CORPORATE : Fluor’s Outside Directors Have Inside Track on Benefits
Ever wonder why corporate bigwigs, many of whom would seem to have their hands full running their own shops, line up to serve as directors of other companies?
Irvine-based Fluor Corp.’s recent proxy report provides a big hint.
The international construction and engineering company’s nonemployee directors get a $30,000-a-year retainer plus $2,000 a day for attending board meetings. (There were four of them last year.) And after six years on the board, the outside directors are entitled to yearly retirement payments equal to the annual stipend. The payments continue for the same number of years the retired director served, or until death, whichever occurs first.
William R. Grant, the 71-year-old chairman of New York investment firm Galen Associates, has been on Fluor’s board for 14 years. He could retire tomorrow and draw $30,000 a year from Fluor until he is 85. He also serves on the boards of five other large corporations.
Such munificence isn’t unusual, though. Fluor’s compensation plan for directors is pretty average, management compensation specialists say.
“About two-thirds of the big companies in the country have retirement plans for their directors, and most of them are like Fluor’s,” said Lawrence A. Wangler, a principal at the Irvine office of benefits consultant Towers Perrin. “But over the past 18 months there’s been a big change because of pressure by shareholder groups. The new philosophy is that even directors’ retirement should be linked to the company’s performance.”
That’s usually achieved by tying the value of the benefits to the value of the company stock.
“We support the trend” toward performance-based retirement benefits for outside directors, said Chuck Bradley, Fluor’s vice president for human relations, “and we will be looking at it in depth in the next couple of months.”
John O’Dell covers major Orange County corporations and economic issues for The Times. He can be reached at (714) 966-5831 and at john.odell@latimes.com.
