Fluor’s Top Executives Get Big Raises, Bonuses After Profits Soar 16%

Fluor Corp., whose annual profit rose nearly 16% to a record $268.1 million in 1996, rewarded Chairman and Chief Executive Leslie G. McCraw with a 15% hike in his annual salary and bonus that pushed his basic pay package to just over $1.8 million.

McCraw also received nearly $2.8 million worth of stock and stock options, a payout of $464,160 under the company’s long-term compensation plan, and a company-paid income tax benefit worth $219,133, bringing his total compensation for the year to $5.3 million, according to a report filed Friday with the Securities and Exchange Commission.

Fluor, an international engineering, construction services and energy resources company, bestowed a 17% basic pay package hike on D.L. Blankenship, chairman and chief executive of its A.T. Massey Coal Co. subsidiary, and gave pay and bonus increases of 5.5% to 6.7% to its three other top-paid executives.

SEC rules require publicly traded companies to report the annual compensation of their five most highly paid executives as part of the annual proxy report to shareholders.

Fluor’s proxy shows that the company also is asking shareholders to vote on a revised retirement plan for its outside directors at its March 11 annual meeting. The meeting is to be held at the Fluor Daniel subsidiary’s complex in Sugar Land, Texas.

The proposed retirement plan change would replace annual cash payments to retired directors with stock awards that, like awards to executives, would not be vested unless the company met certain performance objectives.

The change is being proposed in keeping with arguments by shareholder rights groups and compensation specialists’ arguments that directors--who, after all, help set corporate policies--should not be rewarded for years after leaving the company’s board if the company doesn’t continue to perform well.

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Executive compensation specialists say that Fluor’s 1996 executive pay seems to be within norms for large corporations in 1996.

Bonuses that exceeded base salaries for McCraw and Blankenship “certainly indicate that the board [of directors] thinks these guys are doing a great job,” said Fred Whittlesey, principal of Compensations and Performance Management Inc., a Newport Beach executive compensation consultant.

In addition to the profit increase, Fluor’s annual revenue jumped almost 18.5% to $11.01 billion.

McCraw’s base salary of $830,040 was up 10% from 1995, while his $975,000 bonus represented a 16% increase.

Almost $900,000 of the value of his stock award is in restricted stock that he cannot receive unless the company meets certain, unspecified performance goals over the next three years. The remaining portion of his stock award was in options, for 115,880 shares of Fluor common stock.

Options for McCraw and the other executives vest in four annual installments beginning a year from the date they were granted. And while their true value cannot be known until the executive actually exercises them, the SEC requires companies to place a value on stock options in the year they are granted. Fluor valued the options granted to McCraw at $1.99 million.

Hugh K. Coble, Fluor’s vice chairman, received a $420,000 base salary, up 5% from 1995; a $340,000 bonus that was up 6.25% for the year; $1.4 million in restricted stock and stock options; $198,722 in long-term compensation; and a $99,266 income tax benefit.

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Tax benefits for all five of the executives were to pay for income taxes due on previous year’s restricted stock that became vested in 1996.

For Blankenship, whose St. Louis-based coal mining company was a stellar performer for Fluor last year, a $375,000 base salary represented a 15% raise while a bonus of $380,000 was up 18.7% for the year. Blankenship receives stock options and a restricted stock award worth a total of $513,000, long-term compensation of $137,240 and a tax benefit of $57,900.

Fluor paid chief administrative officer J.O. Rollans a $360,000 salary in 1996, up 7.5%. He also received a $295,000 bonus that was 5% above last year’s, stock options and restricted shares worth $513,000, $130,259 in long term compensation and a $56,393 tax benefit.

J.C. Stein, a Fluor group president, was fifth on the list of highly paid executives with a salary of $325,020 that was 6.5% above last year’s and a $235,000 bonus that was up 6.8%. Stock options and restricted shares were worth $276,799 to Stein, who also received $154,334 in long-term compensation and a $32,638 tax benefit.