Exhibit 10.38

 

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Fluor Corporation

Glenn C. Gilkey

6700 Las Colinas Blvd

Senior Vice President

Irving, TX 75039

Human Resources and Administration

 

 

469.398.7314 tel

 

469.398.7270 fax

 

glenn.gilkey@fluor.com

 

 

Mr. Biggs Porter

4535 Manning Lane

Dallas, Texas  75220

 

Dear Biggs,

 

We are pleased to extend to you an offer of employment as Chief Financial
Officer with Fluor Enterprises, Inc. (“Fluor” or the “Company”).  We are
confident that we will benefit from your experience and are sure that you will
find Fluor a challenging and enjoyable environment in which to work.

 

Base Salary

 

Your starting annual base salary will be $770,000.  Your next salary review will
be in the first fiscal quarter of 2013, and thereafter consistent with our
executive salary administration program.

 

Annual Incentive

 

You will be reviewed on an annual basis for incentive purposes consistent with
our executive annual incentive program.  Your target annual incentive is 85% of
your base salary, or $654,500.  Your incentive opportunity range is from zero to
twice this amount based on your individual performance and the overall results
of Fluor Corporation.  Annual incentives are awarded on a fiscal year basis
payable within 90 days following the close of the fiscal year.

 

Hiring Bonus

 

You will be paid a hiring bonus totaling $3,600,000 in the form of
performance-based restricted stock units.  The date of grant will be your hire
date, and the number of restricted stock units granted will be based on the
closing price of Fluor stock on the date of grant.  The vesting of the
restricted stock units will be dependent on meeting a minimum performance
requirement, and thereafter will vest as follows:

 

·                  One third of the restricted stock units shall vest on the
first anniversary of your date of hire;

·                  One third of the restricted stock units shall vest on the
second anniversary of your date of hire; and

·                  One third of the restricted stock units shall vest on the
third anniversary of your date of hire.

 

The hiring bonus will be considered earned and payable if the company
performance requirement is met, and (a) you remain continuously employed by the
Company through the vesting dates described above, or (b) your employment
terminates prior to the conclusion of the vesting period due to (i) death,
(ii) permanent and total disability, (iii) a Company initiated termination other
than on a for-cause basis or (iv) a Company initiated termination following a
Change of Control. If in the event your employment terminates prior to any
vesting date for any reason other than stated above (including, without
limitation, your voluntary termination or a termination for cause), then the
remaining portion of the hiring bonus will be forfeited.

 

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For purposes hereof, the term “Change of Control” shall mean the occurrence of
an “event” described in Treasury Regulation section 1.409A-3(i)(5), including,
without limitation:

 

·                  a change in ownership of the Company as a result of a person,
or more than one person acting as a group acquiring ownership that in the
aggregate constitutes more than fifty percent (50%) of the total fair market
value of the Company (this provision does not apply to a person or group already
possessing more than fifty percent (50%) of the total fair market value of the
Company);

 

·                  a change in effective control of the Company as a result of a
person or more than one person acting as a group acquiring (or has acquired
during the twelve (12) month period ending on the date of the most recent
acquisition by such person or group) ownership of stock of the Company
possessing more than thirty percent (30%) of the total voting power of the stock
of the Company;

 

·                  a change in effective control of the Company as a result of
the majority of members of the Company’s Board of Directors being replaced
during any twelve (12) month period by directors whose appointment or election
is not endorsed by a majority of the members of the Company’s Board of Directors
before the date of the appointment or election; or

 

·                  a change in ownership of a substantial portion of the
Company’s assets as a result of a person or more than one person acting as a
group acquiring (or has acquired during the twelve (12) month period ending on
the date of the most recent acquisition by such person or persons) assets from
the Company that have a total gross fair market value equal to more than forty
percent (40%) of the total gross fair market value of all of the assets of the
Company immediately before such acquisition or acquisitions.

 

The terms and conditions of the restricted stock units, including those relating
to vesting, will be set forth in a separate restricted stock unit agreement,
which agreement will control in the event of any discrepancy between the
restricted stock unit agreement and this offer letter. A form version of the
agreement is included with this letter for your reference.  It is intended that
the restricted stock unit agreement comply with Section 409A and all provisions
of such agreement shall be construed and interpreted in a manner consistent with
the requirements for avoiding taxes and penalties under Section 409A.

 

Details related to this award, including the final agreement, will be
communicated at the time of grant.

 

Long Term Incentive

 

Fluor will recommend to the Organization and Compensation Committee of the Board
of Directors your participation in the long term incentive program for fiscal
year 2012.  This program emphasizes long term Company performance and
management’s alignment with the creation of long term shareholder value.  Your
grant will be $2,000,000 based on your level, and will be made upon approval by
the Organization and Compensation Committee of the Board of Directors at their
May 2012 meeting.  The award is denominated in approximately equal thirds in
restricted stock units, non-qualified stock options, and value driver incentive
performance units.

 

The terms and conditions of the long term incentive, including those relating to
vesting, will be set forth in separate agreements, which agreements will control
in the event of any discrepancy between the restricted stock unit agreement and
this offer letter. Form versions of those agreements are included with this
letter for your reference.  It is intended that the agreements comply with
Section 409A and all provisions of such agreements shall be construed and
interpreted in a manner consistent with the requirements for avoiding taxes and
penalties under Section 409A.

 

The grant date of your long term incentive award will be May 3, 2012 and you
will receive the details and final agreements related to your award at that
time.

 

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You will continue to be eligible for the long term incentive program consistent
with your level.  The design and target values associated with this program are
reviewed by the Organization and Compensation Committee each year so the
components, timing and/or award values may vary.

 

Executive Perquisite Allowance

 

You will be paid a Monthly Perquisite Allowance of $4,125, less applicable
withholding taxes.

 

Change in Control Agreement

 

Fluor will enter into a Change in Control Agreement with you.  The agreement
generally provides that, if the Company terminates your employment within two
years (the “Employment Period”) following a Change in Control (as defined in the
Change in Control Agreement) without cause or you resign during the Employment
Period for good reason, then you will be entitled to certain severance benefits.
Upon the termination of your employment during the Employment Period under the
circumstances discussed above, you will receive (1) a lump sum cash payment
equal to the sum of your highest annual base salary during the three years
immediately preceding termination (“Base Salary”) plus target bonus for the
year, multiplied by 2.0; (2) your annual bonus earned during the fiscal year in
which the termination occurs, prorated through the last full month worked by you
during the year of termination; and (3) continued health benefit coverage for
two years. In addition, (1) any equity-based compensation awards, other than
performance-based equity awards, will become fully vested and exercisable or
settled; (2) any performance-based equity awards, to the extent applicable
performance criteria are met, shall be earned on a pro rata basis based on the
number of full months worked during the performance period; and (3) any
outstanding retention awards will become immediately vested.  Additional terms
and conditions are contained in the Change in Control Agreement, a copy of the
form of which is attached, and which will control in the event of any
discrepancy between the terms of the agreement and this offer letter.

 

Executive Deferred Compensation Program (EDCP)

 

Starting from your date of hire you will be eligible to participate in this
program, which has been designed to help you manage your tax obligations and
plan for financial security.  Your first eligible participation period will
begin on your date of hire and will end on December 31, 2012.  During this first
eligible participation period, you will be eligible to defer your base salary
only.  You must enroll within 30 days of your hire date with Fluor through
Mullin TBG, our program administrator.

 

Your second eligible participation period will be 2013, and you will be able to
elect to participate during EDCP annual open enrollment in November 2012.  In
your second eligible participation period, three deferral options will be
available to you:  salary deferral, incentive awards deferral, and excess
401(k) contributions.

 

Participation in this program is voluntary.  Amounts deferred under this program
may be deferred until termination, retirement, or for other specified periods of
time as allowed in the program, and will accrue interest based on the allocation
of your Executive Deferred Compensation Program balance among the available
crediting options.

 

401(k) Savings Investment Plan (SIP)

 

You will be eligible immediately to participate in the 401(k) SIP.  You may
elect to defer up to 50% of your base salary up to IRS maximums.  After one year
of service, the Company makes matching contributions of 100% of the first 5% of
your contributions.  The Company match is discretionary and is declared
annually.  If you have funds in a retirement savings account from a previous
employer, you may rollover the funds provided they are from a qualified plan and
constitute a rollover contribution under applicable IRS Code.

 

You will also be eligible for a Performance Contribution after one year of
service.  Based on financial performance, the Company may make an annual
discretionary contribution to your SIP account.  The amount of the contribution
will depend on the overall financial performance of the Company and employees
will receive awards based on a percentage of their eligible base salary. 
Performance Contributions vest 100% after three years of service.

 

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Executive Physical Examination Program

 

As a member of the Senior Management Team, you will be required to obtain an
annual executive physical at the Company’s expense.

 

Group Health, Life, Dental and Vision

 

The United Healthcare group plan offers three health care options with different
cost and coverage levels.  Your cost depends on the option you choose. Coverage
begins on the first day of employment, provided you enroll within 31 days of
your hire date.

 

Your share of the cost for a Company sponsored group health insurance plan will
be 0.75% of your monthly base salary plus a base monthly premium which is
determined by the plan option you choose. Please refer to the rate sheet for
more information.

 

For 2012, your share of the cost for group dental insurance is 0.1% of your base
salary plus a premium of $4.43 (employee only) up to a maximum of $30.56 a
month.  Your cost for group vision insurance is $6.59 a month (employee only). 
Additionally, you may, at your option, cover your dependents on our group health
care, dental care, vision care and life insurance plans for an additional
monthly premium.  For 2013, employee costs for such programs will be
communicated at annual enrollment.

 

Other Employee Benefits

 

In addition, other benefits available include an Employee and Family Assistance
Program, Travel Accident Insurance, and Tax Savings Accounts, which give you the
ability to pay qualifying medical, dental, vision and child/elder care expenses
with pre-tax dollars.

 

Time Off With Pay (TOWP)

 

The Time Off With Pay (TOWP) accrual rate is based on the total number of years
of continuous service.  Therefore, you will start accruing TOWP from your start
date at the rate of 3.85 hours per week, 200 hours per year.  On your date of
hire, we will credit your account with 160 hours.

 

Contingencies

 

The Immigration Reform and Control Act of 1986 requires Fluor to verify and
record both your identity and right to work in the United States.  Accordingly,
this offer of employment is contingent on your being able to satisfy the above
mentioned law on or before your first day of work.  Further, the executive
status of a position is discretionary and subject to change.

 

In connection with your offer of employment, you understand and agree that
background inquiries will be requested that will seek information as to your
character, work habits, job performance, experience, ability and reasons for
separation from previous employers.  Furthermore, you understand and agree
information will be requested from various federal, state and other agencies,
including public and private sources which maintain records concerning your past
activities including criminal records, credit history, previous employment and
educational background.  This offer of employment is contingent upon Fluor
obtaining a satisfactory personal background report as referenced in this
paragraph.

 

In addition, this offer of employment is contingent upon your successful
completion of a pre-employment drug screen test to be conducted by Medtox.  This
screening must be completed prior to your first day of work.  To coordinate an
appointment for a chemical screening, please call Medtox at 1.888.557.2590 as
soon as possible.  A Chain of Custody form is included in your offer package and
should be brought with you to your chemical screening appointment.

 

Further, as with most companies, the employment relationship with Fluor is based
on the mutual consent of you and the Company.  Your employment with Fluor is not
for any specified period of time and can be terminated by

 

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either you or the Company at any time with or without any cause or advance
notice.  Nothing contained in this letter is intended, nor should it be
construed, to alter the at-will relationship Fluor and its employees maintain
with one another.  Although the Company reserves the right to change from
time-to-time other terms, conditions, and benefits of employment, the at-will
nature of employment with the Company is one aspect of our employment
relationship that will not change.  The only way the at-will nature of our
employment relationship can be changed is by way of an express written
agreement, signed by you and the Senior Vice President, Human Resources and
Administration.

 

This offer of employment is also contingent upon your ability to work for the
Company without restrictions from any previous employer.  By accepting this
offer, you represent that you are aware of no obligations legal or otherwise,
inconsistent with the terms of this offer letter or with your undertaking
employment with Fluor.  You further represent that there are no restrictions on
your right to leave your present employer to join Fluor in any capacity or to
perform any work on behalf of Fluor.  You will not disclose to Fluor, or use, or
induce Fluor to use any proprietary information or trade secrets of others.  You
also represent and warrant that you have returned all proprietary and
confidential information belonging to all prior employers.

 

We look forward to your joining the Company and are sure that your employment
with Fluor will be both successful and rewarding for you.  Orientation and the
processing of your new hire paperwork will take place the morning of your first
day of work.  The new-hire paperwork and additional information can be accessed
at http://www.fluormembers.com/NewHire/newhire.htm.  After you access the site,
first click on “Welcome to Fluor” and next “Instructions for New Hires” to
navigate through the website.  Enclosed are hard copies of the paperwork
included in the link, should this be more convenient.

 

Please review the entire contents of this offer letter thoroughly and let us
know of your decision to join the Company by signing a copy of this offer letter
and returning it along with the enclosed authorization forms and application
either to Executive.Compensation@fluor.com, fax to 469.398.7288 or send in the
enclosed self-addressed envelope as soon as possible.  By signing this offer
letter, you also acknowledge that no other promises or representations have been
made to you other than those contained in this offer letter.  This offer of
employment is valid for thirty (30) days from the date of this letter.  An
additional copy is enclosed for your records.

 

Should you have any questions regarding the details of this offer letter, please
contact me at 469.398.7314 or Richard J. Fine, Executive Director, Human
Resources at 469.398.7633.

 

 

Sincerely,

 

 

/s/ Glenn C. Gilkey

 

 

 

Glenn C. Gilkey

 

Senior Vice President, Human Resources and Administration

 

 

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