<PAGE>

                                                                    EXHIBIT 10.4


September 24, 1999


Mr. Jim Rollans
President and Chief Executive Officer
Fluor Signature Services

Dear Jim,

It is my pleasure to inform you that at the December 1998 Organization and
Compensation Committee meeting, the Board of Directors of Fluor Corporation (the
"Company") selected you to participate in a Retention Program.  The amount of
the retention award was $2,750,000.  At your request the award has been
structured as follows:

Award Amount:         $2,750,000

Retention Period:     October 1, 1998 through October 31, 2001

Retention Agreement:  The Award Amount is divided between the following two
                      components:

                      Housing
                      -------

                      You have previously been provided with a personal loan of
                      $1,627,576 secured by a deed of trust on your residence.
                      The loan provides for an interest rate of 4.52%,
                      compounded annually with a balloon payment of the entire
                      amount due on termination of employment. The loan
                      presently states that it is subject to acceleration in the
                      event of your termination of employment for any reason
                      prior to October 31, 2001. The Company will forgive the
                      loan including accrued interest in its entirety (a) if you
                      remain continuously employed by the Company until October
                      31, 2001, or (b) if your employment terminates prior to
                      that date due to (i) death, (ii) permanent and total
                      disability, (iii) a Company-initiated termination for any
                      reason other than for-cause or (iv) following a Change of
                      Control. If your employment with the Company terminates
                      for any other reason prior to October 31, 2001 (including,
                      without
<PAGE>

Jim Rollans
September 24, 1999
Page 2

                      limitation, your voluntary termination or a termination
                      for cause) then this loan shall remain in effect in
                      accordance with its terms.

                      For purposes hereof, the term "Change of Control" shall be
                      deemed to have occurred if, (a) a third person, including
                      a "group" as defined in Section 13(d)(3) of the Securities
                      Exchange Act of 1934, acquires shares of the Company
                      having 25% or more of the votes that may be cast for the
                      election of directors of the Company or (b) as a result of
                      any cash tender or exchange offer, merger or other
                      business combination, or any combination of the preceding
                      (a "transaction"), the persons who are the directors of
                      the Company before the transaction shall cease to
                      constitute a majority of the Board of Directors of the
                      Company or any successor thereto.

                      Accrual to Executive Deferral Compensation Program
                      --------------------------------------------------
                      ("EDCP")
                      --------

                      You may earn $1,122,424, said amount to be adjusted as
                      provided below, if you remain continuously employed by the
                      Company until on or after October 31, 2001 (the "EDCP
                      Accrual"). During the period from October 1, 1998 to the
                      date upon which the EDCP Accrual vests (if at all), you
                      will also be entitled to invest the EDCP Accrual by
                      selecting one or more of the crediting options contained
                      in the EDCP. Thereafter, the amount of your EDCP Accrual,
                      if vested, shall be adjusted based upon the investment
                      return that you would have otherwise received had the EDCP
                      Accrual been actually earned as of October 1, 1998 and
                      credited in your EDCP account based upon your chosen
                      crediting option through the date of vesting. If no
                      crediting option is indicated, the EDCP Accrual will be
                      automatically credited as if you chose the Money Market
                      crediting option under the EDCP.

                      The EDCP Accrual, as adjusted, will vest and be credited
                      to your existing Company EDCP account (a) if you remain
                      continuously employed by the Company until October 31,
                      2001 or (b) if your employment terminates prior to that
                      date due to (i) death, (ii) permanent and total
                      disability, (iii) a Company-
<PAGE>

Jim Rollans
September 24, 1999
Page 3

                      initiated termination other than on a for-cause basis or
                      (iv) following a Change of Control. If in the event your
                      employment terminates for any reason prior to any such
                      vesting date for any other reason (including, without
                      limitation, your voluntary termination or a termination
                      for cause), then the EDCP Accrual, as adjusted, will be
                      forfeited.

Please indicate your acknowledgment of the terms of the letter by signing in the
space provided and returning the original to me for your employee records.  You
should also retain a copy for your file.

If you should have any questions, please give me a call at (949) 349-2000.

Sincerely,




Philip J. Carroll

Agreed by:                             Agreed by:

/s/ PHILIP J. CARROLL                  /s/ JAMES O. ROLLANS
---------------------------            -------------------------------------
Philip J. Carroll                      James O. Rollans