Good morning. On behalf of the Board of Directors and the management team, welcome to Fluor Corporation's twenty twenty Annual Meeting of Shareholders. I am Alan Beckman and I am proud to serve Fluor Corporation as its Executive Chairman. It's an honor and a privilege for me to be here with you today. At this annual meeting, shareholders will act upon the matters outlined in the notice of meeting.
We will also respond to questions from shareholders. On our virtual meeting site, you will find an agenda and rules of conduct for today's meeting. It is our intention to conduct this meeting in accordance with this agenda and the rules of conduct. Please note that this webcast is being recorded and all other audio recordings are prohibited. As is the practice at every floor meeting, we will begin with a health, safety, and environmental topic, and then a value creation topic.
I'd like to introduce Melinda Covert. Melinda is a project manager from Greenville, South Carolina who is currently working as an engineering design manager on the Securis Banksia project, an influenza vaccine manufacturing facility in Australia. Melinda, please share with us your HSE topic.
Thank you. Today I wanted to touch upon a topic that is important to everyone's life but we avoid discussing at work, something that one in four adults experience in The U. S. And one in five construction workers report experiencing. That topic is mental illness and the importance of mental health.
Did you know that depression is the leading cause of disability worldwide or that the construction industry has the second highest rate of suicide according to the CDC? I could share more statistics, but if you're listening, you can likely identify with this topic either personally or because of a family member, friend, or coworker. Mental health is something that affects every one of us, yet we rarely discuss it. Particularly now with the global pandemic, the need for acknowledging the importance of mental health is critical. Employee mental health impacts productivity and influences physical health and safety.
Mental illness can impact a person's ability to be fully present in the workplace, which results in an increased risk of injury. Depression, anxiety, and other mental illnesses can lower awareness, cause sleep loss, and impact decision making abilities and reaction time. At Fluor, this can have a serious consequence at any of our many project sites as well as in our home offices and on our overall project performance. In our recent work from home environment, while some people may be embracing and even enjoying the change, others may be struggling with the impact it has had on their mental health and well-being. So what can you do as an employer, manager, employee, or colleague?
One of the most powerful tools in your toolbox to fight against mental health issues is education. Know the warning signs. A decrease in productivity, isolation, tardiness, and an increase in conflict with coworkers are all warning signs to look out for. Implement mental health first aid training for your employees and managers. This will teach them how to respond to issues around mental health and substance abuse.
Make mental health self assessment tools available to all employees and host seminars and workshops that address depression and stress management techniques. Provide and utilize an employee assistance program if offered. Create a safe space for employees. Start conversations and team meetings and create a healthy, supportive environment. Talk about issues like stress management.
The key is to make a safe environment where people aren't afraid of being reprimanded or judged if they are struggling. Lastly, you can use a three word approach for checking in. Those three words are notice, talk, and act. First, notice. If you see a coworker, friend, family member, or someone in your life whose behavior or performance is changing over time, recognize it.
Second, talk. In a private environment, ask them if they are okay. Express your concern and be a good listener. And third, act. Remind them about the resources available to them, such as an EAP program or recommend they connect with a healthcare professional and ask how you can help connect them with the support and care they need.
I hope this topic today will remind you that mental health impacts every one of us, whether we talk about it or not, and I hope that you will make it a priority in your personal life, home life, and workplace. Thank you.
Thank you, Melinda. Let's turn now to our value creation topic. I'd like to introduce Josh Conan, a process engineer from Scotland who is currently working as a project engineer on our PDH FEED project in Farnborough. Josh, please proceed with your value creation topic.
Thank you very much. Recently organizations from all over the planet celebrated World Quality Day, an annual event where the individuals and teams in the quality profession are recognized in appreciation of all their efforts in all manner of industries. This year, the campaign for World Quality Day was creating customer value. Now this theme is incredibly important for us here at Fluor, where our efforts to improve the quality of our projects and every technical innovation or solution that we develop is tied to doing exactly that, creating value for our clients. On Quality Day this year, our quality team published a big picture overview, breaking down the key focus areas we have targeted to support and improve our project execution efforts, all with the end goal of adding value.
What really struck me was the fact that these focus areas influence almost every single thing that we do at Fluor. It really reminded me of a concept in the world of sports that some coaches call the aggregation of marginal gains. In other words, instead of aiming to improve one thing by 100%, it can be much more effective for an athlete or a team to improve 100 things by 1%. This philosophy has been credited as a real differentiator in many sports, from international rugby teams and NFL teams to endurance athletes like runners and cyclists. They have all benefited from pushing for improvements across every facet of their performance, however small, rather than going after an elusive and sometimes impossible step change in one particular area.
This has many parallels with the quality team's key focus areas. One of these is our revamped Quality Requirement System or QRS, a standard tool that we're now using across all of our projects. QRS streamlines how we execute our work by identifying who is responsible for doing what and what specifications and requirements we need to meet to deliver the project the client wants. Having a framework like this is a powerful step towards improving the efficiency of every single Fluor employee by making their day just that little bit easier. If we go back to the 1% to 100 times idea, think about the value we can add when you consider every Fluor employee being even just 1% more effective every day.
It quickly adds up. In other areas the focus is on providing the tools and processes to empower everyone at Fluor to take ownership of continuous performance improvement. Take our project experiences platform for example. This tool helps to capture lessons learned and best practices from projects all over the world to ensure that we can roll out those great ideas from one project onto any other project that fits. Alongside that, there's our drive to use lean transformation principles and processes to find efficiencies on some of our biggest and most complex projects and challenges like LNG Canada or at our Coex fabrication yard.
By improving quality in so many areas, albeit with these smaller marginal gains, we are helping to push the dial in the pursuit of creating value for our clients. There's a great quote from Milton Hershey, the founder of the Hershey Chocolate Company, who knew a thing or two about making his customers happy. He said, Give them quality. That's the best kind of advertising. World Quality Day this year has helped to remind me and I think everyone else at Fluor exactly how we are striving to do that.
Thank you very much.
Thank you, Josh. At this time, I would like to introduce Fluor's Board of Directors who are standing for election today. Our board is comprised of outstanding individuals who possess a wealth of global business and management experience. They have proven themselves dedicated to Fluor and provide us valuable guidance and leadership. With me is Carlos Hernandez, Fluor's Chief Executive Officer.
Next is Alan Bennett, is the former President and CEO of H and R Block. Alan joined our board in 2011 and is our lead independent director. He also serves as chair of our audit committee and is a member of our executive and our organization and compensation committees. He is also a director of Halliburton Company and the TJX Companies. Next is Rosemary Burkery, who is the former vice chair of UBS Wealth Management Americas and chair of UBS Bank USA.
She is also the former Vice Chairman, Executive Vice President and General Counsel of Merrill Lynch. Rosemary joined our Board in 2010. She serves as Chair of our Governance Committee and as a member of our audit and executive committees. She also serves on the boards of Mutual of America Life Insurance Company and the TJX Companies. Next is David Constable.
David joined our board in 2019 and is the former chief executive officer of Sasol Limited. Prior to that, he had thirty years of service at Fluor. David is also a director on the boards of ABB Limited and the Rio Tinto Group. David is Chair of the Commercial Strategies and Operational Risk Committee and a member of the Executive and Governance Committees. We recently announced that David will become our CEO beginning in January 2021, which we will discuss later in today's meeting.
Next is Paulette Eberhardt, who is a new nominee to our board. Paulette is the chairman and chief executive officer of HMS Ventures and is the former President and Chief Executive Officer of CDI Corp. She is also a Director of LPL Financial Holdings and Valero Energy Company. Next we have Peter Fluor. Peter is Chairman and Chief Executive Officer of Texas Crude Energy.
He is a member of the Executive Committee and has served on our Board since 1984. Then we have Jim Hackett, who has served for two separate terms on our Board. Jim is the Chair of the Organization and Compensation Committee and a member of the Commercial Strategies and Operational Risk and Executive Committees. He is President of Tessellation Services and the former Executive Chairman of Alta Mesa Resources. He also serves on the Boards of Enterprise Products and National Oilwell Varco.
I'd like to also then introduce Thomas Leppard, who is the former Chief Executive Officer of both Kaplan and Turner Construction. He is also a former Mayor of the City Of Dallas. Tom joined our board in 2019. He is a member of the commercial strategies and operational risk and governance committees. Next is Terry McClure, who recently joined our board in October.
Terri is the former chief human resources officer and senior vice president of labor at United Parcel Service. She is a member of the audit and governance committees and she is also a director at GMS, JetBlue Airways Corporation and Lennar Corporation. Next we have Armando Oliveira. Armando is a senior advisor at Ridgelane Limited Partners. He is also former President and CEO of Florida Power and Light.
Armando joined our Board in 2012 and serves on the Commercial Strategies and Operational Risk and Organization and Compensation Committees. Armando is also a Director of Consolidated Edison and Lennar Corporation. Finally, we have Matt Rose, who joined our Board in 2014. Matt is an advisor to BDT Capital Partners and is the former Executive Chairman of Burlington Northern Santa Fe. He is a Director of AT and T and serves as a member of our audit and organization and compensation committees.
I'm also joined today by Fluor senior executives. In addition to Carlos, I'd like to introduce John Reynolds, who will be acting in an official capacity at today's meeting. John is Fluor's Executive Vice President, Chief Legal Officer and Corporate Secretary. Also present representing our outside auditors, Ernst and Young LLP are Daniel Washburn, our global coordinating partner, and Scott Wren, our engagement partner. And now a note on voting.
If you have already voted on the items of business for this meeting by sending in your proxy online or over the telephone, it is not necessary to vote today. However, if you do wish to vote today, you can do so by clicking on the voting button on the meeting website and following the instruction. I now declare the polls open. Again, there is no need to vote today if you've already voted by proxy. The board has appointed Bob Johnson, an agent of Broadridge Financial Solutions Inc to serve as the independent inspector of elections.
I will now ask John Reynolds to confirm that we have a quorum represented at this meeting.
Thank you, Alan. I have been informed by the Inspector of Elections that at least 70,200,000 shares of common stock are represented and voting at this meeting, representing a majority of the total common stock issued and outstanding as of the record date.
Thank you, John. Because a majority of the total issued and outstanding shares is represented, I declare a quorum to be present. Now let's proceed. In our virtual meeting room, you will find there are four items of business we'll be voting on. John, would you describe the items, please?
Thank you, Alan. The first item of business is the election of directors. Nominated for election to serve until the two two thousand twenty one annual meeting and until their respective successors are elected and qualified are the following. Alan M. Bennett, Rosemary T.
Berkery, Alan L. Beckman, David E. Constable, H. Paulette Eberhardt, Peter J. Fluor, James T.
Hackett, Carlos M. Hernandez, Thomas C. Leppard, Terry P. McClure, Armando J. Oliveira, and Matthew K.
Rose. The Board of Directors recommends that they vote for the election of these named directors. The second item is an advisory vote to approve executive compensation. Although nonbinding, the Board and the Organization and Compensation Committee will review and consider the voting results of this advisory resolution, commonly referred to as a say on pay resolution, when evaluating our executive compensation program. The Board of Directors recommends a vote for the advisory resolution to approve executive compensation.
The third item is the approval of the Fluor Corporation twenty twenty performance incentive plan. The Board of Directors recommends a vote for the approval. And the fourth item is the ratification of the appointment of Ernst and Young LLP as Fluor's independent registered public accounting firm. The Board of Directors recommends a vote for the ratification. I will now turn the floor back to Alan.
Thank you, John. Due to the delay in filing our twenty nineteen ten ks, it has been nearly eighteen months since our last shareholder meeting. During that time, Carlos Hernandez has worked tirelessly with his management team and this Board to address the issues we've faced. He has made many critical decisions, strengthened our risk assessment and project pursuit criteria, and brought us to a point where we can confidently plan our future. And so it's fitting that while the votes are being tallied, Carlos will describe the significant accomplishments we've achieved during his time as CEO.
Carlos?
Thank you, Alan. Since my appointment as CEO in May 2019, we have made significant progress restoring Fluor's financial health, operational consistency and industry reputation. I made a concerted effort to reestablish transparency, teamwork and trust throughout the company at every level. We also focused on building an inclusive culture. We undertook a comprehensive backlog review which led to considerable project adjustments last year.
We implemented new project pursuit principles to ensure we are awarded only risk appropriate work. We also made changes at the Board level, which Alan will talk about shortly. We evaluated our cost structure and aggressively streamlined the organization to reduce cost and conserve cash. As a result, many officer roles were eliminated and separations were completed. We successfully completed a detailed internal review in which we analyzed projects from 2016 to 2019 representing a majority of Fluor's lump sum projects based on revenue and quarterly financial reporting dating back to 2016.
While we found two material weaknesses, we have implemented remediation actions to address them. Earlier this year, we were confronted with a global pandemic. Like many companies, we quickly put in place measures to protect our employees while continuing to perform our work for our clients. I would like to thank Board of Directors for their unwavering commitment. And finally, I must thank Fluor's more than 45,000 global employees who contribute every day to our strong and resilient company.
With that, I'll now turn the call over to Alan to handle the questions we've received from our shareholders. Alan?
Carlos, thank you very much. As a result of hosting our shareholder meeting virtually this year, we asked our shareholders to submit their questions online. I would now like to read some of the general questions and give you Fluor's response. First, what are Fluor's long term expectations for NuScale and when is it expected to start producing positive cash flow? We know that investors have been patient with us over the past few years, while NuScale worked diligently towards Nuclear Regulatory Commission approval.
That approval was obtained in August of this year. This approval establishes NuScale as the preeminent leader in the small modular reactor technology market and allows Fluor to respond to customers looking for a unique, flexible, safe, and carbon free energy solution. Since that approval, we have seen an increase in interest from potential customers, capital investors, manufacturers, and supply chain partners to move forward in our development effort. Fluor is very pleased to support NuScale's efforts in creating a carbon free power solution and we look forward to discussing our opportunities in the near future. Second question, given the decline in stock price over the past year, why would shareholders support the executive compensation program?
Let me start by saying that as a shareholder, an employee and a Board member, I am also disappointed in our share price performance. As Carlos mentioned, over the past eighteen months, we have undertaken a number of actions to improve the company's performance. This includes a comprehensive backlog review, evaluation of our cost structure and changing our pursuit criteria to ensure that we are awarded risk appropriate projects. We believe these actions will result in better company performance, which in turn will result in stronger returns to our shareholders. As stated in our proxy, our compensation plan is designed to attract, retain and motivate officers, executives, management, non employee directors and other key personnel and to help promote a pay for performance linkage that aligns executives with short and long term performance targets.
To be clear, as our performance and share price has decreased, the compensation actually paid to our executives has comparably decreased. For example, in our VDI program, the value actually realized for the year ended 2019 when paid was only 7% of what was actually awarded. That was a 93% decrease. When the company does well, our team benefits and is rewarded. When it does not achieve targets, incentive compensation is reduced to reflect that performance.
We have also been asked about the future bid on lump sum turnkey contracts, what are our intentions? As we have discussed, we are undergoing a thorough strategic review of all aspects of the company, which includes a review of what type and form of contracts we will bid on. As part of this, we are reviewing under what circumstances, if any, we will be bidding on lump sum turnkey contracts going forward. As part of our January 2021 rollout of our strategic plan, we will announce our views on future LSTK bids. Ladies and gentlemen, that concludes our question and answer session.
And now at this time, I'd like to take the opportunity on behalf of the Board and the management team to thank Carlos Hernandez for his thirteen years of leadership and his many contributions to Fluor. We are grateful to have had an executive of Carlos' caliber to step in and lead the company over this critical period. As a result, Fluor is on the right track and we are well prepared to enter this new chapter. We are grateful for his service to our company. Since our last annual meeting of stockholders, your Board of Directors has driven a number of significant changes at Fluor.
These include the Board created a new Commercial Strategies and Operational Risk Committee, which is responsible for reviewing the company's strategies and its project related operational risk. We also announced a number of strategic and operational initiatives designed to optimize costs and improve operational efficiency. We have continually refreshed our Board since our last shareholder meeting. I'd like to personally thank Admiral Samuel Locklear, Nadir Sultan and Lynn Swan, all who gracefully and selflessly stepped down from the board in August of twenty nineteen. In addition, two other directors are retiring as of this meeting.
And it's with gratitude that we thank Deborah McQuinney and Peter Barker for their service and dedication. Earlier this year, in response to an inquiry from the SEC, the Board of Directors formed an independent special committee. This committee was empowered to review the projects where we recorded charges in the first half of twenty nineteen along with other related issues. Working with external advisors and financial experts, the special committee engaged in a detailed review and found that there were errors related to the timing of charges and revenue, particularly on one specific project. To correct for this, we restated our financial results for the fiscal years of 2016 through 2019.
You will find a full explanation of the special committee's work and the audit committee's conclusions in our 2019 form 10 ks, which was filed on 09/25/2020. Next, it gives me great pleasure to welcome back David Constable to Fluor as our CEO starting on January. I have had the pleasure of working closely with David when he was previously at Fluor and since he joined the board last year. I am extremely confident that David is the right person to build on our momentum and help Fluor achieve its full potential. David is a versatile and accomplished executive with the right talent, experience, and he has a deep understanding of our operations and the opportunities needed to lead our next phase of growth.
He brings a unique combination of insight into Fluor and an outside perspective from his prior experience as CEO of SASL and his board membership roles at Anadarko Petroleum, Rio Tinto and ABB. With David's previous floor tenure coupled with his time on our board and his broad industry experience, I am confident that his transition to the CEO role will be smooth. David's first order of business will be to roll out our new strategy. This work began late last year, but was slowed by the financial review and the pandemic. However, you should know that your management team continues to work diligently on our strategy and implementation and we are preparing to share our plans with you in mid January.
And now I'll move on to the next item on the agenda. At this point, I hereby announce that the polls are closed. John, would you please give the preliminary results of the voting?
Thank you, Alan. Based on these preliminary voting results, each of the nominees for director had received a majority of the votes cast. Shareholders have approved Item two, the advisory vote to approve executive compensation. Shareholders have approved Item three, the approval of the Fluor Corporation twenty twenty performance incentive plan. And shareholders have approved Item four, the appointment of Ernst and Young LLP as Fluor's independent auditors.
The final voting results will ultimately be available and disclosed on a Form eight ks, which we filed with the SEC after the vote has been certified by our Inspector of Elections.
Thank you. Ladies and gentlemen, this concludes our meeting. I would like to thank everyone for participating and for your confidence in our company. Have a great and safe day.
Ladies and gentlemen, you may all disconnect. Everyone, have a great day.