o	Preliminary Proxy Statement
o	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x	Definitive Proxy Statement
o	Definitive Additional Materials
o	Soliciting Material Under §240.14a-12

 

 

 

 

 

x	No fee required.
o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

1.	Title of each class of securities to which transaction applies:

 

 

 

2.	Aggregate number of securities to which transaction applies:

 

 

 

3.	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

4.	Proposed maximum aggregate value of transaction:

 

---

 

5.	Total fee paid:

 

 

 

o	Fee paid previously with preliminary materials.

 

o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.  Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

 

6.	Amount Previously Paid:

 

 

 

7.	Form, Schedule or Registration Statement No.:

 

 

8.	Filing Party:

 

 

 

9.	Date Filed:

 

 

 

 

 

TIME:

8:30 A.M., Pacific Daylight Time, on May 23, 2013

 

PLACE:

Offices of Cooley LLP 101 California Street, 5th Floor San Francisco, CA  94111-5800

 

ITEMS OF BUSINESS:

(1) To elect our Board’s nominees for director to serve until their successors are elected.

 

(2)  To approve an amendment and restatement of our 2008 Equity Incentive Plan to, among other things, increase the number of shares authorized by 1.5 million shares and extend the term by five years.

 

(3) To ratify the selection by the Audit Committee of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2013.

 

(4) To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this proxy statement.

 

(5)  To consider any other matters that may properly come before the Annual Meeting.

 

These items of business are more fully described in the proxy statement accompanying this Notice.

 

RECORD DATE:

Only holders of record of URS common stock at the close of business on April 1, 2013 may vote at the Annual Meeting or any postponement or adjournment of the Annual Meeting.

 

 

 

 

Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting to Be Held at 8:30 A.M. on May 23, 2013 at the Offices of Cooley LLP at 101 California Street, 5th Floor, San Francisco, CA  94111-5800   The proxy statement, annual report to stockholders and annual report on Form 10-K are available at http://www.urs.com/proxy.   Stockholders are cordially invited to attend the Annual Meeting in person.  Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy as promptly as possible in order to ensure your representation at the Annual Meeting.  A return envelope (which is postage prepaid if mailed in the United States) has been provided for that purpose.  Even if you have given your proxy, you may still vote in person if you attend the Annual Meeting.  Please note that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy card issued in your name from the record holder.

 

 

Proxy Summary			1
About The Annual Meeting			4
Additional Information			10
Information About The Board Of Directors			11
Proposals Requiring Your Vote			35
· Proposal 1 – Election Of Directors			35
· Proposal 2 – Approval Of An Amendment And Restatement Of The 2008 Equity Incentive Plan			43
· Proposal 3 – Ratification Of Selection Of Our Independent Registered Public Accounting Firm			66
· Proposal 4 – Advisory Vote On Executive Compensation			68
Report Of The Audit Committee For Fiscal Year 2012			72
Security Ownership Of Certain Beneficial Owners And Management			73
Section 16(a) Beneficial Ownership Reporting Compliance			75
Compensation Committee Interlocks And Insider Participation			75
Compensation Committee Report			76
Executive Compensation			77
Certain Relationships And Related Person Transactions			118
Appendix A – Amendment and Restatement of the 2008 Equity Incentive Plan

 

 

	MANAGEMENT PROPOSALS		BOARD VOTE RECOMMENDATION
	· Election of Directors		· For each director nominee
	· Approval of an Amendment and Restatement of the 2008 Equity Incentive Plan		· For
	· Ratification of Selection of Our Independent Registered Public Accounting Firm		· For
	· Advisory Vote on Executive Compensation		· For

 

 

	NAME		AGE		DIRECTOR SINCE		CURRENT STATUS		COMMITTEE MEMBERSHIPS						OTHER PUBLIC BOARDS
									AC		BA		CC
	Mickey P. Foret*		67		2003		Retired		C		-		-		2
	Senator William H. Frist, M.D.*		61		2009		Partner at Cressey & Company LP		-		M		-		1
	Lydia H. Kennard*		58		2007		President and CEO of KDG Construction Consulting		-		C		-		2
	Donald R. Knauss*		62		2010		Chairman & CEO at The Clorox Company		-		M		-		2
	Martin M. Koffel		74		1989		Chairman & CEO at URS Corporation		-		-		-		0
	Timothy R. McLevish*		58		2012		EVP & CFO at Kraft Foods Group, Inc.		-		-		-		1
	General Joseph W. Ralston, USAF Ret.*		69		2003		Vice Chairman at The Cohen Group		M		M		C		2
	John D. Roach*		69		2003		Chairman & CEO at Stonegate International		M		-		M		2
	Douglas W. Stotlar*		52		2007		President, CEO & Director at Con-way Inc.		-		-		M		1
	William P. Sullivan*		63		2006		CEO &Director at Agilent Technologies, Inc.		M		-		M		2

 

 

 

Our Corporation Governance Information:
Size of Board	10
Number of Independent Directors	9
Board of Committees Consist Entirely of Independent Directors	Yes
Lead Independent Director	Yes
Annual Election of All Directors	Yes
Majority Voting for Directors in Uncontested Elections	Yes
Annual Advisory Say-on-Pay Vote	Yes
All Directors Attended at Least 75% of Meetings Held	Yes
Independent Directors Meet Regularly in Executive Session	Yes
Annual Board and Committee Self-Evaluations	Yes
Code of Business Conduct and Ethics	Yes
Corporate Governance Guidelines	Yes
Stock Ownership Guidelines for Directors and Executive Officers	Yes
Stockholder Rights Plan (Poison Pill)	No

 

 

· Increases the aggregate number of shares of common stock authorized for issuance under the 2008 Incentive Plan by 1,500,000 shares.

· Extends the term of the Plan until May 23, 2018.

 

 

· PricewaterhouseCoopers LLP has audited our financial statements since 1988.

· Aggregate fees to PricewaterhouseCoopers LLP for fiscal year ended December 28, 2012 were $10.5 million.

 

 

· Solid Financial Performance.  Revenues for fiscal year 2012 grew by 15% from fiscal year 2011, including $1.5 billion from our Flint Energy Services Ltd. (“Flint”) acquisition.  Net income increased to $310.6 million or $4.17 per share on a diluted basis.

· Successful Bond Offering.  We successfully issued $400.0 million in 3.850% Senior Notes due 2017 and $600.0 million in 5.000% Senior Notes due 2022 to the institutional investor community.

· Strategic Acquisition. Our Flint acquisition significantly increased our service offering in the North American oil and gas market.

· Initiated Dividends.  We initiated a $0.20 quarterly cash dividend program in 2012.

 

 

· Base Salary is designed to reward talent and experience in relation to the responsibilities of the position and the competitive market.

· Long-Term Equity Incentives are designed to provide long-term retention incentives and to create an alignment between the interests of our executives and those of our stockholders.

· Performance-Based Awards comprise a substantial portion of the compensation to motivate executives to achieve specific company goals and to link pay to the achievement of those goals.

o Annual Incentive Bonus is primarily intended to focus key employees on achieving specific short-term financial targets, reinforce teamwork, and provides the potential for significant payouts if outstanding performance is achieved.

o Performance-Based Equity Incentives typically represent one-half of each equity incentive award granted to executives. Payouts are variable and tied to performance measures intended to correlate with the creation of long-term stockholder value.

 

 

· Strong Pay-for-Performance Principles.  Our compensation policies and decisions are focused on pay-for-performance principles.

· Dual Long-Term Performance Metrics.  Under the design of our 2013 long-term equity incentive program, performance-based Restricted Stock Unit Awards granted to the Named Executives contain dual-performance metrics based on financial performance and relative total stockholder return, determined over a multi-year performance period.

· The Right Compensation Mix.  A substantial portion of the total compensation is variable and tied to performance measures that correlate with the creation of stockholder value.

· The Right Types of Equity Compensation.  We no longer grant stock options and instead grant only restricted stock and restricted stock units because the values of these awards change with increases and decreases in our stock price after the grant date and thus, ties compensation more closely to changes in stockholder value.

· Stock Ownership Guidelines.  We maintain stock ownership guidelines that encourage our executive officers and directors to own shares of our common stock at levels  determined as a multiple of each executive’s annual base salary and each director’s annual cash retainer.

· Parachute Payment Excise Tax Provisions.  We have committed to not enter into future employment or similar agreements that obligate us to provide tax gross-up payments intended to offset the cost of excise taxes that could be imposed if any severance payments provided to executive officers are considered “excess parachute payments.”

 

 

 

 

 

Q:What is the purpose of the Annual Meeting?

A:At the Annual Meeting, stockholders will vote on the following matters:       · Election of the Board’s nominees for director to serve for the ensuing year and until their successors are elected;       · Approval of an amendment and restatement of our 2008 Equity Incentive Plan to, among other things, increase the number of shares authorized under the Plan by 1.5 million shares and extend the term of the Plan by five years;       · Ratification of the selection by our Audit Committee of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2013; and       · Advisory approval of the compensation of our named executive officers, as disclosed in this proxy statement in accordance with SEC rules.

Q:  Who is entitled to vote at the Annual Meeting?

A:      Only stockholders of record at the close of business on April 1, 2013, the record date for the Annual Meeting, are entitled to receive notice of and to participate in the Annual Meeting.  If you were a stockholder of record on that date, you will be entitled to vote all of the shares that you held on that date at the Annual Meeting, or at a subsequent date if the Annual Meeting were adjourned or postponed.  If, on April 1, 2013, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization.  The organization holding your account is considered the stockholder of

	record for purposes of voting at the Annual Meeting.  As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account.  You are also invited to attend the Annual Meeting in person.  However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.
Q:  What are the voting rights of the holders of common stock?	A:      Each outstanding share of our common stock will be entitled to one vote on each matter to be voted upon at the Annual Meeting.
Q:  How is a quorum determined?	A:      Holders of at least a majority of the outstanding shares of common stock entitled to vote must be present in person or represented by proxy at the Annual Meeting to achieve the required quorum for the transaction of business.  As of the record date, 76,019,070 shares of our common stock, representing the same number of votes, were outstanding and entitled to vote.  Therefore, the presence in person or by proxy of the holders of at least 38,009,536 shares of our common stock will be required to establish a quorum.  Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you attend the meeting in person.  Abstentions and broker non-votes will be counted towards the quorum requirement.  If a quorum is not achieved, holders of at least a majority of the shares present in person or represented by proxy may adjourn the Annual Meeting to another date.   All votes will be tabulated by an independent inspector of elections who will separately count affirmative and negative votes, abstentions and broker non-votes.
Q:  What are broker non-votes?	A:      Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed “non-routine.”  Generally, if shares are held in “street name,” the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares.  If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters.  Under the rules and interpretations of the New York Stock Exchange (“NYSE”), “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of

	directors (even if not contested), executive compensation plans and advisory stockholder votes on executive compensation.  Therefore, brokers and other nominees will not be able to vote on those matters unless they receive instructions from the beneficial owners of the shares.
Q:  How do I vote?	A:      You may vote FOR, AGAINST or ABSTAIN from voting for all or any of the nominees in Proposal 1 as well as Proposal 2, Proposal 3 and Proposal 4.   Record Holders.  If you complete and sign the accompanying proxy card and return it to us before the Annual Meeting, it will be voted as you direct.  Simply complete and mail the proxy card to ensure that your vote is counted.  If you attend the Annual Meeting, you may deliver your completed proxy card in person.  Alternatively, you can vote over the telephone, by dialing toll-free 1-800-690-6903 using a touch-tone phone and following the recorded instructions.  You will be asked to provide the company number and control number from the enclosed proxy card.  To be counted, your vote must be received by 11:59 P.M., Eastern Time, on May 22, 2013, the day prior to the Annual Meeting.   To vote over the internet, go to http://proxyvote.com.  You will be asked to provide the company number and control number from the enclosed proxy card.  To be counted, your vote must be received by 11:59 P.M., Eastern Time, on May 22, 2013, the day prior to the Annual Meeting.  You may also attend the Annual Meeting and vote in person.   Holders of shares in “street name.”  If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than from us.  Simply complete and mail the proxy card according to those instructions to ensure that your vote is counted.  Alternatively, you may vote by telephone or via the internet as instructed by your broker or bank.  “Street name” stockholders who wish to vote in person at the Annual Meeting will need to obtain proxy cards issued in their names from the institutions that hold their shares.
Q:  Can I revoke my proxy later?	A:      Yes.  You have the right to revoke your proxy at any time before the Annual Meeting by:   · Filing a timely written notice of revocation with our Corporate Secretary at our principal executive office (600 Montgomery Street, 26th Floor, San Francisco, CA  94111-2728);   · Filing another properly executed proxy showing a later date with our Corporate Secretary at our principal executive office

	(see address immediately above);   · Granting a subsequent proxy by telephone or through the internet; or   · Attending the Annual Meeting and voting in person, although if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain from the record holder a proxy card issued in your name.  Attendance at the Annual Meeting will not, by itself, revoke your proxy.
Q:  How does the Board recommend I vote on the proposals?	A:      Our Board recommends a vote:   · FOR each of our director nominees;   · FOR approval of the amendment and restatement of our 2008 Equity Incentive Plan;   · FOR the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2013; and   · FOR advisory approval of the compensation of our named executive officers.
Q:  What is the vote required to approve the proposals?	A:      Once a quorum has been established,   · For Proposal 1, directors will be elected by a majority of the votes cast by holders of shares entitled to vote at the Annual Meeting.  This means that the number of votes cast FOR a director must exceed the number of votes cast AGAINST that director.  Under our Bylaws, abstentions are not “votes cast” in the election of directors and will have no effect.  Likewise, broker non-votes will have no effect and will not be counted as “votes cast” for purposes of this proposal.   · Proposal 2, approval of our amended and restated 2008 Equity Incentive Plan, will be considered to be approved if, in accordance with the listing requirements of the New York Stock Exchange (“NYSE”), it receives FOR votes from a majority of the votes cast on the proposal, provided that the total vote cast represents at least a majority of the shares entitled to vote on the proposal.  Votes FOR, AGAINST and ABSTAIN will count as votes cast. Broker non-votes are not considered “votes cast” for purposes of the proposal.   · Proposal 3, ratification of the selection of auditors, will be considered to be approved if it receives FOR votes from the holders of a majority of shares present in person or represented

	by proxy and entitled to vote at the Annual Meeting.  Abstentions will be counted toward the tabulation of votes cast on the proposal and will have the same effect as AGAINST votes.  Broker non-votes will have no effect.   · Proposal 4, advisory approval of the compensation of our named executive officers, will be considered to be approved if it receives FOR votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting.  Abstentions will have the same effect as AGAINST votes.  Broker non-votes will have no effect.
Q:  How will my shares be voted if I return a blank, but signed and dated, proxy card?	A:      If you sign and send in your proxy card and do not indicate how you want to vote, the persons named as proxies will vote as the Board recommends on each proposal, that is, FOR each of the director nominees named in this proxy statement in Proposal 1, and FOR Proposals 2, 3 and 4.
Q:  How will voting on any other business be conducted?	A:      Although we do not know of any business to be conducted at the Annual Meeting other than the proposals described in this proxy statement, if any other business comes before the Annual Meeting, your signed proxy card gives authority to the proxyholders, H. Thomas Hicks and Joseph Masters, to vote on those matters in their discretion.
Q:  How can I attend the Annual Meeting in Person?	A:      To gain admission to our Annual Meeting in person you will need to bring documentation proving that you are the owner of our common stock as of our record date, April 1, 2013, and a valid photo ID.  No cameras, recording equipment, telephones or other electronic devices with recording capabilities will be allowed during the Annual Meeting.
Q:  Who will bear the costs of this solicitation?	A:      We will bear the entire cost of solicitation of proxies, including preparation, assembly, printing and mailing of this proxy statement, the proxy card and any additional information furnished to stockholders.  Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of common stock beneficially owned by others to forward to the beneficial owners.  We may reimburse persons representing beneficial owners of common stock for their costs of forwarding solicitation materials to the beneficial owners.  Original solicitation of proxies by mail may be supplemented by telephone, facsimile or personal solicitation by our directors, officers or other regular employees.  We have also engaged D.F. King as our proxy solicitation firm.  Directors and employees will not be paid any additional compensation for soliciting proxies, but D.F. King will be paid approximately $25,000, plus reimbursement for out-of-pocket expenses.

Q:  What proxy materials are available on the internet?	A:      Our proxy statement, annual report to stockholders and annual report on Form 10-K are available at http://www.urs.com/proxy.
Q:  How can I find out the results of the voting at the Annual Meeting?	A:      Preliminary voting results will be announced at the Annual Meeting.  In addition, we expect to report our preliminary voting results or, if available to us on a timely basis, our final voting results on a current report on Form 8-K to be filed with the SEC within four business days after the end of the Annual Meeting.  If not reported earlier, we expect to report our final voting results in an amendment to our Form 8-K within four business days after the final results are known to us.
Q:  When are stockholder proposals due for next year’s Annual Meeting?	A:      The deadline for submitting a stockholder proposal to us for inclusion in our proxy statement and form of proxy for our 2014 Annual Meeting of Stockholders pursuant to Rule 14a-8 of the Securities and Exchange Commission (the “SEC”) is December 16, 2013.  A stockholder who wishes to nominate persons for election to the Board or propose other proper business before the stockholders at our 2014 Annual Meeting of Stockholders must notify us of that matter not later than the close of business on February 22, 2014 nor earlier than the close of business on January 23, 2014.  You should also review our Bylaws, which contain additional requirements about advance notice of nominees and stockholder proposals, and the section, “Information About The Board of Directors - Director Nominees,” in this proxy statement.

ADDITIONAL INFORMATION
Householding of Proxy Materials	A single proxy statement may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders.  This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.   If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report, or if you currently receive multiple copies of the proxy statement at your address and would like to request “householding” of your communications, please notify your broker or direct your written request to our Corporate Secretary, Joseph Masters, at our principal executive office (600 Montgomery Street, 26th Floor, San Francisco, CA  94111-2728, (415) 774-2700).
Annual Report and Available Information	Our annual report to stockholders and our annual report on Form 10-K for the fiscal year ended December 28, 2012 accompany this proxy statement, but do not constitute a part of the proxy soliciting materials.  Additional copies of our Annual Report on Form 10-K for the fiscal year ended December 28, 2012, including financial statements, but without exhibits, are available without charge to any person whose vote is solicited by this proxy statement upon written request to our Corporate Secretary, Joseph Masters, at our principal executive office (600 Montgomery Street, 26th Floor, San Francisco, CA  94111-2728).  In addition, copies of our Corporate Governance Guidelines, our Audit Committee Charter, our Compensation Committee Charter, our Board Affairs Committee Charter, and our Code of Business Conduct and Ethics are available without charge upon written request to the above address.  Copies also may be obtained without charge through our website at www.urs.com and, with respect to our Annual Report on Form 10-K, on the SEC’s website at www.sec.gov.

 

Board Meetings and Attendance

During our fiscal year 2012, the Board held six board meetings: five board meetings and one joint meeting with the Audit Committee.  Each director attended at least 75% of the aggregate of (1) the total number of meetings of the Board (held during the portion of the last fiscal year for which he or she served as a director) and (2) the total number of meetings of all the Committees of the Board on which he or she served (held during the portion of the last fiscal year that he or she served as a Committee member).  Our non-management directors met in executive session four times during fiscal year 2012.   It is our policy to invite the members of the Board to attend our annual stockholders’ meeting.  Seven out of nine members of the Board attended our 2012 annual stockholders’ meeting.

Majority Vote Standard in Uncontested Board Elections

Our Bylaws include a majority vote standard for the election of directors in uncontested elections.  Under this standard, the number of shares voted FOR a director must exceed the number of votes cast AGAINST that director; for this purpose, abstentions are not considered “votes cast.”  However, in a contested election where the number of nominees for director exceeds the number of directors being elected, each director will be elected by plurality voting.  Any incumbent director nominated for reelection who does not receive a majority of the votes cast in an uncontested election is required to tender his or her resignation to the Board.  In that event, the Board Affairs Committee will consider the vote and recommend to the full Board whether to accept or reject the resignation or whether other action should be taken.  The Board then will act on the Board Affairs Committee’s recommendation, taking into account any factors or other information that it considers appropriate and relevant, and will publicly disclose its decision within 90 days from the date of the certification of the election results.  If the incumbent director’s resignation is not accepted by the Board, then the incumbent director will continue to serve until the next annual meeting or until his or her successor is duly elected, or his or her earlier resignation or removal.

 

Board Committees	The Board has standing Audit, Board Affairs and Compensation Committees.  For our current directors, the following table provides membership information for fiscal year 2012 for each of the Board committees:
	Name			Audit		Board Affairs		Compensation
	Mr. Mickey P. Foret			X*
	Senator William H. Frist, M.D.					X
	Ms. Lydia H. Kennard					X*
	Mr. Donald R. Knauss					X
	Mr. Martin M. Koffel
	Mr. Timothy R. McLevish
	General Joseph W. Ralston, USAF (Ret.)#			X		X		X*
	Mr. John D. Roach			X				X
	Mr. Douglas W. Stotlar							X
	Mr. William P. Sullivan			X				X
		*Committee Chairman #Lead Independent Director
	The Audit Committee is currently composed of four non-management directors, Mr. Mickey P. Foret (Chairman), General Joseph W. Ralston, Mr. John D. Roach and Mr. William P. Sullivan.  The Audit Committee met seven times during fiscal year 2012.  A copy of the Audit Committee Charter is available on our website at www.urs.com.  The Audit Committee has responsibility, under delegated authority from the Board, for providing independent, objective oversight of our accounting functions, the audits of our financial statements and our internal control over financial reporting.  The Audit Committee also oversees our financial reporting process on behalf of the Board.  Management has the primary responsibility for the financial statements and the reporting process, including developing, maintaining and monitoring our systems of internal control over financial reporting.  Our independent registered public accounting firm, PricewaterhouseCoopers LLP, is responsible for performing an independent audit of our financial statements and on our internal control over financial reporting, as well as expressing an opinion on the conformity of those financial statements with generally accepted accounting principles (“GAAP”) and the effectiveness of our internal control over financial reporting.   The primary responsibilities of the Audit Committee include the following:   · Reviewing annual and interim financial reports, earnings releases and other financial information and earnings guidance provided to analysts and rating agencies;

 

· Overseeing our internal auditors' efforts to detect fraud and regulatory noncompliance;   · Overseeing our independent registered public accounting firm’s audit to obtain reasonable, but not absolute, assurance of detecting errors or fraud that would have a material effect on our financial statements;   · Reviewing the audit plan of our internal auditors and independent registered public accounting firm;   · Discussing our guidelines and policies to govern the process by which risk assessment and management is undertaken;   · Reviewing other financial reports, changes in accounting principles, conflicts with the independent registered public accounting firm and other regulatory or legal matters; and   · Establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.   The Board has determined that all members of the Audit Committee are independent within the meaning of SEC regulations, the listing standards of the NYSE and our Corporate Governance Guidelines.  In addition, the Board has determined that all members of the Audit Committee are qualified as “audit committee financial experts” within the meaning of SEC regulations and have accounting and related financial management expertise within the meaning of the listing standards of the NYSE.   In fiscal year 2012, the Audit Committee completed a self-assessment of its performance, which was reported to the Board.

The Board Affairs Committee is currently composed of four non-management directors, Ms. Lydia H. Kennard (Chairman), Senator William H. Frist, M.D., Mr. Donald R. Knauss and General Ralston, and the Board Affairs Committee met three times during fiscal year 2012. A copy of the Board Affairs Committee Charter is available on our website at www.urs.com.  The primary responsibilities of the Board Affairs Committee include the following:   · Identifying, reviewing and recommending director candidates to serve on the Board and its Committees;   · Reviewing director education and orientation programs;   · Reviewing the compensation paid to non-management directors and recommending any appropriate changes to the Board; and   · Reviewing our Corporate Governance Guidelines and overseeing the Board’s periodic self-assessments.   The Board has determined that all members of the Board Affairs Committee are independent within the meaning of the listing standards of the NYSE and our Corporate Governance Guidelines.   In fiscal year 2012, the Board Affairs Committee completed a self-assessment of its performance, which was reported to the Board.

The Compensation Committee currently is composed of four non-management directors, General Ralston (Chairman), Mr. John D. Roach, Mr. Douglas W. Stotlar and Mr. William P. Sullivan, and the Compensation Committee met four times during fiscal year 2012.  A copy of the Compensation Committee Charter is available on our website at www.urs.com.  The primary responsibilities of the Compensation Committee include the following:   · Establishing the overall compensation strategy affecting our Chief Executive Officer (the “CEO”), the executive officers required to file reports under Section 16 (the “Section 16 Officers”) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and other senior management;   · Assessing the performance and determining the compensation of our Section 16 Officers;   · Overseeing the administration of our incentive, executive compensation and benefit plans and programs;   · Assessing and monitoring whether any of our compensation policies and programs has the potential to encourage excessive risk-taking;

· Development and periodic review of our executive succession planning efforts;   · Evaluating whether the work of compensation consultants raised any conflict of interest; and   · Reviewing with management our Compensation Discussion and Analysis proxy disclosure.   The Board has determined that all members of the Compensation Committee are independent within the meaning of the listing standards of the NYSE and our Corporate Governance Guidelines.   In fiscal year 2012, the Compensation Committee completed a self-assessment of its performance, which was reported to the Board.

Compensation Committee Processes and Procedures

Pursuant to its charter, the Compensation Committee regularly reviews and approves our overall compensation strategy and policies, and also reviews and approves the specific components of the Total Compensation (as defined below) paid to the CEO, as well as the executive officers listed on our “Summary Compensation” table (including the CEO, the “Named Executives”) and the other Section 16 Officers.   Historically, the Compensation Committee has made adjustments to annual compensation, determined bonus and equity awards and established new performance objectives at one or more meetings held during the year.  In addition, at various meetings throughout the year, the Compensation Committee may consider matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of our compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation and benefits.   The appointment, termination and removal of the CEO is solely reserved to the Board.  Under its charter, the Compensation Committee has the responsibility and authority for reviewing and approving, in its sole discretion, the compensation (including salary, bonuses, equity incentives, perquisites, severance payments and other benefits) and other terms of employment of the CEO.  However, in practice, the Compensation Committee typically has reviewed and approved the CEO’s employment arrangements subject to final review and approval of the material terms of these arrangements by the independent directors on the full Board.  The Compensation Committee also approves the applicable performance metrics for performance-based bonuses and equity incentives for all senior executives, subject to the Board’s approval of the annual financial plan.  In fulfilling its responsibility, the Compensation Committee typically evaluates the CEO's performance in light of relevant corporate performance

goals and objectives, reviews and approves the CEO’s performance metrics and targets typically near the beginning of the performance cycle, and then reviews and confirms the extent to which the performance targets have been attained and the performance-based compensation has been earned once the performance cycle has been completed.  In determining the equity incentive component of the CEO's compensation, the Compensation Committee considers our performance and relative stockholder return, the value of similar incentive awards given to chief executive officers of comparable companies, and awards given to the CEO in past years.  The Compensation Committee also reviews and approves, in its discretion (without the need for further approval by the Board), but with the input and recommendations of the CEO, the compensation (including salary, bonuses, equity awards, perquisites, severance payments and other benefits) and other terms of employment of all other Section 16 Officers, except that the hiring, appointment or promotion of an individual into a position as a Section 16 Officer, and the conferring of the titles of the Section 16 Officers, are reserved to the Board.  The Compensation Committee reviews and approves the performance metrics of our Section 16 Officers that typically are set at or near the beginning of the applicable performance cycle, and then reviews and confirms the extent to which the performance targets have been attained and the performance-based compensation has been earned once the performance cycle has been completed.  With the assistance of the CEO, the Compensation Committee also reviews the overall performance of the other Section 16 Officers in conjunction with a regular assessment of our executive succession planning.   While the CEO has been delegated the authority to determine the compensation (including salary, bonuses, perquisites, severance payments and other benefits) and other terms of employment of all other officers and employees of URS and its subsidiaries who are not Section 16 Officers, the Compensation Committee periodically reviews and discusses with the CEO and other senior executives the compensation and other terms of employment of such other more junior officers and managers.   The Compensation Committee reviews and approves, or to the extent required or deemed appropriate, makes recommendations to the Board regarding, the adoption of, amendment to, or termination of incentive compensation, stock, bonus and other similar plans and programs established by the Board from time to time.  The Compensation Committee administers these plans, as and to the extent provided in the plan documents and upon the recommendation of the CEO, as appropriate, including without limitation establishing guidelines, interpreting plan documents, selecting participants, approving grants and awards, delegating authority to the CEO to make grants and awards to non-Section

16 Officers, and making all other decisions required to be made by the plan administrator under such plans.   The Compensation Committee agenda for each meeting is usually developed by the Chairman of the Compensation Committee, in consultation with the CEO, the Chief Financial Officer (“CFO”) and our outside advisors.  The Compensation Committee meets regularly in executive session, although the CEO, the CFO and occasionally various other members of senior management, as well as our outside advisors or consultants, typically are invited by the Compensation Committee to make presentations, provide financial or other background information or advice or otherwise participate in Compensation Committee meetings, as appropriate.  The CEO does not participate in and is not present during any deliberations or determinations of the Compensation Committee regarding his own compensation or individual performance objectives, but generally is present and assists the Compensation Committee in its deliberations regarding all other officers.   For all executives, as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive stock ownership information, URS stock performance data, analyses of historical executive compensation levels and current company-wide compensation levels, and recommendations of the Compensation Committee’s compensation consultants, including analyses of executive compensation paid at other companies identified as appropriate peers.  The Compensation Committee uses these comparative market data and other materials to inform and shape the Committee’s decision-making, but does not strictly adhere to quantitative benchmarks.  Ultimately, in determining the amounts of compensation to be awarded, the Compensation Committee relies on its collective business judgment and discretion.  In setting executive compensation for the Named Executives, the Compensation Committee takes into account both objective and subjective information, including general economic conditions, industry conditions, our company-wide performance, challenges confronting us, advice from its compensation consultant, information provided by management (including the recommendations of the CEO with regard to other executives), as well as the executive’s credentials, length of service, experience and past and expected future abilities to contribute to our financial and operational performance and the development and execution of our strategic plans.   The specific determinations of the Compensation Committee with respect to executive compensation for fiscal year 2012 are described in greater

detail in the Compensation Discussion and Analysis section of this proxy statement.

Compensation Consultants; Other Advisors

The charter of the Compensation Committee grants the Compensation Committee the full authority to obtain, at our expense, advice and assistance from internal and external legal, accounting or other advisors and consultants and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties, as well as access to all of our books, records, facilities and personnel.  In particular, the Compensation Committee has the authority to retain compensation consultants in its discretion to assist in its evaluation of executive compensation, including the authority to approve the consultant’s reasonable fees and other retention terms.   The Compensation Committee has designated Towers Watson & Co. (which, together with its other affiliated entities, is referred to in this proxy statement as “Towers Watson”) as its primary compensation consultant to assist the Compensation Committee in performing its functions and fulfilling its responsibilities.  The predecessor to Towers Watson was first recommended to the Compensation Committee by our management in 2004 in connection with a survey of competitive executive compensation practices undertaken at that time.  The Compensation Committee considered management’s recommendation and directly engaged that firm.   Since that time, Towers Watson (or its predecessor) has annually provided the Compensation Committee with information and analyses regarding industry and peer group pay practices and other trends that contribute to the Committee’s understanding and help to shape its determinations regarding the amount and form of various components of the total compensation of our CEO and other Named Executives and other Section 16 Officers, including determinations of base salary levels, cash incentive compensation, and the size of equity grants under our equity incentive plans.  Towers Watson again provided these services for the Compensation Committee in connection with compensation awarded for fiscal year 2012, and also helped the Compensation Committee to evaluate the efficacy of our existing executive compensation strategies and practices in supporting and reinforcing our long-term strategic goals.  In previous years, Towers Watson assisted the Compensation Committee by performing a detailed assessment designed to help the Committee determine whether any of our strategies or practices had the potential to encourage excessive risk-taking.  To assist the Committee in its evaluation for 2013, Towers Watson discussed with the Committee updates to the information underlying the previous assessment and the potential implications of those updates on our risk profile.

In addition to Towers Watson, the Compensation Committee has also relied upon Cooley LLP (“Cooley”), our general outside corporate and securities counsel, to provide legal advice to the Committee regarding its role, responsibilities, and legal developments that may relate to executive compensation issues, and to assist the Compensation Committee regarding the structuring and implementation of its decisions and strategies from a legal perspective.  A partner of Cooley typically attends the meetings of the Compensation Committee.   During 2012, in response to recent trends in compensation and evolving best practices, the Compensation Committee considered whether to reexamine the structure of our executive long-term equity incentives.  As a result, in November 2012, we retained, on behalf of management, the services of Frederic W. Cook & Co., Inc. (“Cook”) to assist management  with the development, for the Committee’s consideration and review and evaluation by Towers Watson, of alternative  new designs for our executive long-term equity incentive program.  In particular, Cook was instructed to consider whether performance-based awards should vest based on additional or different performance metrics, such as total stockholder return, and whether awards should be linked to longer term performance goals and earned over a multi-year performance period.  Cook was further instructed to ensure that the new design was consistent with industry norms, would enhance retention and permit awards that would be competitive for new and existing talent.  A proposed new design was presented to the Compensation Committee and, following an iterative process over a number of months of review and evaluation, a new design was adopted in March 2013.  The new long-term equity incentive plan design is described further under ”Fiscal Year 2012 Long-Term Equity Incentives.”   As required by SEC rules and as a matter of good corporate practice, the Compensation Committee evaluated the services provided by both Towers Watson and Cook to identify any conflicts of interest their services presented, taking into account six independence factors identified by the SEC.   With respect to Towers Watson, the Compensation Committee considered that the predecessor to Towers Watson was initially introduced to the Compensation Committee by management.  The Compensation Committee also considered that the Board Affairs Committee periodically retains Towers Watson to provide that Committee with advice and comparative data regarding the form and amount of compensation paid to our directors.  In fiscal year 2012, Towers Watson provided the Board Affairs Committee with information regarding industry and peer group director equity compensation structures and practices.  In addition, during fiscal year 2012,

Towers Watson provided additional consulting services to a number of our other affiliates and joint ventures, including advice regarding our United Kingdom pension plan.   The Compensation Committee periodically approves the fee schedule for executive compensation consulting fees, and the Board Affairs Committee periodically approves the fee schedule for director compensation consulting fees.  Neither the Board nor the Compensation Committee reviewed or approved the other additional services provided by Towers Watson to us or our affiliates, as those services are approved by our management in the normal course of business.  The aggregate fees for consulting services provided to the Compensation Committee and the Board Affairs Committee during fiscal year 2012 by Towers Watson with regard to services related to determining or recommending the amount or form of executive and director compensation was $291,404.  The total aggregate fees for other services provided to us, including our affiliates, during fiscal year 2012 by Towers Watson was $777,998.   The Committee believes, based on, among other factors, policies and procedures implemented by the Committee and Towers Watson (such as frequent participation by Towers Watson in Committee meetings, including executive sessions, of the Committee), Towers Watson’s own policies regarding conflicts of interest, and the small percentage of the total revenues of Towers Watson that fees from us represent, that Towers Watson is able to provide the Compensation Committee with direct and independent advice and recommendations regarding our compensation policies and decisions.   With respect to Cook, the Compensation Committee considered primarily that, in connection with its assignment, Cook acted as management’s consultant, reported directly to management and assisted management in formulating its recommended proposal.  However, to mitigate any conflict of interest, the Compensation Committee engaged Towers Watson to provide its perspective on the new design developed by Cook and to advise the Committee with regard to any modifications that would be appropriate.  In addition, the Committee considered, among other factors, that Cook performed no other services for us, as well as Cook’s policies and procedures with respect to conflicts of interest.

Equity Award Grant Practices

Our Compensation Committee may grant equity awards under our 2008 Equity Incentive Plan (“2008 Incentive Plan”), which was approved and adopted by our stockholders on May 22, 2008, to the Named Executives and other employees as incentive compensation.  The amendment and restatement in 2013 of the 2008 Incentive Plan is being submitted to the stockholders for their approval at our 2013 annual meeting (the “Amended

	2008 Incentive Plan”).  The Compensation Committee meeting schedule is determined several months in advance, and, therefore, proximity of any award date to a material news announcement or a change in our stock price is coincidental.  We do not backdate equity awards or make equity awards retroactively.  In addition, we do not coordinate our equity grants to precede announcements of favorable information or follow announcements of unfavorable information.  The Compensation Committee believes that, for purposes of determining the fair market value of our common stock, the use of the closing price on the NYSE on the last market trading day before the Committee meets to approve equity grants allows the Committee to make more informed decisions, since the fair market value is known to the Committee at the time of each meeting, regardless of whether the meeting occurs prior to, during or after the close of the market.
Delegation of Limited Authority to the CEO for Equity Awards under the 2008 Incentive Plan	The Board has delegated to the Compensation Committee the authority and responsibility for approving all awards of equity to our executives and other participants under the Amended 2008 Incentive Plan.  As permitted by its charter and the terms of the 2008 Incentive Plan, as well as Delaware corporate law, the Compensation Committee has delegated limited authority to our CEO to grant equity awards under the Amended 2008 Incentive Plan to eligible participants other than Section 16 Officers.  The purpose of this delegation is to facilitate the process of making equity grants, both annually, when large numbers of equity awards are granted, and from time to time between scheduled meetings.  With respect to annual grants, the delegation is designed to allow the Compensation Committee to focus primarily on approving the specific grants being made to the individual Section 16 Officers, while authorizing by category, rather than by individual name and amount, an aggregate pool of grants to be made to the hundreds of more junior officers and managers with whom the Compensation Committee may not be directly familiar.  Out of this pool, the CEO may then specifically allocate awards within the limits established by the Compensation Committee.  The delegation is also intended to facilitate the timely grant of stock awards to non-Section 16 Officers, particularly new employees and promoted employees, in interim periods between scheduled meetings of the Compensation Committee.  The authority delegated to the CEO regarding interim period grants is limited as to both the number of stock awards that may be granted to any individual and the aggregate number of these stock awards that may be granted in any year.  The CEO did not exercise this limited delegated authority during fiscal year 2012.
Director Independence	Our Corporate Governance Guidelines contain standards for determining director independence that meet the listing standards adopted by the NYSE.  Accordingly, Section B.2 of our Corporate Governance Guidelines contains the following paragraph related to director independence, which

is consistent with the NYSE standards for independence:   "It is the policy of the Board that at least a majority of its members be independent.  An ‘independent’ Director is one who (i) the Board has affirmatively determined not to have a material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company); (ii) is not a member of management or an employee of the Company and has not been a member of management or an employee of the Company within the past three years; (iii) is not, and within the past three years has not been, affiliated with or employed by a (present or former) internal or external auditor of the Company (or of an affiliate); (iv) is not, and within the past three years has not been, part of an interlocking directorate in which an executive officer of the Company serves on the compensation committee of another company that concurrently employs the Director; (v) has no immediate family members meeting the descriptions set forth in (ii) through (iv) above; and (vi) to the extent applicable with respect to membership on the Board or any specific Committees, satisfies additional requirements for ‘independence’ promulgated from time to time by the New York Stock Exchange (the ‘NYSE’) and the Securities and Exchange Commission (the ‘SEC’).  Consideration should also be given to all other relevant facts and circumstances, including issues that may arise as a result of any director compensation (whether direct or indirect), any charitable contributions by the Company to organizations with which a Director is affiliated and any consulting arrangement between the Company and a Director.”   The full text of the Corporate Governance Guidelines, which also set forth the practices our Board intends to follow with respect to Board and Committee responsibilities, composition and selection, Board access to management and advisors, Board education and compensation, Board and CEO performance evaluations and succession planning, is available on our website at www.urs.com.  In addition, a copy of the Corporate Governance Guidelines is available upon written request to our Corporate Secretary at our principal executive office (600 Montgomery Street, 26th Floor, San Francisco, CA  94111-2728).   The Board Affairs Committee and the Board undertook their respective annual reviews of director independence on March 27, 2013.  During these reviews, the Board Affairs Committee and the Board considered the director independence categories contained in the Corporate Governance Guidelines to assess the relevant, identified business transactions and relationships between each director or any member of his or her immediate family, and us (including our subsidiaries and affiliates).  As provided in the Corporate Governance Guidelines, the purpose of this review was to determine whether any of these transactions or relationships were inconsistent with a determination that a director is independent.  Among other things, transactions and relationships involving less than $120,000 in

direct payments from us (other than standard director compensation and expense reimbursements) during any 12-month period within the last three years to a director or a member of the director’s immediate family are not regarded as compromising a director’s independence.  Similarly, transactions and relationships within the last three fiscal years involving payments to or from a company for which a director serves as a current employee, or an immediate family member is a current executive officer, also are not regarded as compromising a director’s independence if such payments, in any single fiscal year, do not exceed the greater of $1 million or 2% of the other company’s consolidated gross revenues.   In making these independence determinations, the Board Affairs Committee considered that in the ordinary course of business, relationships and transactions may occur between us and entities with which some of our directors are or have been affiliated.  Under our Corporate Governance Guidelines, certain relationships and transactions that occurred during any 12-month period within the last three fiscal years were considered and determined not to be material transactions that would impair the director’s independence, including the following:          · Mr. Sullivan is the Chief Executive Officer of Agilent Technologies, from which we have purchased products and services during the preceding three fiscal years.          · Mr. Knauss is the Chief Executive Officer of Clorox Co., to which we have provided services and received payment during the preceding three fiscal years.          · Mr. McLevish is the Executive Vice President and Chief Financial Officer of Kraft Foods Group, Inc., with which we have entered into transactions for the purchase and/or sale of products and services during the preceding three fiscal years.   In addition, the Committee considered that the aggregate dollar amount of the transactions during any 12-month period within the last three fiscal years did not exceed the greater of $1 million or 2% of the other company’s consolidated gross revenues and, therefore, was not regarded as compromising the director’s independence.   Based on this review, the Board Affairs Committee and the Board affirmatively determined that all of the directors nominated for election at the Annual Meeting are independent under the standards set forth in the Corporate Governance Guidelines and applicable NYSE rules, with the exception of Mr. Koffel.  Mr. Koffel is considered an inside director because he is one of our senior executives.

Executive Sessions

Pursuant to NYSE rules and our Corporate Governance Guidelines, our non-management directors are required to meet in executive session without the presence of management at least annually.  All of our non-management directors are also independent under the rules of the NYSE.  Since May 2010, General Ralston has presided as the Board’s lead independent director (the “Lead Independent Director”), with responsibility for chairing all non-management director executive sessions.  In fiscal year 2012, General Ralston served as the Lead Independent Director at three executive sessions.

Board Leadership Structure

Under our corporate governance framework, our Board has the flexibility to determine whether the roles of Chairman and CEO should be combined or separated, based upon our circumstances and needs at any given time, while providing independent oversight designed to ensure that management acts in our stockholders’ best interests.  Our Bylaws give the Board the authority to appoint as Chairman either a management or non-management director and provide for either the Chairman or, if the Chairman is not an independent director, one of our independent directors, to be designated by the Board as the Lead Independent Director.  Accordingly, if the Board determines that the advantages of having a CEO/Chairman outweigh any potential disadvantages, then our Bylaws require the Board to appoint a non-management Lead Independent Director with a defined role and responsibilities.   The Board of Directors is currently chaired by our CEO, Martin Koffel.  In addition, in accordance with our Bylaws, the Board has appointed General Ralston as its Lead Independent Director.   We believe that combining the positions of CEO and Chairman is, at the present time, the most effective leadership structure for us in promoting sound decision-making and vigorous execution of our strategic initiatives and business plans.  As the individual with primary responsibility for managing our day-to-day operations, Mr. Koffel has served as CEO (and Chairman) since 1989 and is most familiar with our business and the complex challenges we face in the current environment.  As a result, we believe that he is best positioned at this time to identify strategic priorities and to lead discussions, decision-making regarding key business and strategic issues, as well as to oversee the execution of important strategic initiatives.  In addition, we believe that a combined CEO/Chairman is better positioned to act as a bridge between management and the Board, facilitating the regular flow of information.   We established the position of Lead Independent Director to help reinforce the independence of the Board as a whole.  The position of Lead Independent Director has been structured to serve as an effective balance to

a CEO/Chairman and is empowered under our Bylaws to perform the following:   · approve the agenda for regular Board meetings;   · serve as chairman of Board meetings in the absence of the Chairman;   · establish and approve the agenda for meetings of the independent directors;   · approve Board meeting schedules to assure there is sufficient time for discussion of all agenda items;   · approve information sent to the Board;   · coordinate with the Committee chairs regarding meeting agendas and informational requirements;   · have authority to call meetings of the independent directors;   · preside over meetings of the independent directors;   · preside over any portions of Board meetings at which the evaluation or compensation of the CEO is presented or discussed;   · preside over any portions of Board meetings at which the performance of the Board is presented or discussed;   · serve as a liaison between the Chairman and the independent directors;   · coordinate the activities of the other independent directors; and   · if requested by major stockholders of the corporation, ensure that he or she is available for consultation and direct communication with such stockholders.   In light of this substantial delegation of authority and responsibility, we believe that a Lead Independent Director can help ensure the effective independent functioning of the Board in fulfilling its oversight role.  General Ralston has served as a director since 2003 and currently serves on our Board Affairs, Audit and Compensation Committees.  We believe that General Ralston, as Lead Independent Director, has built consensus among directors and served as a conduit between other independent directors and the Chairman, for example, by facilitating the inclusion on meeting agendas of matters of concern to the independent directors.  In light of Mr. Koffel’s extensive history with and knowledge of URS, and because the Lead Independent Director is empowered to play a significant role in the Board’s leadership and in reinforcing the independence of the Board, we believe that it is advantageous to combine the positions of CEO and Chairman at this time.

Board’s Risk Oversight Role

One of the Board’s key functions is oversight of our risk management process.  The Board administers its oversight function directly through the Board as a whole, which has the ultimate oversight responsibility for the risk management process, as well as through the standing Audit, Board Affairs and Compensation Committees that address risks inherent in their respective areas of oversight.  Our Audit Committee considers and discusses our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment, risk management and our insurance program is undertaken.  The Audit Committee also monitors compliance with legal and regulatory requirements, in addition to oversight of the performance of our internal audit function and independent registered public accounting firm’s audits.  Our Board Affairs Committee monitors the effectiveness of our Corporate Governance Guidelines, including whether they are successful in preventing wrongful conduct, and risks associated with the independence of the Board, potential conflicts of interest and succession planning.  Our Compensation Committee administers our incentive compensation, stock, bonus and other similar plans and arrangements and assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.  See “Board Committees” for a more detailed description of these Committees and their respective areas of oversight.  Senior management reports on enterprise risks issues, including operational, financial, legal and regulatory, and strategic and reputational risks, to the appropriate Committee or the Board.   The entire Board and the Committees receive reports on areas of material risk and, for each Committee, the Committee’s area of oversight, from senior management, internal auditors, our independent registered public accounting firm, compensation consultants, internal and outside counsel, and other members of management and professional advisors.  When a Committee receives such reports, the chairman of the Committee reports on the discussion to the full Board at the next Board meeting.  This process enables the Board and its Committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

The Board’s Role in Succession Planning

As reflected in our Corporate Governance Guidelines, succession planning for both directors and executive officers is one of the primary responsibilities of the Board.  With respect to Board succession planning, the Board Affairs Committee regularly evaluates the size and composition of the Board, giving consideration to our changing circumstances, the Board’s diversity policy and the then-current Board membership.  The Board Affairs Committee and the Board of Directors also regularly consider succession plans for membership of the Board committees and committee chairmen.  With respect to executive succession planning, the Board’s goal

is to have a long-term and continuing program to plan for CEO succession and to monitor and advise on management’s senior leadership development program and succession planning for other executive officers.  The Board, through the Lead Independent Director and his communication with the CEO, also has short-term contingency plans in place for emergencies or unplanned events, such as the departure, death, or disability of the CEO or other executive officers.   Executive succession planning is one of the topics discussed during most regular executive sessions of the Board, and additional executive sessions have been held in recent years, devoted primarily to executive succession planning and professional development.  We have engaged outside consultants to help the Board and the CEO identify and evaluate the skills and capabilities of potential internal CEO succession candidates, and to plan and implement professional development programs tailored to each candidate that are designed to help them maximize their potential regarding leadership, strategy and execution.  During the additional executive sessions focused on succession planning, the Board meets with the outside consultants and the CEO to monitor and assess the progress of the internal succession candidates towards their professional development goals, and to become more familiar with other senior executives with high potential as well as potential external succession candidates.  To enable the directors to become more familiar with succession candidates and other high potential executives, Board meetings are planned to specifically include presentations and attendance by active succession candidates and other senior executives.  Board members also have direct access to all of our employees and are encouraged to make site visits on a worldwide basis to meet with local management.

Director Nominees

Our Board Affairs Committee seeks to assemble a Board that, as a whole, possesses the appropriate balance of professional and industry knowledge and has the diversity of skills, experience and perspectives with respect to management and leadership, vision and strategy, accounting and finance, business operations, business judgment, industry background, and corporate governance necessary to oversee and direct our business.  When the Board Affairs Committee identifies and evaluates candidates recommended by management or stockholders, the Board Affairs Committee looks specifically at the candidate’s qualifications in the broader context of the Board’s overall composition and in light of our needs given the then current mix of director attributes.  The Board Affairs Committee’s goal is to recruit directors who complement and reinforce the skills of other directors.   In accordance with the Board Affairs Committee Charter, a qualified candidate for director nominee must possess the highest personal and professional integrity, have demonstrated exceptional ability and judgment, have the ability to work effectively with other members of the Board, and provide the skills and expertise appropriate to best serve the long-term interests of our stockholders.  In accordance with the Board’s diversity policy, the Board Affairs Committee seeks nominees with a broad diversity of experience, professions, skills, geographic representation and backgrounds.  The Board Affairs Committee ensures that diversity considerations are discussed in connection with each potential nominee, as well as on a periodic basis in connection with the composition of the Board as a whole.  The Board assesses the effectiveness of the Board’s diversity policy in connection with its periodic self-assessment process.  Candidates are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.   In the case of incumbent directors whose terms of office are set to expire, the Board Affairs Committee reviews these directors’ overall service to us during their terms, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair these directors’ independence.  In the case of new director candidates, the Board Affairs Committee also determines whether the nominee is independent for NYSE purposes, which determination is based upon applicable listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary.   The Board Affairs Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board.  The Board Affairs Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote.

	From time to time, the Board Affairs Committee has engaged outside professional  search firms, such as Korn/Ferry International, to assist with the identification and evaluation of director candidates.   The policy of our Board Affairs Committee is to consider Board candidates who are recommended by stockholders in the same manner as candidates recommended by members of the Board or senior management.  Any stockholder wishing to recommend a candidate for nomination as a director should submit in writing the candidate’s name, biographical information and business qualifications to Chairman, Board Affairs Committee, URS Corporation, 600 Montgomery Street, 26th Floor, San Francisco, CA  94111-2728.  All qualified submissions are reviewed by our Board Affairs Committee at the next appropriate meeting.  If a stockholder wishes the Board Affairs Committee to consider a director candidate for nomination at our next annual meeting, the Committee’s policy requires that written recommendations be received by us no sooner than 120 days and no later than 90 days prior to the first anniversary of the preceding year’s annual meeting.  Our Board Affairs Committee has not received a candidate recommendation from any stockholder (or group of stockholders) that beneficially owns more than five percent of our voting common stock.
Communications with the Board	Stockholders and other interested parties may communicate directly with any of our senior managers or members of our Board by writing directly to those individuals at our principal executive office (600 Montgomery Street, 26th Floor, San Francisco, CA  94111-2728).  Communications related to director candidate recommendations should be directed to the Chairman of the Board Affairs Committee.  In addition, we encourage communicating any concerns related to our financial or accounting practices directly to the Chairman of the Audit Committee.  Stockholders may also send communications to General Ralston, the Board’s Lead Independent Director.  The non-management directors have instructed us to review all mail and other direct communications and have directed us to exercise discretion in determining whether to forward to members of the Board correspondence or other communications that are inappropriate, such as business solicitations, frivolous communications and advertising.  Directors may at any time request that we forward to them all communications received by us.  Information about how to contact our Board is also available on our website at www.urs.com.
Code of Business Conduct and Ethics	All of our employees, including our principal executive officer, principal financial officer and principal accounting officer, and directors are required by our Code of Business Conduct and Ethics to conduct our business consistent with the highest legal and ethical standards.  The full text of our Code of Business Conduct and Ethics is available on our website at

www.urs.com.  If we amend or waive a provision of our Code of Business Conduct and Ethics, we would then post such amendment or waiver on our website, as required by applicable rules.   Our employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Business Conduct and Ethics.  The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of related concerns.

Compensation of Non-Management Directors

The following table sets forth information regarding non-management directors’ compensation for fiscal year 2012.

 

 

	Non-Management Director		Fees Earned or Paid in Cash ($) (1)				Stock Awards ($) (2)				All Other Compensation ($)				Total ($)
	Mickey P. Foret		$	109,000			$	119,939				—			$	228,939
	Senator William H. Frist		$	80,750			$	119,939				—			$	200,689
	Lydia H. Kennard		$	93,750			$	119,939				—			$	213,689
	Donald R. Knauss		$	81,500			$	119,939				—			$	201,439
	Timothy R. McLevish		$	2,500			$	0				—			$	2,500
	Joseph W. Ralston		$	146,750			$	119,939				—			$	266,689
	John D. Roach		$	92,250			$	119,939				—			$	212,189
	Douglas W. Stotlar		$	82,500			$	119,939				—			$	202,439
	William P. Sullivan		$	90,750			$	119,939				—			$	210,689

		Grant Date		Grant Price				Quarterly Stock Award Shares				Quarterly Stock Award Grant Date Fair Value ($)
		December 31, 2011		$	35.12				818			$	28,728
		March 31, 2012		$	42.52				676			$	28,744
		June 30, 2012		$	34.88				895			$	31,218
		September 29, 2012		$	35.31				885			$	31,249

 

(3)	Mr. McLevish joined the Board in November 2012.

 

 

 

 

			Deferred Stock Awards (1)(2)
	Non-Management Director		Number of Shares of Stock That Have Not Been Issued (#)				Market Value of Shares of Stock That Have Not been Issued ($)
	Mickey P. Foret			8,778			$	339,796
	Senator William H. Frist			1,969			$	76,220
	Lydia H. Kennard			4,532			$	175,434
	Donald R. Knauss			1,414			$	54,736
	Timothy R. McLevish(3)			0			$	0
	Joseph W. Ralston			8,778			$	339,796
	John D. Roach			8,778			$	339,796
	Douglas W. Stotlar			4,999			$	193,511
	William P. Sullivan			5,741			$	222,234

---

(1)	The market value of the deferred stock awards is calculated by multiplying the number of shares by the closing market price of our common stock as of the last trading day of fiscal year 2012, which was $38.71.  Although these deferred stock awards are fully vested immediately upon grant, the number of notional shares attributed to deferred stock awards accumulate and are not issued to the director until six months after the date he or she terminates service on the Board.
(2)	Prior to May 26, 2011, each non-management director serving on the Board received a deferred stock award on the first day of each fiscal quarter consisting of a number of notional shares equal to $14,375 divided by the Fair Market Value (as defined above) of our common stock on that day, rounded down to the nearest whole share.  The Board eliminated the quarterly deferred stock award effective May 26, 2011.  All deferred stock awards vested immediately upon grant; however, the number of notional shares attributed to deferred stock awards accumulate and are not issued to the non-management director until six months after the date the non-management director terminates his or her service on the Board.
(3)	Mr. McLevish joined the Board in November 2012.

 

 

Description of Non-Management Director Compensation	Quarterly Cash Retainer:  At the start of fiscal year 2012, each non-management director serving on the Board on the first business day of each fiscal quarter received a retainer of $15,000, for an aggregate of $60,000 annually.  Effective June 29, 2012, each non-management directors’ quarterly retainer increased to $19,375, for an aggregate of $77,500 annually.  Additional retainers paid to the Committee Chairmen remain unchanged, with the Chairman of the Audit Committee receiving an additional $3,750 payable on the first business day of each fiscal quarter for an aggregate of $15,000 annually.  Also, the Chairmen of the Board Affairs and Compensation Committees each received an additional $1,250, payable on the first business day of each fiscal quarter, for an aggregate of $5,000 annually.  Finally, at the start of fiscal year 2012, the Lead Independent Director received an additional $6,250, payable on the first business day of each fiscal quarter, for an aggregate of $25,000 annually.  Effective June 29, 2012, the Lead Independent Director payment increased to $13,750, payable on the first business day of each fiscal quarter, for an aggregate of $55,000 annually.
	Board Attendance Fees:  At the start of fiscal year 2012, each non-management director received $2,000 for each Board meeting attended in person and $750 for each Board meeting attended by telephone.  Effective June 29, 2012, each non-management director received $2,500 for each Board meeting attended in person.
	Committee Attendance Fees:  At the start of fiscal year 2012, Committee members who were not serving as Chairmen received $1,500 for each Committee meeting attended in person and $750 for each Committee meeting attended by telephone.  Effective June 29, 2012, Committee members who were not serving as Chairmen received $2,000 for each Committee meeting attended in person.
	Committee Chairman Fees:  At the start of fiscal year 2012, the Chairman of the Audit Committee received $4,000 for each meeting chaired in person and $750 for each meeting chaired by telephone.  The Chairs of the Board Affairs and Compensation Committees each received $3,000 for every meeting chaired in person and $750 for every meeting chaired by telephone.  Effective June 29, 2012, the Chairman of the Audit Committee received $4,500 for each meeting chaired in person and the Chairs of the Board Affairs and Compensation Committees each received $3,500 for every meeting chaired in person.

Quarterly Stock Award:  At the start of fiscal year 2012, each non-management director serving on the Board on the first day of each fiscal quarter received a stock award under the 2008 Incentive Plan, consisting of the number of shares of our common stock equal to $28,750 divided by the Fair Market Value (as defined below) of our common stock on that day, rounded down to the nearest whole share.  Effective June, 29, 2012, each non-management director serving on the Board on the first day of each fiscal quarter received a stock award under the 2008 Incentive Plan, consisting of the number of shares of our common stock equal to $31,250 divided by the Fair Market Value of our common stock on that day, rounded down to the nearest whole share.  The stock awards vest immediately upon grant.  As defined in our 2008 Incentive Plan, “Fair Market Value” means the closing sales price of a share of our common stock on the last market-trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable.  Subject to stockholder approval of the Amended 2008 Incentive Plan, future quarterly stock awards will be made under that Plan.   Consulting Fees:  We also maintain a policy under which non-management directors may be engaged on an as-needed basis from time to time as consultants for special projects at the rate of up to $3,000 per day (plus reasonable expenses) upon the recommendation of the Chairman of the Board or any officer designated by the Chairman of the Board.  No consulting fees were paid to non-management directors during fiscal year 2012.  If consulting fees are paid in the future to a non-management director, the Board will determine whether the special projects affect the independence of the non-management director.

 

 

 

 

	Director		Share Ownership (1)				Share Ownership Value (1)				Annual Cash Retainer				Equity Ownership as Multiple of Fiscal Year Annual Cash Retainer
	Mickey P. Foret			40,644			$	1,894,823			$	92,500				20.5
	Senator William H. Frist			10,284			$	479,440			$	77,500				6.2
	Lydia H. Kennard			15,410			$	718,414			$	82,500				8.7
	Donald R. Knauss			9,174			$	427,692			$	77,500				5.5
	Timothy R. McLevish			1,466			$	68,345			$	77,500				0.9
	Joseph W. Ralston			19,016			$	886,526			$	137,500				6.4
	John D. Roach			19,091			$	890,022			$	77,500				11.5
	Douglas W. Stotlar			16,344			$	761,957			$	77,500				9.8
	William P. Sullivan			17,828			$	831,141			$	77,500				10.7

(1)	Based on an April 1, 2013 share ownership date and closing share price of $46.62.

 

 

 

 

 

 

Nominee and Current Committee Service		Principal Occupation, Business Experience, Other Directorships Held and Age
Mickey P. Foret (Audit Committee)		Mr. Foret has served as one of our directors since March 2003.  He served until 2002 as Executive Vice President and Chief Financial Officer of Northwest Airlines, Inc., an airline company, and Chairman and Chief Executive Officer of Northwest Airlines Cargo, Inc., a transportation and logistics company.  Mr. Foret was employed in various management positions at Northwest Airlines from 1992 until 1996 as well as from 1998 until 2002.  Mr. Foret previously served as President and Chief Operating Officer of Atlas Air Cargo, Inc. and as President and Chief Operating Officer as well as in other management positions at Continental Airlines, Inc.  Mr. Foret has served as a director of Delta Air Lines, Inc. since November 2008 and as a director of the Nash Finch Company since May 2005.  Mr. Foret has previously served as a director for NorAm Energy Corp., as a director of MAIR Holdings, Inc., as a director of First American Funds, as a director of Champion Airlines, Inc., as a director of Worldspan L.P., as a director of ADC Telecommunications, Inc., and as a director of Northwest Airlines.  He is 67 years old.   As the former chief financial officer and senior executive of a multinational public company, Mr. Foret contributes to the Board his considerable operational experience in and knowledge of the transportation and logistics industry, an industry that represents a significant portion of our business.  Mr. Foret’s service on a number of boards of other public companies enables him to share his experience of beneficial governance practices employed at other public companies.  We view accurate financial reporting and robust auditing to be critical to our success and, with his executive experience in capital-intensive industries and his experience as a director of financial funds, Mr. Foret is well positioned to contribute his extensive financial expertise to the Board.  He also qualifies as an audit committee financial expert under the SEC guidelines.
Senator William H. Frist, M.D. (Board Affairs Committee)		Senator Frist has served as one of our directors since November 2009.  He has served as a partner at Cressey & Company LP, a private investment firm, since 2007.  He also served as Distinguished University Professor at Vanderbilt University from 2008 until 2010.  He served as a United States Senator for Tennessee from 1995 until 2007 and was Majority Leader of the United States Senate from 2003 until 2007.  Senator Frist has served as a director of Select Medical Corporation since May 2010.  Senator Frist serves on the boards of several other organizations including the Center for Strategic and International Studies, the Kaiser Family Foundation, the Robert Wood Johnson Foundation, Aegis Laboratories, Accolade LLC, and the

		Harvard Medical School Board of Fellows.  He is 61 years old.   Senator Frist’s experience as a legislator, including numerous committee memberships and chairmanships and, most notably, as former Majority Leader of the United States Senate, gives him the leadership and consensus-building skills to assist the Board in a range of its activities.  He has extensive knowledge of the workings of government and, as a former member of the Senate Finance Committee, of the federal budgeting process, which we view as especially significant given that a large proportion of our business activities are heavily regulated and directly affected by governmental actions.  The Board also benefits from the considerable investment and finance experience he has gained from his tenure as a partner in a private investment firm.  His service on the board of the Center for Strategic and International Studies enables him to contribute his perspective on our international operations.
Lydia H. Kennard (Board Affairs Committee)		Ms. Kennard has served as one of our directors since August 2007.  She is currently President and CEO of KDG Construction Consulting.  Since March 2007, she has also been a Principal of Airport Property Ventures, an operator and developer of aviation facilities.  Ms. Kennard served as the Executive Director of Los Angeles World Airports, the airport authority for the City of Los Angeles, from 1999 to 2003, and again from 2005 to February 2007.  Ms. Kennard has been a director of Prologis, Inc., and its predecessor company, AMB Property Corporation, since 2004 and a director of Intermec, Inc. since 2003.  She served as a director of IndyMac Bank from 2002 to 2008.  She was formerly a trustee of the RAND Corporation, a nonprofit policy research institute from 2007 to 2012 and was a member of the California Air Resources Board from 2004 to 2011.  She is 58 years old.   Ms. Kennard’s prior executive and operational experience, including oversight of such diverse activities as airfield operations, airport retail and restaurant concession management, construction, maintenance, property and asset management, business operations, and police and security activities, positions her to contribute to the Board her leadership skills, her critical insights into the operational requirements of a large company and her expertise in industries in which we participate, such as infrastructure, construction and project management.  As a result of her involvement with the California Air Resources Board, she is able to share her understanding of air quality management and regulation, which is valuable in enhancing the Board’s insight into our environmental management and pollution control and other environmental programs.  The Board also benefits from her knowledge of the conduct and governance of public

		companies based on her experience as a director of several public companies.
Donald R. Knauss (Board Affairs Committee)		Mr. Knauss has served as one of our directors since June 2010.  He has served as chairman and chief executive officer of The Clorox Company, a manufacturer and marketer of consumer products, since October 2006.  He served as Executive Vice President of The Coca-Cola Company (a marketer and distributor of non-alcoholic beverages) and President and Chief Operating Officer for Coca-Cola North America from February 2004 until August 2006.  Mr. Knauss has served as a director of the Kellogg Company since November 2007 and The Clorox Company since October 2006.  He is 62 years old.   With his substantial experience in executive positions at large multi-national corporations, Mr. Knauss brings to the Board substantial leadership skills.  The Board also benefits from his expertise in corporate governance practices gained from his service on the boards of two large public companies.  His experiences serving as a chairman, chief executive officer and chief operating officer allow him to contribute to the Board his critical knowledge and expertise related to the operations of large public companies, particularly in connection with international expansion, development and evaluation of strategic growth opportunities and consideration of the impact of corporate investment on stockholder value.
Martin M. Koffel		Mr. Koffel has served as our Chairman of the Board, Chief Executive Officer, President and as one of our directors since 1989.  He is 74 years old.   Mr. Koffel’s long tenure as our CEO and Chairman positions him to contribute to the Board his extensive knowledge of our business, history and development, and to provide critical Board leadership and continuity.  As CEO, he has developed substantial operational and industry expertise, as well as executive leadership skills that are important to us and to our Board.  Mr. Koffel has previously served on the boards of several international policy institutes, which have given him substantial experience and perspective regarding economic and geopolitical trends, the development and execution of business strategies and evolving views regarding corporate governance best practices.
Timothy R. McLevish		Mr. McLevish has served as one of our directors since November 2012.  He currently serves as Executive Vice President and Chief Financial Officer of Kraft Foods Group, Inc., a manufacturer and marketer of packaged food products.  He served as Executive Vice President of Kraft Foods from 2011 until 2012 when Kraft was separated into Kraft

		Foods Group and Mondelēz International, Inc.  From 2007 to 2011, he served as Executive Vice President and Chief Financial Officer of Kraft Foods.  Before joining Kraft Foods, Mr. McLevish was the Senior Vice President and Chief Financial Officer of Ingersoll-Rand Company Limited, a diversified industrial company, from 2002 to 2007.  Prior to that, he held a series of finance, administration and leadership roles for Mead Corporation, a forest products company, from 1987 to 2002.  His final role with Mead was Vice President and Chief Financial Officer, a position he held from December 1999 through March 2002.  Mr. McLevish has served as a director of Kennametal, Inc. since 2004.  He is 58 years old.   Mr. McLevish brings to the Board valuable experience in finance and accounting as well as substantial executive insight on issues facing large multi-national public corporations.  In light of his considerable past experience in positions as a financial executive at several large public companies, most recently as Executive Vice President and Chief Financial Officer, he adds a valuable perspective to the Board on financial reporting and accounting issues, the risk management and internal audit process, as well as significant operational and management insights.  His executive experience at a multi-national public corporation with global operations positions him to contribute critical insights into a variety of international finance and regulatory issues, which are especially important to us given that a significant portion of our business is conducted overseas.
General Joseph W. Ralston, USAF (Ret.) (Audit, Board Affairs and Compensation Committees)		General Ralston has served as one of our directors since October 2003.  He has served as Vice Chairman of The Cohen Group, an international business consulting firm, since 2003; as a director of Lockheed Martin since 2003; and as a director of The Timken Company since 2003.  General Ralston’s military career began in 1965 and concluded in 2003, when he retired from active duty.  General Ralston’s military career was highlighted by his service as Vice Chairman of the Joint Chiefs of Staff in Washington, D.C. from 1996 to 2000 and Commander, U.S. European Command and Supreme Allied Commander Europe, NATO from 2000 to 2003.  He is 69 years old.   General Ralston’s distinguished career in the armed forces has provided him with extensive experience in executive management, logistics and military procurement.  During his service as a senior military officer, including Vice Chairman of the Joint Chiefs of Staff, General Ralston maintained the highest security clearances and performed a variety of responsibilities, including reviewing the requirements of the armed forces for goods and services and assessing the personnel, equipment, cyber, financial and reputational risks of

		military operations.   Consequently, he has developed a deep understanding of the organization that has historically been among our most important clients, including critical insights into the needs of the armed forces for our services and the federal government procurement processes.  The Board also benefits from his advice regarding our classified activities and his insights into our enterprise risk management.  In addition, in serving as Chairman of the Nominating and Corporate Governance Committee of the Board of The Timken Company, General Ralston has gained valuable experience dealing with relevant rules and regulations and generally overseeing corporate governance matters.
John D. Roach (Audit and Compensation Committees)		Mr. Roach has served as one of our directors since February 2003.  He has served as Chairman of the Board and Chief Executive Officer of Stonegate International, a private investment and advisory services firm, since 1997; as a director of the PMI Group, Inc. since 1997; as a director of Ply Gem Holdings (a private company) since 2004, and as a director of VeriSign, Inc. since August 2007.  He previously served as the Executive Chairman and Chief Executive Officer of Unidare U.S., Inc., an industrial welding and safety supplier, from 2002 to 2006; the founder, Chairman of the Board and Chief Executive Officer of Builders First Source, Inc. from 1998 to 2001; the Chairman of the Board, President, and Chief Executive Officer of Fibreboard Corp. from 1991 to 1997; a director of Kaiser Aluminum Corporation and its subsidiary Kaiser Aluminum & Chemical Corporation from 2002 to 2006; a director of Material Sciences Corporation from 2003 to 2006; and a director of Washington Group (formerly Morrison Knudsen Corporation) from 1997 to 2002.  He is 69 years old.   With his prior extensive service as a chief executive officer of a multinational public company and a private investment firm, Mr. Roach brings to the Board his considerable business leadership and strategic consulting skills.  Mr. Roach has served as a senior executive or director of a variety of companies in the construction and industrial production industries, which positions him to contribute his knowledge in the construction industry, one of the businesses we serve, and a variety of other industries, many of which are relevant to our Industrial and Commercial market sector.  The Board also benefits from his executive experience in financial services, as well as his expertise in corporate governance and finance gained as a director of several public companies.  Mr. Roach qualifies as an audit committee financial expert under the SEC guidelines.

Douglas W. Stotlar (Compensation Committee)		Mr. Stotlar has served as one of our directors since March 2007.  He has served as President, Chief Executive Officer, and director of Con-way Inc., a transportation and logistics company (previously known as CNF Inc.) since April 2005.  He served as President and Chief Executive Officer of Con-way Transportation Services, Inc., a regional trucking subsidiary (“CTS”), from 2004 until 2005.  He also served as CTS’ Executive Vice President and Chief Operating Officer from 2002 until 2004, and as CTS’ Executive Vice President of Operations from 1997 until 2002.  Mr. Stotlar serves as vice president at large and is a member of the executive committee of the American Trucking Associations.  He is also a member of the Board of Directors of the American Transportation Research Institute.  He is 52 years old.   Mr. Stotlar’s executive experience has provided him with substantial knowledge of the transportation and logistics sector, an industry in which we participate.  As the Chief Executive Officer of Con-way, Inc., he gained a significant understanding of public policy issues and supply chain systems in the transportation and logistics sector, which are relevant to our business activities.  In addition, as a currently serving chief executive officer of a public company, Mr. Stotlar can contribute his valuable experience with contemporary corporate governance practices, labor and stockholder relations matters, and current legal and regulatory requirements and trends.  He also serves on the boards of several not-for-profit organizations.
William P. Sullivan (Audit and Compensation Committee)		Mr. Sullivan has served as one of our directors since August 2006.  He has served as the Chief Executive Officer of Agilent Technologies, Inc., a provider of scientific and technical instruments, since March 2005.  He served as Executive Vice President and Chief Operating Officer of Agilent, from March 2002 until March 2005, and as its Senior Vice President and General Manager of its Semiconductor Products Group from August 1999 until March 2002.  Mr. Sullivan has served as a director of Agilent since March 2005 and as director of Avnet, Inc. since July 2008.  He is 63 years old.   As one of the three non-executive directors on the Board who are currently serving as chief executive officers of public companies, Mr. Sullivan brings to the Board his significant executive and operational experience addressing contemporary issues facing public companies today.  His experience as a senior executive of a multinational public company with global operations allows him to provide insight into a variety of international issues, which is especially important to us given that a significant portion of our business is conducted overseas.  We believe that our exposure to new technologies and access to new ideas in this field are important to our future success, and Mr.

Sullivan’s experience in the high technology industry positions him to contribute to the Board his considerable knowledge of developments in the technology sector.  The Board also benefits from his knowledge of finance, as well as of the most current issues in the conduct and governance of public companies.  He also qualifies as an audit committee financial expert under SEC guidelines.

 

Required Vote

Directors are elected by a majority of the votes cast for and against by holders of shares entitled to vote at the Annual Meeting, whether present in person or represented by proxy, which means that, for each director, the number of votes cast for the director must exceed the number of votes cast against that director.  Abstentions and broker non-votes will not be considered votes cast.

 

			As of April 1, 2013
	Total Shares Subject to Outstanding Stock Options			0
	Total Shares Subject to Outstanding Full Value Awards			2,988,588
	Total Common Stock Outstanding on the Record Date			0
	Closing Price of Common Stock as Reported on NYSE on the Record Date		$	46.62
	Weighted-Average Exercise Price of Outstanding Stock Options			0
	Weighted-Average Remaining Term of Outstanding Stock Options			0
	Total Shares Available for Grant under the 2008 Incentive Plan			573,138
	Total Shares Available for Grant under Other Equity Incentive Plans			0

			Fiscal Year 2012
	Number of Shares Subject to Stock Options Granted			0
	Number of Shares Subject to Full Value Awards Granted			1,400,000
	Weighted-Average Common Stock Outstanding			74,300,000

Required Vote

Approval of Proposal 2 requires the affirmative vote of the holders of a majority of the votes cast on the proposal, provided that the total vote cast represents at least a majority of the outstanding shares entitled to vote on the proposal.  Votes FOR, AGAINST and ABSTAIN will count as votes cast.  Broker non-votes do not count as votes cast for this purpose.

General

The Amended 2008 Incentive Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock unit awards, non-executive director stock awards, performance stock awards and other forms of equity compensation (together, “stock awards”), as well as performance cash awards (“performance cash awards” and together with “stock awards,” “awards”). Incentive stock options granted under the Amended 2008 Incentive Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code.  Nonstatutory stock options granted under the Amended 2008 Incentive Plan are not intended to qualify as incentive stock options under the Code.  See “Federal Income Tax Information” for a discussion of the tax treatment of stock awards.

Purpose

Our Board adopted the Amended 2008 Incentive Plan to provide a means to secure and retain the services of employees (including officers), directors and consultants eligible to receive awards, to provide incentives for such individuals to exert maximum efforts for our success and the success of our affiliates, and to provide a means by which such eligible individuals may be given an

opportunity to benefit from increases in the value of our common stock through the grant of stock awards.

Administration

Our Board administers the Amended 2008 Incentive Plan. Subject to the provisions of the Amended 2008 Incentive Plan, the Board has the authority to construe and interpret the Amended 2008 Incentive Plan, to determine the persons to whom and the dates on which awards will be granted, the type or combination of types of awards that will be granted, the number of shares of common stock to be subject to each stock award, the time or times during the term of each stock award within which all or a portion of the award may be exercised, the exercise or purchase price of each stock award, the type of consideration permitted to exercise or purchase each stock award, and other terms of the awards. The Board also has the authority to accelerate the exercisability or vesting of awards.   The Board has the power to delegate some or all of the administration of the Amended 2008 Incentive Plan to a committee or committees, except that the Board may not delegate the administration of the Amended 2008 Incentive Plan to a committee to the extent such administration would affect the quarterly non-executive director stock awards granted under the Amended 2008 Incentive Plan.  In the discretion of the Board, a committee may consist solely of two or more “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act or solely of two or more “outside directors” within the meaning of Section 162(m) of the Code.  If administration is delegated to a committee, the committee has the authority to delegate certain administrative powers to a subcommittee of one or more members.  Any awards granted under the Amended 2008 Incentive Plan to non-executive directors, other than the quarterly non-executive director stock awards, will be granted by a committee consisting solely of two or more non-employee directors or outside directors.  As used herein with respect to the Amended 2008 Incentive Plan, the “Board” refers to any committee the Board appoints or, if applicable, any subcommittee, as well as to the Board itself.   The Board may also delegate to one or more officers the authority to designate employees who are not officers to be recipients of certain stock awards and the number of shares subject to such stock awards.  Under any such delegation, the Board will specify the total number of shares of our common stock that may be

	subject to the stock awards granted by such officer.  The officer may not grant a stock award to himself or herself.
Prohibition on Repricing	The Amended 2008 Incentive Plan expressly provides that the Board will not have the authority to reprice any outstanding stock awards, or cancel any outstanding stock option that has an exercise price greater than the then current fair market value of our common stock in exchange for cash or other stock awards under the Amended 2008 Incentive Plan, unless our stockholders have approved such an action within 12 months prior to such an event.
Authorized Shares	Subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our common stock that may be issued under the Amended 2008 Incentive Plan is 6,500,000 shares.  Shares authorized under the Plan may be used for any award type without limitation, except that the aggregate maximum number of shares of common stock that may be issued pursuant to the exercise of incentive stock options is 5,000,000 shares, subject to adjustment for certain changes in our capitalization.   Shares may be issued in connection with a merger or acquisition as permitted by the rules of the applicable national securities exchange, and such issuance will not reduce the number of shares available for issuance under the Amended 2008 Incentive Plan.  If a stock award expires or otherwise terminates without being exercised in full or is settled in cash, then such expired, terminated or settled award will not reduce the number of shares available for issuance under the Amended 2008 Incentive Plan.  Furthermore, if any shares of our common stock issued pursuant to a stock award are forfeited to us because of the failure to meet a contingency or condition required for the vesting of those shares, then the forfeited shares will revert to and again become available for issuance under the Amended 2008 Incentive Plan.  In addition, any shares withheld for the payment of taxes or acquired by us as consideration for the exercise of an option will again become available for issuance under the Amended 2008 Incentive Plan.  Shares issued under the Amended 2008 Incentive Plan may be previously unissued shares or reacquired shares, including shares repurchased by us on the market or otherwise.
Eligibility	Incentive stock options may be granted under the Amended 2008 Incentive Plan only to our employees (including officers) and the employees of our affiliates.  Non-executive director stock awards

may be granted only to our directors who are not our employees or employees of one of our affiliates.  Our employees (including officers) and consultants (including employees of and consultants to our affiliates), and our non-employee directors, are eligible to receive all other types of awards under the Amended 2008 Incentive Plan, including awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code.  All of our employees, consultants (including employees of and consultants to our affiliates), and non-employee directors are eligible to participate in the Amended 2008 Incentive Plan.   No incentive stock option may be granted under the Amended 2008 Incentive Plan to any person who, at the time of the grant, owns (or is deemed to own) stock possessing more than 10% of our total combined voting power or the total combined voting power of any of our affiliates, unless the exercise price of the option is at least 110% of the fair market value of the stock subject to the option on the date of grant and the term of the option does not exceed five years from the date of grant.  In addition, the aggregate fair market value, determined on the date of grant, of the shares of common stock with respect to which incentive stock options are exercisable for the first time by a participant during any calendar year (under the Amended 2008 Incentive Plan and any of our other plans, including those of our affiliates) may not exceed $100,000.   Under the Amended 2008 Incentive Plan, no employee may be granted during any fiscal year (i) options or performance stock awards covering more than 1,000,000 shares of our common stock, subject to adjustment for certain changes in our capitalization, or (ii) performance cash awards with a value in excess of $5,000,000.

Terms of Options

Options may be granted under the Amended 2008 Incentive Plan pursuant to stock option agreements.   Exercise Price.  The exercise price of options generally may not be less than 100% of the fair market value of the common stock subject to the option on the date of grant and, in the case of certain incentive stock options (see “Eligibility” above), may not be less than 110% of such fair market value.   Consideration.  The exercise price of options granted under the Amended 2008 Incentive Plan may be paid, to the extent permitted by applicable law and at the discretion of the Board, (i) by cash, check, bank draft or money order, (ii) pursuant to a broker-assisted cashless exercise, (iii) by delivery of other shares

of our common stock, (iv) pursuant to a net exercise arrangement, or (v) in any other form of legal consideration acceptable to the Board.   Vesting.  Options granted under the Amended 2008 Incentive Plan may become exercisable in cumulative increments, or “vest,” as determined by the Board.  Vesting typically will occur during the optionholder’s continued service with us or with an affiliate, whether service is performed in the capacity of an employee, consultant or director (collectively, “service”) and regardless of any change in the capacity of the service performed.  Shares covered by different options granted under the Amended 2008 Incentive Plan may be subject to different vesting terms.   Term. The maximum term of options granted under the Amended 2008 Incentive Plan is 10 years, except that, in the case of certain incentive stock options (see “Eligibility” above) the maximum term is five years.   Termination of Service.  Options granted under the Amended 2008 Incentive Plan generally terminate three months after termination of the participant’s service unless (i) termination is due to the participant’s disability, in which case the option may be exercised (to the extent the option was exercisable at the time of the termination of service) at any time within 12 months following termination; (ii) the participant dies before the participant’s service has terminated, or within the period (if any) specified in the option agreement after termination of service for a reason other than death, in which case the option may be exercised (to the extent the option was exercisable at the time of the participant’s death) within 12 months following the participant’s death by the person or persons to whom the rights to such option have passed; or (iii) the option by its terms specifically provides otherwise.  The option term may be extended in the event that exercise of the option following termination of service is prohibited by applicable securities laws.  In no event, however, may an option be exercised beyond the expiration of its term.   Restrictions on Transfer.  Unless provided otherwise by the Board, a participant in the Amended 2008 Incentive Plan may not transfer an option other than by will or by the laws of descent and distribution or pursuant to a domestic relations order.  During the lifetime of the participant, only the participant (or the transferee pursuant to a domestic relations order) may exercise an option.  A

	participant may also designate a beneficiary who may exercise an option following the participant’s death.
Restricted Stock Awards	Restricted stock awards may be granted under the Amended 2008 Incentive Plan pursuant to restricted stock award agreements.   Consideration.  The Board may grant restricted stock awards in consideration of past or future services rendered to us or in exchange for any other form of legal consideration acceptable to the Board.   Vesting.  Shares of common stock acquired under a restricted stock award agreement may be subject to forfeiture to us in accordance with a vesting schedule as determined by the Board.   Termination of Service.  Upon termination of a participant’s service, we may reacquire any forfeited shares of stock that have not vested as of the termination under the terms of the applicable restricted stock award agreement.   Restrictions on Transfer.  Rights to acquire shares under a restricted stock award may be transferred only upon such terms and conditions as determined by the Board.
Restricted Stock Unit Awards	Restricted stock unit awards may be granted under the Amended 2008 Incentive Plan pursuant to restricted stock unit award agreements.   Consideration.  The purchase price, if any, for restricted stock unit awards may be paid in any form of legal consideration acceptable to the Board.   Settlement of Awards.  A restricted stock unit award may be settled by the delivery of shares of our common stock, in cash, by any combination of common stock and cash, or in any other form of consideration, as determined by the Board.   Vesting.  A restricted stock unit award vests at the rate specified in the applicable award agreement as determined by the Board.  At the time of grant, the Board may impose additional restrictions or conditions that delay the delivery of stock or cash subject to the restricted stock unit award after vesting.   Dividend Equivalents.  Dividend equivalent rights may be credited with respect to shares covered by a restricted stock unit award, as determined by the Board.

	Termination of Service.  Except as otherwise provided in the applicable award agreement, restricted stock units that have not vested will be forfeited upon the participant’s termination of service.
Non-Executive Director Stock Awards	Quarterly Grant.  Each person who is serving as a non-executive director on the first day of each of our fiscal quarters will be granted a quarterly grant on each such day.  The number of shares of common stock subject to each quarterly grant will be equal to the quotient of $31,250 divided by the fair market value of the common stock on the date of grant, rounded down to the nearest whole share.  Each quarterly grant will be fully vested on the date of grant.   Consideration.  Non-executive director stock awards will be awarded in consideration of services rendered as one of our directors.   Amendment. The Board may, at any time, amend the terms pursuant to which non-executive director stock awards will be granted, including the value or number of shares that will be subject to each non-executive director stock award.
Performance Awards	The Amended 2008 Incentive Plan provides for the grant of performance-based stock and cash awards that may qualify as “performance-based compensation” that is not subject to the $1 million limitation on the income tax deductibility of compensation paid per covered employee under Section 162(m) of the Code.   Under the Amended 2008 Incentive Plan, an award may be granted, vest or be exercised based upon the attainment, during a certain period of time, of certain performance goals.  All of our employees and consultants (including employees of and consultants to our affiliates) and our directors are eligible to receive performance-based stock and cash awards under the Amended 2008 Incentive Plan.  The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree the performance goals have been attained will be determined by the Compensation Committee.   In granting a performance-based award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Compensation Committee will set a period of time (a “performance period”) over which the attainment of one or more goals (“performance goals”) will be measured for the purpose of

determining whether the award recipient has a vested right in or to the award and the amount of compensation payable under the award.  Within the time period prescribed by Section 162(m) of the Code, the Compensation Committee will establish the performance goals, based upon one or more criteria (“performance criteria”) enumerated in the Amended 2008 Incentive Plan and described below.  As soon as administratively practicable following the end of the performance period, the Compensation Committee will certify (in writing) whether the performance goals have been satisfied.   Performance goals under the Amended 2008 Incentive Plan will be determined by the Compensation Committee, based on one or more of the following performance criteria:  (i) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (ii) earnings before interest and taxes (“EBIT”); (iii) earnings before unusual or nonrecurring items; (iv) net earnings; (v) earnings per share; (vi) net income; (vii) gross profit margin; (viii) operating margin; (ix) operating income; (x) net operating income; (xi) net operating income after taxes; (xii) growth; (xiii) net worth; (xiv) cash flow; (xv) cash flow per share; (xvi) total stockholder return; (xvii) return on capital; (xviii) stock price performance; (xix) revenues; (xx) costs; (xxi) working capital; (xxii) capital expenditures; (xxiii) changes in capital structure; (xxiv) economic value added; (xxv) industry indices; (xxvi) expenses and expense ratio management; (xxvii) debt reduction; (xxviii) profitability of an identifiable business unit or product; (xxix) levels of expense, cost or liability by category, operating unit or any other delineation; (xxx) implementation or completion of projects or processes; (xxxi) contribution; (xxxii) average days sales outstanding; (xxxiii) new sales; and (xxxiv) to the extent that a performance stock award or performance cash award is not intended to comply with Section 162(m) of the Code, other measures of performance selected by the Board.   Performance goals may be based on a company-wide basis, with respect to one or more business units, divisions, affiliates or business segments, and in either absolute terms or relative to other performance criteria or internally-generated business plans, the performance of one or more comparable companies or a relevant index.  The Compensation Committee is authorized to determine whether, when calculating the attainment of performance goals for a performance period, as follows:  (i) to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar

denominated net sales and operating earnings; (iii) to exclude the effects of changes to generally accepted accounting standards required by the Financial Accounting Standards Board; (iv) to exclude the effects of any statutory adjustments to corporate tax rates; (v) to exclude the effects of any “extraordinary items” as determined under generally accepted accounting principles; (vi) to exclude any other unusual, non-recurring gain or loss or other extraordinary item; (vii) to respond to, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development; (viii) to respond to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions; (ix) to exclude the dilutive effects of acquisitions or joint ventures; (x) to assume that any business divested by us achieved performance objectives at targeted levels during the balance of a performance period following such divestiture; (xi) to exclude the effect of any change in the outstanding shares of our common stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common shareholders other than regular cash dividends; (xii) to reflect a corporate transaction, such as a merger, consolidation, separation (including a spinoff or other distribution of stock or property by a corporation), or reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code); and (xiii) to reflect any partial or complete corporate liquidation.  In addition, the Compensation Committee retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of performance goals.   If this Proposal 2 is approved by our stockholders, compensation attributable to performance-based awards under the Amended 2008 Incentive Plan will qualify as “performance-based compensation” under Section 162(m) of the Code, provided that:  (i) the award is granted by a compensation committee composed solely of “outside directors” within the meaning of Section 162(m) of the Code; (ii) the award is granted (or vests or becomes exercisable) only upon the achievement of an objective performance goal established in writing by the compensation committee within the time period prescribed by Section 162(m) of the Code (no later than the earlier of the 90th day of a performance period and the date on which 25% of the performance period has elapsed, and in any event at a time when the achievement of the performance goal remains substantially

	uncertain); and (iii) the Compensation Committee certifies in writing prior to the granting (or vesting or exercisability) of the award that the performance goal has been satisfied.
Other Stock Awards	The Board may grant other stock awards that are based in whole or in part by reference to our common stock.  Subject to the provisions of the Amended 2008 Incentive Plan, the Board has the authority to determine the persons to whom and the dates on which such other stock awards will be granted, the number of shares of common stock (or cash equivalents) to be subject to each award, and other terms and conditions of such awards.
Clawback Policy	Awards granted under the Amended 2008 Incentive Plan will be subject to recoupment in accordance with any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.  In addition, the Board may impose other clawback, recovery or recoupment provisions in an award agreement as the Board determines necessary or appropriate, including a reacquisition right in respect of previously acquired shares of our common stock or other cash or property upon the occurrence of misconduct.
Changes in Capitalization	If any change is made to the outstanding shares of our common stock without our receipt of consideration (whether through a stock split or other specified change in our capital structure), appropriate adjustments will be made to:  (i) the maximum number and/or class of securities issuable under the Amended 2008 Incentive Plan; (ii) the maximum number and/or class of securities that may be issued pursuant to the exercise of incentive stock options; (iii) the maximum number and/or class of securities for which any one person may be granted options or performance-based awards per fiscal year pursuant to the limitation under Section 162(m) of the Code; and (iv) the number and/or class of securities and the price per share in effect under each outstanding stock award under the Amended 2008 Incentive Plan.
Corporate Transactions; Changes in Control	In the event of our dissolution or liquidation, all outstanding stock awards under the Amended 2008 Incentive Plan will terminate immediately prior to such event.   Unless otherwise provided in an agreement or unless otherwise expressly provided by the Board at the time of grant of a stock award, in the event of a “change in control” (as defined in the

Amended 2008 Incentive Plan), (i) any surviving or controlling entity may either assume outstanding stock awards or substitute similar awards for these outstanding stock awards, and any reacquisition rights held by us with respect to common stock issued pursuant to stock awards may be assigned to the surviving or controlling entity, or (ii) the Board may, in its discretion, provide that, in complete settlement of outstanding stock awards, holders of these awards will receive payments (in a form determined by the Board) in amounts that the Board determines represent the value of the outstanding awards.  If the surviving or controlling entity declines to assume the outstanding stock awards or substitute similar awards, and the Board does not provide for payments to settle the outstanding stock awards, then, (i) with respect to awardholders whose service has not terminated prior to the change in control, the vesting and the time during which these awards may be exercised will be accelerated as of a time designated by the Board (contingent upon the effectiveness of the change in control) and the awards will terminate if not exercised before that time, and any reacquisition rights held by us with respect to these awards will lapse, and (ii) any other outstanding awards will terminate if not exercised prior to the time designated by the Board, except that any reacquisition rights held by us with respect to these awards will not terminate.   For purposes of the Amended 2008 Incentive Plan, a “change in control” will be deemed to occur in the event of a transaction, or series of transactions that occur within a 12-month period, as a result of which our stockholders immediately prior to the transaction (or, in the case of a series of transactions, immediately prior to the first transaction in the series) hold less than 50% of the beneficial ownership of the securities of the entity that survives the transaction (or, if more than one entity survives the transaction, of the controlling entity) following the transaction or transactions.   Unless otherwise provided by the Board, in the event that any payment or transfer by us to a participant would be non-tax deductible by us under Section 280G of the Code (regarding “parachute payments” made in connection with a change in control), then the present value of the payments will be reduced to an amount that maximizes the present value of the payments without causing any payment to be nondeductible by us.   The acceleration of vesting of a stock award in the event of a change in control may be viewed as an anti-takeover provision,

	which may have the effect of discouraging a proposal to acquire or otherwise obtain control of us.
Tax Withholding	Unless prohibited by the terms of a stock award agreement, we may satisfy any tax withholding obligation relating to an award by causing a participant to tender a cash payment, withholding a portion of the common stock otherwise issuable to the participant, withholding cash from an award settled in cash, or by such other method as may be set forth in the award agreement.
Section 409A	To the extent that any award granted under the Amended 2008 Incentive Plan is determined to be deferred compensation subject to Section 409A of the Code (“Section 409A”), the award agreement evidencing the award will incorporate the terms necessary to comply with the requirements of Section 409A.  The Board may adopt amendments to the Amended 2008 Incentive Plan and any applicable award agreement (including amendments with retroactive effect) or take any other actions that are determined to be necessary or appropriate to (i) exempt the award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the award, or (ii) comply with the requirements of Section 409A.
Duration, Termination and Amendment	The Board may suspend or terminate the Amended 2008 Incentive Plan without stockholder approval or ratification at any time.  Unless sooner terminated, the Amended 2008 Incentive Plan will terminate five years after approval by our stockholders at the Annual Meeting.  However, no such suspension or termination may impair any rights under a participant’s outstanding awards unless agreed to by the affected participant.   The Board may amend the Amended 2008 Incentive Plan at any time.  However, except as otherwise provided in the Amended 2008 Incentive Plan or an award agreement, no such amendment may impair any rights under a participant’s outstanding awards unless agreed to by the affected participant.  In addition, no amendment will be effective unless approved by our stockholders to the extent stockholder approval is necessary to satisfy applicable law.
Federal Income Tax Information	The following is a summary of the principal United States federal income taxation consequences to participants and us with respect to participation in the Amended 2008 Incentive Plan.  This summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state or foreign jurisdiction in

which a participant may reside.  The information is based upon current federal income tax rules and therefore is subject to change when those rules change.   Incentive Stock Options. Incentive stock options granted under the Amended 2008 Incentive Plan are intended to be eligible for the favorable federal income tax treatment accorded “incentive stock options” under the Code.  There generally are no federal income tax consequences to the participant or us by reason of the grant or exercise of an incentive stock option.  However, the exercise of an incentive stock option may increase the participant’s alternative minimum tax liability, if any.   If a participant holds stock acquired through exercise of an incentive stock option for more than two years from the date on which the option was granted and more than one year after the date the option was exercised for those shares, any gain or loss on a disposition of those shares (a “qualifying disposition”) will be a long-term capital gain or loss.  Upon such a qualifying disposition, we will not be entitled to any income tax deduction.   Generally, if the participant disposes of the stock before the expiration of either of these holding periods (a “disqualifying disposition”), then, at the time of disposition, the participant will realize taxable ordinary income equal to the lesser of (i) the excess of the stock’s fair market value on the date of exercise over the exercise price, or (ii) the participant’s actual gain, if any, on the purchase and sale.  The participant’s additional gain or any loss upon the disqualifying disposition will be a capital gain or loss, which will be long-term or short-term depending on whether the stock was held for more than one year.   To the extent the participant recognizes ordinary income by reason of a disqualifying disposition, generally we will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation) to a corresponding income tax deduction in the tax year in which the disqualifying disposition occurs.   Nonstatutory Stock Options.  No taxable income is recognized by a participant upon the grant of a nonstatutory stock option.  Upon exercise of a nonstatutory stock option, the participant will recognize ordinary income equal to the excess, if any, of the fair market value of the purchased shares on the exercise date over the exercise price paid for those shares.  Generally, we will be entitled (subject to the requirement of reasonableness, the provisions of

Section 162(m) of the Code, and the satisfaction of a tax reporting obligation) to a corresponding income tax deduction in the tax year in which such ordinary income is recognized by the participant.   However, if the shares acquired upon exercise of the nonstatutory stock option are unvested and subject to repurchase by us in the event of the participant’s termination of service prior to vesting in those shares, the participant will not recognize any taxable income at the time of exercise, but will have to report as ordinary income, as and when our repurchase right lapses, an amount equal to the excess of (i) the fair market value of the shares on the date the repurchase right lapses, over (ii) the exercise price paid for the shares.  The participant may, however, elect under Section 83(b) of the Code to include as ordinary income, in the year of exercise of the option, an amount equal to the excess of (i) the fair market value of the purchased shares on the exercise date, over (ii) the exercise price paid for such shares.  If the Section 83(b) election is made, the participant will not recognize any additional income as and when the repurchase right lapses.   Upon disposition of the stock, the participant will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for the stock plus any amount recognized as ordinary income upon acquisition (or vesting) of the stock.  Such gain or loss will be long-term or short-term depending on whether the stock was held for more than one year.   Restricted Stock Awards.  Upon receipt of a restricted stock award, the participant will recognize ordinary income equal to the excess, if any, of the fair market value of the shares on the date of issuance over the purchase price, if any, paid for those shares.  Generally, we will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation) to a corresponding income tax deduction in the year in which such ordinary income is recognized by the participant.   However, if the shares issued upon the grant of a restricted stock award are unvested and subject to repurchase by us in the event of the participant’s termination of service prior to vesting in those shares, the participant will not recognize any taxable income at the time of issuance, but will have to report as ordinary income, as and when our repurchase right lapses, an amount equal to the

excess of (i) the fair market value of the shares on the date the repurchase right lapses, over (ii) the purchase price, if any, paid for the shares.  The participant may, however, elect under Section 83(b) of the Code to include as ordinary income, in the year of issuance, an amount equal to the excess of (a) the fair market value of the shares on the date of issuance, over (b) the purchase price, if any, paid for such shares.  If the Section 83(b) election is made, the participant will not recognize any additional income as and when the repurchase right lapses.   Upon disposition of the stock acquired upon the receipt of a restricted stock award, the participant will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for such stock plus any amount recognized as ordinary income upon issuance (or vesting) of the stock.  Such gain or loss will be long-term or short-term depending on whether the stock was held for more than one year.   Restricted Stock Unit Awards.  No taxable income is recognized upon receipt of a restricted stock unit award.  The participant will recognize ordinary income, in the year in which the shares subject to that unit are actually issued to the participant, in an amount equal to the fair market value of the shares on the date of issuance. Subject to the requirement of reasonableness, Section 162(m) of the Code and the satisfaction of a tax reporting obligation, generally we will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time the shares are issued.  In general, the deduction will be allowed for the taxable year in which such ordinary income is recognized by the participant.   Potential Limitation on Company Deductions.  Section 162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to any of the certain “covered employees” in a taxable year to the extent that compensation to that covered employee exceeds $1,000,000.  It is possible that compensation attributable to awards, when combined with all other types of compensation received by a covered employee from us, may cause this limitation to be exceeded in any particular year.   Certain kinds of compensation, including qualified “performance-based compensation,” are disregarded for purposes of the deduction limitation.  In accordance with Treasury Regulations issued under Section 162(m) of the Code, compensation attributable to stock options will qualify as performance-based

compensation if (i) the awards are granted by a compensation committee comprised solely of “outside directors” within the meaning of Section 162(m) of the Code, (ii) the plan contains a per-employee limitation on the number of shares for which awards may be granted during a specified period, (iii) the per-employee limitation and other material terms of the awards are approved by the stockholders, and (iv) the exercise price of the award is no less than the fair market value of the stock on the date of grant.   Compensation attributable to restricted stock awards, restricted stock unit awards and performance-based awards will qualify as performance-based compensation, provided that:  (i) the award is granted by a compensation committee comprised solely of “outside directors” within the meaning of Section 162(m) of the Code, (ii) the award is granted (or vests or becomes exercisable) only upon the achievement of an objective performance goal established in writing by the compensation committee within the time period prescribed by Section 162(m) of the Code (no later than the earlier of the 90th day of a performance period and the date on which 25% of the performance period has elapsed, and in any event at a time when the achievement of the performance goal remains substantially uncertain), (iii) the compensation committee certifies in writing prior to the granting (or vesting or exercisability) of the award that the performance goal has been satisfied, and (iv) prior to the granting (or vesting or exercisability) of the award, stockholders have approved the material terms of the award (including the class of employees eligible for the award, the business criteria on which the performance goal is based, and the maximum amount, or formula used to calculate the amount, payable upon attainment of the performance goal).

 

	2008 Equity Incentive Plan, as amended and restated (1)
	Name and position		Dollar value ($)		Number of shares subject to awards
	Martin M. Koffel; Chairman of the Board; Chief Executive Officer; President		*		*
	H. Thomas Hicks; Chief Financial Officer; Vice President		*		*
	Gary V. Jandegian; Vice President; President, Infrastructure & Environment		*		*
	Joseph Masters; Vice President; General Counsel & Secretary		*		*
	Randall A. Wotring; Vice President; President, Federal Services		*		*
	Robert W. Zaist; Vice President; President, Energy & Construction		*		*
	All Current Executive Officers, as a group		*		*
	All Current Non-Management Directors, as a group (2)		$1,125,000		*
	All employees, including all current officers who are not executive officers, as a group		*		*

(1)

The amounts allocable under the Amended 2008 Incentive Plan to our executive officers and employees are not determinable because the plan does not provide fixed benefits or objective criteria for determining the compensation thereunder with regard to any participants other than non-employee directors and we have not approved any awards that are conditioned on stockholder approval of this Proposal 2.

(2)

Each non-management director serving on the Board for the entire fiscal year will receive stock awards with an aggregate value on the dates of grant equal to $125,000 under the Amended 2008 Incentive Plan (subject to rounding down to the nearest whole share at each award date).  The number of shares subject to the stock awards is determined on the basis of the fair market value of our common stock for the date of grant, and therefore, is not determinable at this time.

 

 

	2008 Equity Incentive Plan
	Name and position		Number of shares subject to awards
	Martin M. Koffel; Chairman of the Board; Chief Executive Officer; President			500,000
	H. Thomas Hicks; Chief Financial Officer; Vice President			86,600
	Gary V. Jandegian; Vice President; President, Infrastructure & Environment			86,600
	Joseph Masters; Vice President; General Counsel & Secretary			76,000
	Randall A. Wotring; Vice President; President, Federal Services			86,600
	Robert W. Zaist; Vice President; President, Energy & Construction			77,000
	All Current Executive Officers, as a group			1,068,700
	All Current Non-Management Directors, as a group			104,948
	All employees, including all current officers who are not executive officers, as a group			4,900,402
	Mickey P. Foret (Director Nominee)			14,004
	Senator William H. Frist, M.D. (Director Nominee)			10,284
	Lydia H. Kennard (Director Nominee)			14,004
	Donald R. Knauss (Director Nominee)			9,174
	Timothy R. McLevish (Director Nominee)			1,466
	General Joseph W. Ralston, USAF (Ret.) (Director Nominee)			14,004
	John D. Roach (Director Nominee)			14,004
	Douglas W. Stotlar (Director Nominee)			14,004
	William P. Sullivan (Director Nominee)			14,004

 

 

	Plan Category		Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (in thousands) (a)				Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)				Number of Securities Remaining Available for Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (in thousands) (c)
	Equity compensation plans approved by security holders			785			$	24.28				8,863
	Equity compensation plans not approved by security holders			—				—				—
	Total			785								8,863

 

 

 

 

Independent Registered Public Accounting Firm’s Fees

The following table presents aggregate fees for professional audit services rendered by PricewaterhouseCoopers LLP for the audit of our financial statements for the fiscal years ended December 28, 2012 and December 30, 2011, and fees for other services rendered by PricewaterhouseCoopers LLP during these periods.

 

		(In millions)		Fiscal Year 2012				Fiscal Year 2011
		Audit Fees		$	10.2			$	9.0
		Audit-Related Fees			0.2				0.2
		All Other Fees			0.1				0.3
		Total Fees		$	10.5			$	9.5

Audit Fees.  Audit fees include fees for services rendered in connection with the annual audit of our consolidated financial statements.  This category also includes fees for audits and reviews provided in connection with statutory and regulatory filings and engagements or services that generally only independent registered public accounting firms reasonably can provide to a client, such as state overhead audits, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC.   Audit-Related Fees.  Audit-related fees include fees paid for audit-related services, which included agreed-upon procedures performed on interactive data reporting using eXtensible Business Reporting Language and technical accounting training.   All Other Fees.  All other fees primarily include fees associated with reviewing the design or procedures regarding our close process and reporting structure, and allocation of corporate costs under Cost Accounting Standards.   All services described in the table were pre-approved by the Audit Committee in conformity with its pre-approval process.

Policy on Audit Committee Pre-Approval

The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm.  The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by the independent registered public accounting firm.   On an on-going basis, management communicates specific projects and categories of service for which the advance approval of the Audit Committee is requested.  The Audit Committee reviews these requests and advises management if the Audit Committee approves the engagement of the independent registered public accounting firm.  On a periodic basis, management reports to the Audit Committee regarding the actual spending for such projects and services compared to the approved amounts.  The Audit Committee also has delegated the ability to pre-approve audit and permitted non-audit services to the Chairman of the Audit Committee provided that any pre-approvals by the Chairman are reported to the Audit Committee at the subsequent scheduled Audit Committee meeting

 

 

Required Vote

Stockholder ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm is not required by our Bylaws or otherwise.  The Audit Committee is, however, submitting the selection of PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of good corporate practice.  If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm.  Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and those of our stockholders.   The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of PricewaterhouseCoopers LLP.  Abstentions will be counted toward the tabulation of votes cast on the proposal and will have the same effect as negative votes.  Broker non-votes are not counted for any purpose in determining whether this matter has been approved.

 

 

 

 

 

 

•

Solid Financial Performance.  Revenues for fiscal year 2012 grew by 15% from fiscal year 2011, including $1.5 billion from Flint, which we acquired in May 2012.  Net income increased to $310.6 million or $4.17 per share on a diluted basis.

 

•

Successful Bond Offering.  We issued $400.0 million in 3.850% Senior Notes due 2017 and $600.0 million in 5.000% Senior Notes due 2022 to the institutional investor community.  The proceeds of these debt issuances were used to finance, in part, our acquisition of Flint.

 

•

Strategic Acquisition.  Our Flint acquisition significantly increased our service offering in the North American oil and gas market.

 

•

Initiated Dividends.  We initiated a $0.20 quarterly cash dividend program in 2012.

 

 

•

Strong Pay-for-Performance Principles.  Our compensation policies and decisions are focused on pay-for-performance principles.  Annual performance-based bonuses are determined using objective financial performance measures that are designed to correlate closely with the creation of long-term stockholder value.  As discussed below, typically, half of our long-term equity incentives vest only if performance metrics are achieved.