SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Freeport-McMoRan Copper & Gold Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
[Logo of Freeport-McMoRan Copper & Gold Inc. appears here]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 1996
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March 21, 1996
The Annual Meeting of Stockholders of Freeport-McMoRan Copper & Gold Inc.
will be held at the office of the corporation, 1615 Poydras Street, New
Orleans, Louisiana, on Tuesday, April 30, 1996, at 9:00 a.m., for the following
purposes:
(1) To elect eight of the nineteen directors to hold office for various
terms ranging from one to three years and until their respective successors
are elected and qualified;
(2) To ratify the appointment of Arthur Andersen LLP as the independent
auditors to audit the financial statements of the corporation and its
subsidiaries for the year 1996;
(3) To act upon a proposal to amend the corporation's Annual Incentive
Plan;
(4) To act upon a proposal to amend the corporation's 1995 Long-Term
Performance Incentive Plan; and
(5) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 8, 1996, as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting.
Your vote is important. Whether or not you plan to attend the meeting, please
complete, sign and date the enclosed proxy card and return it promptly in the
enclosed envelope. Your cooperation will be appreciated.
By Order of the Board of
Directors.
Michael C. Kilanowski, Jr.
Secretary
FREEPORT-MCMORAN COPPER & GOLD INC.
1615 POYDRAS STREET
NEW ORLEANS, LOUISIANA 70112
The Annual Report to Stockholders for the year 1995, including financial
statements, is being mailed to stockholders together with these proxy materials
on or about March 21, 1996.
PROXY STATEMENT
This proxy statement is furnished in connection with a solicitation of
proxies by the Board of Directors (the "Board of Directors" or the "Board") of
Freeport-McMoRan Copper & Gold Inc. (the "Company") for use at its Annual
Meeting of Stockholders to be held on April 30, 1996, and at any adjournments
thereof (the "Meeting").
VOTING PROCEDURES
Stockholders of record at the close of business on March 8, 1996 (the "Record
Date") will be entitled to vote at the Meeting. On the Record Date there were
outstanding 77,180,781 shares of the Company's Class A Common Stock ("Class A
Common Shares"), 118,246,493 shares of the Company's Class B Common Stock
("Class B Common Shares" and together with the Class A Common Shares, the
"Common Shares"), 8,955,700 depositary shares, each representing 0.05 shares of
the Company's 7% Convertible Exchangeable Preferred Stock (the "7% Preferred
Shares"), 13,999,800 depositary shares, each representing 0.05 shares of the
Company's Step-Up Convertible Preferred Stock (the "Step-Up Preferred Shares"),
6,000,000 depositary shares, each representing 0.05 shares of the Company's
Gold-Denominated Preferred Stock (the "Gold Preferred Shares"), 4,305,580
depositary shares, each representing 0.05 shares of Gold-Denominated Preferred
Stock, Series II (the "Gold-II Preferred Shares"), and 4,760,000 depositary
shares, each representing 0.025 shares of the Company's Silver-Denominated
Preferred Stock (the "Silver Preferred Shares," collectively with the 7%
Preferred Shares, the Step-Up Preferred Shares, the Gold Preferred Shares and
the Gold-II Preferred Shares, the "Preferred Shares"). The Common Shares and
the Preferred Shares are referred to herein collectively as the "Company
Shares."
The Company's By-Laws (the "By-Laws") provide that the holders of a majority
of the Company Shares issued and outstanding and entitled to vote at the
Meeting, present in person or represented by proxy, will constitute a quorum at
the Meeting. The persons appointed by the Company to act as inspectors of
election will treat the Company Shares represented by a properly executed and
returned proxy as present at the Meeting for purposes of determining a quorum.
The Company Shares present at the Meeting that are abstained from voting or
that are the subject of broker non-votes will be counted as present for
purposes of determining a quorum.
Pursuant to a vote of shareholders and in connection with the July 1995
distribution by Freeport-McMoRan Inc. ("FTX") to its stockholders of all of the
then outstanding Class B Common Shares (the "Distribution"), the Company
amended its Certificate of Incorporation (the "Certificate") to provide that
the holders of the Class A Common Shares and Preferred Shares, voting together
as a single class, have the right to elect 20% of the Board of Directors, and
that the holders of Class B Common Shares have the right to elect 80% of the
Board of Directors. If these percentages do not yield whole numbers, the number
of directors to be elected by the holders of the Class A Common Shares and
Preferred Shares will be rounded down to the nearest whole number and the
number of directors to be elected by the holders of the Class B Common Shares
will be rounded up to the nearest whole number. The By-Laws provide that the
Company's directors will be elected by a plurality vote. Except with respect to
the election of directors, the Class A Common Shares and Class B Common Shares,
voting together as a single class, have exclusive voting rights with respect to
all matters to come before the Meeting. Each of the Company Shares entitles the
holder thereof to one vote on all matters as to which the holder is entitled to
vote. Each record holder of depositary shares representing Preferred Shares
will be entitled to instruct the depositary as to the exercise of the voting
rights pertaining to the number of Preferred Shares represented by such
holder's depositary shares. Votes cast at the Meeting will be counted by the
inspectors of election.
Because directors will be elected by a plurality vote, abstentions and broker
non-votes as to the election of directors will have no effect upon the election
of directors. All other matters to come before the Meeting require the approval
of a majority of the Common Shares present and entitled to vote at the Meeting
with respect to such matters; therefore, abstentions as to particular proposals
will have the same effect as votes against such proposals. Broker non-votes as
to particular proposals will not be deemed to be a part of the voting power
present with respect to such proposals, will not count as votes for or against
such proposals and will not be included in calculating the number of votes
necessary for approval of such proposals.
Proxies in the enclosed form are solicited by the Board of Directors to
provide an opportunity to every stockholder to vote on all matters scheduled to
come before the Meeting as to which such stockholder is entitled to vote,
whether or not he or she attends in person. If the proxies in the enclosed form
are properly executed and returned, the shares represented thereby will be
voted as specified. If no specifications are made, the proxies representing the
Common Shares will be voted in favor of the proposed nominees, for the
ratification of the appointment of auditors, for the amendments to the
Company's Annual Incentive Plan and for the amendments to the Company's 1995
Long-Term Performance Incentive Plan. If no specifications are made, proxies
representing the Preferred Shares will be voted in favor of the proposed
nominees. Any stockholder submitting a proxy may revoke that proxy or submit a
revised proxy at any time before it is voted. A stockholder may also attend the
Meeting in person and vote by ballot, thereby cancelling any proxy previously
given. Management expects no matters to be presented for action at the Meeting
other than the election of directors, the ratification of the appointment of
auditors
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and proposals to amend the Company's Annual Incentive Plan and the Company's
1995 Long-Term Performance Incentive Plan. If, however, any other matters
properly come before the Meeting, the persons named as proxies in the enclosed
form of proxy intend to vote in accordance with their judgment on the matters
presented.
PROXY SOLICITATION
The Company will pay all expenses of soliciting proxies for the Meeting. In
addition to solicitations by mail, arrangements have been made for brokers and
nominees to send proxy materials to their principals, and the Company will
reimburse them for their reasonable expenses in doing so. The Company has
retained Georgeson & Co. Inc., Wall Street Plaza, New York, New York, to assist
it in the solicitation of proxies from brokers and nominees. It is estimated
that the fees for such firm's services will be $7,500 plus its reasonable out-
of-pocket expenses. Certain employees of the Company, who will receive no
additional compensation for their services, may also solicit proxies by
telephone, telegram, telex, telecopy or personal interview.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's 1997 proxy
materials, stockholder proposals must be received by the Company no later than
November 21, 1996.
CORPORATE GOVERNANCE
The Board of Directors, which held eight meetings during 1995, has primary
responsibility for directing the management of the business and affairs of the
Company. The Board currently consists of nineteen members. To provide for
effective direction and management of the Company's business, the Board of
Directors has established five committees, including the Audit Committee, the
Nominating Committee and the Corporate Personnel Committee.
The Audit Committee reviews the Company's financial statements and exercises
general oversight with respect to the activities of the Company's independent
auditors and Controller and related matters. The Audit Committee currently
consists of Mr. Day as Chairman, and Messrs. Bruce, Coleman, Cooper, Erdahl,
Harrison, Kissinger, Lackey, Rankin, Siegel and Umene and Ms. McDonald, none of
whom is an officer or an employee of the Company or any of its subsidiaries.
The Audit Committee met three times during 1995.
The Nominating Committee makes recommendations to the Board concerning the
structure of the Board, corporate governance and proposed new members of the
Board, and nominates individuals to stand for election as directors. The
Nominating Committee will consider recommendations by the Company's
stockholders of potential nominees for election as directors. The Company's
Secretary will, upon written request from any stockholder, furnish information
concerning the procedures required to be followed in connection with such
recommendation. The
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Nominating Committee currently consists of Mr. Rankin as Chairman, and Messrs.
Clifford, Day, Moffett and Woods. The Nominating Committee was established in
1995 and held no meetings during 1995.
The Corporate Personnel Committee, which is described further below,
currently consists of Mr. Bruce as Chairman, and Messrs. Erdahl, Harrison,
Putnam, Wharton and Woods. The Corporate Personnel Committee met one time
during 1995.
During 1995 each of the current directors attended at least 75% of the
aggregate number of meetings held of the Board and Board committees on which
he or she served, except Mr. Kissinger.
ELECTION OF DIRECTORS
In connection with the Distribution, the Certificate was amended, as
discussed above, to provide that the holders of Class A Common Shares and
Preferred Shares, voting as a class, elect 20% of the Board of Directors and
that the holders of Class B Common Shares elect the remaining 80%. The Board
of Directors has fixed the number of directors at nineteen, three of whom are
to be elected by the holders of Class A Common Shares and Preferred Shares
(the "Class A Directors") and sixteen of whom are to be elected by the holders
of Class B Common Shares (the "Class B Directors").
Also in connection with the Distribution, the Certificate was amended to
classify the Board into three classes having staggered terms of office, each
class having a three-year term and with one class being elected each year. The
amended Certificate also provides that the initially appointed Class A
Directors are subject to re-election by stockholders at the first annual
meeting of stockholders after the Distribution. Accordingly, the Board is
divided into three classes of directors: Class I, which has a term expiring at
the Meeting; Class II, which has a term expiring at the 1997 annual meeting of
stockholders; and Class III, which has a term expiring at the 1998 annual
meeting of stockholders. After the initial terms, each class will be elected
to a term expiring at the third annual meeting of stockholders after their
election, except that the Class A Directors have terms expiring at the Meeting
without regard to their class designation.
The seven directors who are members of Class I, all of whose terms expire at
the Meeting and all of whom will be nominated for re-election at the Meeting
to terms expiring in 1999, are R. Leigh Clifford and Bobby E. Cooper (both of
whom are Class A Directors) and Robert W. Bruce III, Robert A. Day, Bobby Lee
Lackey, George A. Mealey and Gabrielle K. McDonald (all of whom are Class B
Directors). J. Taylor Wharton, who is a member of Class II, is also a Class A
Director and will be nominated for re-election at the Meeting to a term
expiring in 1997. The persons named as proxies in the enclosed form of proxy,
unless otherwise directed, intend to vote in that capacity for the election of
these nominees, each to serve until the annual meeting of
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stockholders at which his or her term of office expires and until a successor
has been duly elected and qualified.
In May 1995, The RTZ Corporation PLC ("RTZ") and certain of its affiliates
(the "RTZ Affiliates") entered into an agreement with the Company and FTX (the
"RTZ Agreement") under which, among other things, one of the RTZ Affiliates
acquired from FTX an aggregate of 23.9 million Class A Common Shares. Under the
RTZ Agreement, the Company granted to the RTZ Affiliates the right to submit
for nomination for election by the Company's stockholders the percentage of
directors, rounded to the nearest whole number, that is proportionately equal
to the aggregate percentage ownership by the RTZ Affiliates of all outstanding
Common Shares. The RTZ Affiliates may nominate directors either as Class A
Directors or Class B Directors, but the percentage of Class B Directors so
nominated cannot exceed the percentage of the total number of Class B Common
Shares outstanding that are owned by the RTZ Affiliates. An RTZ Affiliate
currently owns 23,931,100 Common Shares or 12.2% of the outstanding Common
Shares as of the Record Date, all of which are Class A Common Shares. In the
RTZ Agreement, the Company agreed to include the nominees submitted by the RTZ
Affiliates in the directors nominated by management for election by Company
stockholders and to refrain from taking any action that may hinder the election
of such nominees. Messrs. Clifford and Cooper are the nominees for election as
directors submitted by the RTZ Affiliates.
INFORMATION ABOUT NOMINEES AND DIRECTORS
The following table provides certain information as of December 31, 1995 with
respect to each nominee and each other director whose term will continue after
the Meeting. Unless otherwise indicated, each person has been engaged in the
principal occupation shown for the past five years.
YEAR FIRST
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS ELECTED A
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY DIRECTOR
--------------- --- ------------------------------------------------ ----------
Robert W. Bruce III 51 President, The Robert Bruce Management Co., 1995
Inc., investment managers. Managing Partner,
Steamboat Group, until 1992. President and
Chief Investment Officer of The Fund American
Companies, Inc., insurance, until 1990.
Director of National Re Corporation, FTX and
McMoRan Oil & Gas Co. ("MOXY").
R. Leigh Clifford 48 Mining Director, RTZ, a worldwide mining and 1995
smelting company. Group Executive for CRA
Limited, mining and metals producer, until
1993. Director of CRA Limited and RTZ.
Thomas B. Coleman 52 Managing Partner and Chief Executive Officer, 1995
International-Matex Tank Terminals, bulk liquid
storage. Director of FTX and MOXY.
5
YEAR FIRST
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS ELECTED A
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY DIRECTOR
--------------- --- ------------------------------------------------ ----------
Bobby E. Cooper 50 President and Chief Executive Officer of 1995
Kennecott Corporation, a management service
company. Chief Operating Officer of Kennecott
Corporation until 1993. Vice-President
Environmental Affairs of Kennecott Corporation
until 1992.
Robert A. Day 52 Chairman of the Board of Trust Company of the 1995
West, an investment management company.
Director of Mafco Consolidated Group, Inc., FTX
and MOXY.
Leland O. Erdahl 67 Private investor. President and Chief Executive 1988
Officer of Albuquerque Uranium Corp., producer
and seller of uranium concentrates, until 1992.
President and Chief Executive Officer of Stolar
Inc., mining industry services, products and
equipment, until 1991. Director of Canyon
Resources Corporation, Hecla Mining Company,
Original Sixteen to One Mine, Inc. and Uranium
Resources, Inc. Trustee of a group of John
Hancock Mutual Funds.
William B. Harrison, Jr. 52 Vice Chairman of Chemical Banking Corporation 1995
and its subsidiary, Chemical Bank. Director of
Dillard Department Stores, Inc., FTX and MOXY.
Henry A. Kissinger 72 Chairman of the Board and Chief Executive 1995
Officer, Kissinger Associates, Inc.,
international consultants. Director of American
Express Company and FTX.
Bobby Lee Lackey 58 President and Chief Executive Officer of J.S. 1995
McManus Produce Company, Inc., grower of
vegetables and shipper of fruits and
vegetables. Director of FTX and MOXY.
Rene L. Latiolais 53 Vice Chairman of the Board of the Company since 1993
1994. Commissioner of P.T. Freeport Indonesia
Company ("PT-FI"), an operating subsidiary of
the Company, since 1993. President and Chief
Executive Officer of FTX and Freeport-McMoRan
Resource Partners, Limited Partnership. Chief
Operating Officer of FTX until 1995. Executive
Vice President of FTX until 1993. Senior Vice
President of FTX until 1992. Director of FTX
and MOXY.
6
YEAR FIRST
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS ELECTED A
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY DIRECTOR
--------------- --- ------------------------------------------------ ----------
Gabrielle K. McDonald 53 Judge, International Criminal Tribunal for the 1995
Former Yugoslavia. Distinguished Visiting
Professor of Law, Texas Southern University,
Thurgood Marshall School of Law, until 1995.
Visiting Professor of Law, St. Mary's
University School of Law, and of counsel,
Walker & Satterthwaite, law firm, until 1993.
Shareholder, Matthews & Branscomb, law firm,
until 1991. Director of FTX and MOXY.
George A. Mealey 62 Director of PT-FI. President and Chief Operating 1988
Officer of the Company and Executive Vice
President of FTX until March 1, 1996.
James R. Moffett 57 Chairman of the Board and Chief Executive 1992
Officer of the Company. President Commissioner
of PT-FI. Chairman of the Board of FTX and Co-
Chairman of the Board of MOXY.
George Putnam 69 Chairman of The Putnam Investment Management 1995
Company, Inc. and of each of the members of the
Putnam group of mutual funds. Director of The
Boston Company, Inc., Boston Safe Deposit and
Trust Company, General Mills, Inc., Houghton-
Mifflin Company, Marsh-McLennan Companies Inc.,
Rockefeller Group, Inc., FTX and MOXY.
B. M. Rankin, Jr. 65 Private investor. Director of FTX and MOXY. 1995
Wolfgang F. Siegel 63 Director of Kreditanstalt fur Wiederaufbau, a 1988
bank owned by the Federal Republic of Germany
(the "FRG") and the states comprising the FRG.
Eiji Umene 70 Private consultant. President of the Japan- 1992
United States Business Council until 1995.
Executive Advisor of Nippon Steel Corporation
until 1994. Director of Schlumberger Limited.
J. Taylor Wharton 57 Chairman of the Department of Gynecology at the 1995
University of Texas M.D. Anderson Cancer
Center. Director of FTX and MOXY.
7
YEAR FIRST
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS ELECTED A
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY DIRECTOR
--------------- --- ------------------------------------------------ ----------
Ward W. Woods, Jr. 53 President and Chief Executive Officer of 1995
Bessemer Securities Corporation, private
investment firm, and Managing General Partner
of Bessemer Holdings, L.P., an industrial
holding company. Chairman of BCP/Essex Holdings
Inc., Overhead Door Incorporated and Stant
Corporation. Director of Boise Cascade
Corporation, Graphic Controls Corporation, FTX
and MOXY.
The directors of the Company who also serve as directors of FTX and MOXY
constitute a majority of the directors of each of those corporations.
DIRECTOR COMPENSATION
Each director who is not an officer or employee of the Company or any of its
subsidiaries receives: (i) an annual fee of $25,000 for serving on the Board;
(ii) a fee of $1,000 for attendance at each meeting of the Board or a Board
committee; and (iii) an annual fee of $2,000 for each Board committee of which
a director is the chairperson. Each Director who is also an officer or employee
of the Company or any of its subsidiaries receives a fee of $1,000 for
attendance at each Board meeting.
In connection with the Distribution, the Company's stockholders approved the
Company's 1995 Stock Option Plan for Non-Employee Directors (the "Non-Employee
Director Plan") and the Company's Adjusted Stock Award Plan ("the Adjusted
Stock Award Plan"). Under the Non-Employee Director Plan, each Company director
who is neither an officer or employee of the Company or any of its
subsidiaries, nor an officer or an employee of an entity with which the Company
has contracted to receive management or executive services, and who is not
otherwise eligible to participate in any of the Company's benefit plans, is
granted an option to purchase 10,000 Class B Common Shares on August 1 of each
year until the year 2004. Under the Adjusted Stock Award Plan, each eligible
holder of FTX stock options prior to the Distribution, including directors,
received adjusted FTX options and similar Company awards designed to ensure
that holders of FTX options were not penalized as a result of the Distribution.
The Company options entitle the holder to purchase a number of Class B Common
Shares equal to the number of Class B Common Shares that a holder of record of
the shares underlying such FTX options would have received in the Distribution.
The exercise prices of the original FTX options were allocated between the
adjusted FTX options and the Company options based upon the relative market
values of FTX and Class B Common Shares. The Company options are otherwise
subject to the same terms and conditions, including exercisability and
expiration, as the original FTX options to which such awards relate.
8
The following table sets forth information with respect to all stock options
and SARs granted by the Company in 1995 to each of its non-employee directors
pursuant to the terms of the Non-Employee Director Plan and the Adjusted Stock
Award Plan. Information regarding stock options and SARs granted to employee
directors is set forth in the table entitled Option/SAR Grants in 1995 under
the heading "Executive Officer Compensation."
NUMBER OF
SECURITIES UNDERLYING EXERCISABILITY EXERCISE EXPIRATION
NAME OPTIONS/SARS GRANTED DATES PRICE DATE
---- --------------------- ------------------ -------- ----------
Robert W. Bruce III 7,491 10/16/95 $16.3071 5/2/00
7,491 10/16/95 16.9329 5/2/01
7,491 10/16/95 to 5/1/96 21.0180 5/2/02
7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
Thomas B. Coleman 7,758 10/16/95 13.8698 5/2/98
7,491 10/16/95 19.3707 5/2/99
7,491 10/16/95 16.3071 5/2/00
7,491 10/16/95 16.9329 5/2/01
7,491 10/16/95 to 5/1/96 21.0180 5/2/02
7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
Robert A. Day 3,879 10/16/95 13.8698 5/2/98
7,491 10/16/95 19.3707 5/2/99
7,491 10/16/95 16.3071 5/2/00
7,491 10/16/95 16.9329 5/2/01
7,491 10/16/95 to 5/1/96 21.0180 5/2/02
7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
Leland O. Erdahl 10,000 8/1/96 to 8/1/99 26.6875 8/1/05
William B. Harrison, Jr. 7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
Henry A. Kissinger 7,491 10/16/95 19.3707 5/2/99
7,491 10/16/95 16.3071 5/2/00
7,491 10/16/95 16.9329 5/2/01
7,491 10/16/95 to 5/1/96 21.0180 5/2/02
7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
9
NUMBER OF
SECURITIES UNDERLYING EXERCISABILITY EXERCISE EXPIRATION
NAME OPTIONS/SARS GRANTED DATES PRICE DATE
---- --------------------- ------------------ -------- ----------
Bobby Lee Lackey 7,758 10/16/95 $13.8698 5/2/98
7,491 10/16/95 19.3707 5/2/99
7,491 10/16/95 16.3071 5/2/00
7,491 10/16/95 16.9329 5/2/01
7,491 10/16/95 to 5/1/96 21.0180 5/2/02
7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
Gabrielle K. McDonald 7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
George Putnam 7,758 10/16/95 13.8698 5/2/98
7,491 10/16/95 19.3707 5/2/99
7,491 10/16/95 16.3071 5/2/00
7,491 10/16/95 16.9329 5/2/01
7,491 10/16/95 to 5/1/96 21.0180 5/2/02
7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
B. M. Rankin, Jr. 7,758 10/16/95 13.8698 5/2/98
7,491 10/16/95 19.3707 5/2/99
7,491 10/16/95 16.3071 5/2/00
7,491 10/16/95 16.9329 5/2/01
7,491 10/16/95 to 5/1/96 21.0180 5/2/02
7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
Wolfgang F. Siegel 10,000 8/1/96 to 8/1/99 26.6875 8/1/05
Eiji Umene 10,000 8/1/96 to 8/1/99 26.6875 8/1/05
J. Taylor Wharton 7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
Ward W. Woods, Jr. 7,758 10/16/95 13.8698 5/2/98
7,491 10/16/95 19.3707 5/2/99
7,491 10/16/95 16.3071 5/2/00
7,491 10/16/95 16.9329 5/2/01
7,491 10/16/95 to 5/1/96 21.0180 5/2/02
7,426 10/16/95 to 5/1/97 21.2709 5/2/03
7,426 10/16/95 to 5/1/98 20.3402 5/2/04
7,017 5/1/96 to 5/1/99 20.2672 5/1/05
10,000 8/1/96 to 8/1/99 26.6875 8/1/05
10
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the ownership of the
Class A Common Shares and Class B Common Shares by (i) each director and
nominee of the Company, (ii) each executive officer for whom compensation
information is disclosed under the heading "Executive Officer Compensation" and
(iii) all directors and executive officers of the Company as a group,
determined in accordance with Rule 13d-3 of the Securities and Exchange
Commission ("SEC") based on information furnished by such persons. None of the
persons shown below beneficially owns any Preferred Shares, except for Mr.
Goodyear who owns depositary shares representing 50 Silver Preferred Shares.
Unless otherwise indicated, all information is presented as of December 31,
1995 and all shares shown are held with sole voting and investment power.
NUMBER OF CLASS A NUMBER OF CLASS B
COMMON SHARES COMMON SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) BENEFICIALLY OWNED (1)(2)
------------------------ ---------------------- -------------------------
Richard C. Adkerson 5,503(3) 246,966(3)(4)
Robert W. Bruce III 180,500(5) 594,572(5)
R. Leigh Clifford -- --
Thomas B. Coleman 13,220(6) 62,207(6)
Bobby E. Cooper -- --
Robert A. Day 384,176(7) 44,490(7)
Leland O. Erdahl 11,605(8) --
Charles W. Goodyear -- 245,896(4)(9)
William B. Harrison, Jr. 208(10) 8,515(10)
Henry A. Kissinger 240 37,027
Bobby Lee Lackey 128(11) 43,284(11)
Rene L. Latiolais 12,492 451,534(4)
Gabrielle K. McDonald 6 2,038
George A. Mealey 16,792 335,993(4)
James R. Moffett 72,868(12) 1,724,241(4)(12)
George Putnam 8,160,268(13) 3,152,309(13)
B. M. Rankin, Jr. 85,567(14) 671,549(14)
Wolfgang F. Siegel -- --
Eiji Umene -- --
J. Taylor Wharton 4,893(15) 28,609(15)
Ward W. Woods, Jr. 3,019(16) 71,521
Directors and executive
officers as a group (25
persons)(17) 8,959,525(18) 8,093,144(18)
- ---------
(1) With the exception of Mr. Moffett (who beneficially owns 1.4% of the
outstanding Class B Common Shares) and Mr. Putnam (who beneficially owns
10.0% of the outstanding Class
11
A Common Shares and 2.7% of the outstanding Class B Common Shares), each
individual holds less than 1% of the outstanding Class A Common Shares and
Class B Common Shares, respectively.
(2) Includes Class B Common Shares that could be acquired within sixty days
after December 31, 1995, upon the exercise of options granted pursuant to
Company stock option plans for the benefit of such individuals, as
follows: Mr. Adkerson, 243,745 shares; Mr. Bruce, 26,168 shares; Mr.
Coleman, 41,417 shares; Mr. Day, 37,538 shares; Mr. Goodyear, 243,745
shares; Mr. Harrison, 5,568 shares; Mr. Kissinger, 33,659 shares; Mr.
Lackey, 41,417 shares; Mr. Latiolais, 320,788 shares; Ms. McDonald, 1,856
shares; Mr. Mealey, 317,712 shares; Mr. Moffett, 771,552 shares; Mr.
Putnam, 41,417 shares; Mr. Rankin, 41,417 shares; Mr. Wharton, 5,568
shares; Mr. Woods, 41,417 shares; all directors and executive officers as
a group, 2,537,219 shares.
(3) Includes 5,503 Class A Common Shares and 628 Class B Common Shares held in
a retirement trust for the benefit of Mr. Adkerson.
(4) Includes Class B Common Shares held by the trustee under the FTX Employee
Capital Accumulation Program, as follows: Mr. Adkerson, 2,593 shares; Mr.
Goodyear, 2,107 shares; Mr. Latiolais, 11,472 shares; Mr. Mealey, 7,125
shares; Mr. Moffett, 17,098 shares; all directors and executive officers
as a group, 61,867 shares.
(5) Includes 180,000 Class A Common Shares and 561,387 Class B Common Shares
held by a limited partnership with respect to which Mr. Bruce shares
voting and investment power.
(6) Includes 13,128 Class A Common Shares and 19,478 Class B Common Shares
held by three trusts established for the benefit of Mr. Coleman's three
daughters with respect to which Mr. Coleman has sole voting and investment
power but as to which he disclaims beneficial ownership.
(7) Includes 242 Class A Common Shares, 3,368 Class B Common Shares and
383,682 Class A Common Shares that may be acquired upon the conversion of
the Step-Up Preferred Shares held by accounts and funds managed by
affiliates of a corporation of which Mr. Day is the chief executive
officer and a stockholder with respect to which he shares voting and
investment power but as to which he disclaims beneficial ownership.
(8) Includes 1,100 Class A Common Shares and 2,505 Class A Common Shares that
may be acquired upon the conversion of Step-Up Preferred Shares held in
retirement accounts for the benefit of Mr. Erdahl.
(9) Includes 44 Class B Common Shares held in a retirement trust for the
benefit of Mr. Goodyear.
(10) Includes 60 Class A Common Shares and 842 Class B Common Shares owned by
Mr. Harrison's wife.
12
(11) Includes 68 Class A Common Shares and 1,006 Class B Common Shares held in
a retirement trust for the benefit of Mr. Lackey.
(12) Includes 16,342 Class A Common Shares and 150,625 Class B Common Shares
held for the benefit of a trust with respect to which Mr. Moffett, as co-
trustee, shares voting and investment power but as to which he disclaims
beneficial ownership.
(13) Includes (i) 6,870,363 Class A Common Shares, 3,099,147 Class B Common
Shares and 1,289,073 Class A Common Shares that may be acquired upon the
conversion of Step-Up Preferred Shares held by mutual funds with respect
to which Mr. Putnam shares voting and investment power but as to which he
disclaims beneficial ownership and (ii) 160 Class A Common Shares and
2,266 Class B Common Shares held by a charitable trust with respect to
which Mr. Putnam, as co-trustee, shares voting and investment power but as
to which he disclaims beneficial ownership.
(14) Includes (i) 3,340 Class A Common Shares that may be acquired upon the
conversion of Step-Up Preferred Shares, (ii) 49,069 Class A Common Shares,
243,496 Class B Common Shares and 3,340 Class A Common Shares that may be
acquired upon the conversion of Step-Up Preferred Shares with respect to
which Mr. Rankin, under a power of attorney, has sole voting and
investment power but as to which he disclaims beneficial ownership and
(iii) 3,340 Class A Common Shares that may be acquired upon the conversion
of Step-Up Preferred Shares with respect to which Mr. Rankin, under a
power of attorney, shares investment power but as to which he disclaims
beneficial ownership.
(15) Includes (i) 420 Class A Common Shares held in a retirement trust for the
benefit of Mr. Wharton, (ii) 3,011 Class A Common Shares and 8,926 Class B
Common Shares held by Mr. Wharton's wife, (iii) 160 Class A Common Shares
held in a retirement trust for the benefit of Mr. Wharton's wife and (iv)
332 Class A Common Shares and 4,757 Class B Common Shares held by Mr.
Wharton as custodian for his daughters.
(16) Includes 218 Class A Common Shares held by a charitable foundation with
respect to which Mr. Woods shares voting and investment power but as to
which he disclaims beneficial ownership.
(17) In addition to the Company's elected executive officers, the Company
currently deems one officer of PT-FI to be an executive officer of the
Company for purposes of the federal securities laws.
(18) Represents approximately 10.9% of the outstanding Class A Common Shares
and approximately 6.7% of the outstanding Class B Common Shares,
respectively.
13
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to each person known
by the Company to be a beneficial owner of more than 5% of any class of the
Company's voting securities determined in accordance with Rule 13d-3 of the SEC
based on information furnished by such persons. Unless otherwise indicated, all
information is presented as of December 31, 1995, and all shares indicated as
beneficially owned are held with sole voting and investment power.
NUMBER OF CLASS A PERCENT NUMBER OF CLASS B PERCENT
NAME AND ADDRESS OF COMMON SHARES OF COMMON SHARES OF
PERSON BENEFICIALLY OWNED CLASS BENEFICIALLY OWNED CLASS
------------------- ------------------ ------- ------------------ -------
Putnam Investments, Inc. 9,058,346(1) 11.0% -- --
One Post Office Square
Boston, Massachusetts
02109
The RTZ Corporation PLC 23,931,100 29.7% -- --
6 St. James's Square
London SW1Y 4LD
England
Oppenheimer Group, Inc. -- -- 25,256,723(2) 21.4%
Oppenheimer Tower
World Financial Center
New York, New York 10281
- ---------
(1) Based on the Schedule 13G dated February 12, 1996 that Putnam Investments,
Inc. filed with the SEC, Putnam Investments, Inc., through its affiliates,
shares voting power with respect to 666,000 Class A Common Shares and
shares investment power with respect to all shares shown but disclaims
beneficial ownership of such shares. Of the shares shown, 1,302,182 may be
acquired upon conversion of the Step-Up Preferred Shares.
(2) Based on the Schedule 13G dated January 10, 1996 that Oppenheimer Group,
Inc. filed with the SEC, Oppenheimer Group, Inc., through its affiliates,
shares voting and investment power with respect to all shares shown but
disclaims beneficial ownership of such shares.
------------------
14
EXECUTIVE OFFICER COMPENSATION
Throughout 1995, the Chief Executive Officer and all but two of the other
executives (the "Executive Officers") were employed by FTX rather than by the
Company, and performed their duties as Executive Officers under a Management
Services Agreement pursuant to which FTX furnished executive, administrative,
financial, legal, insurance, sales and other services to the Company and its
subsidiaries (collectively, the "Company Group"). One of the other Executive
Officers was employed by PT-FI. Compensation costs paid by FTX to the Executive
Officers, including costs of FTX's benefit plans and programs in which the
Executive Officers participated, were allocated to the Company, to the extent
practicable, in proportion to the time spent by such Executive Officers on
Company Group affairs. No other payment was made by the Company to FTX for
providing such compensation and benefit plans and programs to the Executive
Officers.
The Chief Executive Officer and the four other most highly compensated
Executive Officers (the "Named Executive Officers") were employed by FTX
throughout 1995 and received compensation from FTX. The determination of which
Executive Officers were the most highly compensated was made by reference to
(i) the total annual salary and bonus paid to the Executive Officer employed by
PT-FI, (ii) the proportion of total annual salary and bonus paid to each
Executive Officer employed by FTX that was allocated to the Company pursuant to
the Management Services Agreement and (iii) the bonus for 1995 awarded to each
Executive Officer under the Company's annual incentive plan. The amount charged
by FTX to the Company Group for all services in 1995 under the Management
Services Agreement was approximately $55.5 million.
In connection with the Distribution, Company stockholders approved an annual
incentive plan, a long-term incentive plan and the Adjusted Stock Award Plan.
Following the Distribution, holders of FTX awards received adjusted FTX awards
and similar Company awards under the Adjusted Stock Award Plan during 1995 that
were designed to ensure that holders of FTX awards, including Executive
Officers, were not penalized as a result of the Distribution. These Company
options entitle the holder to purchase a number of Class B Common Shares equal
to the number of Class B Common Shares that a holder of record of the shares
underlying the original FTX options would have received in the Distribution.
The exercise prices of the original FTX options were allocated between the
adjusted FTX options and the Company options based upon the relative market
value of FTX and Class B Common Shares. The Company options are otherwise
subject to the same terms and conditions, including exercisability and
expiration, as the original FTX options to which such options relate. Adjusted
SARs were awarded on a similar basis, and transition performance awards with
performance periods that correspond to the performance periods of the FTX
performance awards held by them at the time of the Distribution were also
awarded. See the discussion under the heading "Corporate Personnel Committee
Report on Executive Compensation." No other options, SARs or performance
awards, and no salaries or other compensation were paid to Executive Officers
by the Company for 1995.
15
The following table shows compensation that the Company paid directly to the
Named Executive Officers during 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------------
ANNUAL
COMPENSATION AWARDS PAYOUTS
------------ ------------ --------
SECURITIES
NAME AND PRINCIPAL UNDERLYING LTIP ALL OTHER
POSITION YEAR BONUS OPTIONS/SARS PAYOUTS COMPENSATION(1)
------------------ ---- ------------ ------------ -------- --------------
James R. Moffett 1995 $1,819,336 2,456,799 $102,485 $2,000
Chairman of the Board 1994 -- -- -- --
and Chief Executive 1993 -- -- -- --
Officer
Richard C. Adkerson 1995 849,660 494,203 20,497 --
Executive Vice 1994 -- -- -- --
President 1993 -- -- -- --
Charles W. Goodyear 1995 722,507 478,756 20,497 --
Senior Vice President 1994 -- -- -- --
1993 -- -- -- --
George A. Mealey 1995 708,050 559,666 40,994 2,000
President and Chief 1994 -- -- -- --
Operating Officer 1993 -- -- -- --
Rene L. Latiolais 1995 632,047 735,183 40,994 2,000
Vice Chairman of the 1994 -- -- -- --
Board 1993 -- -- -- --
- ---------
(1) Comprised of director fees.
16
The following table sets forth information with respect to all stock options
and SARs granted in 1995 by the Company, all of which were granted pursuant to
the Adjusted Stock Award Plan to each of the Named Executive Officers.
OPTION/SAR GRANTS IN 1995
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED(1) 1995 PRICE DATE VALUE(2)
---- ------------ ------------ -------- ---------- -----------
James R. Moffett 231,704(3) 2.16% $18.727 5/3/99 $ 2,038,416
1,650,926(3) 15.41 15.372 1/31/00 18,155,005
574,169(4) 5.36 19.925 8/4/02 5,229,531
Rene L. Latiolais 115,849(3) 1.08 18.727 5/3/99 1,019,181
179,755(3) 1.68 15.372 1/31/00 1,976,744
344,500(4) 3.21 19.925 8/4/02 3,137,706
95,079(5) .89 18.764 12/7/03 934,864
George A. Mealey 6,057(3) .06 11.641 12/3/97 86,199
46,338(3) .43 18.727 5/3/99 407,658
162,771(3) 1.52 18.184 11/7/00 1,549,906
344,500(4) 3.21 19.925 8/4/02 3,137,706
Richard C. Adkerson 231,704(3) 2.16 17.129 3/15/99 2,254,249
114,831(4) 1.07 19.925 8/4/02 1,045,881
63,385(5) .59 18.764 12/7/03 623,233
84,283(6) .79 20.054 5/3/04 793,820
Charles W. Goodyear 216,257(3) 2.02 17.129 3/15/99 2,103,965
114,831(4) 1.07 19.925 8/4/02 1,045,881
63,385(5) .59 18.764 12/7/03 623,233
84,283(6) .79 20.054 5/3/04 793,820
- ---------
(1) The stock options and SARs will become immediately exercisable in their
entirety if (a) any persons or group of persons acquires beneficial
ownership of shares representing 20% or more of the Company's total voting
power or (b) under certain circumstances, the composition of the Board of
Directors is changed after a tender offer, exchange offer, merger,
consolidation, sale of assets or contested election or any combination
thereof. Each stock option has an equal number of tandem "limited rights,"
which may be exercisable only for a limited period in the event of a tender
offer, exchange offer, a series of purchases or other acquisitions or any
combination thereof resulting in a person or group of persons becoming a
beneficial owner of shares representing 40% or more of the Company's total
voting power. Each limited right entitles the holder to receive cash equal
to the amount by which the highest price paid in such transaction exceeds
the exercise price.
17
(2) The Black-Scholes option pricing model was used to determine the grant date
present value of the stock options and SARs granted on July 17, 1995 by the
Company to the Named Executive Officers. The following facts and
assumptions were used in making such calculation: (a) an unadjusted
exercise price for each such stock option and SAR as set forth under the
column labeled "Exercise or Base Price"; (b) a fair market value of $25.875
for one Class B Common Share on the date of grant; (c) a dividend yield of
3.5%, derived from dividing (i) $0.90, which is the value of the dividend
currently being paid on one Class B Common Share by (ii) $25.875, which is
the fair market value of one Class B Common Share on the date of grant; (d)
a term for such stock options as set forth under the column labeled
"Expiration Date"; (e) a stock volatility of 26.6%, based on an analysis of
weekly closing stock prices of Class B Common Shares; and (f) an assumed
risk-free interest rate ranging from 5.8% to 6.35%, each such rate being
equivalent to the yield on the date of grant on a treasury note with a
maturity date comparable to the expiration of such stock option. No other
discounts or restrictions related to vesting or the likelihood of vesting
of stock options or SARs were applied. The resulting grant date present
value for each stock option and SAR was multiplied by the total number of
stock options and SARs granted to each of the Named Executive Officers to
determine their total grant date present values.
(3) The stock options and SARs became exercisable on October 16, 1995.
(4) Approximately 75% of the stock options and SARs became exercisable on
October 16, 1995 and approximately 25% will become exercisable on August 4,
1996.
(5) Approximately 25% of the stock options and SARs became exercisable on
October 16, 1995, approximately 25% became exercisable on December 7, 1995,
and approximately 25% will become exercisable on each of December 7, 1996
and 1997.
(6) Approximately 25% of the stock options and SARs became exercisable on
October 16, 1995, and approximately 25% will become exercisable on each of
May 3, 1996, 1997 and 1998.
18
The following table sets forth information with respect to all outstanding
Company stock options and SARs held by each of the Named Executive Officers as
of December 31, 1995. None of the Named Executive Officers exercised Company
stock options or SARs during 1995.
OPTION/SAR VALUES AT DECEMBER 31, 1995
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS/SARS AT DECEMBER THE-MONEY OPTIONS/SARS AT
31, 1995 DECEMBER 31, 1995
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
James R. Moffett............ 2,313,251/143,548 $26,763,731/$1,177,094
Rene L. Latiolais........... 601,504/133,679 5,944,804/ 1,151,356
George A. Mealey............ 473,534/ 86,132 4,272,084/ 706,282
Richard C. Adkerson......... 370,578/123,625 3,720,625/ 1,042,368
Charles W. Goodyear......... 355,131/123,625 3,550,771/ 1,042,368
19
The following table sets forth information with respect to all long-term
incentive plan awards made in 1995 by the Company to each of the Named
Executive Officers.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1995
PERFORMANCE
NUMBER OF OR OTHER ESTIMATED FUTURE PAYOUTS
SHARES, PERIOD UNDER NON-STOCK PRICE-
UNITS UNTIL BASED PLANS(2)
OR OTHER MATURATION --------------------------
NAME RIGHTS(1) OR PAYOUT THRESHOLD TARGET MAXIMUM
---- --------- ----------- --------- -------- -------
James R. Moffett 120,570 12/31/95 N/A $102,485 N/A
120,570 12/31/96 N/A 285,751 N/A
120,570 12/31/97 N/A 469,017 N/A
120,570 12/31/98 N/A 652,284 N/A
Rene L. Latiolais 48,228 12/31/95 N/A 40,994 N/A
48,228 12/31/96 N/A 114,300 N/A
90,428 12/31/97 N/A 351,765 N/A
90,428 12/31/98 N/A 489,215 N/A
George A. Mealey 48,228 12/31/95 N/A 40,994 N/A
48,228 12/31/96 N/A 114,300 N/A
48,228 12/31/97 N/A 187,607 N/A
48,228 12/31/98 N/A 260,913 N/A
Richard C. Adkerson 24,114 12/31/95 N/A 20,497 N/A
24,114 12/31/96 N/A 57,150 N/A
48,228 12/31/97 N/A 187,607 N/A
48,228 12/31/98 N/A 260,913 N/A
Charles W. Goodyear 24,114 12/31/95 N/A 20,497 N/A
24,114 12/31/96 N/A 57,150 N/A
48,228 12/31/97 N/A 187,607 N/A
48,228 12/31/98 N/A 260,913 N/A
- ---------
(1) Represents the number of performance units covered by the Company's
adjusted performance awards grant in 1995 under the 1995 Long-Term
Performance Incentive Plan (the "Long-Term Plan"), which were granted at
the time of the Distribution and credited to the Named Executive Officer's
performance award account. As of December 31 of each year, each Named
Executive Officer's performance award account will be credited with an
amount equal to the Annual Earnings Per Share or Net Loss Per Share (as
defined in the Long-Term Plan) for that year multiplied by the number of
performance units then credited to such performance award account. Annual
Earnings Per Share or Net Loss Per Share includes the net income or net
loss of each majority-owned subsidiary of the Company that is attributable
to equity interests that are not owned by the Company. The Corporate
Personnel Committee may, however, in the exercise of its discretion, prior
to crediting the Named Executive
20
Officers' performance award accounts with respect to a particular year,
reduce or eliminate the amount of the Annual Earnings Per Share that
otherwise would be credited to any performance award account for such year.
The balance in such performance award account is generally paid as soon as
practicable on or after December 31 of the year of maturity.
(2) There are no "threshold," "target," or "maximum" amounts payable with
respect to long-term incentive plan awards. The amounts set forth in the
column labeled "Target" are representative amounts based on the adjusted
Annual Earnings Per Share for 1995, as determined by the Committee.
-----------------
CORPORATE PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In connection with the Distribution, at which time the Company became an
independent financial and operating company, the Board of Directors formed a
Corporate Personnel Committee (the "Committee") to administer the annual
incentive plan, the long-term incentive plans and the stock option plans
approved by FCX stockholders in 1995. Beginning in 1996, the Committee will
determine the base salaries and other compensation of the Chief Executive
Officer and other Executive Officers. The Committee is composed of six
independent directors, none of whom is an employee of the Company. The
Committee met once in 1995.
For 1995, the Committee reviewed the results of a comparison of 1995 Company
performance to a group of mining companies selected from those listed on the
Dow Jones Basic Materials/Other Non-Ferrous, Basic Materials/Precious Metals,
and Basic Materials/Aluminum indices (the "Peer Group"). The review was
conducted by an independent executive compensation consultant to help the
Committee ensure that overall executive compensation levels, other than base
salary, relate appropriately to Company performance when compared to
performance of the Peer Group. Provided below in the section entitled "Annual
Cash Awards" is a listing of the financial performance factors covered in this
comparison of Company performance, and a summary of the Company's operational
and strategic accomplishments during 1995 considered by the Committee.
Base Salaries
The Company did not employ, or pay base salaries to, Executive Officers
during 1995. The Executive Officers were paid salaries for 1995 by their
respective employers, and the appropriate portion of those salaries was
allocated to the Company pursuant to the Management Services Agreement, as
described under the heading "Executive Officer Compensation."
Effective January 1, 1996, base salaries for Executive Officers have been
established by the Committee after consideration of each Executive Officer's
responsibilities and market salaries for similarly situated executive officers
in other organizations. Such organizations are generally not
21
included in the Peer Group, but are organizations whose restructuring, growth
related and other activities are considered comparable to those accomplished by
the Company under the direction of the Executive Officers in recent years.
Annual Cash Awards
In 1995, stockholders approved an annual incentive plan designed to provide
incentives, in the form of annual cash awards, to senior executives whose
performance can have a major impact on the profitability and future growth of
the Company.
Under the terms of the annual incentive plan, in which the Chief Executive
Officer participates, no awards will be made for any year if the five-year
average return on investment (generally, consolidated net income divided by
consolidated stockholders' equity and long-term debt, including the minority
interests' share of subsidiaries' income and stockholders' equity) is less than
6%. During the five-year period ending in 1995, the average return on
investment was 12.6%. When determining the aggregate awards granted under the
annual incentive plan for 1995, the Committee considered as a guideline 2.5% of
net cash provided by operating activities that was earned during the portion of
1995 occurring after the Distribution, which amount is the maximum that may be
awarded under the annual incentive plan to Executive Officers whose
compensation is subject to the limitation on deductible compensation imposed by
Section 162(m) of the Internal Revenue Code ("Section 162(m)").
A performance incentive awards program was adopted by the Board of Directors
in 1995 and is designed to provide incentives in the form of annual cash awards
to certain middle managers and executives who do not participate in the annual
incentive plan described above. Each participant in the performance incentive
awards program was assigned a guideline amount, expressed as a percentage of
the base salary paid to such participant, which when combined with base salary,
was generally designed to achieve total annual cash compensation substantially
equal to 75th percentile Peer Group levels. Under the program, actual
performance incentive awards may range from zero to a multiple of the guideline
amount, with the result being that the competitive position of total annual
cash compensation for participants in the performance incentive awards program
may vary substantially from year to year depending on performance.
To determine the total amount available for incentive awards in 1995 within
the plan limits and guidelines of both plans described above, the Committee
considered certain Company financial performance factors and operational and
strategic accomplishments achieved in 1995. These performance factors were not
individually weighted.
The financial performance factors included the percentage change in net cash
provided by operating activities over the prior year, the percentage change in
total managed net income (generally, consolidated net income plus the minority
interests' share of subsidiaries' net income)
22
over the prior year, return on managed equity, and return on investment.
Results of these performance factors for 1995 were compared to the Company's
historical results during each of the last three fiscal years and to the
estimated 1995 results and the actual results during such four-year period of
the Peer Group.
Operational and strategic accomplishments of the Company and its
subsidiaries during 1995 considered by the Committee included: (i) the
establishment of strategic alliances with The RTZ Corporation, PLC, through
which RTZ agreed to fund $100 million of future exploration costs and up to
$750 million for expansion of existing productive operations; (ii) drilling
results which defined a potential "golden triangle" of mineralization which
could readily be delivered to PT-FI's existing mill and concentrator
facilities via expanding underground access drifts; (iii) the discovery of the
BO 50 zone in Block B of PT-FI's Contract of Work ("COW"), bringing the
estimated gold resource at Wabu to approximately 3 to 4 million ounces; (iv)
the confirmation of numerous igneous intercepts with mineral potential in the
Etna Bay district in Block I of the Eastern Mining Company COW; (v) the
increase in Grasberg's proved and probable recoverable reserves of
approximately 600 million metric tons of ore averaging 1.18% copper, 1.10
grams per ton gold, and 4.54 grams per ton silver; (vi) the successful
completion of the expansion of PT-FI's mining and milling capacity to 125,000
metric tons per day, seven months ahead of schedule and within budget; (vii)
the reduction in site operating costs from $14.31 per ton in 1994 to $11.71
per ton in 1995, producing a savings of over $100 million; (viii) the
production of approximately 100 million pounds of copper and 188,000 ounces of
gold above budget; (ix) the sale or completion of $263 million of
infrastructure projects; (x) substantial agreement with joint venture partners
regarding the $675 million Gresik Smelter project; (xi) the advancement of
engineering, financing, permitting and partner relations for the Gresik
Smelter project maintaining a 1998 start-up schedule as predicted at the end
of 1993, and maintaining overall project costs, now backed by a lump sum
contract, to within 5% of the 1993 estimates; (xii) the substantial completion
of RTM's $215 million smelter expansion on time and within budget; (xiii) an
increase in the Company's annual common dividend from $0.60 per share to $0.90
per share; (xiv) the completion of a $750 million credit facility; and (xv) a
32% increase in the Company's stock price from December 31, 1994 to December
31, 1995.
After reviewing these performance factors, the Committee concluded that,
collectively, financial results of the Company for 1995 exceeded the Company's
1994 results and exceeded the Peer Group median for the financial factors
considered, and that operational and strategic accomplishments exceeded
expectations. Based on its review, the Committee approved an incentive pool
for the annual incentive plan of 1.9% of net cash provided by operating
activities that was earned during the portion of 1995 occurring after the
Distribution, which is less than the amount provided for under the plan, and
each individual award under the annual incentive plan for 1995 was at or below
the individual plan guidelines. The specific amounts awarded to each of the
Executive Officers participating in the plan for 1995, including the Chief
Executive Officer,
23
are shown in the Summary Compensation Table under the heading "Executive
Officer Compensation."
Performance awards for those Executive Officers participating in the
performance incentive awards program in 1995 generally approximated 180% of
their guideline amounts.
Stock Option and Long-Term Incentives
In connection with the Distribution, Executive Officers received adjusted
stock options and SARs under the Company's Adjusted Stock Award Plan and
transition awards under the Company's 1995 Long-Term Performance Incentive
Plan. Both of these plans were approved by the Company's stockholders in 1995.
Under the Adjusted Stock Award Plan, each option to purchase shares of the
common stock of FTX was converted into an adjusted option to purchase shares of
FTX common stock and a new option to purchase shares of the Company's Class B
Common Stock. The number of shares of FTX common stock subject to the adjusted
FTX option was the same as the number of shares subject to the original FTX
option, and the number of shares of the Company's common stock subject to the
adjusted Company option was the number that a holder of the number of shares of
FTX common stock subject to the option would have received in the Distribution.
The exercise price of the original FTX option was allocated between the
adjusted FTX option and the Company option based on the relative fair market
values of the FTX common stock and the Company common stock. The adjusted
options are otherwise subject to the same vesting, expiration, and other terms
and conditions as the original FTX options to which they relate. Adjusted stock
appreciation rights ("SARs") were awarded on a similar basis. The Company also
granted the Executive Officers transition awards in amounts provided under the
1995 Long-Term Performance Incentive Plan, with performance periods that
corresponded to the remaining performance periods of the FTX performance awards
held by them at the time of the Distribution. The performance awards are earned
over a four-year performance period, with values based upon the cumulative
earnings per share of the Company.
The purpose of these adjusted and transition grants was to ensure that
holders of FTX options, SARs and performance awards were not penalized by the
Distribution and that holders of the FTX options and SARs were placed in an
equivalent position as holders of FTX common stock at the time of the
Distribution.
In 1995, stockholders also approved benefit plans providing for the grant of
stock options and long-term cash incentives, pursuant to which Executive
Officers are eligible to receive long-term incentives including stock options,
freestanding SARs and performance units. No incentives were granted under these
plans in 1995.
Under Section 162(m), no deduction by a publicly held corporation will be
allowed for compensation paid by the corporation to its most highly compensated
executive officers to the
24
extent that the amount of such compensation for the taxable year for any such
individual exceeds $1 million. Section 162(m) provides for the exclusion of
compensation that qualifies as performance based from the compensation that is
subject to such deduction limitation. It is the policy of the Company that the
components of executive compensation that are inherently performance based
should qualify for such exclusion from the deduction limitation under Section
162(m). In connection with this, the Board of Directors recommended and the
stockholders approved in 1995, the Annual Incentive Plan, the 1995 Long-Term
Performance Incentive Plan, the 1995 Stock Option Plan and the Adjusted Stock
Award Plan, which were designed to qualify compensation payable thereunder for
deductibility under Section 162(m). The Company is also seeking stockholder
approval of amendments to the Annual Incentive Plan and the 1995 Long-Term
Performance Incentive Plan at the Meeting to ensure that compensation paid
through these plans will continue to be fully deductible. The Company
anticipates that the remaining components of individual executive compensation
for each highly compensated Executive Officer that do not qualify for any
exclusion from the deduction limitation of Section 162(m) should not exceed $1
million in any given year for most such Executive Officers and should therefore
qualify for deductibility in most instances.
Robert W. Bruce III, Chairman George Putnam
Leland O. Erdahl J. Taylor Wharton
William B. Harrison, Jr. Ward W. Woods, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Corporate Personnel Committee are
Messrs. Bruce, Erdahl, Harrison, Putnam, Wharton and Woods. During 1995,
William H. Cunningham also served on the Committee until he resigned from the
Board in December 1995. No Executive Officer served in 1995 as a director or
member of the compensation committee of another entity, one of whose executive
officers served as a director of the Company or on the Company's Corporate
Personnel Committee.
25
PERFORMANCE GRAPH
The following graph compares the change in the cumulative total stockholder
return on Class A Common Shares with the cumulative total return of the
Standard & Poor's 500 Stock Index and the cumulative total return of the Dow
Jones Other Non-Ferrous Metals Group Index during 1991, 1992, 1993, 1994 and
1995.
COMPARISON OF CUMULATIVE TOTAL RETURN*
FREEPORT-MCMORAN COPPER & GOLD INC.,
S & P 500 INDEX & DOW JONES OTHER NON-FERROUS
METALS GROUP
[Performance Graph Appears Here]
1990 1991 1992 1993 1994 1995
Freeport-McMoRan Copper & Gold
Inc. $100.00 $214.17 $293.54 $344.89 $300.56 $409.85
S&P 500 $100.00 $130.47 $140.41 $154.56 $156.60 $214.86
Dow Jones Other Non-Ferrous
Metals Group $100.00 $109.28 $158.07 $161.87 $209.39 $235.07
ASSUMES $100 INVESTED ON DECEMBER
31, 1990 IN FREEPORT- McMoRan COPPER
& GOLD INC. CLASS A COMMON STOCK, [Graphic describing plot point symbols]
S&P 500 INDEX & DOW JONES OTHER NON-
FERROUS METALS GROUP
* TOTAL RETURN ASSUMES
REINVESTMENT OF DIVIDENDS
26
CERTAIN TRANSACTIONS
In 1992, FTX transferred substantially all of its domestic oil and gas
properties and real estate held for development by it and certain of its
subsidiaries to a partnership that is currently 99.8% owned by FM Properties
Inc. ("FMPO"), a corporation of which Richard C. Adkerson is an executive
officer. FTX subsequently distributed the FMPO common stock to its common
stockholders and guaranteed FMPO's debt. In connection with the Distribution,
FCX assumed a guarantee of $90 million of FMPO debt previously guaranteed by
FTX and is receiving an annual 3% fee from FTX on the amount gauranteed.
Throughout 1995, the Company and FTX were parties to a Management Services
Agreement described under the heading "Executive Officer Compensation."
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors seeks ratification by the stockholders of the Board's
appointment of Arthur Andersen LLP to act as the independent auditors of the
financial statements of the Company and its subsidiaries for the year 1996. The
Board has not determined what, if any, action would be taken should the
appointment of Arthur Andersen LLP not be ratified. One or more representatives
of the firm will be available at the Meeting to respond to appropriate
questions, and those representatives will also have an opportunity to make a
statement.
AMENDMENT OF ANNUAL INCENTIVE PLAN
The Board of Directors unanimously proposes that the stockholders approve the
amendments to the Company's Annual Incentive Plan (the "Annual Plan"). The
Annual Plan and the proposed amendments are summarized below. The summary is
qualified in its entirety by reference to the text of the Annual Plan, as it is
proposed to be amended, which is attached to this Proxy Statement as Exhibit A.
REASONS FOR PROPOSED CHANGES
The Annual Plan serves as the Company's annual cash bonus plan for its most
highly compensated executives. The proposed changes would expand the group
eligible to participate, provide the Committee with greater flexibility as to
the amounts of individual awards each year and serve to qualify awards under
the Annual Plan as performance-based compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended ("Section 162(m)").
Certain persons whose services to the Company can have a major impact on its
profitability and growth may not be employed by the Company or a subsidiary.
Instead, some such persons
27
are, or in the future may be, employed by other entities with which the Company
contracts for management, executive and legal services. In order to allow all
of the persons who can make substantial contributions to the Company's
performance to participate in the Annual Plan, the Annual Plan is proposed to
be amended to extend the eligibility provisions to include (i) providers of
executive, management and legal services, if designated as participants by the
Committee, and (ii) employees of entities in which the Company has an economic
interest, if designated as subsidiaries of the Company by the Committee for
purposes of the Annual Plan.
The proposed amendments also are intended to provide the Committee with
greater flexibility to set the level of individual awards on an annual basis,
subject to an overall per person annual limit. The Annual Plan currently sets
percentages applicable to certain executive officer positions. Under the
proposed amendments, the Committee would consider and set the percentages at
the beginning of each year.
Section 162(m) limits tax deductions for executive compensation under certain
circumstances. The limitations relate to the compensation of the Company's
chief executive officer and the four other most highly paid executive officers.
However, compensation will be tax deductible without regard to the limitation
imposed by Section 162(m) if the compensation satisfies the "performance-based"
requirements of Section 162(m). Several of the amendments summarized below are
intended to continue to qualify payments made under the Annual Plan as tax-
deductible, performance-based compensation under the provisions of Section
162(m).
SUMMARY OF THE ANNUAL INCENTIVE PLAN AS PROPOSED TO BE AMENDED
General
The stockholders originally approved the Annual Plan in 1995. The purpose of
the Annual Plan is to provide incentives for senior executives whose
performance can have a major impact on the Company's profitability and future
growth.
Administration
Awards under the Annual Plan are made by the Committee, which currently
consists of six members of the Board each of whom is a "disinterested person"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and
an "outside director" within the meaning of Section 162(m).
Eligible Participants
The Annual Plan provides that the Committee may select salaried officers or
employees of the Company or any of its subsidiaries (including officers or
employees who are also directors) to receive awards under the Annual Plan, and
determine the amounts of such awards. The proposed
28
amendments expand the group of persons eligible to receive awards to include
non-employees who provide management, executive and legal services to the
Company or a subsidiary and any person who has agreed in writing to become a
person eligible to participate within 30 days. Although all employees, officers
and non-employee service providers are eligible to receive awards, the Company
anticipates that approximately twelve officers will be considered for
participation and that only a small number of those officers will participate
in the Annual Plan. In 1996, four officers are expected to participate in the
Annual Plan. The proposed amendments also define the term "subsidiary" as (i)
any 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 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.
Performance Awards
Awards under the Annual Plan are paid from the plan funding amount (the "Plan
Funding Amount"), which is equal to two and one-half percent of the Net Cash
Provided by Operating Activities (as such term is defined in the Annual Plan)
for the year with respect to which awards are made. The Annual Plan currently
provides that the Committee may award less than the Plan Funding Amount for a
given year and gives the Committee discretion to reduce or eliminate the amount
of a participant's award. If the Plan Funding Amount exceeds the aggregate
amount awarded in any year, the excess will not be available for awards with
respect to future years. To ensure that the Annual Plan conforms with the
requirements of Section 162(m), the proposed amendments specify that any
reduction may not accrue to the benefit of any other participant in the Annual
Plan who is subject to Section 162(m). In addition, under the proposed
amendments, any adjustments to the Plan Funding Amount for material changes in
accounting policies or practices, material acquisitions or dispositions of
property, or other unusual items must be specified at the time the
participants' maximum percentages of the Plan Funding Amount are set or within
the first 90 days of the year, if permitted under Section 162(m).
The Annual Plan currently provides that, subject to the Committee's
discretion to reduce the aggregate amount of awards paid with respect to a
calendar year, the maximum percentages of the Plan Funding Amount that may be
awarded to executive officers subject to Section 162(m) are as follows: 35% to
the chief executive officer, 20% to the chief operating officer, 20% of the
chief financial officer, 15% to the chief investment officer and 10% to the
vice chairman of the board, or if there is no such individual, any other
participant subject to Section 162(m). The proposed amendments delete these
specified percentages and grant the Committee discretion to assign
participation percentages among the participants who are subject to Section
162(m) within 90 days after the beginning of the year with respect to which
such awards will be paid, subject to a maximum annual award to any one employee
of 60% of the Plan Funding Amount. This amendment is generally intended to
provide the Committee with the flexibility to determine
29
annually the level at which participants under the Annual Plan should be
compensated for their personal contributions to the Company while allowing
awards paid under the Annual Plan to continue to qualify as performance-based
compensation under Section 162(m).
Awards may not be made under the Annual Plan with respect to any calendar
year in which the average of annual "Return on Investment" (as defined in the
Annual Plan) for such year and each of the four preceding calendar years, after
giving effect to any amounts awarded or credited with respect to such prior
years and the amounts that would have been so awarded or credited with respect
to such calendar year, is less than six percent.
Subject to certification by the Committee, awards under the Annual Plan are
paid in cash by February 28 of the year following the grant of such awards,
unless a participant elects to defer some or all of such payments. The Annual
Plan provides that unpaid deferred amounts will bear interest at the prime
commercial lending rate of The Chase Manhattan Bank, N.A., and the proposed
amendments eliminate the power of the Committee to designate a different rate
other than the prime commercial lending rate of another major national bank
headquartered in New York, New York.
Termination or Amendment of Annual Plan
The Annual Plan may be terminated at any time, in whole or in part, and may
be amended from time to time by the Board or, upon delegation, by the
Committee. However, no amendment or termination may adversely affect the awards
previously made to a participant and deferred by such participant pursuant to
the Annual Plan. Certain amendments to the Annual Plan will require stockholder
approval in order for awards under the Annual Plan to continue to qualify as
performance-based compensation under Section 162(m).
30
AWARDS UNDER THE AMENDED PLAN
The following table sets forth the maximum awards under the Annual Plan, as
proposed to be amended, that could have been made with respect to 1995 to (i)
each of the Named Executive Officers, (ii) all current executive officers as a
group, (iii) all current directors who are not executive officers as a group
and (iv) all persons other than the executive officers who will be participants
in the Annual Plan during 1996, if the Annual Plan, as proposed to be amended,
had been in effect in 1995.
NEW PLAN BENEFITS
ANNUAL INCENTIVE PLAN
DOLLAR
NAME AND POSITION(1) VALUE(2)
-------------------- ----------
James R. Moffett, Chairman of the Board and Chief Executive Officer. $4,913,950
Rene L. Latiolais, Vice Chairman of the Board....................... 1,474,185
Richard C. Adkerson, Executive Vice President....................... 1,965,580
Charles W. Goodyear, Senior Vice President.......................... 1,474,185
Executive Officer Group............................................. 9,827,900
Non-Executive Officer Director Group................................ --
Non-Executive Officer Employee Group................................ --
- ---------
(1) George A. Mealey, one of the executive officers named in the Summary
Compensation Table, retired from his position as President and Chief
Operating Officer effective March 1, 1996, and will not receive any awards
under the Annual Plan, as proposed to be amended.
(2) The amounts of awards under the Annual Plan for 1996 performance will be
determined by reference to "Net Cash Provided by Operating Activities" for
1996 and are thus not determinable at this time. The amounts set forth in
this column of this table are the maximum awards that could have been made
with respect to 1995 if the Annual Plan, as proposed to be amended, had
been in effect in 1995 and if the Committee had designated the per person
percentages for 1995 that it designated in 1996.
------------------
If the proposed amendments are not approved by the stockholders, no awards
will be paid under the Annual Plan to executive officers subject to Section
162(m) for 1996. In that event, the Committee may decide to pay any such
officer a cash bonus other than the bonus provided for in the Annual Plan. In
addition, the Annual Plan, as proposed to be amended, does not preclude the
Company from adopting or continuing in effect other compensation arrangements
with Annual Plan participants.
VOTE REQUIRED FOR APPROVAL OF THE AMENDMENTS TO THE ANNUAL PLAN
Approval of the proposed amendments to the Annual Plan requires the
affirmative vote of a majority of the Common Shares present and entitled to
vote at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF THE COMMON
SHARES VOTE FOR THE PROPOSED AMENDMENTS TO THE ANNUAL PLAN.
31
AMENDMENT OF 1995 LONG-TERM PERFORMANCE INCENTIVE PLAN
The Board of Directors unanimously proposes that the stockholders approve the
amendments to the Company's 1995 Long-Term Performance Incentive Plan (the
"Long-Term Plan"). The Long-Term Plan and the proposed amendments are
summarized below. The summary is qualified in its entirety by reference to the
text of the Long-Term Plan, as it is proposed to be amended, which is attached
to this Proxy Statement as Exhibit B.
REASONS FOR THE PROPOSED CHANGES
The Long-Term Plan serves as a long-term incentive plan for senior executives
based upon Company performance over a four-year period. The proposed changes
would expand the group eligible to participate, provide the Committee with
greater flexibility as to the amounts of individual awards each year and serve
to qualify awards under the Long-Term Plan as performance-based compensation
under Section 162(m).
Certain persons whose services to the Company can have a major impact on its
profitability and growth may not be employed by the Company or a subsidiary.
Instead, some such persons are, or in the future may be, employed by other
entities with which the Company contracts for management, executive and legal
services. In order to allow all of the persons who can make substantial
contributions to the Company's performance to participate in the Long-Term
Plan, the Long-Term Plan is proposed to be amended to extend the eligibility
provisions to include (i) providers of executive, management and legal
services, if designated as participants by the Committee, and (ii) employees of
entities in which the Company has an economic interest, designated as
subsidiaries of the Company by the Committee for purposes of the Long-Term
Plan.
The proposed amendments also are intended to provide the Committee with
greater flexibility to set the level of individual awards on an annual basis,
subject to an annual per person limit. The Long-Term Plan currently fixes the
number of performance units to be granted to persons holding certain executive
officer positions. Under the proposed amendments, the Committee would determine
at the beginning of each year the number of performance units to be awarded to
participants, subject to a per person annual maximum of 250,000 units.
Section 162(m) limits tax deductions for executive compensation under certain
circumstances. The limitations relate to the compensation of the Company's
chief executive officer and the four other most highly paid executive officers.
However, certain compensation is tax deductible without regard to the
limitation imposed by Section 162(m) if the compensation satisfies the
requirements for "performance-based" compensation under Section 162(m). Several
of the amendments summarized below are intended to continue to qualify payments
made under the Long-Term Plan as tax-deductible, performance-based compensation
under the provisions of Section 162(m).
32
SUMMARY OF THE LONG-TERM PLAN AS PROPOSED TO BE AMENDED
General
The Board of Directors and the stockholders originally approved the Long-Term
Plan in 1995. The purpose of the Long-Term Plan is to provide incentive awards
for senior executives whose performance can have a major impact on the
Company's profitability and future growth.
Administration
Performance awards under the Long-Term Plan are made by the Committee, which
currently consists of six members of the Board each of whom is a "disinterested
person" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 and an "outside director" within the meaning of Section 162(m).
Eligible Participants
The Long-Term Plan provides that the Committee may select salaried officers
or employees of the Company or any of its subsidiaries (including officers or
employees who are also directors) for participation in the Long-Term Plan. The
proposed amendments expand the group of persons eligible to receive awards to
include non-employees who provide management, executive and legal services to
the Company or a subsidiary and any person who has agreed in writing to become
a person eligible to participate within 30 days. Although all employees,
officers and non-employee service providers are eligible to receive performance
awards, the Company anticipates that only approximately twenty-five officers
and fifteen employees will be considered for participation and that
approximately fifteen of those officers and ten of those employees would
participate in the Long-Term Plan. In 1996, only fifteen officers and six
employees have been designated as participants in the Long-Term Plan. The
proposed amendments also expand the definition of the term "subsidiary" to
include an entity in which the Company has a direct or indirect economic
interest that is designated as a subsidiary by the Committee. A participant may
hold more than one outstanding performance award at any time.
Performance Awards
A performance award consists of a number of performance units credited to a
performance award account for each participant. The Long-Term Plan currently
specifies the number of performance units that may be granted annually to the
chief executive officer (110,000 units), the chief operating officer (65,000
units), vice chairman of the Board (35,000 units) and other participants who
are subject to Section 162(m) (30,000 units). The proposed amendments delete
these specified amounts and grant the Committee discretion to award performance
units to participants who are subject to Section 162(m) within 90 days after
the beginning of the year, subject to a maximum annual award to any one
employee of 250,000 performance units.
33
On December 31 of each year, each performance award account is credited with
an amount equal to the "Annual Earnings Per Share" or "Net Loss Per Share," as
defined in the Long-Term Plan, for each performance unit then credited to such
account. The balance in the account is paid to the participant in cash as soon
as practicable after December 31 of the year in which the third anniversary of
the award occurs, unless, in certain cases, the participant's employment with
the Company terminates prior to that date.
Under the Long-Term Plan, the Committee may, in its sole discretion, suspend
the making of credits that otherwise would have been made to performance award
accounts belonging to all or certain participants. The Committee may also
determine that account balances will bear interest during any such suspension
period, except that under the proposed amendments, account balances of
participants subject to Section 162(m) will not bear interest.
A participant may elect to defer for up to ten years the payment of all or a
portion of any amount to which he or she has become entitled. Subject to the
Committee's discretion to establish a different rate of interest, unpaid
deferred amounts will bear interest at the prime commercial lending rate
announced from time to time by The Chase Manhattan Bank, N.A. Under the
proposed amendments, the Committee no longer will have the discretion to
specify a different rate or manner of determining the amount of interest other
than the prime commercial lending rate of a major national bank headquartered
in New York, New York.
The number of all performance units outstanding at any time under the Long-
Term Plan may not exceed 3,000,000. Performance units that have been forfeited,
or with respect to which payment has been made or deferred, are not considered
to be outstanding. No performance awards may be granted under the Long-Term
Plan after December 31, 1999.
Termination of Employment
If a participant's employment with the Company or one of its subsidiaries
terminates prior to December 31 of the year in which the third anniversary of
the award occurs for any reason other than death, disability or retirement (and
other than within two years of a change in control of the Company), the unpaid
balance in such participant's performance award account (other than amounts
that would have been paid if not deferred) is forfeited. However, unless the
participant is discharged for dishonesty or similar serious misconduct directly
related to the performance of the participant's duties, the Committee may
elect, in special mitigating circumstances, to determine that no such
forfeiture will occur. If termination of employment is by reason of death,
disability, retirement, or is within two years following a change in control,
performance award account balances will be paid to such participant as soon as
practicable after December 31 of the year in which such termination occurs. If
a participant's employment with the Company is terminated, but the participant
continues to be employed by a Related Entity, as defined in the Plan, the
participant's performance award account will continue to be credited under the
terms
34
of the Long-Term Plan as if there had been no change in the participant's
employment status. In addition, the Committee may pay a supplemental amount to
a former participant, other than a participant who is at the time of payment
subject to Section 162(m), determined as if the term of a performance award of
such former participant had been extended for up to an additional three years
after the date of such participant's termination.
Termination or Amendment of the Long-Term Plan
The Long-Term Plan may be terminated at any time, in whole or in part, and
may be amended from time to time by the Board or, upon delegation, by the
Committee. However, no such amendment or termination may adversely affect the
amounts previously credited to a participant's performance award account.
Certain amendments to the Long-Term Plan will require stockholder approval in
order for awards under the Long-Term Plan to continue to qualify as
performance-based compensation under Section 162(m).
The Long-Term Plan currently provides that the Committee may terminate the
Long-Term Plan and make a lump sum payment of unpaid performance units accrued
under the Long-Term Plan. In order to ensure that the Long-Term Plan conforms
with the requirements of Section 162(m), the proposed amendments provide that
if the Committee terminates the Long-Term Plan, any payment to a participant
who is subject to Section 162(m) with respect to accrued, unpaid performance
units must be discounted to reflect present value.
Other Changes
Several additional amendments, which are indicated in the Long-Term Plan
attached as Exhibit B hereto, are intended to conform the remainder of the
Long-Term Plan with the proposed amendments described above and to address
technical issues in connection with the Section 162(m) limitations.
35
AWARDS UNDER THE AMENDED PLAN
The following table sets forth the benefits under the Long-Term Plan, as
proposed to be amended, that have been granted, subject to stockholder approval
of the proposed amendments, to (i) each of the Named Executive Officers, (ii)
all current executive officers as a group, (iii) all current directors who are
not executive officers as a group, and (iv) all employees, other than executive
officers, as a group.
NEW PLAN BENEFITS
1995 LONG-TERM PERFORMANCE INCENTIVE PLAN
NUMBER
OF
NAME AND POSITION(1) UNITS(2)
-------------------- -------
James R. Moffett, Chairman of the Board and
Chief Executive Officer............................................... 180,000
Rene L. Latiolais, Vice Chairman of the Board.......................... 50,000
Richard C. Adkerson, Executive Vice President.......................... 75,000
Charles W. Goodyear, Senior Vice President............................. 50,000
Executive Group........................................................ 355,000
Non-Executive Director Group........................................... --
Non-Executive Officer Employee Group................................... 227,000
- ---------
(1) George A. Mealey, one of the executive officers named in the Summary
Compensation Table, retired from his position as President and Chief
Operating Officer effective March 1, 1996, and will not receive any awards
under the Long-Term Plan, as proposed to be amended.
(2) The amounts of payments that may be made with respect to performance awards
granted under the Long-Term Plan in 1996 will be determined by reference to
"Annual Earnings Per Share" or "Net Loss Per Share" for 1996, 1997, 1998
and 1999 and thus are not determinable at this time.
If the proposed amendments are not approved by the stockholders, no payment
will be made under the Long-Term Plan with respect to grants of performance
units in 1996 to executive officers subject to Section 162(m). In that event,
the Committee may decide to pay any such officer a cash bonus other than the
bonus provided for in the Long-Term Plan. In addition, the Long-Term Plan, as
proposed to be amended, does not preclude the Company from adopting or
continuing in effect other compensation arrangements with Long-Term Plan
participants.
VOTE REQUIRED FOR APPROVAL OF THE AMENDMENTS TO THE LONG-TERM PLAN
Approval of the proposed amendments to the Long-Term Plan requires the
affirmative vote of a majority of the Common Shares present and entitled to
vote at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF THE COMMON
SHARES VOTE FOR THE PROPOSED AMENDMENTS TO THE LONG-TERM PLAN.
36
EXHIBIT A
SET FORTH BELOW IS THE TEXT OF THE ANNUAL INCENTIVE PLAN OF FREEPORT-McMoRan
COPPER & GOLD INC., AS PROPOSED TO BE AMENDED. MATERIAL TO BE ADDED AS A
RESULT OF THE AMENDMENTS IS SHOWN IN BOLDFACE TYPE, AND MATERIAL TO BE
DELETED IS SHOWN IN BRACKETS.
ANNUAL INCENTIVE PLAN
OF FREEPORT-MCMORAN COPPER & GOLD INC.
ARTICLE I
Purpose of Plan
Section 1.1. The purpose of the Annual Incentive Plan of Freeport-McMoRan
Copper & Gold 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
Copper & Gold 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; provided,
however, that the Committee may not exercise any authority otherwise granted
to it hereunder if such action would have the effect of increasing the amount
of an Award to any Covered Officer. 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 [officers or employees (including officers or
employees who are also directors) of the
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Company or any of its subsidiaries] ANY OF THE FOLLOWING to receive Awards
under the Plan with respect to such year[, and determine the amount of such
Awards.] AND DETERMINE THE AMOUNTS OF SUCH AWARDS: (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 AWARD UNDER THE
PLAN.
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,
accrue interest 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 [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 Officer 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 Officer who is
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functioning as the chief executive officer of the Company at the time of such
grant shall be 35% 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
Officer who is functioning as the chief operating officer or chief financial
officer of the Company at the time of such grant shall be, as to each such
individual, 20% 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
Officer who is functioning as the chief investment officer of the Company at
the time of such grant shall be 15% 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 the Covered Officer who is the Vice Chairman of the Board of the
Company at the time of such grant or, if there is no such individual, any other
Covered Officer of the Company at the time of such grant shall be 10% of the
Plan Funding Amount for such year.]
(b) All Awards to Covered Officers 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) THE COMMITTEE SHALL ASSIGN PARTICIPANT SHARES OF THE PLAN FUNDING AMOUNT
TO THOSE COVERED OFFICERS WHOM THE COMMITTEE DESIGNATES AS PARTICIPANTS FOR
THAT AWARD YEAR (WHICH PARTICIPANT SHARES IN THE AGGREGATE MAY NOT EXCEED 100%
OF THE PLAN FUNDING AMOUNT). THE MAXIMUM ANNUAL AWARD THAT MAY BE MADE TO ANY
COVERED OFFICER FOR AN AWARD YEAR IS 60% OF THE PLAN FUNDING AMOUNT.
(D) IF THE PLAN FUNDING AMOUNT WITH RESPECT TO AN AWARD YEAR IS TO BE
ADJUSTED TO EXCLUDE THE EFFECT OF MATERIAL CHANGES IN ACCOUNTING POLICIES OR
PRACTICES, MATERIAL ACQUISITIONS OR DISPOSITIONS OF PROPERTY, OR OTHER UNUSUAL
ITEMS ON THE PLAN FUNDING AMOUNT, THE COMMITTEE MUST SO PROVIDE AT THE TIME
THAT THE PARTICIPANT SHARES OF THE PLAN FUNDING AMOUNT FOR THAT AWARD YEAR ARE
ASSIGNED OR WITHIN THE FIRST 90 DAYS OF THE AWARD YEAR, IF PERMITTED UNDER
SECTION 162(M).
[(c)](E) Any provision of the Plan to the contrary notwithstanding, no
Covered Officer 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 PARTICIPANT SHARE FOR EACH COVERED OFFICER, 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
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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 6%.
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; provided that, EXCEPT AS PROVIDED IN SECTION 3.4(D) HEREOF, the
Committee shall not take any such adjustment into account in calculating Awards
to Covered Officers if the effect of such adjustment would be to increase the
Plan Funding Amount.
(c) Notwithstanding the provisions of subparagraphs (a) and (b) above, the
amount available for the grant of Awards under the Plan to Covered Officers
with respect to a calendar year shall be equal to the Plan Funding Amount for
such year and, EXCEPT AS SPECIFIED UNDER SECTION 3.4(C), any adjustments made
in accordance with or for the purposes of subparagraphs (a) or (b) that would
have the effect of increasing the Plan Funding Amount shall be disregarded for
purposes of calculating Awards to Covered Officers. The Committee may, in the
exercise of its discretion, determine that the aggregate amount of all Awards
granted to Covered Officers 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 of Awards granted to Covered Officers shall
not be available for any Awards to Covered Officers 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 Officer otherwise
calculated in accordance with the provisions of Section 3.4 prior to payment
thereof. ANY REDUCTION OF AN AWARD SHALL NOT ACCRUE TO THE BENEFIT OF ANY OTHER
COVERED OFFICER.
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.
A-4
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 or any 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 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 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.
A-5
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 or portion thereof 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 Officer: 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 Officer" 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 or with respect to the taxable year of the Company in which any
Award will be paid to such individual.
(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 reviewed by the Company's independent auditors and released by
the Company to the public; 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 reviewed by the Company's independent
auditors and released by the Company to the public; plus (or minus) (iii)
the effect of 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 reviewed by
the Company's independent auditors and released by the Company to the
public.
(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
A-6
year as reviewed by the Company's independent auditors and released by the
Company to the public.
(h) Net Interest Expense: With respect to any year, the net interest
expense of the Company and its consolidated subsidiaries for such year as
reviewed by the Company's independent auditors and released by the Company
to the public.
(i) Participant: An individual who has been selected by the Committee to
receive an Award.
(J) PARTICIPANT SHARE: THE PERCENTAGE OF THE PLAN FUNDING AMOUNT ASSIGNED
TO A COVERED EMPLOYEE BY THE COMMITTEE.
[(j)](K) PLAN FUNDING AMOUNT: With respect to any year, two and one-half
percent of Net Cash Provided by Operating Activities for such year[;
provided, however, that the Plan Funding Amount for 1995 shall equal two
and one-half percent of the portion of Net Cash Provided by Operating
Activities that was earned during the portion of 1995 occurring after the
distribution by Freeport-McMoRan Inc. to its common shareholders of all of
the shares of Class B Common Stock of the Company then owned by it].
[(k)](L) 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.
(M) SECTION 162(M): SECTION 162(M) OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, AND RULES PROMULGATED BY THE INTERNAL REVENUE SERVICE
THEREUNDER.
(N) 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.
[(l)](O) 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 appropriate statutory income
tax rate for such year as reviewed by the Company's independent auditors.
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[(m)](P) 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 Inc., any subsidiary of
Freeport-McMoRan 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)](Q) 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, (iii) the weighted average of the redeemable preferred stock of
the Company for such year and (iv) 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.
A-8
EXHIBIT B
SET FORTH BELOW IS THE TEXT OF THE 1995 LONG-TERM PERFORMANCE INCENTIVE PLAN
OF FREEPORT-McMoRan COPPER & GOLD INC., AS PROPOSED TO BE AMENDED. MATERIAL
TO BE ADDED AS A RESULT OF THE AMENDMENTS IS SHOWN IN BOLDFACE TYPE, AND
MATERIAL TO BE DELETED IS SHOWN IN BRACKETS.
1995 LONG-TERM PERFORMANCE INCENTIVE PLAN
OF FREEPORT-MCMORAN COPPER & GOLD INC.
ARTICLE I
Purpose of Plan
Section 1.1. The purposes of the 1995 Long-Term Performance Incentive Plan
of Freeport-McMoRan Copper & Gold Inc. (the "Plan") are (i) 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 Copper & Gold Inc. (the
"Company") and its subsidiaries and (ii) to provide for the issuance of awards
relating to performance awards issued to employees and officers of Freeport-
McMoRan Inc. ("FTX"), the Company's current parent, in connection with the
Distribution.
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; provided,
however, that the Committee may not exercise any authority otherwise 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
Officer. 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.
B-1
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 [officers or employees (including officers or employees who
are also directors) of the Company or any Subsidiary] 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. In addition, the Committee will identify
Eligible Individuals for the grant of Transition Awards. Performance Awards may
be granted at different times to the same individual. No Performance Awards
shall be granted hereunder after December 31, 1999.
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. Subject to adjustment as provided in Section 3.4(d), the number
of Performance Units outstanding at any time shall not exceed 3,000,000.
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
[hereof, with respect to any], ALL Performance Awards granted [under the Plan
after December 31, 1995 the number of Performance Units covered by an annual
Performance Award that may be granted to the Covered Officer who is functioning
as the chief executive officer of the Company at the time of such grant shall
be 110,000; the number of Performance Units covered by an annual Performance
Award that may be granted to the Covered Officer who is functioning as the
chief operating officer of the Company at the time of such grant shall be
65,000; the number of Performance Units covered by an annual Performance Award
that may be granted to the Covered Officer who is the Vice Chairman of the
Board of the Company at the time of such grant shall be 35,000; and the number
of Performance Units covered by an annual Performance Award that
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may be granted to any other Covered Officer shall be, as to each such
individual, 30,000.] TO COVERED OFFICERS MUST BE GRANTED NO LATER THAN 90 DAYS
FOLLOWING THE BEGINNING OF THE PLAN YEAR. NO COVERED OFFICER MAY BE GRANTED
MORE THAN 250,000 PERFORMANCE UNITS IN ANY CALENDAR YEAR.
(b) Notwithstanding the provisions of Section 3.1, 3.2 and 3.3 hereof and
subject to adjustment as provided in Section 3.4(d), with respect to any
Transition Awards granted under the Plan during calendar year 1995, the number
of Performance Units covered by any such Transition Award that may be granted
to the Covered Officer who is functioning as the chief executive officer of the
Company at the time of such grant shall be 400,000, in such series as are
designated on Schedule A; the number of Performance Units covered by any such
Transition Award that may be granted to the Covered Officer who is functioning
as the chief operating officer of the Company at the time of such grant shall
be 160,000, in such series as are designated on Schedule A; the number of
Performance Units covered by any such Transition Award that may be granted to
the Vice Chairman of the Board of the Company at the time of such grant shall
be 230,000, in such series as are designated on Schedule A; and the number of
Performance Units covered by any such Transition Award that may be granted to
any other Covered Officer shall be, as to each such individual, 120,000, in
such series as are designated on Schedule A.
(c) All Performance Awards to Covered Officers 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.
(d) Upon effectiveness of the Plan, each number of Performance Units
specified in Section 3.3 and in paragraph (b) of this Section 3.4 shall be
multiplied by a fraction, the numerator of which is the number of shares of all
classes of common stock of the Company outstanding immediately after the
Distribution, and the denominator of which is the number of common shares of
FTX outstanding immediately prior to the Distribution.
ARTICLE IV
Credits To and Payments From Participants' Performance Award Accounts
Section 4.1. (a) Except as provided in paragraph (b), subject to the
provisions of the Plan, each Performance Unit in any Performance Award Account
of each Participant at December 31 of any year shall be credited, as of such
December 31 of each year in the Performance Period for such Performance Unit,
with an amount equal to the Annual Earnings Per Share (or Net Loss Per Share)
for such year; provided that, if in any year there shall be any outstanding Net
Loss Carryforward applicable to such Performance Unit, such Net Loss
Carryforward shall be applied to reduce any amount which would otherwise be
credited to or in respect of such Performance
B-3
Unit pursuant to this Section 4.1 in such year until such Net Loss Carryforward
has been fully so applied.
(b) With respect to Performance Units outstanding on December 31, 1995, the
credit in respect of any such Performance Unit shall equal the portion of
Annual Earnings Per Share (or Net Loss Per Share) that relates to the portion
of such year occurring after the effective date of the Distribution.
Section 4.2. (a) Subject to the provisions of the Plan, amounts credited to a
Participant's Performance Award Account in respect of Performance Units shall
be paid to such Participant as soon as practicable on or after the Award
Valuation Date with respect to such Performance Units.
(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 Officer shall be entitled to any payment with respect to any
Performance Units unless the members of the Committee referred to in Section
3.4(c) hereof shall have certified the amount of the Annual Earnings Per Share
(or Net Loss Per Share) for each year or portion thereof in the Performance
Period applicable to such Performance Units.
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 OFFICER, 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
any Performance Units granted to 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 Units
may occur, a Participant may elect, in accordance with procedures established
by the Committee, to defer, as and to the extent
B-4
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,
accrue interest 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 [or at such other rate and in such manner as shall
be determined from time to time 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) Each Performance Unit and all other amounts credited to a
Participant's Performance Award Account in respect of such Performance Unit
shall be forfeited in the event of the Discharge for Cause of such
Participant prior to the end of the Performance Period applicable to such
Performance Unit.
(c) Each Performance Unit and all other amounts credited to a
Participant's Performance Award Account in respect of such Performance Unit
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 the end of the Performance Period
applicable to such Performance Unit.
B-5
(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
amount 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 OFFICER, shall accrue
interest, 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 Officer if the effect of any such action would be to
increase the amount that would be credited to or paid from such Performance
Award Accounts.
Section 5.2. In addition to the adjustment specified in Section 3.4(d), 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.
B-6
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 Subsidiary, and the right of the Company or any 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 any Subsidiary 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
OFFICER 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.
B-7
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 Class A Common Stock, par value $.10
per share, of the Company and Class B Common Stock, par value $.10 per
share, of the Company during such year as reviewed by the Company's
independent auditors.
(b) Award Valuation Date: (I) With respect to any Performance Units
constituting a Performance Award granted after December 31, 1995, (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 and
(II) with respect to any Performance Units comprising all or a portion of
any Transition Award, (i) December 31 of the applicable year corresponding
to such Performance Unit, as set forth in Schedule A hereto in respect of
any Covered Officer, and as determined by the Committee in respect of any
other Participant, provided that in the case of any Participant such date
shall not be later than December 31 of the year in which the third
anniversary of the grant of such Performance Unit to such 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 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, otherwise than
as a result of the Distribution, beneficially own more than 20% of all
classes and series of the Company's stock outstanding, taken as a whole,
that has voting rights with respect to the election of directors of the
Company (not including any series of preferred stock of the Company that
has the right to elect directors only upon the failure of the Company to
pay dividends) 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
B-8
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: Class B Common Stock, par value $0.10 per
share, of the Company and such other Company or subsidiary securities as
may be designated from time to time by the Committee.
(g) Covered Officer: 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 Officer" 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 or with respect to the taxable year of the Company in which
payment from any Performance Award Account of such individual will be made.
(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) Distribution: The distribution by FTX to its common stockholders of
all of the Company Common Stock then owned by it.
B-9
(k) Eligible Individual: Any holder of a performance award under the 1992
Long-Term Performance Incentive Plan of FTX on the date of the
Distribution.
(l) 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 reviewed by the Company's independent auditors and released by the
Company to the public; 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 reviewed by the Company's independent auditors and
released by the Company to the public; plus (or minus) (iii) the effect of
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 reviewed by the Company's
independent auditors and released by the Company to the public.
(m) Net Loss Carryforward: With respect to any Performance Units, (i) an
amount equal to the Net Loss Per Share for any year in the applicable
Performance Period times the number of such Performance Units then
outstanding, reduced by (ii) any portion thereof which has been applied in
any prior year as provided in Section 4.1.
(n) Net Loss Per Share: The amount obtained when the calculation of
Annual Earnings Per Share results in a number that is less than zero.
(o) 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.
(p) Performance Award: The grant of Performance Units by the Committee to
a Participant pursuant to Section 3.1 or 3.4.
(q) Performance Award Account: An account established for a Participant
pursuant to Section 3.2.
(r) Performance Period: With respect to any Performance Unit, the period
beginning on January 1 of the year in which such Performance Unit was
granted and ending on the Award Valuation Date for such Performance Unit
provided that, with respect to Performance Units constituting Transition
Awards, the Performance Period shall begin on the effective date of the
Distribution.
(s) Performance Unit: A unit covered by Performance Awards granted or
subject to grant pursuant to Article III.
(t) Related Entities: The Company, any subsidiary of the Company,
Freeport-McMoRan Inc., any subsidiary of Freeport-McMoRan Inc., McMoRan Oil
& Gas Co., any subsidiary of McMoRan Oil and 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.
B-10
(u) 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.
(v) Termination of Employment: The cessation of the rendering of
services, whether or not as an employee, to any and all of the Related
Entities.
(w) Transition Award: A Performance Award granted to an Eligible
Individual during 1995 by way of adjustment to such individual's FTX 1992
Long-Term Performance Incentive Plan performance award in connection with
the Distribution.
B-11
SCHEDULE A
TRANSITION AWARDS
SCHEDULE OF AWARD VALUATION DATES
FOR TRANSITION AWARD PERFORMANCE UNITS GRANTED TO
COVERED OFFICERS DURING CALENDAR YEAR 1995
NUMBER OF AWARD
COVERED OFFICER PERFORMANCE UNITS* VALUATION DATE
--------------- --------------------- -----------------
Chief Executive Officer 100,000 (1998 series) December 31, 1998
100,000 (1997 series) December 31, 1997
100,000 (1996 series) December 31, 1996
100,000 (1995 series) December 31, 1995
Chief Operating Officer 40,000 (1998 series) December 31, 1998
40,000 (1997 series) December 31, 1997
40,000 (1996 series) December 31, 1996
40,000 (1995 series) December 31, 1995
Vice Chairman of the Board 75,000 (1998 series) December 31, 1998
75,000 (1997 series) December 31, 1997
40,000 (1996 series) December 31, 1996
40,000 (1995 series) December 31, 1995
Each Additional Covered Officer 40,000 (1998 series) December 31, 1998
40,000 (1997 series) December 31, 1997
20,000 (1996 series) December 31, 1996
20,000 (1995 series) December 31, 1995
- ---------
* To be adjusted in accordance with Section 3.4(d).
B-12
[LOGO OF RECYCLED PAPER APPEARS HERE]
FREEPORT-MCMORAN COPPER & GOLD INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERS, APRIL 30, 1996
The undersigned hereby appoints James R. Moffett, Rene L. Latiolais, and
Richard C. Adkerson as proxies, with full power of substitution, to vote the
shares of the undersigned in Freeport-McMoRan Copper & Gold Inc. at the Annual
Meeting of Stockholders to be held on Tuesday, April 30, 1996, at 9:00 a.m.,
and at any adjournment thereof, on all matters coming before the meeting. THE
PROXIES WILL VOTE: (1) AS YOU SPECIFY ON THE BACK OF THIS CARD, (2) AS THE
BOARD OF DIRECTORS RECOMMENDS WHERE YOU DO NOT SPECIFY YOUR VOTE ON A MATTER
LISTED ON THE BACK OF THIS CARD, AND (3) AS THE PROXIES DECIDE ON ANY OTHER
MATTER.
DATED ___________________________________, 1996
_______________________________________________
_______________________________________________
(SIGNATURE)
IF YOU WISH TO VOTE ON ALL MATTERS AS THE
BOARD OF DIRECTORS RECOMMENDS, PLEASE SIGN,
DATE AND RETURN THIS CARD. IF YOU WISH TO VOTE
ON ITEMS INDIVIDUALLY, PLEASE ALSO MARK THE
APPROPRIATE BOXES ON THE BACK OF THIS CARD.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
The Board of Directors recommends a Nominees for directors of Freeport-
vote FOR: McMoRan Copper & Gold Inc.
R. Leigh Clifford
Bobby E. Cooper
J. Taylor Wharton
1. Election of the nominees for directors.
[_] FOR[_] WITHHELD
[_] FOR, EXCEPT
WITHHELD FROM:
------------------------------------
2. Ratification of appointment of Arthur Andersen LLP as independent auditors.
[_] FOR[_] AGAINST[_] ABSTAIN
3. Approval of proposal to amend the Annual Incentive Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
4. Approval of proposal to amend the 1995 Long-Term Performance Incentive Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
- --------------------------------------------------------------------------------
You may specify your votes by marking the appropriate boxes on this side. You
need not mark any boxes, however, if you wish to vote all items in accordance
with the Board of Directors' recommendation. IF YOUR VOTES ARE NOT SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS AND FOR
PROPOSALS 2, 3 AND 4.
PLEASE SIGN AND DATE ON OTHER SIDE
FREEPORT-MCMORAN COPPER & GOLD INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERS, APRIL 30, 1996
The undersigned hereby appoints James R. Moffett, Rene L. Latiolais, and
Richard C. Adkerson as proxies, with full power of substitution, to vote the
shares of the undersigned in Freeport-McMoRan Copper & Gold Inc. at the Annual
Meeting of Stockholders to be held on Tuesday, April 30, 1996, at 9:00 a.m.,
and at any adjournment thereof, on all matters coming before the meeting. THE
PROXIES WILL VOTE: (1) AS YOU SPECIFY ON THE BACK OF THIS CARD, (2) AS THE
BOARD OF DIRECTORS RECOMMENDS WHERE YOU DO NOT SPECIFY YOUR VOTE ON A MATTER
LISTED ON THE BACK OF THIS CARD, AND (3) AS THE PROXIES DECIDE ON ANY OTHER
MATTER.
DATED ___________________________________, 1996
_______________________________________________
_______________________________________________
(SIGNATURE)
IF YOU WISH TO VOTE ON ALL MATTERS AS THE
BOARD OF DIRECTORS RECOMMENDS, PLEASE SIGN,
DATE AND RETURN THIS CARD. IF YOU WISH TO VOTE
ON ITEMS INDIVIDUALLY, PLEASE ALSO MARK THE
APPROPRIATE BOXES ON THE BACK OF THIS CARD.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
The Board of Directors recommends a Nominees for directors of Freeport-
vote FOR: McMoRan Copper & Gold Inc.
Robert W. Bruce III
Robert A. Day
Bobby Lee Lackey
Gabrielle K. McDonald
George A. Mealey
1. Election of the nominees for directors.
[_] FOR[_] WITHHELD
[_] FOR, EXCEPT
WITHHELD FROM:
------------------------------------
2. Ratification of appointment of Arthur Andersen LLP as independent auditors.
[_] FOR[_] AGAINST[_] ABSTAIN
3. Approval of proposal to amend the Annual Incentive Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
4. Approval of proposal to amend the 1995 Long-Term Performance Incentive Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
- --------------------------------------------------------------------------------
You may specify your votes by marking the appropriate boxes on this side. You
need not mark any boxes, however, if you wish to vote all items in accordance
with the Board of Directors' recommendation. IF YOUR VOTES ARE NOT SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS AND FOR
PROPOSALS 2, 3 AND 4.
PLEASE SIGN AND DATE ON OTHER SIDE
DEPOSITARY RECEIPTS EVIDENCING DEPOSITARY SHARES REPRESENTING PREFERRED SHARES
OF
FREEPORT-MCMORAN COPPER & GOLD INC.
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF STOCKHOLDERS, APRIL 30, 1996
The undersigned hereby instructs Chemical Mellon Shareholder Services,
L.L.C., as Depositary under the Deposit Agreement pertaining to Depositary
Shares (the "Depositary Shares") representing shares of certain preferred stock
(the "Stock") of Freeport-McMoRan Copper & Gold Inc. (the "Company"), to vote
the shares of Stock represented by Depositary Shares evidenced by Depositary
Receipts issued by the Depositary in the name of the undersigned at the Annual
Meeting of Stockholders to be held on Tuesday, April 30, 1996, at 9:00 a.m.,
and at any adjournment thereof, on all matters coming before the meeting with
respect to which the owners of shares of Stock are entitled to vote. THE
DEPOSITARY WILL (1) VOTE AS YOU SPECIFY ON THE BACK OF THIS CARD OR (2) ABSTAIN
FROM VOTING WHERE YOU DO NOT SPECIFY YOUR VOTE ON THE MATTER LISTED ON THE BACK
OF THIS CARD.
DATED _______________________, 1996
___________________________________
___________________________________
(SIGNATURE)
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE
The Board of Directors recommends a Nominees for directors of Freeport-
vote FOR: McMoRan Copper & Gold Inc.
R. Leigh Clifford
Bobby E. Cooper
J. Taylor Wharton
Election of the nominees for directors.
[_] FOR[_] WITHHELD
[_] FOR, EXCEPT
WITHHELD FROM:
- --------------------------------------------------------------------------------
You may specify your vote by marking the appropriate box above. IF YOUR VOTE IS
NOT SPECIFIED, YOUR SHARES WILL BE COUNTED AS HAVING ABSTAINED FROM VOTING.
PLEASE SIGN AND DATE ON OTHER SIDE