Exhibit 10.24
ANNUAL INCENTIVE PLAN
OF FREEPORT-MCMORAN INC.
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. The purpose of the Annual Incentive Plan
of Freeport-McMoRan Inc. (the "Plan") is to provide incentives
for senior executives whose performance in fulfilling the
responsibilities of their positions can have a major impact on
the profitability and future growth of Freeport-McMoRan Inc. (the
"Company") and its subsidiaries.
ARTICLE II
ADMINISTRATION OF THE PLAN
SECTION 2.1. Subject to the authority and powers of
the Board of Directors in relation to the Plan as hereinafter
provided, the Plan shall be administered by a Committee
designated by the Board of Directors consisting of two or more
members of the Board each of whom is a "disinterested person"
within the meaning of Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of
1934. The Committee shall have full authority to interpret the
Plan and from time to time to adopt such rules and regulations
for carrying out the Plan as it may deem best. All
determinations by the Committee shall be made by the affirmative
vote of a majority of its members, but any determination reduced
to writing and signed by a majority of the members shall be fully
as effective as if it had been made by a majority vote at a
meeting duly called and held. All decisions by the Committee
pursuant to the provisions of the Plan and all orders or
resolutions of the Board of Directors pursuant thereto shall be
final, conclusive and binding on all persons, including the
Participants, the Company and its subsidiaries and their
respective equity holders.
ARTICLE III
ELIGIBILITY FOR AND PAYMENT OF AWARDS
SECTION 3.1. Subject to the provisions of the Plan, in
each calendar year the Committee may select salaried officers or
employees (including officers or employees who are also
directors) of the Company or any of its subsidiaries to receive
Awards under the Plan with respect to such year, and determine
the amount of such Awards.
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SECTION 3.2. Subject to the provisions of the Plan,
Awards with respect to any year shall be paid to each Participant
at such time established by the Committee following the
determination of the amounts of such Awards, which payment shall
in no event be later than February 28 of the year following such
Award Year.
SECTION 3.3. Notwithstanding the provisions of Section
3.2, if, prior to the date established by the Committee for any
Award Year, a Participant shall so elect, in accordance with
procedures established by the Committee, all or any part of an
Award to such Participant with respect to such Award Year shall
be deferred and paid in one or more periodic installments, not in
excess of ten, at such time or times before or after the date of
such Participant's Termination of Employment, but not later than
ten years after such date of Termination of Employment, as shall
be specified in such election. If and only if any Award or
portion thereof is so deferred for payment after December 31 of
the year following such Award Year, such Award or portion
thereof, as the case may be, shall, commencing with January 1 of
the year following such Award Year, be increased at a rate equal
to the prime commercial lending rate announced from time to time
by The Chase Manhattan Bank, N.A. (compounded quarterly) or at
such other rate and in such manner as shall be determined from
time to time by the Committee. If such Participant's Termination
of Employment occurs for any reason other than death, retirement
under the Company's retirement plan, or retirement with the
consent of the Company outside the Company's retirement plan and
if, on the date of such Termination of Employment, there remain
unpaid any installments of Awards which have been deferred as
provided in this Section 3.3, the Committee may, in its sole
discretion, authorize payment to the Participant of the aggregate
amount of such unpaid installments in a lump sum, notwithstanding
such election.
SECTION 3.4. (a) Notwithstanding the provisions of
Sections 3.1, 3.2, 3.3, 4.2(a), and 4.2(b) hereof, any Award to
any Covered Employee shall be granted in accordance with the
provisions of this Section 3.4. Subject to the discretion of the
Committee as set forth in Section 4.2(c) hereof, the amount of
the Award that may be granted with respect to any calendar year
to the Covered Employee who is the chief executive officer of the
Company at the time of such grant shall be 32% of the Plan
Funding Amount for such year, the amount of the Award that may be
granted with respect to any calendar year to the Covered Employee
who is the chief operating officer of the Company at the time of
such grant shall be 23% of the Plan Funding Amount for such year,
and the amount of the Award that may be granted with respect to
any calendar year to any other Covered Employee shall be, as to
each such individual, 15% of the Plan Funding Amount for such
year.
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(b) All Awards to Covered Employees under the Plan
will be made and administered by two or more members of the
Committee who are also "outside directors" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended,
and rules promulgated by the Internal Revenue Service of the
Department of the Treasury thereunder.
(c) Any provision of the Plan to the contrary
notwithstanding, no Covered Employee shall be entitled to any
payment of an Award with respect to a calendar year unless the
members of the Committee referred to in Section 3.4(b) hereof
shall have certified the Plan Funding Amount for such year and
that the condition of Section 4.1 hereof has been met for such
year.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. Any provision of the Plan to the contrary
notwithstanding, no Award shall be made pursuant to Section 3.1
or 3.4 with respect to any calendar year if the average of the
Return on Investment for such calendar year and each of the four
preceding calendar years, after giving effect to the aggregate
amount (if any) that was awarded or credited with respect to such
prior years and the aggregate amount that would otherwise have
been so awarded or credited with respect to such calendar year,
would be less than six percent.
SECTION 4.2. (a) In determining the aggregate amount
awarded to Participants under the Plan for any calendar year, the
Committee shall consider as a guideline that the aggregate amount
of all Awards granted with respect to any calendar year should
not exceed two and one-half percent of Net Cash Provided by
Operating Activities for such year.
(b) If Managed Net Income or Total Investment of
Capital for any year shall have been affected by special factors
(including material changes in accounting policies or practices,
material acquisitions or dispositions of property, or other
unusual items) which in the Committee's judgment should or should
not be taken into account, in whole or in part, in the equitable
administration of the Plan, the Committee may, for any purpose of
the Plan, adjust Managed Net Income or Total Investment of
Capital and make payments and reductions accordingly under the
Plan.
(c) Notwithstanding the provisions of subparagraphs
(a) and (b) above, the amount available for the grant of Awards
under the Plan to Covered Employees with respect to a calendar
year shall be equal to the Plan Funding Amount for such year and
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any adjustments made in accordance with or for the purposes of
subparagraphs (a) or (b) shall be disregarded for purposes of
calculating the Plan Funding Amount. The Committee may, in the
exercise of its discretion, determine that the aggregate amount
of all Awards granted to Covered Employees with respect to a
calendar year shall be less than the Plan Funding Amount for such
year, but the excess of such Plan Funding Amount over such
aggregate amount covered by Awards granted to Covered Employees
shall not be available for any Awards to Covered Employees with
respect to future years. In addition, the Committee may, in the
exercise of its discretion, reduce or eliminate the amount of an
Award to a Covered Employee otherwise calculated in accordance
with the provisions of Section 3.4 prior to payment thereof.
SECTION 4.3. A Participant may designate in writing a
beneficiary (including the trustee or trustees of a trust) who
shall upon the death of such Participant be entitled to receive
all amounts which would have been payable hereunder to such
Participant. A Participant may rescind or change any such
designation at any time. Except as provided in this Section 4.3,
none of the amounts which may be payable under the Plan may be
assigned or transferred otherwise than by will or by the laws of
descent and distribution.
SECTION 4.4. All payments made pursuant to the Plan
shall be subject to withholding in respect of income and other
taxes required by law to be withheld, in accordance with
procedures to be established by the Committee.
SECTION 4.5. The selection of an individual for
participation in the Plan shall not give such Participant any
right to be retained in the employ of the Company or any of its
subsidiaries, and the right of the Company and of any such
subsidiary to dismiss or discharge any such Participant is
specifically reserved. The benefits provided for Participants
under the Plan shall be in addition to, and shall in no way
preclude, other forms of compensation to or in respect of such
Participants.
SECTION 4.6. The Board of Directors and the Committee
shall be entitled to rely on the advice of counsel and other
experts, including the independent public accountants for the
Company. No member of the Board of Directors or of the Committee
or any officers of the Company or its subsidiaries shall be
liable for any act or failure to act under the Plan, except in
circumstances involving bad faith on the part of such member or
officer.
SECTION 4.7. Nothing contained in the Plan shall
prevent the Company or any subsidiary or affiliate of the Company
from adopting or continuing in effect other compensation
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arrangements, which arrangements may be either generally
applicable or applicable only in specific cases.
ARTICLE V
AMENDMENT OR TERMINATION OF THE PLAN
SECTION 5.1. The Board of Directors may at any time
terminate, in whole or in part, or from time to time amend the
Plan, provided that, except as otherwise provided in the Plan, no
such amendment or termination shall adversely affect any Awards
previously made to a Participant and deferred by such Participant
pursuant to Section 3.3. In the event of such termination, in
whole or in part, of the Plan, the Committee may in its sole
discretion direct the payment to Participants of any Awards not
theretofore paid out prior to the respective dates upon which
payments would otherwise be made hereunder to such Participants,
and in a lump sum or installments as the Committee shall
prescribe with respect to each such Participant. The Board may
at any time and from time to time delegate to the Committee any
or all of its authority under this Section 5.1.
ARTICLE VI
DEFINITIONS
SECTION 6.1. For the purposes of the Plan, the
following terms shall have the meanings indicated:
(a) Award: The grant of an award of cash by the
Committee to a Participant pursuant to Section 3.1 or
3.4.
(b) Award Year: Any calendar year with respect
to which an Award may be granted.
(c) Board of Directors: The Board of Directors
of the Company.
(d) Committee: The Committee designated pursuant
to Section 2.1. Until otherwise determined by the
Board of Directors, the Corporate Personnel Committee
designated by such Board shall be the Committee under
the Plan.
(e) Covered Employee: At any date, (i) any
individual who, with respect to the previous taxable
year of the Company, was a "covered employee" of the
Company within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the
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rules promulgated thereunder by the Internal Revenue
Service of the Department of the Treasury, provided,
however, the term "Covered Employee" shall not include
any such individual who is designated by the Committee,
in its discretion, at the time of any grant as
reasonably expected not to be such a "covered employee"
with respect to the current taxable year of the Company
and (ii) any individual who is designated by the
Committee, in its discretion, at the time of any grant
as reasonably expected to be such a "covered employee"
with respect to the current taxable year of the
Company. Notwithstanding the foregoing, at any date in
fiscal year 1994, "Covered Employee" shall mean any
individual designated by the Committee, in its
discretion, at the time of any grant as reasonably
expected to be a "covered employee" with respect to the
Company's taxable year 1994.
(f) Managed Net Income: With respect to any
year, the sum of (i) the net income (or net loss) of
the Company and its consolidated subsidiaries for such
year as shown in the Company's Annual Report to
Stockholders for such year; plus (or minus) (ii) the
minority interests' share in the net income (or net
loss) of the Company's consolidated subsidiaries for
such year as shown in the Company's Annual Report to
Stockholders for such year; plus (or minus) (iii)
changes in accounting principles of the Company and its
consolidated subsidiaries for such year plus (or minus)
the minority interests' share in such changes in
accounting principles as shown in the Company's Annual
Report to Stockholders for such year; plus (iv) the
portion for such year of the deferred gain on the 1992
sale of newly issued Freeport-McMoRan Resource
Partners, Limited Partnership depositary units as shown
in the Company's Annual Report to Stockholders for such
year.
(g) Net Cash Provided by Operating Activities:
With respect to any year, the net cash provided by
operating activities of the Company and its
consolidated subsidiaries for such year as shown in the
Company's Annual Report to Stockholders for such year.
(h) Net Interest Expense: With respect to any
year, the net interest expense of the Company and its
consolidated subsidiaries for such year as shown in the
Company's Annual Report to Stockholders for such year.
(i) Participant: An individual who has been
selected by the Committee to receive an Award.
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(j) Plan Funding Amount: With respect to any
year, two and one-half percent of Net Cash Provided by
Operating Activities for such year.
(k) Return on Investment: With respect to any
year, the result (expressed as a percentage) calculated
according to the following formula:
a + (b - c)
d
in which "a" equals Managed Net Income for such year,
"b" equals Net Interest Expense for such year, "c"
equals Tax on Net Interest Expense for such year, and
"d" equals Total Investment of Capital for such year.
(l) Tax on Net Interest Expense: With respect to
any year, the tax on the net interest expense of the
Company and its consolidated subsidiaries for such year
calculated at the statutory federal income tax rate for
such year as shown in the Company's Annual Report to
Stockholders for such year.
(m) Termination of Employment: Solely for
purposes of Section 3.3 hereof, the cessation of the
rendering of services, whether or not as an employee,
to any and all of the following entities: the Company,
any subsidiary of the Company, Freeport-McMoRan Copper
& Gold Inc., any subsidiary of Freeport-McMoRan Copper
& Gold Inc., McMoRan Oil & Gas Co., any subsidiary of
McMoRan Oil & Gas Co., and any law firm rendering
services to any of the foregoing entities provided such
law firm consists of at least two or more members or
associates who are or were officers of the Company or
any subsidiary of the Company.
(n) Total Investment of Capital: With respect to
any year, the sum of (i) the weighted average of the
stockholders' equity in the Company and its
consolidated subsidiaries for such year, (ii) the
weighted average of the minority interests in the
consolidated subsidiaries of the Company for such year,
and (iii) the weighted average of the long-term debt of
the Company and its consolidated subsidiaries for such
year, all as shown in the quarterly balance sheets of
the Company and its consolidated subsidiaries for such
year.
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