(9)
|
$776,196
|
(10)
|
Value Driver Incentive (VDI)
|
|
$0
|
(8)
|
$0
|
(8)
|
$1,791,377
|
(9)
|
$954,957
|
(10)
|
Total Value of Payments
|
|
$0
|
|
$810,385
|
|
$6,170,783
|
|
$2,326,153
|
|
|
|
|
|
|
|
|
|
|
|
Biggs C. Porter
Eligible for retirement
|
|
Voluntary Termination
of
Employment/Retirement
|
|
Not for Cause
Termination of
Employment
|
|
Termination of
Employment in
Connection with a
Change in Control
|
|
Death or
Termination
due to Disability
|
|
Cash Severance Benefit
|
|
$0
|
(1)
|
$161,788
|
(2)
|
$3,113,000
|
(3)
|
$0
|
(1)
|
Annual Incentive Award
|
|
$0
|
(4)
|
$715,200
|
(5)
|
$715,200
|
(6)
|
$715,200
|
(7)
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$0
|
(8)
|
$0
|
(8)
|
$0
|
(9)
|
$0
|
(10)
|
Restricted Stock Units
|
|
$1,278,647
|
(8)
|
$1,278,647
|
(8)
|
$2,056,496
|
(9)
|
$1,278,647
|
(10)
|
Value Driver Incentive (VDI)
|
|
$1,629,299
|
(8)
|
$1,629,299
|
(8)
|
$3,184,842
|
(9)
|
$1,629,299
|
(10)
|
Total Value of Payments
|
|
$2,907,946
|
|
$3,784,934
|
|
$9,069,538
|
|
$3,623,146
|
|
|
|
|
|
|
|
|
|
|
|
Carlos M. Hernandez
Eligible for retirement
|
|
Voluntary Termination
of
Employment/Retirement
|
|
Not for Cause
Termination of
Employment
|
|
Termination of
Employment in
Connection with a
Change in Control
|
|
Death or Termination
due to Disability
|
|
Cash Severance Benefit
|
|
$0
|
(1)
|
$242,308
|
(2)
|
$2,331,000
|
(3)
|
$0
|
(1)
|
Annual Incentive Award
|
|
$0
|
(4)
|
$535,500
|
(5)
|
$535,500
|
(6)
|
$535,500
|
(7)
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$0
|
(8)
|
$0
|
(8)
|
$0
|
(9)
|
$0
|
(10)
|
Restricted Stock Units
|
|
$1,178,188
|
(8)
|
$1,178,188
|
(8)
|
$1,849,122
|
(9)
|
$1,178,188
|
(10)
|
Value Driver Incentive (VDI)
|
|
$1,449,712
|
(8)
|
$1,449,712
|
(8)
|
$2,791,579
|
(9)
|
$1,449,712
|
(10)
|
Total Value of Payments
|
|
$2,627,900
|
|
$3,405,708
|
|
$7,507,201
|
|
$3,163,400
|
|
|
|
|
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|
2018
PROXY
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|
Table of Contents
|
|
|
COMPENSATION
TABLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garry W. Flowers
Eligible for retirement
|
|
Voluntary Termination
of
Employment/Retirement
|
|
Not for Cause
Termination of
Employment
|
|
Termination of
Employment in
Connection with a
Change in Control
|
|
Death or Termination
due to Disability
|
|
Cash Severance Benefit
|
|
$0
|
(1)
|
$530,000
|
(2)
|
$1,961,000
|
(3)
|
$0
|
(1)
|
Annual Incentive Award
|
|
$0
|
(4)
|
$450,500
|
(5)
|
$450,500
|
(6)
|
$450,500
|
(7)
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$0
|
(8)
|
$0
|
(8)
|
$0
|
(9)
|
$0
|
(10)
|
Restricted Stock Units
|
|
$806,411
|
(8)
|
$806,411
|
(8)
|
$1,235,003
|
(9)
|
$806,411
|
(10)
|
Value Driver Incentive (VDI)
|
|
$1,014,768
|
(8)
|
$1,014,768
|
(8)
|
$1,871,951
|
(9)
|
$1,014,768
|
(10)
|
Total Value of Payments
|
|
$1,821,179
|
|
$2,801,679
|
|
$5,518,454
|
|
$2,271,679
|
|
|
|
|
|
|
|
|
|
|
|
Jose L. Bustamante
Not eligible for retirement
|
|
Voluntary Termination
of
Employment/Retirement
|
|
Not for Cause
Termination of
Employment
|
|
Termination of
Employment in
Connection with a
Change in Control
|
|
Death or Termination
due to Disability
|
|
Cash Severance Benefit
|
|
$0
|
(1)
|
$475,000
|
(2)
|
$1,757,600
|
(3)
|
$0
|
(1)
|
Annual Incentive Award
|
|
$0
|
(4)
|
$403,800
|
(5)
|
$403,800
|
(6)
|
$403,800
|
(7)
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$0
|
(8)
|
$0
|
(8)
|
$0
|
(9)
|
$0
|
(10)
|
Restricted Stock Units
|
|
$0
|
(8)
|
$0
|
(8)
|
$1,215,118
|
(9)
|
$726,561
|
(10)
|
Value Driver Incentive (VDI)
|
|
$0
|
(8)
|
$0
|
(8)
|
$1,922,620
|
(9)
|
$945,505
|
(10)
|
Total Value of Payments
|
|
$0
|
|
$878,800
|
|
$5,299,138
|
|
$2,075,866
|
|
-
(1)
-
A
severance benefit would not have been paid in the event of voluntary termination/retirement, death or disability.
-
(2)
-
The
named executive would have received a cash severance benefit of two weeks of base salary per year of service upon a termination without cause. The
minimum severance benefit is eight weeks and the maximum is 52 weeks of pay. The severance benefit is paid in a lump sum upon termination.
-
(3)
-
The
named executive would have received a lump sum cash payment equal to the sum of the executive's highest annual base salary during the three years
immediately preceding termination plus target annual incentive for the year, determined immediately prior to the date of the change in control or date of termination, whichever yields the higher
amount, multiplied by 3.0 in the case of Mr. Seaton and 2.0 for other named executives.
-
(4)
-
The
named executive would have forfeited any portion of the award earned in the year upon voluntary termination or retirement.
-
(5)
-
Upon
Committee approval, the named executive may receive any annual incentive award earned during the fiscal year. This amount represents the 2017
annual incentive target and assumes approval.
-
(6)
-
The
named executive would receive an annual incentive payment earned for the current year under the Performance Plan, prorated for whole months worked.
This amount represents the 2017 annual incentive target.
-
(7)
-
Upon
approval, the named executive may receive any annual incentive award earned during the fiscal year. This amount represents the 2017 annual
incentive target and assumes approval.
-
(8)
-
For
Messrs. Seaton, Porter, Hernandez and Flowers, who are retirement eligible, this amount represents the value of unvested options, RSUs and
2016 VDI units (at target) that they would have received if their voluntary retirement had occurred on December 31, 2017, with the reported value being based on the closing price of the
company's common stock on December 29, 2017 ($51.65). The value of the awards made in 2017 is not included in this amount because under then-existing plans and arrangements, the awards would
have been forfeited if Messrs. Seaton, Porter, Hernandez and Flowers had retired on or before the first anniversary of the awards' grant date (and, in the case of Mr. Porter, the
Committee did not
|
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|
|
|
COMPENSATION
TABLES
|
|
|
|
provide
its consent to waive the one-year holding period). The value of such 2017 awards (at target for VDI units) as of December 31, 2017 is shown below:
|
|
|
|
|
|
|
|
Name
|
|
Stock Options
|
|
RSUs
|
|
VDI Units
|
|
David T. Seaton
|
|
$0
|
|
$2,292,795
|
|
$4,585,590
|
|
Biggs C. Porter
|
|
$0
|
|
$777,849
|
|
$1,555,543
|
|
Carlos M. Hernandez
|
|
$0
|
|
$670,934
|
|
$1,341,867
|
|
Garry W. Flowers
|
|
$0
|
|
$428,592
|
|
$857,183
|
|
In
the case of Messrs. Stanski and Bustamante, pursuant to the terms of the applicable plan(s), they would have forfeited any unvested options, RSUs and VDI units because they are not
retirement eligible.
-
(9)
-
This
amount represents the value of unvested options, RSUs and VDI units which would have become vested assuming a change in control and a qualifying
termination on December 31, 2017, based on the closing price of the company's common stock on December 29, 2017 ($51.65). Any remaining unvested 2016 and 2017 VDI awards would have been
paid out at target.
-
(10)
-
This
amount represents the value of unvested options, RSUs and 2016 VDI units (at target) as of December 31, 2017, which would have become
vested assuming death or termination due to total and permanent disability on such date, based on the closing price of the company's common stock on December 29, 2017 ($51.65). Any remaining
unvested 2016 VDI awards would have been paid out at the Committee-approved performance ratings. The value of the awards made in 2017 is not included in this amount because these awards would have
been forfeited upon the occurrence of the specified events on or before the first anniversary of the awards' grant date. The value of such 2017 awards (at target for VDI units) as of
December 31, 2017 is shown below:
|
|
|
|
|
|
|
|
Name
|
|
Stock Options
|
|
RSUs
|
|
VDI Units
|
|
David T. Seaton
|
|
$0
|
|
$2,292,795
|
|
$4,585,590
|
|
Bruce A. Stanski
|
|
$0
|
|
$418,210
|
|
$836,420
|
|
Biggs C. Porter
|
|
$0
|
|
$777,849
|
|
$1,555,543
|
|
Carlos M. Hernandez
|
|
$0
|
|
$670,934
|
|
$1,341,867
|
|
Garry W. Flowers
|
|
$0
|
|
$428,592
|
|
$857,183
|
|
Jose L. Bustamante
|
|
$0
|
|
$488,557
|
|
$977,115
|
|
|
|
|
60
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PROXY
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Table of Contents
PAY RATIO DISCLOSURE
The 2017 annual total compensation of the median-compensated of all our employees who were employed as of October 1, 2017 (other than
the CEO) was $67,580. The annual total compensation of David T. Seaton, our CEO, as reported in the Summary Compensation Table, was $10,253,787. The ratio of the annual total compensation of our CEO
to the annual total compensation of our median compensated employee was 152 to 1.
The
SEC's rules for identifying the median compensated employee and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies, to
apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may
not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and
assumptions in calculating their own pay ratio.
The
pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records, as well as the methodology described below. In order
to identify the median compensated employee, we selected fixed cash compensation paid to our employees from January 1, 2017 through October 1, 2017 as our consistently applied
compensation measure. We define fixed cash compensation as any regular payment(s) (such as base salary), overtime pay and annual fixed allowance(s) that are guaranteed to the employee irrespective of
performance. For employees who did not work for the entire nine-month period (and were not designated as temporary employees in our payroll records), we estimated their nine-month fixed cash
compensation based on (i) the amount paid for the portion of the period that employees hired in 2017 worked or (ii) the planned salary for employees on a leave of absence.
As
permitted by SEC rules, we excluded 16 employees in Aruba, 99 in Curacao, 1,774 in the Philippines, 651 in Trinidad and Tobago, and 327 in Kazakhstan who, in the aggregate, represented less than 5%
of our total employee population of approximately 57,650 on October 1, 2017. As a result of these exclusions, the employee population used to identify our median employee was comprised of
approximately 54,783 individuals.
|
|
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|
Table of Contents
|
|
|
DIRECTOR
COMPENSATION
|
|
|
|
Our
compensation philosophy for non-management directors is consistent with the philosophy established for the company's named executives. The compensation program is designed to
attract and retain directors with the necessary experience to represent the company's stockholders and to advise the company's executive management. The company believes that director compensation
should be reasonable in light of what is customary for companies of similar size, scope and complexity, and providing a competitive compensation package is important because it enables us to attract
and retain highly qualified directors who are critical to our long-term success. The compensation program is also designed to align the directors' interests with the interests of stockholders over the
long term. On an annual basis, the Committee considers market data for our Compensation Peer Group and input from our independent compensation consultant regarding market practices for director
compensation. The company uses a combination of cash and stock-based awards to compensate non-management directors and targets the 50
th
percentile of compensation survey data from
the companies included in the Compensation Peer Group as well as companies from similar industry segments and our general industry. Directors who are employees of the company receive no compensation
for their service as directors.
Cash Compensation
For 2017, non-management directors received an annual cash retainer of $120,000, paid quarterly. The chair of the Audit Committee receives an
additional annual cash retainer in the amount of $20,000; the chairs of the Organization and Compensation and Governance Committee receive an additional annual cash retainer in the amount of $15,000;
the Lead Independent Director receives an additional annual cash retainer in the amount of $30,000; and members of the Executive Committee who are not the chair of a committee receive an additional
annual cash retainer in the amount of $10,000.
Stock-Based Compensation
Non-management directors receive an annual grant of RSUs with a total market value (based on the fair market value of the company's common
stock on the New York Stock Exchange on the date of grant) of $150,000 as of the date of the annual meeting of stockholders. Restrictions on the 2017 awards lapse after one year. If a director leaves
the Board prior to the vesting, the portion of any award remaining subject to restrictions is forfeited. Restrictions immediately lapse and the stock vests, however, if an award has been held for at
least six months and a director attains the age for mandatory retirement (currently 72 years of age) and retires, obtains approval for early retirement, dies, becomes permanently and totally
disabled or ceases to serve due to a change in control. RSU awards granted to directors in 2017 are subject to a three-year post-vest holding period. Non-management directors are required to own
shares or share units in an amount equivalent to five times the annual retainer for Board service within five years of joining the Board.
Deferred Compensation Program
Directors have the option of deferring receipt of directors' fees and RSUs. Fees may be deferred until retirement, other termination of status
as a director or, if elected by the
director, a date at least two years after the end of the year in which they make a distribution election, pursuant to the 409A Director Deferred Compensation Program. Directors may elect to have
deferred fees valued as if
|
|
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Table of Contents
|
|
|
DIRECTOR
COMPENSATION
|
|
|
|
invested
either wholly or partially in company stock or one or more of 25 investment funds. Fee deferrals made into the Fluor Stock Valuation Fund prior to January 1, 2013 and maintained
continuously for five years earn a 25% premium on the deferred amount deemed invested in company stock via the Fluor Stock Valuation Fund. The 25% premium was discontinued for any deferrals made
following January 1, 2013. All amounts from deferred fees in the deferral accounts are paid in cash based on the directors' distribution elections.
RSUs
may be deferred until retirement or other termination of status as a director and are invested in company stock. RSU deferrals are paid in Fluor shares based on the directors' distribution
elections.
The
company does not guarantee the rate of return on any deferrals whether in fees or in RSUs.
Former Retirement Plan
In March 2003, a committee of disinterested directors determined that non-management directors who received restricted shares on
March 11, 1997 in consideration of the cancellation of the Fluor Corporation Retirement Plan for Outside Directors could make an irrevocable election to surrender such shares upon their
retirement, death or disability. The only remaining director who made this election is Mr. Fluor. In lieu of these shares, Mr. Fluor will receive the amount of his accrued retirement
benefits at the time of the cancellation of the retirement plan upon his retirement, death or disability. These benefits equal the retainer fees at the time of cancellation multiplied by the number of
years he served prior to the cancellation of the plan. This amount will be paid in a lump sum (reduced to present value based on the 10-year Treasury rate) at retirement.
DIRECTOR COMPENSATION TABLE
The table below summarizes the total compensation earned by each of the non-management directors serving in 2017.
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
Name
|
|
Fees Earned
or
Paid in Cash
($)
(1)
|
|
Stock Awards
($)
(2)
|
|
All Other
Compensation
($)
(3)
|
|
Total
($)
(4)
|
Peter K. Barker
|
|
$140,000
|
|
$167,537
|
|
$5,140
|
|
$312,677
|
Alan M. Bennett
|
|
$135,000
|
|
$167,537
|
|
$7,510
|
|
$310,047
|
Rosemary T. Berkery
|
|
$120,000
|
|
$167,537
|
|
$11,449
|
|
$298,986
|
Peter J. Fluor
|
|
$165,000
|
|
$167,537
|
|
$140
|
|
$332,677
|
James T. Hackett
|
|
$120,000
|
|
$167,537
|
|
$5,140
|
|
$292,677
|
Samuel J. Locklear
|
|
$120,000
|
|
$167,537
|
|
$4,601
|
|
$292,138
|
Deborah D. McWhinney
|
|
$120,000
|
|
$167,537
|
|
$5,140
|
|
$292,677
|
Armando J. Olivera
|
|
$120,000
|
|
$167,537
|
|
$5,140
|
|
$292,677
|
Joseph W. Prueher
|
|
$130,000
|
|
$167,537
|
|
$8,106
|
|
$305,643
|
Matthew K. Rose
|
|
$120,000
|
|
$167,537
|
|
$5,140
|
|
$292,677
|
Nader H. Sultan
|
|
$120,000
|
|
$167,537
|
|
$140
|
|
$287,677
|
Lynn C. Swann
|
|
$120,000
|
|
$167,537
|
|
$5,140
|
|
$292,677
|
-
(1)
-
The
amounts in column (b) represent fees paid for board retainers, committee chair retainers and the lead independent director retainer.
-
(2)
-
The
amounts in column (c) represent the fair market value of the RSUs granted in 2017 on the date of grant in accordance with ASC 718,
calculated using the closing price of the company's common stock on the New York Stock Exchange on the date of grant. The 2017 annual stock grant made to each director was based on a fair market value
of $50.60, which was the closing price of the company's common stock
|
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|
|
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COMPENSATION
|
|
|
|
on
the New York Stock Exchange on May 4, 2017, the date of grant, less a liquidity discount of 10.46% related to the Post-Vest Holding Period on the common stock underlying these awards.
As
of December 31, 2017, the directors held unvested restricted shares and unvested RSUs as detailed in the following table.
|
|
|
|
|
Name
|
|
Restricted Shares
|
|
Restricted Stock Units
|
Peter K. Barker
|
|
0
|
|
3,311
|
Alan M. Bennett
|
|
0
|
|
3,311
|
Rosemary T. Berkery
|
|
0
|
|
3,311
|
Peter J. Fluor
|
|
11,018
|
|
3,311
|
James T. Hackett
|
|
0
|
|
3,311
|
Samuel J. Locklear
|
|
0
|
|
3,311
|
Deborah D. McWhinney
|
|
0
|
|
3,311
|
Armando J. Olivera
|
|
0
|
|
3,311
|
Joseph W. Prueher
|
|
0
|
|
3,311
|
Matthew K. Rose
|
|
0
|
|
3,311
|
Nader H. Sultan
|
|
0
|
|
3,311
|
Lynn C. Swann
|
|
0
|
|
3,311
|
-
(3)
-
The
amounts in column (d) may include the following, which amounts vary by director: charitable gift match, company-paid premiums on director's
life insurance, spousal travel and any related tax gross-ups. Such amounts are detailed in a separate Director All Other Compensation table.
-
(4)
-
The
amounts in column (e) represent the total of columns (b) through (d).
DIRECTOR ALL OTHER COMPENSATION
The following table and related footnotes describe each component of the All Other Compensation column (d) of the Director Summary
Compensation Table for 2017.
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
Name
|
|
Charitable
Gift Match
($)
(1)
|
|
Life
Insurance
Premiums
($)
(2)
|
|
Spousal
Travel ($)
(3)
|
|
Total
($)
(4)
|
Peter K. Barker
|
|
$5,000
|
|
$140
|
|
$0
|
|
$5,140
|
Alan M. Bennett
|
|
$5,000
|
|
$140
|
|
$2,370
|
|
$7,510
|
Rosemary T. Berkery
|
|
$5,000
|
|
$140
|
|
$6,309
|
|
$11,449
|
Peter J. Fluor
|
|
$0
|
|
$140
|
|
$0
|
|
$140
|
James T. Hackett
|
|
$5,000
|
|
$140
|
|
$0
|
|
$5,140
|
Samuel J. Locklear
|
|
$0
|
|
$140
|
|
$4,461
|
|
$4,601
|
Deborah D. McWhinney
|
|
$5,000
|
|
$140
|
|
$0
|
|
$5,140
|
Armando J. Olivera
|
|
$5,000
|
|
$140
|
|
$0
|
|
$5,140
|
Joseph W. Prueher
|
|
$5,000
|
|
$140
|
|
$2,966
|
|
$8,106
|
Matthew K. Rose
|
|
$5,000
|
|
$140
|
|
$0
|
|
$5,140
|
Nader H. Sultan
|
|
$0
|
|
$140
|
|
$0
|
|
$140
|
Lynn C. Swann
|
|
$5,000
|
|
$140
|
|
$0
|
|
$5,140
|
-
(1)
-
The
amounts in column (b) represent company matched charitable contributions (to a maximum of $5,000 per donor, per fiscal year) made to
eligible institutions.
-
(2)
-
The
amounts in column (c) represent company-paid premiums for each director for non-contributory life insurance benefits.
-
(3)
-
The
amounts in column (d) represent the incremental cost of business-related spousal travel and any corresponding tax gross-up for the
business-related spousal travel.
-
(4)
-
The
amounts in column (e) represent the total of columns (b) through (d).
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PROPOSAL
3
RATIFICATION
OF
ACCOUNTING
FIRM
|
|
|
|
PROPOSAL 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
Consistent
with our commitment to good corporate governance, the Board is asking stockholders to ratify the Audit Committee's appointment of Ernst & Young LLP as our
independent registered public accounting firm to audit the financial statements of the company for the fiscal year ending on December 31, 2018. In the event the stockholders fail to ratify the
appointment of Ernst & Young LLP, the Audit Committee will reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the
appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of Fluor and
its stockholders.
A
representative of Ernst & Young LLP is expected to be present at the meeting and available to respond to appropriate questions and, although that firm has indicated that no statement
will be made, an opportunity for a statement will be provided.
Audit and Other Fees
The following table presents aggregate fees for professional audit services rendered by Ernst & Young LLP for the audit of the
company's annual financial statements for fiscal years 2017 and 2016, and fees billed for other services provided by Ernst & Young LLP for fiscal years 2017 and 2016.
|
|
|
|
|
|
|
|
Fiscal Year Ended
(in millions)
|
|
|
|
2017
|
|
2016
|
|
Audit Fees
(1)
|
|
$8.9
|
|
$8.3
|
|
Audit-Related Fees
(2)
|
|
0.6
|
|
0.7
|
|
Tax Fees
(3)
|
|
0.2
|
|
0.5
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees Paid
|
|
$9.7
|
|
$9.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Consists
of fees relating to the annual audit, quarterly reviews, statutory audits, new accounting standards and comfort letters.
-
(2)
-
Consists
of fees relating to benefit plan audits and accounting and reporting consultations, and financial due diligence related to acquisitions.
-
(3)
-
Consists
of fees for tax compliance services (including preparation and filing of expatriate tax returns) and tax consulting services (including
support for tax restructuring).
Audit Firm Independence
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public
accounting firm. The Audit Committee evaluates the selection of the independent registered public accounting firm each year. In addition, in order to promote continuing auditor independence, the Audit
Committee considers the independence of the firm at least annually. In conjunction with the mandated rotation of the independent registered public accounting firm's lead engagement partner, the Audit
Committee and its chair are also directly
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PROPOSAL
3
RATIFICATION
OF
ACCOUNTING
FIRM
|
|
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involved
in the selection of Ernst & Young LLP's new lead engagement partner. Based on their most recent evaluation of Ernst & Young LLP, including the firm's past
performance and an assessment of
the firm's qualifications and resources, the members of the Audit Committee believe that the continued retention of Ernst & Young LLP to serve as the company's independent registered
public accounting firm is in the best interests of the company and its stockholders.
Audit Committee's Pre-Approval Policy
The Audit Committee of our Board has policies and procedures that govern the pre-approval of all audit and non-audit services to be provided
by our independent registered public accounting firm and prohibit certain services from being provided by our independent registered public accounting firm. The independent registered public
accounting firm may not render any audit or non-audit service unless the service is approved in advance by the Audit Committee pursuant to its pre-approval policies and procedures. For any
pre-approval, the Audit Committee confirms that such services are consistent with the rules of the Securities and Exchange Commission and the Public Company Accounting Oversight Board on auditor
independence.
On
an annual basis, the Audit Committee may pre-approve services that are expected to be provided to the company by our independent registered public accounting firm during the fiscal year. Management
provides the Audit Committee a quarterly report listing services performed by and fees paid to the independent registered public accounting firm during the current fiscal year. The Audit Committee has
delegated authority to the chair of the Audit Committee to pre-approve any audit or non-audit services to be provided to the company by the independent registered public accounting firm for which the
cost is less than $500,000. The chair must report any pre-approval pursuant to the delegation of authority to the Audit Committee at its next scheduled meeting, and the Audit Committee is then asked
to approve and ratify the pre-approved service.
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Table of Contents
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|
|
REPORT
OF
THE
AUDIT
COMMITTEE
|
|
|
|
REPORT OF THE AUDIT COMMITTEE
|
The
Audit Committee assists the Board in fulfilling its oversight responsibility for the:
-
-
company's accounting, reporting and financial practices, including the integrity of its financial statements;
-
-
company's compliance with legal and regulatory requirements;
-
-
independent registered public accounting firm's qualifications and independence;
-
-
performance of the company's internal audit function and independent registered public accounting firm; and
-
-
preparation of this report.
In
carrying out these responsibilities, the Audit Committee, among other things, supervises the relationship between the company and its independent registered public accounting firm, including making
decisions with respect to its appointment or removal, reviewing the scope of its audit services, pre-approving audit engagement fees and non-audit services and evaluating its independence. The Audit
Committee oversees and evaluates the adequacy and effectiveness of the company's systems of internal and disclosure controls and oversees the internal audit function. The Audit Committee has the
authority to investigate any matter brought to its attention and may engage outside counsel for such purpose.
The
company's management is responsible, among other things, for preparing the financial statements and for the overall financial reporting process, including the company's system of internal
controls. The independent registered public accounting firm's responsibilities include auditing the financial statements and expressing an opinion on the conformity of the audited financial statements
with U.S. generally accepted accounting principles and an opinion on the company's internal control over financial reporting.
As
part of its oversight of the company's financial statements, the Audit Committee reviewed and discussed with management and Ernst & Young LLP, the company's independent registered
public accounting firm, the audited financial statements of the company for the fiscal year ended December 31, 2017. The Audit Committee discussed with Ernst & Young LLP such
matters as are required to be discussed under the rules adopted by the Public Company Accounting Oversight Board, relating to the conduct of the audit. The Audit Committee has received the written
disclosures and the letter from Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's
communications with the Audit Committee concerning independence. The Audit Committee has discussed with Ernst & Young LLP the registered public accounting firm's independence from the
company and its management, and considered the compatibility of non-audit services with the registered public accounting firm's independence.
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|
|
|
REPORT
OF
THE
AUDIT
COMMITTEE
|
|
|
|
Based
on its review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2017, for filing with the Securities and Exchange Commission. The Audit Committee has also appointed Ernst & Young LLP as
the company's independent registered public accounting firm for the fiscal year ended December 31, 2018.
|
|
|
|
|
|
|
|
The Audit Committee
|
|
|
Peter K. Barker,
Chairman
Alan M. Bennett
Samuel J. Locklear
Matthew K. Rose
Nader H. Sultan
Lynn C. Swann
|
|
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PROPOSAL
4
STOCKHOLDER
PROPOSAL
|
|
|
|
PROPOSAL 4 STOCKHOLDER PROPOSAL
|
Fluor
has received the following stockholder proposal from The Comptroller of the State of New York, who is the trustee of the New York State Common Retirement Fund. The address and
stock ownership of the proponent will be furnished by the company's Secretary to any person, orally or in writing as requested, promptly upon receipt of any oral or written request.
PROPOSAL AND SUPPORTING STATEMENT
RESOLVED:
Shareholders request that Fluor Corporation adopt time bound quantitative, company-wide goals for the reduction of
greenhouse gas (GHG) emissions, taking into consideration the goals of the Paris Climate Agreement, and issue a report by
December 2018, at reasonable cost and omitting proprietary information, on its plans to achieve these goals.
Supporting Statement
In setting strategies to achieve the GHG goals, we recommend consideration of enhancing the energy efficiency of Fluor's operations (wherever
profitable) and sourcing renewable energy.
In
order to mitigate the worst impacts of climate change, the IPCC estimates that a 55 percent reduction in GHG emissions globally is needed by 2050 (relative to 2010 levels) to stabilize
global temperatures, entailing a US target reduction of 80 percent.
The
costs of failing to address climate change are significant and estimated to have an average value at risk of $4.2 trillion globally representing 6% of the current market
capitalization of all the world's stock markets (
The Economist
, Intelligence Unit, 2015).
Risky Business: The Economic Risks of
Climate Change in the United States (2014)
, an analysis of climate change impacts, found serious economic effects including property damage, shifting agricultural patterns,
reduced labor productivity, and increased energy costs. These effects could substantially impact a company's business operations, revenue or expenditures.
Setting
GHG emission targets is widespread among US companies and can have positive financial outcomes. More than 60 percent of Fortune 100 companies have GHG reduction commitments, renewable
energy commitments, or both.
A
report published by WWF, Carbon Disclosure Project (CDP), and McKinsey & Company,
The 3% Solution: Driving Profits Through Carbon Reduction
(2013)
, found that companies with GHG targets achieved an average of 9% better return on investment than companies without targets.
Additionally,
the 79% of companies in the S&P 500 that report to CDP earned a higher return on their carbon reduction investments than on their overall corporate capital investments. Also, the
53 Fortune 100 companies reporting on climate change and energy targets to CDP are saving $1.1 billion annually through their emission reductions and renewable energy initiatives. These
goals enable companies to reduce costs, build resilient supply chains, and manage operational and reputational risk.
Electricity
costs from sources such as wind and solar have declined rapidly and are now cheaper in some regions than fossil fuel-based energy. In 2015, Berkshire Hathaway's NV Energy secured a
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PROPOSAL
4
STOCKHOLDER
PROPOSAL
|
|
|
|
power
purchase agreement (PPA) price of 3.87 cents per kWh for electricity generated by a 100 Megawatt First Solar project. In addition, longterm wind and solar PPA's (used by companies like Apple),
with fixed prices, can help companies reduce the volatility energy costs.
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Board of Directors agrees that the reduction of greenhouse gas ("GHG") emissions is an important issue. To that end, the company has had a
32 percent reduction in its normalized carbon footprint over the 11-year period it has collected GHG data, as further discussed
below, and the company continues to identify appropriate ways to reduce GHG emissions. In addition, the company already reports its GHG emission information to our stakeholders and to the CDP, the
world's largest database of corporate climate change information. In light of these continuing actions by the company, the Board recommends a vote "AGAINST" this stockholder proposal because it does
not believe that disclosure of strict GHG emissions goals would provide significant incremental benefits to the company, its stockholders or the environment.
Company Goals For the Reduction of Greenhouse Gas Emissions
We manage our greenhouse gas emissions, use of renewable energy and energy efficiency on a facility-by-facility basis. As a result, we have
received LEED (or similar) certifications for a number of our facilities around the world, as highlighted in our annual Sustainability Report, which can be found in the Sustainability section of our
website (
www.fluor.com
). We believe that setting company-wide goals for the reduction of GHG emissions does not allow local facility management the full
flexibility that is necessary to reduce environmental impact, increase energy efficiency and employ renewable energy at their facilities. Rather, our current approach allows local management around
the globe to institute the best initiatives for their facilities and has resulted in our superior performance, which is the ultimate indicator of how well a program is designed and executed.
Reporting Greenhouse Gas Emissions
The company has tracked GHG emissions arising from its offices, vehicle fleets at those offices and air travel since 2006. To drive
accountability and verify transparency in our global operations, we proactively report our GHG emission information to our stakeholders in our Sustainability Report and to the CDP for use by financial
and policy decision-makers. In our 2016 Sustainability Report, we note that over the 11-year period that Fluor has collected GHG emissions data, there has been a 32% reduction in our normalized carbon
footprint. Data related to Stork Holding B.V., which we acquired in 2016, will be added once its accuracy and precision are confirmed, which is expected to occur in 2018.
Strategies to Reduce Greenhouse Gas Emissions
Fluor's facilities consist primarily of office space. Using the carbon footprint information we collect, the company continues to identify
appropriate ways to reduce carbon emissions from its offices, including (i) energy reduction through energy-efficient lighting, low power use modality computers and monitors, and programmable
thermostats for heating for both new construction and retrofits; (ii) recycling programs including paper products, metals, cooking oils and light bulbs; and (iii) reuse of office
supplies such as work stations, carpeting, binders and furniture. In addition, the company seeks to lower carbon emissions from employee travel by increasing its utilization of video-conferencing and
otherwise reducing commuting with carpools, office shuttles, bicycle initiatives and support of public transportation.
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PROPOSAL
4
STOCKHOLDER
PROPOSAL
|
|
|
|
Creating Technology to Reduce Greenhouse Gas Emissions
The company is also committed to helping reduce GHG emissions through its investment in NuScale Power, LLC, a leader in the development
of light water, passively safe small modular reactors ("SMRs"). SMRs can help achieve carbon reduction while playing a significant role in meeting future energy demands. According to the IPCC Working
Group III, reducing the carbon intensity of electrical generation is a key component of a cost effective mitigation strategy in achieving a low carbon stabilization level. Nuclear energy is cited as
having the potential to make an increasing contribution to low carbon energy supply. We believe NuScale can be a leader in providing a key technology that will assist in reducing GHG emissions.
The
company maintains its commitment to the reduction of GHG emissions by (i) pursuing internal efforts to reduce emissions; (ii) reporting our GHG emissions in our Sustainability Report
and to the CDP; and (iii) continuing to develop innovative technologies that can play a large role in addressing climate change. In light of our continuing commitment to GHG reduction and
reporting, the Board does not believe that establishing future company-wide goals and reporting on those goals is necessary to further these efforts.
|
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|
|
STOCK
OWNERSHIP
|
|
|
|
STOCK OWNERSHIP AND STOCK-BASED HOLDINGS OF EXECUTIVE OFFICERS AND DIRECTORS
|
The
following table contains information regarding the beneficial ownership of our common stock as of March 2, 2018 by:
-
-
each director and nominee for director;
-
-
each named executive; and
-
-
all current directors and executive officers of the company as a group.
Except
as otherwise noted, the individual or his or her family members had sole voting and investment power with respect to such shares.
|
|
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
|
Shares
Beneficially
Owned
(1)
|
|
|
Fluor
Stock-Based
Holdings
(2)
|
|
|
Percent of
Shares
Beneficially
Owned
(3)
|
|
Directors:
|
|
|
|
|
|
|
|
|
|
|
Peter K. Barker
|
|
|
17,366
|
|
|
37,542
|
|
|
|
*
|
Alan M. Bennett
|
|
|
11,898
|
|
|
19,018
|
|
|
|
*
|
Rosemary T. Berkery
|
|
|
14,564
|
|
|
25,431
|
|
|
|
*
|
Peter J. Fluor
|
|
|
81,998
|
|
|
314,051
|
|
|
|
*
|
James T. Hackett
|
|
|
20,990
|
|
|
37,012
|
|
|
|
*
|
Samuel J. Locklear
|
|
|
3,311
|
|
|
3,311
|
|
|
|
*
|
Deborah D. McWhinney
|
|
|
11,725
|
|
|
11,725
|
|
|
|
*
|
Armando J. Olivera
|
|
|
2,483
|
|
|
19,973
|
|
|
|
*
|
Joseph W. Prueher
|
|
|
19,534
|
|
|
36,795
|
|
|
|
*
|
Matthew K. Rose
|
|
|
2,573
|
|
|
10,873
|
|
|
|
*
|
David T. Seaton
(4)
|
|
|
681,414
|
|
|
822,472
|
|
|
|
*
|
Nader H. Sultan
|
|
|
5,007
|
|
|
20,908
|
|
|
|
*
|
Lynn C. Swann
|
|
|
4,384
|
|
|
9,373
|
|
|
|
*
|
Named Executives:
|
|
|
|
|
|
|
|
|
|
*
|
Jose L. Bustamante
|
|
|
69,033
|
|
|
94,986
|
|
|
|
*
|
Garry W. Flowers
|
|
|
174,105
|
|
|
159,186
|
|
|
|
*
|
Carlos M. Hernandez
|
|
|
242,157
|
|
|
284,680
|
|
|
|
*
|
Biggs C. Porter
|
|
|
182,057
|
|
|
204,882
|
|
|
|
*
|
Bruce A. Stanski
|
|
|
139,090
|
|
|
173,007
|
|
|
|
|
All directors and executive officers as a group (26 persons)
|
|
|
1,984,283
|
|
|
2,742,625
|
|
|
1.4
|
%
|
-
*
-
owns
less than 1% of the outstanding common stock
-
(1)
-
The
number of shares of common stock beneficially owned by each person is determined under rules promulgated by the Securities and Exchange Commission.
Under these rules, a person is deemed to have "beneficial ownership" of any shares over which that person has or shares voting or investment power, plus any shares that the person may acquire within
60 days, including through the exercise of stock options or vesting of restricted stock units. This number of shares beneficially owned therefore includes all restricted stock, shares held in
the company's 401(k) plan, and shares that may be acquired within 60 days pursuant to the exercise of stock
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STOCK
OWNERSHIP
|
|
|
|
options
or vesting of restricted stock units. Included in the number of shares beneficially owned by Mr. Bustamante, Mr. Flowers, Mr. Hernandez, Mr. Porter,
Mr. Seaton and Mr. Stanski, and all directors and executive officers as a group, are 53,802, 110,573, 188,001, 182,057, 587,145, 122,111 and 1,243,689 shares, respectively, subject to
restricted stock units vesting or options exercisable currently or within 60 days after March 2, 2018.
-
(2)
-
Combines
beneficial ownership of shares of our common stock with (i) deferred directors' fees held by certain non-management directors as of
March 2, 2018, in an account economically equivalent to our common stock (but payable in cash and some of which is unvested and attributable to the premium described in "Director Compensation"
on pages 62-63 of this proxy statement), (ii) restricted stock units deferred by certain non-management directors as of March 2, 2018 under the Director Deferred Compensation
Program, (iii) restricted stock units held by directors and executive officers (which are payable in shares of common stock upon vesting) and (iv) performance units held by executive
officers (for which the performance period has passed and which are payable in cash or shares of common stock upon vesting, as elected by the executive officer). This column indicates the alignment of
the named individuals and group with the interests of the company's stockholders because the value of their total holdings will increase or decrease correspondingly with the price of Fluor's common
stock. The amounts described in this footnote are not included in the calculation of the percentages contained in the Percent of Shares Beneficially Owned column of this table.
-
(3)
-
The
percent ownership for each stockholder on March 2, 2018 is calculated by dividing (i) the total number of shares beneficially owned
by the stockholder by (ii) 139,911,820 shares (the total number of shares outstanding on March 2, 2018) plus any shares that may be acquired (including upon exercise of stock
options or vesting of restricted stock units) by that person currently or within 60 days after March 2, 2018.
-
(4)
-
Mr. Seaton
is also a named executive.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains information regarding the beneficial ownership of our common stock as of the dates indicated below by the
stockholders that our management knows to beneficially own more than 5% of our outstanding common stock. The percentage of ownership is calculated using the number of outstanding shares on
March 2, 2018.
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
|
Shares
Beneficially
Owned
|
|
|
Percent
of
Class
|
|
The Vanguard Group
|
|
|
13,988,968
|
(1)
|
|
10.0%
|
|
ClearBridge Investments, LLC
|
|
|
11,585,823
|
(2)
|
|
8.3%
|
|
BlackRock, Inc.
|
|
|
9,811,969
|
(3)
|
|
7.0%
|
|
-
(1)
-
Based
on information contained in Amendment No. 5 to the Schedule 13G filed with the Securities and Exchange Commission on
February 12, 2018 by The Vanguard Group ("Vanguard"), which indicates that, as of December 31, 2017, Vanguard had sole voting power relative to 191,255 shares, shared voting power
relative to 40,342 shares, sole dispositive power relative to 13,768,968 shares and shared dispositive power relative to 220,000 shares. The address of Vanguard is 100 Vanguard Blvd., Malvern, PA
19355.
-
(2)
-
Based
on information contained in Amendment No. 3 to the Schedule 13G filed with the Securities and Exchange Commission on
February 14, 2018 by ClearBridge Investments, LLC ("ClearBridge"), which indicates that, as of December 31, 2017, ClearBridge had sole voting
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STOCK
OWNERSHIP
|
|
|
|
power
relative to 11,207,306 shares, shared voting power relative to 0 shares, sole dispositive power relative to 11,585,823 shares and shared dispositive power relative to 0 shares. The address of
ClearBridge is 620 8
th
Avenue, New York, NY 10018.
-
(3)
-
Based
on information contained in Amendment No. 3 to the Schedule 13G filed with the Securities and Exchange Commission on
January 25, 2018 by BlackRock, Inc. ("BlackRock"), which indicates that, as of December 31, 2017, BlackRock and certain of its subsidiaries had sole voting power relative to
8,591,479 shares, shared voting power relative to 0 shares, sole dispositive power relative to 9,811,969 shares and shared dispositive power relative to 0 shares. The address of BlackRock is 55 East
52
nd
Street, New York, NY 10055.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of Fluor common stock to file
with the Securities and Exchange Commission reports regarding their ownership and changes in ownership of our securities. In addition to requiring prompt disclosure of open-market purchases or sales
of company shares, Section 16(a) applies to technical situations. The company maintains and regularly reviews procedures to assist the company in identifying reportable transactions, and
assists our directors and executive officers in preparing reports regarding their ownership and changes in ownership of our securities and filing those reports with the Securities and Exchange
Commission on their behalf. Based solely upon a review of filings with the Securities and Exchange Commission, a review of company records and written representations by our directors and executive
officers, the company believes that Mr. Olivera had a late filing on Form 4 relating to two transactions involving Fluor stock made by Mr. Olivera's investment advisor in error.
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OTHER BUSINESS
The company does not intend to present any other business for action at the annual meeting and does not know of any other business intended to
be presented by others.
ADDITIONAL INFORMATION
Electronic Delivery of Our Stockholder Communications
If you received the Notice or proxy materials by mail, we strongly encourage you to conserve natural resources and reduce the company's
printing and processing costs by signing up to receive your stockholder communications via e-mail. With electronic delivery, we will notify you via e-mail as soon as the annual report and the proxy
statement are available on the Internet, and you can submit your vote easily online. Electronic delivery can help reduce the number of bulky documents in your personal files and eliminate duplicate
mailings. Your electronic delivery enrollment will be effective until you cancel it. To sign up for electronic delivery, go to
http://enroll.icsdelivery.com/fluor
. This link is also available in the
investor relations section of our website at
www.fluor.com
. If you have questions about electronic delivery, please call our investor relations department at (469) 398-7070.
Expenses of Solicitation and "Householding" of Proxy Materials
The expense of the proxy solicitation will be paid by the company. Some officers and employees may solicit proxies personally, by phone or
electronically, without additional compensation. Georgeson & Company Inc. has been engaged to assist in the solicitation for which it will receive approximately $15,000, plus
reimbursement of reasonable expenses incurred on our behalf. The company also expects to reimburse banks, brokers and other persons for their reasonable out-of-pocket expenses in handling proxy
materials for beneficial owners of the company's common stock.
The
Securities and Exchange Commission has adopted rules that permit companies and intermediaries, such as brokers, to satisfy delivery requirements for proxy materials with respect to two or more
stockholders sharing the same address by delivering a single copy of the Notice or certain proxy materials addressed to those stockholders. This process, which is commonly referred to as
"householding," potentially provides extra convenience for stockholders and cost savings for companies. The company and some brokers will be householding the Notice and proxy materials for
stockholders who do not participate in electronic delivery of proxy materials, unless contrary instructions are received from the affected stockholders. Once you have received notice from your broker
or us that they or we will be householding the Notice or proxy materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time,
you no longer wish to participate in householding and would prefer to receive a separate copy of the Notice or proxy materials, or if you share an address with another stockholder and you would prefer
to receive a single copy of the Notice or proxy materials instead of multiple copies, please notify Fluor's investor relations department at (469) 398-7070, Fluor Corporation,
6700 Las Colinas Boulevard, Irving, Texas 75039 or, if your shares are held in a brokerage account, your broker. The company promptly will deliver to a stockholder who received one copy of the
Notice or proxy materials as the result of householding a separate copy of the Notice or proxy materials upon the stockholder's written or oral request directed to Fluor's investor relations
department at (469) 398-7070, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039. Please note, however, that if you wish to receive a paper proxy card or other proxy
materials for purposes of this year's annual meeting, you should follow the instructions provided in the Notice.
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Advance Notice Procedures
Under the company's Amended and Restated Bylaws, stockholders may nominate directors or bring other business before an annual meeting if
written notice is delivered to the company's Secretary (containing certain information specified in the Amended and Restated Bylaws about the stockholder and the proposed action) not later than the
close of business on the 90
th
day nor earlier than the close of business on the 120
th
day prior to the first anniversary of the preceding year's annual
meeting that is, with respect to the 2019 annual meeting, between January 3, 2019 and February 2, 2019, assuming the date of the 2019 annual meeting is not changed
by more than 30 days before or more than 70 days after the first anniversary of the 2018 annual meeting. These requirements are separate from the company's proxy access procedures and
the Securities and Exchange Commission's requirements that a stockholder must meet in order to have a stockholder proposal included in the company's proxy statement (which are described below). Any
notices should be sent to: Carlos M. Hernandez, Chief Legal Officer and Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039. The chairman of the meeting may refuse to
acknowledge or introduce any stockholder proposal or nomination if notice thereof is not received within the applicable deadlines or does not comply with the Amended and Restated Bylaws. If a
stockholder fails to meet these deadlines or fails to satisfy the requirements of Rule 14a-4 under the Exchange Act, the company may exercise discretionary voting authority under proxies it
solicits to vote on any such proposal as it determines appropriate.
Proxy Access Procedures
The company's Amended and Restated Bylaws permit a stockholder, or group of up to 20 stockholders, owning continuously for at least
three years shares of Fluor stock representing an aggregate of at least 3% of our outstanding shares, to nominate and include in the company's proxy materials director nominees constituting up to the
greater of two or 20% of the company's Board, provided that the stockholder(s) and nominee(s) satisfy the requirements in our Amended and Restated Bylaws. Written notice of proxy access director
nominees must be received not later than the close of business on the 120
th
day nor earlier than the close of business on the 150
th
day prior to the first
anniversary of the date the definitive proxy statement was first sent to stockholders in connection with the preceding year's annual meeting that is, with respect to the 2019
annual meeting, between October 9, 2018 and November 8, 2018, assuming the date of the 2019 annual meeting is not changed by more than 30 days before or after the first
anniversary of the 2018 annual meeting. Any notices should be addressed to Carlos M. Hernandez, Chief Legal Officer and Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas
75039.
Stockholder Proposals for the 2019 Annual Meeting
Stockholders interested in submitting a Rule 14a-8 proposal for inclusion in the proxy materials for the annual meeting of stockholders
in 2019 may do so by following the procedures prescribed in Rule 14a-8, under the Exchange Act. To be eligible for inclusion, stockholder proposals must be received by the company's Secretary
no later than the close of business on November 8, 2018. Any proposals should be sent to: Carlos M. Hernandez, Chief Legal Officer and Secretary, Fluor Corporation, 6700 Las Colinas
Boulevard, Irving, Texas 75039.
Electronic Voting
Use of the Internet or telephonic voting procedures described on page 78 of this proxy statement constitutes your authorization for
Broadridge Financial Solutions, or in the case of shares held in company retirement plans, the trustee, to deliver a proxy card on your behalf to vote at the annual meeting in accordance with your
Internet or telephonically communicated instructions.
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Annual Report
Any stockholder who would like a copy of our 2017 Annual Report on Form 10-K, including the financial
statements and the financial statement schedules, may obtain one, without charge, by addressing a request to the Corporate Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, TX
75039. You may also obtain access to a copy of the Form 10-K in the investor relations section of our website at
www.fluor.com
by clicking on
"Financial Information" and "SEC Filings."
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QUESTIONS
AND
ANSWERS
ABOUT
THE
ANNUAL
MEETING
AND
VOTING
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
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Why did I receive a notice regarding Internet availability of proxy materials instead of a full set of printed materials?
As
permitted by Securities and Exchange Commission rules, we are making this proxy statement and our annual report available to our stockholders primarily via the Internet, rather than mailing printed
copies of these materials to each stockholder. We believe that this process will expedite stockholders' receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural
resources. Each stockholder (other than those who previously requested electronic delivery of all materials or previously elected to receive a paper copy of the proxy materials) will receive a Notice
of Internet Availability of Proxy Materials (the "Notice") containing instructions on how to access and review the proxy materials, including our proxy statement and our annual report, on the Internet
and how to access an electronic proxy card to vote on the Internet or by phone. The Notice
also contains instructions on how to receive a paper copy of the proxy materials. If you receive a Notice, you will not receive a printed copy of the proxy materials unless you request one. If you
receive a Notice and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice.
Who is entitled to vote at the meeting?
The Board of Directors set March 5, 2018 as the record date for the 2018 annual meeting. If you were a stockholder of record at the
close of business on March 5, 2018, you are entitled to vote at the annual meeting.
What are my voting rights?
Stockholders have one vote for each share of Fluor common stock owned by them as of the close of business on March 5, 2018, the record
date, with respect to all business of the meeting. There is no cumulative voting.
How many shares must be present to hold a meeting?
On March 5, 2018, the company had 139,913,699 shares of common stock outstanding. The presence at the meeting, in person or by proxy,
of a majority of the outstanding shares of Fluor common stock on the record date will constitute a quorum at the annual meeting. Abstentions and broker non-votes (broker-held shares for which the
brokers have not received voting instructions from clients and with respect to which the brokers do not have discretionary authority to vote on a matter) are counted for purposes of determining the
presence or absence of a quorum for the transaction of business at the annual meeting.
How do I vote my shares?
If you are a stockholder of record as of the record date, you may authorize the voting of your shares in any of the following ways by
following the instructions in the Notice:
-
-
over the Internet at www.proxyvote.com;
-
-
telephonically by calling 1-800-690-6903;
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QUESTIONS
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-
-
by completing, signing and mailing the printed proxy card, if you requested a paper copy of the proxy materials; or
-
-
in person at the annual meeting.
Authorizations
submitted over the Internet or by phone must be received by 11:59 p.m. Eastern Daylight Time on May 2, 2018.
If
the shares you own are held in "street name" by a bank, brokerage firm or other nominee, that nominee may provide you with a Notice. Follow the instructions on the Notice to access our proxy
materials and vote online, or to request a paper or email copy of our proxy materials. If you receive these materials in paper form, a voting instruction card is included so you can instruct your
bank, broker or other nominee how to vote your shares. Please note that if your shares are held in street name by a bank, brokerage firm or other nominee and you wish to vote in person at the annual
meeting, you must first obtain a legal proxy issued in your name from the bank, brokerage firm or other nominee that holds your shares.
How do I vote if my shares are held in company retirement plans?
If you hold any shares in the company retirement plans, you are receiving, or are being provided access to, the same proxy materials as any
other stockholder of record. However, your proxy vote will serve as voting instructions to The Northern Trust Company, as trustee of the plans. If voting instructions (or any revocation or change of
voting instructions) are not received by the trustee by 5:59 p.m. Eastern Daylight Time on May 1, 2018, or if you do not provide properly completed and executed voting instructions, any
shares you hold in the company retirement plans will be voted by the trustee in favor of the twelve nominees for director, and in proportion to the manner in which the other company retirement plan
participants vote their shares with respect to the other proposals.
What vote is required for the election of directors and the other proposals?
Each director nominee receiving the majority of votes cast (number of shares voted "for" a director nominee must exceed the number of shares
voted "against" that director nominee) will be elected as a director, provided that if the number of nominees exceeds the number of directors to be elected (a situation we do not anticipate), the
directors shall be elected by a plurality of the votes cast. Abstentions and broker non-votes are not counted in the determination of votes cast, and thus do not have an effect on the outcome of
voting for directors.
With respect to Proposals 2 and 3, the affirmative vote of the majority of shares represented in person or by proxy at the annual meeting and
entitled to vote is required. Abstentions have the same effect as a vote "against" Proposals 2 and 3, and broker non-votes (if applicable) do not have an effect on the outcome of these
proposals. Each of these votes is advisory, and the Board will give consideration to the voting results.
With respect to Proposal 4, the affirmative vote of the majority of shares represented in person or by proxy at the annual meeting and
entitled to vote is required. Abstentions have the same effect as a vote "against" Proposal 4, and broker non-votes do not have an effect on the outcome of this proposal.
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QUESTIONS
AND
ANSWERS
ABOUT
THE
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MEETING
AND
VOTING
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If your shares are held in street name and you do not provide voting instructions to your broker in advance of the annual meeting, New York
Stock Exchange rules grant your broker discretionary authority to vote on "routine matters," including the ratification of the independent auditors (Proposal 3). However, the proposals
regarding the election of directors, the advisory vote to approve executive compensation and the stockholder proposal are not considered "routine matters." Therefore, if you hold your shares of
company common stock in street name and do not provide voting instructions to your broker, your shares will not be voted on Proposals 1, 2 and 4. We urge you to promptly provide voting
instructions to your broker to ensure that your shares are voted on these proposals. Please follow the instructions set forth in the Notice.
What if I do not specify how I want my shares voted?
For shares other than shares held in the Fluor retirement plans or held in street name, if you properly submit a proxy without giving specific
voting instructions, the proxyholders named therein will vote in accordance with the recommendation of the Board of Directors (1) FOR the election of the twelve director nominees listed above,
(2) FOR the advisory resolution to approve executive compensation, (3) FOR the ratification of the appointment of Ernst & Young LLP as independent registered public
accounting firm for the year ending December 31, 2018 and (4) AGAINST the stockholder proposal. As to any other business that may properly come before the meeting, the proxyholders will
vote in accordance with their best judgment, although the company does not presently know of any other business.
Can I revoke my proxy or change my vote after submitting my proxy?
Yes. For shares held of record, you may revoke your proxy or change your voting instructions by submitting a later-dated vote in person at the
annual meeting, via the Internet, by phone or by delivering written notice to the Secretary of the company at any time prior to 24 hours before the commencement of the annual meeting. Attending
the meeting will not revoke your proxy unless you specifically request to revoke it or submit a ballot at the meeting. If you are a participant in Fluor's retirement plans, you may revoke your proxy
and change your vote, but only until 5:59 p.m. Eastern Daylight Time on May 1, 2018. If the shares you own are held in street name by a bank, brokerage firm or other nominee, you should
contact that nominee if you wish to revoke or change previously given voting instructions.
How can I attend the meeting?
Attendance at the annual meeting is limited to stockholders of the company as of the record date. You may be asked to present valid,
government-issued picture identification, such as a driver's license or passport, before being admitted to the meeting. If you hold your shares in street name, you also will need proof of ownership to
be admitted to the meeting. A recent brokerage statement or letter from your broker or other nominee are examples of proof of ownership. Each stockholder may appoint only one proxy holder or
representative to attend the meeting on his or her behalf.
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QUESTIONS
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ANSWERS
ABOUT
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MEETING
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VOTING
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Please
let us know whether you plan to attend the meeting by responding affirmatively when prompted during telephone or Internet voting or by marking the attendance box on the proxy card or voting
instruction card.
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Carlos M. Hernandez
Executive Vice President, Chief Legal Officer and Secretary
|
March 8,
2018
Irving, Texas
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Directions to the
Fluor Corporation 2018 Annual Meeting of Stockholders
Thursday, May 3, 2018, beginning at 8:30 a.m. Central Daylight Time
Fluor Corporation
6700 Las Colinas Boulevard
Irving, Texas 75039
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From DFW Airport:
|
|
From Love Field:
|
Leaving the airport, take the north exit
|
|
Leaving the airport, turn right on Mockingbird Ln.
|
Travel east on TX 114
|
|
Travel west on TX 183 to TX 114 W
|
Take the MacArthur Blvd. exit and turn left
|
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Take the MacArthur Blvd. exit and turn right
|
Turn right onto Fluor Drive
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|
Turn right onto Fluor Drive
|
End at Fluor Corporation entrance
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End at Fluor Corporation entrance
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VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 5:59 P.M. Eastern Daylight Time on May 1, 2018 (benefit plan shares) or 11:59 P.M. Eastern Daylight Time on May 2, 2018 (registered shares). Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. FLUOR CORPORATION ATTN DAWN STOUT E-3L 6700 LAS COLINAS BLVD. IRVING, TX 75039 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 5:59 P.M. Eastern Daylight Time on May 1, 2018 (for shares allocable to a benefit plan account) or 11:59 P.M. Eastern Daylight Time on May 2, 2018 (for registered shares). Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E35914-P01986 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. FLUOR CORPORATION The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees: Peter K. Barker For ! ! ! ! ! ! ! ! ! ! ! Yes Against ! ! ! ! ! ! ! ! ! ! ! No Abstain ! ! ! ! ! ! ! ! ! ! A. B. Alan M. Bennett For Against Abstain ! ! ! ! ! ! K. Nader H. Sultan C. Rosemary T. Berkery D. Peter J. Fluor L. Lynn C. Swann E. James T. Hackett The Board of Directors recommends you vote FOR proposal 2. ! ! ! 2. An advisory vote to approve the company's executive compensation. F. Samuel J. Locklear III The Board of Directors recommends you vote FOR proposal 3. G. Deborah D. McWhinney ! ! ! H. Armando J. Olivera 3. The ratification of the appointment by our Audit Committee of Ernst & Young LLP as independent registered public accounting firm for the fiscal year ending December 31, 2018. I. Matthew K. Rose The Board of Directors recommends you vote AGAINST proposal 4. J. David T. Seaton ! ! ! 4. Stockholder proposal requesting adoption of greenhouse gas emissions reduction goals. Please indicate if you plan to attend this meeting. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. NOTE: I also authorize my proxies to vote in their discretion with respect to such other business as may properly come before the meeting or any adjournment thereof. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
FLUOR CORPORATION 2018 Annual Meeting of Stockholders May 3, 2018 You are cordially invited to attend the 2018 Annual Meeting of Stockholders which will be held on Thursday, May 3, 2018, beginning at 8:30 a.m. Central Daylight Time at Fluor Corporation Headquarters 6700 Las Colinas Blvd. Irving, TX 75039 A map is included on the last page of the proxy statement. ADMITTANCE TICKET This ticket entitles you, the stockholder, to attend the 2018 Annual Meeting. Please bring it with you. Only stockholders with this ticket, valid identification and proof of stock ownership will be admitted. We look forward to welcoming you on Thursday, May 3, 2018. Important Notice Regar ding the A vailability of Pr oxy Materials for the Annual Meeting: The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com E35915-P01986 FLUOR CORPORATION Annual Meeting of Stockholders This proxy is solicited by the Board of Directors The undersigned, a stockholder of Fluor Corporation, a Delaware corporation, revoking any proxy previously given, hereby constitutes and appoints C.M. Hernandez and E.P. Helm, or either of them, the true and lawful agents and proxies of the undersigned with full power of substitution in each, to vote the shares of common stock of Fluor Corporation standing in the name of the undersigned at the Annual Meeting of Stockholders of Fluor Corporation, on Thursday, May 3, 2018 at 8:30 a.m. Central Daylight Time, and at any adjournment or postponement thereof with respect to the proposals listed on the reverse side of this proxy card and upon such other matters as may be properly presented. If you are a stockholder of record, this proxy card when properly executed will be voted as directed by the undersigned stockholder and in accordance with the discretion of the proxies as to any other matters that are properly presented. If no such direction is made, this proxy card will be voted FOR the election of the twelve nominees for director, FOR the advisory resolution to approve the company's executive compensation, FOR the ratification of the appointment by our Audit Committee of Ernst & Young LLP as independent registered public accounting firm for the fiscal year ending December 31, 2018, and AGAINST the stockholder proposal. If you are a participant in a 401(k) or other retirement plan sponsored by Fluor Corporation or a subsidiary (the "Company Retirement Plans"), this proxy represents the number of Fluor Corporation shares allocable to that plan account as well as other shares registered in your name. As a participant in and a named fiduciary under the Company Retirement Plans, you have the right to direct the Northern Trust Company, as trustee, how to vote the shares of Fluor Corporation allocated to the plan account as well as a portion of any shares for which no timely voting instructions are received from other participants with respect to Proposals 2-4. If the trustee does not receive voting instructions from you by 5:59 p.m. Eastern Daylight Time on May 1, 2018, the trustee will vote FOR the nominees for Director in Proposal 1 and, with respect to Proposals 2-4, will vote the shares allocated to the plan account in the same proportion as it votes the shares for which it has received such instructions unless to do so would be inconsistent with the trustee's duties. If other matters come before the meeting, the named proxies will vote plan shares on those matters in their discretion. Continued and to be signed on reverse side
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