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        A Board meeting immediately follows our annual meeting of shareholders.the Annual Meeting. The Board has a policy that directors attend the annual meeting of shareholders.shareholders each year. All directors attended the 20072010 annual meeting of shareholders.

        The standing committees of the Board consist of an Audit Committee, Executive Committee, Governance Committee and Organization and Compensation Committee. 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.

Audit Committee

        The current members of the Audit Committee are Kent Kresa (Chair), Ilesanmi Adesida, Peter K. Barker, Dean R. O'Hare, (Chair), Peter K. Barker, James T. Hackett, Kent Kresa, Vilma S. Martinez, Lord Robin W. RenwickNader H. Sultan and Suzanne H. Woolsey. All current members qualify, and all members during 20072010 qualified, as "independent" within the meaning of SECSecurities and Exchange Commission regulations, the listing standards of the New York Stock Exchange and the company'sCorporate Governance Guidelines. The Board has determined that each of Mr. Kresa, Mr. Barker and Mr. O'Hare qualifiesqualify as an "audit committee financial expert" under the rules of the Securities and Exchange Commission. None of the members of the Audit Committee serve on the audit committeecommittees of more than two other public companies.

        The Audit Committee held six meetings during 2007,2010, one of which was to review and approve the company's 20062009 Annual Report, Form 10-K and proxy materials for the 20072010 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 with the company's head of internal audit and other members of management, without the presence of any other company officers or personnel and at additional times as necessary. In addition, at the endpersonnel.

        The charter of every regular meeting, the Audit Committee met in executive session with members of management and the company's compliance officer.

        The Audit Committee acts pursuant to the Audit Committee Charter, which was amended in November 2007. A copy of this charter, as amended,2010 and is available on the company's website atwww.fluor.com under "Investor Relations""Sustainability"—"Governance"—"Corporate Governance.Governance Documents." The charter is also available in print for any shareholder who requests it from our Chief Legal Officer and Secretary at Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039. The functions of the Audit Committee and its activities during 20072010 are described in the "Report of the Audit Committee" section of this proxy statement.

Executive Committee

        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.standards of the New York Stock Exchange. The current members of the Executive Committee are Alan L. Boeckmann (Chair), Peter J. Fluor, Lord Robin W. RenwickKent Kresa and Dean R. O'Hare. In 2007, the Executive Committee took action by unanimous written consent on five occasions.

Governance Committee

        The current members of the Governance Committee are Lord Robin W. RenwickDean R. O'Hare (Chair), Ilesanmi Adesida,Peter K. Barker, Rosemary T. Berkery, Peter J. Fluor, Vilma S. Martinez, Dean R. O'Hare,James T. Hackett, Joseph W. Prueher, Peter S. WatsonNader H. Sultan and Suzanne H. Woolsey. All current members qualify, and all members during 20072010 qualified, as "independent" within the meaning of the listing standards of the New York Stock Exchange and the company'sCorporate Governance Guidelines. During 2007,2010, the Governance Committee held four meetings.

        The Governance Committee's primary responsibilities, which are discussed in detail within its charter, are to:

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identify qualified candidates to be nominated for election to the Board and directors qualified to serve on the company's committees;

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develop, implement, monitor and oversee policies and practices relating to corporate governance, including the company'sCorporate Governance Guidelines andCode of Business Conduct and Ethics for Members of the Board of Directors;



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oversee the annual evaluation of the Board and determine non-employee director compensation; and



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develop, review and evaluate background information for any candidates for the Board, including those recommended by shareholders, and make recommendations to the Board regarding such candidates. For information relating to nominations of directors by our shareholders, see "—Consideration of Director Nominees" above.above;



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oversee the independence of the directors;



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develop, implement, monitor and oversee policies and practices relating to corporate governance, including the company's Corporate Governance Guidelines and Code of Business Conduct and Ethics for Members of the Board of Directors; and



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oversee the annual evaluation of the Board and the committees of the Board.

        The Governance Committee has the ability, under its charter, to engage, retain and terminate the services of outside legal counsel, search firms and other advisors for advice.advisors. In 2007, our two new Board members were first identified and recommended by2010, a third party search firm, Russell Reynolds

Associates. In addition, in connection with its review of director compensation, the Governance Committee considers compensation dataSpencer Stuart, researched and provided by Towers Perrin or such other compensation consultants as may be retained from time to time.recommendations regarding potential new directors.

        The charter of the Governance Committee was amended in November 2007,2010 and February 2011 and is available on the company's website atwww.fluor.com under "Investor Relations""Sustainability"—"Governance"—"Corporate Governance.Governance Documents." The charter is also available in print for any shareholder who requests it from our Chief Legal Officer and Secretary at Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039.

Organization and Compensation Committee

        The current members of the Organization and Compensation Committee are Peter J. Fluor (Chair), Ilesanmi Adesida, Peter K. Barker, James T. Hackett, Kent Kresa and Joseph W. Prueher and Peter S. Watson.Prueher. All current members qualify, and all members during 20072010 qualified, as "independent" within the meaning of the listing standards of the New York Stock Exchange and the company'sCorporate Governance Guidelines. The Organization and Compensation Committee held sevensix meetings during 2007. Five2010. Four of the sevensix meetings included an executive session attended by the Committeecommittee members and itsthe committee's independent compensation advisor. The two meetings that did not have an executive session were brief teleconferences. In 2007, the

        The Organization and Compensation Committee took action by unanimous written consent on two occasions.

        Frederic W. Cook & Co., Inc. serves as the Committee's independent compensation advisor, and works directly on behalf of the Committee and in cooperation with management under the direction of the Committee. Frederick W. Cook & Co., Inc. does not perform any other services for the company. The Committee has the ability under its charter to engage, retain and terminate the services of outside legal counsel, compensation consultants and other advisorsadvisors. In 2010, the Organization and Compensation Committee again engaged Frederic W. Cook & Co., Inc. to serve as its independent compensation consultant and to advise the committee on all matters related to executive compensation. The compensation consultant conducts an annual review of the total compensation program for advice.the Chief Executive Officer and other senior management reporting to him and, in doing so, completes a report benchmarking the senior executives against other executives with similar responsibilities in order to assist the Organization and Compensation Committee in making compensation decisions. The 2010 compensation review provided the committee with relevant market data and alternatives to consider when making compensation decisions in 2010 for the Chief Executive Officer and other senior management reporting to him. In addition, in 2010, the compensation consultant conducted a review of non-management director compensation and provided recommendations to the committee which were subsequently recommended to the Board for approval.

        In early 2011, the compensation consultant conducted a broad-based review of the company's compensation programs and policies 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. Frederic W. Cook & Co., Inc. also provided verbal advice to the Organization and Compensation Committee at the 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.

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        The Organization and Compensation Committee's primary responsibilities, which are discussed in detail within its charter, are to:

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review and monitor the company's top level organizational structure functions of management and senior management succession planning and recommend the appointment of corporate officers and group executive officers;officers of the company's principal operating units;



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review and approve compensation strategy, set corporate goals and objectives relevant to the Chairman and Chief Executive Officer, other named executivescorporate officers and key employees,group executive officers, evaluate the achievement of these goals and set compensation levels; and



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establish the base salary, incentive compensation and other compensation for the company's Chairman and Chief Executive Officer and review and approve the Chairman and Chief Executive Officer's recommendations for senior management reporting to him.him; and



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review the compensation for non-management directors.

        Non-employee director compensation is reviewedThe Organization and Compensation Committee has the authority under its charter to delegate any portion of its responsibilities to a subcommittee denominated by the Governance Committee.it when appropriate, but did not do so in 2010.

        The charter of the Organization and Compensation Committee was amended in November 2010 and February 2011 and is available on the company's website atwww.fluor.com under "Investor Relations""Sustainability"—"Governance"—"Corporate Governance.Governance Documents." The charter is also available in print for any shareholder who requests it from our Chief Legal Officer and Secretary at Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039.

        The responsibilities of our Organization and Compensation Committee and its activities during 20072010 are further described in the "Compensation Discussion and Analysis" section of this proxy statement.

Certain Relationships and Related Transactions

        Peter J. Fluor, a member of our Board, is the brother of J. Robert Fluor, II, who is our Vice President—Global Public Affairs.employed by a Fluor subsidiary to assist with ongoing community relations efforts. J. Robert Fluor, II has been employed by the company since 1967 and does not perform a policy-making function.function and is, therefore, not an executive officer. During 2007, he2010, J. Robert Fluor, II earned total compensation of approximately $611,516. This figure was determined by applying$335,400 from the same principles used to calculate total compensation for the named executives in the Summary Compensation Table below. Peter J. Fluor joined our Board in 1984.company. The Organization and Compensation Committee, of which Peter J. Fluor is the Chair, doesdid not individually review or approve J. Robert Fluor, II's compensation.

        In February 2011, we agreed to sell one of our country club memberships to our non-executive Chairman, Alan Boeckmann. The membership was sold to Mr. Boeckmann for $250,000, the same price at which it could be purchased from the club.

Review and Approval of Transactions with Related Persons

        The company has adopted a written policy for approval of transactions betweento which the company is a party and its directors,the aggregate amount involved in the transaction will or may be expected to exceed $100,000 in any calendar year if any director, nominees,director nominee, executive officers,officer, greater-than-5% beneficial owners andowner or their respective immediate family members where the amount involved in the transaction exceedshave or is expected to exceed $100,000 inwill have a single calendar year. The related person transaction described in this proxy statement is subject to, and has been approveddirect or ratified under, this policy.indirect 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 company than terms generally available to an unaffiliated third-partythird party under the same or similar circumstances and the extent of the related person's interest in the

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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.

        The Governance Committee has considered and adopted standing pre-approvals under the policy for limited transactions with related persons. Pre-approved transactions include:include, but are not limited to:

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employment of immediate family members of directors, director nominees, executive officers and greater-than-5% beneficial owners in non-executive positions with the company;



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business transactions with other companies at which a related person's only relationship is as an employee (other than an executive officer), director or less-than-10% beneficial owner if the amount of business falls below the thresholds in the New York Stock Exchange's listing standards and the company's director independence standards; and



•

contributions to non-profit organizations at which a related person's only relationship is as an employee (other than an executive officer) or director if the aggregate amount involved does not exceed the lesser of $1 million or 2% of the organization's consolidated gross annual revenues.

        At least annually, a summary of new transactions covered by the standing pre-approvals described above is provided to the Governance Committee for its review. In 2011, the transaction between the company and Mr. Boeckmann mentioned above under "Certain Relationships and Related Transactions" was pre-approved by the Chair of the Governance Committee; and a summary of the transaction was provided to the Governance Committee.

Risk Management Oversight

        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 annual strategic planning meeting every June. 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 and legal compliance, as well as accounting risk exposure. The Audit Committee is provided quarterly reports on enterprise risk management, including the economic, geographic, operational and market risks facing our company. In carrying out its responsibilities related to risk oversight, the Audit Committee meets with the Chief Executive Officer, the Chief Financial Officer, the Chief Accounting Officer, the Chief Compliance Officer, the head of internal audit and the independent registered public accounting firm in executive sessions at least quarterly, and with the Chief Legal Officer as determined from time to time by the Audit Committee, 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 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

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practices that are critical to the success of the business. Each of the Audit Committee, Governance Committee and Organization and Compensation Committee report quarterly to the Board regarding the areas of risk they oversee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        During 2010, Peter J. Fluor, Ilesanmi Adesida, Peter K. Barker, H. Paulett Eberhart, James T. Hackett, Kent Kresa, Joseph W. Prueher and Peter S. Watson served on the Organization and Compensation Committee. As discussed above under "Certain Relationships and Related Transactions," Peter Fluor's brother is an employee of a subsidiary of the company. There are no compensation committee interlocks between the company and other entities involving the company's executive officers and directors.

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REPORT OF THE AUDIT COMMITTEEADVISORY VOTE ON EXECUTIVE COMPENSATION

        The Audit Committee assists the Board in fulfilling its oversight responsibility for the:

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company's accounting, reporting and financial practices, including the integrity of its financial statements;



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company's compliance with legal and regulatory requirements;



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independent registered public accounting firm's qualifications and independence;



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performance of the company's internal audit function and independent registered public accounting firm; and



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preparation of this report.

        In carrying out these responsibilities, the Audit Committee, among other things, supervises the relationship between the company and its independent registered public accounting firm, including making decisions with respect to its appointment or removal, reviewing the scope of its audit services, pre-approving audit engagement fees and non-audit services and evaluating its independence. The Audit Committee oversees and evaluates the adequacy and effectiveness of the company's systems of internal and disclosure controls and 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.Proposal 2

        The company's management is responsible, among other things, for preparing the financial statements and for the overall financial reporting process, including the company's system of internal controls. The independent registered public accounting firm's responsibilities include auditing the financial statements and expressingWe are asking shareholders to approve an opinion on the conformity of the audited financial statements with U.S. generally accepted accounting principles.

        As part of its oversight of the company's financial statements, the Audit Committee reviewed and discussed with management and Ernst & Young LLP, the company's independent registered public accounting firm, the audited financial statements of the company for the fiscal year ended December 31, 2007. The Audit Committee discussed with Ernst & Young LLP, who is responsible for expressing an opinion on the conformity of the audited financial statements with accounting principles generally accepted in the United States and an opinionadvisory resolution on the company's internal control over financial reporting, such mattersexecutive compensation as are required to be discussed byStatement on Auditing Standards No. 61, as amended (Communication with Audit Committees), relating to the conduct of the audit. The Audit Committee also has discussed with Ernst & Young LLP, the registered public accounting firm's independence from the company and its management, including the mattersreported in this proxy statement. As described below in the written disclosures and the letter the Audit Committee received from the independent registered public accounting firm as required byIndependence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), 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 has recommended to the Board of Directors that the audited financial statements be included in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, for filing with the Securities and Exchange Commission. The Audit Committee has also selected Ernst & Young LLP as the company's independent registered public accounting firm for 2008.

The Audit Committee

Dean R. O'Hare
Peter K. Barker
James T. Hackett
Kent Kresa
Vilma S. Martinez
Lord Robin W. Renwick
Suzanne H. Woolsey

EXECUTIVE COMPENSATION
Compensation"Compensation Discussion and Analysis

Introduction

        This Compensation Discussion and Analysis is designed to provide shareholders with an understandingAnalysis" section of how our compensation programs are designed and operate in practice with respect to named executives. Our named executives are those individuals who served as our Chairman and Chief Executive Officer and Chief Financial Officer during 2007, as well asthis proxy statement, the other individuals included in the Summary Compensation Table on page 29.

        The Organization and Compensation Committee ofhas structured our executive compensation program to achieve the Board of Directors (the "Committee") has responsibility for establishing and implementingfollowing key objectives that contribute to the company's executive compensation philosophy. The Committee reviews and determines all components of named executives' compensation, including making individual compensation decisions, and reviewing and revising the company's compensation plans, programs and other arrangements.

Compensation Philosophy and Objectives

        The Committee has established the following compensation philosophy and objectives for the company's named executives:long-term success:

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Align the interests of executives, including the company's named executives, with those of the shareholders. The Committee believes it is appropriate to tie a significant portion of executive compensation to the value of the company's stock in orderWe seek to closely align the interests of our named executivesexecutive officers with the interests of our shareholders. The Committee also believes We design our annual and long-term incentive programs to reward our named executives for achievement of specific short-term and long-term goals that enhance shareholder value. In addition, between 38% and 78% of the compensation of our named executive officers is provided in equity-based compensation; and named executives should haveare expected to hold company shares or share units with a meaningful ownership interest in the companyvalue between two and has established and regularly reviews executive stock ownership guidelines.six times their base salary.



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HaveWe have a significant portion of pay that is performance-based.  Payments under our annual and long term incentive programs are significantly impacted by company performance. Specifically, 85% to 90% of the annual incentive award for named executives is tied to company performance, including corporate measures such as net earnings, return on assets employed and business segment performance. Lower performance of these measures during 2010 was partially responsible for a significant decrease in cash compensation paid to named executives. In addition, long term incentive payouts under the company's value driver incentive ("VDI") program are tied to performance measures related to the company's new awards, a key driver for shareholder returns. In 2010, payouts under the VDI program were much lower than 2009 due to lower new award margins during the performance period.



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We structure our executive compensation programs to be competitive within the marketplace so that we can attract and retain our highly qualified executives, who are critical to achieving our strategic objectives and building shareholder value. In order to attract and retain qualified executives, we generally target total compensation for our named executives at the 50^th percentile of the peer group against which our compensation is benchmarked.

        We urge shareholders to read the "Compensation Discussion and Analysis" beginning on page 21 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and related compensation tables and narrative appearing on pages 35 through 52, 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.

        In accordance with recently adopted 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 shareholders to approve the following advisory resolution at the 2011 Annual Meeting of Shareholders:

        RESOLVED, that the shareholders of Fluor expects superior performance. OurCorporation (the "Company") approve, on an advisory basis, the compensation of the Company's named executives as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables and narrative in the Proxy Statement for the Company's 2011 Annual Meeting of Shareholders.

        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.

Board Recommendation

        The Board of Directors recommends a vote FOR the approval of the advisory resolution on executive compensation.

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ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES
ON EXECUTIVE COMPENSATION

Proposal 3

        In Proposal 2 above, we are asking shareholders to vote on an advisory resolution on executive compensation. Pursuant to recently adopted Section 14A of the Exchange Act, in this Proposal 3 we are asking shareholders to vote on whether future advisory votes on executive compensation should occur every year, every two years or every three years.

        The Board believes that a triennial vote on executive compensation is appropriate for a number of reasons. Most significantly, our compensation programs are designed to reward long-term performance, and a triennial vote corresponds with the payout and vesting periods under our long-term incentive awards. In addition, we believe that a triennial advisory vote on executive compensation reflects the appropriate time frame for the Organization and Compensation Committee and the Board to evaluate the results of the most recent advisory vote on executive compensation, to discuss the implications of that vote with shareholders to the extent needed, to develop and implement any adjustments to our executive compensation programs that may be appropriate in light of a past advisory vote on executive compensation, and for shareholders to see and evaluate the Organization and Compensation Committee's actions in context. In this regard, because the advisory vote on executive compensation occurs after we have already implemented our executive compensation programs for the current year, and because the different elements of compensation are designed to operate in a integrated manner and to complement one another, we expect that in many cases it may not be appropriate or feasible to fully address and respond to any one year's advisory vote on executive compensation by the time of the following year's annual meeting of shareholders.

        The Board is also aware of views that some have expressed in support of conducting an annual advisory vote on executive compensation. We are aware that some shareholders believe that annual advisory votes will enhance or reinforce accountability. However, we have in the past and will in the future continue to be engaged with our shareholders on a number of topics and in a number of forums. Thus, we view the advisory vote on executive compensation as an additional, but not exclusive, means for our shareholders to communicate with us regarding their views on the company's executive compensation programs. We believe that the many avenues that have and will continue to exist for shareholder engagement differentiate the company's situation from that of companies in some countries where an annual advisory vote on executive compensation is prevalent. Also, because our executive compensation programs are designed to operate over the long-term and to enhance long-term performance, we are concerned that an annual advisory vote on executive compensation could lead to a near-term perspective inappropriately bearing on our executive compensation programs.

        We understand that our shareholders may have different views as to what is an appropriate frequency for advisory votes on executive compensation, and we will carefully review the voting results. Shareholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Board.

Board Recommendation

        The Board acknowledges that there are a number of points of view regarding the relative benefits of triennial and more frequent say-on-pay votes. Accordingly, the Board is not recommending that shareholders support any specific view. The Board will carefully consider and expects to be guided by the alternative that receives the most shareholder support in determining the frequency of future say-on-pay votes. Notwithstanding the outcome of the shareholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to compensation programs.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Summary

        We seek to closely align the interests of our named executives with the interests of our shareholders and to reward our named executives whenfor achievement of short-term and long-term strategic and operational goals that contribute to the long-term success of the company. We also strive to provide compensation that will attract and retain highly qualified executives to lead our company. We believe our executive compensation programs fulfill these key objectives.

        In this Executive Summary we highlight (1) the relationship between our named executives' compensation and the company's 2010 financial performance and (2) key compensation policies adopted by our Organization and Compensation Committee (the "Committee") as they relate to governance, risk mitigation and best practices.

Financial Overview

        In 2010, the company faced another year of slow global recovery and continued economic uncertainty. In the face of these challenges, solid progress was made in growing our project backlog, which was $34.9 billion at year end, nearly matching 2008's record. Bolstered by an improving global economic climate, new project awards reached an all-time record of $27.4 billion for the year. Also, at December 31, 2010, one-, three- and five-year total shareholder returns exceeded those of the S&P 500 and our peer group. However, the year was not without its disappointments. Earnings performance was significantly impacted by charges relating to certain projects, including $343 million in charges on one project for a variety of execution challenges, including material and equipment delivery issues, productivity issues, weather-related delays and the bankruptcy of a major subcontractor, with net earnings at $357.5 million at year end. In addition, revenue of $20.8 billion in 2010 fell slightly from $22.0 billion in 2009.

        The chart below summarizes some of the key company financial results for fiscal 2010 compared to fiscal 2009.

Pay for Performance

        While the company made great progress in 2010, with growth in project backlog and new awards, and shareholder returns that outpaced market comparisons, a substantial percentage of each named executive's cash compensation was tied to financial results that were lower than both the target achievement outlined in our 2010 plans as well as our 2009 financial performance. As a result, cash payments to named executives in 2010 under both our annual and long term incentive programs were

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significantly lower than 2009. Each of the cash payments under our incentive plans, relative to 2009 payments, is set forth below for those named executives who were also named executives in 2009.

        An explanation of the impact of the company's performance on the payment of the annual and long-term cash-based incentives is set forth below:

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Cash Annual Incentives.  As noted on page 25 below, between 55% and 80% of each named executive's annual cash incentive award was tied to the company's net earnings and corporate return on operating assets employed for 2010, both of which were below the minimum performance required for those measures and significantly lower than 2009. As a result, payouts ranged from 26% of target for our Chief Executive Officer to 60% of target for a group president. These payouts compare to a range of 90% to 115% of target for our named executives last year, including 109% for our Chief Executive Officer.



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Cash Value Driver Incentive ("VDI") Payouts.  As noted on pages 27-28 below, prior to 2010, one third of the long term incentive plan award was granted under the company's cash-based VDI program. Due to lower gross margins on new awards obtained during the performance periods, payouts under the VDI program in 2010 for awards made in 2008 and 2009 were based on lower-than-target performance and were thus substantially lower than prior years.



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Total Cash Compensation.  The company's 2010 financial results had a significant impact on the cash compensation paid to named executives in 2010, which was, on an aggregate basis for the named executives who were also named in 2009, 46% lower than their cash compensation in 2009.

Additional Compensation

        In addition, several other Committee decisions affected compensation in 2010, as summarized below:

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Base salary.  Salaries for some named executives were increased slightly from 2009 levels, with increases up to 6%. However, neither the Chief Executive Officer nor the Chief Financial Officer received a salary increase in either 2010 or 2009. The Committee believed these salary determinations were appropriate given the current economic conditions, general market trends, current salaries in relation to the peer group and the performance of the company.



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Long term incentive awards.  Long term incentive target awards were increased for some named executives from the prior year in order to approximate the 50^th percentile of the Compensation Peer Group and, in Mr. Seaton's case, to reflect his new position as Chief Operating Officer in 2010. In 2010, long term incentive award values were divided evenly between options and restricted stock units as a result of the Committee's previously disclosed decision to suspend the company's cash-based VDI program in 2010. Under SEC reporting rules, equity awards such as stock options and restricted stock units are reported in the Summary Compensation Table for the year in which they are granted, based upon their grant date value, whereas long term cash incentive arrangements such as the VDI program are reported in the Summary Compensation

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Table only in the last year of the performance period, based on the amount actually earned. Although 2010 awards were only marginally increased, this change in the mix of long term incentive awards (from¹/3 cash and²/3 stock in prior periods to 100% equity-based compensation in 2010), and the SEC reporting standards for equity and cash awards discussed above, results in higher amounts being reflected in the Summary Compensation Table on page 35. Specifically, if one third of the value shown in the "stock awards" and "option awards" columns of the Summary Compensation Table for 2010 were removed from those columns and a corresponding change were made to overall compensation, the table would provide a more consistent year-over-year comparison of annual compensation.

Governance Practices

        The Committee has endeavored to maintain good governance standards in our compensation practices. The following policies were in effect in 2010 and remain in effect in 2011:

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No tax gross-ups:  Our named executives are not provided with any tax gross-ups other than for business-related spousal travel.



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Change in control agreements are governed by double trigger arrangements:  Change in control payments are made to named executives and other senior executives only upon a qualifying termination of employment (i.e., without cause or as a result of good reason) within two years of a change in control of the company.



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Robust stock ownership guidelines:  Named executives are required to own company stock and stock units valued between two and six times their individual base salaries.



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Clawback of performance-based compensation allowed:  The Board of Directors may seek recoupment of performance-based compensation of key employees, including named executives, who engage in fraud or willful misconduct that caused or otherwise contributed to a need for a material restatement of the company's financial results.



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Repricing of options not allowed without shareholder approval:  Our current stock plans do not allow the company to reprice options without shareholder approval.



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Independence of executive compensation consultant:  The advisor retained by the Committee provides no services to management.



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Our policies contain restrictions on hedging, pledging and short term trading: Our insider trading policy for executive officers and non-employee directors prohibits transactions involving short term or speculative trading in, or any hedging or monetization transactions involving, company securities. In addition, our policy prohibits the holding of company securities in a margin account or pledging company securities unless the company's Chief Legal Officer approves such transaction after the executive clearly demonstrates that he or she may repay the loan without resort to the pledged securities.



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Risk management assessments are conducted annually:  In fiscal 2010, the Committee initiated an annual risk management assessment for our compensation and benefit programs for named executives and all other employees.

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Components of 2010 Named Executive Compensation

Base Salary

        The company provides named executives with base salaries that provide a competitive, stable level of income, since most other elements of their compensation are at risk based on company performance. In determining base salaries for positions held by named executives, the Committee generally targets the 50^th percentile for similar types of executives within the Compensation Peer Group. Base salaries may deviate from the 50^th percentile for named executives with more experience or specialized duties or skill sets. The individual named executives' base salaries for 2010 were at approximately the 50^th percentile of the Compensation Peer Group, with the exception of Mr. Oosterveer and Mr. Steuert. Mr. Oosterveer's base salary currently falls within the first quartile of similarly situated executives because he is fairly new to his position. Mr. Steuert's base salary falls within the top quartile of chief financial officers within the Compensation Peer Group because his salary reflects his years of experience and the level of duties he has at the company. Base salaries for named executives are reviewed 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 2010 annual review:

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the Compensation Peer Group data and other general industry survey data for comparable positions;



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individual level of responsibility, performance and contributions to the company;



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internal equitability based on relative duties and responsibilities;



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the company's 2010 salary increase percentage budget; and



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the Chief Executive Officer's feedback on the performance of the other named executives.

        Increases up to 6% from December 31, 2009 are reflected in the base salaries for 2010 reported in column (c) of the Summary Compensation Table on page 35.

Annual Incentive Program

        The annual incentive program is administered by the Committee pursuant to the shareholder-approved Fluor Corporation 2008 Executive Performance Incentive Plan. Cash-based annual incentives are provided to reward named executives for performance during the year. Each named executive participates in this program and is provided with a target annual incentive amount, based on a percentage of his annual base salary. This percentage reflects the executive's respective organizational level, position and responsibility for achievement of the company's strategic goals. For 2010, all named executives were provided an annual incentive target percentage of base salary that approximated the 50^th percentile of target award percentages for executives with similar job responsibilities within the Compensation Peer Group.

        The named executives' target annual incentives for 2010 were as follows:

        A named executive may receive more or less than the target annual incentive amount, depending on whether he meets, fails to meet or exceeds certain performance measures relating to overall

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company performance and the individual's own performance or the performance of his group or function during the year. The types of measures and relative weight of those measures are determined by the Committee each year and are tailored to the named executive's position and organizational responsibility. The measures have remained fairly consistent over the past five years, but their relative weightings have changed slightly. When making its determination, the Committee considers the company's annual operating plan and strategic priorities, as well as the company's performance in the previous year. The discretionary individual and team performance measures are subjective; and no targets are set for these measures. The other measures for each named executive are objective. For 2010, the Committee selected both corporate financial and strategic measures. The use of multiple financial goals prevents an over-emphasis on any one financial metric; and the other metrics assist in focusing executives on key areas of importance to the company, including safety. The measures, along with their respective weightings, for each named executive were as follows:

        Corporate net earnings ties to the amount set forth in our financial statements but may be adjusted at the discretion of the Committee for extraordinary non-operating events. Corporate ROAE is calculated by dividing full year corporate net earnings by net assets. Net assets is defined as total assets (excluding excess cash) minus current liabilities (excluding non-recourse debt). No adjustments were made to these measures for purposes of 2010 compensation decisions.

        Corporate safety includes two distinct measures: Fluor's days away from work incidence rate and Fluor's total recordable case incidence rate. Fluor's days away from work incidence rate is defined as a work-related injury or illness that involves days away from work beyond the day of injury or onset of the illness. Fluor's total recordable case incidence rate is defined as work-related injury or illness that results in one or more of the following: death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid, loss of consciousness, or a significant injury or illness diagnosed by a physician or other licensed health care professional. 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:

        Oil and Gas group segment profit is reported in our financial statements on page F-42 of our annual report on Form 10-K as filed with the Securities and Exchange Commission on February 23, 2011. Segment profit is calculated as revenue less cost of revenue and earnings attributable to noncontrolling interests excluding: corporate administrative and general expense; interest expense; interest income; domestic and foreign income taxes; and other non-operating income and expense items. The Oil and Gas group's segment profit measure can be adjusted at the discretion of the Committee for extraordinary non-operating events. No adjustments were made to this measure in 2010 for purposes of compensation decisions. In addition, discretionary individual and team functional

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measures are given a rating based on subjective evaluations and recommendations by the Chief Executive Officer.

        The 2010 performance ranges for each of the measures applicable to our named executives, together with the actual achievement amounts for such measures, are presented below. With respect to corporate net earnings and corporate ROAE, actual achievement must be between 95% and 105% of the target amount for the target to be met. The company's performance for 2010 varied with respect to each corporate measure: corporate net earnings and ROAE were both below the minimum. The company's performance with respect to the corporate safety measures exceeded the maximum; while the Oil and Gas group segment profit measure was just above stated objectives.minimum. The overall level of achievement of the targets in 2010 was lower than the last ten years.

        Achievement of the discretionary individual and team performance measure varied among the named executives because of the difference in responsibilities and the accomplishments of each individual. The Committee determined the achievement of the discretionary individual and team performance measure for the Chief Executive Officer and also the other named executives, after taking into account the Chief Executive Officer's recommendations with regard to other named executives. Subjective evaluations made by the Chief Executive Officer were based on each named executive's leadership and group accomplishments. Individual performance was not a significant factor in determining compensation, and no named executive's compensation was materially affected by his level of achievement of this measure.

        Once the achievement amounts are determined and compared to the various targets, each named executive's overall performance rating is calculated by multiplying each measure's rating (which can range from 0% to 200% achievement) 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.

        The annual incentive amounts for each named executive were determined as follows.

        For 2010, the average annual incentive payment for all named executives was between minimum and target achievement based on company, group and individual performance. The annual incentive payment for each named executive was significantly lower than his 2009 payment, due to the failure to achieve minimum performance for the Corporate Net Earnings and ROAE measures. With the exception of 2007 and 2008, historically, annual incentive payments have been close to target levels, and not at or above the upper target level. Payments for 2010 were below this historical trend.

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Long Term Incentive Program

        In 2010, the company's long term incentives were awarded by the Committee under the shareholder-approved Fluor Corporation 2008 Executive Performance Incentive Plan. The plan was designed to allow for awards that create increased value for our shareholders, reward the achievement of superior operating results, facilitate the retention of key management personnel and align the interests of management and shareholders through equity ownership.

        In 2010, the long term incentive awards for named executives included two components:

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50% restricted stock units; and



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50% non-qualified stock options.

        As disclosed last year, the Committee did not grant awards under the cash-based Value Driver Incentive (VDI) program for 2010, in order to re-evaluate and refine the program for 2011, as further described below. The total dollar award value for the restricted stock unit and option grants made in 2010 was targeted and granted at approximately the same total dollar award value as the aggregate long-term awards granted in 2009, which were at approximately the 50^th percentile of the Compensation Peer Group. Long term incentive grants made to Mr. Seaton were greater than prior years due to his promotion to Chief Operating Officer near the end of 2009.

        Under SEC reporting rules, equity awards such as stock options and restricted stock units are reported in the Summary Compensation Table on page 35 for the year in which they are granted, based upon their grant date value, whereas long term cash incentive arrangements such as the VDI program are reported in the Summary Compensation Table only in the last year of the performance period, based on the amount actually earned. The Committee's decision to suspend the VDI program and award long term incentive compensation in only stock options and restricted stock units in 2010 results in higher amounts of stock awards and option awards being reflected in the Summary Compensation Table for long term compensation in 2010.

Equity Awards

        The Committee determines the dollar value of annual equity awards for named executives at the first regularly scheduled meeting of the Committee each year, which is typically held in February. The determinations are made at that time because it coincides with the annual performance review and compensation adjustment cycle, which are addressed at that same meeting. The equity awards are granted after the meeting on the third business day following the publication of our annual results, based on the closing price on that date. Stock options provide actual economic value to the holder if the price of Fluor stock has increased from the grant date at the time the option is exercised. Restricted stock units have economic value when they vest, so they incentivize holders to create shareholder value but also have some retention value even if the stock price declines or stays flat. Stock options motivate executive officers by providing more potential upside, while restricted stock units align named executives with shareholders and balance our compensation program design, as they take into account both upside and downside risk in our stock price. Both stock options and restricted stock units, which vest over time, encourage retention. The combination of the two components aligns the interests of named executives with those of shareholders without overemphasizing any one type of grant, and reflects a structure similar to many of our peers in granting more than one form of award.

Value Driver Incentive Program

        In January 2010, the Committee suspended the company's cash-based VDI program for future grants due to uncertainties from evolving compensation legislation or regulation and for other corporate reasons. However, portions of two prior awards under the 2008-2009 VDI program and the

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2009-2010 VDI program were earned in 2010. The prior awards were based upon the achievement of the following weightings and objectives and were measured over a two-year performance period:

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75% of the total award was based on new awards gross margin dollars; and



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25% of the total award was based on new awards gross margin percentage.

        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 these projects. The Committee selected these performance criteria because, although measured over a relatively short period, they relate to contracts that typically will extend a number of years into the future and thus, will generate, and position the company for, increased future earnings. The Committee believes the inclusion of the two different measures is appropriate given the diversified nature of our business. These measures are not reported in our financial statements and the disclosure of the new awards gross margin targets would result in competitive harm to the company.

        Each of the VDI plans for 2008-2009 and 2009-2010 had payouts as of December 31, 2010. For the 2008-2009 VDI plan, the final half of the total award was paid at an achievement of 92% of the target payout level based on 2008-2009 performance achievement for each named executive. For the 2009-2010 VDI plan, the first half of the award was paid to named executives in 2011 at an achievement of 14% of the target payout level based on cumulative performance over the two-year performance period. The final half of the 2009-2010 award will be paid at the same level in March 2012. The VDI payouts are detailed in the Non-Equity Incentive Plan Compensation table on page 37. In the past five years, VDI payouts have ranged from just above minimum through maximum and have averaged between target and upper target.

Revised Value Driver Incentive Program

        During 2010, with the assistance of the Committee's independent compensation consultant, the Committee reviewed the long term incentive program, re-establishing the VDI program for stock-based VDI grants in 2011 and beyond. The Committee believes that compensation paidthe VDI program provides an incentive for named executives to executives shouldgrow the business and create shareholder value, as the awards are denominated in company shares, as described below. The vesting requirements of the program also enhance retention.

        In 2011, VDI awards will constitute one third of the long term incentive grant, with stock options and restricted stock units each comprising an additional third. Performance goals under the new program will continue to be closely aligned withbased on the new awards gross margin dollars and new awards gross margin percentage objectives; but the performance measurement period will be one year (i.e., January 1^st to December 31^st). Generally, in the first quarter of a year, the Committee will set threshold (paid at 50% of target), target (paid at 100%), upper target (paid at 150% of target) and maximum (paid at 200% of target) levels for both objectives of the company.VDI plan for the performance period. When setting these performance goals, the Committee will consider the company's past performance, current business outlook and other corporate financial measures. When determining whether the performance goals have been met, the Committee will take into account any scope changes or project cancellations that occurred during the year with respect to new awards obtained during the performance period.

        During the first quarter of each year, the Committee will grant performance units based on a target value of the grant. The number of units granted will be calculated using the closing trading value of our common stock on the date of grant. On the first anniversary of the grant date, the Committee will determine the actual achievement of the performance measures and the number of performance units will be adjusted by multiplying the number of performance units by the performance rating

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(ranging from 0.0 to 2.0). The performance units, as adjusted on the first anniversary for performance, will vest 100% on the date two years following the adjustment date and will be settled in cash or stock, as elected by the named executive, provided that any award for a named executive not meeting company stock ownership guidelines will be settled in stock.

        However, to address the cash incentive compensation gap that will occur in 2011 and 2012 as a result of the change in the payout schedule under the revised VDI program to three years from the grant date and the fact that no VDI awards were made in 2010 while the program was suspended:

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VDI awards made in 2011 will be paid half in 2012 and half in 2014; and



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VDI awards made in 2012 will be paid half in 2013 and half in 2015.

Payments under the award will be subject to risk of forfeiture if, prior to payment, the participant'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.

Provide competitive compensation.Other Compensation Decisions

        In 2009, Mr. Seaton was promoted to Chief Operating Officer. The increase in his compensation for 2010 reflected the increased responsibilities of his new role. Effective February 3, 2011, Mr. Seaton was promoted to Chief Executive Officer, and the Committee adjusted his compensation accordingly. His base salary was increased to $1,025,000; and his target annual incentive was increased to 125% of his base salary, or $1,281,300. In addition, his target long term incentive award was increased to $6,250,000.

Other Elements of Named Executive Compensation

Perquisites

        The company's executiveCommittee evaluates perquisites based on their cost efficiency, motivational value and benefits to the company. Perquisites, which are relatively small in relation to total direct compensation, programs are designedtargeted at the 50^th percentile of the Compensation Peer Group. In 2010, named executives were paid a taxable monthly allowance as a substitute for the company reimbursing or paying for the following perquisites: an automobile allowance, tax and financial planning, and company-owned country club membership dues. In addition, named executives are required to attract, retain and motivate highly qualifiedhave a physical examination each year that is paid for by the company. Named executives critical to achieving Fluor's strategic objectives and building shareholder value.

may have spousal travel paid for by the company only when it is for an approved business purpose, in which case a related tax gross-up is provided. The Committee reviewsdoes not provide any other tax gross-ups. Named executives can make personal use of charter aircraft in conjunction with a business purpose, but the company's compensation philosophy and objectives each yearnamed executive is required to determine if revisions are necessary in light of market conditions,reimburse the company's strategic goals or other relevant factors. In eachcompany for the incremental operational cost. None of the last three years, the Committee determinednamed executives used charter aircraft in 2010 for personal reasons. Executive perquisites and benefits are provided so that no revisions to the executive compensation philosophy and objectives were necessary.

Overview of 2007 Compensation

        Our named executives' compensation for 2007 reflected improved earnings under performance-based arrangements, and the company's strong financial, operational and stock price performance over the past year and over multi-year performance periods.