Freeport-McMoRan (FCX) DEFA14A Additional proxy soliciting materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

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Freeport-McMoRan Copper & Gold Inc.
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Explanatory Note - Commencing June 6, 2014, Freeport-McMoRan Copper & Gold Inc. will refer to the attached presentation in discussions with shareholders.

www.fcx.com

www.fcx.com

2014 Shareholder Engagement

June 2014

2

Engaged and Responsive Board

Engaged and Responsive Board

Shareholder Feedback from 2013 Engagement

Redesign Executive Compensation Program

Independent Board Leadership

Board Refreshment

Board Actions During Past Year

Established New Executive Compensation Program

Appointed Lead Independent Director

Added Four New Independent Directors

Actions Represent Significant Move Towards Best Practices

In March and April 2014, Our Lead Independent Director Met

with Shareholders Representing Approximately 25% of Our

Outstanding Common Stock to Review Board Actions

Robust Independent Board Leadership

3

Independent Directors Appointed Jerry Ford as Lead Independent

Director in Late June 2013 Shortly Before Annual Meeting

Mr. Ford Has Implemented Several Initiatives, Including New Approach

to Board Refreshment and Formation of a Fully Independent Executive

Committee

Mr. Ford’s Role Has Included: 

Providing Recommendations on New Directors

Providing Recommendations on Board Committee Memberships and

Chairman/Vice Chairman Roles

Working with the Chairman of Compensation Committee to Implement

New

Executive Compensation Program and Negotiate Revised Executive

Employment Arrangements

Appointment of Five

New Directors in Past Year

Appointment of Five

New Directors in Past Year

4

Former Plains Exploration & Production

Company directors joined the Board in

June 2013,

contributing valuable

backgrounds in oil & gas exploration

and production and banking  

Thomas Fry

Independent Director

Jim Flores

Inside Director

Lydia Kennard

Independent Director

Fran Townsend

Independent Director

Alan Buckwalter

Independent Director

The Shift in Composition of Our Board, Including Four New Independent

Directors and New Lead Independent Director Role, Has Introduced

New Perspectives and Reshaped Conversation in the Boardroom

New Independent Directors Appointed

to

Board

in

December

2013,

bringing

diverse professional experience in

executive management roles and deep

expertise as directors at public

companies

Well-Balanced Board

Well-Balanced Board

5

During Past Year, We Reduced Tenure of Our Directors to Average of

8.5 Years and Increased Percentage of Independent Directors

Independent

Directors

81.25%

Other

Directors

18.75%

Board Composition

Board Tenure

5 Directors

5 Directors

6 Directors

Less than 5 Years

5-10 Years

More than 10

Years

Board Has Wealth of

Expertise & Knowledge

Board Has Wealth of

Expertise & Knowledge

6

Invaluable Experience in Leading and

Managing Mining, Oil & Gas Companies,

Including Exploration and Production

In-depth Experience in Geology

and Development of Mines, Milling

Facilities and Infrastructure

Expertise in Legal, Regulatory and

Accounting Matters

Deep Understanding of Both Onshore

and Offshore Oil and Gas Operations

Public and Private Company Board

Service

Former Leadership Positions at

International Accounting Firms

Entrepreneurship and Innovation

Involvement in Trade Associations

and Federal Agencies

Former Leaders of Banking and

Financial Institutions

International Government Relations,

Public Policy, Sustainability and

Environmental Experience

Exceptional Leadership Abilities in

Developing and Executing Financial

Strategies

Strong Management, Administrative

and Operational Skills

7

Office of the Chairman –

Develop & Execute Operational and Financial Strategy

Office of the Chairman –

Develop & Execute Operational and Financial Strategy

James R. Moffett

Chairman of the Board

Richard C. Adkerson

Vice Chairman,

President and CEO

James C. Flores

Vice Chairman,

President and CEO

of Oil & Gas Business

Experienced Leadership –

Interests Aligned with Shareholders

Collectively Own Approximately 14 Million FCX Shares

•

Founder

•

50+ Years Experience in

Natural Resources Business

•

Accomplished Geologist

•

Leads Global Exploration

Program & Guides Strategy

•

Owns 3.2 Million Shares

•

40+ Years Experience in

Natural Resources Business

•

Leads Global Mining Business &

Corporate Functions

•

Owns 2.7 Million Shares,

Including Vested RSUs

•

30+ Years Experience in

Energy Business

•

Leads Oil & Gas Business

•

Owns 8.0 Million Shares

New Executive Compensation Program

New Executive Compensation Program

8

In Response to the 2013 Shareholder Vote on Executive Compensation, We

Transformed Our Approach to Executive Compensation

Restructured

the

Direct

Compensation

of

Members

of

Office

of

the

Chairman

with Each Being Paid at Same Level

Reduced by 50% the Base Salaries to $1.25 Million from $2.5 Million

Evaluated the Median Aggregate Compensation of Top Three Executives at Peer

Companies and Set Total Target Direct Compensation at $7.5 Million for Each of

Our Top Three Executives

Total Target Direct Compensation of $7.5 Million = Bottom 25th Percentile

for Peer Companies and CEOs at S&P 100 Companies

Of the $7.5 Million Target Compensation, $6.25 Million is at Risk

New Annual Incentive Program (AIP) and New Long-Term Incentive Program

Performance-Based Elements Tied to Enterprise Level Goals and Shareholder

Return Align Focus on Positive Outcomes that Deliver Value to Shareholders

New Executive Compensation Framework –

Office of the Chairman

New Executive Compensation Framework –

Office of the Chairman

9

Compensation Structure for Office of Chairman with Total Target Direct

Compensation of $7.5 Million (in millions):

AIP Awards are Earned Based on Performance vs. Defined Goals Established

Each Year

AIP 2014 Performance Metrics:

Performance Category

Performance Metric

Weighting

Financial

Operating Cash Flow Excluding Working

Capital Changes

50.0%

Operational

Copper Production Volumes

17.5%

Oil Equivalents Production Volumes

7.5%

Safety and

Environmental/Social

Responsibility

Safety (Reportable Rate)

15.0%

Environmental/SR (Score)

10.0%

Base Salary

$1.25

Annual Incentive

$1.25 (Min 0%; Max 2x Target)

Stock Options

$2.50 (No Value Unless Share Price > Strike Price When Vested)

Performance Shares

$2.50 (Min 0%; Max 2x Target)

Established New Performance Shares

Established New Performance Shares

FCX’s Total Shareholder Return (TSR) Will Be Compared to Peer

Group Companies After Three Years in Order to Determine FCX’s

Rank Within the Peer Group

Earned Awards Will Be Determined According to TSR Rank as

Specified in the Following Table:

FCX Rank

FCX TSR >0%

FCX TSR </=0%

Performance Share Payout %

Performance Share Payout %

1-2 (>87

th

percentile)

200%

100%

3

180%

100%

4

160%

100%

5

140%

100%

6

120%

100%

7 –

8 (50

th

–

56

th

percentile)

100%

100%

9

80%

80%

10

60%

60%

11

40%

40%

12-16 (< 25

th

percentile)

0%

0%

10

Restricted Stock Unit Grant to CEO

11

New Executive Management Structure Potentially Triggered Termination Provisions in

Mr. Adkerson’s Employment Agreement

Resulted

in

a

Potential

Claim

by

Mr.

Adkerson

of

a

“Good

Reason”

Termination

under

Employment Agreement and Right to Receive a $46M Cash Severance Payment

The

Board

Firmly

Believed

Retaining

Mr.

Adkerson,

an

Experienced

and

Skilled

CEO,

Was

in

the Best Interests of Our Shareholders

Board

Negotiated

with

Mr.

Adkerson

to

Reach

a

Mutually

Agreeable

Solution

and

Retain

Him

as CEO

Board Structured New Severance Arrangement as Restricted Stock Units to Ensure

Strong Link Between Pay and Corporate Performance

Agreed to a One-time Restricted Stock Unit Grant Valued at Less than 80% of the Prescribed

Payout, An Immediate Savings of $11M

Restricted

Stock

Units

Cannot

Be

Paid

Out

Until

Six

Months

After

Retirement

to

Avoid

Unintended Incentive for Short-Term Actions

Terminated Mr. Adkerson’s Employment Agreement; No Future Obligations for the Company

We Believe this Action Served the Best Interests of our Shareholders by Terminating

the More Expensive Payout Set Forth in the Employment Agreement while Retaining an

Experienced and Skilled CEO at a Time of Significant Transformation at the Company

Employment Agreement Changes

12

Terminated Mr. Adkerson’s Employment Agreement

Amended Mr. Flores’

Employment Agreement

Eliminated All Tax Gross-ups and Provision Providing for a Payout of Three Times the Sum

of Salary and Target Annual Bonus Upon Death or Disability, and Reduced Base Salary

Removed

Daily

Automatic

Renewal

Provision

Resulting

in

Mr.

Flores’

Agreement

Now

Having a Five-year Term Ending in February 2019, Subject to One-year Extensions Unless

the Company Provides Prior Notice that it Does Not Wish to Extend the Term

Amended Mr. Moffett’s Employment Agreement

Reduced Base Salary by 50%

Changes in Base Salary and Annual Bonus Reduced Potential Severance Payments

As of December 31, 2013

As of March 1, 2014

Lump Sum Payment (in millions)

James C. Flores

Retirement

None

None

Death/Disability

$15.0

None

Termination

–

Good

Reason/No

Cause

$15.0

$7.5

Termination

–

After

Change

of

Control

$15.0

$7.5

James R. Moffett

Retirement/Death/Disability

None

None

Termination

–

Good

Reason/No

Cause

$45.9

$25.6

Termination

–

After

Change

of

Control

$60.8

$36.0

No Equity Grants for 2013 Performance

13

No Long-Term Incentive Awards Were Granted for 2013 Performance, But

Proxy

Disclosure

Rules

Require

Reporting

of

Equity

Awards

in

the

Year

of

Grant

•

We

Historically

Granted

Equity

in

January

for

Performance

in

the

Prior

Year

•

The Summary Compensation Table in our 2014 Proxy Statement Therefore Reflects Equity

Awards Granted for 2012 Performance in February 2013 (prior to Annual Meeting)

•

Starting in 2014, Long-Term Incentive Awards will be Granted at the Beginning of the Applicable

Year, which will Align the Performance Period with Proxy Disclosure

Compensation

Awarded

for

2013

Performance

(a)

Name

Salary

Stock

Awards

Option

Awards

Non-Equity

Incentive Plan

Compensation

Change in Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

All Other

Compensation

Total

James R. Moffett

$2,500,000

$1,250,000

$1,644,729

$1,644,603

$7,039,332

Richard C. Adkerson

2,500,000

1,250,000

5,269,323

James

C.

Flores

1,461,795

1,250,000

353,190

3,064,985

Kathleen L. Quirk

650,000

1,100,000

159,822

1,909,822

Michael J. Arnold

550,000

1,000,000

156,706

1,706,706

(a) Please see page 38 of the 2014 FCX Proxy Statement for the 2013 Summary Compensation Table; this is not a substitute for that table.

(b) Excludes $35,190,000 aggregate grant date value of RSUs awarded in connection with the termination of Mr. Adkerson’s employment agreement.

1,519,323

(b)

(c)

Amounts reflect compensation to Mr. Flores from May 31, 2013 (date FCX acquired Plains Exploration) through December 31, 2013.

(c

)

Oversight of Environmental Risk

14

A Stockholder Has Proposed that the Board Appoint a Director Who

is a Recognized

Expert on Environmental Matters

The Restrictive Proposal Would Limit the Board’s Ability to Identify and Recruit the

Most Qualified Director Candidates

The Board Has a Strong Commitment to Environmental Management and Minimizing

the Environmental Impact of Our Operations

Two of Our Recently Appointed Directors, Mr. Fry and Ms. Kennard, Have Experience in

Environmental Management and Are Members of Our Corporate Responsibility Committee

The Nominating and Corporate Governance Committee Seeks to Maintain a Board with

the Right Mix of Skills and Experience; This Proposal Does Not Advance That Goal

All

Mining

Operations

Maintain

ISO

14001

Certified

Environmental

Management

Systems,

Independently

Audited

Annually

Grasberg Operation has Undergone Triennial Independent Environmental Audits by Recognized Industry Experts

Annual

External

Assurance

of

Our

Continued

Implementation

of

the

ICMM

Sustainable

Development

Framework,

Including Visits at Six Operations in 2013

Long Track Record of Independent Reviews of Our Environmental Management Systems

Mr. Fry is a Former Director of the Department of the Interior’s Bureau of Land Management

Ms. Kennard Served for Seven Years on the California Air Resources Board

Additional Disclosure

15

This information is being provided to certain shareholders in addition to Freeport-McMoRan

Copper & Gold Inc.’s proxy statement dated April 29, 2014, that has been available since

such date. Please read the complete proxy statement and accompanying materials carefully

before you make a voting decision. Even if voting instructions for your proxy have already

been given, you can change your vote at any time before the annual meeting by giving new

voting instructions as described in more detail in the proxy statement. The proxy statement,

and any other documents filed by Freeport-McMoRan Copper & Gold Inc. with the Securities

and Exchange Commission (“SEC”), may be obtained free of charge at the SEC web site at

www.sec.gov and from the Company’s web site at www.fcx.com.

Freeport-McMoRan Copper & Gold Inc. and its directors and officers may be

deemed to be

participants in the solicitation of proxies from Freeport-McMoRan Copper & Gold Inc.’s

shareholders in connection with the upcoming annual meeting of shareholders. Information

about Freeport-McMoRan Copper & Gold Inc.’s directors and executive officers and their

ownership of Freeport-McMoRan Copper & Gold Inc. stock is set forth in the proxy statement

for Freeport-McMoRan Copper & Gold Inc.’s 2014 annual meeting of shareholders.