Exhibit 10.1

 

FLUOR CORPORATION 2008 EXECUTIVE PERFORMANCE INCENTIVE PLAN

 

SECTION 1. Purpose of Plan

 

The purpose of this “Fluor Corporation 2008 Executive Performance Incentive
Plan” (the “Plan”) of Fluor Corporation, a Delaware corporation, is to enable
the Company, as defined in Section 2.2(a)(ii) hereof, to attract, retain and
motivate its officers, executives, management and other key personnel, and to
further align the interests of such persons with those of the shareholders of
the Company, by providing for or increasing their proprietary interest in the
Company.

 

SECTION 2. Administration of the Plan

 

2.1  Composition of Committee.  The Plan shall be administered by the
Organization and Compensation Committee of the Board of Directors of the Company
and/or by the Board of Directors of the Company or another committee of the
Board of Directors of the Company, as appointed from time to time by the Board
of Directors (any such administrative body, the “Committee”). The Board of
Directors shall fill vacancies on, and may remove from or add members to, the
Committee. The Committee shall act pursuant to a majority vote or unanimous
written consent. If an award granted under the Plan (an “Award”) is intended to
satisfy the conditions of Section 162(m)(4)(C) of the Internal Revenue Code of
1986, as amended (the “Code”), then approval of such grant shall be required to
be made solely by Committee members who are an “outside director” as described
in the Treasury regulations under Section 162(m). Notwithstanding the foregoing,
with respect to any Award that is not intended to satisfy the conditions of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) or Code Section 162(m)(4)(C), the Committee may appoint one or more
separate committees (any such committee, a “Subcommittee”) composed of one or
more directors of the Company (who may but need not be members of the Committee)
or officers of the Company who may but need not be members of the Board of
Directors of the Company and may delegate to any such Subcommittee(s) the
authority to grant Awards, as defined in Section 5.1 hereof, under the Plan to
employees, to determine all terms of such Awards, and/or to administer the Plan
or any aspect of it; provided, however, that if the Subcommittee is composed of
one or more officers of the Company who are not members of the Board of
Directors of the Company, the resolution so authorizing such Subcommittee shall
specify the total number of Awards (if any) such Subcommittee may award pursuant
to such delegated authority, and any such Award shall be subject to the form of
award agreement theretofore approved by the Committee. Any action taken by a
Subcommittee within the scope of such delegation shall be deemed for all
purposes to have been taken by the Committee. The Committee hereby designates
the Secretary of the Company and the head of the Company’s human resource
function to assist the Committee in the administration of the Plan and execute
agreements evidencing Awards made under this Plan or other documents entered
into under this Plan on behalf of the Committee or the Company. In addition, the
Committee may designate other Company employees to assist the Committee in the
administration of the Plan, and may grant authority to such persons to execute
agreements evidencing Awards made under this Plan or other documents entered
into under this Plan on behalf of the Committee or the Company.

 

2.2  Powers of the Committee.  Subject to the express provisions of this Plan,
the Committee shall be authorized and empowered to do all things necessary or
desirable in connection with the administration of this Plan with respect to the
Awards over which such Committee has authority, including, without limitation,
the following:

 

(a)           to prescribe, amend and rescind rules and regulations relating to
this Plan and to define terms not otherwise defined herein; provided that,
unless the Committee shall specify otherwise, for purposes of this Plan: (i) the
term “fair market value” shall mean, as of any date, the closing price per share
at which the Shares (as defined in Section 3.1 hereof) are sold in the regular
way on the New York Stock Exchange or, if no Shares are traded on the New York
Stock Exchange on the date in question, then for the next preceding date for
which Shares are traded on the New York Stock Exchange; and (ii) the term
“Company” shall mean Fluor Corporation and its subsidiaries and affiliates,
unless the context otherwise requires.

 

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(b)           to determine which persons are Eligible Employees (as defined in
Section 4 hereof), to which of such Eligible Employees, if any, Awards shall be
granted hereunder, to make Awards under the Plan and to determine the terms of
such Awards and the timing of any such Awards;

 

(c)           to determine the number of Shares subject to Awards and the
exercise or purchase price of such Shares;

 

(d)           to establish and verify the extent of satisfaction of any
performance goals applicable to granting Awards;

 

(e)           to prescribe and amend the terms of the agreements or other
documents evidencing Awards made under this Plan (which need not be identical);

 

(f)            to determine the extent to which adjustments are required
pursuant to Section 12 hereof;

 

(g)           to interpret and construe this Plan, any rules and regulations
under the Plan and the terms and conditions of any Award granted hereunder, and
to make exceptions to any such provisions in good faith and for the benefit of
the Plan, Participants (as defined in Section 4 hereof) and the Company;

 

(h)           to approve corrections in the documentation or administration of
any Award; and

 

(i)            to make all other determinations deemed necessary or advisable
for the administration of the Plan.

 

2.3  Determinations of the Committee.  All decisions, determinations and
interpretations by the Committee or the Board of Directors regarding the Plan
shall be final and binding on all Eligible Employees and Participants, as
defined in Section 4 hereof. The Committee or the Board of Directors, as
applicable, shall consider such factors as it deems relevant, in its sole and
absolute discretion, to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of
any officer of the Company or Eligible Employee and such attorneys, consultants
and accountants as it may select.

 

SECTION 3. Stock Subject to Plan

 

3.1  Aggregate Limits.  Subject to adjustment as provided in Section 12, at any
time, the aggregate number of shares of the Company’s common stock, $0.01 par
value (“Shares”), issued pursuant to all Awards (including all ISOs (as defined
in Section 5.1 hereof)) granted under this Plan shall not exceed 5,500,000
(number of shares), plus the number of Shares subject to awards outstanding as
of May 7, 2008 (the date of the Annual Shareholder’s Meeting) under the
Company’s 2000 Executive Performance Incentive Plan, the Company’s 2001 Key
Employee Performance Incentive Plan and the Company’s 2003 Executive Performance
Incentive Plan (collectively, the “Prior Plans”) but which shares are not
thereafter issued upon exercise or settlement of such awards; provided that the
aggregate limit of the total number of Shares that may be issued under this Plan
shall be further reduced by an additional three-quarters (3/4) of a Share for
each Share issued upon settlement of an Award granted in terms of Shares under
the Plan other than as a Stock Option or Stock Appreciation Right. The Shares to
be utilized in the Plan may be either Shares reacquired by the Company,
including Shares purchased in the open market, or authorized but unissued
Shares.

 

3.2  Code Section 162(m) Limits.  The aggregate number of Shares subject to
Stock Options or Stock Appreciation Rights granted under this Plan during any
calendar year to any one Eligible Employee shall not exceed 750,000. The
aggregate number of Shares issuable with respect to any Restricted Stock Awards,

 

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Incentive Awards denominated in Shares or Stock Unit Awards (other than Shares
issued or issuable upon exercise of Options or Stock Appreciation Rights)
granted under this Plan during any calendar year to any one Eligible Employee
shall not exceed 250,000. Notwithstanding anything to the contrary in the Plan,
the foregoing limitations shall be subject to adjustment under Section 12 only
to the extent that such adjustment will not affect the status of any Award
intended to qualify as “performance based compensation” under Code
Section 162(m).

 

3.3  Issuance of Shares.  For purposes of Section 3.1, the aggregate number of
Shares issued under this Plan at any time shall equal only the number of Shares
actually issued upon exercise or settlement of an Award. Notwithstanding the
foregoing, Shares subject to an Award under the Plan (or an award under any of
the Prior Plans) may not again be made available for issuance under this Plan if
such Shares are: (i) Shares that were subject to a Stock Option or Stock
Appreciation Right and were not issued upon the net settlement or net exercise
of such Award, (ii) Shares used to pay the exercise price of a Stock Option,
(iii) Shares delivered to or withheld by the Company to pay the withholding
taxes related to an Award, or (iv) Shares repurchased on the open market with
the proceeds of a Stock Option exercise. Shares subject to Awards that have been
canceled, expired, forfeited or otherwise not issued under an Award and Shares
subject to Awards settled in cash shall not count as Shares issued under this
Plan.

 

SECTION 4. Persons Eligible Under Plan

 

Any person who is (i) an employee of the Company (within the meaning of
Section 303A.08 of the New York Stock Exchange Listed Company Manual) and who
also is an officer, key employee or member of the Executive Management Team
(“EMT”), (ii) a prospective employee of the Company who is to be an officer, key
employee or member of the EMT, (iii) a consultant to the Company, or (iv) an
advisor of the Company (each, an “Eligible Employee”) shall be eligible to be
considered for the grant of Awards. For purposes of this Plan, the Chairman of
the Board’s status as an employee shall be determined by the Board of Directors.
For purposes of determining eligibility for Awards, the term “Eligible Employee”
shall also include a former Eligible Employee or any person (including any
estate) who is a beneficiary of a former Eligible Employee. A “Participant” is
any Eligible Employee to whom an Award has been made and any person (including
any estate) to whom an Award has been assigned or transferred pursuant to
Section 11.1.

 

SECTION 5. Plan Awards

 

5.1  Award Types.  The Committee, on behalf of the Company, is authorized under
this Plan to enter into certain types of arrangements with Eligible Employees
and to confer certain benefits to them (“Awards”). The following types of Awards
are authorized under the Plan if granted according to the terms and conditions
of the Plan: Stock Option (including Incentive Stock Options), Restricted Stock,
Incentive and Stock Unit. These authorized types of Awards are defined as
follows:

 

Stock Option Award:  A Stock Option is a right granted under Section 6 of this
Plan to purchase a specified number of Shares at a specified exercise price, at
such times, and on such other terms and conditions as are specified in or
determined pursuant to the document(s) evidencing the Award (the “Option
Agreement”). Stock Options intended to qualify as Incentive Stock Options
(“ISOs”) pursuant to Code Section 422 and Stock Options that are not intended to
qualify as ISOs (“Non-Qualified Stock Options” or “NQSOs”) may be granted.

 

Stock Appreciation Right Award:  A Stock Appreciation Right is a right granted
pursuant to Section 7 of this Plan that entitles the Participant to receive, in
cash or Shares or a combination thereof, as determined by the Committee, value
equal to or otherwise based on the excess of (i) the fair market value of a
specified number of Shares at the time of exercise over (ii) the exercise price
of the right, as established by the Committee on the date of grant, and on such
other terms and conditions as are specified in or determined pursuant to the
document(s) evidencing the Award (the “Stock Appreciation Right Agreement”).

 

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Restricted Stock Award:  A Restricted Stock Award is an award of Shares made
under Section 8 of this Plan, the grant, issuance, retention and/or vesting of
which is subject to such performance and other conditions as are expressed in
the document(s) evidencing the Award (the “Restricted Stock Agreement”).

 

Incentive Award:  An Incentive Award is a bonus opportunity awarded under
Section 9 of this Plan pursuant to which a Participant may become entitled to
receive an amount payable either in cash, Shares or other property based on
satisfaction of such performance criteria as are specified in the
document(s) evidencing the Award (the “Incentive Bonus Agreement”).

 

Stock Unit Award:  A Stock Unit Award is an award of a right to receive the fair
market value of a specified number of Shares made under Section 10 of this Plan,
the grant, issuance price, retention and/or vesting of which is subject to such
performance and other conditions as are expressed in the document(s) evidencing
the Award (the “Stock Unit Agreement”).

 

5.2  Grants of Awards.  An Award may consist of one or two or more Award types
made in any combination or in the alternative.

 

SECTION 6. Stock Option Awards

 

The Committee may grant a Stock Option or provide for the grant of a Stock
Option, in the discretion of the Committee or automatically upon the occurrence
of specified events previously established by the Committee including, without
limitation, the achievement of performance goals, the satisfaction of an event
or condition within the control of the recipient of the Award, within the
control of others or not within any person’s control.

 

6.1  Option Agreement.  Each Option Agreement shall contain provisions regarding
(a) the number of Shares which may be issued upon exercise of the Stock Option,
(b) the purchase price of the Shares and the means of payment for the Shares,
(c) the term of the Stock Option, (d) such terms and conditions of
exercisability as may be determined by the Committee, (e) any restrictions on
the transfer of the Stock Option, (f) forfeiture provisions, and (g) such
further terms and conditions, consistent with the Plan as may be determined by
the Committee. Option Agreements evidencing ISOs shall contain such terms and
conditions as may be necessary to comply with the applicable provisions of Code
Section 422.

 

6.2  Stock Option Price.  The purchase price per Share of the Shares subject to
each Stock Option granted under the Plan shall equal or exceed 100% of the fair
market value of such Stock on the date the Stock Option is granted, except that
the Committee may specifically provide that the exercise price of a Stock Option
may be higher or lower in the case of a Stock Option granted to employees of a
company acquired by the Company in assumption and substitution of options held
by such employees at the time such company is acquired. The assumption and
substitution of options shall not result in discounted options subject to
Section 409A.

 

6.3  Stock Option Term.  The “term” of each Stock Option granted under the Plan,
including any ISOs, shall be stated in the Option Agreement but may not exceed
ten (10) years from the date of its grant.

 

6.4  Stock Option Vesting.  Stock Options granted under the Plan shall be
exercisable at such time and in such manner prior to the expiration of the Stock
Option’s term as determined in the sole discretion of the Committee and
evidenced in the terms of the Option Agreement. The Committee shall have the
right to make the timing of the ability to exercise any Stock Option granted
under the Plan subject to such performance requirements as deemed appropriate by
the Committee. At any time after the grant of a Stock Option, the Committee may,
in its sole discretion, reduce or eliminate any restrictions surrounding any
Participant’s right to exercise all or part of the Stock Option, limited by the
fact that a Stock Option shall first become exercisable upon satisfaction of
such performance requirements as deemed appropriate by the Committee but in no
case shall such Stock Option become fully exercisable prior to the twelfth
(12th) month following its date of grant, other than as a result of the
Participant’s death, disability or termination of employment, or a change of
control of the Company.

 

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6.5  Option Exercise.

 

(a)  Partial Exercise.  An exercisable Stock Option may be exercised in whole or
in part. However, a Stock Option shall not be exercisable with respect to
fractional Shares and the Committee may require, by the terms of the Option
Agreement, that any partial exercise must be for a minimum number of whole
Shares.

 

(b)  Manner of Exercise.  An exercisable Stock Option shall be deemed exercised
(in whole or in part) only upon delivery to the Company representative
designated by the Committee all of the following: (i) a notice of exercise (in
such form as the Committee authorizes) specifying the number of Shares to be
purchased by the Participant; (ii) payment or provision for payment of the
exercise price (in compliance with Section 6.5(c) hereof) for such number of
Shares; (iii) such representations and documents as the Committee, in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
Federal, state or foreign securities laws or regulations; (iv) in the event that
the Stock Option shall be exercised pursuant to Section 11.1 by any person or
persons other than the Participant, appropriate proof of the right of such
person or persons to exercise the Option; and (v) such representations and
documents as the Committee, in its sole discretion, deems necessary or advisable
to provide for tax withholding. Unless provided otherwise by the Committee, no
Participant shall have any right as a shareholder with respect to any Shares
purchased pursuant to any Stock Option until the registration of Shares in the
name of the Participant, and no adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such Shares are so registered.

 

(c)  Payment of Exercise Price.  To the extent authorized by the Committee, the
exercise price of a Stock Option may be paid at the time established by the
terms of the Option Agreement or at the time of exercise of the Stock Option in
one or more of the following methods: (i) cash or certified or cashiers’ check;
(ii) shares of Company capital stock that have been held by the Participant for
such period of time as the Committee may specify; (iii) other property deemed
acceptable by the Committee; (iv) a reduction in the number of Shares or other
property otherwise issuable pursuant to such Stock Option; or (v) any
combination of (i) through (iv).

 

6.6  No Repricing without Stockholder Approval.  Other than in connection with a
change in the Company’s capitalization (as described in Section 12) the exercise
price of a Stock Option may not be reduced without stockholder approval
(including canceling previously awarded Stock Options and regranting them with a
lower exercise price).

 

SECTION 7. Stock Appreciation Right Awards

 

Stock Appreciation Rights may be granted to Participants from time to time
either in tandem with or as a component of other Awards granted under the Plan
(“tandem Stock Appreciation Rights”) or not in conjunction with other Awards
(“freestanding Stock Appreciation Rights”) and may, but need not, relate to a
specific Stock Option granted under Section 6. The provisions of Stock
Appreciation Rights need not be the same with respect to each grant or each
recipient. Any Stock Appreciation Right granted in tandem with an Award may be
granted at the same time such Award is granted or at any time thereafter before
exercise or expiration of such Award. All freestanding Stock Appreciation Rights
shall be granted subject to the same terms and conditions applicable to Stock
Options as set forth in Section 6 and all tandem Stock Appreciation Rights shall
have the same exercise price, vesting, exercisability, forfeiture and
termination provisions as the Award to which they relate. Subject to the
provisions of Section 6 and the immediately preceding sentence, the Committee
may impose such other conditions or restrictions on any Stock Appreciation Right
as it shall deem appropriate. Stock Appreciation Rights may be settled in
Shares, cash or a combination thereof, as determined by the Committee and set
forth in the applicable award agreement. Other than in connection with a change
in the Company’s capitalization (as described in Section 12) the exercise price
of Stock Appreciation Rights may not be reduced without stockholder approval
(including canceling previously awarded Stock Appreciation Rights and regranting
them with a lower exercise price).

 

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SECTION 8. Restricted Stock Awards

 

Restricted Stock consists of an award of Shares, the grant, issuance, retention
and/or vesting of which shall be subject to such performance conditions and to
such further terms and conditions as the Committee deems appropriate.

 

8.1  Restricted Stock Award.  Each Restricted Stock Award shall reflect, to the
extent applicable (a) the number of Shares subject to such Award or a formula
for determining such, (b) the time or times at which Shares shall be granted or
issued and/or become retainable or vested, and the conditions or restrictions on
such Shares, (c) the performance criteria and required level of achievement
relative to these criteria which shall determine the number of Shares granted,
issued, retainable and/or vested, (d) the measuring period for determining
achievement of performance, (e) forfeiture provisions, and (f) such further
terms and conditions consistent with the Plan as may be determined from time to
time by the Committee.

 

8.2  Restrictions and Performance Criteria.  The grant, issuance, retention
and/or vesting of each Restricted Stock Award may be subject to such performance
criteria and required level of achievement relative to these criteria as the
Committee shall determine, which criteria may be based on financial performance,
personal performance evaluations and/or completion of a specified period of
service by the Participant. The grant, issuance, retention, vesting and/or
settlement of any such Restricted Stock Award that is based on performance
criteria and level of achievement relative to such criteria will be subject to a
performance period of not less than one year, and the grant, issuance,
retention, vesting and/or settlement of any such Restricted Stock Award that is
based solely upon continued service and/or the passage of time may not vest or
be settled in full prior to the thirty-sixth month following its date of grant,
but may be subject to pro-rata vesting over such period, in each case, other
than as a result of the Participant’s death, disability or termination of
employment, or a change of control of the Company.

 

Notwithstanding anything to the contrary herein, the performance criteria for
any Restricted Stock Award that is intended by the Committee to satisfy the
requirements for “performance-based compensation” under Code
Section 162(m) shall be a measure based solely on one or more Qualifying
Performance Criteria (as defined in Section 11.2 hereof) selected by the
Committee.

 

8.3  Timing of Award.  The Committee shall determine all specifics concerning
the timing of any Restricted Stock Award.

 

8.4  Discretionary Adjustments.  Notwithstanding satisfaction of any required
period of service or performance goals, the number of Shares granted, issued,
retainable and/or vested under a Restricted Stock Award based on either
financial performance or personal performance evaluations may be reduced by the
Committee on the basis of such further considerations as the Committee in its
sole discretion shall determine.

 

SECTION 9. Incentive Awards

 

Each Incentive Award will confer upon the Eligible Employee the opportunity to
earn a future payment tied to a specified level of achievement with respect to
one or more performance criteria for a specific performance period of not less
than one year.

 

9.1  Incentive Award.  Each Incentive Award shall contain provisions regarding
(a) the target and maximum amount payable to the Participant as an Incentive
Award, (b) the performance criteria and required level of achievement relative
to these criteria which shall determine the amount of such payment, (c) the
period as to which performance shall be measured for establishing the amount of
any payment, (d) the vesting of the Incentive Award, (e) restrictions on the
alienation or transfer of the Incentive Award prior to actual payment,
(f) forfeiture provisions, and (g) such further terms and conditions, consistent
with the Plan as may be determined by the Committee. In establishing the
provisions of Incentive Awards, the Committee may refer to categories of such
Awards as parts of “Programs” or “Plans”, which names will not affect the
applicability of this Plan. The maximum amount payable pursuant to that portion
of an

 

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Incentive Award granted under this Plan for any fiscal year to any Participant
that is intended to satisfy the requirements for “performance based
compensation” under Code Section 162(m) shall not exceed Five Million Dollars
($5,000,000).

 

9.2  Performance Criteria.  The Committee shall establish the performance
criteria and required level of achievement relative to these criteria which
shall determine the target, minimum and maximum amount payable under an
Incentive Award, which criteria may be based on financial performance and/or
personal performance evaluations. The Committee may specify the amount or
percentage of the target Incentive Award that is intended to satisfy the
requirements for “performance-based compensation” under Code Section 162(m).
Notwithstanding anything to the contrary herein, the performance criteria for
any portion of an Incentive Award that is intended by the Committee to satisfy
the requirements for “performance-based compensation” under Code
Section 162(m) shall be a measure based solely on one or more Qualifying
Performance Criteria (as defined in Section 11.2 hereof) selected by the
Committee and specified at the time required under Code Section 162(m).

 

9.3  Timing and Form of Payment.  An Incentive Award will be paid in a single
lump sum payment in the year following vesting, but no later than 21/2 months
following the year of vesting. The Committee may permit a Participant or the
Company to elect for the payment of any Incentive Award to be deferred to a
specified date or event in accordance with an election made pursuant to the
Fluor Executive 409A Deferred Compensation Program. The Committee may specify
the form of payment of Incentive Awards, which may be cash, shares, or other
property.

 

9.4  Discretionary Adjustments.  Notwithstanding satisfaction of any performance
goals, the amount paid under an Incentive Award based on either financial
performance or personal performance evaluations may be reduced by the Committee
on the basis of such further considerations as the Committee in its sole
discretion shall determine.

 

SECTION 10. Stock Units

 

10.1  Stock Units.  A “Stock Unit” is a bookkeeping entry representing an amount
equivalent to the fair market value of one Share, also sometimes referred to as
a “restricted unit” or “shadow stock”. Stock Units represent an unfunded and
unsecured obligation of the Company, except as otherwise provided for by the
Committee.

 

10.2  Stock Unit Awards.  Each Stock Unit Award shall reflect, to the extent
applicable (a) the number of Stock Units subject to such Award or a formula for
determining such, (b) the time or times at which Stock Units shall be granted
and/or become vested, and the conditions or restrictions on such Stock Units,
(c) the performance criteria and required level of achievement relative to these
criteria which shall determine the number of Stock Units granted, issued,
retainable and/or vested, (d) the measuring period for determining achievement
of performance, (e) forfeiture provisions, and (f) such further terms and
conditions, in each case not inconsistent with the Plan as may be determined by
the Committee.

 

10.3  Performance Criteria.  The grant, issuance, retention and or vesting of
each Stock Unit may be subject to such performance criteria and required level
of achievement relative to these criteria as the Committee shall determine,
which criteria may be based on financial performance, personal performance
evaluations and/or completion of a specified period of service by the
Participant. The grant, issuance, retention, vesting and/or settlement of any
such Stock Unit that is based on performance criteria and level of achievement
relative to such criteria will be subject to a performance period of not less
than one year, and the grant, issuance, retention, vesting and/or settlement of
any such Stock Unit that is based solely upon continued service and/or the
passage of time may not vest or be settled in full prior to the thirty-sixth
month following its date of grant, but may be subject to pro-rata vesting over
such period, in each case, other than as a result of the Participant’s death,
disability or termination of employment, or a change of control of the Company.

 

Notwithstanding anything to the contrary herein, the performance criteria for
any Stock Unit that is intended by the Committee to satisfy the requirements for
“performance-based compensation” under

 

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Code Section 162(m) shall be a measure based solely on one or more Qualifying
Performance Criteria (as defined in Section 11.2 hereof) selected by the
Committee and specified at the time the Stock Unit is granted.

 

10.4  Timing of Award.  The Committee shall determine all specifics concerning
the timing of any Stock Unit Award.

 

10.5  Settlement of Stock Units.  The Committee may provide for Stock Units to
be settled in cash and/or Shares. A Stock Unit Award will be settled in a single
lump sum payment of cash and/or Shares in the calendar year following vesting,
but no later than 21/2 months following the end of the calendar year of vesting.
The Committee may permit a Participant or the Company to elect for the
settlement of any Stock Unit Award to be deferred to a specified date or event
in accordance with an election made pursuant to the Fluor Executive 409A
Deferred Compensation Program. The amount of cash or Shares, to be distributed
may, if the Stock Unit Agreement provides, be increased by an interest factor or
by dividend equivalents, as the case may be, which may be valued as if
reinvested in Shares. Until a Stock Unit is settled, the number of Shares
represented by a Stock Unit shall be subject to adjustment pursuant to
Section 12.

 

10.6  Discretionary Adjustments.  Notwithstanding satisfaction of any required
period of service or performance goals, the number of Stock Units granted,
issued, retainable and/or vested under a Stock Unit Award due to financial
performance or personal performance evaluations may be reduced by the Committee
on the basis of such further considerations as the Committee in its sole
discretion shall determine.

 

SECTION 11. Other Provisions Applicable to Awards

 

11.1  Transferability.  Unless the agreement evidencing an Award (or an
amendment thereto authorized by the Committee) expressly states that it is
transferable as provided hereunder, no Award granted under the Plan, nor any
interest in such Award, may be sold, assigned, conveyed, gifted, pledged,
hypothecated or otherwise transferred in any manner, other than by will or the
laws of descent and distribution, prior to the vesting or lapse of any and all
restrictions applicable to an Award or any Shares issued under an Award. During
a Participant’s lifetime, Stock Options and Stock Appreciation Rights may only
be exercised by the Participant.

 

The Committee may in its sole discretion grant an Award or amend an outstanding
Award to provide that the Award is transferable or assignable to a member or
members of the Participant’s “immediate family”, as such term is defined under
Exchange Act Rule 16a-1(e), or to a trust for the benefit solely of a member or
members of the Participant’s immediate family, or to a partnership or other
entity whose only owners are members of the Participant’s family, provided that
following any such transfer or assignment the Award will remain subject to
substantially the same terms applicable to the Award while held by the
Participant, as modified as the Committee in its sole discretion shall determine
appropriate, and the Participant shall execute an agreement agreeing to be bound
by such terms.

 

11.2  Qualifying Performance Criteria.  For purposes of this Plan, the term
“Qualifying Performance Criteria” shall mean any one or more of the following
performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit, subsidiary or
business segment, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years’ results or to
a designated comparison group, in each case as specified by the Committee in the
Award: (a) cash flow; (b) earnings (including gross margin, earnings before
interest and taxes (“EBIT”), earnings before taxes (“EBT”), and net earnings);
(c) earnings per share; (d) growth in earnings or earnings per share; (e) stock
price; (f) return on equity or average stockholders’ equity; (g) total
stockholder return; (h) return on capital; (i) return on assets or net assets;
(j) return on investment; (k) revenue; (l) income or net income; (m) operating
income or net operating income; (n) operating profit or net operating profit;
(o) operating margin; (p) return on operating revenue; (q) market share;
(r) contract awards or backlog; (s) overhead or other expense reduction;
(t) growth in stockholder value relative to the two-year moving average of the
S&P 500 Index; (u) growth in stockholder value relative to the two-year

 

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moving average of the Dow Jones Heavy Construction Index; (v) credit rating;
(w) strategic plan development and implementation; (x) succession plan
development and implementation; (y) retention of executive talent;
(z) improvement in workforce diversity; (aa) return on average stockholders’
equity relative to the Ten Year Treasury Yield (as hereinafter defined); (bb)
improvement in safety records; (cc) capital resource management plan development
and implementation; (dd) improved internal financial controls plan development
and implementation; (ee) corporate tax savings; (ff) corporate cost of capital
reduction; (gg) investor relations program development and implementation; (hh)
corporate relations program development and implementation; (ii) executive
performance plan development and implementation; (jj) tax provision rate for
financial statement purposes; (ll) growth in stock price; (mm) return on
invested capital (ROIC); (nn) return on assets employed (ROAE); (oo) project
gross margin (PGM) in earnings and in contract awards; (pp) project gross margin
percentage in earnings and contract awards; (qq) project working capital; (rr)
cost of cash; (ss) overhead leverage; (tt) ratio of earnings to fixed charges;
and (uu) debt as a percentage of total capitalization.

 

To the extent determined by the Committee at the time an Award is granted, the
Committee shall appropriately adjust any evaluation of performance under a
Qualifying Performance Criteria to account for any of the following events that
occurs during a performance period: (a) asset write-downs; (b) litigation or
claim judgments or settlements; (c) the effect of changes in tax law, accounting
principles or other such laws or provisions affecting reported results;
(d) accruals for reorganization and restructuring programs; and (e) any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management’s discussion and analysis of financial
condition and results of operations appearing in the Company’s annual report to
stockholders for the applicable year.

 

The term “Ten Year Treasury Yield” shall mean, for any fiscal period, the daily
average percent per annum yield for U.S. Government Securities—10 year Treasury
constant maturities, as published in the Federal Reserve statistical release or
any equivalent publication. Prior to the payment of any Award intended to
qualify as “performance-based compensation” under Code Section 162(m) the
Committee shall certify the extent to which any Qualifying Performance Criteria
and any other material terms under such Award have been satisfied (other than in
cases where the criteria relate solely to the increase in the value of the
Company’s Common Stock).

 

11.3  Dividends.  Unless otherwise provided by the Committee, no adjustment
shall be made in Shares issuable under any Award on account of cash dividends
which may be paid or other rights which may be issued to the holders of Shares
prior to their issuance under the Award. The Committee shall specify whether
dividends or dividend equivalent amounts shall be paid to any Participant with
respect to the Shares subject to an Award that has not vested or been issued or
that is subject to any restrictions or conditions on the record date for
dividends.

 

11.4  Agreements Evidencing Awards.  The Committee shall, subject to applicable
law, determine the date an Award is deemed to be granted, which for purposes of
this Plan shall not be affected by the fact that an Award is contingent on
subsequent stockholder approval of the Plan. The Committee or its delegate(s),
except to the extent prohibited under applicable law, may establish the terms of
agreements evidencing Awards under this Plan and may, but need not, require as a
condition to any such agreement’s effectiveness that such agreement be executed
by the Participant and that the Participant agree to such further terms and
conditions as specified in the agreement. The grant of an Award under this Plan
shall not confer any rights upon the Participant holding such Award other than
such terms, and subject to such conditions, as are specified in this Plan as
being applicable to such type of Award (or to all Awards) or as are expressly
set forth in the agreement evidencing such Award.

 

11.5  Tandem Stock or Cash Rights.  Either at the time an Award is granted or by
subsequent action, the Committee may, but need not, provide that an Award shall
contain as a provision thereof, a right, either in tandem with the other rights
under the Award or as an alternative thereto, of the Participant to receive,
without payment to the Company, a number of Shares, cash or a combination
thereof, the amount of which is determined by reference to the value of the
Award; provided, however, that the number of such rights granted under any Award
shall not exceed the per Eligible Employee share limitation for such Award as
set forth in Section 3.2.

 

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11.6  Financing.  The Committee may in its discretion provide financing to a
Participant in a principal amount sufficient to pay the exercise price
associated with an Award and/or to pay any required tax withholding with respect
to any Award. Any such loan shall be subject to all applicable legal
requirements and restrictions pertinent thereto, including Regulation G
promulgated by the Federal Reserve Board. The grant of an Award shall in no way
obligate the Company or the Committee to provide any financing whatsoever in
connection with the Award.

 

SECTION 12. Changes in Capital Structure

 

If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or shares
or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or if substantially all of the property and
assets of the Company are sold, then, the Committee shall make appropriate and
proportionate adjustments in (i) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to
outstanding Awards under this Plan and the exercise or settlement price of such
Awards; provided, however, that any such adjustment shall be made in such a
manner that will not affect the status of any Award intended to qualify (A) as
an ISO under Code Section 422, (B) as exempt from coverage under Code
Section 409A, or (C) as “performance based compensation” under Code
Section 162(m), and (ii) the maximum number and type of shares or other
securities that may be issued pursuant to such Awards thereafter granted under
this Plan.

 

SECTION 13. Change of Control

 

13.1  Effect of Change of Control.  The Committee may through the terms of the
Award or otherwise provide that any or all of the following shall occur, either
immediately upon the Change of Control or a Change of Control Transaction, or
upon termination of the Eligible Employee’s employment within twenty-four
(24) months following a Change of Control or a Change of Control Transaction:
(a) in the case of an Option, the Participant’s ability to exercise any portion
of the Option not previously exercisable; (b) in the case of an Incentive Award,
the right to receive a payment equal to the target amount payable or, if
greater, a payment based on performance through a date determined by the
Committee prior to the Change of Control; and (c) in the case of Shares issued
in payment of any Incentive Award, and/or in the case of Restricted Stock or
Stock Units, the lapse and expiration of any conditions to the grant, issuance,
retention, vesting or transferability of, or any other restrictions applicable
to, such Award. The Committee also may, through the terms of the Award or
otherwise, provide for an absolute or conditional exercise, payment or lapse of
conditions or restrictions on an Award which shall only be effective if, upon
the announcement of a Change of Control Transaction, no provision is made in
such Change of Control Transaction for the exercise, payment or lapse of
conditions or restrictions on the Award, or other procedure whereby the
Participant may realize the full benefit of the Award.

 

13.2  Definitions.  Unless the Committee or the Board shall provide otherwise,
“Change of Control” shall mean an occurrence of any of the following events:
(a) a third person, including a “group” as defined in Section 13(d)(3) of the
Exchange Act, acquires shares of the Company having twenty-five percent or more
of the total number of votes that may be cast for the election of directors of
the Company; (b) as the result of any cash tender or exchange offer, merger or
other business combination, or any combination of the foregoing transactions (a
“Transaction”), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of the Company or
any successor to the Company; or (c) such other events as the Committee or the
Board from time to time may specify. “Change of Control Transaction” shall
include any tender offer, offer, exchange offer, solicitation, merger,
consolidation, reorganization or other transaction that is intended to or
reasonably expected to result in a Change of Control.

 

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SECTION 14. Taxes

 

14.1  Withholding Requirements.  The Committee may make such provisions or
impose such conditions as it may deem appropriate for the withholding or payment
by the Eligible Employee or Participant, as appropriate, for any taxes required
as a result of any Awards granted under this Plan, and a Participant’s rights in
any Award are subject to satisfaction of such requirements.

 

14.2  Payment of Withholding Taxes.  Notwithstanding the terms of Section 14.1
hereof, the Committee may provide in the agreement evidencing an Award or
otherwise that all or any portion of the required withholding for taxes by the
Company or, if permitted by the Committee, desired to be withheld by the
Participant, in connection with the exercise of a Stock Option or Stock
Appreciation Right or the exercise, vesting, settlement or transfer of any other
Award shall be paid or, at the election of the Participant, may be paid by the
Company with cash or shares of the Company’s capital stock otherwise issuable or
subject to such Award, or by the Participant delivering previously owned shares
of the Company’s capital stock, in each case having a fair market value equal to
the amount required or elected to be withheld or paid. Any such elections are
subject to such conditions or procedures as may be established by the Committee
and are subject to Committee approval.

 

SECTION 15. Amendments or Termination

 

The Board of Directors may amend, alter or discontinue the Plan or any agreement
evidencing an Award made under the Plan, but any such amendment shall be subject
to approval of the shareholders of the Company to the extent required by law or
by any applicable listing standard of the New York Stock Exchange or other
securities exchange or stock market where the Company has listed the Shares. In
addition, unless approved by a majority of the shareholders of the Company
present in person or by proxy and actually voting, no such amendment shall be
made that would:

 

(a)           materially increase the maximum number of Shares for which Awards
may be granted under the Plan, other than an increase pursuant to Section 12
(“Changes in Capital Structure”);

 

(b)           reduce the price at which Stock Options or Stock Appreciation
Rights may be granted, as described in Section 6.2;

 

(c)           reduce the exercise price of outstanding Stock Options or Stock
Appreciation Rights;

 

(d)           extend the term of the Plan; or

 

(e)           change the class of persons eligible to be Participants.

 

After the date of a Change of Control, no amendment to the Plan or any agreement
evidencing an Award made under the Plan shall be effected that impairs the
rights of any Award holder, without such holder’s consent, under any Award
granted prior to the date of the Change of Control.

 

SECTION 16. Compliance with Other Laws and Regulations

 

The Plan, the grant and exercise of Awards hereunder, and the obligation of the
Company to sell, issue or deliver Shares under such Awards, shall be subject to
all applicable Federal, state and foreign laws, rules and regulations and to
such approvals by any governmental or regulatory agency as may be required. The
Company shall not be required to register in a Participant’s name or deliver any
Shares prior to the completion of any registration or qualification of such
Shares under any Federal, state or foreign law or any ruling or regulation of
any government body which the Committee shall, in its sole discretion, determine
to be necessary or advisable. This Plan is intended to constitute an unfunded
arrangement for a select group of management or other key employees.

 

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No Stock Option or Stock Appreciation Right shall be exercisable unless a
registration statement with respect to the Stock Option or Stock Appreciation
Right has been made and is in effect or the Company has determined that such
registration is unnecessary. Unless the Awards and Shares covered by this Plan
have been registered under the Securities Act of 1933, as amended, or the
Company has determined that such registration is unnecessary, each person
receiving an Award and/or Shares pursuant to any Award may be required by the
Company to give a representation in writing that such person is acquiring such
Shares for his or her own account for investment.

 

SECTION 17. Award Grants by Subsidiaries

 

In the case of a grant of an Award to any Participant employed by a subsidiary
or affiliate, such grant may, if the Committee so directs, be implemented by the
Company issuing any subject Shares to the subsidiary or affiliate, for such
lawful consideration as the Committee may determine, upon the condition or
understanding that the subsidiary or affiliate will transfer the Shares to the
Participant in accordance with the terms of the Award specified by the Committee
pursuant to the provisions of the Plan. Notwithstanding any other provision
hereof, such Award may be issued by and in the name of the subsidiary or
affiliate and shall be deemed granted on such date as the Committee shall
determine.

 

SECTION 18. No Right to Company Employment

 

Nothing in this Plan or as a result of any Award granted pursuant to this Plan
shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate an
individual’s employment at any time. The Award agreements may contain such
provisions as the Committee may approve with reference to the effect of approved
leaves of absence by the Participant receiving the Award.

 

SECTION 19. Effectiveness and Expiration of Plan

 

The Plan shall be effective on the date the Board of Directors adopts the Plan.
No Stock Option Award, Stock Appreciation Right Award, Restricted Stock Award,
Incentive Award or Stock Unit Award shall be granted pursuant to the Plan more
than ten (10) years after the effective date of the Plan.

 

SECTION 20. Non-Exclusivity of the Plan

 

Neither the adoption of the Plan by the Board of Directors nor the submission of
the Plan to the shareholders of the Company for approval shall be construed as
creating any limitations on the power of the Board of Directors or the Committee
to adopt such other incentive arrangements as it or they may deem desirable,
including without limitation, the granting of restricted stock or stock options
otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.

 

SECTION 21. Governing Law

 

This Plan and any agreements hereunder shall be interpreted and construed in
accordance with the laws of the State of Delaware and applicable Federal law.
The Committee may provide that any dispute as to any Award shall be presented
and determined in such forum as the Committee may specify, including through
binding arbitration. Any reference in this Plan or in the agreement evidencing
any Award to a provision of law or to a rule or regulation shall be deemed to
include any successor law, rule or regulation of similar effect or
applicability.

 

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