Just 1 of Fluor’s Top 20 Execs Given Bonus

Fluor Corp., keeping an earlier promise, paid a bonus to only one of its 20 top executives in 1997, penalizing the rest for a year of falling profits and plunging stock value, the company’s new proxy report shows.

It was the first time in more than a decade that the Irvine-based engineering and construction services firm’s principal officers went without cash and stock option bonuses, which often doubled their base salaries.

“We ought to call these guys in and give them a heroism award,” executive pay specialist Graef S. “Bud” Crystal said.

Retired Fluor Chairman and Chief Executive Leslie McCraw was among the executives who didn’t receive a bonus. As a result, his compensation totaled $2.8 million for 1997, far short of the $5.3 million he received in 1996, according to the proxy report filed Friday with the Securities and Exchange Commission.

Only Donald L. Blankenship, whose A.T. Massey Coal Co. subsidiary was Fluor’s sole growth story last year, received a bonus.

The decision sends a message to shareholders that the company is serious about tying executive’s compensation to the company’s performance and its ability to reward shareholders.

But Fluor, whose stock value dropped by 36% during the fiscal year that ended Oct. 31, did award top executives large blocks of restricted shares that can be sold in increments over a 10-year period. McCraw’s award was valued at $974,063, although the shares could be worth far more--or far less--by the time he cashes them in.

Companies justify the awards by pointing out that the stock’s value only increases if the executives do their jobs well.

But some compensation specialists dispute that argument. “Even if the stock loses half its value, it still represents a gain for the executive who didn’t pay anything for it,” said Fred Whittlesey, principal of Compensation and Performance Management Inc. in Newport Beach. “An investor who had to pay for the stock would lose money if its value fell.

Fluor earned $146 million in fiscal 1997, down 45% from a record $268 million posted for fiscal 1996. Executives said during the year that they had focused on an aggressive expansion program and let critical daily operational matters slip.

McCraw, who retired unexpectedly at the end of December after being diagnosed with bladder cancer, received an annual salary of $875,040--up $45,000 from 1996. Fluor executives’ raises are based on the company’s prior-year performance.

Blankenship, Massey’s chairman and chief executive, received a $50,000 pay raise--to $425,040--and a cash bonus of $425,000. Like other top executives, he did not receive any stock options for the year, which reduced his total compensation package by 14% to $1.2 million.

Fluor wants to match senior executives’ compensation to the performance of the company’s stock, said James Rollans, Fluor’s chief administrative officer. His own compensation package fell almost 57% to $611,000.

“It’s appropriate that management be rewarded when the company performs, because it is likely that shareholders will be rewarded too,” he said. “But when the company doesn’t perform, then management shouldn’t be rewarded.”