Fluor Chairman to Retire; McCraw Seen as Successor
Having helped return Fluor Corp. to profitability, Chairman David S. Tappan Jr. 4said Tuesday that he plans to retire within the next six to 18 months and identified Fluor President Leslie G. McCraw as his likely successor.
Tappan, 66, had intended to retire in 1987 but was persuaded by Fluor’s board to stay on and see the huge construction and engineering company through bad times in the mid-1980s. He oversaw a massive reorganization that is credited with turning around the company.
In fiscal 1988, Fluor recorded its first operating profit since 1984.
During the company’s annual shareholders meeting on Tuesday, Tappan declined to answer a shareholder’s question about his plans for retirement. He referred the question to board member Louis Wilson, who heads the organization and compensation committee.
Wilson told the group that the board will be working over the next few months on a succession plan but did not say when Tappan would step down. After the meeting, Fluor officials said Tappan plans to retire in the next six to 18 months.
“Based on Leslie McCraw’s accomplishment and experience, he is clearly the leading candidate,” Tappan said in a prepared statement.
Although analysts have speculated that Tappan would step down soon, Tuesday’s statement marked the first time the company had discussed the timetable for his retirement.
Analysts generally praised Tappan’s leadership and the diversification of Fluor, which early in the decade had invested heavily in coal and metals when prices for those commodities were at their peak and about to dive.
Tappan, who joined the company 37 years ago, was named president in February, 1982. He became chairman in late 1984, after the company’s earnings had already started to slide.
Asked to Stay On
The company had earned $152.8 million in fiscal 1982, but by fiscal 1984 Fluor squeaked out earnings of only $1 million. Fluor subsequently posted losses of $633.3 million in 1985 and $60.4 million in 1986.
By 1987, Fluor sold several of its mining operations and was able to report earnings of $26.6 million, but its continuing operations still lost $75 million. For fiscal 1988, the firm posted an operating profit and net income of $56 million.
The board asked Tappan to see the company through the restructuring that shifted the emphasis away from energy services and into several other areas, including engineering and construction.
“After holding the companies together through its agonies, he’s certainly entitled to retire at 67,” said Wayne Johnson, an analyst at H. G. Wellington, a New York brokerage firm. Tappan will be 67 in May.
McCraw, 54, joined the company in 1977. He was president and chief executive of Fluor Daniel, the company’s principal subsidiary, before becoming Fluor president in January, 1988.
“He is highly involved in the company’s performance right now,” said Tom Samuelson, an analyst at Duff & Phelps, a research firm in Chicago. “But Fluor will have new challenges as it continues to expand globally.”
Also Tuesday, Fluor’s board voted to double the company’s quarterly dividend to 4 cents per share. Analysts said the increased dividend might help boost the price of Fluor’s stock. The stock, which closed Tuesday at $23.375 per share, is unchanged from the first of the year. Meanwhile, the Standard & Poor’s index of 500 stocks has gained 6.3% so far this year.