<PAGE>

                                                                   EXHIBIT 10.16


                      FLUOR CORPORATION AND SUBSIDIARIES
                              Management  Manual

<TABLE>
<S>                                                            <C>
=====================================================================================

     Section:    Compensation                                  Page:            129

     Subject:    EXECUTIVE SEVERANCE PLAN                      Effective:  07-21-99

     Applies To: Fluor Corporation and Selected Subsidiaries   Supersedes: 10-20-98

=====================================================================================
</TABLE>

     OBJECTIVE

     To provide severance compensation to eligible executives of Fluor
     Corporation and designated subsidiaries (the company) who leave the
     company, depending on the circumstances and conditions leading to
     termination.

     ELIGIBILITY

     Executives of Fluor Corporation and designated subsidiaries actively at
     work who are participants in the Fluor Corporation and Subsidiaries
     Executive Incentive Compensation Plan.

     DEFINITIONS

     For the purpose of the Plan, the following definitions apply:

          A.   VOLUNTARY SEPARATION

               Action taken by an executive for personal reasons, to seek other
               employment, to accept another position, for failure to return at
               conclusion of leave, or to voluntarily retire.

          B.   INVOLUNTARY SEPARATION

               1.  Action taken by the company due to reduction in force
                   resulting from reorganization or reduced workload or other
                   similar circumstances whereby the executive's services are no
                   longer required on the job. Executives involuntarily
                   separated who meet the retirement criteria may elect
                   retirement.

               2.  Action taken by the company when an executive is covered by
                   the Americans with Disabilities Act and is unable to perform
                   his/her essential job functions with reasonable
                   accommodation.

          C.   INVOLUNTARY DISCHARGE

                   Action taken by the company for reasons other than stated in
                   Paragraph B. above including but not limited to absenteeism,
                   misconduct, insubordination, appearing at work under the
                   influence of a controlled substance or alcohol, unethical
                   behavior, disclosure of confidential information, sexual
                   harassment, employment discrimination, or unsatisfactory
                   performance.


<PAGE>

                      FLUOR CORPORATION AND SUBSIDIARIES
                               Management Manual


<TABLE>
=====================================================================================
<S>                                                            <C>
     Section:    Compensation                                  Page:            130

     Subject:    EXECUTIVE SEVERANCE PLAN                      Effective:  07-21-99
              (Continued)

     Applies To: Fluor Corporation and Selected Subsidiaries   Supersedes: 10-20-98

=====================================================================================
</TABLE>

              D.   OFFICER

                   An executive who is a vice president or above of Fluor
                   Corporation, Fluor Daniel, Inc., Fluor Signature Services,
                   Fluor Global Services, Inc., or Fluor Constructors, Inc., who
                   participates in the Fluor Corporation and subsidiaries
                   Executive Incentive Compensation Plan.

              E.   COMPLETED YEARS OF ACCUMULATED SERVICE

                   A period of accumulated service with the company, subject to
                   the limitation set forth under Procedure, A.4.c.

              F.   BENEFICIARY

                   The beneficiary designated by the executive under the Fluor
                   Corporation Employee's Retirement Plan, or, if no such
                   designation has been made, then as designated under the Group
                   Life/Health Insurance Plan unless the executive otherwise
                   makes a beneficiary designation on the form provided by the
                   executive's corporate employer, or, in the absence of any
                   designation, the administrator or executor of the executive's
                   estate.

     PROCEDURE

              A.   SEVERANCE PAY

                   1.   Voluntary Separation

                        The company will not provide severance pay nor prorated
                        Incentive Compensation (Paragraph A under
                        "Definitions").

                   2.   Involuntary Separation

                        Severance pay will be based on current base salary and
                        total completed years of accumulated service as follows:

                        a.   Officers

                             1.   Two weeks' severance pay for each completed
                                  year of accumulated service up to 52 weeks.

                             2.   Minimum eight weeks' severance.

<PAGE>

                      FLUOR CORPORATION AND SUBSIDIARIES
                              Management  Manual

<TABLE>
<S>                                                            <C>
=====================================================================================

     Section:    Compensation                                  Page:            131

     Subject:    EXECUTIVE SEVERANCE PLAN                      Effective:  07-21-99
              (Continued)

     Applies To: Fluor Corporation and Selected Subsidiaries   Supersedes: 10-20-98

=====================================================================================
</TABLE>

                    b.   Non-Officer Executives

                         1.   Two weeks' severance pay for each completed year
                              of accumulated service up to 26 weeks.

                         2.   Minimum four weeks' severance

               3.   Involuntary Discharge

                    a.   The company will not provide severance pay nor consider
                         proration of Incentive Compensation (Paragraph C,
                         Definitions).

               4.   Limitations

                    a.   Maximum severance pay will be 52 weeks for officers, 26
                         weeks for non-officer executives.

                    b.   Minimum severance pay will be eight weeks for officers,
                         four weeks for non-officer executives.

                    c.   The total completed years of accumulated service
                         calculated for a severance payment may only be used one
                         time in severance calculations.

                    d.   For executives involuntarily separated and placed on
                         Leave of Absence in Lieu of Layoff, severance pay will
                         be based on completed years of accumulated service up
                         to the effective date of the Leave of Absence.

                    e.   Officers in policy making positions who meet retirement
                         criteria will receive severance pay as follows:

                         1.   Officers who meet the minimum retirement income
                              requirement set forth by federal law, excluding
                              any amount payable under this Plan, will receive
                              severance pay for only the period from the date of
                              termination until January 2 following the
                              officer's 65th birthday subject to the limitation
                              set forth under Procedure, A.2.a.

                         2.   Officers who do not meet the minimum retirement
                              income requirement set forth by federal law,
                              computed excluding any amount payable under this
                              Plan, will receive severance pay as determined
                              under Procedure, A.2.a.

<PAGE>

                      FLUOR CORPORATION AND SUBSIDIARIES
                               Management Manual


<TABLE>
<S>                                                            <C>
=====================================================================================

     Section:    Compensation                                  Page:            132

     Subject:    EXECUTIVE SEVERANCE PLAN                      Effective:  07-21-99
              (Continued)

     Applies To: Fluor Corporation and Selected Subsidiaries   Supersedes: 10-20-98

=====================================================================================
</TABLE>

               f.   In the case of involuntary separation due to an executive's
                    inability to perform his/her essential job functions with
                    reasonable accommodation, the executive's severance pay
                    amount will be reduced by the expected entitlements under
                    Fluor's short-term and long-term disability for the number
                    of weeks determined under Procedure A.2.a and b. If the
                    actual entitlements received by the employee are less than
                    that deducted from severance pay, the employee will be paid
                    the difference for the period of weeks for which the
                    employee received severance. This provision is not intended
                    to affect any state or federal benefits to which the
                    executive may be entitled.

               g.   In cases where the executive is entitled to legislated
                    severance pay in non-U.S. countries, executive's severance
                    pay amount will be reduced by any legislated severance
                    payments required of the company that are calculated with
                    reference to the number of weeks determined under Procedure
                    A.2.a and b.

          5.    Severance pay will be paid in a lump sum, or at the discretion
                of the company, annual installments over a period not to exceed
                the total number of weeks determined under Paragraph A.2.a. and
                b. above.

          6.    In event of an executive's death prior to payment of the entire
                entitlement, payment may be made to the designated beneficiary
                in one lump sum or by continuation of installments at the
                discretion of the executive's corporate employer.

B.   INCENTIVE COMPENSATION

               (As defined in the Executive Incentive Compensation Plan, Fluor
               Corporation and Subsidiaries Management Manual)

          1.   Voluntary Separation

               The company will not provide a prorated incentive award.

          2.   Involuntary Separation

               Incentive Compensation may be considered based on the number of
               completed months of service during the current fiscal year prior
               to termination and consistent with the administration of the Plan
               during the year of termination.

<PAGE>

                      FLUOR CORPORATION AND SUBSIDIARIES
                               Management Manual


<TABLE>
=====================================================================================
<S>                                                            <C>
     Section:    Compensation                                  Page:            133

     Subject:    EXECUTIVE SEVERANCE PLAN                      Effective:  07-21-99
              (Continued)

     Applies To: Fluor Corporation and Selected Subsidiaries   Supersedes: 10-20-98

=====================================================================================
</TABLE>

               3.   Involuntary Discharge

                    The company will not provide a prorated incentive award.

          C.   COMPANY AUTOMOBILES

                    In company locations where officers/directors may be
                    assigned company-owned automobiles, the following will
                    apply:

                    a.   Voluntary Separation

                         Officers/directors who voluntarily retire will be
                         presented with the automobile that is currently
                         assigned as a gift.

                    b.   Involuntary Separation

                         Officers/directors who are requested to take early
                         retirement will be presented with the automobile which
                         is currently assigned as a gift.

                    c.   Involuntary Discharge

                         Officers/directors will not be given an automobile, and
                         it will not be available for purchase.

               D.   CLUB MEMBERSHIP

                    Company memberships will not be awarded to an executive
                    regardless of reason for termination.

               E.   AUTOMOBILE ALLOWANCE

                    1.   In locations where executives receive a car
                         allowance/insurance, the following will apply:

                         a.   Voluntary Separation

                         The company will not provide a car allowance/insurance.

<PAGE>

                      FLUOR CORPORATION AND SUBSIDIARIES
                               Management Manual


<TABLE>
=====================================================================================
<S>                                                            <C>
     Section:    Compensation                                  Page:            134

     Subject:    EXECUTIVE SEVERANCE PLAN                      Effective:  07-21-99
              (Continued)

     Applies To: Fluor Corporation and Selected Subsidiaries   Supersedes: 10-20-98

=====================================================================================
</TABLE>

               b.   Involuntary Separation

                    The company will not provide a car
                    allowance/insurance.

               c.   Involuntary Discharge
                    The company will not provide a car
                    allowance/insurance.

          F.   INSURANCE COVERAGE

                    Applicable insurance coverage, i.e., group health, long-term
                    disability, executive health, etc., will cease on date of
                    termination. Where applicable, departing executive may elect
                    continued coverage through the Consolidated Omnibus Budget
                    Reconciliation Act (COBRA).

          G.   TIME OFF WITH PAY (TOWP) PROGRAM

                    Balance will be paid at time of termination.

          H.   STOCK BASED AWARDS

                    1.   Voluntary Separation

                         Upon qualified retirement, awards become
                         100 percent vested.

                    2.   Involuntary Separation

                         Upon qualified retirement, awards become 100 percent
                         vested.

                    3.   Involuntary Discharge

                         Vested portion may be exercised.

          I.   LONG TERM INCENTIVE (LTI) PROGRAM

                    Applicable cash awards under the long-term incentive program
                    will not be prorated for any reason, except death or total
                    and permanent disability.

<PAGE>

                      FLUOR CORPORATION AND SUBSIDIARIES
                               Management Manual


<TABLE>
=====================================================================================
<S>                                                            <C>
     Section:    Compensation                                  Page:            135

     Subject:    EXECUTIVE SEVERANCE PLAN                      Effective:  07-21-99
              (Continued)

     Applies To: Fluor Corporation and Selected Subsidiaries   Supersedes: 10-20-98

=====================================================================================
</TABLE>

               J.   WAIVERS

                    A settlement agreement and release form must be obtained
                    from employees in exchange for severance benefits. No
                    severance benefit will be due employees unless a settlement
                    and release agreement provided by the company has been
                    properly executed.

               K.   OUTPLACEMENT

                    In-house outplacement services are available.

               L.   PLAN TERMINATION

                    This Plan will expire December 31st., 2000. Any executive
                    whose employment terminates after the Plan expires, will not
                    be eligible for participation in the Plan. Further, no
                    benefits will accrue or be payable under the Plan after Plan
                    Termination.

               M.   EXCEPTION

                    Approved by the Chief Executive Officer of Fluor
                    Corporation.