How I Voted: Fluor Corp (FLR) – Proxy Score 58%

Fluor Corp ($FLR) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/2/2013. had collected the votes of two funds when I checked on 4/26/2013. I also checked OTPP, which voted with management except they voted against amending the stock plan. I voted with management 58% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime)

I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.

Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third world.

FLR’s Summary Compensation Table shows CEO/Chair David T. Seaton was the highest paid named executive officer (NEO) at about $9.3M in 2012. I’m using Yahoo! Finance to determine market cap ($9.2B) and Wikipedia’s rule of thumb regarding classification. FLR is at the high end of mid-cap companies. According to the United States Proxy Exchange (USPX) guidelines (pages 9 & 10), using data from Equilar, the median CEO compensation at mid-cap corporations was $4.3 million in 2010.

Even factoring inflationFLR’s pay is well above median. Therefore, I voted for against the compensation plan and all the directors on the compensation committee (Peter J. Fluor, Chairman, James T. Hackett, Kent Kresa, Dean R. O’Hare and Joseph W. Prueher) as well as amending the stock plan. Unfortunately, although FLR recently declassified their board, some members on the compensation committee are still serving their terms that were grandfathered in, so I couldn’t vote against them all.  I voted in favor of the auditor.

How I voted (CorpGov) below:

Mark your calendar:

Stockholders interested in submitting a Rule 14a-8 proposal for inclusion in the proxy materials for the annual meeting of stockholders in 2014 may do so by following the procedures prescribed in Rule 14a-8, under the Exchange Act. To be eligible for inclusion, stockholder proposals must be received by the company’s Secretary no later than November 13, 2013. Any proposals should be sent to: Carlos M. Hernandez, Chief Legal Officer and Secretary, Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039.

 Looking at, I see no action can be taken without a meeting by written consent and only shareholders with at least 25% of shares can call special meetings.

Fluor Corporation’s ISS Governance QuickScore as of Apr 1, 2013 is 3. The pillar scores are Audit: 1; Board: 10; Shareholder Rights: 4; Compensation: 2. Brought to you by Institutional Shareholder Services (ISS). Scores range from “1” (low governance risk) to “10” (higher governance risk). Each of the pillar scores for Audit, Board, Shareholder Rights and Compensation, are based on specific company disclosure. With a pillar score of 10 for the Board, maybe it is time to be looking at proxy access.

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