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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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ý | Definitive Proxy Statement | |
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o | Soliciting Material under §240.14a-12 | |
| FLUOR CORPORATION | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
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March 8, 201819, 2021
On behalf of theour Board of Directors, I would like to thank you for your investment in Fluor Corporation.Fluor. Our Board appreciates that it is elected by you, our stockholders, to oversee the management of our companyCompany for the long-term benefit of all stakeholders.
Since our stakeholders. As such,last annual meeting of stockholders, our Board has continued to drive a number of changes to position Fluor for the Board seeksfuture. One of our directors, David Constable, became CEO on January 1, 2021. On January 28, we held a Strategy Day with investors, where we unveiled our new strategy to ensure that it hasbecome the appropriate mixpreeminent leader of skills, experienceprofessional and background to provide effective oversight.technical solutions. At our Strategy Day event, we outlined four strategic priorities for value creation:
We remain accountablealso announced a realignment into three segments: Urban Solutions, Mission Solutions and Energy Solutions. This better aligns our business with identified growth markets, accompanied by changes to stockholders through a variety of governance practices, including fully independent Board committees, the annual election of directors, a majority vote bylaw in uncontested director elections, and a robust Board evaluation process. Moreour executive team.
You can find more information about these practices,our strategic and others, can be foundoperational initiatives in our Annual Report to Stockholders that accompanies this Proxy Statement.proxy statement.
I amWe are pleased to invite you to join us at the Fluor Corporation 2018our 2021 annual meeting of stockholders to be held on Thursday, May 3, 20186, 2021 at 8:30 a.m., Central Daylight Time,Time. To support the health and well-being of our employees and shareholders, this year's meeting will again be held virtually via an audio webcast at the Fluor headquarters located at 6700 Las Colinas Blvd., Irving, Texas 75039.www.virtualshareholdermeeting.com/FLR2021. At this year's meeting, we will vote on the election of twelveten directors and the ratification of the selection of Ernst & Young LLP as Fluor's independent registered accounting firm. We will also hold a non-binding advisory votesvote on the compensation of Fluor's named executive officers and a stockholder proposal.officers. Members of management will report on the company'sCompany's operations and respond to stockholder questions.
We hopeIt is important that your shares be represented and voted at the annual meeting regardless of how many shares you will be able to attend the meeting. However, whetherown. Whether or not you plan to attendjoin the meeting, we encourage you to review our proxy materials and promptly cast your vote over the Internetinternet or by phone. Alternatively, if you receive a paper copy of the proxy materials by mail, you may vote by signing, dating and mailing the proxy card or voting instruction card in the envelope provided. Voting in any one of these ways will ensure that your shares are represented at the meeting.
On behalf of our Board, we would like to thank Carlos Hernandez, our previous CEO and a former director, for his leadership and the integral role he played in stabilizing the Company during his tenure. We would also like to thank Peter Fluor for his many years of service and contributions to our Company. Peter will be retiring from the Board upon the expiration of his term at this year's annual meeting.
TheOur Board remains committed to serving your interests in 2018 and greatly appreciates your continued support of our company. ICompany. We look forward to seeing you joining us virtually on May 36rdth.
Sincerely,
David T. SeatonChairman and Chief Executive Officer
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| Alan L. Boeckmann Executive Chairman | ||||
David E. Constable |
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Notice of Annual Meeting of Stockholders
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WHEN |
| Thursday, May 8:30 a.m. Central Daylight Time |
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RECORD DATE |
| Close of business on March |
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ITEMS OF BUSINESS | ||
1. | The election of the | |
2. | An advisory vote to approve the | |
3. | The ratification of the appointment by our Audit Committee of Ernst & Young LLP as independent registered public accounting firm for the | |
Stockholders will also act on such other matters as may be properly presented at the meeting or any adjournment or postponement thereof. | ||
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All stockholders of record at the close of business on March 5, 20188, 2021 are entitled to receive notice of, and to vote at, the annual meeting and any adjournment of the meeting. Stockholders are cordially invitedDue to concerns related to the COVID-19 pandemic, the annual meeting of stockholders will be a virtual meeting, conducted exclusively online via audio webcast at www.virtualshareholdermeeting.com/FLR2021. There will not be a physical location for the annual meeting, and you will not be able to attend the meeting in person; however, regardlessperson. Stockholders as of whether you plan to attendthe record date may participate in the annual meeting online, vote, submit questions or view the list of registered stockholders during the meeting by visiting the meeting website and logging in person, please cast your vote as instructed inwith the control number on their proxy card or Notice of Internet Availability of Proxy Materials (the "Notice"),. For additional information, see "Questions and Answers about the Annual Meeting and Voting: How Do I Attend the Annual Meeting?" on page 90. Please cast your vote by either voting your shares over the Internetinternet or by phone, as promptly as possible. Alternatively, if you wish to receive paper copies of your proxy materials, including the proxy card or voting instruction card, please follow the instructions in the Notice. Once you receivehave received paper copies of your proxy materials, please complete, sign, date and promptly return the proxy card or voting instruction card in the postage-prepaid return envelope provided, or follow the instructions set forth on the proxy card or voting instruction card to authorize the voting of your shares over the Internetinternet or by phone. Your prompt response is necessary to ensure that your shares are represented at the meeting. If you wish to receive paper copies of your proxy materials, including the proxy card or voting instruction card, please follow the instructions in the Notice.
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| Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on May | | |||
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Please take time tovote your shares! | ||||
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| TABLE OF CONTENTS |
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Proxy Summary | i | |||
PROPOSAL 1 — ELECTION OF DIRECTORS | 1 | |||
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Director Skills Matrix | 2 | |||
Director Biographies | 3 | |||
Corporate Governance | 9 | |||
Corporate Governance Highlights | 9 | |||
Stockholder Engagement | 10 | |||
Sustainability | 10 | |||
Board Independence | ||||
Risk Management Oversight | ||||
Board Leadership | ||||
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Board | ||||
Board and Committee Evaluations | 19 | |||
Consideration of Director Nominees | ||||
Related Person Transactions | 21 | |||
Certain | ||||
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Communications with the Board | ||||
Compensation Committee Interlocks and Insider Participation | ||||
PROPOSAL 2 — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | ||||
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Organization and Compensation Committee Report | ||||
Summary Compensation Table | ||||
All Other Compensation | ||||
Grants of Plan-Based Awards in | ||||
Outstanding Equity Awards at | ||||
Option Exercises and Stock Vested in | ||||
Nonqualified Deferred Compensation | ||||
Pension Benefits | 64 | |||
Potential Payments Upon Termination or Change in Control | ||||
Pay Ratio Disclosure | ||||
Director Compensation | ||||
PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||
Report of the Audit Committee | ||||
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Stock Ownership and Stock-Based Holdings of Executive Officers and Directors | ||||
Stock Ownership of Certain Beneficial Owners | ||||
Delinquent Section 16(a) | ||||
Other Business | ||||
Additional Information | ||||
2022 Annual Meeting of Stockholders | 86 | |||
Questions and Answers About the Annual Meeting and Voting | ||||
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This is a summary only and does not contain all of the information that you should consider in connection with this proxy statement. Please read the entire proxy statement carefully before voting.
ANNUAL MEETING OF STOCKHOLDERSGOVERNANCE HIGHLIGHTS
Stockholders are being asked to vote on the following matters:
Stockholders also will transact any other business that may properly come before the meeting.
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FLUOR CORPORATION|2021 PROXY STATEMENT i | ||
You are entitled to vote at the 20182021 annual meeting of stockholders if you were a stockholder of record at the close of business on March 5, 2018,8, 2021, the record date for the meeting.
Website References. Website references throughout this document are provided for convenience only and the content on the referenced websites is not incorporated by reference in, and does not form a part of, this proxy statement.
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ii FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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Proxy Statement
March 8, 201819, 2021
This proxy statement is furnished in connection with the solicitation by the Board of Directors (the "Board") of Fluor Corporation (the "company""Company" or "Fluor") of your proxy for use at the annual meeting of stockholders to be held online via audio webcast at the Fluor Corporation Headquarters at 6700 Las Colinas Boulevard, Irving, Texas 75039,www.virtualshareholdermeeting.com/FLR2021 on Thursday, May 3, 2018,6, 2021, at 8:30 a.m. Central Daylight Time, or at any adjournment or postponement thereof. This proxy statement is first being mailed or made available to stockholders on or about March 8, 2018.19, 2021.
The current mailing address of the principal executive offices of Fluor Corporation is 6700 Las Colinas Boulevard, Irving, Texas 75039. Please direct any communications to this mailing address.
Each of Peter K. Barker,the Company's nominees are current directors, who were elected by stockholders at the 2020 annual meeting and whose terms will expire at the 2021 annual meeting. Each of Alan M. Bennett, Rosemary T. Berkery, Peter J. Fluor,Alan L. Boeckmann, David E. Constable, H. Paulett Eberhart, James T. Hackett, Samuel J. Locklear, Deborah D. McWhinney,Thomas C. Leppert, Teri P. McClure, Armando J. Olivera and Matthew K. Rose David T. Seaton, Nader H. Sultan and Lynn C. Swann has been nominated for election at the annual meeting to serve a one-year term expiring at the annual meeting in 20192022 and until his or her respective successor is elected and qualified. Mr. Prueher will not stand for re-election, as he has reached the mandatory retirement age andPeter J. Fluor will be retiring from the Board aseffective upon the expiration of his term at the 20182021 annual meeting. Accordingly, the Board has set the number of directors at twelve,ten, effective May 3, 2018.as of the 2021 annual meeting.
Each of the nominees listed above has agreed to serve as a director of the companyCompany if elected. The companyCompany knows of no reason why the nominees would not be available for election or, if elected, would not be able to serve. If any of the nominees decline or are unable to serve as a nominee at the time of the annual meeting, the persons named as proxies may vote either (1) for a substitute nominee designated by the Board to fill the vacancy or (2) just for the remaining nominees, leaving a vacancy. Alternatively, the Board may reduce the size of the Board.
Under the standard applicable to the company'sCompany's director elections, a director must receive the affirmative vote of a majority of the votes cast; except that directors shall be elected by a plurality of the votes cast if as of the record date for such meeting, the number of director nominees exceeds the number of directors to be elected (a situation we do not anticipate). A majority of the votes cast means that the number of shares voted "for" a director nominee must exceed the number of shares voted "against" that director nominee. If an incumbent director is not re-elected, the Governance Committee will consider his or her contingent resignation given(given prior to the meetingmeeting) and make a recommendation to the Board on whether to accept or reject the resignation. The Board will then publicly announce its decision regarding whether to accept the resignation and, if not, the reasons why.
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ELECTION OF DIRECTORS | ||
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Biographical Information, Including Experience, Qualifications, Attributes and SkillsDirector Nominees
The following biographical information is furnished with respect to each of the nominees for election at the annual meeting. The information presented includes information each director has given us about his or her age, all positions he or she holds with the company, his or her principal occupation and business experience for at least the past five years, and the names of other public companies of which he or she currently serves or has served as a director in the last five years. Mr. Peter J. Fluor is shown as serving from the date of his original election to the Board prior to the company's reverse spin-off transaction in November 2000.
As discussed further below under "Corporate Governance — Consideration of Director Nominees," the Governance Committee is responsible for reviewing with the Board, on an annual basis (and as needed), the appropriate skills and characteristics required of memberscomposition of the Board to assess whether the skills, experience, characteristics and other criteria established by the Board are currently represented on the Board as a whole and in individual Board members, and to assess the contextcriteria that may be needed in light of the current make-up of the Board.Company's anticipated future needs. The company'sCompany's directors have experience with businesses that operate in industries in which the companyCompany operates, such as oil and gas power and government contracting,infrastructure, and collectively have additional skills that are important to overseeing the company'sCompany's business, such as knowledge of construction services, financial matters, risk oversight and compliance, and familiarity with non-U.S. markets. The following information highlightspages highlight the specific experience, qualifications, attributes and skills that our individual directors possess which have led the Governance Committee to conclude that each such individual should continue to serve on the company's Board.Company's Board, and therefore may not list all of the skills and experience that each director possesses.
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The following biographical information is furnished with respect to each of the nominees for election at the annual meeting.
ALAN M. BENNETT |
Age: Director Since: 2011 Board Committees: Independent: Yes | POSITION AND BUSINESS EXPERIENCE KEY ATTRIBUTES, EXPERIENCE AND SKILLS Mr. Bennett brings to the Board a deep understanding of business operations, finance, OTHER BOARD SERVICE • Director, Halliburton Company • Director, The TJX Companies, Inc. |
ROSEMARY T. BERKERY |
Director Since: 2010 Board Committees: Independent: Yes | POSITION AND BUSINESS EXPERIENCE Vice Chair of UBS Wealth Management Americas and Chair of UBS Bank USA, each a wealth management banking business, KEY ATTRIBUTES, EXPERIENCE AND SKILLS Ms. Berkery's broad range of experience in financial, business and legal matters makes her a valued member of the OTHER BOARD SERVICE • Director, Mutual of America Life Insurance Company • Director, The TJX Companies, Inc. |
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Age: Director Since: Board Committees: Independent: | POSITION AND BUSINESS EXPERIENCE Executive Chairman (since 2019) of Fluor Corporation; non-executive Chairman of Fluor from 2011 until his retirement in 2012; Chairman and Chief Executive Officer of KEY ATTRIBUTES, EXPERIENCE AND SKILLS Mr. OTHER BOARD SERVICE • Director, • Former director, • Former director, BP p.l.c. |
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Director Since: Board Committees: Independent: | POSITION AND BUSINESS EXPERIENCE Chief Executive KEY ATTRIBUTES, EXPERIENCE AND SKILLS Mr. OTHER BOARD SERVICE • Director, •
• Former director, Anadarko Petroleum Corporation
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Independent: Yes | POSITION AND BUSINESS EXPERIENCE
KEY ATTRIBUTES, EXPERIENCE AND SKILLS Ms. OTHER BOARD SERVICE • Director, • Director, • • Former director, Cameron International Corporation |
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FLUOR CORPORATION | | ||
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ELECTION OF DIRECTORS | ||
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Director Since: Board Committees: Independent: Yes | POSITION AND BUSINESS EXPERIENCE President of Tessellation Services, LLC, a privately-held consulting services firm, since 2020; Executive Chairman of Alta Mesa Resources, Inc., an onshore oil and gas acquisition, exploration and production company, from 2018 to 2020; Chief Executive Officer of Kingfisher Midstream, LLC, a wholly owned subsidiary of Alta Mesa, from 2018 to 2020; Interim Chief Executive Officer of Alta Mesa from 2018 to 2019; Partner of Riverstone Holdings LLC, an energy and power focused private investment firm, from 2013 to 2018; Executive Chairman of Anadarko Petroleum Corporation from 2012 until his retirement in 2013; Chief Executive Officer of Anadarko from 2003 to 2012. Alta Mesa Resources, Inc. and Kingfisher Midstream, LLC, and certain of their subsidiaries, filed for protection under Chapter 11 of the United States Bankruptcy Code in September 2019 and January 2020, respectively. KEY ATTRIBUTES, EXPERIENCE AND SKILLS Mr. Hackett has extensive knowledge of the global oil and gas industry. His several decades of executive experience, as well as his experience serving on other public company boards and as a former Chairman of the Board of the Federal Reserve Bank of Dallas, enable him to provide respected guidance on business strategy and financial matters, as well as perspective about the oil and gas and power markets. OTHER BOARD SERVICE • Director, Enterprise Products Partners L.P. • Director, NOV Inc. • Former director, Alta Mesa Resources, Inc. • Former director, Cameron International Corporation |
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6 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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ELECTION OF DIRECTORS | ||
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THOMAS C. LEPPERT |
Director Since: 2019 Board Committees: Independent: Yes | POSITION AND BUSINESS EXPERIENCE Chief Executive Officer of Kaplan, Inc. a provider of education services to colleges, universities and businesses from 2014 until his retirement in 2015; President and Chief Operating Officer of Kaplan from 2013 to 2014; Mayor of the City of Dallas from 2007 to 2011; Chairman and Chief Executive Officer of The Turner Corporation from 1999 to 2006, one of the largest construction services companies in the U.S. KEY ATTRIBUTES, EXPERIENCE AND SKILLS Mr. Leppert's diverse leadership background in the public and private sectors, both as a corporate chief executive officer and elected political official, provide him with valuable experience in business, strategy, project management and governance. His prior service as Chief Executive Officer of The Turner Corporation, one of the nation's largest general building companies, provide the Board with unique insight and experience in the construction services industry. OTHER BOARD SERVICE • Former director, Tutor Perini Corporation • Former director, W.S. Atkins PLC |
TERI P. MCCLURE |
Director Since: 2020 Board Committees: Independent: Yes | POSITION AND BUSINESS EXPERIENCE Chief Human Resources Officer and Senior Vice President, Labor at United Parcel Service, Inc., the world's largest package delivery company and provider of global supply chain management services, from 2016 until her retirement in 2019; Senior Vice President, Legal, Compliance & Public Affairs, General Counsel & Secretary at UPS from 2006 to 2016; General Counsel at UPS from 2006 to 2006; joined UPS in 1995. KEY ATTRIBUTES, EXPERIENCE AND SKILLS Ms. McClure's long tenure as a senior executive of a large, publically traded company make her a valued member of our Board. Her broad experience and expertise provide the Board with unique experience and knowledge in human capital strategy and executive compensation, as well as compliance and regulatory, corporate governance and legal matters. OTHER BOARD SERVICE • Director, GMS, Inc. • Director, JetBlue Airways Corporation • Director, Lennar Corporation |
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FLUOR CORPORATION|2021 PROXY STATEMENT 7 | ||
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ELECTION OF DIRECTORS | ||
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ARMANDO J. OLIVERA |
Director Since: 2012 Board Committees: Independent: Yes | POSITION AND BUSINESS EXPERIENCE Senior Advisor, Ridge-Lane Limited Partners, a strategic advisory firm, since KEY ATTRIBUTES, EXPERIENCE AND SKILLS Mr. Olivera's tenure as the former President and Chief Executive Officer of one of the largest electric utilities in the United States provides him with extensive knowledge of financial and accounting matters, as well as a keen understanding of the power industry and its regulations. OTHER BOARD SERVICE • Director, Consolidated Edison, Inc. • Director, Lennar Corporation • Former director, AGL Resources, Inc. |
MATTHEW K. ROSE |
Director Since: 2014 Board Committees: Independent: Yes | POSITION AND BUSINESS EXPERIENCE Advisor to BDT Capital Partners, LLC, an investment and advisory firm specializing in family and founder-led companies, since 2019; Executive Chairman, Burlington Northern Santa Fe, LLC, a subsidiary of Berkshire Hathaway Inc. (and former public company) and one of the largest freight rail systems in North America ("BNSF"), KEY ATTRIBUTES, EXPERIENCE AND SKILLS Mr. Rose's qualifications to serve on the Board include his extensive leadership experience obtained from overseeing a large, complex and highly regulated organization, his considerable knowledge of operations management and business strategy and his deep understanding of public company oversight. In addition, his experience serving on other public company boards, as well as the board of the Federal Reserve Bank of Dallas, makes him a valuable member of our Board. OTHER BOARD SERVICE • Director, AT&T Inc.
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8 FLUOR CORPORATION | | ||
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CORPORATE GOVERNANCE | ||
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Corporate Governance Highlights
Fluor has long believedbelieves that good corporate governance practices promote the principles of fairness, transparency, accountability and responsibility and will help manage the companyCompany for the long-term benefit of its stockholders. During the past year, we continued to reviewour annual practice of reviewing our corporate governance policies and practices, compare them to those suggested by various commentators on corporate governance and the practices of other public companies and engage with our stockholders on corporate governance issues.
The following list highlights some of our core governance values and more recent corporate governance initiatives:values:
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Proxy Access | Our proxy access bylaws give stockholders the ability to nominate and include director nominees in the | |||||
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Annual Director Elections | All directors stand for election on an annual basis. | |||||
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Annual Board Evaluations | We conduct annual evaluations of the Board, its committees and all individual Board members. | |||||
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Stockholder Right to Call a Special Meeting | Holders of at least 25% of our outstanding shares of common stock have the right to call a special meeting of stockholders. | |||||
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Majority Voting Provisions | Our corporate governance documents contain majority (as opposed to supermajority) voting provisions. | |||||
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Director Independence | All directors, with the exception of our Executive Chairman and our Chief Executive Officer ("CEO"), are independent. We also have a Lead Independent Director who presides over executive sessions of the independent directors of the Board and approves agendas and schedules for Board meetings. | |||||
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During 2017,Each year, our Board reviewedreviews all committee charters and in our most recent review the Board updated each of the company'scharters for:
In addition, in October 2020 the Board reviewed and updated the company'sCompany's Corporate Governance Guidelines. You can accessAmong the changes made in the most recent review, our current committee charters, Corporate Governance Guidelines, Code of Business Conduct and Ethics for Members of the Board of Directors, as well as other information regarding our corporate governance practices, on our website atwww.fluor.com under "Sustainability" — "Governance" — "Corporate Governance Documents." Our Code of Business Conduct and Ethics for Fluor employees can be found on our website atwww.fluor.com under "Sustainability" — "Ethics and Compliance" — "The Code."
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Guidelines were updated to require that, as part of the search process for each new director, the Governance Committee must include women and minorities in the pool of candidates (and instruct any search firm engaged by the Governance Committee to do so). You can access our current committee charters, Corporate Governance Guidelines, Code of Business Conduct and Ethics for Members of the Board of Directors, as well as other information regarding our corporate governance practices, on our website at www.fluor.com under "Sustainability" — "Governance" — "Corporate Governance Documents." Our Code of Business Conduct and Ethics for Fluor employees can be found on our website at www.fluor.com under "Sustainability" — "Ethics and Compliance" — "The Code."
On March 24, 2020, the Board adopted a limited duration stockholder rights agreement designed to protect stockholders from efforts to capitalize on market volatility that was occurring in light of the COVID-19 pandemic. Under the terms of the rights agreement, as amended, the rights expire on March 24, 2021, unless earlier redeemed or exchanged.
Fluor has a long tradition of engaging with its stockholders and being responsive to their perspectives. In addition to our regular investor days organized by Investor Relations,investor relations, we meet with stockholders on corporate governance and other topics of interest to them. Prior to adopting corporate governance initiatives, including those noted above, we consider the policies of our stockholders and solicit certain of their perspectives on potential courses of action.
Fluor has engaged in outreach to investors on a number of topics over the last several years, including proxy access, disclosuregovernance, sustainability and compensation. Since our last annual meeting, we conducted stockholder engagement on a number of political contributionstopics, including the timely submission of financials, risk management, our CEO transition and greenhouse gas emissions reductionour strategic goals. After consideringOur team reported to the Board on the investor feedback and, based on that feedback, we received onhave enhanced our proxy access,statement disclosure regarding our Board amendeddirectors' skills, approach to compensation and our Bylawssustainability efforts.
Fluor's sustainability mission envisions meeting the needs of our clients while conducting business in a socially, economically and environmentally responsible manner to the benefit of current and future generations, thereby creating value for all stakeholders. Fluor helps clients safeguard the environment, conserve energy, protect lives and strengthen economies and social structures of communities. As a key priority for our sustainability program, we have committed to reduce our greenhouse gas emissions. At our Strategy Day in January 2021, we committed to achieving net zero emissions for Scopes 1 and 2 absolute greenhouse gas emissions by the end of 2023. | NET ZERO BY 2023 We have committed to achieving net zero scopes 1 and 2 |
Fluor has a Sustainability Committee to adopt the proxy access provisions summarized above. A copyoversee our sustainability policies, strategies and programs. The Sustainability Committee includes representatives of each of our Amendedbusiness segments, as well as a cross-functional team of subject matter experts from communications, health, safety and Restated Bylaws is availableenvironmental, investor relations and legal, who serve as advisors to the Sustainability Committee. In furtherance of the Board's commitment to sustainability, our Governance Committee reviews and receives reports from management on our website,sustainability efforts.
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10 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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You can read more about our client offerings, as well as our initiatives to develop a diverse workforce; our achievements in health, safety and environmental matters; our commitment to integrity and ethical business conduct; our proactive approach to community involvement and other sustainability efforts, by visiting the Fluor Corporation Sustainability Report at www.fluor.com. Further, under the "Sustainability" — "Sustainability Report" section. The Sustainability Report was developed using the Sustainability Accounting Standards Board and other standards. The Sustainability Report is provided for convenience only and the report and the website references throughout the document are not incorporated by reference in, response to stockholder feedback onand do not form a proposal requesting disclosurepart of, political contributions, the Board approved an amendment to our political activities policy that, among other things, requires that corporate political contributions be disclosed on a semi-annual basis in reports posted on the company's website. The policy, as well as the semi-annual reports, are available on our website,www.fluor.com, in the "Sustainability — Governance" section. Finally, after taking into account our conversations with stockholders regarding greenhouse gas emissions reduction goals, our Board has determined to oppose the stockholder proposal discussed on pages 69-71.this proxy statement.
In accordance with the New York Stock Exchange ("NYSE") listing standards and our Corporate Governance Guidelines, our Board determines annually which directors are independent and, through the Governance Committee, oversees the independence of directors throughout the year. In addition to meeting the minimum standards of independence adopted by the New York Stock Exchange,NYSE, a director qualifies as "independent" only if the Board affirmatively determines that the director has no material relationship with the companyCompany (either directly, or as a partner, stockholder or officer of an organization that has a relationship with the company)Company). A relationship is "material" if, in the judgment of the Board, the relationship would interfere with the director's independent judgment.
Our Board has adopted director independence standards for assessing the independence of our directors. These criteria include restrictions on the nature and extent of any affiliations the directors and their immediate family members may have with us, our independent accountants, organizations with which we do business, other companies where our executive officers serve as compensation committee members and non-profit entities with which we have a relationship. Our independence standards are included in our Corporate Governance Guidelines, which are available on our website atwww.fluor.com under the "Sustainability" — "Governance" section.
The Board, as recommended by the Governance Committee, has determined that each of the company'sCompany's current directors and director nominees (other than Mr. Seaton)Boeckmann and Mr. Constable) are independent of the companyCompany and its management under New York Stock ExchangeNYSE listing standards and the standards set forth in our Corporate Governance Guidelines. The Board previously had determined that Mr. Constable was independent prior to his employment as an officer of the Company. In addition, the Board previously determined that Mr. Peter K. Barker and Ms. Deborah D. McWhinney, each of whom served on the Board during 2020, were independent. The Board also determined that each of the members of the Audit, Commercial Strategies and Operational Risk, Governance and Organization and Compensation Committees has no material relationship with Fluor and is independent within the meaning of the New York Stock ExchangeNYSE listing standards and Fluor's director independence standards for such committee.
In making its independence determination with regard to Ms. Berkery, the Board considered payments to PricewaterhouseCoopers ("PWC"), where Ms. Berkery's brother is a partner. With regard to PWC: (i) the fees paid to PWC in each of the last three years were less than .02% of such firm's revenues; (ii) Ms. Berkery's brother is one of over 11,000 partnersMr. Boeckmann and 236,000 employees at
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PWC; (iii) Ms. Berkery's brother does not personally provide services to the company or oversee others who provide such services; and (iv) the company hired PWC prior to Ms. Berkery joining the Board. In addition, it is important to note that Fluor, as a global corporation, and due to various securities regulations and requirements, utilizes multiple accounting firms for different kinds of services and, in fact, retained each of the four major public accounting firms to provide various services during 2017. The Board does not believe that the company's use of PWC raises any independence concerns with regard to Ms. Berkery. The Board determined that Mr. Seaton isConstable are not independent under the New York Stock ExchangeNYSE listing standards and our Corporate Governance Guidelines because of histheir employment as the Chief Executive OfficerChairman and CEO of the company.Company, respectively.
Finally, the Board reviewed charitable contributions made to non-profit organizations for which Board members (or their respective spouses) serve as an employee or on the board of directors. Specifically, the Board considered that certain directors and/or their family members (Mr. Barker, Mr. Bennett, Ms.(Ms. Berkery, Mr. Hackett, Admiral Locklear, Ms. McWhinney,Mr. Leppert, Mr. Olivera and Mr. Rose) are affiliated with non-profit organizations that received contributions from the companyCompany in 2017, 2016 and/2020, 2019 or 2015.2018. No organization received contributions in a single year in excess of $100,000; and therefore these contributions fell well below the thresholds of the company'sCompany's independence standards.
As part of its oversight function, the Board monitors how management operates the company. When granting authority to management, approving strategies and receiving management reports, the Board considers, among other things, the risks and vulnerabilities the company faces. In addition, the Board discusses risks related to the company's business strategy at the Board's annual strategic planning meeting. The Board also delegates responsibility for the oversight of certain risks to the Board's committees.
Under the Audit Committee charter, the Audit Committee is responsible for reviewing and discussing with management the company's most significant risks, methods of risk assessment, risk mitigation strategies, and the overall effectiveness of the company's guidelines, policies and systems with respect to risk assessment and management. In particular, the Audit Committee considers risk issues associated with our overall financial reporting, disclosure process, legal matters, regulatory compliance, cybersecurity and information technology, as well as accounting risk exposure and other operational and strategic risks. The Audit Committee is provided quarterly information on the geographic, operational and market risks facing our company. In carrying out its responsibilities related to risk oversight, the Audit Committee meets in executive sessions, at least quarterly, with the Chief Executive Officer, the Chief Financial Officer, the Chief Legal Officer, the Chief Compliance Officer, the head of internal audit and the independent registered public accounting firm to discuss particular risks facing the company.
The Organization and Compensation Committee is also tasked with certain elements of risk oversight. The Organization and Compensation Committee annually reviews the company's compensation policies and programs, as well as the mix and design of short-term and long-term compensation, to confirm that our compensation programs do not encourage unnecessary and excessive risk taking.
Finally, the Governance Committee is responsible for overseeing governance issues that may create governance risks, such as board composition, director selection and the other governance policies and practices that are critical to the success of the company. Each of the Audit, Governance and
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The Board | As part of its oversight function, the Board monitors how management operates the Company. When granting authority to management, approving strategies and receiving management reports, the Board considers, among other things, the risks and vulnerabilities the Company faces. In addition, the Board discusses risks related to the Company's business strategy at the Board's annual strategic planning meeting. The Board also delegates responsibility for the oversight of certain risks to the Board's committees, each of which reports at least quarterly to the Board regarding the areas they oversee. | |
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Audit Committee | Coordinates and communicates with the Board's Commercial Strategies and Operational Risk Committee regarding the Company's strategic and operational risks. | |
| | Reviews and discusses with management the Company's other most significant risks, methods of risk assessment, risk mitigation strategies, and the overall effectiveness of the Company's guidelines, policies and systems with respect to risk assessment and management, including policies and procedures for derivative and foreign exchange transaction and insurance coverage. | |
| | Considers risk issues associated with financial reporting, disclosure process, legal matters, regulatory compliance, cybersecurity and information technology, as well as accounting risk exposure. | |
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Commercial Strategies and Operational Risk Committee | Reviews and discusses with management the Company's commercial strategies and operational risks, the Company's significant prospective and current projects, including major strategic and operational risks with respect to such prospects and projects, as well as the Company's risk identification, risk assessment and risk mitigation policies, procedures and practices for its strategic and operational risks. | |
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Organization and Compensation Committee | Annually reviews the Company's compensation policies and programs, as well as the mix and design of short-term and long-term compensation, to confirm that our compensation programs do not encourage unnecessary and excessive risk taking. | |
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Governance Committee | Responsible for overseeing issues that may create governance risks, such as board composition, director selection and the other governance policies and practices that are critical to the success of the Company. | |
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12 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
Organization
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COVID-19 Risks
From the beginning of the COVID-19 pandemic, the Board has been engaged with management in identifying the strategic and Compensation Committees report quarterlyoperational risks to the Company from the pandemic. The Board has received regular updates from management regarding the impact of COVID-19 on the Company, including our employees, clients and the industries in which we operate. The Board's discussions have involved a diverse set of issues, including the health and safety of our employees and job sites, the impact of the pandemic on the communities where we are located, compliance with applicable laws and regulations and the pandemic's effects on our clients, operations and results. In addition, the Audit Committee, as part of its oversight of the Company's financial reporting processes, considered the design and operation of the Company's internal controls in the context of the COVID-19 environment.
Cybersecurity Risks
Cybersecurity and information technology risks are important areas they oversee.of focus for the Board, which views management of these risks as essential to our success. As part of its oversight function, the Board devotes significant attention to cybersecurity and information technology matters.
Our Board receives quarterly reports from management that address a broad range of cybersecurity and information technology topics, including technology trends, regulatory developments, data security policies and practices, cybersecurity incidents, current and projected threat assessments and ongoing efforts to prevent, detect and respond to critical threats. In addition, the Audit Committee regularly reviews and discusses with management risk issues associated with cybersecurity and information technology and policies and controls to mitigate those risks, and periodically meets with our Chief Information Officer to review and discuss cybersecurity risk management and related issues.
The Chairman of the company's Board is elected by the Board on an annual basis.basis based on the recommendation of the Governance Committee. The Board, together with the Governance Committee annually reviews the leadership structure of the Board and recommends changes to the Board as appropriate. As set forth in the company's AmendedBylaws and Restated Bylaws andthe Corporate Governance Guidelines, the Board is empowered to choose any one of its members as Chairman of the Board. The Board has chosen Mr. Seaton,determined that different individuals should hold the company's Chief Executive Officer, to serve as thepositions of Chairman of the Board.Board and CEO of the Company, with Mr. Boeckmann serving as Executive Chairman of the Board and Mr. Constable serving as CEO. The Board has determinedbelieves that this structure is best for the Company at the current time, as it allows Mr. Seaton,Constable to focus on the individual with primary responsibility for managing the company'sCompany's strategy, business and day-to-day operations, is best positionedwhile enabling Mr. Boeckmann to chair regularfocus on Board meetingsmatters and serve as a liaison between the Board and the Company's senior management, headed by Mr. Constable. This structure also allows the Board to leadbenefit from Mr. Boeckmann's prior experience and facilitate discussionsknowledge of key business and strategic issues.the Company from his prior service as CEO. In his role as Executive Chairman, Mr. SeatonBoeckmann provides guidance and support to the CEO and senior management, presides over Board meetings, provides input onprepares the agenda for each Board meeting and performs such other duties as the Board may request from time to time. However,
To provide for independent leadership, the Board has also established a Lead Independent Director position, as it believes that the role of Lead Independent Director promotes effective governance when the companyCompany has a non-independent Chairman. As discussed below, theThe Lead Independent Director is elected everyserves for a term of three years and hisis elected by the independent directors. His or her duties are closely aligned
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FLUOR CORPORATION|2021 PROXY STATEMENT 13 | ||
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with the role of an independent chairman. chair. In particular, the Lead Independent Director's primary responsibility is to preside over and set the agenda for all executive sessions of the independent directors of the Board. The Lead Independent Director also:
The Lead Independent Director also has the authority to call executive sessions of the independent directors, as needed. In October 2020, the independent members of the Board designated Mr. Alan M. Bennett to serve as Lead Independent Director for a three-year term that will expire in October 2023.
The Board believes that its current leadership structure provides independent Board leadership and engagement while also offering the benefits described above of having our Chief Executive Officer serve as Chairman.
engagement. In addition, each of the Audit, Commercial Strategies and Operational Risk, Governance and Organization and Compensation Committees is composed entirely of independent directors. Consequently, independent directors directly oversee critical matters such as the compensation policy for executive officers, succession planning, our methods of risk assessment and risk mitigation strategies, our policies and practices related to corporate governance, the director nominations process, our corporate finance strategies and initiatives, and the integrity of our financial statements and internal controls over financial reporting.
To provide for independent leadership, the Board has appointed a Lead Independent Director, whose primary responsibility is to preside over and set the agenda for all executive sessions of the independent directors of the Board. The Lead Independent Director also approves agendas and schedules for meetings of the Board and information sent to the Board, chairs Board meetings in the Chairman's absence, acts as a liaison between the independent directors and the Chairman, provides guidance on the director orientation process for new Board members, consults and communicates with stockholders, as appropriate, and monitors communications to the Board from stockholders and other interested parties. The Lead Independent Director also has the authority to call executive sessions of the independent directors, as needed. In 2018, the independent members of the Board designated Mr. Peter J. Fluor to serve in this position for a three-year term that expires in February 2021.
Board of Directors Meetings and Committees
During 2017,2020, the Board held sixnineteen meetings, one of which was an extensive two-daya strategic planning session. Each of the current directors attended more than 75% of the aggregate number of meetings of the Board and of the Board committees on which he or she served and which were held during the period that each director served.
As discussed earlier, the Lead Independent Director presides over all executive sessions of the independent directors. Executive sessions of independent directors must take place at each regular
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Board meeting according to our Corporate Governance Guidelines. During 2017, five2020, eleven executive sessions of the independent directors were held.
The Board has a policy that directors attend the annual meeting of stockholders each year. All twelve directors serving on the Board at that time attended the 20172020 annual meeting of stockholders.stockholders that was held virtually due to the COVID-19 pandemic.
Our Board has fourfive standing committees:
Each committee has a charter that has been approved by the Board. With the exception of the Executive Committee, each committee must review the appropriateness of its charter and perform a self-evaluation at least annually. Any recommended changes to the charters are then submitted to the Board for approval.
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Five, including one to review the company's 2016 Annual Report, Form 10-K and proxy materials for the 2017 annual meeting. At the end of each of the four regular meetings of the committee, the members of the Audit Committee met privately with the company's independent registered public accounting firm, and also met with the company's head of internal audit and other members of management.
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The responsibilities of the Audit Committee and its activities during 2017 are described in the "Report of the Audit Committee" section of this proxy statement on pages 67-68.
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One meeting to discuss director evaluations.
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When the Board is not in session, the Executive Committee has all of the power and authority of the Board, subject to applicable laws, rules, regulations and listing standards of the New York Stock Exchange.
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Each committee has a charter that has been approved by the Board. With the exception of the Executive Committee, each committee must review the appropriateness of its charter and perform a self-evaluation at least annually. Any recommended changes to the charters require approval by the Board. The table below shows the current chairs and membership of each committee, and the independence status of each director.
| Director | Independent | Audit Committee | Commercial Strategies and Operational Risk Committee | Executive Committee | Governance Committee | Organization and Compensation Committee | ||||||
| Alan M. Bennett* | ✓ | C | · | · | ||||||||
| Rosemary T. Berkery | ✓ | · | | · | C | | ||||||
| Alan L. Boeckmann** | C | |||||||||||
| David E. Constable | | | | · | | | ||||||
| H. Paulett Eberhart | ✓ | · | · | |||||||||
| Peter J. Fluor | ✓ | | | · | · | | ||||||
| James T. Hackett | ✓ | · | · | C | ||||||||
| Thomas C. Leppert | ✓ | | · | | · | | ||||||
| Teri P. McClure | ✓ | · | · | |||||||||
| Armando J. Olivera | ✓ | | C | · | | · | ||||||
| Matthew K. Rose | ✓ | · | · |
* Lead Independent Director ** Executive Chairman C Chair · Member
During 2020, Messrs. Bennett and Leppert also served on the Special Committee that was formed to review the projects where we recorded charges in the first half of 2019 and other related issues. In addition, during 2020 Messrs. Constable and Olivera served on an ad hoc Strategic Review Committee to assist, advise and review the Company's strategic plans and initiatives.
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| Members: • Alan M. Bennett,Chair* • Rosemary T. Berkery • Teri P. McClure • Matthew K. Rose* | Each of the members of the Audit Committee is independent within the meaning set forth in Securities and Exchange Commission (the "SEC") regulations, NYSE listing standards and our Corporate Governance Guidelines. *Audit Committee Financial Expert, as determined by the Board. |
Meetings During 2020: |
Nine, including one to review the Company's 2019 Form 10-K and the proxy materials for the 2020 annual meeting. At the end of each of the four regular meetings of the committee, the members of the Audit Committee met privately with the Company's independent registered public accounting firm, with the Company's head of internal audit and other members of management.
Key Responsibilities: |
In addition to the risk oversight responsibilities discussed above, the responsibilities of the Audit Committee and its activities during 2020 are addressed in the "Report of the Audit Committee" section of this proxy statement on pages 79 and 80. The Audit Committee also meets in executive sessions, at least quarterly, with the Company's independent registered public accounting firm, the head of internal audit and management. Meetings with management may include any or all of the CEO, the Chief Financial Officer, the Chief Legal Officer and the Chief Compliance Officer.
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COMMERCIAL STRATEGIES AND OPERATIONAL RISK COMMITTEE |
| Members: • Armando J. Olivera, Chair •
• James T. Hackett •
| Each of the members of the |
Meetings During |
Six.Seven. The committee also held numerous information sessions focused on specific project reviews.
Key Responsibilities: |
The Commercial Strategies and Operational Risk Committee's primary responsibilities, which are discussed in detail within its charter, are to:
EXECUTIVE COMMITTEE |
| Members: • Alan L. Boeckmann, Chair • Alan M. Bennett • Rosemary T. Berkery • David E. Constable • Peter J. Fluor* • James T. Hackett • Armando J. Olivera | Each of the members of the Executive Committee is independent within the meaning set forth in NYSE listing standards and our Corporate Governance Guidelines, other than Mr. Boeckmann and Mr. Constable. *Retiring from the Board at the 2021 annual meeting. |
Meetings During 2020: |
Three, including one to discuss individual director evaluations.
Key Responsibilities: |
When the Board is not in session, the Executive Committee has all of the power and authority of the Board, subject to applicable laws, rules, regulations and the listing standards of the NYSE.
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16 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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GOVERNANCE COMMITTEE |
| Members: • Rosemary T. Berkery, Chair • Peter J. Fluor* • Thomas C. Leppert • Teri P. McClure | Each of the members of the Governance Committee is independent within the meaning set forth in NYSE listing standards and our Corporate Governance Guidelines. *Retiring from the Board at the 2021 annual meeting. |
Meetings During 2020: |
Seven.
Key Responsibilities: |
The Governance Committee's primary responsibilities, which are discussed in detail within its charter, are to:
The Governance Committee has the authority, under its charter, to engage, retain and terminate the services of outside legal counsel, search firms and other advisors.
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ORGANIZATION AND COMPENSATION COMMITTEE |
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| Members:
• James T. Hackett, Chair •
• H. Paulett Eberhart • Armando J. Olivera
• Matthew K. Rose | Each of the members of the Organization and Compensation Committee is independent within the meaning set forth in |
Meetings During |
Seven.Eleven. Each of the four regular meetings included an executive session attended by the committee members and the committee's independent compensation advisor.
Key Responsibilities: |
The Organization and Compensation Committee's primary responsibilities, which are discussed in detail within its charter, are to:
TheIn addition to the risk oversight responsibilities described above, the responsibilities of ourthe Organization and Compensation Committee and its activities during 20172020 are further describedaddressed in the "Compensation Discussion and Analysis" section of this proxy statement. The Organization and Compensation Committee has the authority under its charter to delegate any portion of its responsibilities to a subcommittee denominated by it, when appropriate, but did not do so in 2017.
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The Organization and Compensation Committee has the authority under its charter to engage, retain and terminate the services of outside legal counsel, compensation consultants and other advisors. In 2017, the Organization and Compensation Committee again engaged Frederic W. Cook & Co., Inc. to serve as its independent compensation consultant to advise the committee on all matters related to executive and director compensation. The compensation consultant conducts an annual review of the total compensation program for the Chief Executive Officer and other senior management reporting to him and, in doing so, completes a report benchmarking the senior executives against2020.
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Board and Committee Evaluations
In order to monitor and improve their effectiveness, and to solicit and act upon feedback received, the Board and its committees engage in an annual formal self-evaluation process. As part of the self-evaluation process, directors consider various topics related to Board composition, structure, effectiveness and responsibilities. While the Board and each of its committees conduct the self-evaluations annually, the Board considers its performance and that of its committees continuously throughout the year and shares feedback with management. The self-evaluation process that the Board has historically used is conducted as follows:
Consideration of Director Nominees
Diversity and Refreshment
The Board believes that our stockholders benefit when the Board, as a whole, includes individuals with a diverse range of backgrounds and experience to give the Board both depth and breadth in the mix of skills represented. Forty percent of our director nominees are diverse individuals, consisting of three women and two racially or ethnically diverse directors.
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other executives with similar responsibilitiesAs provided in orderour Corporate Governance Guidelines, while all directors should possess business acumen and must exercise sound judgment in their oversight of our operations, the Board endeavors to assistinclude in its overall composition an array of targeted skills and experience in its overall composition rather than requiring each director to possess the Organizationsame skills, perspectives and Compensationinterests. Accordingly, the Board and Governance Committee consider the qualifications of directors and director nominees both individually and in making compensation decisions. The 2017 compensation review provided the committee with relevant market data and alternatives to consider when making compensation decisions in 2017 for the Chief Executive Officer and other senior management reporting to him.
In 2017, as partbroader context of the committee's oversightBoard's overall composition and the Company's current and anticipated future needs.
The Board and Governance Committee also understand the importance of certain aspects of risk,board refreshment and aim to strike a balance between the compensation consultant conducted a broad-based reviewknowledge that comes from longer-term service on the board with the new experience, ideas and energy that can come from adding directors to the Board. To that end, our Corporate Governance Guidelines provide that non-management directors may not stand for re-election after the end of the company's compensation programsyear in which they reach the age of 75. In addition, the Board and policiesGovernance Committee view the consistent focus on Board membership criteria, Board composition and size, as well as the anticipation of vacancies, to be integral parts of board refreshment. Each of these items is further discussed its findings with the committee, indicating that the company's compensation programs do not encourage behaviors that would create material risk for the company. Frederic W. Cook & Co., Inc. also provided written and verbal advice to the Organization and Compensation Committee at committee meetings, attended executive sessions of the committee to respond to questions, and had individual calls and meetings with the chair of the committee to provide advice and perspective on executive compensation issues. Frederic W. Cook & Co., Inc. was engaged by, and reports directly to, the committee and does not perform any other services for the company. None of the work of the compensation consultant has raised any conflicts of interest.below.
Consideration of Director Nominees
Director Qualifications and Diversity
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Our Corporate Governance Guidelines contain Board membership criteria that apply to current directors as well as nominees for director. The Governance Committee is responsible for reviewing with the Board on an annual basis (and as needed), and recommending to the appropriateBoard, the skills, experience, characteristics and characteristics required ofother criteria for identifying and evaluating Board members inmembers. The Governance Committee evaluates the contextcomposition of the current make-upBoard annually (and as needed) to assess whether the criteria established by the Board are currently represented on the Board as a whole, and in individual directors, and to assess the criteria that may be appropriate in light of the Board.Company's anticipated future needs. This annual review takes into consideration issues of diversity of thought and background (including but not limited to gender, race, ethnicity, national background, geography and age), experience, qualifications, attributes and skills. Certain criteria that our Board looks for in a candidate include, among other things, an individual's business experience and skills, judgment, independence, integrity, reputation and international background, the individual's understanding of such areas as finance, marketing, information technology, regulation and public policy, whether the individual has the ability to commit sufficient time and attention to the activities of the Board, the fit of the individual's skills and personality with those of other directors in building a
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Board that is effective, collegial and responsive to the needs of the company,Company, and the absence of any potential conflicts with the company'sCompany's interests. The Board assesses its effectiveness in achieving these goals in the course of assessing director candidates, which is an ongoing process.process, and in the context of its Board and committee evaluations.
Identifying and Evaluating Nominees for Director
The Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Governance Committee regularly assesses the appropriate size of the Board, and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated or otherwise arise, or skills or experience needs are identified, the Governance Committee considers various potential candidates for director. Candidates may come to the attention of the Governance Committee through various means, including current Board members, professional search firms, stockholders or other persons. Under our Corporate Governance Guidelines, as part of the search process for each new director, the Governance Committee must include women and minorities in the pool of candidates (and instruct any search
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firm engaged by the Governance Committee to do so). Candidates are evaluated at meetings of the Governance Committee, and may be considered at any point during the year. The Governance Committee reviews a variety of information about candidates, including materials provided by professional search firms, if applicable, or other parties suggesting the candidate. In evaluating candidates, the Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board.
Stockholder Recommendations
The policy of the Governance Committee is to consider properly submitted stockholder recommendations for candidates for membership on the Board as described above under "— Identifying and Evaluating Nominees for Director." If a stockholder properly recommends an individual to the Governance Committee to serve as a director, all recommendations are aggregated and considered by the Governance Committee at a meeting prior to the issuance of the proxy statement for our annual meeting. Any materials provided by a stockholder in connection with the recommendation of a director candidate are forwarded to the Governance Committee. In evaluating these recommendations, the Governance Committee assesses candidates in light of the membership criteria set forth under "— Director Qualifications and Diversity"Qualifications" above and the Board's existing composition. Any stockholder wishing to recommend a candidate for consideration by the Governance Committee should submit a recommendation in writing demonstrating their share ownership and indicating the candidate's qualifications and other relevant biographical information and provide confirmation of the candidate's consent to serve as director. This information should be addressed to Carlos M. Hernandez, Chief Legal Officer andthe Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039. Stockholders also have the ability to nominate directors for election in accordance with our Amended and Restatedthe Bylaws. See "Additional Information"2022 Annual Meeting of Stockholders — Advance Notice Procedures" and "— Proxy Access Procedures" on page 7686 of this proxy statement, and Sections 2.04 and 2.10 of our Amended and Restated Bylaws, which are included on our website atwww.fluor.com under "Sustainability" — "Governance."
Certain Relationships and Related Person Transactions
The company is not aware of any transactions with related persons that would be required to be disclosed.
Review and Approval of Transactions with Related Persons
The companyCompany has adopted a written policy for the approval of transactions to which the companyCompany is a party and in which the aggregate amount involved in the transaction will or may be expected to exceed $100,000 in any calendar year if any director, director nominee, executive officer, greater-than-5% beneficial owner or their respective immediate family members have or will have a direct or indirect
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material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity).
The policy provides that the Governance Committee reviews certain transactions subject to the policy and determines whether or not to approve or ratify those transactions. In doing so, the committee takes into account, among other factors it deems appropriate, whether the transaction is on terms that are no less favorable to the companyCompany than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person's interest in the transaction. In addition, the Board has delegated authority to the chair of the Governance Committee to pre-approve or ratify transactions where the aggregate amount involved is expected to be less than $1 million. A summary of any new transactions pre-approved by the chair is provided to the full Governance Committee for its review in connection with each regularly scheduled Governance Committee meeting.
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The Governance Committee has considered and adopted standing pre-approvals under the policy for limited transactions with related persons. Pre-approved transactions include, but are not limited to:
Alan L. Boeckmann, the Executive Chairman of our Board and the Company's former CEO, receives distributions of deferred compensation and payments of supplemental benefits under arrangements that were previously disclosed and were approved by the Organization and Compensation Committee and the Board's independent directors at the time he served as CEO and for which he chose to receive annuity payments.
During 2020, the Company entered into a consulting agreement with its then CEO, Carlos M. Hernandez, in connection with his planned retirement from the Company on June 30, 2021. Following his retirement, Mr. Hernandez will provide advisory and consulting services to the Company through June 30, 2022 for a quarterly payment of $125,000.
Since September 2018, ten separate purported stockholders' derivative actions were filed against various current and former members of the Board, including our nominees other than Mses. Eberhart and McClure, as well as certain of Fluor's current and former executives. Fluor Corporation is named as a nominal defendant in the actions. The complaints generally allege federal securities law violations and breaches of the individuals' fiduciary duties, including for purported oversight failures, with regard to statements that were made concerning the company's internal and disclosure controls, risk management, revenue recognition and gas-fired power business, which statements the plaintiffs assert were materially misleading. While these proceedings are in early stages and no assurance can be given as to their ultimate outcomes, the Company does not believe it is probable that it will incur a loss.
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Individuals may communicate with the Board and individual directors by writing directly to the Board of Directors c/o Carlos M. Hernandez, Chief Legal Officer andthe Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039. Stockholders and other parties interested in communicating directly with the Lead Independent Director or with the independent directors as a group may do so by writing directly to the Lead Independent Director c/o the Chief Legal Officer and Secretary at the above address. The Lead Independent Director, will, with the assistance of Fluor's internal legal counsel, beis primarily responsible for monitoring any such communications from stockholders and other interested parties to the Board, individual directors, the Lead Independent Director or the independent directors as a group, and provideprovides copies or summaries of such communications to the other directors as he considers appropriate.
Communications will be forwarded to all directors if they relate to substantive matters and include suggestions or comments that the Lead Independent Director considers to be important for the directors to know. The Board will give appropriate attention to written communications on issues that are submitted by stockholders and other interested parties, and will respond if and as appropriate.
Compensation Committee Interlocks and Insider Participation
During 2020, Mr. Barker, Mr. Bennett, Ms. Eberhart, Mr. Hackett, Mr. Olivera and Mr. Rose served on the Organization and Compensation Committee. During 2020, there were no compensation committee interlocks between the Company and other entities involving the Company's executive officers and directors.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2017, Mr. Fluor, Mr. Barker, Mr. Hackett, Ms. McWhinney, Mr. Olivera, Admiral Prueher and Mr. Rose served on the Organization and Compensation Committee. During 2017, there were no compensation committee interlocks between the company and other entities involving the company's executive officers and directors.
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PROPOSAL 2 — EXECUTIVE COMPENSATION | ||
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We are asking stockholders to vote on an advisory resolution to approve the company'scompensation of the Company's named executive compensationofficers, 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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We urge stockholders to read the "Compensation Discussion and Analysis" beginning on page 23,25, which describes in more detail how our executive compensation policiesprogram operates and procedures operate and areis designed to achieve our compensation objectives, as well as the Summary Compensation Table and related compensation tables and narrative appearing on pages 4452 through 60,70, 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.executive officers.
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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 executivesexecutive officers 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 20182021 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 companyCompany last held an advisory vote on frequency in 2017. After consideration of the majority vote of stockholders at the 2017 annual meeting of stockholders in favor of an annual frequency 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 20192022 annual meeting of stockholders.
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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 theour compensation program, as well as the decisions made under this program for 2017,2020, for our named executive officers (referred to herein as the "named executives"). For 2017,2020, our named executives were:
| Name | Position as of December 31, 2020 | |
Executive Vice President | ||
| Alan L. Boeckmann | Executive Chairman | |
| David E. Constable | Executive Vice President, Office of the CEO (effective December 21, 2020)(1) | |
Executive Vice President, Construction, HSE and Risk | ||
| Rick Koumouris | Former Senior Advisor to the CEO (through September 22, 2020) | |
| D. Michael Steuert | Former Executive Vice President | |
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.
Overview of Fiscal 20172020 Business Results
OverIn 2020, our business was adversely affected by COVID-19 and the past few years, clients reduced their capital expenditure budgets and were increasingly constrainedsteep decline in approving new projects as a reaction to low commodityoil prices political uncertainties, currency devaluations and athat occurred in the early part of the year. Despite the challenging competitive environment. Through this difficult business environment that resulted from these forces, in September 2020 we remainedcompleted our previously announced internal review, led by a Special Committee of the Board, into projects where we recorded charges in the first half of 2019 and other related issues. Following the Special Committee's review, we became current in our financial reporting and implemented a remediation plan that resulted from the Special Committee's review. We also announced several leadership changes during the year, including the appointments of our new CEO (effective January 1, 2021) and CFO (effective July 22, 2020).
Throughout the year, we focused on becoming the integrated solutions provider of choice forpreserving cash and reducing costs to maintain 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 marketsfinancial strength. At year-end, we serve.
New Awards and Backlog. In 2017, we received $12.6had $2.2 billion in new awards acrosscash and marketable securities. Net losses attributable to Fluor from continuing operations in 2020 were $293.9 million, or $2.09 per diluted share, compared to losses from continuing operations of $1.6 billion, or $10.89 per share for 2019.
Compensation Decisions in Response to COVID-19
In April 2020, to conserve cash because of COVID-19 concerns, executive officers voluntarily agreed to a temporary 20% reduction in base pay that extended through September 2020. Our non-employee directors similarly agreed to a temporary 20% reduction in their cash retainer fees for Board service.
Due to the entire asset life cycle, from front-end engineering and design (FEED) to full engineering, procurement, fabrication and construction,delayed filing of the Company's 2019 annual report on Form 10-K, as well as operationsthe impact of COVID-19, our Organization and maintenance services. We ended 2017 with a consolidated backlogCompensation Committee (the "Committee") determined that for 2020 only, the weightings of approximately $31.0 billion.the performance measures for 2020 annual incentive awards for named executives would be: (i) 90% strategic performance and (ii) 10% safety. The strategic performance portion of the award was based on six Company-wide objectives set by the Committee for all executive officers, as further described below. Goals were initially established by the Committee
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FLUOR CORPORATION | | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Process Improvements. More than ever, clients are demanding costmid-year and schedule certainty and that facilities be designed and built for capital efficiency, allowing themfinalized in September, after the filing of our 2019 annual report on Form 10-K, to thrive in any commodity price environment. In 2017, we took significant stepsprovide a necessary reference 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 theprior 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.performance.
Performance-Based Compensation
Our overriding objectiveexecutive compensation program is designed to align the interests of our named executives with our stockholders and link real pay fordelivery with Company performance. As shown in the charts below, for 2017, 89%2020, 88% of our Chief Executive Officer'sCEO's target total direct compensation ("TDC") and an average of approximately 81% (on average)76% of theour other named executives' target TDC was in the form of annual or long-term incentives, where real pay delivery was variable depending on performance or price of the Company's common stock.
As noted above, our 2020 annual incentives for executive officers were paid in cash and earned based on six strategic measures (weighted 90%) and safety (weighted 10%). The strategic measures included recognition for individual and Company-wide achievement of six annual strategic goals: (1) cash-flow generation; (2) cost reduction and restructuring; (3) COVID-19 response; (4) execution excellence and risk management; (5) diversity and inclusion; and (6) other environmental, social and governance ("ESG") goals. Safety has been a consistent performance and/or the price of the company's stock).measure for our annual incentives for several years.
For 2017, ourOur 2020 long-term incentives included a mix of restricted stock units ("RSUs"), performance-based equity awards ("Performance Awards") and non-qualified stock optionsoptions. Performance Awards replaced our Value-Driver Incentive ("VDI") awards starting in 2020, and stock-based performance awards under our VDI program. The VDI awards are paid in stockshares based on achievement of earnings per share ("EPS") 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 isinvested capital ("ROIC") goals over three one-year periods. Earned Performance Awards for executive officers are further adjusted based on the company'sCompany's three-year cumulative total shareholder return relative to a select groupcompanies in the S&P 500 on date 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.grant ("Relative TSR").
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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RealizableReal Pay for our Chief Executive OfficerDelivery and Performance Alignment
The chart below illustratesCommittee accomplishes its goal of aligning real pay delivery with performance by establishing rigorous goals for our Chief Executive Officer's "realizable" compensationperformance-based annual and long-term incentives that support our business strategy as comparedwell as long-term value creation for the Company and our shareholders.
Annual incentives were designed to his target TDC, averaged overrecognize and reward key accomplishments in 2020 that supported our annual strategic priorities. We also continued our focus on the last three fiscal years. We believe that itsafety and well-being of our workforce. Despite the challenging business environment from COVID-19, our progress in advancing our strategic priorities is important to show realizable compensation because it provides valuable supplemental information to assistreflected in our stockholdersincreasing stock price performance beginning in understandingthe third quarter of 2020, following completion of our executive compensation program. Realizable compensation shows the value of the compensationinternal review and becoming current in our Chief Executive Officer actuallySEC filings. Average 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 impacts2020 annual incentives for our named executives were 114% of target, and VDIranged individually from 109% to 118%. The 2020 awards and (ii) stock price. On average, over the last three years,were our first above target annual incentive payout in five years. As shown below for 2017 to 2019, 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 averaged 48% of target, ranging from 46% 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, resulting2019 to 49% 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 officer2017 and stockholder interests and our commitment to pay for performance.2018.
Average Annual Incentive Earned by Named Executives
(% of Target)
Years 2017-2020
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FLUOR CORPORATION | | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Long-term incentives represent a much more significant portion of named executive's annual compensation opportunity than annual incentives. Non-qualified stock options granted to named executives from 2017 through 2019 are underwater, with grant prices ranging from $27.72 in 2019 to $58.15 in 2018. Similarly because our performance has not met our rigorous goals, and our mid- to longer-range stock-price performance has been below historical norms, the value realized from performance-based long-term incentives that vested in 2017 through 2020 averaged approximately 8% of target value, ranging from a low of 0% in 2017 to 20% in 2018, as shown below.
CEOVDI Awards Earned by Named Executives
(% of Target TDC and Realizable PayValue at Vesting)3-Year Average (2015 - 2017)Years 2017-2020
Compensation Actions for 2017Leadership Changes
In making decisions regardingNovember 2020, we announced the compensation opportunities forappointment of Mr. Constable as our new CEO, effective January 1, 2021. Mr. Constable previously served as chief executive officer (from 2011) and president and chief executive officer (from 2014) of Sasol Limited, an integrated chemicals and energy company, until his retirement in 2016. Before joining Sasol Limited, Mr. Constable had a nearly 30-year career at the named executivesCompany, serving in 2017,various leadership roles from 1982 to 2011. He returned to the Company's Board in 2019. Prior to his appointment as CEO, Mr. Constable began employment transitionally as an Executive Vice President, effective December 21, 2020.
In addition, Mr. Brennan was appointed as our new CFO, effective July 22, 2020. Prior to his appointment, Mr. Brennan served in a non-executive role as the Senior Vice President, Operations Controller of the Company since June 2020. Prior to that, he was the Company's Senior Vice President, Segment Controller — Energy & Chemicals from 2018 to 2020; and Vice President, Segment Controller — Energy & Chemicals from 2016 to 2018. Mr. Brennan joined Fluor in 1991.
As part of these leadership transitions, the Committee, took into account market conditionswith the advice of its independent compensation consultant, approved new compensation packages for each of Messrs. Constable and performance, and also considered market data for our compensation peer group (asBrennan, which in Mr. Constable's case was approved by the Board, that are 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:below.
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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New CEO Compensation. In connection with his appointment as CEO, the Board approved the following compensation for Mr. Constable:
When setting Mr. Constable's offer, the Committee took into account his unique position as having served as the chief executive officer of a large, publicly traded corporation with international operations while also having extensive knowledge and experience with the Company's operations, both through his prior employment at the Company and more recently as a director. The Committee also took into account the compensation provided to previous CEOs as well as competitive peer information from its consultant.
New CFO Compensation. In connection with his promotion to CFO on July 22, 2020, the Committee approved the following compensation for Mr. Brennan:
Corporate Governance Highlights
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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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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FLUOR CORPORATION | | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Separation Arrangements with Departing Executives. In 2020, the Company entered into individual separation agreements with Mr. Hernandez and Mr. Koumouris specifying the terms of their respective departures from the Company. The Committee determined that the circumstances of each of these was equivalent to a termination without cause. Each of these agreements contains customary confidentiality and cooperation covenants, a release of claims and non-competition and non-solicitation restrictions that bind the departing executives and protect the Company.
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Components of 2017 Named Executive Compensation
Base Salaries
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 50th 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 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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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.
Annual Incentive Awards
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:
Named Executive | Percentage of Base Salary | Target Annual Incentive Amount | |||
David T. Seaton | 150% | $1,943,000 | |||
Bruce A. Stanski | 85% | $595,000 | |||
Carlos M. Hernandez | 85% | $535,500 | |||
Garry W. Flowers | 85% | $450,500 | |||
Jose L. Bustamante | 85% | $403,800 |
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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areas of importance toCompensation Governance Highlights
Our executive compensation policies reflect our strong focus on sound governance. As in prior years, the company. The measures, along with their respective weightings, for each named executive who received an annual incentive for 2017following practices and policies were as follows:in effect during 2020:
2017 Measure | David T. Seaton | Bruce A. Stanski | Carlos M. Hernandez | Garry W. Flowers | Jose L. Bustamante | ||||||
Corporate Net Earnings | 60% | 55% | 55% | 55% | 55% | ||||||
Cash Flow from Operations | 20% | 20% | 20% | 20% | 20% | ||||||
Safety | |||||||||||
Days Away, Restricted and Transfer Incidence Rate | 3% | 3% | 3% | 3% | 3% | ||||||
Total Case Incidence Rate | 3% | 3% | 3% | 3% | 3% | ||||||
HSE Audit Score | 4% | 4% | 4% | 4% | 4% | ||||||
Individual Performance | 10% | 15% | 15% | 15% | 15% |
| What we do | What we do not do | |
✓ Maintain robust stock ownership guidelines, including a 6x base salary requirement for the CEO. ✓ Maintain a clawback policy for performance-based compensation and forfeiture provisions in our equity awards. ✓ Provide a balanced program design that does not encourage behavior that could create material adverse risks to our business; and conduct an annual compensation risk assessment. ✓ Recognize diversity and inclusion and other ESG metrics in annual incentive determinations. ✓ Engage an independent compensation consultant for our fully independent Committee. | ✗ No single trigger change-in-control agreements. ✗ No excise tax gross-ups in change-in-control agreements. ✗ No repricing of stock options without stockholder approval. ✗ No payments of dividends or dividend equivalents on unvested stock awards. ✗ No hedging, pledging and short-term trading of Company stock. |
Performance MeasuresChanges to Executive Compensation for 20172020
Effective in 2020, the Company's VDI awards were redesignated as Performance Awards. The number of earned shares under the Performance Awards will be determined based on the Company's performance measures forusing two equally rated measures: (i) ROIC and (ii) EPS. The number of earned shares will be modified based on the 2017 annual incentive awards forCompany's Relative TSR. If the named executives are described below.
Corporate net earnings. Corporate net earningsCompany's Relative TSR is defined asin 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 achievementbottom one-third of the target: expenses related to discontinued operations,S&P 500, the financial impact of any acquisition activity (including integration costs and other expenses), expenses associated with restructuring programs and unusual expenses outsideearned shares will be decreased by 30%. If 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 asCompany's Relative TSR is in the impact from implementationtop one-third of the recently enacted U.S. tax reform legislation have been excluded fromS&P 500, the earnings calculation.
Cash Flow From Operations. Cash flow from operationsearned shares will be increased by 30%. No adjustments will be made if the Company's Relative TSR 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 onsetmiddle one-third 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 allS&P 500.
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FLUOR CORPORATION | | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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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 support the attraction and retention of key executive talent necessary to run our business, lines. The company audits only those joint ventures for whichand reward 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.
2017 Annual Incentive Determination
The performance ranges for each of the measures applicable to our named executives, together with the actual achievement of both short- and long-term goals, the measures,majority of which are presenteddirectly linked to performance as described 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.below:
| 2017 Performance Ranges (dollars in millions) | |||||||
Measure | 2017 Actual Achievement | 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% | ||||
Component | Primary Purpose | Linkage to Performance | ||
Base Salaries | Provide a market competitive, stable level of income to attract and retain top talent | • Individual responsibility, performance and contributions to the Company, overall salary movements in the Compensation Peer Group, and internal pay equity are considered in determining initial salary levels and appropriate salary adjustments each year | ||
Annual Incentives | Provide annual cash compensation for achievement of annual performance goals |
Pays out based on Company achievement of near-term objectives that support long-term value creation. • For the reasons noted above, for 2020 only the weightings of the performance measures for named executives were: (i) 90% strategic performance and (ii) 10% safety. • Completely at-risk, depending on the level of actual performance against the established criteria | ||
Long-Term Incentives | ||||
Performance Awards | Provide a stock-based incentive and retention vehicle linked to formulaic financial and Relative TSR measures that focus named executives on the creation of long-term value |
Performance Awards are earned based on performance against annual EPS and ROIC criteria averaged over three one-year periods, and modified based on the Company's Relative TSR • Vest at the end of the performance period, aligning the interests of named executives with those of long-term stockholders by focusing named executives on the Company's financial and Relative TSR performance over a multi-year period • Completely at-risk, depending on actual performance against the relevant measures and Relative TSR |
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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32 FLUOR CORPORATION | | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Component | Primary Purpose | Linkage to Performance | ||
Restricted Stock Units | Provide a long-term equity ownership and retention vehicle that is directly linked to stockholder value creation over time | • Vest in equal thirds over three years, aligning the interests of named executives with those of stockholders by focusing named executives on the Company's financial performance over a multi-year period • Value is at-risk, increasing or decreasing with the stock price over the vesting period | ||
Stock Options | Provide a long-term vehicle that is directly linked to growing the value of our stock price over time |
Vest in equal thirds over three years and have a ten-year term, aligning the interests of named executives with those of stockholders by focusing named executives on long-term stockholder value creation • Completely at-risk, attaining value only if the stock price grows over the initial grant price |
Components of 2020 Named Executive Compensation
Base Salaries
The Company provides named executives with base salaries for a competitive, stable level of income, since other elements of their direct compensation are at-risk based on Company performance. The Committee reviews base salaries for named executives annually and upon a change in responsibilities.
In establishing and annually evaluating base salary levels, the Committee and, with respect to the CEO and Executive Chairman, the independent directors of the Board, consider the following factors:
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FLUOR CORPORATION|2021 PROXY STATEMENT 33 | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Following the annual review at the beginning of 2020, the base salaries of Messrs. Hernandez, Boeckmann, Flowers, Koumouris and Steuert increased between 3.0% and 6.7%. The base salaries for Mr. Brennan and Mr. Constable were set at the time of their appointments in July 2020 and December 2020, respectively. The 2020 annualized base salaries for the named executives as of December 31, 2020 (and for Mr. Steuert, as of his last day of employment) were as follows:
Named Executive | 2020 Base Salary | |
Carlos M. Hernandez | $1,150,000 | |
Joseph L. Brennan | $500,000 | |
Alan L. Boeckmann | $525,000 | |
David E. Constable | $1,350,000 | |
Garry W. Flowers | $600,000 | |
Rick Koumouris | $501,400 | |
D. Michael Steuert | $854,900 |
Annual Incentives
Cash-based annual incentives are provided to motivate and reward named executives for achieving annual performance objectives. In 2020, each of the named executives, other than Mr. Constable, participated in the annual incentive award program and had a target annual incentive amount established as a percentage of annual base salary. This percentage reflects each named executive's respective organizational level, position and responsibility for achievement of the Company's strategic goals, and aligns with market practice.
The 2020 target annual incentives for each named executive who participated in the 2020 annual incentive award program are shown below. The final target annual incentives for participating named executives were as follows:
Named Executive | | Percentage of Base Salary | Target Annual Incentive Amount | ||
Carlos M. Hernandez | 150 | % | $1,725,000 | ||
Joseph L. Brennan | | 60% | (1) | $298,300 | |
Alan L. Boeckmann | 100 | % | $525,000 | ||
Garry W. Flowers | | 95 | % | $570,000 | |
Rick Koumouris | 85 | % | $398,410(2) | ||
D. Michael Steuert | | 100 | % | $854,900(3) |
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34 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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The 2017Named executives could receive from zero to 200% of their target annual incentive amounts, depending on the extent that applicable performance goals were achieved. The types of measures, relative weightings and goals are determined by the Committee each year.
When determining performance measures and goals, the Committee considers the Company's annual operating plan and strategic priorities at the start of the year, as well as the Company's performance in the previous year. For 2020, due to the delayed filing of the Company's 2019 annual report on Form 10-K, as well as uncertainties regarding COVID-19, the Committee determined that for 2020 only, performance measures and weightings would be:
The 2020 annual strategic goals were agreed to by the Committee mid-year and finalized in September after the filing of the Company's 2019 annual report on Form 10-K, when the prior-year's performance was known. The 2020 annual strategic goals and key Company achievements are shown in the following table.
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FLUOR CORPORATION|2021 PROXY STATEMENT 35 | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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| Performance Measure | Annual Strategic Goal | 2020 Key Company Achievements | ||
Cash Flow Generation | Positive cash balance between $1.8-$2.0 billion. | ✓ 2020 closing cash balance of $2.2 billion exceeded goal. | ||
Cost Reduction and Restructuring | Achieve $100 million cost reduction and restructuring to strategically reposition the Company for profitable, sustainable growth. | ✓ 2020 cost reductions of approximately $140 million exceeded goal. | ||
COVID-19 Response |
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Business units worked with clients to comply with regulatory and client requirements, as well as our focus on employee safety. | ||
✓ Reinforced IT capabilities enabling our employees to support projects while working remotely. | ||||
✓ Developed our COVID-19 Infection Control and Prevention Plan, Global COVID-19 Task Force, Future Remote Working Task Force and local crisis management teams to address the pandemic and effects on employees. | ||||
Execution Excellence and Risk Management | Deliver global project execution success and adherence to our risk management processes and project pursuit rules. | ✓ Enhanced risk management with in-depth reviews of prospects and corporate risk projects. | ||
| | ✓ Newly formed Commercial Strategies and Operational Risk Coimmittee improved the review of commercial strategies and project-related operational risks | ||
| | ✓ Completed a rigorous review of the Company's prior financial reporting, became current in our SEC filings and took appropriate remedial action. | ||
Diversity and Inclusion | Advocate diversity and inclusion across all levels of the organization. | ✓ Rolled out a new strategy to advance diversity, equity and inclusion, focused on four pillars: (i) championing an inclusive culture; (ii) recruiting, developing and retaining talent; (iii) enhancing employee experience and (iv) improving social progress and impact. | ||
Other ESG | Implement a sustainability policy and reinforce a culture of social responsibility. | ✓ Published our 2019 annual Sustainability Report. | ||
| | ✓ Committed to achieving net zero scopes 1 and 2 GHG emissions by 2023. |
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36 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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The Committee assigned weightings and ratings to each of the annual strategic goals based on the Company's achievements described above. In assessing performance, the Committee took into account the significant operational and organization-wide accomplishments of the management team in the context of the challenging economic environment created by COVID-19 and the steep decline in oil prices that occurred in the early part of 2020. The Committee also considered the broad restructuring plan that our CEO commenced in 2019, and our re-engagement with clients, subcontractors and suppliers to bring resolution to, or get clarification on, matters that arose under our prior leadership team, including outstanding disputes and claims, pending change orders, schedule extensions, accounts receivable and other project close out items. In evaluating the executives' success on these matters, the Committee took into account the fact that by the end of the year the Company's stock price had almost returned to pre-COVID-19 levels. The final overall weighted rating for the Company's achievement of the annual strategic goals was 1.16, as shown in the table below.
Measure | Annual Strategic Goal | | Weight | | Performance Rating | | Weighted Rating (Max 2.00) | |||||
Cash Flow Generation | Positive cash balance between $1.8-$2.0 billion | 20 | % | 1.15 | 0.23 | |||||||
Cost Reduction and Restructuring | Achieve $100 million cost reduction and restructuring to strategically reposition the Company for profitable, sustainable growth | | 20 | % | | 1.10 | | 0.22 | ||||
COVID-19 Response | Business continuity and resumption while maintaining client relationships, project execution and employee engagement | 10 | % | 1.25 | 0.13 | |||||||
Execution Excellence and Risk Management | Deliver global project execution success and adherence to our risk management processes and project pursuit rules | | 30 | % | | 1.20 | | 0.36 | ||||
Diversity and Inclusion | Advocate diversity and inclusion across all levels of the organization | 10 | % | 1.20 | 0.12 | |||||||
Other ESG | Implement a sustainability policy and reinforce a culture of social responsibility | | 10 | % | | 1.00 | | 0.10 | ||||
Total | 100 | % | 1.16 |
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FLUOR CORPORATION|2021 PROXY STATEMENT 37 | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Thirty percent of the annual incentive was determined based on each named executive's individual achievements as measured against the same six strategic goals. The 2020 strategic goals and key achievements for each named executive participating in the 2020 annual incentive program were as follows:
| Named Executive | Annual Strategic Goals | Key Achievements | ||
| Carlos M. Hernandez | ✓ Achieve $100 million cost reduction and restructuring to strategically reposition the Company for profitable, sustainable growth | ✓ Identified and implemented cost reductions exceeding 2020 goals. | ||
✓ Business continuity and resumption while maintaining client relationships, project execution and employee engagement. | ✓ Led corporate response to COVID-19, as business units worked with clients to comply with regulatory and client requirements, while putting employee safety first. | |||
✓ Advocate diversity and inclusion across all levels of the organization | ✓ Championed the establishment of regional inclusion councils to help advance diversity and inclusion throughout the Company. | |||
| Joseph L. Brennan | ✓ Positive cash balance between $1.8-$2.0 billion | ✓ 2020 closing cash balance of $2.2 billion exceeded goal. | ||
| | ✓ Deliver global project execution success and adherence to our risk management processes and project pursuit rules | ✓ Led finance team as Company became current in our SEC filings and took appropriate remedial action in response to our internal review. | ||
| Alan L. Boeckmann | ✓ Deliver global project execution success and adherence to our risk management processes and project pursuit rules | ✓ Newly formed Commercial Strategies and Operational Risk Committee improved the review of commercial strategies and project-related operational risk. | ||
✓ Implement a sustainability policy and reinforce a culture of social responsibility. | ✓ Board committed to achieving net zero scopes 1 and 2 GHG emissions by 2023. | |||
✓ Advocate diversity and inclusion across all levels of the organization | ✓ Increased Board diversity with the recruitment of two new diverse directors. | |||
| Garry W. Flowers | ✓ Business continuity and resumption while maintaining client relationships, project execution and employee engagement | ✓ Led the HSE team in response to COVID-19, with a focus on employee safety with our offices and on project sites. | ||
| | ✓ Deliver global project execution success and adherence to our risk management processes and project pursuit rules | ✓ Led corporate risk leadership with enhanced risk reporting and accountability. | ||
| Rick Koumouris | ✓ Business continuity and resumption while maintaining client relationships, project execution and employee engagement | ✓ Coordinated with clients to minimize COVID-19 project impact and implemented appropriate protocols at project sites. | ||
✓ Deliver global project execution success and adherence to our risk management processes and project pursuit rules | ✓ Served as a senior advisor to the CEO on the operational strategic review of the Company and supporting the overall development of the Company's long-term strategy. |
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38 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Achievement of the individual strategic performance measure varied among the named executives because of the differences in responsibilities and individual accomplishments.
Each named executive's strategic performance rating, other than for Messrs. Hernandez and Boeckmann, was determined based on evaluations and recommendations by Mr. Hernandez that were assessed and subsequently approved by the Committee. In the case of the Messrs. Hernandez and Boeckmann, strategic performance was assessed by the independent directors of the Board after consideration of a recommendation from the Committee.
The final 10% of the annual incentive was determined based on achievement of the safety performance measure based on management's assessment of the overall safety performance of the Company, as reviewed and approved by the Committee. 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 was determined, each named executive's overall performance rating was 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 overall performance rating was then multiplied by the individual's target annual incentive amount to determine the annual incentive payment for each named executive. Based on performance, annual incentive award cash payouts averaged 114% of target for the named executives.
Other than Mr. Steuert, who forfeited his 2020 annual incentive in connection with his retirement, the 2020 target annual incentive percentages and amounts for each named executive other than Mr. Porter (who retired fromwho participated in the company in January 2018 and was no longer employed by2020 annual incentive program, as well as the company on the dateactual annual incentivesincentive amounts to be paid, were paid), were determined as follows:
Named Executive | Percentage of Base Salary | Target Annual Incentive Amount | X | Overall Performance Rating | = | Annual Incentive Amount | ||||||
Carlos M. Hernandez | 150% | $1,725,000 | X | 1.13 | = | $1,945,800 | ||||||
Joseph L. Brennan | 60%(1) | $298,300 | X | 1.18 | = | $352,000 | ||||||
Alan L. Boeckmann | 100% | $525,000 | X | 1.13 | = | $592,200 | ||||||
Garry W. Flowers | 95% | $570,000 | X | 1.17 | = | $666,900 | ||||||
Rick Koumouris | 85% | $398,410(2) | X | 1.09 | = | $434,300 |
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
Changes to Annual Incentives for 2018
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.
2017 Long-Term Incentives
The stockholder-approved Performance Plan and its successor, the 2017 Performance Incentive Plan allowallows the Committee to grant various forms of long-term equity incentives. The Committee's objectives in granting long-term equity awards are to motivate named executives and reward the achievement of superior operating results and stock price appreciation,total shareholder return, facilitate the attraction and retention of key management personnel and align the interests of management and stockholders through equity ownership.
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FLUOR CORPORATION|2021 PROXY STATEMENT 39 | ||
As discussed earlier, our compensation program is designed to align pay with performance. Table of Contents
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Named executives receive long-term incentive grants that reflect potential pay,grant date accounting values (not ultimately earned amounts), based on market considerations as well as individual contributions, experience, advancement potential and internal pay equity. For 2017, long-term incentive awardsIn 2020, when initially determining the compensation for our Chief Executive Officer approximated the 50th percentile of the Compensation Peer Group, while the value of such awards for other named executives (other than Mr. Porter) ranged from the 42nd percentile to the 67th percentile. In 2017,Messrs. Hernandez, Boeckmann, Flowers and Koumouris, the Committee determined to maintain performance-based VDI awards asthat Performance Awards would comprise approximately 50% of the long-term incentive grant to named executives, RSUs would comprise approximately 35% and non-qualified stock options would comprise approximately 15%. In connection with his promotion to provideCFO, Mr. Brennan received $300,000 in long-term incentives in the remainder in equal proportions of options and RSUs. Shares issued under RSUs and VDI awards granted tosame proportion as the other named executives, in 2017 are subject to a three-year post-vest holding period. Duringwhich were granted at the post-vest holding period,same time as the other named executives. Mr. Brennan, who was not an executive officer when the original long-term incentive awards for the named executives maywere established in 2020, also received separate long-term incentive awards that are described below under "Other Compensation Decisions." Mr. Steuert, who retired before the long-term incentive grants were made, and Mr. Constable, who commenced employment with the Company in December 2020, did not sell or otherwise transfer the underlying shares of company common stock (exceptreceive an annual grant in the case of death).2020.
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 long-term growth of the Company, while providing a balanced pay package that aligns with the Compensation Peer Group and mitigates potential compensation-related Company risk. In determining the relevant allocations, Performance Awards were valued at the target performance level (and converted into performance units based on the closing stock price on the 2020 grant date) and RSUs were valued at the fair market value (closing stock price) on the date of grant. RSUs and stock options vest one-third per year in each of the years following the grant date. Stock options have a ten-year term assuming continued employment.
The 2020 target annual long-term incentive award values approved by the Committee were as follows:
Named Executive | Performance Award Value | RSU Award Value | Non-Qualified Stock Option Award Value | Stock Growth Incentive Award Value | Total Long-Term Incentive Award Value | ||||||
Carlos M. Hernandez | $3,287,500 | $2,301,250 | $986,250 | — | $6,575,000 | ||||||
Joseph L. Brennan(1) | $300,000 | $205,000 | $45,000 | $150,000 | $700,000 | ||||||
Alan L. Boeckmann | $2,100,000 | $1,470,000 | $630,000 | — | $4,200,000 | ||||||
Garry W. Flowers | $800,000 | $560,000 | $240,000 | — | $1,600,000 | ||||||
Rick Koumouris | $550,000 | $385,000 | $165,000 | — | $1,100,000 |
The total value of the 2020 long-term incentive awards for Messrs. Hernandez and Boeckmann increased by approximately 25% and 53%, respectively, from 2019 levels to reflect their appointments as CEO and Executive Chairman, respectively, during 2019.
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40 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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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. 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. Although the Committee determined the dollar value of executives' 2020 long-term incentive awards in February 2020, the Committee did not grant the awards until September, after the Special Committee had completed its review of the Company's financial statements and the Company became current in its filings with the SEC, since the Company's SEC registration statement covering the 2017 Performance Incentive Plan could not be used while the Special Committee's review was on-going.
In December 2020, Mr. Constable received a one-time grant of equity awards with a value at grant of $5,000,000 in connection with his appointment as CEO. These awards are described separately above under "Leadership Changes."
Performance Awards Granted in 2020
The Performance Awards granted to the named executives in 2020 are subject to a three-year performance period, which started on January 1, 2020 and ends on December 31, 2022. The awards will be earned based on actual performance for each year during the three-year performance period and will vest and be payable in shares in March 2023, subject to continued employment (except in the event of certain qualified terminations of employment) and performance achievement. Upon vesting, additional shares will be issued equal to the amount of any accrued dividends paid by the Company with respect to shares earned. The three-year performance period and vesting requirements are intended to facilitate retention of the participating executives and to link the value of the awards to long-term total shareholder return.
The Committee established the following 2020 performance criteria and relative weightings for the 2020 Performance Awards for named executives:
The Committee selected these criteria in October 2019 in response to the Company's discussions with stockholders, to increase transparency and support the Company's growth strategy, and after a review of the practices of the Compensation Peer Group by the Committee's independent consultant.
Each year, the Committee determines the actual achievement of the performance measures for the previous year. At the end of the three-year period, the Committee will average the performance from each year and determine the number of earned units by multiplying the number of target units by the average of the three annual performance ratings (which can range from zero to 200%). The number of earned shares for all named executives will then be modified based on the Company's Relative TSR. If the Company's Relative TSR is in the bottom third of the S&P 500, the earned shares will be decreased by 30%. If the Company's Relative TSR is in the top third of the S&P 500, the earned shares will be increased by 30%. No adjustment will be made if the Company's Relative TSR is in the middle third. In no event will the number of earned shares exceed two times the target number of shares.
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FLUOR CORPORATION | | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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EPS represents diluted earnings per share attributable to Fluor Corporation from continuing operations. ROIC is calculated by dividing full year corporate net earnings attributable to Fluor Corporation from continuing operations (excluding after-tax net interest) by Net Invested Capital. Net Invested Capital is defined as total shareholders' equity (excluding accumulated other comprehensive income) plus total external long and short-term debt (excluding non-recourse debt) minus cash, current and non-current marketable securities more than $1.0 billion. EPS and ROIC exclude the following items that are not related to the Company's ongoing core business operations: (i) expenses, income, gains or losses and taxes related to discontinued or divested operations; (ii) the effect of changes in tax laws and accounting principles; (iii) restructuring charges; (iv) NuScale funding; (v) pension settlements; (vi) significant asset impairments; (vii) significant natural disasters; and (viii) significant litigation and regulatory costs and settlements.
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 exchange rates that are difficult to forecast and impact our operating margins and growth. The long-term financial measures are different from the annual incentive financial measures to avoid paying twice for the same performance, and there is a modifier for three-year Relative TSR performance to align pay with stockholder value. When setting these performance goals, the Committee considered the Company's past performance, business outlook and other corporate financial measures. The Committee also considered 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 to be achieved.
A named executive's unvested award is subject to risk of forfeiture if, prior to vesting, 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.
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42 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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The eventual determination of the payout of 2020 Performance Awards for the named executives is illustrated below:
Achievement for 2018-2020 VDI Awards
In 2018, the Committee granted VDI awards to certain of the named executives, which were subject to a three-year performance period. For each of the first two years of the performance period, the performance criteria and relative weightings for the 2018 VDI awards for named executives were as follows: 40% of the total award was based on average annual new awards gross margin percentage ("NAGM%"), 30% of the total award was based on average annual new awards gross margin dollars ("NAGM$") and 30% of the total award was based on return on assets employed ("ROAE"). For the third year of the performance period, the performance criteria and relative weightings for the 2018 VDI awards were the same as the 2020 Performance Awards, with 50% of the total award based on EPS and 50% of the total award based on ROIC. The performance targets were set each year during the performance period, and for 2020 were the same as the performance targets for the 2020 Performance Awards. Following each year of the performance period, the Committee determined the actual achievement of the performance measures for the previous year. At the end of the three-year period, the Committee averaged the performance outcomes and determined the number of earned units by multiplying the number of target units granted in 2018 by the average of the three annual performance ratings (which could range from 0.00 to 2.00). The number of earned units was then adjusted based on the Company's three-year cumulative TSR relative to the engineering and construction peers included in the Compensation Peer Group.
Based on the Company's performance over the performance period, the named executives each earned 19% of their target stock-settled VDI awards granted in 2018, as reflected in the Outstanding Equity Awards at 2020 Year End table on page 60. Taking into account the Company's stock price at the time of vesting, the dollar value realized on the 2018 VDI awards was 6% of the grant date target value.
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FLUOR CORPORATION|2021 PROXY STATEMENT 43 | ||
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COMPENSATION DISCUSSION AND 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,The 2018 VDI awards for Messrs. Brennan and Flowers, who were valued at the target performance level (and converted into performance unitsnot executive officers in 2018, were based on the closing stock pricesame performance measures as the first year of the 2018 VDI awards described above for the other named executives, calculated over a one-year period (the 2018 calendar year) with a three-year vesting period, and payable in cash. Except for this single year performance period, the performance criteria, relative weightings and 2018 performance targets for Messrs. Brennan and Flowers were the same as those of the other named executives, including being subject to adjustment using a relative TSR modifier measured solely over 2018.
The performance targets for each year of the performance period, together with the actual achievement and performance ratings, are set forth below.
| Performance Ranges | ||||||||||
Measure | Min | Target | Max | Actual Achievement | Performance Rating | |||||
2018 Targets | (.25 rating) | (1.0 rating) | (2.0 rating) | |||||||
NAGM% | 3.7% | 7.4% | 11.1% | 6.3% | 0.71 | |||||
NAGM$ | $785.0 | $1,568.0 | $2,352.0 | $1,747.0 | 1.23 | |||||
ROAE | 5.0% | 9.0% | 16.0% | 5.6% | 0.31 | |||||
2018 Average Performance Rating | 0.75 | 0.75 | ||||||||
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2019 Targets | (.25 rating) | (1.0 rating) | (2.0 rating) | | | |||||
NAGM% | 4.0% | 8.0% | 12.0% | (5.2)% | 0.00 | |||||
NAGM$ | $805.2 | $1,608.4 | $2,412.6 | $(467.7) | 0.00 | |||||
ROAE | 4.8% | 9.7% | 14.5% | (24.1)% | 0.00 | |||||
2019 Average Performance Rating | | 0.00 | 0.00 | |||||||
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2020 Targets | (0.375 rating) | (1.0 rating) | (2.0 rating) | |||||||
EPS | $0.82 | $1.36 | $1.90 | $(0.71) | 0.00 | |||||
ROIC | 4.2% | 7.0% | 9.8% | (2.40)% | 0.00 | |||||
2020 Average Performance Rating | | 0.00 | 0.00 | |||||||
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2018–2020 Average Performance Rating | 0.25 | 0.25 | ||||||||
Relative TSR Modifier | | –25% | –25% | |||||||
Final VDI Rating | 0.19 | 0.19 | ||||||||
Pre-Executive Officer Compensation
Mr. Brennan was not an executive officer of the Company when the compensation levels and opportunities for the named executives were initially established in 2020. As a result, prior to his appointment as CFO, he participated in different compensation arrangements than the other named executives. As noted above, for 2020, Mr. Brennan's initial base salary was $340,000 and his target annual incentive was $170,000, or 50% of his base salary. Mr. Brennan was appointed as an executive officer on July 22, 2020. His target 2020 long-term incentive award value for the portion of his long-term incentive related to his employment before becoming an executive officer was $400,000, of which $100,000 was in the form of RSUs, $150,000 was in the form of a Performance Award and $150,000 in the form of a Stock-Growth Incentive Award. His RSU award vests in full on the third anniversary of 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, whichgrant. His Performance Award 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 ofsame performance measures as the years following the grant date.
VDI Awards Granted in 2017
The VDI awards granted to theother 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 overincluding the three-year performance period and will vest (and beRelative TSR modifier, but is payable in shares)cash. The Stock Growth Incentive Award is a cash-settled award that vests 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:
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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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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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Inannual installments, with 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) levelscash payout for the portion of the 2017 VDI awards that were subjecteach tranche equal 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 performancevested units by multiplying the number of performance unitsmultiplied 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 fromCompany's closing stock price on 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.vesting.
Achievement for VDIRetention Awards Granted in 2015
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% | |||
Changes to Long-Term Incentives for 2018
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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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.
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 cashNo retention awardawards were made to named executives in order2020.
Changes to retain his servicesExecutive Compensation for key projects; and Mr. Stanski received a relocation payment2021
Effective in connection with his relocation from Arlington, Virginia to our headquarters in Irving, Texas. For further details on these arrangements, see footnotes 8 and 92021, the weightings of the Summary Compensation Table on page 46.
In addition, in August 2017, Mr. Porter stepped down as Chief Financial Officer. He remained employed byperformance measures for annual incentive awards for named executives other than business group presidents will be: (i) 30% corporate net earnings, (ii) 30% cash flow from operations, (iii) 10% safety and (iv) 30% strategic performance. For business group presidents, 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 bonusweightings and other paymentsperformance measures will be: (i) 15% corporate net earnings, (ii) 15% cash flow from the company to which he may have been entitled. Mr. Porter's previously awarded, but unvested, stock optionsoperations, (iii) 30% business group earnings before income taxes, (iv) 10% safety, 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.(v) 30% strategic performance.
Other Elements of Named Executive Compensation
Perquisites
In 2017,2020, in lieu of reimbursement of typical perquisites, each of the named executives werewas paid a taxable monthly allowance as set forth in the All"All Other CompensationCompensation" table on page 46.55. The Committee believes that these allowances are reasonable costs and are justified by the perceived value to the named executives. The allowances can be usedare intended to coverprovide convenience considering the demands on the named executives and are considered an important part of a competitive compensation package. We do not pay for items such as automobile leasing or tax and financial planning, and club membership dues.which are items that are typically reimbursed or paid directly by our peers. 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.Company, with results shared with the Company. Named executives may have spousal travel paid for by the companyCompany 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 companyCompany for the incremental operational cost.cost of such personal use. Our 20172020 perquisite costs, which are relatively small in relation to total direct compensation, approximatedwere below the median of the Compensation Peer Group.
Executive Deferred Compensation Program
The named executives are eligible to participate in Fluor's Executive Deferred Compensation Program. The companyCompany 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. Please refer to the discussion in the Nonqualified Deferred Compensation section beginning on page 62 for a more detailed discussion of this program.
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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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.
Severance and Change in ControlChange-in-Control Benefits
The company providesCompany maintains a severance policy pursuant to which each of the named executives withwould be eligible to receive cash severance in the event of a termination of employment by the companyCompany without cause. The companyCompany 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 controlchange-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.Company. The change in controlchange-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 theCompany. All potential change in controlchange-in-control payments are "single"double 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 controlchange-in-control agreements do not provide for a tax gross-up. The companyCompany 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" belowbeginning on page 65 for a more detailed discussion of these arrangements. Severance and change in controlchange-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'sCompany's executive compensation philosophy. The Committee reviews and determines all components of named executives' compensation (other than with respect to the compensation of our ChiefCEO and Executive Officer's compensation,Chairman, which the Committee reviews and recommends for approval by our independent directors), including making individual compensation decisions and reviewing and revising the company'sCompany's compensation plans, programsprogram and other arrangements.practices.
The Committee has established the following compensation philosophy and objectives for the company'sCompany's named executives:
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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objectives. The Committee believes that compensation paid to executives should be closely aligned with the performance of the Company relative to these objectives.
The Committee reviews the Company's compensation philosophy and objectives each year to determine if revisions are necessary considering 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 the business and operating environment have evolved.
In addition, the Committee reviewed the incentive compensation we provide to our employees, including our named executives, and evaluated the mix of plans 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 program is designed to appropriately align compensation with our business strategy and not to encourage behavior that could create material adverse risks to our business.
Role of Independent Compensation Consultant
The Committee has the authority under its charter to engage, retain and terminate the services of outside legal counsel, compensation consultants and other advisors. In 2020, the Committee again engaged Frederic W. Cook & Co., Inc. ("FW Cook") to serve as its independent compensation consultant to advise the Committee on all matters related to executive and non-management director compensation. The compensation consultant conducts an annual review of the total compensation program for the CEO and the other named executives.
In 2020, as part of the Committee's oversight of certain aspects of risk, FW Cook conducted a broad-based review of the Company's compensation program and discussed its findings with the Committee, indicating that the Company's compensation programs do not encourage behaviors that would create material risk for the Company. FW Cook also provided written and verbal advice at Committee meetings, attended executive sessions of the Committee to respond to questions, and had individual calls and meetings with the chair of the Committee to provide advice and perspective on executive compensation issues. FW Cook was engaged by, and reports directly to, the Committee and does not perform any other services for the Company. The Committee has determined that FW Cook's engagement does not raise any conflicts of interest.
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FLUOR CORPORATION|2021 PROXY STATEMENT 47 | ||
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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when performance results for the company and the executive meet or exceed stated objectives. The Committee believes that compensation paid to executives should be closely aligned with the performance of the company relative to these objectives.
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.
Peer Group Comparisons
In making compensation decisions, the Committee looks at the practices of our Compensation Peer Group. The Committee annually reviews with its independent compensation consultantFW Cook 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:
As part of its compensation review for 2017,For 2020, the Committee reviewed the Compensation Peer Group and determined that the peer group and its selection criteria should remain unchanged.unchanged and no changes were made to the peer group. The companies comprising Fluor's Compensation Peer Group for purposes of establishing 2020 compensation were:
• AECOM Technology Corporation* | • Jacobs Engineering Group Inc.* | |
• Cummins Inc. | • Johnson Controls International plc | |
• Deere & Company | • KBR, Inc.* | |
• Eaton Corporation plc | • L3 Harris Technologies | |
• EMCOR Group* | • McDermott International* | |
• Emerson Electric Co. | • PACCAR Inc. | |
• Icahn Enterprises | • Parker-Hannifin Corporation | |
• Ingersoll-Rand plc | • Quanta Services, Inc.* |
The Committee reviews benchmarking comparisons prepared by its compensation consultant for each named executive against similar positions within the Compensation Peer Group.
Role of Company Management in Compensation Decisions
Before the Committee makes decisions on executive compensation, the CEO reviews compensation for the other named executives other than himself and the Executive Chairman, and makes recommendations to the Committee based on their individual and group performance. Specifically, the CEO proposes to the Committee current year base salary adjustments, annual incentive award target percentages and long-term incentive grants for each of the other named executives. In addition, the Committee reviews and approves the compensation actually paid to the named executives after consideration of the recommendations made by the CEO. The Committee has discretion to modify named executives' compensation from the CEO's recommendation but did not exercise that discretion for the named executives with respect to 2020 compensation.
The independent members of the Board assess the CEO's performance each year. They also receive input from the Executive Chairman on the CEO's performance to determine the CEO's annual incentive payout for the prior year and to set target compensation for the following year, including any base salary adjustment, annual incentive award target percentage and long-term incentive grants. Each year the independent members of the Board also have a thorough discussion before determining the Executive Chairman's annual incentive payouts for the prior year and setting target compensation for the following year.
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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companies comprising Fluor's Compensation Peer Group for purposes of establishing 2017 compensation were:
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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.
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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 ProgramsProgram
2017 "Say on Pay"2020 "Say-on-Pay" Advisory Vote on Executive Compensation
We hold an annual "say on pay" advisorysay-on-pay vote to approve our named executive compensation. At our 20172020 annual meeting of stockholders, stockholders approved the compensation of our named executives was approved by stockholders, with approximately 93%84% of the votes cast for approval of the company's executive compensation.approval. The Committee evaluated the results of the 20172020 advisory vote at its May meeting and then again in February 2018 when determining executive compensation.following the annual meeting. The Committee also considered many other factors in evaluating our executive compensation program, including the Committee's assessment of the interaction of our compensation programsplans 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 2020 executive compensation program and policies as a resultbecause of the 2017 "say on pay" advisory vote.2020 say-on-pay vote, since most elements of compensation were established prior to the annual meeting. However, in response to an evaluation of market practices, the Committee approved changes to the company's annual incentive and VDI programsprogram as discussed above.above under "Changes to Executive Compensation for 2021."
Compensation Clawback Policy
Pursuant to the company'sThe Company's clawback policy ifwas expanded in 2020 to provide the Board determines thator a Board committee with the discretion to recover compensation in the event of any keymaterial restatement of financial results, whether an executive officer or employee including any named executive, has engagedis individually "at fault." Under the expanded policy, in fraud or willful misconduct that caused or otherwise contributed to a need forthe event of a material restatement of the company'sCompany's financial results, the Board or a Board committee will review allevaluate the circumstances and may, in its discretion, recover from any current or former executive officer or employee the portion of any performance-based compensation earned by that executive or employee during the fiscal periods materially affected by the restatement. If the Board determinesrestatement that any such compensation would not have been lower if itearned had performance been basedmeasured on the basis of the restated results, the Board will,results.
Outside of our clawback policy, we also consider other potential recourse mechanisms as part of our approach to executive compensation. In addition to potential legal remedies and disciplinary or other employment actions that may be available to the extent permitted by applicable law, seek recoupmentCompany, named executive compensation may be subject to forfeiture, recovery, or adjustment in a variety of such compensation as it deems appropriate. To date, the Board has not encountered a situation where a reviewcircumstances under our other policies and agreements. These include: (i) our ability to pursue appropriate remedies for violations of our Code of Conduct; (ii) forfeiture of compensation pursuantif a named executive's employment is terminated for "cause" under the terms of our agreements with named executives, which includes, among other things, termination for dishonesty, fraud, willful misconduct, breach of fiduciary duty, conflict of interest, commission of a felony, material failure or refusal to perform job duties in accordance with Company policies, material violation of Company policy that causes harm to the policy was necessary.Company or its subsidiaries or other wrongful conduct of a similar nature and degree; (iii) forfeiture and recovery of compensation in the event a named executive breaches applicable restrictive covenants; and (iv) potential downward adjustments by the Committee to pay opportunities or incentive plan payouts.
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COMPENSATION DISCUSSION AND ANALYSIS | ||
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Stock Ownership Guidelines
Executive officers are encouragedrequired to hold Fluor common stock to align their financial interests with those of our stockholders. The companyCompany maintains the following stock ownership guidelines for named executives as follows:based in the U.S.:
Role | Value of Shares or Share Units to be Owned | |
| 6 times base salary | |
| 3.5 times base salary | |
| 2 times base salary |
AMr. Koumouris, who is an Australian employee, was required to hold at least $1 million in Company stock, which is approximately 2 times his base salary.
Named executives may sell shares of Fluor common stock if the guidelines are met after the sale. To the extent a named executive is requiredhas not satisfied the guidelines, a named executive may only sell up to settle VDI awards in stock and to retain all company common stock, including 100%50% 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.VDI awards and Performance Awards. Unvested RSUs and earned but unvested VDI unitsawards and Performance Awards are considered as owned by the named executive in determining whether the named executive has met histhe ownership guidelines. As of the dateMarch 1, 2021, each of this report, allthe named executives were in compliance withhas satisfied these stock ownership guidelines, except Mr. StanskiMessrs. Constable and Brennan, who was recently promotedremain subject to Chief Financial Officer and is expected to fulfill his stock ownership requirement in 2018.the holding requirements.
Restrictions on Certain Trading Activities, including Short Sales, Hedging and Pledging
Our insider trading policy forprohibits all directors, employees (including executive officersofficers) and non-management directors prohibits transactions involving short-termcontractors of the Company and its subsidiaries from engaging in short term or speculative trading in Company securities. It is against the policy for directors and employees to trade in puts, calls or other publicly traded "over-the-counter" options in Company securities, or to sell Company securities short. In addition, directors and employees are prohibited from engaging in any hedging or monetization transactions involving company securities. In addition, our policy prohibits pledging companyCompany securities or(such as zero cost collars and forward sale contracts).
Directors and employees are also prohibited from holding companyCompany securities in a margin account.
Tax Implications
account or pledging Company securities as collateral for a loan or otherwise. The Committee reviews and considerspolicy does not prohibit broker-assisted exercise or settlement of equity awards granted by the deductibilityCompany that may involve an extension of executive compensation under Section 162(m)credit only until the sale is settled, provided that any such transaction complies with the terms 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.policy.
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ORGANIZATION AND COMPENSATION COMMITTEE REPORT | ||
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ORGANIZATION AND COMPENSATION COMMITTEE
REPORT
Management of the companyCompany 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 2018Company's 2021 annual meeting of stockholders.
| The Organization and Compensation Committee | ||
James T. Hackett,Chair H. Paulett Eberhart Armando J. Olivera Matthew K. Rose |
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COMPENSATION TABLES | ||
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The table below summarizes the total compensation earned by or granted to each of the 20172020 named executives in the relevant years. The 20172020 named executives are the individual who held the position of principal executive officer in 2020, the two executivesindividuals who held the position of principal financial officer in 2017,2020, and the three other highest paid executives. Effective August 4, 2017,executive officers. In addition, Mr. Porter stepped down fromKoumouris, who served as an executive officer during a portion of 2020 but not as of December 31, 2020, is considered a named executive because his position as Chief Financial Officer and Mr. Stanski was appointed tototal compensation in 2020 would have placed him among 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 tranchetop five most highly compensated executive officers of the 2016 VDI award was included in the Summary Compensation Table; however, in 2017, both the second trancheCompany had he still been an executive officer as 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.December 31, 2020.
(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 | — | — | — | — | — | — | — | — |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||
Name and | Year | Salary | Bonus | Stock | Option | Non-Equity | Change in | All Other | Total | ||||||||||
Carlos M. Hernandez | 2020 | $1,046,952 | $1,750,000 | (6) | $3,652,593 | $986,259 | $1,945,800 | — | $1,855,028 | $11,236,632 | |||||||||
Chief Executive Officer | 2019 | $949,196 | — | $3,836,522 | $1,000,008 | $586,400 | — | $150,121 | $6,522,247 | ||||||||||
| 2018 | $651,346 | — | $2,942,476 | — | $334,200 | — | $124,827 | $4,052,849 | |||||||||||
Joseph L. Brennan | 2020 | $411,698 | $120,000 | (7) | $406,373 | $45,005 | $352,000 | | $67,426 | $1,402,502 | |||||||||
Executive Vice President | |||||||||||||||||||
and Chief Financial Officer | |||||||||||||||||||
(effective July 22, 2020) | |||||||||||||||||||
Alan L. Boeckmann | 2020 | $477,704 | — | $2,188,842 | $630,007 | $592,200 | — | $291,740 | $4,180,493 | (8) | |||||||||
Executive Chairman | 2019 | $323,084 | $335,000 | $1,350,068 | $1,350,013 | — | — | $292,818 | $3,650,983 | ||||||||||
David E. Constable | 2020 | $51,925 | $1,000,000 | (9) | $2,746,342 | $2,500,008 | — | — | $295,023 | $6,593,298 | |||||||||
Executive Vice President, | |||||||||||||||||||
Office of the CEO | |||||||||||||||||||
(effective December 21, 2020) | |||||||||||||||||||
Garry W. Flowers | 2020 | $544,908 | — | $833,866 | $240,002 | $666,900 | — | $68,688 | $2,354,364 | ||||||||||
Executive Vice President | 2019 | $559,880 | $150,000 | $2,007,179 | — | $773,050 | — | $101,629 | $3,591,738 | ||||||||||
| 2018 | $543,507 | $100,000 | $1,440,420 | — | $915,925 | — | $103,131 | $3,102,983 | |||||||||||
Rick Koumouris | 2020 | $539,257 | (10) | — | $657,434 | $165,006 | $434,300 | $687,000 | $35,618 | $2,518,615 | |||||||||
Former Senior Advisor to | |||||||||||||||||||
the CEO | |||||||||||||||||||
(until September 22, 2020) | |||||||||||||||||||
D. Michael Steuert | 2020 | $776,421 | — | — | — | — | — | $164,522 | $940,943 | ||||||||||
Former Executive Vice | 2019 | $462,898 | $316,700 | $2,271,784 | $787,509 | — | — | $28,875 | $3,867,766 | ||||||||||
President and Chief | |||||||||||||||||||
Financial Officer | |||||||||||||||||||
(until July 21, 2020) |
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COMPENSATION TABLES | ||
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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 RSU2018 and 2019 VDI award and 2020 Performance Award tranches described above reflects a liquidity discount of 10.46%,reflected as a resultcompensation for 2020 is based on the closing stock price of the three-year post-vest transfer restrictions (the "Post-Vest Holding Period") imposed by the companyCompany's common stock on the common stock issued upon settlementNYSE on the date of those awards. Beginning in 2017, the grant, date fair value of the VDI awards was further adjusted upward by 7.64%14.16%, based on the Monte Carlo valuation method,3.71% and 2.69%, respectively, to reflect the impact of the Relative TSR modifier on thethose VDI awards.
awards and Performance Awards.
The chart below details the grant date fair value of the (i) RSUs granted in 2017,2020, (ii) third tranche of the 2018 VDI awards, (iii) second tranche of the 20162019 VDI awards, and the(iv) first tranche of the 2017 VDI awards,2020 Performance 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 |
above, and (v) SGI awards granted in 2020, all of which are reported in the table as 2020 compensation. The amount for Mr. Constable includes $246,299 in RSUs granted for his service as a non-employee director prior to his employment with the Company. Neither Mr. Constable, who joined the Company as an employee in 2020, nor Mr. Steuert received Performance Award grants in 2020. In addition, Mr. Brennan and Mr. Flowers, who were employees of the Company prior to their appointments as executive officers, did not receive VDI award grants with three-year performance periods when they were not executive officers. With respect to each of the 2018 and 2019 VDI award and 2020 Performance Award tranches, the grant date fair value, of the second tranche of the 2016 VDI awards, assuming the highest level of performance is achieved, is equal to two times the value reflected in the chart below.
| | Carlos M. Hernandez | Joseph L. Brennan | Alan L. Boeckmann | David E. Constable | Garry W. Flowers | Rick Koumouris | D. Michael Steuert | |||||||
RSUs | | $2,301,260 | | $205,008 | | $1,470,010 | | $2,746,342 | | $560,025 | | $385,006 | | — |
2018 VDI | | $87,849 | | — | | — | | — | | — | | $33,144 | | — |
2019 VDI | | $138,170 | | — | | — | | — | | — | | $51,016 | | — |
2020 PA | | $1,125,314 | | $51,348 | | $718,832 | | — | | $273,841 | | $188,268 | | — |
2020 SGI | | — | | $150,017 | | — | | — | | — | | — | | — |
Total | | $3,652,593 | | $406,373 | | $2,188,842 | | $2,746,342 | | $833,866 | | $657,434 | | — |
The 2020 amount in column (e) for Mr. Brennan does not include the grant date fair value that was determinedof Mr. Brennan's 2020 cash-settled Performance Award, which is payable in cash, vests over a three-year period and is based on February 21, 2017, which was the date on which thesame performance objectives for that particular tranchemeasures and Relative TSR modifier as stock-settled Performance Awards granted to other named executives. The earned amount of the 2016this award were approved by thewill be included in future Summary 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 reportedTables 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 $672,810 for Mr. Bustamante.year earned.
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FLUOR CORPORATION | | ||
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COMPENSATION TABLES | ||
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54 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION TABLES | ||
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| Salary ($) | 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 | $12,286,444 |
The following table and related footnotes describedescribes each component of the All Other Compensation column (column (i)) of the Summary Compensation Table for 2017.2020.
(a) | (b) | (c) | (d) | (e) | (f) | (b) | (c) | (d) | (e) | (f) | (g) | |||||||||||
Name | Company Contributions to Qualified and Nonqualified Defined Contribution Plans ($)(1) | Tax Gross-up ($)(2) | Perquisite Allowances ($)(3) | Other Perquisites ($)(4) | Total All Other Compensation ($)(5) | Company Contributions to Qualified and Nonqualified Defined Contribution Plans ($)(1) | Tax Gross-up ($)(2) | Perquisite Allowances ($)(3) | Other Perquisites ($)(4) | Other Payments ($)(5) | Total All Other Compensation ($) | |||||||||||
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 | $52,348 | $201 | $65,175 | $12,304 | $1,725,000 | $1,855,028 | |||||||||||
Joseph L. Brennan | $14,762 | $7,170 | $21,400 | $24,094 | — | $67,426 | ||||||||||||||||
Alan L. Boeckmann | $14,298 | $1,316 | $54,000 | $9,789 | $212,337 | $291,740 | ||||||||||||||||
David E. Constable | — | — | $5,925 | $11,598 | $277,500 | $295,023 | ||||||||||||||||
Garry W. Flowers | $63,852 | $2,615 | $32,400 | $9,246 | $108,113 | $26,866 | $890 | $32,400 | $8,532 | — | $68,688 | |||||||||||
Jose L. Bustamante | $50,181 | $3,257 | $32,400 | $11,408 | $97,246 | |||||||||||||||||
Rick Koumouris | — | — | $35,618 | — | — | $35,618 | ||||||||||||||||
D. Michael Steuert | $14,134 | $115 | $45,375 | $178 | $104,720 | $164,522 | ||||||||||||||||
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COMPENSATION TABLES | ||
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GRANTS OF PLAN-BASED AWARDS IN 2020
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | ||||||||||||
| Estimated Future Payouts Under Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(3) | ||||||||||||||||||||||
Name | Type of Award(1) | Grant Date | Approval Date | Target (#) | Maximum (#) | Target ($) | Maximum ($) | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | All Other Option Awards: Number of Securities Under- lying Options (#)(5) | Exercise or Base Price of Option Awards Per Share ($/sh)(6) | Grant Date Fair Value of Stock and Option Awards ($) | ||||||||||||
Carlos M. Hernandez | RSU | 9/30/2020 | 9/18/2020 | — | — | — | — | 261,210 | — | — | $2,301,260 | (7) | |||||||||||
| SO | 9/30/2020 | 9/18/2020 | — | — | — | — | — | 216,951 | $8.81 | $986,259 | (8) | ||||||||||||
| 2018 VDI | 9/18/2020 | 9/18/2020 | 8,169 | 16,338 | — | — | — | — | — | $87,849 | (9) | ||||||||||||
| 2019 VDI | 9/18/2020 | 9/18/2020 | 14,143 | 28,286 | — | — | — | — | — | $138,170 | (10) | ||||||||||||
| 2020 PA | 9/30/2020 | 9/18/2020 | 124,385 | 248,770 | — | — | — | — | — | $1,125,314 | (11) | ||||||||||||
| AI | N/A | N/A | — | — | $1,725,000 | $3,450,000 | — | — | — | — | |||||||||||||
Joseph L . Brennan | RSU | 9/30/2020 | 9/18/2020 | — | — | — | — | 11,919 | — | — | $105,006 | (7) | |||||||||||
| RSU | 9/30/2020 | 9/18/2020 | — | — | — | — | 11,351 | — | — | $100,002 | (7) | |||||||||||
| SO | 9/30/2020 | 9/18/2020 | — | — | — | — | — | 9,900 | $8.81 | $45,005 | (8) | |||||||||||
| 2020 PA | 9/30/2020 | 9/18/2020 | 5,676 | 11,352 | — | — | — | — | — | $51,348 | (11) | |||||||||||
| 2020 PC | 9/30/2020 | 9/18/2020 | — | — | $150,000 | $300,000 | — | — | — | — | (12) | |||||||||||
| 2020 SGI | 9/30/2020 | 9/18/2020 | — | — | — | — | 17,028 | — | — | $150,017 | (13) | |||||||||||
| AI | N/A | N/A | — | — | $298,300 | $596,600 | — | — | — | — | ||||||||||||
Alan L. Boeckmann | RSU | 9/30/2020 | 9/18/2020 | — | — | — | — | 166,857 | — | — | $1,470,010 | (7) | |||||||||||
| SO | 9/30/2020 | 9/18/2020 | — | — | — | — | — | 138,585 | $8.81 | $630,007 | (8) | ||||||||||||
| 2020 PA | 9/30/2020 | 9/18/2020 | 79,455 | 158,910 | — | — | — | — | — | $718,832 | (11) | ||||||||||||
| AI | N/A | N/A | — | — | $525,000 | $1,050,000 | — | — | — | — | |||||||||||||
David E. Constable | RSU | 11/24/2020 | 11/24/2020 | — | — | — | — | 13,837 | — | — | $246,299 | (7) | |||||||||||
| RSU | 12/23/2020 | 12/23/2020 | — | — | — | — | 151,060 | — | — | $2,500,043 | (7) | |||||||||||
| SO | 12/23/2020 | 12/23/2020 | — | — | — | — | — | 276,360 | $16.55 | $2,500,008 | (8) | |||||||||||
Garry W. Flowers | RSU | 9/30/2020 | 9/18/2020 | — | — | — | — | 63,567 | — | — | $560,025 | (7) | |||||||||||
| SO | 9/30/2020 | 9/18/2020 | — | — | — | — | — | 52,794 | $8.81 | $240,002 | (8) | ||||||||||||
| 2020 PA | 9/30/2020 | 9/18/2020 | 30,269 | 60,538 | — | — | — | — | — | $273,841 | (11) | ||||||||||||
| AI | N/A | N/A | — | — | $570,000 | $1,140,000 | — | — | — | — | |||||||||||||
Rick Koumouris | RSU | 9/30/2020 | 9/18/2020 | — | — | — | — | 43,701 | — | — | $385,006 | (7) | |||||||||||
| SO | 9/30/2020 | 9/18/2020 | — | — | — | — | — | 36,297 | $8.81 | $165,006 | (8) | |||||||||||
| 2018 VDI | 9/18/2020 | 9/18/2020 | 3,082 | 6,164 | — | — | — | — | — | $33,144 | (9) | |||||||||||
| 2019 VDI | 9/18/2020 | 9/18/2020 | 5,222 | 10,444 | — | — | — | — | — | $51,016 | (10) | |||||||||||
| 2020 PA | 9/30/2020 | 9/18/2020 | 20,810 | 41,620 | — | — | — | — | — | $188,268 | (11) | |||||||||||
| AI | N/A | N/A | — | — | $398,410 | $796,821 | — | — | — | — | ||||||||||||
D. Michael Steuert | AI | N/A | N/A | — | — | $854,900 | (14) | $1,709,800 | — | — | — | — | |||||||||||
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56 FLUOR CORPORATION | | ||
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COMPENSATION TABLES | ||
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FLUOR CORPORATION|2021 PROXY STATEMENT 57 | ||
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COMPENSATION TABLES | ||
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discretionary contributions that wouldThe upward adjustment derived from the Monte Carlo valuation method simulates a range of possible future stock prices for Fluor and each company in Fluor's E&C Peer Group over the 2018 VDI's three-year performance period using certain factual data and an assumed risk-free interest rate. The expected term was based on the 2.85-year remaining term of the 2018 VDI from the grant date, the expected volatility of 28.3% was based on the daily historical stock price volatility over the 2.85 years prior to the date of grant to conform to the term of the awards for the Company and the Peer Group, consistent with the methodology addressed in FASB ASC Topic 718, and the expected dividend rate for Fluor's stock of 0%, as we do not currently pay cash dividends. In addition, the risk-free rate of interest utilized was 2.38% which is based on government bond rates. Based on this methodology, the valuation of the 2018 VDI was 114.16% of the closing price of the Company's stock on the date of grant for 2018 VDI.
As described in footnote 2 of the Summary Compensation Table beginning on page 52, one-third of the shares subject to the 2018 VDI awards have been credited to each named executive's accounta 2020 grant date fair value under applicable accounting standards and, therefore, are reported as 2020 compensation in the 401(k) plan for contributionsSummary Compensation Table and this Grants of Plan Based Awards Table. The grant date fair value of the first and second tranches of the 2018 VDI award were presented in excess of Internal Revenue Code ("IRC") limitations.the 2018 and 2019 tables, respectively.
The amountsupward adjustment derived by the Monte Carlo valuation method simulates a range of possible future stock prices for Fluor and each company in column (c) representFluor's E&C Peer Group over the tax gross-up provided2019 VDI's three-year performance period using certain factual data and an assumed risk-free interest rate. The expected term was based on the 2.85-year remaining term of the 2019 VDI from the grant date, the expected volatility of 33.9% was based on the daily historical stock price volatility over the 2.85 years prior to the date of grant to conform to the term of the awards for (i) business-related spousal travelthe Company and (ii) business-related spousal air charter usage.
As noted above, one-third of perquisite.
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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.
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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 | — | — | — | — | ||||||||||||
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COMPENSATION TABLES | ||
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The upward adjustment derived by the Monte Carlo valuation method simulates a range of possible future stock prices for Fluor and each company in the S&P 500 Index group over the PA's three-year performance goals were approved, less a liquidity discountperiod using certain factual data and an assumed risk-free interest rate. The expected term was based on the 2.25-year remaining term of 10.46% relatedthe 2020 PA from the grant date, the expected volatility of 85.6% was based on the daily historical stock price volatility over the 2.25 years prior to the Post-Vest Holding Perioddate of grant to conform to the term of the awards for the Company and the S&P 500 Index Group, consistent with the methodology addressed in FASB ASC Topic 718, and an expected dividend rate on Fluor's stock of 0%, as we do not currently pay cash dividends. In addition, the risk-free rate of interest utilized was 0.14% for PAs granted which is based on Daily Treasury Yield Curve rates. Based on this methodology, the valuation of the PAs granted in 2020 was 102.69% of the closing price of the Company's stock on the common stock underlying these awards.date of grant for 2020 PAs.
As described in footnote 2 of the Summary Compensation Table on pages 44-45,noted above, only one-third of the shares subject to the 2016 VDI awards2020 PA granted to the named executives have a 2020 grant date fair value under applicable accounting standards in 2017 and, therefore, are reported as 20172020 compensation in the Summary Compensation Table and this Grants of PlansPlan Based Awards Table. The grant date fair value of the first trancheremaining two tranches of the 2016 VDI award was presented in2020 PA granted to the tables in 2016; and the grant date fair value of the remaining tranche of the 2016 VDI awardnamed executives will be presented in the 2021 and 2022 tables, respectively.
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FLUOR CORPORATION | | ||
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COMPENSATION TABLES | ||
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OUTSTANDING EQUITY AWARDS AT 2020 YEAR END
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||
| Option Awards(1) | Stock Awards | |||||||||||||||||
Name | Number of | Number of | Option | Option | Option | Number of | Market Value | Equity | Equity | |||||||||
Carlos M. Hernandez | 17,067 | — | $70.76 | 2/28/2011 | 2/28/2021 | 324,921 | $5,188,989 | 92,674 | $1,480,004 | |||||||||
| 23,364 | — | $62.50 | 2/27/2012 | 2/27/2022 | ||||||||||||||
| 29,028 | — | $61.45 | 2/25/2013 | 2/25/2023 | ||||||||||||||
| 28,653 | — | $79.19 | 2/21/2014 | 2/21/2024 | ||||||||||||||
| 43,416 | — | $59.05 | 2/23/2015 | 2/23/2025 | ||||||||||||||
| 45,240 | — | $55.35 | 2/23/2017 | 2/23/2027 | ||||||||||||||
| 41,074 | 82,148 | $29.50 | 5/16/2019 | 5/16/2029 | ||||||||||||||
| — | 216,951 | $8.81 | 9/30/2020 | 2/21/2030 | ||||||||||||||
Joseph L. Brennan | 543 | — | $62.50 | 2/27/2012 | 2/27/2022 | 43,438 | $693,705 | 3,803 | $60,734 | |||||||||
| 1,646 | — | $61.45 | 2/25/2013 | 2/25/2023 | | | | | |||||||||
| 1,629 | — | $79.19 | 2/21/2014 | 2/21/2024 | | | | | |||||||||
| 2,244 | — | $59.05 | 2/23/2015 | 2/23/2025 | | | | | |||||||||
| 1,992 | — | $46.07 | 2/23/2016 | 2/23/2026 | | | | | |||||||||
| 3,516 | — | $55.35 | 2/23/2017 | 2/23/2027 | | | | | |||||||||
| — | 28,861 | $19.25 | 10/17/2019 | 10/17/2029 | | | | | |||||||||
| — | 9,900 | $8.81 | 9/30/2020 | 2/21/2030 | | | | | |||||||||
Alan L. Boeckmann | 55,450 | 110,900 | $29.50 | 5/16/2019 | 5/16/2029 | 197,367 | $3,151,951 | 53,236 | $850,179 | |||||||||
| — | 138,585 | $8.81 | 9/30/2020 | 2/21/2030 | ||||||||||||||
David E. Constable | — | 276,360 | $16.55 | 12/23/2020 | 12/23/2030 | 151,060 | $2,412,429 | — | — | |||||||||
Garry W. Flowers | 5,640 | — | $70.76 | 2/28/2011 | 2/28/2021 | 135,165 | $2,158,586 | 20,281 | $323,888 | |||||||||
| 13,350 | — | $62.50 | 2/27/2012 | 2/27/2022 | ||||||||||||||
| 20,319 | — | $61.45 | 2/25/2013 | 2/25/2023 | ||||||||||||||
| 18,624 | — | $79.19 | 2/21/2014 | 2/21/2024 | ||||||||||||||
| 26,640 | — | $59.05 | 2/23/2015 | 2/23/2025 | ||||||||||||||
| 28,902 | — | $55.35 | 2/23/2017 | 2/23/2027 | ||||||||||||||
| — | 52,794 | $8.81 | 9/30/2020 | 2/21/2030 | ||||||||||||||
Rick Koumouris | 9,162 | — | $46.07 | 2/23/2016 | 2/23/2026 | 58,984 | $941,975 | 17,390 | $277,719 | |||||||||
| 8,697 | — | $55.35 | 2/23/2017 | 2/23/2027 | | | | | |||||||||
| — | 36,297 | $8.81 | 9/30/2020 | 2/21/2030 | | | | | |||||||||
D. Michael Steuert | 34,423 | 68,846 | $27.72 | 6/01/2019 | 6/01/2029 | 30,586 | $488,459 | — | — | |||||||||
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60 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION TABLES | ||
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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:
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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:
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OUTSTANDING EQUITY AWARDS AT2017 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) |
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Name | Number of | Number of | Option | Option | Option | Number of | Market Value | Equity | Equity | |||||||||
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 | $55.35 | 02/23/2017 | 02/23/2027 | | | | | |||||||||
The following table provides the number of unvested VDI awards granted in 2019 and unvested 2020 PA, as adjusted for performance through December 31, 2020:
| Unvested VDI Awards and PA | ||||||
Name | 2019 | 2020 | Total | |||
Carlos M. Hernandez | 9,335 | 83,339 | 92,674 | |||
Joseph L. Brennan | — | 3,803 | 3,803 | |||
Alan L. Boeckmann | — | 53,236 | 53,236 | |||
David E. Constable | — | — | — | |||
Garry W. Flowers | — | 20,281 | 20,281 | |||
Rick Koumouris | 3,447 | 13,943 | 17,390 | |||
D. Michael Steuert | — | — | — | |||
OPTION EXERCISES AND STOCK VESTED IN 2020
(a) | (b) | (c) | (d) | (e) | ||||
| Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||
Carlos M. Hernandez | — | — | 48,866 | $435,515 | ||||
Joseph L. Brennan | — | — | 2,245 | $19,868 | ||||
Alan L. Boeckmann | — | — | 15,255 | $139,126 | ||||
David E. Constable | — | — | 13,837 | $246,299 | ||||
Garry W. Flowers | — | — | 21,331 | $188,779 | ||||
Rick Koumouris | — | — | 9,050 | $80,093 | ||||
D. Michael Steuert | — | — | 15,293 | $186,575 | ||||
A portion of the shares reported under column (d) are withheld or sold on behalf of the individual upon vesting to satisfy tax withholding obligations.
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FLUOR CORPORATION | | ||
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COMPENSATION TABLES | ||
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had a performance period ending on December 31, 2017) because the company did not meet the minimum performance criteria for these awards.
Vesting Date | David T. Seaton | Bruce A. Stanski | Biggs C. Porter | Carlos M. Hernandez | Garry W. Flowers | Jose L. Bustamante | ||||||
March 6, 2018 | 66,985 | 11,564 | 19,261 | 17,785 | 11,830 | 11,118 | ||||||
March 6, 2019 | 50,592 | 8,862 | 15,535 | 13,686 | 9,315 | 9,255 | ||||||
March 6, 2020 | 14,797 | 2,699 | 5,020 | 4,330 | 2,766 | 3,153 | ||||||
Total | 132,374 | 23,125 | 39,816 | 35,801 | 23,911 | 23,526 |
The following table provides the number of unvested VDI units granted in 2016 and 2017, as adjusted for performance to date:
| Unvested VDI Units | ||||||
Name | 2016 | 2017 | Total | |||
David T. Seaton | 30,784 | 28,706 | 59,490 | |||
Bruce A. Stanski | 5,300 | 5,236 | 10,536 | |||
Biggs C. Porter | 9,043 | 9,738 | 18,781 | |||
Carlos M. Hernandez | 8,046 | 8,400 | 16,446 | |||
Garry W. Flowers | 5,632 | 5,366 | 10,998 | |||
Jose L. Bustamante | 5,248 | 6,117 | 11,365 | |||
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OPTION EXERCISES AND STOCK VESTED IN 2017
The following table provides information on the option exercises by, and RSU and VDI award vestings for, the named executives in 2017.
(a) | (b) | (c) | (d) | (e) | ||||
| Option Awards | Stock Awards | ||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | 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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NONQUALIFIED DEFERRED COMPENSATION
All U.S. executives, including the 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 IRCInternal Revenue Code ("IRC") contribution limits for qualified retirement plans (which was $18,000$19,500 or $24,000,$26,000, depending on the participant's age, in 2017)2020).
In addition, the companyCompany contributes to the Excess 401(k) portion of the plan any amounts that would have been contributed by the companyCompany to the Company's 401(k) plan as matching or discretionary retirement contributions that are in excess of the IRC compensation limit on contributions ($270,000285,000 in 2017)2020) or were lessened by an election to defer base salary.IRC limit on participant elective deferrals. In 2017,2020, the companyCompany matched the first 5% of base salary deferred to the 401(k) Planplan or Excess 401(k) Plan and made a discretionary contribution of 4% to 7% of base salary depending on years of service.plan. Most U.S. salaried employees were eligible for the 5% match and most received the 4% to 7% discretionary retirement contribution in 2017.2020. 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 companyCompany does not guarantee theany rates of return. Executives may change their deemed investment selections on a daily basis.
For amounts deferred on or after January 1, 2005,2004, 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,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 | $70,521 |
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COMPENSATION TABLES | ||
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The table below shows executive and Company contributions made to the EDCP for each individual who participated in the EDCP in 2020, as well as the aggregate earnings and aggregate balance for amounts deferred under the EDCP.
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | ||||||
Name | | Executive Contributions in 2020 ($)(1) | | Company Contributions in 2020 ($)(2) | | Aggregate Earnings (Loss) in 2020 ($)(3) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at December 31, 2020 ($)(4) | ||||||
Carlos M. Hernandez | $55,113 | $39,001 | $593,554 | — | $5,562,946 | |||||||||||
Joseph L. Brennan | | $1,154 | | $1,154 | | $117,219 | | — | | $1,123,092 | ||||||
Alan L. Boeckmann | — | — | $94,891 | ($611,008 | ) | $683,407 | ||||||||||
Garry W. Flowers | | $13,616 | | $13,616 | | $398,884 | | — | | $2,489,470 | ||||||
D. Michael Steuert | — | — | $2,053 | ($14,528 | ) | $16,581 |
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FLUOR CORPORATION|2021 PROXY STATEMENT 63 | ||
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COMPENSATION TABLES | ||
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Mr. Koumouris holds an accumulated benefit in a defined benefit pension plan for employees in Australia. Payments from this plan are in a lump sum form, paid on leaving the Company.
The present value of Mr. Koumouris's defined benefit under this plan as of December 31, 2020, as detailed in the chart below, was $3,272,000 (4,252,664 AUD), calculated using a discount rate of 1.90% and based on an exchange rate of 0.7694 US Dollars per AUD as of December 31, 2020.
The table below provides certain information on the defined benefit retirement benefits available under the Australia Pension Plan to Mr. Koumouris as of December 31, 2020.
(a) | (b) | (c) | (d) | (e) | ||||
Name | Plan Name | Number of Years of Credited Service (#)(1) | Present Value of Accumulated Benefit ($) | Payments During Last Year | ||||
Rick Koumouris | Australia Pension Plan | 33.0 | $3,272,000 | — |
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64 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION TABLES | ||
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POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL
The tables below reflect the amount of compensation that would have become payable to each of the named executives under existing plans and arrangements if the named executive's employment had terminated on December 31, 2017,2020, given their compensation and service levels as of such date and, if applicable, based on the company'sCompany's closing stock price on December 29, 2017.31, 2020. These benefits are in addition to amounts previously earned and to which theynamed executives 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'sCompany's retirement plans and payout of any accrued time off with pay (collectively, the "Pre-Termination Benefits"). NamedThe 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,certain terminations, except upon 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 naturetermination and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be higher or lower than as reported below. Factors that could affect these amounts includebelow due to, among other things, the timingtime during the year of any such event,termination, the company'sCompany's stock price and the executive's age. In addition, in connection with any actual termination of employment, the companyCompany 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.
The tables below do not include Messrs. Hernandez, Koumouris and Steuert, who stepped down from their respective positions during 2020. Messrs. Hernandez and Koumouris received payments in connection with their transitions pursuant to agreements with the Company that are described further under "Leadership Changes" beginning on page 28. In the case of Mr. Steuert, who retired in 2020, his unvested RSUs and options that were granted more than one year prior to his retirement date will continue to vest as previously scheduled, as described below under the heading "Payments Made Upon Voluntary Termination/Retirement." These outstanding awards are noted in the Outstanding Equity Awards at 2020 Year End Table above. Other than Pre-Retirement Benefits, Mr. Steuert received no payments in connection with his retirement.
Payments Made Upon Voluntary Termination/Retirement
As of December 31, 2017,2020, Messrs. Seaton, Porter, Hernandez, Boeckmann, Constable and Flowers were eligible for retirement based on the company'sCompany's age and years of service requirements.requirements, as was Mr. Steuert as of the date of his separation. 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 wereCompany. Mr. Brennan was not eligible for retirement and would not be entitled to compensation upon voluntary termination, other than theirhis 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, VDI awards and VDI unitsPAs will continue to vest on the dates set forth in the agreements.as previously scheduled.
Amounts reported in the tables below assume that the above requirements have been met.
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FLUOR CORPORATION|2021 PROXY STATEMENT 65 | ||
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COMPENSATION TABLES | ||
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Payments Made Upon Not for Cause Termination
InPursuant to Fluor's Executive Severance Policy, 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,executive, 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. Further, for Mr. Boeckmann, the cash retention award granted to him in 2019 would become immediately payable.
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. For Mr. Brennan, any unvested PC or SGI awards will forfeit.
Payments Made Upon a Termination in Connection with a Change in Control
InPursuant to Fluor's Change in Control Agreements with our named executives, in the event of a qualifying termination of a named executive within two years following a Changechange in Control,control, in addition to the Pre-Termination Benefits:
A qualifying termination, generally, is a termination of the named executive without cause or a resignation by the named executive for good reason. "Cause" meansincludes the named executive's (i) fraud, (ii) conviction of a felony, (iii) material failure or refusal to perform his job duties in accordance with companyCompany policies or (iv) a material violation of companyCompany policy that causes substantial harm to the companyCompany 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), andor 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.Company.
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66 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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COMPENSATION TABLES | ||
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No gross-up for excise taxes, if any, is payable under the change in control agreements. The companyCompany 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.
Further, for Mr. Boeckmann, the cash retention award granted to him in 2019 would become immediately payable. For Messrs. Brennan and Flowers, any remaining unvested performance-based cash awards granted in 2018 or later will immediately vest based on actual results for any performance periods ending prior to the change in control and at target performance levels for any performance periods ending after the change in control.
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, in addition to the paymentsPre-Termination Benefits, the named executives would be entitled to:
For Messrs. Brennan and Flowers, any remaining unvested performance-based cash awards would vest as previously scheduled and be paid at actual performance if held more than one 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. |
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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.2020.
David T. Seaton | 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 | 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 | 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 | 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 | ||||||||||||||
Joseph L. Brennan | 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) | — | (1) | $500,000 | (2) | $1,596,600 | (3) | — | (1) | ||
Annual Incentive Award | $0 | (4) | $535,500 | (5) | $535,500 | (6) | $535,500 | (7) | — | (4) | $298,300 | (5) | $298,300 | (6) | $298,300 | (7) | ||
Long-Term Incentive Awards | ||||||||||||||||||
Stock Options | $0 | (8) | $0 | (8) | $0 | (9) | $0 | (10) | — | (8) | — | (8) | $70,884 | (9) | — | (10) | ||
Restricted Stock Units | $1,178,188 | (8) | $1,178,188 | (8) | $1,849,122 | (9) | $1,178,188 | (10) | — | (8) | — | (8) | $421,768 | (9) | $50,146 | (10) | ||
Value Driver Incentive (VDI) | $1,449,712 | (8) | $1,449,712 | (8) | $2,791,579 | (9) | $1,449,712 | (10) | — | (8) | — | (8) | $145,450 | (9) | $145,450 | (10) | ||
Performance Award (PA) | — | (8) | — | (8) | $182,187 | (9) | — | (10) | ||||||||||
Performance Cash (PC) | — | (8) | — | (8) | $115,500 | (9) | — | (10) | ||||||||||
Stock Growth Incentive (SGI) | — | (8) | — | (8) | $271,937 | (9) | — | (10) | ||||||||||
Total Value of Payments | $2,627,900 | $3,405,708 | $7,507,201 | $3,163,400 | — | $798,300 | $3,102,626 | $493,896 | ||||||||||
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COMPENSATION TABLES | ||
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Garry W. Flowers | 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 | ||||||||||||||
Alan L. Boeckmann | 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) | — | (1) | $525,000 | (2) | $2,100,000 | (3) | — | (1) | ||
Annual Incentive Award | $0 | (4) | $450,500 | (5) | $450,500 | (6) | $450,500 | (7) | — | (4) | $525,000 | (5) | $525,000 | (6) | $525,000 | (7) | ||
Long-Term Incentive Awards | ||||||||||||||||||
Stock Options | $0 | (8) | $0 | (8) | $0 | (9) | $0 | (10) | — | (8) | — | (8) | $992,269 | (9) | — | (10) | ||
Restricted Stock Units | $806,411 | (8) | $806,411 | (8) | $1,235,003 | (9) | $806,411 | (10) | $487,245 | (8) | $487,245 | (8) | $3,151,951 | (9) | $487,245 | (10) | ||
Value Driver Incentive (VDI) | $1,014,768 | (8) | $1,014,768 | (8) | $1,871,951 | (9) | $1,014,768 | (10) | — | (8) | — | (8) | — | (9) | — | (10) | ||
Performance Award (PA) | — | (8) | — | (8) | $2,550,492 | (9) | — | (10) | ||||||||||
Retention Award | — | (11) | $1,750,000 | (11) | $1,750,000 | (11) | $1,750,000 | (11) | ||||||||||
Total Value of Payments | $1,821,179 | $2,801,679 | $5,518,454 | $2,271,679 | $487,245 | $3,287,245 | $11,069,712 | $2,762,245 | ||||||||||
Jose L. Bustamante | 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 |
David E. Constable | 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 | — | (1) | $1,350,000 | (2) | $2,700,000 | (3) | — | (1) | |
Annual Incentive Award | — | (4) | — | (5) | — | (6) | ��� | (7) | |
Long-Term Incentive Awards | |||||||||
Stock Options | — | (8) | — | (8) | — | (9) | — | (10) | |
Restricted Stock Units | — | (8) | — | (8) | $2,412,428 | (9) | — | (10) | |
Value Driver Incentive (VDI) | — | (8) | — | (8) | — | (9) | — | (10) | |
Performance Award (PA) | — | (8) | — | (8) | — | (9) | — | (10) | |
Total Value of Payments | — | $1,350,000 | $5,112,428 | — |
Garry W. Flowers | 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 | — | (1) | $600,000 | (2) | $2,340,000 | (3) | — | (1) | |
Annual Incentive Award | — | (4) | $570,000 | (5) | $570,000 | (6) | $570,000 | (7) | |
Long-Term Incentive Awards | |||||||||
Stock Options | — | (8) | — | (8) | $378,006 | (9) | — | (10) | |
Restricted Stock Units | $1,143,420 | (8) | $1,143,420 | (8) | $2,158,585 | (9) | $1,143,420 | (10) | |
Value Driver Incentive (VDI) | $870,875 | (8) | $870,875 | (8) | $870,875 | (9) | $870,875 | (10) | |
Performance Award (PA) | — | (8) | — | (8) | $971,615 | (9) | — | (10) | |
Total Value of Payments | $2,104,295 | $3,184,295 | $7,289,081 | $2,584,295 |
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68 FLUOR CORPORATION | | ||
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COMPENSATION TABLES | ||
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provide its consent to waive
The value of such 20172020 awards (at target for VDI units)2020 PAs and 2020 PCs) as of December 31, 20172020 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 |
Name | Stock Options | RSUs | Performance Award Units | Performance Award Cash | ||||
Alan L. Boeckmann | $992,269 | $2,664,706 | $3,806,705 | — | ||||
David E. Constable | — | $2,412,428 | — | — | ||||
Garry W. Flowers | $378,005 | $1,015,165 | $1,450,172 | — |
In the case of Messrs. Stanski and Bustamante,Mr. Brennan, pursuant to the terms of the applicable plan(s), theyhe would have forfeited any unvested options, RSUs, SGI awards, VDI awards, PAs and VDI unitsPCs because they arehe is not retirement eligible.
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FLUOR CORPORATION|2021 PROXY STATEMENT 69 | ||
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COMPENSATION TABLES | ||
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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 |
Name | Stock Options | RSUs | Performance Award Units | Performance Award Cash | SGI | |||||
Alan L. Boeckmann | $992,269 | $2,664,706 | $3,806,705 | — | — | |||||
David E. Constable | — | $2,412,428 | — | — | — | |||||
Garry W. Flowers | $378,005 | $1,015,165 | $1,450,172 | — | — | |||||
Joseph L. Brennan | $70,884 | $371,622 | $271,921 | $150,000 | $271,937 |
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PAY RATIO | ||
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The 20172020 annual total compensation of the median-compensatedmedian compensated of all of our employees who were employed as of October 1, 20172020 (other than the CEO) was $67,580.$67,737. The 2020 annual total compensation of David T. Seaton,Mr. Hernandez, our CEO, as reported in the Summary Compensation Table, was $10,253,787.$11,236,632. The ratio of the 2020 annual total compensation of our CEO to the 2020 annual total compensation of our median compensated employee was 152166 to 1.
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 utilized annual salary from our human resources information systems as our consistently applied compensation measure. We identified a group of employees with the approximate median annual salary ("Median Group") as indicated in our records. We then excluded employees with characteristics that could distort the pay ratio calculation and selected our median employee from the individuals remaining in the Median Group. As permitted by SEC rules, we excluded 42 employees in Mozambique, 1,811 in the Philippines, 101 in Russia, 25 in Azerbaijan, 6 in Argentina, and 189 in the United Arab Emirates, who in the aggregate, represented less than 5% of our total population of approximately 43,584 on October 1, 2020. As a result of these exclusions, the employee population used to identify our median employee was comprised of approximately 41,410 individuals.
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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FLUOR CORPORATION | | ||
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DIRECTOR COMPENSATION | ||
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Our compensation philosophy for non-management directors is consistent with the philosophy established for the company'sCompany's named executives. The compensation program is designed to attract and retain directors with the necessary experience to represent the company'sCompany's stockholders and to advise the company'sCompany's executive management. The companyCompany believes that director compensation should be reasonable in light of what is customary for companies of similar size, scope and complexity, and providingcomplexity. 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 ourthe Committee's independent compensation consultant regarding market practices for director compensation. The companyCompany uses a combination of cash and stock-based awards to compensate non-management directors and targets the 50th percentile ofreviews 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 companyCompany receive no compensation for their service as directors.
For 2017,2020, non-management directors received an annual cash retainer of $120,000, paid quarterly.$125,000. The chair of the Audit Committee receivesreceived an additional annual cash retainer in the amount of $20,000; the chairs of the Organization and Compensation, Governance and Governance Committee receiveCommercial Strategies and Operational Risk Committees received an additional annual cash retainer in the amount of $15,000; the Lead Independent Director receivesreceived an additional annual cash retainer in the amount of $30,000;$35,000; and members of the Executive Committee who arewere not the chair of a committee receivereceived an additional annual cash retainer in the amount of $10,000. All cash retainers are paid quarterly. No changes were made to the cash-based components of our director compensation program in 2020.
In April 2020, in response to the business environment as impacted by the COVID-19 pandemic, our non-management directors voluntarily agreed to a temporary 20% reduction in their cash retainer fees. This temporary reduction in retainer fees ended in September 2020.
Non-management directors receive an annual grant of RSUs with a total market value (based on the fair market value of the company'sCompany's common stock on the New York Stock ExchangeNYSE on the date of grant) of $150,000$155,000 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.The 2020 RSU awards granted to directors in 2017 are subject to a three-year post-vest holding period.vested immediately upon grant. 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.
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 invested either wholly or partially in Company stock or one or more of 25 investment funds. Fee
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DIRECTOR COMPENSATION | ||
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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 companyCompany 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 companyCompany stock. RSU deferrals are paid in Fluor shares based on the directors' distribution elections.
The companyCompany does not guarantee the rate of return on any deferrals whether in fees or in RSUs.
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.
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 | $292,677 |
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FLUOR CORPORATION | | ||
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DIRECTOR COMPENSATION | ||
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The table below summarizes the New York Stock Exchangetotal compensation earned by each of the non-management directors serving in 2020. The compensation received by Mr. Constable, who served as a non-management director prior to his hiring as an Executive Vice President of the Company, effective December 21, 2020, is reported above in the Summary Compensation Table.
(a) | (b) | (c) | (d) | (e) | ||||
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||
Peter K. Barker(4) | $117,500 | $90,424 | $129 | $208,053 | ||||
Alan M. Bennett(5) | $291,250 | $155,002 | $5,140 | $451,392 | ||||
Rosemary T. Berkery | $127,500 | $155,002 | $5,140 | $287,642 | ||||
H. Paulett Eberhart(6) | $31,250 | $77,501 | $23 | $108,774 | ||||
Peter J. Fluor(7) | $147,500 | $155,002 | $140 | $302,642 | ||||
James T. Hackett | $127,500 | $155,002 | $5,140 | $287,642 | ||||
Thomas C. Leppert(5),(8) | $232,500 | $244,999 | $140 | $477,639 | ||||
Teri P. McClure(9) | $31,250 | $90,421 | $35 | $121,706 | ||||
Deborah D. McWhinney(4) | $112,500 | $90,424 | $5,129 | $208,053 | ||||
Armando J. Olivera | $112,500 | $155,002 | $5,140 | $272,642 | ||||
Matthew K. Rose | $112,500 | $155,002 | $140 | $267,642 |
AsNYSE on November 24, 2020, the date of December 31, 2017, the directors held unvested restricted shares and unvested RSUs as detailedgrant, except for Ms. McClure, whose award is described in the following table.
Name | Restricted Shares | Restricted Stock Units | ||
Peter K. Barker | 0 | 3,311 | ||
Alan M. Bennett | 0 | 3,311 | ||
Rosemary T. Berkery | 0 | 3,311 | ||
Peter J. Fluor | 11,018 | 3,311 | ||
James T. Hackett | 0 | 3,311 | ||
Samuel J. Locklear | 0 | 3,311 | ||
Deborah D. McWhinney | 0 | 3,311 | ||
Armando J. Olivera | 0 | 3,311 | ||
Joseph W. Prueher | 0 | 3,311 | ||
Matthew K. Rose | 0 | 3,311 | ||
Nader H. Sultan | 0 | 3,311 | ||
Lynn C. Swann | 0 | 3,311 |
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74 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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DIRECTOR COMPENSATION | ||
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FLUOR CORPORATION|2021 PROXY STATEMENT 75 | ||
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DIRECTOR COMPENSATION | ||
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DIRECTOR ALL OTHER COMPENSATION
The following table and related footnotes describe each component of the All Other Compensation column (column (d)) of the Director Summary Compensation Table for 2017.2020.
(a) | (b) | (c) | (d) | (e) | (b) | (c) | (d) | (e) | ||||||||
Name | Charitable Gift Match ($)(1) | Life Insurance Premiums ($)(2) | Spousal Travel ($) (3) | Total ($)(4) | Charitable Gift Match ($)(1) | Life Insurance Premiums ($)(2) | Spousal Travel ($)(3) | Total ($) | ||||||||
Peter K. Barker | $5,000 | $140 | $0 | $5,140 | — | $129 | — | $129 | ||||||||
Alan M. Bennett | $5,000 | $140 | $2,370 | $7,510 | $5,000 | $140 | — | $5,140 | ||||||||
Rosemary T. Berkery | $5,000 | $140 | $6,309 | $11,449 | $5,000 | $140 | — | $5,140 | ||||||||
H. Paulett Eberhart | — | $23 | — | $23 | ||||||||||||
Peter J. Fluor | $0 | $140 | $0 | $140 | — | $140 | — | $140 | ||||||||
James T. Hackett | $5,000 | $140 | $0 | $5,140 | $5,000 | $140 | — | $5,140 | ||||||||
Samuel J. Locklear | $0 | $140 | $4,461 | $4,601 | ||||||||||||
Thomas C. Leppert | — | $140 | — | $140 | ||||||||||||
Teri P. McClure | — | $35 | — | $35 | ||||||||||||
Deborah D. McWhinney | $5,000 | $140 | $0 | $5,140 | $5,000 | $129 | — | $5,129 | ||||||||
Armando J. Olivera | $5,000 | $140 | $0 | $5,140 | $5,000 | $140 | — | $5,140 | ||||||||
Joseph W. Prueher | $5,000 | $140 | $2,966 | $8,106 | ||||||||||||
Matthew K. Rose | $5,000 | $140 | $0 | $5,140 | — | $140 | — | $140 | ||||||||
Nader H. Sultan | $0 | $140 | $0 | $140 | ||||||||||||
Lynn C. Swann | $5,000 | $140 | $0 | $5,140 | ||||||||||||
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PROPOSAL 3 — RATIFICATION OF ACCOUNTING FIRM | ||
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Consistent with our commitment to good corporate governance, the Board is asking stockholders to ratify the Audit Committee's appointment of Ernst & Young LLP ("EY") as our independent registered public accounting firm to audit the financial statements of the companyCompany for the fiscal year ending on December 31, 2018.2021. In the event the stockholders fail to ratify the appointment of Ernst & Young LLP,EY, 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 LLPEY is expected to be present at the virtual 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.
The following table presents aggregate fees for professional audit services rendered by Ernst & Young LLPEY for the audit of the company'sCompany's annual financial statements for fiscal years 20172020 and 2016,2019, and fees billed for other services provided by Ernst & Young LLPEY for fiscalthe years 20172020 and 2016.2019.
| Fiscal Year Ended (in millions) | Year (in millions) | |||||||||
| 2017 | 2016 | 2020 | 2019 | |||||||
Audit Fees(1) | $8.9 | $8.3 | $9.5 | $13.3 | ||||||
Audit-Related Fees(2) | 0.6 | 0.7 | 0.4 | 0.4 | ||||||
Tax Fees(3) | 0.2 | 0.5 | 0.3 | 0.3 | ||||||
All Other Fees | — | — | — | — | ||||||
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Total Fees Paid | $9.7 | $9.5 | $10.2 | $14.0 | ||||||
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FLUOR CORPORATION|2021 PROXY STATEMENT 77 | ||
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PROPOSAL 3 — RATIFICATION OF ACCOUNTING FIRM | ||
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Audit Firm Selection and 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.annually, including with respect to the tax services provided by them. In conjunction with the mandated rotation of the independent registered public accounting firm's lead engagement partner every five years, the Audit Committee and its chair are also directly
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involved in the selection of Ernst & Young LLP'sEY's new lead engagement partner. When evaluating our independent registered public accounting firm, the Audit Committee considers the firm's past performance, including the quality and efficiency of the services provided, the firm's qualifications and resources, and the firm's knowledge of our operations and industry. Based on their most recent evaluation of Ernst & Young LLP,EY, including the firm's past performance and an assessment of the firm's qualifications and resources,factors described above, the members of the Audit Committee believe that the continued retention of Ernst & Young LLPEY to serve as the company'sCompany's independent registered public accounting firm is in the best interests of the companyCompany 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 CommissionSEC 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 companyCompany 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 companyCompany 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. For 2020, all services by the independent registered public accounting firm were pre-approved.
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REPORT OF THE AUDIT COMMITTEE | ||
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The Audit Committee assists the Board in fulfilling its oversight responsibility for the:
In carrying out these responsibilities, the Audit Committee, among other things, supervises the relationship between the companyCompany 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 the audit engagement and related fees and non-audit services and related fees and evaluating its independence. The Audit Committee oversees the mandated rotation of the independent registered public accounting firm's lead engagement partner every five years, and the Audit Committee and its chair are also directly involved in the selection of the independent registered public accounting firm's new lead engagement partner. In accordance with such rotation, Ernst & Young LLP (EY), the Company's independent registered public accounting firm since 1973, will have a new lead engagement partner in 2021. The Audit Committee oversees and evaluates the adequacy and effectiveness of the company'sCompany'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.
Each member of the Audit Committee is independent within the meaning set forth in SEC regulations, NYSE listing standards and our Corporate Governance Guidelines, and the Board has further determined that Mr. Bennett and Mr. Rose are "audit committee financial experts" as such term is defined in SEC regulations. The company'sAudit Committee acts pursuant to a charter, a copy of which can be found on our website at http://www.fluor.com/sustainability/corporate-governance/corporate-governance-documents.
The Company's management is responsible, among other things, for preparing the financial statements and for the overall financial reporting process, including the company'sCompany's system of internal controls. The independent registered public accounting firm'sEY'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'sCompany's internal control over financial reporting.
As part of its oversight of the company'sCompany's financial statements, the Audit Committee reviewed and discussed with management and Ernst & Young LLP, the company's independent registered public accounting firm,EY, the audited financial statements of the companyCompany for the fiscal year ended December 31, 2017.2020. The Audit Committee discussed with Ernst & Young LLP suchEY the matters asthat are required to be discussed underby the rules adopted byapplicable requirements of the Public Company Accounting Oversight Board relating toand the conduct of the audit.SEC. The Audit Committee has received the written disclosures and the letter from Ernst & Young LLPEY 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 LLPEY 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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FLUOR CORPORATION | | ||
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REPORT OF THE AUDIT COMMITTEE | ||
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Company and its management, and considered the compatibility of non-audit services with the registered public accounting firm's independence.
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'sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 2017,2020, for filing with the Securities and Exchange Commission.SEC. The Audit Committee has also appointed Ernst & Young LLPEY as the company'sCompany's independent registered public accounting firm for the fiscal year ended December 31, 2018.2021.
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| The Audit Committee | ||
Alan M. Bennett,Chair* Teri P. McClure Matthew K. Rose |
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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.
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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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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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 | ||
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The following table contains information regarding the beneficial ownership of our common stock as of March 2, 20181, 2021 by:
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 | % |
Name of Beneficial Owner | Shares Beneficially Owned(1) | Fluor Stock-Based Holdings(2) | | Percent of Shares Beneficially Owned(3) | ||||
Directors: | ||||||||
Alan M. Bennett | 20,606 | 37,016 | | * | ||||
Rosemary T. Berkery | 23,272 | 43,671 | * | |||||
Alan L. Boeckmann(4) | 187,056 | 328,804 | | * | ||||
David E. Constable(4) | 13,837 | 164,897 | * | |||||
H. Paulett Eberhart | 12,354 | 12,354 | | * | ||||
Peter J. Fluor | 149,006 | 407,050 | * | |||||
James T. Hackett | 33,009 | 54,548 | | * | ||||
Thomas C. Leppert | 13,764 | 13,764 | * | |||||
Teri P. McClure | — | 11,626 | | * | ||||
Armando J. Olivera | 19,491 | 38,688 | * | |||||
Matthew K. Rose | 19,581 | 28,409 | | * | ||||
Named Executive Officers: | ||||||||
Joseph L. Brennan | 27,644 | 48,138 | | * | ||||
Garry W. Flowers(5) | 245,573 | 347,962 | * | |||||
Carlos M. Hernandez(6) | 552,430 | 763,313 | | * | ||||
Rick Koumouris(7) | 96,464 | 87,119 | * | |||||
D. Michael Steuert(8) | 45,992 | 76,578 | | * | ||||
All directors and executive officers as a group (20 persons) | 860,641 | 1,779,081 | 0.61 | % |
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STOCK OWNERSHIP | ||
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options or vesting of vested restricted stock units.units deferred by certain non-management directors under the Director Deferred Compensation Program. Included in the number of shares beneficially owned by Mr. Bustamante, Mr.Messrs. Boeckmann, Brennan, Flowers, Mr. Hernandez, Mr. Porter, Mr. SeatonKoumouris and Mr. Stanski,all directors and officers as a group, are 157,264, 20,786, 158,209, 397,404, 54,290 and 836,068 shares, respectively, subject to RSUs or VDI units vesting or options exercisable within 60 days after March 1, 2021. Included in the number of shares beneficially owned by Messrs. Fluor, Hackett, Olivera, Rose, and all directors and executive officers as a group, are 53,802, 110,573, 188,001, 182,057, 587,145, 122,1118,300, 3,311, 17,008, 8,300 and 1,243,68936,919 shares, respectively, subject to restricted stock units vesting or options exercisable currently orthat may be acquired within 60 days after March 2, 2018.pursuant to the settlement of vested RSUs deferred under the Director Deferred Compensation Program.
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82 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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STOCK OWNERSHIP | ||
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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, 2018.1, 2021.
Name of Beneficial Owner | | Shares Beneficially Owned | | Percent of Class | | Shares Beneficially Owned | | Percent of Class | ||||||
BlackRock, Inc. | 14,765,027 | (1) | 10.5% | |||||||||||
The Vanguard Group | 13,988,968 | (1) | 10.0% | | 11,202,387 | (2) | | 8.0% | ||||||
ClearBridge Investments, LLC | | 11,585,823 | (2) | | 8.3% | |||||||||
BlackRock, Inc. | 9,811,969 | (3) | 7.0% | |||||||||||
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power relative to 11,207,30614,563,113 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 8th Avenue, New York, NY 10018.
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
REPORTS
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 CommissionSEC reports regarding their ownership and changes in ownership of our securities. In addition to requiring prompt disclosure of open-market purchases or sales of companyCompany shares, Section 16(a) applies to technical situations. The companyCompany maintains and regularly reviews procedures to assist the companyCompany 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 CommissionSEC on their behalf. Based solely upon a review of filings with the Securities and Exchange Commission,SEC, a review of companyCompany records and written representations by our directors and executive officers, the companyCompany believes that Mr. Olivera had a lateall Section 16(a) filing onrequirements were complied with for 2020, except that Joseph L. Brennan filed one Form 4 amendment relating to two transactions involving Fluor stock made by Mr. Olivera's investment advisor inthe grant of a Stock Growth Incentive Award that was inadvertently omitted from the original filing due to administrative error.
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ADDITIONAL INFORMATION | ||
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The companyCompany 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.
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'sCompany'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,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 tohttp://enroll.icsdelivery.com/fluor. This link is also available in the investor relations section of our website atwww.fluor.com. If you have questions about electronic delivery, please call our investor relations department at (469) 398-7070.398-7222.
Expenses of Solicitation and "Householding" of Proxy Materials
The expense of the proxy solicitation will be paid by the company.Company. Some officers and employees may solicit proxies personally, by phone or electronically, without additional compensation. Georgeson & Company Inc.Innisfree M&A Incorporated has been engaged to assist in the solicitation for which it will receive approximately $15,000,$20,000 plus reimbursement of reasonable expenses incurred on our behalf. The companyCompany 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'sCompany's common stock.
The Securities and Exchange CommissionSEC 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.companies and benefits to the environment. The companyCompany 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) 398-7070,398-7222 or Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039 or, if your shares are held in a brokerage account, your broker. The companyCompany 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) 398-7070,398-7222 or Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039. Please note, however, that if you
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84 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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ADDITIONAL INFORMATION | ||
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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.
Use of the internet or telephonic voting procedures described on page 88 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.
Any stockholder who would like a copy of our 2020 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 Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 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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FLUOR CORPORATION | | ||
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ADDITIONAL INFORMATION | ||
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2022 ANNUAL MEETING OF STOCKHOLDERS
We anticipate that the 2022 annual meeting of stockholders will be held on or about May 5, 2022.
Under the company's Amended and RestatedCompany's Bylaws, stockholders may nominate directors or bring other business before an annual meeting if written notice is delivered to the company'sCompany'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 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year's annual meeting — that is, with respect to the 20192022 annual meeting, between January 3, 20196, 2022 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.5, 2022. These requirements are separate from the company'sCompany's proxy access procedures and the Securities and Exchange Commission'sSEC's requirements that a stockholder must meet in order to have a stockholder proposal included in the company'sCompany'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 chairmanchair 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 companyCompany may exercise discretionary voting authority under proxies it solicits to vote on any such proposal as it determines appropriate.
The company's Amended and RestatedCompany's 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'sCompany's proxy materials director nominees constituting up to the greater of two or 20% of the company'sCompany'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 120th day nor earlier than the close of business on the 150th 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 20192022 annual meeting, between October 9, 201820, 2021 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.19, 2021. Any notices should be addressed to Carlos M. Hernandez, Chief Legal Officer andthe Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039.
Stockholder Proposals for the 20192022 Annual Meeting
Stockholders interested in submitting a Rule 14a-8 proposal for inclusion in the proxy materials for the annual meeting of stockholders in 20192022 may do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act. To be eligible for inclusion, stockholder proposals mustshould be received by the company'sCompany's Secretary no later than the close of business on November 8, 2018.19, 2021. Any proposals should be sent to: Carlos M. Hernandez, Chief Legal Officer and Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039.
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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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 atwww.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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Why did I receive a notice regarding Internetinternet availability of proxy materials instead of a full set of printed materials?
As permitted by Securities and Exchange CommissionSEC rules, we are making this proxy statement and our annual report available to our stockholders primarily via the Internet,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 on the internet, including our proxy statement and our annual report, on the Internet and how to access an electronic proxy card to vote on the Internetinternet 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, 20188, 2021 as the record date for the 20182021 annual meeting. If you were a stockholder of record at the close of business on March 5, 2018,8, 2021, you are entitled to vote at the 2021 annual meeting.
Stockholders have one vote for each share of Fluor common stock owned by them as of the close of business on March 5, 2018,8, 2021, 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, 2018,8, 2021, the companyCompany had 139,913,699140,857,290 shares of common stock outstanding. The presence at the meeting, in person (online) 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.
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FLUOR CORPORATION|2021 PROXY STATEMENT 87 | ||
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | ||
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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:
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Authorizations submitted over the Internetinternet at www.proxyvote.com or by phone must be received by 11:59 p.m. Eastern Daylight Time on May 2, 2018.5, 2021.
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 companyCompany retirement plans?
If you hold any shares in the companyCompany 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, 2018,4, 2021, or if you do not provide properly completed and executed voting instructions, any shares you hold in the companyCompany retirement plans will be voted by the trustee in favor of the twelveten nominees for director, and in proportion to the manner in which the other companyCompany 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?
Proposal 1 — Election of Directors
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.
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88 FLUOR CORPORATION|2021 PROXY STATEMENT | ||
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | ||
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Proposals 2 and 3 — Executive Compensation and Auditors
With respect to each of Proposals 2 and 3, the affirmative vote of the majority of shares represented in person (online) or by proxy at the annual meeting and entitled to vote on the proposal 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.
Proposal 4 — Stockholder ProposalBroker Discretionary Voting
With respectIf your shares are held in street name and you do not provide voting instructions to Proposal 4, the affirmative voteyour broker in advance of the majority of shares represented in person or by proxy at the annual meeting, and entitledNYSE rules grant your broker discretionary authority to vote is required. Abstentions haveyour shares on "routine matters," including the same effect as aratification of the independent auditors (Proposal 3). However, the proposals regarding the election of directors and the advisory vote "against" Proposal 4,to approve executive compensation are not considered "routine matters." Therefore, if you hold your shares of Company common stock in street name and broker non-votes do not have an effectprovide voting instructions to your broker, your shares will not be voted on Proposals 1 and 2. We urge you to promptly provide voting instructions to your broker to ensure that your shares are voted on these proposals, even if you plan to attend the annual meeting. 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 Company 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: (1) FOR the election of the ten director nominees listed above, (2) FOR the advisory resolution to approve executive compensation and (3) FOR the ratification of the appointment of EY as independent registered public accounting firm for the year ending December 31, 2021. 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 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, or by joining the virtual annual meeting and following the voting instructions provided on the outcome of this proposal.meeting website. If you are a participant in Company retirement plans, you may revoke your proxy and change your vote, but only until 5:59 p.m. Eastern Daylight Time on May 4, 2021. 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.
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FLUOR CORPORATION | | ||
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | ||
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To support the health and well-being of our employees and our shareholders, this year's annual meeting will be held exclusively online as an audio webcast, with no option to attend in person. The Company has sought to provide stockholders with the same rights and opportunities to participate in the annual meeting online as in person. If you plan to join the virtual meeting, you will need to visit Broker Discretionary Votingwww.virtualshareholdermeeting.com/FLR2021
and use your 16-digit control number provided in the Notice or proxy card to log into the meeting. 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"street name" by a bank, brokerage firm or other nominee, you shouldmay participate in the annual meeting online, vote and submit questions during the meeting by visiting the meeting website and logging in with the control number on the voting instruction form or Notice sent to you. We encourage shareholders to log in to the website and access the webcast early, beginning approximately 15 minutes before the annual meeting's 8:30 a.m. Central Daylight start time. We will have technicians available to assist with any difficulties you may have accessing the annual meeting. If you experience technical difficulties, please contact the technical support telephone number posted on www.virtualshareholdermeeting.com/FLR2021.
In the event of a technical malfunction or other situation that nominee if you wishthe meeting chair determines may affect the ability of the meeting to revokesatisfy the requirements for a meeting of stockholders to be held by means of remote communication under the Delaware General Corporation Law, or change previously given voting instructions.that otherwise makes it advisable to adjourn the meeting, the chair of the meeting will convene the meeting at 8:30 a.m. CDT on the date specified above and at the Company's address specified below solely for the purpose of adjourning the meeting to reconvene at a date, time and physical or virtual location announced by the meeting chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the investor relations page of the Company's website at investor.fluor.com.
How canWill I attendbe able to ask questions and participate in the virtual annual meeting?
Attendance atShareholders of record and proxy holders who provide their valid 16-digit control number will be able to participate in the annual meeting is limited to stockholdersby voting their shares as outlined above. Such persons may also submit questions in advance of the companyannual meeting beginning approximately two weeks prior to the meeting until 11:59 p.m., Eastern Daylight Time on Friday, April 30, 2021, by logging into www.proxyvote.com and following the instructions on the website. In addition, shareholders attending the meeting can submit questions during the meeting by following the instructions on the meeting website.
We will answer questions that are pertinent to the annual meeting or the Company's business and that comply with the meeting rules of conduct during the annual meeting of stockholders, subject to time constraints. If we receive substantially similar questions, we may group such questions together. If we do not have sufficient time to respond to proper questions during the meeting, we will post those questions and responses on the investor relations page of our website as soon as practicable following the meeting. Questions regarding personnel matters or matters not relevant to meeting matters will not be answered. In addition, a replay of the record date. You mayannual meeting will be asked to present valid, government-issued picture identification, suchmade available on our investor relations website as a driver's license or passport, before being admitted tosoon as practicable following 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 AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | ||
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Please let us know whether you planBeginning 15 minutes prior to, attendand during, the annual meeting, the list of our stockholders of record entitled to vote will be available for viewing at www.virtualshareholdermeeting.com/FLR2021 for any purpose germane to the meeting by responding affirmatively when prompted during telephone or Internet voting or by markingstockholders of record with their valid 16-digit control number.
Additional information regarding the attendance boxrules and procedures for participating in the virtual annual meeting (including the Q&A process, such as the number and types of questions permitted, the time allotted for questions, and how questions will be recognized, answered and disclosed) will be provided in our meeting rules of conduct, which shareholders can view once they log on to the proxy card or voting instruction card.meeting website.
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| March 19, 2021 Irving, Texas | Executive Vice President, Chief Legal Officer and Secretary |
March 8, 2018Irving, Texas
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FLUOR CORPORATION | | ||
Directions to theFluor Corporation 2018 Annual Meeting of Stockholders
Thursday, May 3, 2018, beginning at 8:30 a.m. Central Daylight Time
Fluor Corporation6700 Las Colinas BoulevardIrving, Texas 75039
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, 20184, 2021 (benefit plan shares) or 11:59 P.M. Eastern Daylight Time on May 2, 20185, 2021 (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 75039During The Meeting - Go to www.virtualshareholdermeeting.com/FLR2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. 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, 20184, 2021 (for shares allocable to a benefit plan account) or 11:59 P.M. Eastern Daylight Time on May 2, 20185, 2021 (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. FLUOR CORPORATION 6700 LAS COLINAS BLVD. IRVING, TX 75039 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E35914-P01986D36406-P51080-Z79290 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. BarkerAlan M. Bennett 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. For Against Abstain ! ! ! 2. An advisory vote to approve the company's executive compensation. F. Samuel J. Locklear IIIC. Alan L. Boeckmann D. David E. Constable The Board of Directors recommends you vote FOR proposal 3. G. Deborah D. McWhinney ! ! ! E. H. Armando J. OliveraPaulett Eberhart 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, 2018.2021. F. James T. Hackett 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. G. Thomas C. Leppert H. Teri P. McClure I. Armando J. Olivera J. 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 20182021 Annual Meeting of Stockholders May 3, 20186, 2021 You are cordially invited to attendjoin the 20182021 Annual Meeting of Stockholders which will be held on Thursday, May 3, 2018,6, 2021, beginning at 8:30 a.m. Central Daylight Time online via audio webcast 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.www.virtualshareholdermeeting.com/FLR2021 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-P01986Meeting: D36407-P51080-Z79290 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. HernandezJ.R. Reynolds 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, 20186, 2021 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 twelveten nominees for director, FOR the advisory resolution to approve the company's executive compensation, and 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.2021. 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 2-4.2-3. If the trustee does not receive voting instructions from you by 5:59 p.m. Eastern Daylight Time on May 1, 2018,4, 2021, the trustee will vote FOR the nominees for Director in Proposal 1 and, with respect to Proposals 2-4,2-3, 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
