EXHIBIT 10.9
1992 LONG-TERM PERFORMANCE INCENTIVE PLAN
OF FREEPORT-McMoRan INC.
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. The purpose of the 1992 Long-Term Performance
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 "non-
employee director" 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; provided, however, that the Committee may
not exercise any authority granted to it hereunder if such action would
have the effect of increasing the amount of any credit to or payment from
the Performance Award Account of any Covered Employee. 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 but not limited
to the Participants, the Company and its Subsidiaries and their
respective equity holders.
ARTICLE III
ELIGIBILITY FOR AND GRANT OF PERFORMANCE AWARDS
SECTION 3.1. Subject to the provisions of the Plan, the
Committee may from time to time select any of the following to be granted
Performance Awards under the Plan, and determine the number of
Performance Units covered by each such Performance Award: (a) any person
providing services as an officer of the Company or a Subsidiary, whether
or not employed by such entity, including any person who is also a
director of the Company, (b) any salaried employee of the Company or a
Subsidiary, including any director who is also an employee of the Company
or a Subsidiary, (c) any officer or salaried employee of an entity with
which the Company has contracted to receive executive, management or
legal services who provides services to the Company or a Subsidiary
through such arrangement and (d) any person who has agreed in writing to
become a person described in clauses (a), (b) or (c) within not more than
30 days following the date of grant of such person's first Performance
Award under the Plan. Performance Awards may be granted at different
times to the same individual. The Plan shall expire on December 31,
1997 and no Performance Awards shall be granted hereunder after such
date.
SECTION 3.2. Upon the grant of a Performance Award to a
Participant, the Company shall establish a Performance Award Account for
such Participant and shall credit to such Performance Award Account the
number of Performance Units covered by such Performance Award.
SECTION 3.3. The number of Performance Units outstanding at
any time shall not exceed 500,000. Performance Units that shall have
been forfeited or with respect to which payment has been made pursuant to
Section 4.2 or deferred pursuant to Section 4.4 shall not thereafter be
deemed to be credited or outstanding for any purpose of the Plan and may
again be the subject of Performance Awards.
SECTION 3.4. (a) Notwithstanding the provisions of Section
3.1, 3.2 and 3.3, all Performance Awards granted to Covered Employees
must be granted no later than 90 days following the beginning of the Plan
Year. No Covered Employee may be granted more than 75,000 Performance
Units in any calendar year.
(b) All Performance 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.
ARTICLE IV
CREDITS TO AND PAYMENTS FROM PARTICIPANTS'
PERFORMANCE AWARD ACCOUNTS
SECTION 4.1. Subject to the provisions of the Plan, the
Performance Award Account or Accounts of each Participant at December 31
of any year shall be credited, as of such December 31, with an amount
equal to the Annual Earnings Per Share (or Net Loss Per Share) for such
year times the number of Performance Units then credited to each such
Performance Award Account; provided that, if in any year there shall be
any outstanding Net Loss Carryforward applicable to such Performance
Award Account, such Net Loss Carryforward shall be applied to reduce any
amount which would otherwise be credited to such Performance Award
Account pursuant to this Section 4.1 in such year until such Net Loss
Carryforward has been fully so applied.
SECTION 4.2. (a) Subject to the provisions of the Plan, the
balance credited to a Participant's Performance Award Account shall be
paid to such Participant as soon as practicable on or after the Award
Valuation Date with respect to such Performance Award.
(b) Payments pursuant to Section 4.2(a) shall be in cash.
(c) Notwithstanding any other provision of the Plan to the
contrary, no Covered Employee shall be entitled to any payment with
respect to a Performance Award unless the members of the Committee
referred to in Section 3.4(b) hereof shall have certified the amount of
the Annual Earnings Per Share (or Net Loss Per Share) for each year
covered by such Performance Award.
SECTION 4.3. In addition to any amounts payable pursuant to
Section 4.2, the Committee may in its sole discretion determine that
there shall be payable to a former Participant, other than a Participant
who is at the time of any payment a Covered Employee, a supplemental
amount not exceeding the excess, if any, of (i) the amount determined in
accordance with Section 4.1 which would have been payable to such former
Participant if the Award Valuation Date with respect to a Performance
Award of such Participant had been December 31 of the first, second or
third calendar year next following the year in which such Participant's
Termination of Employment occurred (the selection of such first, second
or third calendar year to be in the sole discretion of the Committee
subject only to the last sentence of this Section 4.3) over (ii) the
amount determined in accordance with said Section 4.1 as of December 31
of the calendar year in which such Termination of Employment actually
occurred. Any such supplemental amount so payable shall be paid in a
lump sum as promptly as practicable on or after December 31 of the
calendar year so selected by the Committee or in one or more installments
ending not later than five years after such December 31, as the Committee
may in its discretion direct. In no event shall any payment under this
Section 4.3 be made with respect to any calendar year after the year in
which such former Participant reaches his normal retirement date under
the Company's retirement plan.
SECTION 4.4. (a) Prior to January 1 of any calendar year in
which it is anticipated that an Award Valuation Date with respect to any
Performance Award may occur, a Participant may elect, in accordance with
procedures established by the Committee, to defer, as and to the extent
hereinafter provided, the payment of the amount, if any, which shall be
paid pursuant to Section 4.2.
(b) All payments deferred pursuant to Section 4.4(a) shall be
paid in one or more periodic installments, not in excess of ten, at such
time or times after the applicable Award Valuation Date, but not later
than ten years after such Award Valuation Date, as shall be specified in
such Participant's election pursuant to Section 4.4(a).
(c) In the case of payments deferred as provided in Section
4.4(a), the unpaid amounts shall, commencing with the applicable Award
Valuation Date, 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 by another major national bank
headquartered in New York, New York and designated by the Committee. If
subsequent to such Participant's election pursuant to Section 4.4(a) such
Participant's Termination of Employment occurs for any reason other than
death, Disability, retirement under the Company's retirement plan, or
retirement with the consent of the Company outside the Company's
retirement plan, the Committee may, in its sole discretion, pay to such
Participant in a lump sum the aggregate amount of any payments so
deferred, notwithstanding such election.
SECTION 4.5. Anything contained in the Plan to the contrary
notwithstanding:
(a) The Committee may, in its sole discretion, suspend,
permanently or for a specified period of time or until further
determination by the Committee, the making of any part or all of the
credits which would otherwise have been made to the Performance Award
Accounts of all the Participants or to such Accounts of one or more
Participants as shall be designated by the Committee.
(b) All Performance Units and other amounts credited to a
Participant's Performance Award Account with respect to or arising from
any Performance Award shall be forfeited in the event of the Discharge
for Cause of such Participant prior to December 31 of the third year
following the year of grant of such Performance Award.
(c) All Performance Units and other amounts credited to a
Participant's Performance Award Account with respect to or arising from a
Performance Award shall, unless and to the extent that the Committee
shall in its absolute discretion otherwise determine by reason of special
mitigating circumstances, be forfeited in the event that such
Participant's Termination of Employment shall occur for any reason other
than death, Disability, retirement under the Company's retirement plan,
or retirement with the consent of the Company outside the Company's
retirement plan, at any time (except within two years after the date on
which a Change in Control shall have occurred) prior to December 31 of
the third year following the year of grant of such Performance Award.
(d) If any suspension is in effect pursuant to Section 4.5(a)
on a date when a credit would otherwise have been made pursuant to
Section 4.1, the amounts which would have been credited but for such
suspension shall be forfeited and no credits shall thereafter be made in
lieu thereof. If the Committee shall so determine in its sole
discretion, the amounts theretofore credited to any Performance Award
Account or Accounts, other than any Performance Award Account of a
Covered Employee, shall be increased, during the suspension period, 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.
ARTICLE V
GENERAL INFORMATION
SECTION 5.1. If Net Income, Annual Earnings Per Share or Net
Loss Per Share 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 Net Income, Annual
Earnings Per Share or Net Loss Per Share, as the case may be, for such
year (and subsequent years as appropriate), or any combination of them,
and make credits, payments and reductions accordingly under the Plan;
provided, however, the Committee shall not have the authority to make any
such adjustments to payments with respect to the Performance Awards of,
or credits to the Performance Award Accounts of, any Participant who is
at such time a Covered Employee. Notwithstanding the foregoing, the
Committee may, in the exercise of its discretion prior to the making of
credits to the Performance Award Accounts of Participants with respect to
a particular year, reduce or eliminate the amount of the Annual Earnings
Per Share that would otherwise be credited to any Performance Award
Account of any Participant, including but not limited to any Covered
Employee, for such year in accordance with the terms of the Plan.
SECTION 5.2. The Committee shall for purposes of Articles III
and IV make appropriate adjustments in the number of Performance Units
which shall remain subject to Performance Awards and in the number of
Performance Units which shall have been credited to Participants'
accounts, in order to reflect any merger or consolidation to which the
Company is a party or any stock dividend, split-up, combination or
reclassification of the outstanding shares of Company Common Stock or any
other relevant change in the capitalization of the Company.
SECTION 5.3. 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 5.3, 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 5.4. 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 5.5. 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 such Subsidiary to dismiss or discharge any such
Participant or to terminate any arrangement pursuant to which any such
Participant provides services to the Company 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 5.6. 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 5.7. 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 arrangements, which arrangements
may be either generally applicable or applicable only in specific cases.
ARTICLE VI
AMENDMENT OR TERMINATION OF THE PLAN
SECTION 6.1. 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 the amounts credited to the
Performance Award Account of a Participant with respect to Performance
Awards previously made to such Participant. 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 amounts
specified in Article IV and 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. Notwithstanding
the foregoing, any such payment to a Covered Employee must be discounted
to reflect the present value of such payment using the rate specified in
Section 4.4(c). The Board may at any time and from time to time delegate
to the Committee any or all of its authority under this Article VI.
ARTICLE VII
DEFINITIONS
SECTION 7.1. For the purposes of the Plan, the following terms
shall have the meanings indicated:
(a) Annual Earnings Per Share: With respect to any year, the
result obtained by dividing (i) Net Income for such year by (ii) the
average number of issued and outstanding shares (excluding treasury
shares and shares held by any Subsidiaries) of Company Common Stock
during such year as shown in the Company's Annual Report to Stockholders
for such year.
(b) Award Valuation Date: With respect to any Performance
Award, (i) December 31 of the year in which the third anniversary of the
grant of such Performance Award to a Participant shall occur or, (ii) if
earlier, December 31 of the year in which such Participant's Termination
of Employment shall occur, if such Termination of Employment occurs (x)
within two years after a Change in Control or (y) as a result of death,
Disability, retirement under the Company's retirement plan or retirement
with the consent of the Company outside the Company's retirement plan.
(c) Board of Directors: The Board of Directors of the
Company.
(d) Change in Control: A Change in Control shall be deemed to
have occurred if either (i) any person, or any two or more persons acting
as a group, and all affiliates of such person or persons, shall own
beneficially more than 20% of the Company Common Stock outstanding
(exclusive of shares held in the Company's treasury or by the Company's
Subsidiaries) pursuant to a tender offer, exchange offer or series of
purchases or other acquisitions, or any combination of those
transactions, or (ii) there shall be a change in the composition of the
Board of Directors of the Company at any time within two years after any
tender offer, exchange offer, merger, consolidation, sale of assets or
contested election, or any combination of those transactions (a
"Transaction"), so that (A) the persons who were directors of the Company
immediately before the first such Transaction cease to constitute a
majority of the Board of Directors of the corporation which shall
thereafter be in control of the companies that were parties to or
otherwise involved in such first Transaction, or (B) the number of
persons who shall thereafter be directors of such corporation shall be
fewer than two-thirds of the number of directors of the Company
immediately prior to such first Transaction. A Change in Control shall
be deemed to take place upon the first to occur of the events specified
in the foregoing clauses (i) and (ii).
(e) 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.
(f) Company Common Stock: Common Stock, par value $0.01, of
the Company.
(g) 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 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 or at any subsequent time 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
or at any subsequent time 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, as reasonably expected to be a "covered employee" with
respect to the Company's taxable year 1994.
(h) Disability: In the case of any Participant, disability
which after the expiration of more than 26 weeks after its commencement
is determined to be total and permanent by a physician selected by the
Company and acceptable to such Participant or his legal representatives.
(i) Discharge for Cause: Involuntary Termination of
Employment as a result of dishonesty or similar serious misconduct
directly related to the performance of duties for any and all of the
Related Entities.
(j) 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.
(k) Net Loss Carryforward: With respect to any Performance
Award Account, (i) an amount equal to the Net Loss Per Share for any year
times the number of Performance Units then outstanding and credited to
such Performance Award Account, reduced by (ii) any portion thereof which
has been applied in any prior year as provided in Section 4.1.
(l) Net Loss Per Share: The amount obtained when the
calculation of Annual Earnings Per Share results in a number that is less
than zero.
(m) Participant: An individual who has been selected by the
Committee to receive a Performance Award and in respect of whose
Performance Award Account any amounts remain payable.
(n) Performance Award: The grant of Performance Units by the
Committee to a Participant pursuant to Section 3.1 or 3.4.
(o) Performance Award Account: An account established for a
Participant pursuant to Section 3.2.
(p) Performance Unit: A unit covered by Performance Awards
granted or subject to grant pursuant to Article III.
(q) Related 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.
(r) Subsidiary: (i) Any corporation or other entity in which
the Company possesses directly or indirectly equity interests
representing at least 50% of the total ordinary voting power or at least
50% of the total value of all classes of equity interests of such
corporation or other entity and (ii) any other entity in which the
Company has a direct or indirect economic interest that is designated as
a Subsidiary by the Committee.
(s) Termination of Employment: The cessation of the rendering
of services, whether or not as an employee, to any and all of the Related
Entities.
As amended effective December 10, 1996