Fluor Corp 10-Q for FY2024 Q1
Fluor Corp (FLR)
10-Q
2024-05-03
For: 2024-03-31
View Original
Added on
April 08, 2026
About this 10-Q
Fluor Corp filed this 10-Q on May 3, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).
Headline figures
Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.73B
- down 0.5% from $3.75B a year earlier
- Net income
- $59M
- compared with a net loss of $107M a year earlier
- Diluted EPS
- $0.34
- compared with -$0.82 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended March 31, 2024
Or
For the transition period from to
Commission File Number: 1-16129
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | ||||||||||
| incorporation or organization) | Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| ☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 30, 2024, 171,190,541 shares of the registrant’s common stock, $0.01 par value, were outstanding.
FLUOR CORPORATION
FORM 10-Q
| TABLE OF CONTENTS | PAGE | ||||||||||
1
Glossary of Terms
The definitions and abbreviations set forth below apply to the indicated terms used throughout this filing.
| Abbreviation/Term | Definition | ||||
| 2023 10-K | Annual Report on Form 10-K for the year ended December 31, 2023 | ||||
| 2023 Quarter | Three months ended March 31, 2023 | ||||
| 2024 Quarter | Three months ended March 31, 2024 | ||||
| 3ME | Three months ended | ||||
| AMECO | American Equipment Company, Inc. | ||||
| AOCI | Accumulated other comprehensive income (loss) | ||||
| APIC | Additional paid-in capital | ||||
| ASC | Accounting Standards Codification | ||||
| ASU | Accounting Standards Update | ||||
| CFM | Customer-furnished materials | ||||
| COVID | Coronavirus pandemic | ||||
| CPS | Convertible preferred stock | ||||
| CTA | Currency translation adjustment | ||||
| DB plan | Defined benefit pension plan | ||||
| DOE | U.S. Department of Energy | ||||
| DOJ | U.S. Department of Justice | ||||
| EPC | Engineering, procurement and construction | ||||
| EPS | Earnings (loss) per share | ||||
| Exchange Act | Securities Exchange Act of 1934 | ||||
| FASB | Financial Accounting Standards Board | ||||
| Fluor | Fluor Corporation | ||||
| G&A | General and administrative expense | ||||
| GAAP | Accounting principles generally accepted in the United States | ||||
| ICFR | Internal control over financial reporting | ||||
| IT | Information technology | ||||
| LNG | Liquefied natural gas | ||||
| NCI | Noncontrolling interests | ||||
| NM | Not meaningful | ||||
| NuScale | NuScale Power Corporation | ||||
| OCI | Other comprehensive income (loss) | ||||
| PP&E | Property, plant and equipment | ||||
| RSU | Restricted stock units | ||||
| RUPO | Remaining unsatisfied performance obligations | ||||
| SEC | Securities and Exchange Commission | ||||
| SGI | Stock growth incentive awards | ||||
| Stork | Stork Holding B.V. and subsidiaries | ||||
| TSR | Total shareholder return | ||||
| VIE | Variable interest entity | ||||
2
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
| 3ME March 31, | |||||||||||
| (in millions, except per share amounts) | 2024 | 2023 | |||||||||
| Revenue | $ | $ | |||||||||
| Cost of revenue | ( | ( | |||||||||
| Gross profit (loss) | ( | ||||||||||
| G&A | ( | ( | |||||||||
| Foreign currency gain (loss) | ( | ||||||||||
| Operating profit (loss) | ( | ||||||||||
| Interest expense | ( | ( | |||||||||
| Interest income | |||||||||||
| Earnings (loss) before taxes | ( | ||||||||||
| Income tax expense | ( | ( | |||||||||
| Net earnings (loss) | ( | ||||||||||
| Less: Net earnings (loss) attributable to NCI | ( | ( | |||||||||
| Net earnings (loss) attributable to Fluor | $ | $ | ( | ||||||||
| Less: Dividends on CPS | |||||||||||
| Net earnings (loss) available to Fluor common stockholders | $ | $ | ( | ||||||||
| Basic EPS available to Fluor common stockholders | $ | $ | ( | ||||||||
| Diluted EPS available to Fluor common stockholders | $ | ( | |||||||||
The accompanying notes are an integral part of these financial statements.
3
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
UNAUDITED
| 3ME March 31, | ||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||
| Net earnings (loss) | $ | $ | ( | |||||||||||
| OCI, net of tax: | ||||||||||||||
| Foreign currency translation adjustment | ( | |||||||||||||
| Ownership share of equity method investees’ OCI | ( | ( | ||||||||||||
| Other | ( | |||||||||||||
| Total OCI, net of tax | ( | |||||||||||||
| Comprehensive income (loss) | ( | ( | ||||||||||||
| Less: Comprehensive income (loss) attributable to NCI | ( | ( | ||||||||||||
| Comprehensive income (loss) attributable to Fluor | $ | $ | ( | |||||||||||
The accompanying notes are an integral part of these financial statements.
4
FLUOR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
UNAUDITED
| (in millions, except share and per share amounts) | March 31, 2024 | December 31, 2023 | ||||||||||||
| ASSETS | ||||||||||||||
| Current assets | ||||||||||||||
Cash and cash equivalents ($ | $ | $ | ||||||||||||
Marketable securities | ||||||||||||||
Accounts receivable, net ($ | ||||||||||||||
Contract assets ($ | ||||||||||||||
Other current assets ($ | ||||||||||||||
| Total current assets | ||||||||||||||
| Noncurrent assets | ||||||||||||||
Property, plant and equipment, net ($ | ||||||||||||||
| Investments | ||||||||||||||
| Deferred taxes | ||||||||||||||
| Deferred compensation trusts | ||||||||||||||
| Goodwill | ||||||||||||||
Other assets ($ | ||||||||||||||
| Total noncurrent assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current liabilities | ||||||||||||||
Accounts payable ($ | $ | $ | ||||||||||||
Contract liabilities ($ | ||||||||||||||
Accrued salaries, wages and benefits ($ | ||||||||||||||
Other accrued liabilities ($ | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Deferred taxes | ||||||||||||||
Other noncurrent liabilities ($ | ||||||||||||||
| Commitments and contingencies | ||||||||||||||
| Equity | ||||||||||||||
| Shareholders’ equity | ||||||||||||||
Common stock — authorized | ||||||||||||||
APIC | ||||||||||||||
| AOCI | ( | ( | ||||||||||||
| Retained earnings | ||||||||||||||
| Total shareholders’ equity | ||||||||||||||
| NCI | ||||||||||||||
| Total equity | ||||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||||
The accompanying notes are an integral part of these financial statements.
5
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
| 3ME March 31, | ||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||
| OPERATING CASH FLOW | ||||||||||||||
Net earnings | $ | $ | ( | |||||||||||
Adjustments to reconcile net earnings to operating cash flow: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| (Earnings) loss from equity method investments, net of distributions | ( | |||||||||||||
(Gain) loss on sales of assets | ( | |||||||||||||
| Stock-based compensation | ||||||||||||||
| Deferred taxes | ||||||||||||||
| Changes in assets and liabilities | ( | ( | ||||||||||||
| Other | ( | |||||||||||||
| Operating cash flow | ( | ( | ||||||||||||
| INVESTING CASH FLOW | ||||||||||||||
| Purchases of marketable securities | ( | ( | ||||||||||||
| Proceeds from sales and maturities of marketable securities | ||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Proceeds from sales of assets | ||||||||||||||
| Investments in partnerships and joint ventures | ( | ( | ||||||||||||
| Other | ||||||||||||||
| Investing cash flow | ( | |||||||||||||
| FINANCING CASH FLOW | ||||||||||||||
| Purchases and retirement of debt | ( | ( | ||||||||||||
| Dividends paid on CPS | ( | |||||||||||||
| Taxes paid on vested restricted stock | ( | ( | ||||||||||||
Other | ( | ( | ||||||||||||
| Financing cash flow | ( | ( | ||||||||||||
| Effect of exchange rate changes on cash | ( | |||||||||||||
| Increase (decrease) in cash and cash equivalents | ( | ( | ||||||||||||
| Cash and cash equivalents at beginning of period | ||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||
| SUPPLEMENTAL INFORMATION: | ||||||||||||||
| Cash paid for interest | $ | $ | ||||||||||||
| Cash paid for income taxes (net of refunds) | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
6
FLUOR CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
UNAUDITED
| (in millions, except per share amounts) | Preferred Stock | Common Stock | APIC | AOCI | Retained Earnings | Total Shareholders' Equity | NCI | Total Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2023 | $ | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||
Net earnings (loss) | — | — | — | — | — | — | ( | |||||||||||||||||||||||||
| OCI | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
| Distributions to NCI, net of contributions | — | — | — | — | — | — | ( | |||||||||||||||||||||||||
| Other NCI transactions | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Stock-based plan activity | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||
| BALANCE AS OF MARCH 31, 2024 | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||
| (in millions, except per share amounts) | Preferred Stock | Common Stock | APIC | AOCI | Retained Earnings | Total Shareholders' Equity | NCI | Total Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2022 | $ | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||
Net earnings (loss) | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||
| OCI | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Capital contributions by NCI | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Other NCI transactions | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Stock-based plan activity | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||
| BALANCE AS OF MARCH 31, 2023 | $ | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
7
1. Principles of Consolidation
These financial statements do not include footnotes and certain financial information presented annually under GAAP, and therefore, should be read in conjunction with our 2023 10-K. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. Although such estimates are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available, our reported results of operations may not necessarily be indicative of results that we expect for the full year.
The financial statements included herein are unaudited. We believe they contain all adjustments of a normal recurring nature which are necessary to present fairly our financial position and our operating results as of and for the periods presented. All significant intercompany transactions of consolidated subsidiaries are eliminated. Certain amounts in tables may not total or agree back to the financial statements due to immaterial rounding differences. Management has evaluated all material events occurring subsequent to March 31, 2024 through the filing date of this Q1 2024 10-Q.
Quarters are typically 13 weeks in length but, due to our December 31 year-end, the number of weeks in a reporting period may vary slightly during the year and for comparable prior year periods. We report our quarterly results of operations based on periods ending on the Sunday nearest March 31, June 30 and September 30, allowing for 13-week interim reporting periods. For clarity of presentation, all periods are labeled as if the periods ended on March 31, June 30 and September 30.
2. Recent Accounting Pronouncements
We did not implement any new accounting pronouncements during the 2024 Quarter. However, we are evaluating the impact of the future disclosures that may arise under recent SEC and other promulgators' recently finalized rules and outstanding proposals, some of which will require new disclosures beginning with our next 10-K filing.
During 2023, the FASB issued ASU 2023-05, which requires certain joint ventures to apply a new basis of accounting upon formation by recognizing and initially measuring most of their assets and liabilities at fair value. The guidance does not apply to joint ventures that may be proportionately consolidated and those that are collaborative arrangements. ASU 2023-05 is effective for joint ventures with a formation date on or after January 1, 2025. We do not expect this ASU will have a material impact on our financial statements.
During 2023, the FASB issued ASU 2023-07, which requires us to disclose significant segment expenses and other segment items. ASU 2023-07 will be applied retrospectively and is effective for annual reporting beginning in 2024 and for quarterly reporting beginning in 2025. We are currently evaluating the impact this ASU will have on our financial statements, but do not expect it to have any impact to our consolidated results.
During 2023, the FASB issued ASU 2023-09, which requires us to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes and to provide more details in our rate reconciliation about items that meet a quantitative threshold. ASU 2023-09 is effective for annual reporting beginning in 2025. We are currently evaluating the impact this ASU will have on our financial statements, but do not expect it to have any impact to our consolidated results.
8
3. Earnings Per Share
Potentially dilutive securities include CPS, convertible debt, stock options, RSUs and performance-based award units. Diluted EPS reflects the assumed exercise or conversion of all dilutive securities using the if-converted and treasury stock methods. In computing diluted EPS, only securities that are actually dilutive are included.
| 3ME March 31, | ||||||||||||||
| (in millions, except per share amounts) | 2024 | 2023 | ||||||||||||
| Net earnings (loss) attributable to Fluor | $ | $ | ( | |||||||||||
Less: Dividends on CPS | ||||||||||||||
| Net earnings (loss) available to Fluor common stockholders | ( | |||||||||||||
| Weighted average common shares outstanding | ||||||||||||||
| Diluted effect: | ||||||||||||||
| CPS | ||||||||||||||
| Stock options, RSUs and performance-based award units | ||||||||||||||
Convertible debt (1) | ||||||||||||||
| Weighted average diluted shares outstanding | ||||||||||||||
| Basic EPS available to Fluor common stockholders | $ | $ | ( | |||||||||||
| Diluted EPS available to Fluor common stockholders | $ | $ | ( | |||||||||||
| Anti-dilutive securities not included in shares outstanding: | ||||||||||||||
| CPS | ||||||||||||||
| Stock options, RSUs and performance-based award units | ||||||||||||||
Stock delivered under capped call options (2) | ||||||||||||||
(1) Holders of our 2029 Notes may convert their notes at a conversion price of $45.37 per share when the stock price exceeds $58.98 for 20 of the last 30 days preceding quarter end. Upon conversion, we will repay the principal amount of the notes in cash and may elect to convey the conversion premium in cash, shares of our common stock or a combination of both. The conversion feature of our 2029 Notes will have a dilutive impact on EPS when the average market price of our common stock exceeds the conversion price of $45.37 per share for the quarter. During the 2024 Quarter, the weighted average price per share of our common stock was less than the minimum conversion price.
(2) Diluted shares outstanding does not include the impact of the capped call options we entered into concurrently with the issuance of the 2029 Notes, as the effect is always anti-dilutive. If shares are delivered to us under the capped calls, those shares will offset the dilutive effect of the shares that we would issue upon conversion of the 2029 Notes.
9
4. Operating Information by Segment and Geographic Area
| 3ME March 31, | ||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||
| Revenue | ||||||||||||||
| Energy Solutions | $ | $ | ||||||||||||
| Urban Solutions | ||||||||||||||
| Mission Solutions | ||||||||||||||
| Other | ||||||||||||||
| Total revenue | $ | $ | ||||||||||||
| Segment profit (loss) | ||||||||||||||
| Energy Solutions | $ | $ | ||||||||||||
| Urban Solutions | ( | |||||||||||||
| Mission Solutions | ||||||||||||||
| Other | ( | ( | ||||||||||||
| Total segment profit (loss) | $ | $ | ( | |||||||||||
| G&A | ( | ( | ||||||||||||
| Foreign currency gain (loss) | ( | |||||||||||||
| Interest income (expense), net | ||||||||||||||
| Earnings (loss) attributable to NCI | ( | ( | ||||||||||||
| Earnings (loss) before taxes | $ | $ | ( | |||||||||||
| Intercompany revenue for our professional staffing business, excluded from revenue above | $ | $ | ||||||||||||
Energy Solutions. Segment profit in the 2024 Quarter was adversely impacted by $29 million (or $0.12 per share) in cost growth for delays, craft labor and material escalation on a construction only subcontract executed by our joint venture entity in Mexico. Segment profit in the 2023 Quarter included a favorable foreign currency remeasurement effect totaling $22 million (or $0.09 per share) on a project with multiple currencies. Segment profit in the 2024 Quarter included a gain of $7 million on embedded foreign currency derivatives compared to a loss of $39 million in the 2023 Quarter.
Urban Solutions. Segment profit in the 2024 Quarter significantly improved due to the ramp up of execution activities on several recently awarded projects while segment profit in the 2023 Quarter included a $59 million (or $0.34 per share) charge for rework associated with subcontractor design errors on the LAX Automated People Mover project.
Mission Solutions. Segment profit improved in the 2024 Quarter compared to the 2023 Quarter that included a $21 million (or $0.12 per share) charge for cost growth on a weapons facility project.
Other. Segment profit (loss) for NuScale, Stork and AMECO follows:
| 3ME March 31, | |||||||||||
| (in millions) | 2024 | 2023 | |||||||||
NuScale(1) | $ | ( | $ | ( | |||||||
| Stork | |||||||||||
| AMECO | ( | ||||||||||
| Segment profit (loss) | $ | ( | $ | ( | |||||||
(1) As of March 31, 2024, we had an approximate 55 % ownership in NuScale.
10
In March 2024, we completed the sale of Stork's operations in continental Europe for $67 million, including a second payment of $38 million that was received in April 2024. During the 2024 Quarter, we recognized a gain on sale of $11 million including de-recognition of Stork's net assets and cumulative foreign currency translation.
During April 2024, we also entered into a definitive sale agreement for Stork's U.K. operations, which could close as early as the second quarter of 2024. The financial statement effects for this proposed U.K. sale did not meet the requirements for held-for-sale reporting as of March 31, 2024. The transaction, as agreed to, is not expected to have a material earnings impact when recognized.
In March 2023, we sold our AMECO South America business, which included operations in Chile and Peru. This transaction marked the completion of the AMECO divestiture. Upon the sale of AMECO South America in the 2023 Quarter, we recognized a $60 million negative earnings impact, including $35 million associated with foreign currency translation.
Total assets by segment are as follows:
| (in millions) | March 31, 2024 | December 31, 2023 | ||||||||||||
| Energy Solutions | $ | $ | ||||||||||||
| Urban Solutions | ||||||||||||||
| Mission Solutions | ||||||||||||||
| Other | ||||||||||||||
| Corporate | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
Revenue by project location follows:
| 3ME March 31, | ||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||
| North America | $ | $ | ||||||||||||
| Asia Pacific (includes Australia) | ||||||||||||||
| Europe | ||||||||||||||
| Central and South America | ||||||||||||||
| Middle East and Africa | ||||||||||||||
| Total revenue | $ | $ | ||||||||||||
11
5. Income Taxes
The effective tax rate on earnings for the 2024 Quarter was 55.6 % compared to (30.1 )% for the 2023 Quarter. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:
| 3ME March 31, | |||||||||||
| (In millions) | 2024 | 2023 | |||||||||
| U.S statutory federal income tax expense | $ | $ | ( | ||||||||
| Increase (decrease) in taxes resulting from: | |||||||||||
| State and local income taxes, net of federal income tax effects | ( | ||||||||||
| Valuation allowance, net | ( | ||||||||||
| Foreign tax impacts | |||||||||||
| Noncontrolling interest | |||||||||||
| Sale of AMECO South America | ( | ||||||||||
Reserve for uncertain tax positions | |||||||||||
| Other adjustments | ( | ||||||||||
| Total income tax expense | $ | $ | |||||||||
6. Partnerships and Joint Ventures
Many of our partnership and joint venture agreements provide for capital calls to fund operations, as necessary. Investments in a loss position of $274 million and $307 million were included in other accrued liabilities as of March 31, 2024 and December 31, 2023, respectively, and consisted primarily of provision for anticipated losses on two legacy infrastructure projects. Accounts receivable related to work performed for unconsolidated partnerships and joint ventures included in “Accounts receivable, net” was $186 million and $174 million as of March 31, 2024 and December 31, 2023, respectively.
Variable Interest Entities
The aggregate carrying value of unconsolidated VIEs (classified under both "Investments” and “Other accrued liabilities”) was a net asset of $103 million and $91 million as of March 31, 2024 and December 31, 2023, respectively. Some of our VIEs have debt; however, such debt is typically non-recourse to us. Our maximum exposure to loss as a result of our investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding necessary to satisfy the contractual obligations of the VIE. Future funding commitments as of March 31, 2024 for the unconsolidated VIEs were $57 million.
We are required to consolidate certain VIEs. Assets and liabilities associated with the operations of our consolidated VIEs are presented on the balance sheet. The assets of a VIE are restricted for use only for the particular VIE and are not available for our general operations. We have agreements with certain VIEs to provide financial or performance assurances to clients, as discussed elsewhere.
7. Guarantees
12
8. Contingencies and Commitments
We and certain of our subsidiaries are subject to litigation, claims and other commitments and contingencies, including matters arising in the ordinary course of business, of which the asserted value may be significant. We record accruals in the financial statements for contingencies when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. While there is at least a reasonable possibility that a loss may be incurred in any of the matters identified below, including a loss in excess of amounts accrued, management is unable to estimate the possible loss or range of loss or has determined such amounts to be immaterial. At present, except as set forth below, we do not expect that the ultimate resolution of any open matters will have a material adverse effect on our financial position or results of operations. However, legal proceedings and regulatory and governmental matters are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable outcomes could involve substantial monetary damages, fines, penalties and other expenditures. An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position. We might also enter into an agreement to settle one or more such matters if we determine such settlement is in the best interests of our stakeholders, and any such settlement could include substantial payments.
The following disclosures for commitments and contingencies have been updated since the matter was presented in the 2023 10-K.
Fluor Australia Ltd., our wholly-owned subsidiary (“Fluor Australia”), completed a cost reimbursable engineering, procurement and construction management services project for Santos Ltd. (“Santos”) involving a large network of natural gas gathering and processing facilities in Queensland, Australia. On December 13, 2016, Santos filed an action in Queensland Supreme Court (the “Court”) against Fluor Australia, asserting various causes of action and seeking damages and/or a refund of contract proceeds paid of AUD $1.47 billion. Santos has joined Fluor to the matter on the basis of a parent company guarantee issued for the project. In March 2023, a panel of 3 referees appointed by the Court (the "Panel”) issued a draft, non-binding report setting forth recommendations to the Court regarding liability and damages in the lawsuit. After consideration of further submissions by the parties, the Panel finalized its report on July 14, 2023. The Panel’s report has no legal effect unless it is adopted by the Court through an adoption hearing, and the Court can accept or reject, in whole or in part, the Panel’s recommendations. In the final report, the Panel recommended judgment for Fluor on one of Santos’s damages claims that Santos contends has an approximate value of AUD $700 million, and recommended judgment for Santos on other claims that the Panel valued at approximately AUD $790 million excluding interest and costs. While the project contract contains a liability cap of approximately AUD $236 million, the Panel found that the liability cap did not apply to Santos’s claims. Fluor has made an application to have the Court set aside the reference to the Panel and the Panel’s recommendations on several procedural and substantive grounds, including in relation to apparent bias of the referees, a failure to comply with the order which established the reference to the Panel and a lack of procedural fairness. In July 2023, the Court held oral argument on that application and reserved its decision. Pursuant to an application by Santos to adopt the Panel’s report, the Court then held an adoption hearing in February and March 2024 at which Fluor contended that the Court should not adopt the Panel’s recommendation based on numerous grounds, including the Panel’s failure to apply the project’s liability cap. The Court also reserved its decision at the close of the adoption hearing. We await the Court’s decisions on Fluor’s application to set aside the reference and Santos’s application to adopt the Panel’s report.
There have been no substantive changes to the disclosures for the following commitments and contingencies since the matter was presented in the 2023 10-K.
13
9. Contract Assets and Liabilities
The following summarizes information about our contract assets and liabilities:
| (in millions) | March 31, 2024 | December 31, 2023 | ||||||
| Information about contract assets: | ||||||||
| Contract assets | ||||||||
| Unbilled receivables - reimbursable contracts | $ | $ | ||||||
| Contract work in progress - lump-sum contracts | ||||||||
| Contract assets | $ | $ | ||||||
| 3ME March 31, | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Information about contract liabilities: | ||||||||
| Revenue recognized that was included in contract liabilities as of January 1 | $ | $ | ||||||
10. Remaining Unsatisfied Performance Obligations
We estimate that our RUPO will be satisfied over the following periods:
| (in millions) | March 31, 2024 | ||||
| Within 1 year | $ | ||||
| 1 to 2 years | |||||
| Thereafter | |||||
| Total RUPO | $ | ||||
11. Debt and Letters of Credit
Debt consisted of the following:
| (in millions) | March 31, 2024 | December 31, 2023 | |||||||||
| Borrowings under credit facility | $ | $ | |||||||||
| Senior Notes | |||||||||||
2028 Notes ( | |||||||||||
| Unamortized discount and deferred financing costs | ( | ( | |||||||||
2029 Notes ( | |||||||||||
| Unamortized deferred financing costs | ( | ( | |||||||||
| Total debt | $ | $ | |||||||||
Credit Facility
14
As of March 31, 2024, letters of credit totaling $450 million were outstanding under our $1.8 billion credit facility, which matures in February 2026. This credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.60 to 1.00 , a limitation on the aggregate amount of debt of the greater of $750 million or €750 million for our subsidiaries, and a minimum liquidity threshold of $1.2 billion, defined in the amended credit facility, which may be reduced to $1.0 billion upon the repayment of debt. The credit facility also contains provisions that will require us to provide collateral to secure the facility should we be downgraded to BB by S&P and Ba2 by Moody's, such collateral consisting broadly of our U.S. assets. Borrowings under the facility, which may be denominated in USD, EUR, GBP or CAD, bear interest at a base rate, plus an applicable borrowing margin. As of March 31, 2024, we had not made any borrowings under our credit facility line and maintained a borrowing capacity of $776 million.
Uncommitted Lines of Credit
As of March 31, 2024, letters of credit totaling $916 million were outstanding under uncommitted lines of credit.
Redemption of 2028 Notes
During the 2024 Quarter, we redeemed $10 million of aggregate outstanding 2028 Notes, with an immaterial earnings impact.
12. Convertible Preferred Stock
13. Fair Value Measurements
The following table delineates assets and liabilities that are measured at fair value on a recurring basis:
| March 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Hierarchy | Fair Value Hierarchy | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Trading securities(1) | $ | $ | $ | — | $ | — | $ | $ | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||
Derivative assets(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Commodity | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
NuScale warrants(3) | $ | $ | $ | $ | — | $ | $ | $ | $ | — | ||||||||||||||||||||||||||||||||||||||||
Derivative liabilities(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Commodity | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
_________________________________________________________
(1) Consists of registered money market funds and an equity index fund held in deferred compensation trusts. These investments represent the net asset value at the close of business of the period based on the last trade or official close of an active market or exchange.
(2) Foreign currency and commodity derivatives are estimated using pricing models with market-based inputs, which take into account the present value of estimated future cash flows.
15
(3) The NuScale warrant liabilities are comprised of public and private placement warrants redeemable by NuScale under certain conditions, both measured using the price of the public warrants. The private placement warrants are not publicly traded and have been classified as Level 2 measurements while the public warrants are classified as Level 1.
We have measured certain other impaired assets at fair value on a nonrecurring basis. The following summarizes information about financial instruments that are not required to be measured at fair value:
| March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||
| (in millions) | Fair Value Hierarchy | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
Cash(1) | Level 1 | $ | $ | $ | $ | ||||||||||||||||||||||||
Cash equivalents(2) | Level 2 | ||||||||||||||||||||||||||||
Marketable securities, current(2) | Level 2 | ||||||||||||||||||||||||||||
| Notes receivable, including noncurrent portion | Level 3 | ||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
2028 Senior Notes(3) | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
2029 Senior Notes(3) | Level 2 | ||||||||||||||||||||||||||||
_________________________________________________________
(1) Cash consists of bank deposits. Carrying amounts approximate fair value.
(2) Cash equivalents and marketable securities, current primarily consists of time deposits. Carrying amounts approximate fair value because of the short-term maturity of these instruments. Amortized cost is not materially different from the fair value.
(3) The fair value of the Senior Notes was estimated based on quoted market prices and Level 2 inputs.
14. Stock-Based Compensation
Equity Awards
Our executive and director stock-based compensation plans are described more fully in the 2023 10-K. In the 2024 and 2023 Quarters, RSUs totaling 390,442 and 383,974 , respectively, were granted to executives at a weighted-average grant date fair value of $37.05 and $35.76 per share, respectively, and generally vest over three years
Stock options for the purchase of 178,644 and 178,434 shares at a weighted-average exercise price of $37.02 and $35.76 per share were awarded to executives during the 2024 and 2023 Quarters, respectively. The options granted in 2024 and 2023 generally vest over 3 years and expire 10 years after the grant date.
Performance-based award units totaling 272,844 and 274,755 were awarded to Section 16 officers during the 2024 and 2023 Quarters, respectively. These awards generally cliff vest after 3 years and contain annual performance conditions for each of the 3 years of the vesting period. Under GAAP, performance-based elements of such awards are not deemed granted until the performance targets have been established. The performance targets for each year are generally established in the first quarter.
For awards granted under the 2024 performance plan, 80 % of the award is earned based on achievement of earnings before taxes targets over three 1-year periods and 20 % of the award is earned based on our 3-year cumulative TSR relative to companies in the S&P 500 on the date of the award. The performance component of these awards is deemed granted when targets are set while the TSR component of these awards is deemed granted upon issuance. During 2024 Quarter, the following units were granted based upon the establishment of performance targets:
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| Performance-based Award Units Granted in 2024 | Weighted Average Grant Date Fair Value Per Share | |||||||
| 2024 Performance Award Plan | $ | |||||||
| 2023 Performance Award Plan | $ | |||||||
| 2022 Performance Award Plan | $ | |||||||
For awards granted under the 2024, 2023 and 2022 performance award plans, the number of units are adjusted at the end of each performance period based on attainment of certain performance targets and on market conditions, pursuant to the terms of the award agreements. As of March 31, 2024, there were 218,783 shares associated with performance awards that had been awarded to employees, but which are not deemed granted due to the underlying performance targets having not yet been established.
Liability Awards
SGI awards granted to executives vest and become payable at a rate of 1/3 of the total award each year. Performance-based awards awarded to non-Section 16 officer executives will be settled in cash.
| Location in Statement of Operations | 3ME March 31, | |||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||
| SGI awards | G&A | $ | $ | |||||||||||||||||
Performance-based awards for non-Section 16 officers | G&A | |||||||||||||||||||
| Liabilities (in millions) | Location on Balance Sheet | March 31, 2024 | December 31, 2023 | |||||||||||
| SGI awards | Accrued salaries, wages and benefits and other noncurrent liabilities | $ | $ | |||||||||||
Performance-based awards for non-Section 16 officers | Accrued salaries, wages and benefits and other noncurrent liabilities | |||||||||||||
17
FLUOR CORPORATION
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our financial statements and our 2023 10-K. Except as the context otherwise requires, the terms Fluor or the Registrant, as used herein, are references to Fluor and references to the company, we, us, or our, as used herein, shall include Fluor, its consolidated subsidiaries and joint ventures.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made herein, including statements regarding our projected operating results, liquidity and backlog levels and the implementation of strategic initiatives are forward-looking in nature. Under the Private Securities Litigation Reform Act of 1995, a “safe harbor” may be provided to us for certain of these forward-looking statements. We caution readers that forward-looking statements, including disclosures which use words such as we “believe,” “anticipate,” “expect,” “estimate,” "aspire," "commit," "will," "may" and similar statements, are subject to risks and uncertainties which could cause actual results to differ materially from stated expectations. Significant factors potentially contributing to such differences include:
•The cyclical nature of many of the markets we serve and our clients' vulnerability to poor economic conditions, such as inflation, slow growth or recessions, which may result in decreased capital investment and reduced demand for our services;
•Our failure to receive anticipated new contract awards and the related impact on our operations;
•Failure to accurately estimate the cost and schedule on our projects, potentially resulting in cost overruns or obligations, including those related to project delays and those caused by the performance of our clients, subcontractors, suppliers and partners;
•Intense competition in the global EPC industry, which can place downward pressure on our contract prices and profit margins and may increase our contractual risks;
•The inability to hire and retain qualified personnel;
•Failure of our joint venture partners to perform their venture obligations, which could impact the success of those ventures and impose additional financial and performance obligations on us;
•Failure of our suppliers or subcontractors to provide supplies or services at the agreed-upon levels or times;
•Cybersecurity breaches of our systems and information technology;
•Civil unrest, security issues, labor conditions and other unforeseeable events in the countries in which we do business;
•Project cancellations, scope adjustments or deferrals, or foreign currency fluctuations, that could reduce the amount of our backlog and the revenue and profits that we earn;
•Repercussions of events beyond our control, such as severe weather conditions, natural disasters, pandemics, political crises or other catastrophic events, that may significantly affect operations, result in higher cost or subject the company to contract claims by our clients;
•Differences between our actual results and the assumptions and estimates used to prepare our financial statements;
•Client delays or defaults in making payments;
•The potential impact of changes in tax laws and other tax matters including, but not limited to, those from foreign operations, the realizability of our deferred tax assets and the ongoing audits by tax authorities;
•Our ability to secure appropriate insurance;
•The loss of business from one or more significant clients;
•The inability to adequately protect our intellectual property rights;
•The availability of credit and financial assurances plus restrictions imposed by credit facilities, both for us and our clients, suppliers, subcontractors or other partners;
•Adverse results in existing or future litigation, regulatory proceedings or dispute resolution proceedings (including claims for indemnification), or claims against project owners, subcontractors or suppliers;
•Failure of our employees, agents or partners to comply with laws, which could result in harm to our reputation and reduced profits or losses;
•The impact of new or changing legal requirements, as well as past and future environmental, health and safety regulations including climate change regulations; and
•The risks associated with our strategic initiatives, including dispositions.
Any forward-looking statements that we may make are based on our current expectations and beliefs concerning future developments and their potential effects on us. There is no assurance that future developments affecting us will be those presently anticipated by us.
Additional information concerning these and other factors can be found in our press releases and periodic filings with the SEC, including the 2023 10-K. These filings are available publicly on the SEC’s website at http://www.sec.gov, on our website at http://investor.fluor.com or upon request from our Investor Relations Department at (469) 398-7222. We cannot control such risk factors and other uncertainties, and in many cases, cannot predict the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. These risks and uncertainties should be considered when evaluating Fluor and deciding whether to invest in our securities. Except as otherwise required by law, we undertake no obligation to publicly update or revise our forward-looking statements, whether as a result of new information, future events or otherwise.
Results of Operations
In March 2024, we completed the sale of Stork's operations in continental Europe for $67 million, including a second payment of $38 million that was received in April 2024. During the 2024 Quarter, we recognized a gain on sale of $11 million including de-recognition of Stork's net assets and cumulative foreign currency translation.
During April 2024, we also entered into a definitive sale agreement for Stork's U.K. operations, which could close as early as the second quarter of 2024. The financial statement effects for this proposed U.K. sale did not meet the requirements for held-for-sale reporting as of March 31, 2024. The transaction, as agreed to, is not expected to have a material earnings impact when recognized.
In March 2023, we sold our AMECO South America business, which included operations in Chile and Peru. This transaction marked the completion of the AMECO divestiture. Upon the sale of AMECO South America in the 2023 Quarter, we recognized a $60 million negative earnings impact, including $35 million associated with foreign currency translation.
In August and September 2023, we completed the issuance of the 2029 Notes and the conversion of all our CPS. In December 2023, we extinguished the remaining outstanding 2024 Notes.
| 3ME March 31, | |||||||||||||||||
| (in millions) | 2024 | 2023 | |||||||||||||||
| Revenue | |||||||||||||||||
| Energy Solutions | $ | 1,432 | $ | 1,612 | |||||||||||||
| Urban Solutions | 1,479 | 1,208 | |||||||||||||||
| Mission Solutions | 601 | 649 | |||||||||||||||
| Other | 222 | 283 | |||||||||||||||
| Total revenue | $ | 3,734 | $ | 3,752 | |||||||||||||
| Segment profit (loss) $ and margin % | |||||||||||||||||
| Energy Solutions | $ | 68 | 4.7% | $ | 88 | 5.5% | |||||||||||
| Urban Solutions | 50 | 3.4% | (20) | (1.7)% | |||||||||||||
| Mission Solutions | 22 | 3.7% | 7 | 1.1% | |||||||||||||
| Other | (22) | NM | (90) | NM | |||||||||||||
Total segment profit (loss) $ and margin %(1) | $ | 118 | 3.2% | $ | (15) | (0.4)% | |||||||||||
| G&A | (59) | (62) | |||||||||||||||
| Foreign currency gain (loss) | 12 | (41) | |||||||||||||||
| Interest income (expense), net | 39 | 41 | |||||||||||||||
| Earnings (loss) attributable to NCI | (19) | (23) | |||||||||||||||
| Earnings (loss) before taxes | 91 | (100) | |||||||||||||||
| Income tax expense | (51) | (30) | |||||||||||||||
| Net earnings (loss) | $ | 40 | $ | (130) | |||||||||||||
| Less: Net earnings (loss) attributable to NCI | (19) | (23) | |||||||||||||||
| Net earnings (loss) attributable to Fluor | $ | 59 | $ | (107) | |||||||||||||
| New awards | |||||||||||||||||
| Energy Solutions | $ | 716 | $ | 712 | |||||||||||||
| Urban Solutions | 4,873 | 1,775 | |||||||||||||||
| Mission Solutions | 1,145 | 331 | |||||||||||||||
| Other | 284 | 416 | |||||||||||||||
| Total new awards | $ | 7,018 | $ | 3,234 | |||||||||||||
| New awards related to projects located outside of the U.S. | 27% | 53% | |||||||||||||||
(in millions) | March 31, 2024 | December 31, 2023 | |||||||||||||||
Backlog (2)(3) | |||||||||||||||||
| Energy Solutions | $ | 9,259 | $ | 9,722 | |||||||||||||
| Urban Solutions | 18,603 | 14,848 | |||||||||||||||
| Mission Solutions | 4,389 | 3,945 | |||||||||||||||
| Other | 488 | 926 | |||||||||||||||
| Total backlog | $ | 32,739 | $ | 29,441 | |||||||||||||
| Backlog related to projects located outside of the U.S. | 56% | 62% | |||||||||||||||
| Backlog related to reimbursable projects | 80% | 76% | |||||||||||||||
(1)Total segment profit is a non-GAAP financial measure. We believe that total segment profit provides a meaningful perspective on our results as it is the aggregation of individual segment profit measures that we use to evaluate and manage our performance.
(2)Backlog as of March 31, 2024 increased from backlog as of December 31, 2023 primarily due to an award for a large life sciences project. Backlog may include significant estimated amounts of third-party, subcontracted, CFM and pass-through costs. We do not report new awards or backlog for projects related to our equity method investments even though these awards may be significant contributors to earnings in future periods. Although backlog reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur.
(3)Includes backlog of $1.2 billion and $1.3 billion for legacy projects in a loss position as of March 31, 2024 and December 31, 2023, respectively.
While we experienced reductions in demand for certain services and the delay or abandonment of ongoing or anticipated projects during the COVID pandemic, our ability to win work was not materially impacted by COVID during the 2024 Quarter. Although many of our projects are in a state we consider normal, we continue to deal with the effects of COVID on our operating results as our estimates are inclusive of COVID effects and client recoveries.
During the 2024 Quarter, segment profit significantly improved. Segment profit in the 2023 Quarter included a $59 million charge for cost growth on the LAX Automated People Mover project as well as a $60 million negative earnings impact upon the sale of our AMECO South America business.
The effective tax rate on earnings for the 2024 Quarter was 55.6% compared to (30.1)% for the 2023 Quarter. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:
| 3ME March 31, | |||||||||||
| (In millions) | 2024 | 2023 | |||||||||
| U.S statutory federal income tax expense | $ | 19 | $ | (21) | |||||||
| Increase (decrease) in taxes resulting from: | |||||||||||
| State and local income taxes, net of federal income tax effects | 1 | (3) | |||||||||
| Valuation allowance, net | (4) | 52 | |||||||||
| Foreign tax impacts | 7 | 8 | |||||||||
| Noncontrolling interest | 4 | 5 | |||||||||
| Sale of AMECO South America | — | (10) | |||||||||
Reserve for uncertain tax positions | 17 | — | |||||||||
| Other adjustments | 7 | (1) | |||||||||
| Total income tax expense | $ | 51 | $ | 30 | |||||||
During the 2024 Quarter, we established a $17 million reserve for an uncertain tax position. We received an adverse court ruling and have reassessed our tax position. We have filed an appeal and intend to begin settlement negotiations, requesting penalty relief. The reserve established excludes $9 million of assessed penalties.
Beginning in January 2024, many non-US tax jurisdictions have enacted or in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion Model Rules, also known as Pillar Two. Pillar Two establishes a global minimum tax of 15% on large multinational corporations. We considered the applicable tax law changes in the countries in which we operate and have determined that there is no material impact to our tax provision for the 2024 Quarter. We will continue to evaluate the impact of these tax law changes on future periods.
Segment Operations
Energy Solutions
Revenue decreased in the 2024 Quarter primarily due to a decline in execution activity for several projects nearing completion partially offset by the ramp up of execution activities on chemicals projects in China and Canada and a batteries project in Poland.
Segment profit in the 2024 Quarter was adversely impacted by $29 million in cost growth for delays, craft labor and material escalation on a construction only subcontract executed by our joint venture entity in Mexico. The joint venture is working with the client to establish a commercial resolution to project impacts. Segment profit in the 2024 Quarter was also impacted by projects nearing completion partially offset by scope increase and ramp up of execution activities on a refinery project in Mexico. Segment profit in the 2024 Quarter included a gain of $7 million on embedded foreign currency derivatives compared to a loss of $39 million in the 2023 Quarter. The decline in segment profit margin in the 2024 Quarter reflects these same factors.
New awards in the 2024 Quarter remained flat compared to the 2023 Quarter. Backlog declined slightly during the 2024 Quarter due to the execution pace exceeding new award activity.
Urban Solutions
Revenue in the 2024 Quarter increased primarily due to the ramp up of execution activities on several recently awarded projects including two life sciences projects, a green steel project and two semiconductor projects. The revenue increases in the 2024 Quarter were partially offset by declines in the volume of execution activity for projects nearing completion including a large mining project and a life sciences project as well as the realignment of a large metals project.
Segment profit in the 2024 Quarter significantly improved due to the ramp up of execution activities on the new projects discussed above and segment profit in the 2023 Quarter included a $59 million charge for rework associated with subcontractor design errors, related schedule impacts and system integration testing timelines on the LAX Automated People Mover project. The increase in segment profit margin in the 2024 Quarter reflects these same factors.
New awards significantly increased in the 2024 Quarter due to awards for a large life sciences project and a mining project. Backlog increased during 2024 due to the new award activity. Our staffing business does not report new awards or backlog.
Mission Solutions
Revenue decreased in the 2024 Quarter due to lower contributions from 2 DOE contracts and the cancellation of a power project in 2023 partially offset by increased execution activities on FEMA hurricane support and a DOE contract.
Segment profit improved in the 2024 Quarter compared to the 2023 Quarter that included a $21 million charge for cost growth associated with additional schedule delays on a weapons facility project. The increase in segment profit margin in the 2024 Quarter was also driven by this same factor.
New awards increased during the 2024 Quarter and included task order contract awards under the Air Force Contract Augmentation Program V. Backlog included $2.8 billion and $2.7 billion of unfunded government contracts as of March 31, 2024 and December 31, 2023, respectively. Unfunded backlog reflects our estimate of future revenue under awarded government contracts for which funding has not yet been appropriated. We do not report new awards or backlog for projects related to our equity method investments even though these awards may be significant contributors to earnings in future periods.
Other
Other includes the operations of NuScale and the remaining Stork and AMECO businesses prior to their sale.
| 3ME March 31, | |||||||||||
| (in millions) | 2024 | 2023 | |||||||||
NuScale (1) | $ | (33) | $ | (29) | |||||||
| Stork | 11 | 1 | |||||||||
| AMECO | — | (62) | |||||||||
| Segment profit (loss) | $ | (22) | $ | (90) | |||||||
(1) NuScale expenses included in the determination of segment profit were as follows: | |||||||||||
| NuScale expenses | $ | (65) | $ | (58) | |||||||
| Less: DOE Reimbursable expenses | 6 | 8 | |||||||||
| NuScale expenses, net | (59) | (50) | |||||||||
| Less: Attributable to NCI | 26 | 21 | |||||||||
| NuScale profit (loss) | $ | (33) | $ | (29) | |||||||
Segment profit in 2024 includes an $11 million gain on the sale of Stork's operations in continental Europe. During April 2024, we also entered into a definitive sale agreement for Stork's U.K. operations, which could close as early as the second quarter of 2024.
Segment profit in 2023 includes the $60 million negative earnings impact upon the sale of our AMECO South America business, including $35 million for foreign currency translation.
G&A
| 3ME March 31, | |||||||||||
| (in millions) | 2024 | 2023 | |||||||||
| G&A | |||||||||||
| Compensation | $ | 43 | $ | 44 | |||||||
| SEC investigation | — | 5 | |||||||||
| Facilities | 2 | 2 | |||||||||
| Exit costs | 5 | 2 | |||||||||
| Other | 9 | 9 | |||||||||
| G&A | $ | 59 | $ | 62 | |||||||
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and estimates from those disclosed in our 2023 10-K.
Recent Accounting Pronouncements
Item is described more fully in the Notes to Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity arises from available cash and cash equivalents and marketable securities, cash generated from
operations, capacity under our credit facilities and, when necessary, access to capital markets. We have committed and uncommitted lines of credit available for revolving loans and letters of credit. We believe that for at least the next 12 months, anticipated cash generated from operations, along with our unused credit capacity and cash position, is sufficient to support operating requirements and debt maturities. We regularly review our sources and uses of liquidity and may pursue opportunities to address our liquidity needs.
18
Our credit facility contains provisions that will require us to provide collateral to secure the facility should we be downgraded to BB by S&P and Ba2 by Moody's, which is a one notch downgrade from both agencies' current ratings. If we are required to provide collateral, it would consist broadly of liens on our U.S. assets.
In January 2023, we redeemed the remaining €129 million of outstanding 2023 Notes for $140 million using cash on hand. During the fourth quarter of 2023, we extinguished the remaining outstanding $266 million principal amount of our 2024 Notes by transferring interest-bearing government securities to the trustee of those Notes.
As of March 31, 2024, letters of credit totaling $450 million were outstanding under our $1.8 billion credit facility, which matures in February 2026. This credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.60 to 1.00, a limitation on the aggregate amount of debt of the greater of $750 million or €750 million for our subsidiaries, and a minimum liquidity threshold of $1.2 billion, all as defined in the amended credit facility, which may be reduced to $1.0 billion upon the repayment of debt. Borrowings under the facility, which may be denominated in USD, EUR, GBP or CAD, bear interest at a base rate, plus an applicable borrowing margin. As of March 31, 2024 and through the issuance of this 10-Q, we had not made any borrowings under our credit facility. We have a sublimit of up to $1.0 billion in aggregate cash advances and financial letters of credit available to us under our credit facility with a current borrowing capacity of $776 million.
Cash and cash equivalents combined with marketable securities were $2.4 billion and $2.6 billion as of March 31, 2024 and December 31, 2023, respectively. Cash balances as of March 31, 2024 and December 31, 2023 include cash and cash equivalents and marketable securities held by NuScale of $120 million and $118 million, respectively. Cash and cash equivalents are held in numerous accounts throughout the world to fund our global project execution activities. Non-U.S. cash and cash equivalents amounted to $1.1 billion as of both March 31, 2024 and December 31, 2023. Non-U.S. cash and cash equivalents exclude deposits of U.S. legal entities that are invested in offshore, overnight accounts or short-term time deposits, to which there is unrestricted access.
In evaluating our liquidity needs, we consider cash and cash equivalents held by our consolidated variable interest entities (joint ventures and partnerships). These amounts (which totaled $462 million and $491 million as of March 31, 2024 and December 31, 2023, respectively) were not necessarily readily available for general purposes. We do not include our share of cash held by our proportionately consolidated joint ventures and partnerships in our consolidated cash balances even though these amounts may be significant. We also consider the extent to which client advances (which totaled $44 million and $80 million as of March 31, 2024 and December 31, 2023, respectively) are likely to be sustained or consumed over the near term for project execution activities and the cash flow requirements of our various foreign operations. In some cases, it may not be financially efficient to move cash and cash equivalents between countries due to statutory dividend limitations and/or adverse tax consequences. We did not consider any cash to be permanently reinvested outside the U.S. as of March 31, 2024 and December 31, 2023, other than unremitted earnings required to meet our working capital and long-term investment needs in non-U.S. foreign jurisdictions where we operate.
19
Cash Flows
| 3ME March 31, | ||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||
| OPERATING CASH FLOW | $ | (111) | $ | (161) | ||||||||||
| INVESTING CASH FLOW | ||||||||||||||
| Proceeds from sales and maturities (purchases) of marketable securities | (5) | 11 | ||||||||||||
| Capital expenditures | (34) | (20) | ||||||||||||
| Proceeds from sale of assets (including AMECO-South America in 2023) | 30 | 22 | ||||||||||||
| Investments in partnerships and joint ventures | (13) | (2) | ||||||||||||
| Other | — | 2 | ||||||||||||
| Investing cash flow | (22) | 13 | ||||||||||||
| FINANCING CASH FLOW | ||||||||||||||
| Purchases and retirement of debt | (10) | (137) | ||||||||||||
| Dividends paid on CPS | — | (10) | ||||||||||||
| Other | (16) | (14) | ||||||||||||
| Financing cash flow | (26) | (161) | ||||||||||||
| Effect of exchange rate changes on cash | (25) | 7 | ||||||||||||
| Increase (decrease) in cash and cash equivalents | (184) | (302) | ||||||||||||
| Cash and cash equivalents at beginning of period | 2,519 | 2,439 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 2,335 | $ | 2,137 | ||||||||||
| Cash paid during the period for: | ||||||||||||||
| Interest | $ | 20 | $ | 19 | ||||||||||
| Income taxes (net of refunds) | 46 | 24 | ||||||||||||
Operating Activities
Cash flows from operating activities result primarily from our EPC activities and are affected by our earnings level and changes in working capital associated with such activities. Working capital levels vary from period to period and are primarily affected by our volume of work and billing schedules on our projects. These levels are also impacted by the stage of completion and commercial terms of engineering and construction projects, as well as our execution of our projects compared to their budget. Working capital requirements also vary by project and the payments terms agreed to with our clients, vendors and subcontractors. Most contracts require payments as the projects progress. Additionally, certain projects receive advance payments from clients. A typical trend for our lump-sum projects is to have higher cash balances during the initial phases of execution due to deposits paid to us which then diminish toward the end of the construction phase. As a result, our cash position is reduced as customer advances are utilized, unless they are replaced by advances on other projects. We maintain cash reserves and borrowing facilities to provide additional working capital in the event that a project’s net operating cash outflows exceed its available cash balances. As of March 31, 2024, our backlog included $1.2 billion for loss projects, including approximately $300 million of estimated unfunded losses associated therewith. The comparable amounts in December 31, 2023 were $1.3 billion of backlog and $344 million of unfunded losses.
20
Our operating cash flow is typically lower in the first quarter of each year due to the timing of payout of employee incentive awards from the prior year. Our operating cash flow for the 2024 and 2023 Quarters was also negatively impacted by increases in working capital on several large projects. During the 2024 Quarter, we funded an estimated $55 million on loss projects.
Investing Activities
We hold cash in bank deposits and marketable securities which are governed by our investment policy. This policy focuses on, in order of priority, the preservation of capital, maintenance of liquidity and maximization of yield. These investments may include money market funds, bank deposits placed with highly-rated financial institutions, repurchase agreements that are fully collateralized by U.S. Government-related securities, high-grade commercial paper and high quality short-term and medium-term fixed income securities.
Capital expenditures in 2024 primarily related to improvements to our new office lease in Houston as well as construction equipment on infrastructure projects compared to expenditures for construction equipment and investments in IT in 2023.
Proceeds from sales of assets during the 2024 Quarter included $29 million for the sale of our Stork's European business. We received additional proceeds from the sale of $38 million in April 2024. Proceeds from sales of assets during the 2023 Quarter included $17 million for the sale of our AMECO South America business, which included operations in Chile and Peru.
Investments in unconsolidated partnerships and joint ventures in the 2024 Quarter included capital contributions to an infrastructure joint venture.
Financing Activities
During the 2024 Quarter, we redeemed $10 million of aggregate outstanding 2028 Notes, with an immaterial earnings impact. During the 2023 Quarter, we redeemed the remaining €129 million of outstanding 2023 Notes for $140 million with no earnings impact.
In September 2023, we exercised our mandatory conversion rights on our CPS in which all of the outstanding shares of CPS converted to 44.9585 shares of our common stock, plus a cash payment of $45.23 per CPS for a make-whole premium. 2023 Quarter CPS dividends of $10 million were paid in February 2023. Upon conversion, all dividends on the CPS ceased.
Distributions paid to holders of NCI represent cash outflows to partners of consolidated partnerships or joint ventures created primarily for the execution of single contracts or projects. Distributions in the 2024 Quarter related to a Mission Solutions joint venture. Capital contributions by NCI during the 2024 and 2023 Quarters related to investments by NuScale's NCI holders.
We have a common stock repurchase program, authorized by our Board of Directors, to purchase shares in the open market or privately negotiated transactions at our discretion. As of March 31, 2024, over 10 million shares could still be purchased under the existing stock repurchase program.
Letters of Credit
As of March 31, 2024, letters of credit totaling $450 million were outstanding under committed lines of credit. As of March 31, 2024, letters of credit totaling $916 million were outstanding under uncommitted lines of credit including letters of credit totaling $345 million for two lump-sum projects in Kuwait that are substantially complete except for the resolution of unapproved change orders and extension of time claims. Letters of credit are ordinarily provided to indemnify our clients if we fail to perform our obligations under our contracts. Surety bonds may be used as an alternative to letters of credit.
Guarantees
The maximum potential amount of future payments that we could be required to make under outstanding performance guarantees, which represents the remaining cost of work to be performed, was estimated to be $15 billion as of March 31, 2024.
Financial guarantees, made in the ordinary course of business in certain limited circumstances, are entered into with financial institutions and other credit grantors and generally obligate us to make payment in the event of a default by the borrower. These arrangements generally require the borrower to pledge collateral to support the fulfillment of the borrower’s obligation.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes to market risk during the 2024 Quarter. Accordingly, our disclosures provided in the 2023 10-K remain relevant.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on their evaluation as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) are effective as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 of the Exchange Act.
Changes in Internal Control over Financial Reporting
There were no changes to our ICFR that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our ICFR.
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FLUOR CORPORATION
CHANGES IN CONSOLIDATED BACKLOG
UNAUDITED
| 3ME March 31, | ||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||
| Backlog, January 1 | $ | 29,441 | $ | 26,049 | ||||||||||
| New awards | 7,018 | 3,234 | ||||||||||||
| Adjustments and cancellations, net | (20) | 52 | ||||||||||||
| Work performed | (3,700) | (3,712) | ||||||||||||
| Backlog, March 31 | $ | 32,739 | $ | 25,623 | ||||||||||
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PART II: OTHER INFORMATION
Item 1. Legal Proceedings
As part of our normal business activities, we are party to a number of legal proceedings and other matters in various stages of development. Management periodically assesses our liabilities and contingencies in connection with these matters based upon the latest information available. We disclose material pending legal proceedings pursuant to SEC rules and other pending matters as we may determine to be appropriate.
Additional information on matters in dispute may be found in Part I, Item 1 of this Q1 2024 10-Q.
Item 1A. Risk Factors
There have been no material changes from our risk factors as disclosed in the 2023 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) The following table provides information for the quarter ended March 31, 2024 about purchases by the company of equity securities that have been registered pursuant to Section 12 of the Exchange Act.
Issuer Purchases of Equity Securities
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Program (1) | ||||||||||||||||||||||
| January 1 — January 31, 2024 | — | $ | — | — | 10,513,093 | |||||||||||||||||||||
| February 1 — February 29, 2024 | — | — | — | 10,513,093 | ||||||||||||||||||||||
| March 1 — March 31, 2024 | — | — | — | 10,513,093 | ||||||||||||||||||||||
| Total | — | $ | — | — | ||||||||||||||||||||||
_________________________________________________________
(1) The share repurchase program, as amended, totals 34,000,000 shares. We may repurchase shares from time to time in open market or privately negotiated transactions, including through pre-arranged trading programs, at our discretion, subject to market conditions and other factors and at such time and in amounts that we deem appropriate.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
During the quarter ended March 31, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) adopted terminated
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Item 6. Exhibits
EXHIBIT INDEX
| Exhibit | Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 10.1 | ||||||||
| 10.2 | ||||||||
| 10.3 | ||||||||
| 10.4 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 101.INS | Inline XBRL Instance Document.* | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document.* | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.* | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.* | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.* | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.* | |||||||
| 104 | The cover page from the Company's Q1 2024 10-Q for the three months ended March 31, 2024, formatted in Inline XBRL (included in the Exhibit 101 attachments).* | |||||||
_______________________________________________________________________
* New exhibit filed with this report.
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FLUOR CORPORATION | |||||||||||
| Date: | May 2, 2024 | By: | /s/ Joseph L. Brennan | ||||||||
| Joseph L. Brennan | |||||||||||
| Chief Financial Officer | |||||||||||
| Date: | May 2, 2024 | By: | /s/ John C. Regan | ||||||||
| John C. Regan | |||||||||||
| Chief Accounting Officer | |||||||||||
26
Exhibit 10.1
FORM OF OPTION AGREEMENT
This Option Agreement ("Agreement") entered into as of [GRANT DATE] (the "Grant Date"), by and between Fluor Corporation, a Delaware corporation (the "Company"), and you ("Grantee" or “you”) evidences the grant to Grantee of a Stock Option ("Option") under the Fluor Corporation 2020 Performance Incentive Plan (the "Plan"). Capitalized terms used in this Agreement and not defined herein have the meaning set forth in the Plan.
Section 1.AWARD SUBJECT TO PLAN
This Option is granted subject to all of the terms and conditions of this Agreement and the Plan, including any terms, rules or determinations made by the Committee pursuant to its administrative authority under the Plan, and such further terms as are set forth in the Plan that are applicable to awards thereunder, including without limitation provisions on adjustment of awards, non-transferability, satisfaction of tax requirements and compliance with other laws. The Option is not intended to be an "incentive stock option" within the meaning of that term under Code Section 422.
Section 2.OPTION AWARD
The Company hereby awards Grantee an Option to purchase shares of Company common stock, par value $.01 per share (“Shares”), pursuant to this Agreement at an exercise price per Share of $XX.XX, subject to the terms and conditions set forth herein and in the Plan. The Option may not be exercised in whole or in part as of the Grant Date, and becomes exercisable only if and to the extent provided in the following paragraphs and otherwise subject to and in accordance with the Plan.
Section 3.VESTING AND EXPIRATION
The Option shall vest and become exercisable at a rate of one third of the total number of Shares granted per year (rounded up to the nearest whole Share) commencing on [FIRST VESTING DATE IN ONE YEAR] and annually thereafter with [FINAL VESTING DATE IN THREE YEARS], provided that Grantee’s employment has not terminated on or before such date unless one of the exceptions in this Section 3 is met. Subject to the provisions below and the terms of the Plan, the right to exercise any vested portion of the Option shall expire on [EXPIRATION DATE IN 10 YEARS]. Notwithstanding the foregoing, in the event that on the expiration date (i) the exercise of the Option is prohibited by applicable law or (ii) Shares may not be purchased or sold by you due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the expiration date shall be delayed until 30 days following the end of the legal prohibition, black-out period or lock-up agreement.
If your employment with the Company or any of its subsidiaries terminates for any reason other than death, Retirement, Disability or a Qualifying Termination, or a termination for Cause, each as defined below and determined by the Committee in accordance with the Plan, then as of the date of such termination this Option shall expire as to any portion which has not yet become vested and exercisable, meaning that you shall forfeit such portion in exchange for no additional consideration or payment. If prior to the Option becoming vested and exercisable in full pursuant to the preceding paragraph, your employment with the Company or any of its subsidiaries terminates by reason of your death, Disability or a Qualifying Termination, each as determined by the Committee in accordance with the Plan, then any portion of this Option which has yet to become vested and exercisable shall become immediately vested and exercisable. If prior to the Option becoming vested and exercisable in full pursuant to the preceding paragraph, your employment with the Company or any of its subsidiaries terminates by reason of your Retirement and you deliver a signed long term incentive vesting/forfeiture agreement to the Company in a form acceptable to the Company (except when such an agreement is prohibited by governing law as determined by the Company), then any portion of this Option which has yet to become vested and exercisable shall continue to vest and become exercisable as set forth in the preceding paragraph. If prior to the Option becoming vested and exercisable in full pursuant to the preceding paragraph, your employment with the Company is terminated for Cause, regardless of whether you are Retirement eligible, you shall forfeit your right to receive any unvested or unexercised portion of this Option in exchange for no additional consideration or payment, unless otherwise prohibited by law. Notwithstanding the foregoing and regardless of reason for termination, under all circumstances other than your Qualifying Termination, any Option held less than one year from [DATE] shall be forfeited for no additional consideration or payment[; provided, however, in the event of your Retirement, this one-year holding requirement may be waived by the Committee, in its sole and absolute discretion and any portion of this Option which has yet to become vested and exercisable shall continue to vest and become exercisable as set forth in the preceding paragraph]1. Nothing in the Plan or this Agreement confers any right of continuing employment with the Company or its subsidiaries. Notwithstanding the foregoing, if in the event of a Change of Control the successor to the Company does not assume this Option, then any portion of this Option which has yet to become vested and exercisable and which has not otherwise been forfeited pursuant to the provisions of this Section 3 shall become immediately vested and exercisable.
1 May be added for some officers.
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To the extent that this Option is exercisable after your termination of employment, after taking into account the vesting provisions set forth in this Section 3, then this Option shall expire three (3) months following your termination of employment; provided, that if such termination occurred on account of your death, Retirement, Disability, or a Qualifying Termination, the Option shall expire on its original expiration date; provided further, that if such termination occurred for Cause, the Option shall expire on the date of termination of emplyoment.
For purposes of this Agreement, "Retirement" and "Disability" mean, respectively, your retirement or disability, all as determined in accordance with applicable Company personnel policies and the Plan. The term “Qualifying Termination” means your involuntary termination of employment by the Company, without Cause, within two (2) years following a Change of Control of the Company. For this purpose, “Cause” means your dishonesty, fraud, willful misconduct, breach of fiduciary duty, conflict of interest, commission of a felony, material failure or refusal to perform your job duties in accordance with Company policies, material violation of Company policy that causes harm to the Company or its subsidiaries or other wrongful conduct of a similar nature and degree.
Section 4.RESALE AND TRANSFER RESTRICTIONS
Neither the Option nor any interest therein 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. The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any re-sales by the Grantee or other subsequent transfers by the Grantee of any Shares issued as a result of the exercise of this Option, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Grantee and other Option holders and (с) restrictions as to the use of a specified brokerage firm for such re-sales or other transfers.
Section 5.WITHHOLDING
Regardless of any action the Company or the Grantee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Grantee acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by the Grantee is and remains the Grantee’s responsibility and that the Company and/or the Employer (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the grant of this Option, including the grant, vesting and exercise of the Option, delivery of Shares and/or cash related to such Option or the subsequent sale of any Shares acquired pursuant to such Option, and (ii) do not commit to structure the terms or any aspect of the grant of this Option to reduce or eliminate the Grantee’s liability for Tax-Related Items. The Grantee shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Grantee’s participation in the Plan or receipt of this Option that cannot be satisfied by the means described below. Further, if the Grantee is subject to tax in more than one jurisdiction, the Grantee acknowledges that the Company and/or Employer (or former Employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. The Company may refuse to deliver the Shares if the Grantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items.
Prior to the taxable or tax withholding event, as applicable, the Grantee shall pay, or make adequate arrangements satisfactory to the Company or to the Employer (in their sole discretion) to satisfy all Tax-Related Items. In this regard, the Grantee authorizes the Company or Employer to withhold all applicable Tax-Related Items legally payable by the Grantee by (1) withholding a number of Shares otherwise deliverable equal to the Retained Share Amount (as defined below); (2) withholding from the Grantee’s wages or other cash compensation paid by the Company and/or Employer; and/or (3) withholding from proceeds of the sale of Shares acquired upon settlement of the Option (e.g. through cashless exercise), either through a voluntary sale or through a sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization), to the extent permitted by the Plan Administrator. The “Retained Share Amount” shall mean a number of Shares equal to the quotient of the minimum statutory tax withholding obligation of the Company triggered by the Option on the relevant date, divided by the fair market value of one Share on the relevant date or as otherwise provided in the Plan. If the obligation for Tax-Related Items is satisfied by withholding a number of Shares as described herein, the Grantee understands that he or she shall be deemed to have been issued the full number of applicable Shares, notwithstanding that a number of Shares are held back solely for the purpose of paying the Tax-Related Items.
Grantee acknowledges and understands that Grantee should consult a tax advisor regarding Grantee’s tax obligations.
Section 6.SEVERABILITY
In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
- 2 -
Section 7.DATA PROTECTION
The Grantee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Grantee’s personal data as described in this document by and among, as applicable, the Employer, and the Company and its subsidiaries for the exclusive purpose of implementing, administering and managing the Grantee’s participation in the Plan. The Grantee understands that the Company, its subsidiaries and the Employer hold certain personal information about the Grantee, including, but not limited to, name, home address and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Options or any other entitlement to Shares awarded, canceled, purchased, exercised, vested, unvested or outstanding in the Grantee’s favor for the purpose of implementing, managing and administering the Plan (“Data”). The Grantee understands that the Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Grantee’s country or elsewhere, including outside the European economic area, and that the recipient country may have different data privacy laws and protections than the Grantee’s country. The Grantee understands that he/she may request a list with the names and addresses of any potential recipients of the Data by contacting the local human resources representative. The Grantee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Grantee’s participation in the Plan, including any requisite transfer of such Data, as may be required to a broker or other third party with whom the Grantee may elect to deposit any Shares acquired under the Plan. The Grantee understands that Data will be held only as long as is necessary to implement, administer and manage participation in the Plan. The Grantee understands that he/she may, at any time, view Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by contacting the local human resources representative in writing. The Grantee understands that refusing or withdrawing consent may affect the Grantee’s ability to participate in the Plan. For more information on the consequences of refusing to consent or withdrawing consent, the Grantee understands that he/she may contact the Plan administrator at the Company.
Section 8.ACKNOWLEDGMENT AND WAIVER
By accepting the grant of this Option, the Grantee acknowledges and agrees that:
(a)the Plan is established voluntarily by the Company, and it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan or this Agreement;
(b)the grant of Options is voluntary and occasional and does not create any contractual or other right to receive future grants of Shares or Options, or benefits in lieu of Shares or Options, even if Shares or Options have been granted repeatedly in the past;
(c)all decisions with respect to future grants, if any, shall be at the sole discretion of the Company;
(d)the Grantee’s participation in the Plan shall not create a right to further employment with Employer and shall not interfere with the ability of Employer to terminate the Grantee’s employment relationship, and it is expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law;
(e)the Grantee is participating voluntarily in the Plan;
(f)Option grants and resulting benefits are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and are outside the scope of the Grantee’s employment contract, if any;
(g)Option grants and resulting benefits are not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance, resignation, termination, redundancy, or end of service payments, or bonuses, long-service awards, pension or retirement benefits or similar payments insofar as permitted by law;
(h)in the event that the Grantee is not an employee of the Company, this grant of Options shall not be interpreted to form an employment contract or relationship with the Company, and furthermore, this grant of Options shall not be interpreted to form an employment contract with the Employer or any subsidiary of the Company;
- 3 -
(i)the future value of the Shares is unknown, may increase or decrease from the date of grant or exercise of the Option and cannot be predicted with certainty;
(j)in consideration of the grant of this Option, no claim or entitlement to compensation or damages shall arise from termination or diminution in value of this Option resulting from termination of the Grantee’s employment by the Company or the Employer (for any reason whatsoever), and the Grantee irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the terms of this Agreement, the Grantee shall be irrevocably deemed to have waived any entitlement to pursue such claim; and
(k)the award evidenced by this Agreement is subject to all Company policies relating to the clawback and/or recoupment of compensation, as the same may be amended from time to time, and to the extent the Grantee is subject to such policies, the terms and conditions of such policies are hereby incorporated by reference into this Agreement.
Section 9.CONFIDENTIALITY
The Agreement and the Option granted hereunder are conditioned upon Grantee not disclosing this Agreement or said Option to anyone other than Grantee's spouse or financial advisor or senior management of the Company or senior members of the Company's Law, Tax, and Human Resources departments during the period prior to the exercise of said Option. If disclosure is made by Grantee to any other person not authorized by the Company, this Agreement and said Option shall be null and void and shall terminate in exchange for no additional consideration or payment. Notwithstanding any other provision of this Agreement or any other agreement, if Grantee makes a confidential disclosure of a Company trade secret to a government official or an attorney for the purpose of reporting or investigating a suspected violation of law, or in a court filing under seal, Grantee shall not be held liable under this Agreement or any other agreement, or under any federal or state trade secret law for such a disclosure. Moreover, nothing in this Agreement or any other agreement shall prevent Grantee from making a confidential disclosure of any other confidential information to a government official, to an attorney as necessary to obtain legal advice or in a court filing under seal.
Section 10.GRANT-SPECIFIC TERMS
Appendix A contains additional terms and conditions of the Agreement applicable to Grantees residing outside the U.S. In addition, Appendix A also contains information and notices regarding exchange control and certain other issues of which the Grantee (if residing outside the U.S.) should be aware that may arise as a result of participation in the Plan.
Section 11.ENFORCEMENT
This Agreement and the Option granted hereunder shall be governed by, construed, administered and enforced in accordance with the laws of the State of Delaware without reference to choice or conflict of law principles.
Section 12.EXECUTION OF AWARD AGREEMENT
Please acknowledge your acceptance of the terms of this Agreement by electronically signing this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first herein above written.
FLUOR CORPORATION
____________________________
By: [NAME]
[TITLE]
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APPENDIX A
Fluor Corporation Option Award
Under the 2020 Performance Incentive Plan
Fluor Corporation Option Award
Under the 2020 Performance Incentive Plan
Terms For Non-U.S. Grantees
TERMS AND CONDITIONS
This Appendix A, which is part of the Agreement, includes additional terms and conditions of the Agreement that will apply to you if you are a resident in one of the countries listed below. Capitalized terms used but not defined herein shall have the same meanings assigned to them in the Plan and the Agreement.
NOTIFICATIONS
This Appendix A also includes information regarding exchange control and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of [DATE]. Such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the information in this Appendix A as the only source of information relating to the consequences of your participation in the Plan because such information may be out-of-date when your Options vest and/or you sell any Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to your particular situation. As a result, the Company is not in a position to assure you of any particular result. You are therefore advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your situation.
Finally, if you are a citizen or resident of a country other than that in which you are currently working, the information contained herein may not apply to you.
GRANT-SPECIFIC TERMS
Below please find country specific language that applies to Australia, Canada, Chile, Germany, the Netherlands, Russia, South Africa, Spain and the United Kingdom.
AUSTRALIA
Terms and Conditions
Prospectus Information. The “Offer Document” and “Australian Rules” contain additional terms and conditions that govern the Option. Grantees should review those documents carefully. In addition, the written or other materials provided to Grantees in connection with the Options have been prepared for the purpose of complying with the relevant United States securities regulations and applicable stock exchange requirements. The information disclosed may not be the same as that which must be disclosed in a prospectus prepared under Australian law.
Notifications
Securities Law Information. If Grantee acquires Shares pursuant to the Option and offers the Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. Grantees should obtain legal advice on disclosure obligations prior to making any such offer.
Exchange Control Information. Exchange control reporting is required for cash transactions exceeding A$10,000 and international fund transfers. The Australian bank assisting with the transaction will file the report. If there is no Australian bank involved in the transfer, Grantee will be required to file the report.
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CANADA
Terms and Conditions
Form of Payment. Due to legal restrictions in Canada, and notwithstanding any language to the contrary in the Plan, Grantees are prohibited from surrendering previously owned Shares or, from attesting to the ownership of previously owned Shares, to pay the exercise price or any tax liability in connection with the Option.
Language Consent
The following provision applies to residents of Quebec:
The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à la présente convention.
Notifications
Additional Restrictions on Resale. Securities purchased under the Plan may be subject to certain restrictions on resale imposed by Canadian provincial securities laws. You are encouraged to seek legal advice prior to any resale of such securities. In general, participants resident in Canada may resell their securities in transactions carried out on exchanges outside of Canada.
Tax Reporting. The Tax Act and the regulations thereunder require a Canadian resident individual (among others) to file an information return (Form T1135) disclosing prescribed information where, at any time in a tax year, the total cost amount of such individual’s “specified foreign property” (which includes Shares) exceeds Cdn.$100,000. You should consult your own tax advisor regarding this reporting requirement.
CHILE
Terms and Conditions
There are no country-specific provisions.
Terms and Conditions
There are no country-specific provisions.
Notifications
Securities Law Information. Neither the Company, the award, nor any Company shares acquired under the Plan are registered with the Chilean Registry of Securities or are under the control of the Chilean Superintendence of Securities.
Exchange Control Information. Exchange control reporting is required to remit funds for the purchase of shares exceeding US$10,000 (including cashless exercise transactions). If reporting is required, you will be responsible for filing this report with the Central Bank of Chile. In addition, you must also file a report with the Central Bank if, in a given year, you have kept investments, deposits, or credits abroad in an amount that exceeds US$5,000,000.
Tax Information. Registration of your investment in Company Shares with the Chilean Internal Revenue Service may result in more favorable tax treatment. Please consult your tax advisor for additional details.
GERMANY
Terms and Conditions
There are no country-specific provisions.
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Notifications
Exchange Control Information. Cross-border payments in excess of EUR12,500 must be reported monthly to the German Federal Bank. If Grantee uses a German bank to transfer a cross-border payment in excess of EUR12,500 in connection with the sale of Shares acquired under the Plan, the bank will file the report for you. In addition, you must report any receivables, payables, or debts in foreign currency exceeding an amount of EUR5,000,000 on a monthly basis.
THE NETHERLANDS
Terms and Conditions
There are no country-specific provisions.
Notifications
Insider-Trading Notification. Grantees should be aware of the Dutch insider-trading rules, which may impact the sale of Shares acquired upon exercise of the Option. In particular, Grantees may be prohibited from effectuating certain transactions involving Shares if they have inside information about the Company. Grantees should consult their personal legal advisor if they are uncertain whether the insider-trading rules apply to them. By accepting the Agreement and participating in the Plan, Grantee acknowledges having read and understood this notification and acknowledges that it is his or her responsibility to comply with the Dutch insider-trading rules.
RUSSIA
Terms and Conditions
Securities Law Information. Grantee acknowledges that the Agreement, the grant of options, the Plan and all other materials that Grantee may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. The issuance of securities pursuant to the Plan has not and will not be registered in Russia and therefore, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.
Grantee further acknowledges that in no event will Shares acquired upon exercise of the options be delivered to Grantee in Russia; all Shares acquired upon exercise of the options will be maintained on Grantee’s behalf in the United States.
Grantee acknowledges that Grantee is not permitted to sell Shares directly to a Russian legal entity or resident.
Notifications
Grantee understands that Grantee is solely liable for all applicable Russian exchange control requirements (including repatriation requirements applicable to the proceeds from the sale of Shares).
SOUTH AFRICA
Terms and Conditions
There are no country-specific provisions.
Notifications
Exchange Control Information. To participate in the Plan, Grantee understands that Grantee must comply with exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.
Because the Exchange Control Regulations change frequently and without notice, Grantee understands that Grantee should consult a legal advisor prior to the purchase or sale of shares under the Plan to ensure compliance with current regulations. Grantee understands that it is Grantee’s responsibility to comply with South African exchange control laws, and neither the Company nor your Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.
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SPAIN
Terms and Conditions
There are no country-specific provisions.
Notifications
No Special Employment or Similar Rights. Grantee understands that the Company has unilaterally, gratuitously, and discretionally decided to distribute awards under the Plan to individuals who may be employees of the Company or its subsidiaries throughout the world. The decision is a temporary decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its subsidiaries presently or in the future, other than as specifically set forth in the Plan and the terms and conditions of Grantee’s option grant. Consequently, Grantee understands that any grant is given on the assumption and condition that it shall not become a part of any employment contract (either with the Company or any of its subsidiaries) and shall not be considered a mandatory benefit, salary for any purpose (including severance compensation) or any other right whatsoever. Further, Grantee understands and freely accepts that there is no guarantee that any benefit whatsoever shall arise from any gratuitous and discretionary grant since the future value of the awards and underlying shares is unknown and unpredictable. In addition, Grantee understands that this grant would not be made but for the assumptions and conditions referred to above; thus, Grantee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of awards shall be null and void and the Plan shall not have any effect whatsoever.
Further, the Option provides a conditional right to Shares and may be forfeited or affected by Grantee’s termination of employment, as set forth in the Agreement. For avoidance of doubt, Grantee’s rights, if any, to the Options upon termination of employment shall be determined as set forth in the Agreement, including, without limitation, where (i) Grantee is considered to be unfairly dismissed without good cause; (ii) Grantee is dismissed for disciplinary or objective reasons or due to a collective dismissal; (iii) Grantee terminates service due to a change of work location, duties or any other employment or contractual condition; or (iv) Grantee terminates service due to the Company’s or any of its subsidiaries’ unilateral breach of contract.
Securities Law Notice. The options granted under the Plan do not qualify as securities under Spanish regulations. By the grant of the options, no "offer of securities to the public", as defined under Spanish law, has taken place or will take place in Spanish territory. The present document and any other document relating to the offer of options under the Plan has not been nor will it be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission), and it does not constitute a public offering prospectus.
Foreign Asset and Account Reporting. To the extent that Spanish residents hold rights or assets (e.g., shares of common stock, cash, etc.) in a bank or brokerage account outside of Spain with a value in excess of €50,000 per type of right or asset as of December 31 each year, such residents are required to report information on such rights and assets on their tax return for such year. Shares of common stock constitute securities for purposes of this requirement, but Options (whether vested or unvested) are generally not considered assets or rights for purposes of this requirement.
If applicable, Spanish residents must report the assets or rights on Form 720 by no later than March 31 following the end of the relevant year. After such assets or rights are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reported assets or rights increases by more than €20,000. Failure to comply with this reporting requirement may result in penalties.
Spanish residents are also required to electronically declare to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the securities held in such accounts, if the value of the transactions for all such accounts during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceeds €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €1,000,000.
Spanish residents should consult with their personal tax and legal advisors to ensure compliance with their personal reporting obligations.
Exchange Control Information. All acquisitions of foreign shares by Spanish residents must comply with exchange control regulations in Spain. Because of foreign investments requirements, the acquisition of Company shares under the Plan must be declared for statistical purposes to the Spanish Direccion General de Politica Comercial y de Inversiones Extranjeras (the “DGPCIE“). If you acquire the Shares through the use of a Spanish financial institution, that institution will automatically make the declaration to the DGPCIE for you. Otherwise, you must make the declaration by filling a form with the DGPCIE.
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If you import the Shares acquired under the Plan into Spain, you must declare the importation of the share certificates to the DGPCIE.
In addition, you must also file a declaration of the ownership of the Shares with the Directorate of Foreign Transactions each January while the Shares are owned. These filings are made on standard forms furnished by the Directorate of Foreign Transactions.
When you receive any foreign currency payments (i.e., as a result of the sale of the Shares), you must inform the institution receiving the payment of the basis upon which such payment is made and provide certain specific information (e.g., name, address, and fiscal identification number; the name and corporate domicile of the company; the amount of the payment; the type of foreign currency received; the country of origin; and the reason for the payment).
UNITED KINGDOM
Terms and Conditions
UK Rules. The Option is granted under the “UK Rules,” which contain additional terms and conditions that govern the Option. Grantees should review the UK Rules carefully.
Notifications
There are no country-specific notifications.
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Exhibit 10.2
FORM OF RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement ("Agreement") entered into as of [GRANT DATE] (the "Grant Date"), by and between Fluor Corporation, a Delaware corporation (the "Company"), and you ("Grantee" or “you”) evidences the grant to Grantee of a Stock Unit Award (“RSU Award”) under the Fluor Corporation 2020 Performance Incentive Plan (the "Plan"). Capitalized terms used in this Agreement and not defined herein have the meaning set forth in the Plan.
Section 1.AWARD SUBJECT TO PLAN
This RSU Award is granted subject to all of the terms and conditions of this Agreement and the Plan, including any terms, rules or determinations made by the Committee pursuant to its administrative authority under the Plan, and such further terms as are set forth in the Plan that are applicable to awards thereunder, including without limitation provisions on adjustment of awards, non-transferability, satisfaction of tax requirements and compliance with other laws.
Section 2.RESTRICTED STOCK UNIT AWARD
The Company hereby awards Grantee restricted stock units (“RSUs”), subject to the terms and conditions set forth herein. Each RSU represents the right to receive one share of Company common stock, par value $.01 per share (“Shares”), pursuant to this RSU Award, subject to the terms and conditions set forth herein. Subject to the provisions of Section 3 and Section 4 hereof, upon the issuance to Grantee of Shares hereunder, Grantee shall also receive cash in an amount equivalent to any dividends or distributions paid or made by the Company from the date of this RSU Award to the date of the issuance of the Shares with respect to the number of Shares so issued.
Section 3.RESTRICTIONS ON SALE OR OTHER TRANSFER
Each RSU awarded to Grantee pursuant to this Agreement shall be subject to forfeiture to the Company pursuant to the terms and conditions set forth herein and each RSU may not be sold or otherwise transferred except pursuant to the following provisions:
(a)The RSUs shall be held in book entry form by the Company until (1) the restrictions set forth herein lapse in accordance with the provisions of Section 4, at which time the RSUs will be converted to Shares, or (2) the RSUs are forfeited pursuant to Section 4 hereof.
(b)No such RSUs may be sold, transferred or otherwise alienated or hypothecated so long as such RSUs are subject to the restrictions provided for in this Agreement.
(c)The Company may impose such other restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any re-sales by the Grantee or other subsequent transfers by the Grantee of any Shares issued as a result of the vesting of the RSUs, including without limitation (i) restrictions under an insider trading policy, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by Grantee and other stockholders of the Company and (iii) restrictions as to the use of a specified brokerage firm for such re-sales or other transfers.
Section 4.LAPSE OF RESTRICTIONS
The RSUs subject to this RSU Award shall vest and restrictions thereon shall lapse at a rate of one third of the total number of RSUs granted per year commencing with [FIRST VESTING DATE IN ONE YEAR] and annually thereafter ending with [THIRD VESTING DATE IN THREE YEARS], provided that Grantee’s employment has not terminated on or before such date unless one of the exceptions set forth below in this Section 4 is met. The Company will issue you the Shares subject to this RSU Award (as well as any cash payments related to dividends or distributions related to such Shares) as soon as reasonably possible after each date on which the applicable restrictions lapse or any other date upon which this RSU Award vests as set forth below in this Section 4.
If your employment with the Company or any of its subsidiaries terminates for any reason other than death, Retirement, Disability or a Qualifying Termination, each as defined below and determined by the Committee in accordance with the Plan, then as of the date of such termination any RSUs which have yet to vest shall be forfeited by you in exchange for no additional consideration or payment. If prior to the RSUs becoming vested in full pursuant to the preceding paragraph, your employment with the Company or any of its subsidiaries terminates by reason of your death, Disability or a Qualifying Termination, each as determined by the Committee in accordance with the Plan, then any portion of this RSU Award which has yet to become vested shall become immediately vested. If prior to the RSUs becoming vested in full pursuant to the preceding paragraph, your employment with the Company or any of its subsidiaries terminates by reason of your Retirement and you deliver a signed long term incentive vesting/forfeiture agreement to the Company in a form acceptable to the Company (except when such an agreement is prohibited by governing law as determined by the Company), then any portion of this RSU Award which has yet to become vested shall continue to vest pursuant to the vesting schedule set forth in the
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preceding paragraph. Notwithstanding the foregoing and regardless of the reason for termination, under all circumstances other than your Qualifying Termination, any RSUs held less than one year from [DATE] shall be forfeited in exchange for no additional consideration or payment[; provided, however, in the event of your Retirement, this one-year holding requirement may be waived by the Committee, in its sole and absolute discretion, and any portion of this RSU Award which has yet to become vested shall continue to vest as set forth in the preceding paragraph]1. Nothing in the Plan or this Agreement confers any right of continuing employment with the Company or its subsidiaries. Notwithstanding the foregoing, if in the event of a Change of Control the successor to the Company does not assume this RSU Award, then any portion of this RSU Award which has yet to become vested and which has not otherwise been forfeited pursuant to the provisions of this Section 4 shall become immediately vested. Notwithstanding anything to the contrary herein, in the event your employment is terminated for Cause (as defined herein), regardless of whether you are Retirement eligible, you shall forfeit the unvested RSUs in exchange for no additional consideration or payment, unless otherwise prohibited by law.
For purposes of this Agreement, "Retirement" shall mean your retirement as determined in accordance with applicable Company personnel policies and the Plan. “Disability” and “Change of Control” shall have the meanings given to them in Appendix B to this Agreement. The term “Qualifying Termination” means your involuntary termination of employment by the Company, without Cause, within two (2) years following a Change of Control of the Company. For this purpose, “Cause” means your dishonesty, fraud, willful misconduct, breach of fiduciary duty, conflict of interest, commission of a felony, material failure or refusal to perform your job duties in accordance with Company policies, material violation of Company policy that causes harm to the Company or its subsidiaries or other wrongful conduct of a similar nature and degree.
Section 5.ТАХ WITHHOLDING
Regardless of any action the Company or the Grantee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Grantee acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by the Grantee is and remains the Grantee’s responsibility and that the Company and/or the Employer (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this grant of RSUs, including the grant and vesting of RSUs, subsequent delivery of Shares and/or cash related to such RSUs or the subsequent sale of any Shares acquired pursuant to such RSUs and receipt of any dividend equivalent payments (if any) and (ii) do not commit to structure the terms or any aspect of this grant of RSUs to reduce or eliminate the Grantee’s liability for Tax-Related Items. The Grantee shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Grantee’s participation in the Plan or receipt of RSUs or of Shares pursuant to RSUs that cannot be satisfied by the means described below. Further, if the Grantee is subject to tax in more than one jurisdiction, the Grantee acknowledges that the Company and/or Employer (or former Employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. The Company may refuse to deliver the Shares if the Grantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items.
Prior to the taxable or tax withholding event, as applicable, the Grantee shall pay, or make adequate arrangements satisfactory to the Company or to the Employer (in their sole discretion) to satisfy all Tax-Related Items. In this regard, the Grantee authorizes the Company or Employer to withhold all applicable Tax-Related Items legally payable by the Grantee by (1) withholding a number of Shares otherwise deliverable equal to the Retained Share Amount (as defined below); (2) withholding from the Grantee’s wages or other cash compensation paid by the Company and/or Employer; and/or (3) withholding from proceeds of the sale of Shares acquired upon settlement of the RSUs, either through a voluntary sale or through a sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization), to the extent permitted by the Plan Administrator. The “Retained Share Amount” shall mean a number of Shares equal to the quotient of the minimum statutory tax withholding obligation of the Company triggered by the RSUs on the relevant date, divided by the fair market value of one Share on the relevant date or as otherwise provided in the Plan. If the obligation for Tax-Related Items is satisfied by withholding a number of Shares as described herein, the Grantee understands that he or she shall be deemed to have been issued the full number of Shares subject to the settled RSUs, notwithstanding that a number of Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of the settlement of the RSUs.
Grantee acknowledges and understands that Grantee should consult a tax advisor regarding Grantee’s tax obligations.
Section 6.SEVERABILITY
In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
1 May be added for some officers.
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Section 7.DATA PROTECTION
The Grantee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Grantee’s personal data as described in this document by and among, as applicable, the Employer, and the Company and its subsidiaries for the exclusive purpose of implementing, administering and managing the Grantee’s participation in the Plan. The Grantee understands that the Company, its subsidiaries and the Employer hold certain personal information about the Grantee, including, but not limited to, name, home address and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all options or any other entitlement to Shares awarded, canceled, purchased, exercised, vested, unvested or outstanding in the Grantee’s favor for the purpose of implementing, managing and administering the Plan (“Data”). The Grantee understands that the Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Grantee’s country or elsewhere, including outside the European economic area, and that the recipient country may have different data privacy laws and protections than the Grantee’s country. The Grantee understands that he/she may request a list with the names and addresses of any potential recipients of the Data by contacting the local human resources representative. The Grantee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Grantee’s participation in the Plan, including any requisite transfer of such Data, as may be required to a broker or other third party with whom the Grantee may elect to deposit any Shares acquired under the Plan. The Grantee understands that Data will be held only as long as is necessary to implement, administer and manage participation in the Plan. The Grantee understands that he/she may, at any time, view Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by contacting the local human resources representative in writing. The Grantee understands that refusing or withdrawing consent may affect the Grantee’s ability to participate in the Plan. For more information on the consequences of refusing to consent or withdrawing consent, the Grantee understands that he/she may contact the Plan Administrator at the Company.
Section 8.ACKNOWLEDGMENT AND WAIVER
By accepting this grant of RSUs, the Grantee acknowledges and agrees that:
(a)the Plan is established voluntarily by the Company, and it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan or this Agreement;
(b)the grant of RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of Shares or RSUs, or benefits in lieu of Shares or RSUs, even if Shares or RSUs have been granted repeatedly in the past;
(c)all decisions with respect to future grants, if any, shall be at the sole discretion of the Company;
(d)the Grantee’s participation in the Plan shall not create a right to further employment with Employer and shall not interfere with the ability of Employer to terminate the Grantee’s employment relationship, and it is expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law;
(e)the Grantee is participating voluntarily in the Plan;
(f)RSU awards and resulting benefits are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and are outside the scope of the Grantee’s employment contract, if any;
(g)RSU awards and resulting benefits are not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance, resignation, termination, redundancy, or end of service payments, or bonuses, long-service awards, pension or retirement benefits or similar payments insofar as permitted by law;
(h)in the event that the Grantee is not an employee of the Company, this award of RSUs shall not be interpreted to form an employment contract or relationship with the Company, and furthermore, this award of RSUs shall not be interpreted to form an employment contract with the Employer or any subsidiary of the Company;
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(i)the future value of the Shares is unknown, may increase or decrease from the date of award or vesting of the RSU and cannot be predicted with certainty;
(j)in consideration of this grant of RSUs, no claim or entitlement to compensation or damages shall arise from termination or diminution in value of this grant of RSUs resulting from termination of the Grantee’s employment by the Company or the Employer (for any reason whatsoever), and the Grantee irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the terms of this Agreement, the Grantee shall be irrevocably deemed to have waived any entitlement to pursue such claim; and
(k)the award evidenced by this Agreement is subject to all Company policies relating to the clawback and/or recoupment of compensation, as the same may be amended from time to time, and to the extent the Grantee is subject to such policies, the terms and conditions of such policies are hereby incorporated by reference into this Agreement.
Section 9.CONFIDENTIALITY
This Agreement and the receipt of any RSUs hereunder are conditioned upon Grantee not disclosing this Agreement or said receipt to anyone other than Grantee's spouse, financial advisor, senior management of the Company or members of the Company's Law, Tax, and Human Resources departments. If unauthorized disclosure is made to any other person, the RSUs received hereunder shall be forfeited in exchange for no additional payment or consideration. Notwithstanding any other provision of this Agreement or any other agreement, if Grantee makes a confidential disclosure of a Company trade secret to a government official or an attorney for the purpose of reporting or investigating a suspected violation of law, or in a court filing under seal, Grantee shall not be held liable under this Agreement or any other agreement, or under any federal or state trade secret law for such a disclosure. Moreover, nothing in this Agreement or any other agreement shall prevent Grantee from making a confidential disclosure of any other confidential information to a government official, to an attorney as necessary to obtain legal advice or in a court filing under seal.
Section 10.GRANT-SPECIFIC TERMS
Appendix A contains additional terms and conditions of the Agreement applicable to Grantees residing outside the United States. In addition, Appendix A also contains information and notices regarding exchange control and certain other issues of which the Grantee (if residing outside the U.S.) should be aware that may arise as a result of participation in the Plan. Appendix B contains additional terms in compliance with Section 409A of the United States Internal Revenue Code.
Section 11.ENFORCEMENT
This Agreement and the RSUs granted hereunder shall be governed by, construed, administered and enforced in accordance with the laws of the State of Delaware without reference to choice or conflict of law principles.
Section 12.EXECUTION OF AWARD AGREEMENT
Please acknowledge your acceptance of the terms of this Agreement by electronically signing this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first herein above written.
FLUOR CORPORATION
_____________________________________
By: [NAME]
[TITLE]
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APPENDIX A
FLUOR CORPORATION
RESTRICTED STOCK UNIT AWARD
FLUOR CORPORATION
RESTRICTED STOCK UNIT AWARD
UNDER THE 2020 PERFORMANCE INCENTIVE PLAN
TERMS FOR NON-U.S. GRANTEES
TERMS AND CONDITIONS
This Appendix A, which is part of the Agreement, includes additional terms and conditions of the Agreement that will apply to you if you are a resident in one of the countries listed below. Capitalized terms used but not defined herein shall have the same meanings assigned to them in the Plan and the Agreement.
NOTIFICATIONS
This Appendix A also includes information regarding exchange control and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of [DATE]. Such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the information in this Appendix A as the only source of information relating to the consequences of your participation in the Plan because such information may be out-of-date when your RSUs vest and/or you sell any Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to your particular situation. As a result, the Company is not in a position to assure you of any particular result. You are therefore advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your situation.
Finally, if you are a citizen or resident of a country other than that in which you are currently working, the information contained herein may not apply to you.
GRANT-SPECIFIC TERMS
Below please find country specific language that applies to Australia, Canada, Chile, Germany, the Netherlands, Russia, South Africa, Spain and the United Kingdom.
AUSTRALIA
Terms and Conditions
Prospectus Information. The “Offer Document” and “Australian Rules” contain additional terms and conditions that govern the RSU. Grantees should review those documents carefully. In addition, the written or other materials provided to Grantees in connection with the RSUs have been prepared for the purpose of complying with the relevant United States securities regulations and applicable stock exchange requirements. The information disclosed may not be the same as that which must be disclosed in a prospectus prepared under Australian law.
RSUs Settled in Shares Only. Notwithstanding anything to the contrary in the Plan and/or the Agreement, Grantee understands that RSUs granted to Grantee shall be paid in Shares only and do not provide any right for Grantee to receive a cash payment.
Notifications
Securities Law Information. If Grantee acquires Shares pursuant to the RSU and offers the Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. Grantees should obtain legal advice on disclosure obligations prior to making any such offer.
Exchange Control Information. Exchange control reporting is required for cash transactions exceeding A$10,000 and international fund transfers. The Australian bank assisting with the transaction will file the report. If there is no Australian bank involved in the transfer, Grantee will be required to file the report.
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CANADA
Terms and Conditions
Form of Payment. Due to legal restrictions in Canada, and notwithstanding any language to the contrary in the Plan, Grantees are prohibited from surrendering previously owned Shares, or from attesting to the ownership of previously owned Shares, to pay any tax liability in connection with the RSUs. For the avoidance of ambiguity, withholding in Shares for this RSU Award is permissible.
RSUs Settled in Shares Only. Notwithstanding anything to the contrary in the Plan and/or the Agreement, Grantee understands that RSUs granted to Grantee shall be paid in Shares only and do not provide any right for Grantee to receive a cash payment.
Language Consent
The following provision applies to residents of Quebec:
The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à la présente convention.
Notifications
Additional Restrictions on Resale. Securities acquired under the Plan may be subject to certain restrictions on resale imposed by Canadian provincial securities laws. You are encouraged to seek legal advice prior to any resale of such securities. In general, participants resident in Canada may resell their securities in transactions carried out on exchanges outside of Canada.
Tax Reporting. The Tax Act and the regulations thereunder require a Canadian resident individual (among others) to file an information return (Form T1135) disclosing prescribed information where, at any time in a tax year, the total cost amount of such individual’s “specified foreign property” (which includes Shares) exceeds Cdn.$100,000. You should consult your own tax advisor regarding this reporting requirement.
CHILE
Terms and Conditions
There are no country-specific provisions.
Terms and Conditions
There are no country-specific provisions.
Notifications
Securities Law Information. Neither the Company, the award, nor any Company shares acquired under the Plan are registered with the Chilean Registry of Securities or are under the control of the Chilean Superintendence of Securities.
Exchange Control Information. If exchange control reporting is required , you will be responsible for filing the report with the Central Bank of Chile. In addition, you must also file a report with the Central Bank if, in a given year, you have kept investments, deposits, or credits abroad in an amount that exceeds US$5,000,000.
Tax Information. Registration of your investment in Company shares with the Chilean Internal Revenue Service may result in more favorable tax treatment. Please consult your tax advisor for additional details.
Exchange Control Information. If exchange control reporting is required , you will be responsible for filing the report with the Central Bank of Chile. In addition, you must also file a report with the Central Bank if, in a given year, you have kept investments, deposits, or credits abroad in an amount that exceeds US$5,000,000.
Tax Information. Registration of your investment in Company shares with the Chilean Internal Revenue Service may result in more favorable tax treatment. Please consult your tax advisor for additional details.
GERMANY
Terms and Conditions
There are no country-specific provisions.
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Notifications
Exchange Control Information. Cross-border payments in excess of EUR12,500 must be reported monthly to the German Federal Bank. If Grantee uses a German bank to transfer a cross-border payment in excess of EUR12,500 in connection with the sale of Shares acquired under the Plan, the bank will file the report for you. In addition, you must report any receivables, payables, or debts in foreign currency exceeding an amount of EUR5,000,000 on a monthly basis.
THE NETHERLANDS
Terms and Conditions
There are no country-specific provisions.
Notifications
Insider-Trading Notification. Grantees should be aware of the Dutch insider-trading rules, which may impact the sale of Shares acquired upon vesting of the RSU. In particular, Grantees may be prohibited from effectuating certain transactions involving Shares if they have inside information about the Company. Grantees should consult their personal legal advisor if they are uncertain whether the insider-trading rules apply to them. By accepting the Agreement and participating in the Plan, Grantee acknowledges having read and understood this notification and acknowledges that it is his or her responsibility to comply with the Dutch insider-trading rules.
RUSSIA
Terms and Conditions
Securities Law Information. Grantee acknowledges that the Agreement, the grant of RSUs, the Plan and all other materials Grantee may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. The issuance of securities pursuant to the Plan has not and will not be registered in Russia and therefore, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.
Grantee further acknowledges that in no event will Shares acquired upon vesting of the RSUs be delivered to Grantee in Russia; all Shares acquired upon vesting of the RSUs will be maintained on Grantee’s behalf in the United States.
Grantee acknowledges that Grantee is not permitted to sell Shares directly to a Russian legal entity or resident.
Notifications
Grantee understands that Grantee is solely liable for all applicable Russian exchange control requirements (including repatriation requirements applicable to the proceeds from the sale of Shares).
SOUTH AFRICA
Terms and Conditions
There are no country-specific provisions.
Notifications
Exchange Control Information. To participate in the Plan, Grantee understands that Grantee must comply with exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.
For RSUs, because no transfer of funds from South Africa is required, no filing or reporting requirements should apply when the RSUs, if any, are granted or when shares are issued upon vesting and settlement of the RSUs.
Because the Exchange Control Regulations change frequently and without notice, Grantee understands that Grantee should consult a legal advisor prior to the purchase or sale of shares under the Plan to ensure compliance with current regulations. Grantee understands
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that it is Grantee’s responsibility to comply with South African exchange control laws, and neither the Company nor Grantee’s Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.
SPAIN
Terms and Conditions
There are no country-specific provisions.
Notifications
No Special Employment or Similar Rights. Grantee understands that the Company has unilaterally, gratuitously, and discretionally decided to distribute awards under the Plan to individuals who may be employees of the Company or its subsidiaries throughout the world. The decision is a temporary decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its subsidiaries presently or in the future, other than as specifically set forth in the Plan and the terms and conditions of Grantee’s RSU grant. Consequently, Grantee understands that any grant is given on the assumption and condition that it shall not become a part of any employment contract (either with the Company or any of its subsidiaries) and shall not be considered a mandatory benefit, salary for any purpose (including severance compensation) or any other right whatsoever. Further, Grantee understands and freely accepts that there is no guarantee that any benefit whatsoever shall arise from any gratuitous and discretionary grant since the future value of the awards and underlying shares is unknown and unpredictable. In addition, Grantee understands that this grant would not be made but for the assumptions and conditions referred to above; thus, Grantee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of awards shall be null and void and the Plan shall not have any effect whatsoever.
Further, the RSU Award provides a conditional right to Shares and may be forfeited or affected by Grantee’s termination of employment, as set forth in the Agreement. For avoidance of doubt, Grantee’s rights, if any, to the RSUs upon termination of employment shall be determined as set forth in the Agreement, including, without limitation, where (i) Grantee is considered to be unfairly dismissed without good cause; (ii) Grantee is dismissed for disciplinary or objective reasons or due to a collective dismissal; (iii) Grantee terminates service due to a change of work location, duties or any other employment or contractual condition; or (iv) Grantee terminates service due to the Company’s or any of its subsidiaries’ unilateral breach of contract.
Securities Law Notice. The RSUs granted under the Plan do not qualify as securities under Spanish regulations. By the grant of RSUs, no "offer of securities to the public", as defined under Spanish law, has taken place or will take place in Spanish territory. The present document and any other document relating to the offer of RSUs under the Plan has not been nor will it be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission), and it does not constitute a public offering prospectus.
Foreign Asset and Account Reporting. To the extent that Spanish residents hold rights or assets (e.g., shares of common stock, cash, etc.) in a bank or brokerage account outside of Spain with a value in excess of €50,000 per type of right or asset as of December 31 each year, such residents are required to report information on such rights and assets on their tax return for such year. Shares of common stock constitute securities for purposes of this requirement, but unvested rights (e.g., RSUs) are not considered assets or rights for purposes of this requirement.
If applicable, Spanish residents must report the assets or rights on Form 720 by no later than March 31 following the end of the relevant year. After such assets or rights are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reported assets or rights increases by more than €20,000. Failure to comply with this reporting requirement may result in penalties.
Spanish residents are also required to electronically declare to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the securities held in such accounts, if the value of the transactions for all such accounts during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceeds €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €1,000,000.
Spanish residents should consult with their personal tax and legal advisors to ensure compliance with their personal reporting obligations.
Exchange Control Information. All acquisitions of foreign shares by Spanish residents must comply with exchange control regulations in Spain. Because of foreign investments requirements, the acquisition of Company shares under the Plan must be declared for statistical purposes to the Spanish Direccion General de Politica Comercial y de Inversiones Extranjeras (the “DGPCIE“). If you acquire the Shares
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through the use of a Spanish financial institution, that institution will automatically make the declaration to the DGPCIE for you. Otherwise, you must make the declaration by filling a form with the DGPCIE.
If you import the Shares acquired under the Plan into Spain, you must declare the importation of the share certificates to the DGPCIE.
In addition, you must also file a declaration of the ownership of the Shares with the Directorate of Foreign Transactions each January while the Shares are owned. These filings are made on standard forms furnished by the Directorate of Foreign Transactions.
When you receive any foreign currency payments (i.e., as a result of the sale of the Shares), you must inform the institution receiving the payment of the basis upon which such payment is made and provide certain specific information (e.g., name, address, and fiscal identification number; the name and corporate domicile of the company; the amount of the payment; the type of foreign currency received; the country of origin; and the reason for the payment).
UNITED KINGDOM
Terms and Conditions
UK Rules. The RSU Award is granted under the “UK Rules,” which contain additional terms and conditions that govern the RSU Award. Grantees should review the UK Rules carefully.
Notifications
There are no country-specific notifications.
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APPENDIX B
Compliance with Section 409A of the Internal Revenue Code
(a) It is intended that the provisions of this Agreement comply with Section 409A of the U.S. Internal Revenue Code (“Section 409A”), and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
(b) Neither Grantee nor any of Grantee’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Agreement to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to Grantee or for Grantee’s benefit under this Agreement may not be reduced by, or offset against, any amount owing by Grantee to the Company or any of its subsidiaries.
(c) If, at the time of Grantee’s separation from service (within the meaning of Section 409A), (i) Grantee is a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date pursuant to Section 4 of this Agreement but shall instead pay it, without interest, on the first business day after such six-month period or, if earlier, upon the Grantee’s death.
(d) Notwithstanding anything to the contrary contained herein, for the purpose of this Agreement, (i) “Disability” shall mean that the Grantee is considered disabled in accordance with U.S. Treasury Regulations section 1.409A-3(i)(4), determined as if all permissible provisions of such regulation were in effect, and (ii) a “Change of Control” of the Company is considered to have occurred with respect to the Grantee upon the occurrence with respect to the Grantee of a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as determined in accordance with U.S. Treasury Regulations section 1.409A-3(i)(5).
(e) Notwithstanding any provision of this Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to this Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, Grantee shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on Grantee or for Grantee’s account in connection with this Agreement (including, without limitation, any taxes and penalties under Section 409A), and neither the Company nor any of its subsidiaries shall have any obligation to indemnify or otherwise hold Grantee harmless from any or all of such taxes or penalties.
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Exhibit 10.3
FORM OF PERFORMANCE AWARD AGREEMENT
This Performance Award Agreement (“Agreement”) entered into as of [GRANT DATE] (the “Grant Date”), by and between Fluor Corporation, a Delaware corporation (the “Company”), and you (“Grantee” or “you”) evidences the grant to Grantee of a performance Incentive Award (“Performance Award”) under the Fluor Corporation 2020 Performance Incentive Plan (the “Plan”). Capitalized terms used in this Agreement and not defined herein have the meaning set forth in the Plan.
Section 1. AWARD SUBJECT TO PLAN
Your Performance Award is granted subject to all of the terms and conditions of this Agreement and the Plan, including any terms, rules or determinations made by the Committee pursuant to its administrative authority under the Plan, and such further terms as are set forth in the Plan that are applicable to awards thereunder, including without limitation provisions on adjustment of awards, non-transferability, satisfaction of tax requirements and compliance with other laws.
Section 2. PERFORMANCE TARGETS AND VALUE OF AWARD
Your Performance Award target amount is communicated in your long-term incentive award letter (the “Target Amount”). [This Target Amount shall be expressed in units by dividing the Target Amount by the closing price of the Company’s common stock ($XX.XX), par value $.01 per share (“Shares”), on [GRANT DATE], rounded for any fractional units (e.g., if your Target Amount is $100,000 and the Company’s Share price is $XX.XX on the applicable date, this Target Amount shall be expressed as X,XXX units).]1
[These units]/[This Target Amount] will be adjusted for the three-year period beginning [BEGINNING OF PERFORMANCE PERIOD] and ending on [END OF PERFORMANCE PERIOD] (the “Performance Period”) against performance criteria (the “Performance Targets”) established by the Committee. For [FIRST YEAR], specific Performance Targets are set forth on Exhibit A, which may be attached hereto or sent to you separately at a later date. Performance Targets for [SECOND YEAR AND THIRD YEAR] will be set at the beginning of the respective year and provided to you. The Performance Targets may be subject to certain adjustments approved by the Committee in connection with the grants. In no event will the final earned [units]/[amount] exceed 200% of the [target units]/[Target Amount].
[Once the units are adjusted for the Company’s performance, the number of units shall not change for this Performance Award.]
Section 3. RETENTION PERIOD AND PAYOUT
The period commencing [GRANT DATE] and ending on [FINAL VESTING DATE IN THREE YEARS] shall be the “Retention Period”. Your Performance Award will vest in full on [FINAL VESTING DATE IN THREE YEARS] (the “Vesting Date”), subject to the continued employment requirements, or other exceptions contained in Section 4 below, and the achievement level of the Performance Targets. Payment of the Performance Award, if any based on the performance level achieved, shall be made as soon as practicable after the Vesting Date, except as provided in Section 4. [The Performance Award shall be paid (i.e., settled) in Shares. Subject to the provisions of Section 3 and Section 4 hereof, upon the issuance to Grantee of Shares hereunder, Grantee shall also receive cash in an amount equivalent to any dividends or distributions paid or made by the Company from the date of this Performance Award to the date of the issuance of the Share with respect to the number of Shares so issued.]2
Section 4. CONTINUED EMPLOYMENT
Vesting of the Performance Award is conditioned upon you remaining in the employment of the Company or its subsidiaries for the Retention Period or satisfying the exceptions described in this Section 4. If your employment with the Company or any of its subsidiaries terminates for any reason other than death, Retirement, Disability or a Qualifying Termination, each as defined below and as determined by the Committee in accordance with the Plan, then as of the date of such termination any unvested Performance Award shall be forfeited by you in exchange for no additional consideration or payment. If your employment with the Company or any of its subsidiaries terminates during the Retention Period by reason of your death or Disability, each as determined by the Committee in accordance with the Plan, then any portion of this Performance Award which has yet to become vested shall [vest and continue to become payable in accordance with its terms on the
1 Awards may also be payable in cash, in which case no units will be established.
2 For awards payable in cash, payment will be made “generally on the same date that other executive incentives are paid, if any.”
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Vesting Date as described in section 3.]3 If prior to the Performance Award becoming vested in full pursuant to Section 3 hereof, your employment with the Company or any of its subsidiaries terminates by reason of your Retirement and you deliver a signed long term incentive vesting/forfeiture agreement to the Company in a form acceptable to the Company (except when such an agreement is prohibited by governing law as determined by the Company), then any portion of this Performance Award which has yet to become vested shall continue to vest over the Retention Period and become payable in accordance with the terms hereof on the Vesting Date as described in Section 3. In the event that you incur a Qualifying Termination, the Performance Award shall immediately vest and be paid to you based on actual results for any annual performance period ending prior to the Change of Control and at target performance levels for annual performance periods ending after the Change of Control as soon as practicable after such termination (provided that such award has not previously been forfeited pursuant to the provisions of this Agreement). Notwithstanding the foregoing and regardless of the reason for termination, under all circumstances other than your Qualifying Termination, any Performance Award held less than one year from the Grant Date shall be forfeited in exchange for no additional consideration or payment[; provided, however, in the event of your Retirement, this one year holding requirement may be waived by the Committee, in its sole and absolute discretion, and any portion of this Performance Award which has yet to become vested shall continue to vest as set forth in the preceding paragraph]4.
Nothing in the Plan or this Agreement confers any right of continuing employment with the Company or its subsidiaries. Notwithstanding the foregoing, if in the event of a Change of Control the successor to the Company does not assume this Performance Award, then any portion of this Performance Award which has yet to become vested and which has not otherwise been forfeited pursuant to the provisions of this Section 4 shall immediately vest and shall be paid based on actual results for any annual performance period ending prior to the Change of Control and at target performance levels for annual performance periods ending after the Change of Control, as soon as practicable following the Change of Control (provided that the Performance Award has not previously been forfeited pursuant to the provisions of this Section 4). Notwithstanding anything to the contrary herein, in the event your employment is terminated for Cause (as defined herein), regardless of whether you are Retirement eligible, you shall forfeit the unvested portion of your Performance Award in exchange for no additional consideration or payment, unless otherwise prohibited by law.
For purposes of this Agreement, "Retirement" shall mean your retirement as determined in accordance with applicable Company personnel policies and the Plan. “Disability” and “Change of Control” shall have the meanings given to them in Appendix B to this Agreement.
The term “Qualifying Termination” means your involuntary termination of employment by the Company, without Cause, within two (2) years following a Change of Control of the Company. For this purpose, “Cause” means your dishonesty, fraud, willful misconduct, breach of fiduciary duty, conflict of interest, commission of a felony, material failure or refusal to perform your job duties in accordance with Company policies, material violation of Company policy that causes harm to the Company or its subsidiaries or other wrongful conduct of a similar nature and degree.
Section 5. TAX WITHHOLDING
Regardless of any action the Company or the Grantee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Grantee acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by the Grantee is and remains the Grantee’s responsibility and that the Company and/or the Employer (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this grant of a Performance Award, including the grant and vesting of the Performance Award, subsequent delivery of the [Shares and/or cash related to such Performance Award or the subsequent sale of any Shares acquired pursuant to such Performance Award and receipt of any dividend equivalent payments (if any)]/[cash payment] and (ii) do not commit to structure the terms or any aspect of this grant of a Performance Award to reduce or eliminate the Grantee’s liability for Tax-Related Items. The Grantee shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Grantee’s participation in the Plan or receipt of a Performance Award that cannot be satisfied by the means described below. Further, if the Grantee is subject to tax in more than one jurisdiction, the Grantee acknowledges that the Company and/or Employer (or former Employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. The Company may refuse to deliver the Performance Award payment if the Grantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items.
Prior to the taxable or tax withholding event, as applicable, the Grantee shall pay, or make adequate arrangements satisfactory to the Company or to the Employer (in their sole discretion) to satisfy all Tax-Related Items. In this regard, the Grantee authorizes the Company or Employer to withhold all applicable Tax-Related Items legally payable by the Grantee by [(1) withholding from the Performance Award a number of Shares otherwise deliverable equal to the Retained Share Amount (as defined below); (2)] withholding from the Grantee’s wages or
3 For awards payable in cash, awards shall “immediately vest and be paid to you as soon as practicable after such termination (provided that such award has not previously been forfeited pursuant to the provisions of this Agreement).”
4 May be included for some officers.
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other cash compensation paid by the Company and/or Employer[; and/or (3) withholding from proceeds of the sale of Shares acquired upon settlement of the Performance Award, either through a voluntary sale or through a sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization), to the extent permitted by the Plan Administrator. The “Retained Share Amount” shall mean a number of Shares equal to the quotient of the minimum statutory tax withholding obligation of the Company triggered by the Performance Award payment on the relevant date, divided by the fair market value of one Share on the relevant date or as otherwise provided in the Plan. If the obligation for Tax-Related Items is satisfied by withholding a number of Shares as described herein, the Grantee understands that he or she shall be deemed to have been issued the full number of Shares, notwithstanding that a number of Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of the settlement of the Performance Award].
Grantee acknowledges and understands that Grantee should consult a tax advisor regarding Grantee’s tax obligations.
Section 6. SEVERABILITY
In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
Section 7. DATA PROTECTION
THE GRANTEE HEREBY EXPLICITLY AND UNAMBIGUOUSLY CONSENTS TO THE COLLECTION, USE AND TRANSFER, IN ELECTRONIC OR OTHER FORM, OF THE GRANTEE’S PERSONAL DATA AS DESCRIBED IN THIS DOCUMENT BY AND AMONG, AS APPLICABLE, THE EMPLOYER, AND THE COMPANY AND ITS SUBSIDIARIES FOR THE EXCLUSIVE PURPOSE OF IMPLEMENTING, ADMINISTERING AND MANAGING THE GRANTEE’S PARTICIPATION IN THE PLAN. THE GRANTEE UNDERSTANDS THAT THE COMPANY, ITS SUBSIDIARIES AND THE EMPLOYER HOLD CERTAIN PERSONAL INFORMATION ABOUT THE GRANTEE, INCLUDING, BUT NOT LIMITED TO, NAME, HOME ADDRESS AND TELEPHONE NUMBER, DATE OF BIRTH, SOCIAL SECURITY OR INSURANCE NUMBER OR OTHER IDENTIFICATION NUMBER, SALARY, NATIONALITY, JOB TITLE, ANY SHARES OR DIRECTORSHIPS HELD IN THE COMPANY, DETAILS OF ALL OPTIONS OR ANY OTHER ENTITLEMENT TO SHARES AWARDED, CANCELED, PURCHASED, EXERCISED, VESTED, UNVESTED OR OUTSTANDING IN THE GRANTEE’S FAVOR FOR THE PURPOSE OF IMPLEMENTING, MANAGING AND ADMINISTERING THE PLAN (“DATA”). THE GRANTEE UNDERSTANDS THAT THE DATA MAY BE TRANSFERRED TO ANY THIRD PARTIES ASSISTING IN THE IMPLEMENTATION, ADMINISTRATION AND MANAGEMENT OF THE PLAN, THAT THESE RECIPIENTS MAY BE LOCATED IN THE GRANTEE’S COUNTRY OR ELSEWHERE, INCLUDING OUTSIDE THE EUROPEAN ECONOMIC AREA, AND THAT THE RECIPIENT COUNTRY MAY HAVE DIFFERENT DATA PRIVACY LAWS AND PROTECTIONS THAN THE GRANTEE’S COUNTRY. THE GRANTEE UNDERSTANDS THAT HE/SHE MAY REQUEST A LIST WITH THE NAMES AND ADDRESSES OF ANY POTENTIAL RECIPIENTS OF THE DATA BY CONTACTING THE LOCAL HUMAN RESOURCES REPRESENTATIVE. THE GRANTEE AUTHORIZES THE RECIPIENTS TO RECEIVE, POSSESS, USE, RETAIN AND TRANSFER THE DATA, IN ELECTRONIC OR OTHER FORM, FOR THE PURPOSES OF IMPLEMENTING, ADMINISTERING AND MANAGING THE GRANTEE’S PARTICIPATION IN THE PLAN, INCLUDING ANY REQUISITE TRANSFER OF SUCH DATA, AS MAY BE REQUIRED TO A BROKER OR OTHER THIRD PARTY WITH WHOM THE GRANTEE MAY ELECT TO DEPOSIT SHARES, IF ANY, ACQUIRED UNDER THE PLAN. THE GRANTEE UNDERSTANDS THAT DATA WILL BE HELD ONLY AS LONG AS IS NECESSARY TO IMPLEMENT, ADMINISTER AND MANAGE PARTICIPATION IN THE PLAN. THE GRANTEE UNDERSTANDS THAT HE/SHE MAY, AT ANY TIME, VIEW DATA, REQUEST ADDITIONAL INFORMATION ABOUT THE STORAGE AND PROCESSING OF THE DATA, REQUIRE ANY NECESSARY AMENDMENTS TO THE DATA OR REFUSE OR WITHDRAW THE CONSENTS HEREIN, IN ANY CASE WITHOUT COST, BY CONTACTING THE LOCAL HUMAN RESOURCES REPRESENTATIVE IN WRITING. THE GRANTEE UNDERSTANDS THAT REFUSING OR WITHDRAWING CONSENT MAY AFFECT THE GRANTEE’S ABILITY TO PARTICIPATE IN THE PLAN. FOR MORE INFORMATION ON THE CONSEQUENCES OF REFUSING TO CONSENT OR WITHDRAWING CONSENT, THE GRANTEE UNDERSTANDS THAT HE/SHE MAY CONTACT THE PLAN ADMINISTRATOR AT THE COMPANY.
Section 8. ACKNOWLEDGMENT AND WAIVER
By accepting the grant of this Performance Award, the Grantee acknowledges and agrees that:
(a) the Plan is established voluntarily by the Company, and it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan or this Agreement;
(b) the grant of Performance Awards is voluntary and occasional and does not create any contractual or other right to receive future grants of Performance Awards, or benefits in lieu of Performance Awards, even if Performance Awards have been granted repeatedly in the past;
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(c) all decisions with respect to future grants, if any, shall be at the sole discretion of the Company;
(d) the Grantee’s participation in the Plan shall not create a right to further employment with Employer and shall not interfere with the ability of Employer to terminate the Grantee’s employment relationship, and it is expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law;
(e) the Grantee is participating voluntarily in the Plan;
(f) Performance Awards and resulting benefits are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and are outside the scope of the Grantee’s employment contract, if any;
(g) Performance Awards and resulting benefits are not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance, resignation, termination, redundancy, or end of service payments, or bonuses, long-service awards, pension or retirement benefits or similar payments insofar as permitted by law;
(h) in the event that the Grantee is not an employee of the Company, this Performance Award shall not be interpreted to form an employment contract or relationship with the Company, and furthermore, this Performance Award shall not be interpreted to form an employment contract with the Employer or any subsidiary of the Company;
(i) in consideration of this Performance Award, no claim or entitlement to compensation or damages shall arise from termination or diminution in value of this Performance Award resulting from termination of the Grantee’s employment by the Company or the Employer (for any reason whatsoever), and the Grantee irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the terms of this Agreement, the Grantee shall be irrevocably deemed to have waived any entitlement to pursue such claim;
(j) [the Company may impose such other restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any re-sales by the Grantee or other subsequent transfers by the Grantee of any Shares issued as a result of the vesting of the Performance Award, including without limitation (i) restrictions under an insider trading policy, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by Grantee and other Shareholders and (iii) restrictions as to the use of a specified brokerage firm for such re-sales or other transfers;] and
(k) the award evidenced by this Agreement is subject to all Company policies relating to the clawback and/or recoupment of compensation, as the same may be amended from time to time, and to the extent the Grantee is subject to such policies, the terms and conditions of such policies are hereby incorporated by reference into this Agreement.
Section 9. CONFIDENTIALITY
This Agreement and the receipt of any Performance Award hereunder are conditioned upon Grantee not disclosing this Agreement or said receipt to anyone other than Grantee's spouse, financial advisor, senior management of the Company or members of the Company's Law, Tax, and Human Resources departments. If unauthorized disclosure is made to any other person, this Performance Award shall be forfeited in exchange for no additional consideration or payment. Notwithstanding any other provision of this Agreement or any other agreement, if Grantee makes a confidential disclosure of a Company trade secret to a government official or an attorney for the purpose of reporting or investigating a suspected violation of law, or in a court filing under seal, Grantee shall not be held liable under this Agreement or any other agreement, or under any federal or state trade secret law for such a disclosure. Moreover, nothing in this Agreement or any other agreement shall prevent Grantee from making a confidential disclosure of any other confidential information to a government official, to an attorney as necessary to obtain legal advice or in a court filing under seal.
Section 10. GRANT-SPECIFIC TERMS
Appendix A contains additional terms and conditions of the Agreement applicable to Grantees residing outside the United States. In addition, Appendix A also contains information and notices regarding exchange control and certain other issues of which the Grantee (if residing outside the United States) should be aware that may arise as a result of participation in the Plan. Appendix B contains additional terms in compliance with Section 409A of the United States Internal Revenue Code.
Section 11. ENFORCEMENT
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This Agreement and the Performance Award granted hereunder shall be governed by, construed, administered and enforced in accordance with the laws of the State of Delaware without reference to choice or conflict of law principles.
Section 12. EXECUTION OF AWARD AGREEMENT
Please acknowledge your acceptance of the terms of this Agreement by electronically signing this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first herein above written.
FLUOR CORPORATION
By:
____________________________________
[NAME]
[TITLE]
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EXHIBIT A
PERFORMANCE TARGETS
[TO BE SET ANNUALLY]
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APPENDIX A
FLUOR CORPORATION
PERFORMANCE AWARDS
FLUOR CORPORATION
PERFORMANCE AWARDS
UNDER THE 2020 PERFORMANCE INCENTIVE PLAN
TERMS FOR NON-U.S. GRANTEES
TERMS AND CONDITIONS
This Appendix A, which is part of the Agreement, includes additional terms and conditions of the Agreement that will apply to you if you are a resident in one of the countries listed below. Capitalized terms used but not defined herein will have the same meanings assigned to them in the Plan and the Agreement.
NOTIFICATIONS
This Appendix A also includes information regarding exchange control and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of [DATE]. Such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the information in this Appendix A as the only source of information relating to the consequences of your participation in the Plan because such information may be out-of-date when your Performance Awards vest.
In addition, the information contained herein is general in nature and may not apply to your particular situation. As a result, the Company is not in a position to assure you of any particular result. You are therefore advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your situation.
Finally, if you are a citizen or resident of a country other than that in which you are currently working, the information contained herein may not apply to you.
GRANT-SPECIFIC LANGUAGE
Below please find country specific language that applies to Australia, Canada, Chile, Germany, the Netherlands, Russia, South Africa, Spain and the United Kingdom.
AUSTRALIA
Terms and Conditions
There are no country-specific provisions.
Notifications
Exchange Control Information. Exchange control reporting is required for cash transactions exceeding A$10,000 and international fund transfers. The Australian bank assisting with the transaction will file the report. If there is no Australian bank involved in the transfer, Grantee will be required to file the report.
CANADA
Terms and Conditions
There are no country-specific provisions.
Language Consent
The following provision applies to residents of Quebec:
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The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices, and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à la présente convention.
Notifications
Additional Restrictions on Resale. Securities acquired under the Plan may be subject to certain restrictions on resale imposed by Canadian provincial securities laws. You are encouraged to seek legal advice prior to any resale of such securities. In general, participants resident in Canada may resell their securities in transactions carried out on exchanges outside of Canada.
Tax Reporting. The Tax Act and the regulations thereunder require a Canadian resident individual (among others) to file an information return (Form T1135) disclosing prescribed information where, at any time in a tax year, the total cost amount of such individual’s “specified foreign property” (which includes Shares) exceeds Cdn.$100,000. You should consult your own tax advisor regarding this reporting requirement.
CHILE
Terms and Conditions
There are no country-specific provisions.
Terms and Conditions
There are no country-specific provisions.
Notifications
Securities Law Information. Neither the Company, the award, nor any Company shares acquired under the Plan are registered with the Chilean Registry of Securities or are under the control of the Chilean Superintendence of Securities.
Exchange Control Information. If exchange control reporting is required , you will be responsible for filing the report with the Central Bank of Chile. In addition, you must also file a report with the Central Bank if, in a given year, you have kept investments, deposits, or credits abroad in an amount that exceeds US$5,000,000.
Tax Information. Registration of your investment in Company shares with the Chilean Internal Revenue Service may result in more favorable tax treatment. Please consult your tax advisor for additional details.
Exchange Control Information. If exchange control reporting is required , you will be responsible for filing the report with the Central Bank of Chile. In addition, you must also file a report with the Central Bank if, in a given year, you have kept investments, deposits, or credits abroad in an amount that exceeds US$5,000,000.
Tax Information. Registration of your investment in Company shares with the Chilean Internal Revenue Service may result in more favorable tax treatment. Please consult your tax advisor for additional details.
GERMANY
Terms and Conditions
There are no country-specific provisions.
Notifications
Exchange Control Information. Cross-border payments in excess of EUR12,500 must be reported monthly to the German Federal Bank. If Grantee uses a German bank to transfer a cross-border payment in excess of EUR12,500, the bank will file the report for you. In addition, you must report any receivables, payables, or debts in foreign currency exceeding an amount of EUR5,000,000 on a monthly basis.
THE NETHERLANDS
Terms and Conditions
Insider-Trading Notification. Grantees should be aware of the Dutch insider-trading rules, which may impact the sale of Shares acquired upon vesting of the Performance Award. In particular, Grantees may be prohibited from effectuating certain transactions involving Shares if they have inside information about the Company. Grantees should consult their personal legal advisor if they are uncertain whether the insider-trading rules apply to them. By accepting the Agreement and participating in the Plan, Grantee acknowledges having read and understood this notification and acknowledges that it is his or her responsibility to comply with the Dutch insider-trading rules.
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Notifications
There are no country-specific notifications.
RUSSIA
Terms and Conditions
Securities Law Information. Grantee acknowledges that the Agreement, the grant of Performance Awards, the Plan and all other materials Grantee may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. The issuance of securities pursuant to the Plan has not and will not be registered in Russia and therefore, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.
Grantee further acknowledges that in no event will Shares acquired upon vesting of the Performance Awards be delivered to Grantee in Russia; all Shares acquired upon vesting of the Performance Awards will be maintained on Grantee’s behalf in the United States.
Grantee acknowledges that Grantee is not permitted to sell Shares directly to a Russian legal entity or resident.
Notifications
Grantee understands that Grantee is solely liable for all applicable Russian exchange control requirements (including repatriation requirements applicable to the proceeds from the sale of Shares).
SOUTH AFRICA
Terms and Conditions
There are no country-specific provisions.
Notifications
Exchange Control Information. To participate in the Plan, Grantee understands that Grantee must comply with exchange control regulations and rulings (the “Exchange Control Regulations”) in South Africa.
For Performance Awards, because no transfer of funds from South Africa is required, no filing or reporting requirements should apply when the Performance Awards, if any, are granted or upon settlement of the Performance Awards (in Shares).
Because the Exchange Control Regulations change frequently and without notice, Grantee understands that Grantee should consult a legal advisor to ensure compliance with current regulations. Grantee understands that it is Grantee’s responsibility to comply with South African exchange control laws, and neither the Company nor Grantee’s Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.
SPAIN
Terms and Conditions
There are no country-specific provisions.
Notifications
No Special Employment or Similar Rights. Grantee understands that the Company has unilaterally, gratuitously, and discretionally decided to distribute Performance Awards under the Plan to individuals who may be employees of the Company or its subsidiaries throughout the world. The decision is a temporary decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its subsidiaries presently or in the future, other than as specifically set forth in the Plan and the terms and conditions of Grantee’s Performance Award. Consequently, Grantee understands that any grant is given on the assumption and condition that it will not become a part of any employment contract (either with the Company or any of its subsidiaries) and will not be considered a mandatory benefit, salary for any purpose (including severance compensation) or any other right whatsoever. Further, Grantee understands
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and freely accepts that there is no guarantee that any benefit whatsoever will arise from any gratuitous and discretionary grant. In addition, Grantee understands that this grant would not be made but for the assumptions and conditions referred to above; thus, Grantee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of awards will be null and void and the Plan will not have any effect whatsoever.
Further, the Performance Award provides a conditional right to Shares and may be forfeited or affected by Grantee’s termination of employment, as set forth in the Agreement. For avoidance of doubt, Grantee’s rights, if any, to the Performance Awards upon termination of employment will be determined as set forth in the Agreement, including, without limitation, where (i) Grantee is considered to be unfairly dismissed without good cause; (ii) Grantee is dismissed for disciplinary or objective reasons or due to a collective dismissal; (iii) Grantee terminates service due to a change of work location, duties or any other employment or contractual condition; or (iv) Grantee terminates service due to the Company’s or any of its subsidiaries’ unilateral breach of contract.
Securities Law Notice. The Performance Awards granted under the Plan do not qualify as securities under Spanish regulations. By the grant of Performance Awards, no "offer of securities to the public", as defined under Spanish law, has taken place or will take place in Spanish territory. The present document and any other document relating to the offer of Performance Awards under the Plan has not been nor will it be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission), and it does not constitute a public offering prospectus.
Foreign Asset and Account Reporting. To the extent that Spanish residents hold rights or assets (e.g., shares of common stock, cash, etc.) in a bank or brokerage account outside of Spain with a value in excess of €50,000 per type of right or asset as of December 31 each year, such residents are required to report information on such rights and assets on their tax return for such year. Shares of common stock constitute securities for purposes of this requirement, but unvested rights are not considered assets or rights for purposes of this requirement.
If applicable, Spanish residents must report the assets or rights on Form 720 by no later than March 31 following the end of the relevant year. After such assets or rights are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reported assets or rights increases by more than €20,000. Failure to comply with this reporting requirement may result in penalties.
Spanish residents are also required to electronically declare to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the securities held in such accounts, if the value of the transactions for all such accounts during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceeds €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €1,000,000.
Spanish residents should consult with their personal tax and legal advisors to ensure compliance with their personal reporting obligations advisors to ensure compliance with their
Exchange Control Information. All acquisitions of foreign shares by Spanish residents must comply with exchange control regulations in Spain. Because of foreign investments requirements, the acquisition of Company shares under the Plan must be declared for statistical purposes to the Spanish Direccion General de Politica Comercial y de Inversiones Extranjeras (the “DGPCIE“). If you acquire the Shares through the use of a Spanish financial institution, that institution will automatically make the declaration to the DGPCIE for you. Otherwise, you must make the declaration by filling a form with the DGPCIE.
If you import the Shares acquired under the Plan into Spain, you must declare the importation of the share certificates to the DGPCIE.
In addition, you must also file a declaration of the ownership of the Shares with the Directorate of Foreign Transactions each January while the Shares are owned. These filings are made on standard forms furnished by the Directorate of Foreign Transactions.
When you receive any foreign currency payments (i.e., as a result of the sale of the Shares), you must inform the institution receiving the payment of the basis upon which such payment is made and provide certain specific information (e.g., name, address, and fiscal identification number; the name and corporate domicile of the company; the amount of the payment; the type of foreign currency received; the country of origin; and the reason for the payment).
UNITED KINGDOM
Terms and Conditions
UK Rules. The Performance Award is granted under the “UK Rules,” which contain additional terms and conditions that govern the Performance Award. Grantees should review the UK Rules carefully.
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Notifications
There are no country-specific notifications.
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APPENDIX B
Compliance with Section 409A of the Internal Revenue Code
(a) It is intended that the provisions of this Agreement comply with Section 409A of the U.S. Internal Revenue Code (“Section 409A”), and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
(b) Neither Grantee nor any of Grantee’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Agreement to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to Grantee or for Grantee’s benefit under this Agreement may not be reduced by, or offset against, any amount owing by Grantee to the Company or any of its subsidiaries.
(c) If, at the time of Grantee’s separation from service (within the meaning of Section 409A), (i) Grantee is a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date pursuant to Section 4 of this Agreement but shall instead pay it, without interest, on the first business day after such six-month period or, if earlier, upon the Grantee’s death.
(d) Notwithstanding anything to the contrary contained herein, for the purpose of this Agreement, (i) “Disability” shall mean that the Grantee is considered disabled in accordance with U.S. Treasury Regulations section 1.409A-3(i)(4), determined as if all permissible provisions of such regulation were in effect, and (ii) a “Change of Control” of the Company is considered to have occurred with respect to the Grantee upon the occurrence with respect to the Grantee of a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as determined in accordance with U.S. Treasury Regulations section 1.409A-3(i)(5).
(e) Notwithstanding any provision of this Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to this Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, Grantee shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on Grantee or for Grantee’s account in connection with this Agreement (including, without limitation, any taxes and penalties under Section 409A), and neither the Company nor any of its subsidiaries shall have any obligation to indemnify or otherwise hold Grantee harmless from any or all of such taxes or penalties.
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Exhibit 10.4
FORM OF STOCK GROWTH INCENTIVE AWARD AGREEMENT
This Stock Growth Incentive Award Agreement (this "Agreement") entered into as of [GRANT DATE] (the “Grant Date”) by and between Fluor Corporation, a Delaware corporation (the "Company"), and you ("Grantee" or "you") evidences the grant to Grantee of a Stock Growth Incentive Award (the “Award”) under the Fluor Corporation 2020 Performance Incentive Plan (the "Plan"). Capitalized terms used in this Agreement and not defined herein have the meaning set forth in the Plan.
Section 1.AWARD SUBJECT TO PLAN
Your Award is granted subject to all of the terms and conditions of this Agreement and the Plan, including any terms, rules or determinations made by the Committee pursuant to its administrative authority under the Plan, and such further terms as are set forth in the Plan that are applicable to awards thereunder, including without limitation provisions on adjustment of awards, non-transferability, satisfaction of tax requirements and compliance with other laws.
Section 2.TARGET VALUE OF AWARD AND EARNOUT PERIOD
Your Award target amount is communicated in your long-term incentive award letter (the “Target Amount”). The Award shall be granted in the form of Stock Units, determined by dividing the Target Amount by the closing price of the Company’s common stock ($XX.XX), par value $.01 per share (the “Shares”), on [GRANT DATE] (the “Grant Date Share Price”), rounded for any fractional Stock Units (e.g., if your Target Amount is $100,000 and the Company’s Share price is $XX.XX on the applicable date, you will be granted X,XXX Stock Units). Each Stock Unit under this Award represents the right to receive cash equal to the value of one Share upon settlement of the Stock Unit, capped at a maximum value per Share equal to 200% of the Grant Date Share Price, pursuant to the terms and conditions set forth herein.
The Stock Units subject to this Award will vest and become payable at a rate of one-third of the total number of Stock Units granted per year on [VESTING DATE] of each year, commencing with [FIRST VESTING DATE] and annually thereafter ending on [FINAL VESTING DATE], provided that Grantee’s employment has not terminated on or before such date unless one of the exceptions set forth below in Section 3 is met. Following each such vesting date, the vested Stock Units shall be settled in cash, in an amount equal to the number of Stock Units vested on such vesting date multiplied by the closing price of the Company’s Shares on such vesting date or, if the vesting date is not a trading day on the New York Stock Exchange (“NYSE”), the closing price of the Company’s Shares on the trading day immediately preceding such vesting date, capped at a maximum of 200% of the Grant Date Share Price.
Payment of the Award shall be made as soon as practicable after each vesting date, generally on the same date that other executive incentives are paid, if any.
Section 3.CONTINUED EMPLOYMENT AND AWARD PAYMENT
Payment of the Award is conditioned upon you remaining in the employment of the Company or its subsidiaries through the payment dates, subject to limited exceptions described in this Section 3. If your employment with the Company or any of its subsidiaries terminates for any reason other than death, Retirement, Disability or a Qualifying Termination, each as defined below and as determined by the Committee in accordance with the Plan, then as of the date of such termination this Award shall expire as to any portion which has not yet become vested and payable, meaning that you shall forfeit such portion in exchange for no additional consideration or payment. If prior to the Award becoming vested and payable in full pursuant to Section 2 above, your employment with the Company or any of its subsidiaries terminates by reason of your death, Disability or a Qualifying Termination, each as determined by the Committee in accordance with the Plan, then any portion of this Award which has yet to vest and become payable, shall vest and be paid to you as soon as practicable after such termination based on the closing price of the Company’s Shares on the date of termination or, if the termination date is not a trading day on the NYSE, the closing price of the Company’s Shares on the trading day immediately preceding the termination date. If prior to the Award becoming vested and payable in full pursuant to Section 2 above, your employment with the Company or any of its subsidiaries terminates by reason of your Retirement and you deliver a signed long term incentive vesting/forfeiture agreement to the Company in a form acceptable to the Company (except when such an agreement is prohibited by governing law as determined by the Company), then any portion of this Award which has yet to vest and become payable, shall continue to vest and become payable as set forth in Section 2 above. Notwithstanding the foregoing and regardless of the reason for termination, under all circumstances other than your Qualifying Termination, if your employment is terminated prior to [DATE], this Award shall be forfeited in exchange for no consideration or payment. Nothing in the Plan or this Agreement confers any right of continuing employment with the Company or its subsidiaries. Notwithstanding the foregoing, if in the event of a Change of Control the successor to the Company does not
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assume this Award, then any portion of this Award which has yet to vest and become payable and has not otherwise been forfeited pursuant to the provisions of this Section 3 shall vest and be paid to you as soon as practicable after such Change of Control based on the closing price of the Company’s Shares on the date of the Change of Control or, if the Change of Control date is not a trading day on the NYSE, the closing price of the Company’s Shares on the trading day immediately preceding the Change of Control date. Notwithstanding anything to the contrary herein, in the event your employment is terminated for Cause (as defined herein), regardless of whether you are Retirement eligible, you shall forfeit the unvested portion of this Award in exchange for no additional consideration or payment, unless otherwise prohibited by law.
For purposes of this Agreement, "Retirement" means your retirement as determined in accordance with applicable Company personnel policies and the Plan. The term “Qualifying Termination” means your involuntary termination of employment by the Company, without Cause, within two (2) years following a Change of Control of the Company. For this purpose, “Cause” means your dishonesty, fraud, willful misconduct, breach of fiduciary duty, conflict of interest, commission of a felony, material failure or refusal to perform your job duties in accordance with Company policies, material violation of Company policy that causes harm to the Company or its subsidiaries or other wrongful conduct of a similar nature and degree. “Disability” and “Change of Control” shall have the meanings given to them in Appendix A to this Agreement.
Section 4.CONFIDENTIALITY
This Award is conditioned upon Grantee not disclosing this Agreement or said Award to anyone other than Grantee's spouse or financial advisor or senior management of the Company or senior members of the Company's Law, Tax and Human Resources departments during the period prior to the full payment of the Award. If disclosure is made by Grantee to any other person not authorized by the Company, this Award shall be forfeited in exchange for no additional consideration or payment. Notwithstanding any other provision of this Agreement or any other agreement, if Grantee makes a confidential disclosure of a Company trade secret to a government official or an attorney for the purpose of reporting or investigating a suspected violation of law, or in a court filing under seal, Grantee shall not be held liable under this Agreement or any other agreement, or under any federal or state trade secret law for such a disclosure. Moreover, nothing in this Agreement or any other agreement shall prevent Grantee from making a confidential disclosure of any other confidential information to a government official, to an attorney as necessary to obtain legal advice or in a court filing under seal.
Section 5.TAX WITHHOLDING
Regardless of any action the Company or the Grantee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Grantee acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by the Grantee is and remains the Grantee’s responsibility and that the Company and/or the Employer (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this grant of an Award, including the grant and vesting of the Award, subsequent delivery of the cash payment and/or (ii) do not commit to structure the terms or any aspect of this grant of an Award to reduce or eliminate the Grantee’s liability for Tax-Related Items. The Grantee shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Grantee’s participation in the Plan or receipt of this Award that cannot be satisfied by the means described below. Further, if the Grantee is subject to tax in more than one jurisdiction, the Grantee acknowledges that the Company and/or Employer (or former Employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. The Company may refuse to deliver the Award payment if the Grantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items.
Prior to the taxable or tax withholding event, as applicable, the Grantee shall pay, or make adequate arrangements satisfactory to the Company or to the Employer (in their sole discretion) to satisfy all Tax-Related Items. In this regard, the Grantee authorizes the Company or Employer to withhold all applicable Tax-Related Items legally payable by the Grantee by (1) withholding from the Award payment in cash and/or (2) withholding from the Grantee’s wages or other cash compensation paid by the Company and/or Employer.
Grantee acknowledges and understands that Grantee should consult a tax advisor regarding Grantee’s tax obligations.
Section 6.SEVERABILITY
In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
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Section 7.DATA PROTECTION
THE GRANTEE HEREBY EXPLICITLY AND UNAMBIGUOUSLY CONSENTS TO THE COLLECTION, USE AND TRANSFER, IN ELECTRONIC OR OTHER FORM, OF THE GRANTEE’S PERSONAL DATA AS DESCRIBED IN THIS DOCUMENT BY AND AMONG, AS APPLICABLE, THE EMPLOYER, AND THE COMPANY AND ITS SUBSIDIARIES FOR THE EXCLUSIVE PURPOSE OF IMPLEMENTING, ADMINISTERING AND MANAGING THE GRANTEE’S PARTICIPATION IN THE PLAN. THE GRANTEE UNDERSTANDS THAT THE COMPANY, ITS SUBSIDIARIES AND THE EMPLOYER HOLD CERTAIN PERSONAL INFORMATION ABOUT THE GRANTEE, INCLUDING, BUT NOT LIMITED TO, NAME, HOME ADDRESS AND TELEPHONE NUMBER, DATE OF BIRTH, SOCIAL SECURITY OR INSURANCE NUMBER OR OTHER IDENTIFICATION NUMBER, SALARY, NATIONALITY, JOB TITLE, ANY SHARES OR DIRECTORSHIPS HELD IN THE COMPANY, DETAILS OF ALL OPTIONS OR ANY OTHER ENTITLEMENT TO SHARES AWARDED, CANCELED, PURCHASED, EXERCISED, VESTED, UNVESTED OR OUTSTANDING IN THE GRANTEE’S FAVOR FOR THE PURPOSE OF IMPLEMENTING, MANAGING AND ADMINISTERING THE PLAN (“DATA”). THE GRANTEE UNDERSTANDS THAT THE DATA MAY BE TRANSFERRED TO ANY THIRD PARTIES ASSISTING IN THE IMPLEMENTATION, ADMINISTRATION AND MANAGEMENT OF THE PLAN, THAT THESE RECIPIENTS MAY BE LOCATED IN THE GRANTEE’S COUNTRY OR ELSEWHERE, INCLUDING OUTSIDE THE EUROPEAN ECONOMIC AREA, AND THAT THE RECIPIENT COUNTRY MAY HAVE DIFFERENT DATA PRIVACY LAWS AND PROTECTIONS THAN THE GRANTEE’S COUNTRY. THE GRANTEE UNDERSTANDS THAT HE/SHE MAY REQUEST A LIST WITH THE NAMES AND ADDRESSES OF ANY POTENTIAL RECIPIENTS OF THE DATA BY CONTACTING THE LOCAL HUMAN RESOURCES REPRESENTATIVE. THE GRANTEE AUTHORIZES THE RECIPIENTS TO RECEIVE, POSSESS, USE, RETAIN AND TRANSFER THE DATA, IN ELECTRONIC OR OTHER FORM, FOR THE PURPOSES OF IMPLEMENTING, ADMINISTERING AND MANAGING THE GRANTEE’S PARTICIPATION IN THE PLAN, INCLUDING ANY REQUISITE TRANSFER OF SUCH DATA, AS MAY BE REQUIRED TO A BROKER OR OTHER THIRD PARTY WITH WHOM THE GRANTEE MAY ELECT TO DEPOSIT SHARES, IF ANY, ACQUIRED UNDER THE PLAN. THE GRANTEE UNDERSTANDS THAT DATA WILL BE HELD ONLY AS LONG AS IS NECESSARY TO IMPLEMENT, ADMINISTER AND MANAGE PARTICIPATION IN THE PLAN. THE GRANTEE UNDERSTANDS THAT HE/SHE MAY, AT ANY TIME, VIEW DATA, REQUEST ADDITIONAL INFORMATION ABOUT THE STORAGE AND PROCESSING OF THE DATA, REQUIRE ANY NECESSARY AMENDMENTS TO THE DATA OR REFUSE OR WITHDRAW THE CONSENTS HEREIN, IN ANY CASE WITHOUT COST, BY CONTACTING THE LOCAL HUMAN RESOURCES REPRESENTATIVE IN WRITING. THE GRANTEE UNDERSTANDS THAT REFUSING OR WITHDRAWING CONSENT MAY AFFECT THE GRANTEE’S ABILITY TO PARTICIPATE IN THE PLAN. FOR MORE INFORMATION ON THE CONSEQUENCES OF REFUSING TO CONSENT OR WITHDRAWING CONSENT, THE GRANTEE UNDERSTANDS THAT HE/SHE MAY CONTACT THE PLAN ADMINISTRATOR AT THE COMPANY.
Section 8.ACKNOWLEDGMENT AND WAIVER
By accepting the grant of this Award, the Grantee acknowledges and agrees that:
(a) the Plan is established voluntarily by the Company, and it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan or this Agreement;
(b) the grant of Awards is voluntary and occasional and does not create any contractual or other right to receive future grants of Awards, or benefits in lieu of Awards, even if Awards have been granted repeatedly in the past;
(c) all decisions with respect to future grants, if any, shall be at the sole discretion of the Company;
(d) the Grantee’s participation in the Plan shall not create a right to further employment with Employer and shall not interfere with the ability of Employer to terminate the Grantee’s employment relationship, and it is expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law;
(e) the Grantee is participating voluntarily in the Plan;
(f) Awards and resulting benefits are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and are outside the scope of the Grantee’s employment contract, if any;
(g) Awards and resulting benefits are not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance, resignation, termination, redundancy, or end of service payments, or bonuses, long-service awards, pension or retirement benefits or similar payments insofar as permitted by law;
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(h) in the event that the Grantee is not an employee of the Company, this Award shall not be interpreted to form an employment contract or relationship with the Company, and furthermore, this Award shall not be interpreted to form an employment contract with the Employer or any subsidiary of the Company;
(i) the future value of the Shares is unknown, may increase or decrease from the date of award and cannot be predicted with certainty;
(j) in consideration of this Award, no claim or entitlement to compensation or damages shall arise from termination or diminution in value of this Award resulting from termination of the Grantee’s employment by the Company or the Employer (for any reason whatsoever), and the Grantee irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the terms of this Agreement, the Grantee shall be irrevocably deemed to have waived any entitlement to pursue such claim; and
(k) the award evidenced by this Agreement is subject to all Company policies relating to the clawback and/or recoupment of compensation, as the same may be amended from time to time, and to the extent the Grantee is subject to such policies, the terms and conditions of such policies are hereby incorporated by reference into this Agreement.
Section 9.GRANT-SPECIFIC TERMS
Appendix A contains additional terms in compliance with Section 409A of the U.S. Internal Revenue Code.
Section 10.ENFORCEMENT
This Agreement and the Award granted hereunder shall be governed by, construed, administered and enforced in accordance with the laws of the State of Delaware without reference to choice or conflict of law principles.
Section 11.EXECUTION OF AWARD AGREEMENT
Please acknowledge your acceptance of the terms of this Agreement by electronically signing this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first hereinabove written.
FLUOR CORPORATION
By:
_________________________
[NAME]
[TITLE]
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APPENDIX A
Compliance with Section 409A of the Internal Revenue Code
(a) It is intended that the provisions of this Agreement comply with Section 409A of the U.S. Internal Revenue Code (“Section 409A”) and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
(b) Neither Grantee nor any of Grantee’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Agreement to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to Grantee or for Grantee’s benefit under this Agreement may not be reduced by, or offset against, any amount owing by Grantee to the Company or any of its subsidiaries.
(c) If, at the time of Grantee’s separation from service (within the meaning of Section 409A), (i) Grantee is a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date pursuant to Section 2 of this Agreement but shall instead pay it, without interest, on the first business day after such six-month period or, if earlier, upon the Grantee’s death.
(d) Notwithstanding anything to the contrary contained herein, for the purpose of this Agreement, (i) “Disability” shall mean that the Grantee is considered disabled in accordance with U.S. Treasury Regulations section 1.409A-3(i)(4), determined as if all permissible provisions of such regulation were in effect, and (ii) a “Change of Control” of the Company is considered to have occurred with respect to the Grantee upon the occurrence with respect to the Grantee of a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as determined in accordance with U.S. Treasury Regulations section 1.409A-3(i)(5).
(e) Notwithstanding any provision of this Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to this Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, Grantee shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on Grantee or for Grantee’s account in connection with this Agreement (including, without limitation, any taxes and penalties under Section 409A), and neither the Company nor any of its subsidiaries shall have any obligation to indemnify or otherwise hold Grantee harmless from any or all of such taxes or penalties.
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Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
I, David E. Constable, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Fluor Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| May 2, 2024 | By: | /s/ David E. Constable | ||||||
| David E. Constable | ||||||||
| Chief Executive Officer | ||||||||
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Joseph L. Brennan, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Fluor Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| May 2, 2024 | By: | /s/ Joseph L. Brennan | ||||||
| Joseph L. Brennan | ||||||||
| Chief Financial Officer | ||||||||
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of Fluor Corporation (the “Company”) on Form 10-Q for the period ended
March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David E. Constable, Chief Executive Officer of the Company, certify, for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
• the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| May 2, 2024 | By: | /s/ David E. Constable | ||||||
| David E. Constable | ||||||||
| Chief Executive Officer | ||||||||
A signed original of this written statement required by 18 U.S.C. Section 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of Fluor Corporation (the “Company”) on Form 10-Q for the period ended
March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph L. Brennan, Chief Financial Officer of the Company, certify, for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
• the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| May 2, 2024 | By: | /s/ Joseph L. Brennan | ||||||
| Joseph L. Brennan | ||||||||
| Chief Financial Officer | ||||||||
A signed original of this written statement required by 18 U.S.C. Section 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.