SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 Section 240.14a-11(c) or Section 240.14a-12
Freeport-McMoRan Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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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(4) Date Filed:
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Notes:
[Logo of Freeport-McMoRan Appears Here]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1997
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March 21, 1997
The Annual Meeting of Stockholders of Freeport-McMoRan Inc. will be held at
the office of the corporation, 1615 Poydras Street, New Orleans, Louisiana, on
Tuesday, April 29, 1997, at 1:30 p.m., for the following purposes:
(1) To elect four of twelve directors to hold office for three years and
until their successors are respectively 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 1997; and
(3) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 7, 1997, as
the record date for the determination of stockholders entitled to notice of
and to vote at the meeting and any adjournments thereof.
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 INC.
1615 POYDRAS STREET
NEW ORLEANS, LOUISIANA 70112
The Annual Report to Stockholders for the year 1996, including financial
statements, is being mailed to stockholders together with these proxy
materials on or about March 21, 1997.
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 Inc. (the "Company") for use at its Annual Meeting of
Stockholders to be held on April 29, 1997, and at any adjournment thereof (the
"Meeting").
VOTING PROCEDURE
Stockholders of record at the close of business on March 7, 1997 (the
"Record Date") will be entitled to vote at the Meeting. On the Record Date,
there were 23,928,107 shares of common stock (the "Common Stock") outstanding,
and each of such shares will entitle the holder to one vote at the Meeting.
The Company's By-Laws (the "By-Laws") provide that the holders of a majority
of the shares of Common Stock 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 shares of Common Stock represented by a
properly executed and returned proxy as present at the Meeting for purposes of
determining a quorum. The shares of Common Stock 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.
The By-Laws provide that the Company's directors will be elected by a
plurality vote and that, except as otherwise provided by statute, the
Company's Certificate of Incorporation or the By-Laws, all other matters
coming before the Meeting will be decided by the vote of a majority of the
number of shares of Common Stock present in person or represented by proxy and
entitled to vote at the Meeting. 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 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 shares of Common Stock 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, whether or not he or she attends in person. If
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 will be voted in favor of the proposed nominees and for the
ratification of the appointment of auditors. 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 canceling any proxy previously given. Management expects no matters to
be presented for action at the Meeting other than the election of directors
and the ratification of the appointment of auditors. 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.
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 with 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 1998 proxy
materials, stockholder proposals must be received by the Company no later than
November 20, 1997.
CORPORATE GOVERNANCE
The Board of Directors, which held six meetings during 1996, has primary
responsibility for directing the management of the business and affairs of the
Company. The Board currently consists of twelve members. To provide for
effective direction and management of the Company's business, the Board of
Directors has established six 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, principal accounting officer and internal auditing group and related
matters. The Audit Committee currently consists of
2
Mr. Day as Chairman, and Messrs. Bruce, Harrison, Kissinger, Lackey and Rankin
and Ms. McDonald, none of whom is an officer or employee of the Company or any
of its subsidiaries. The Audit Committee met three times during 1996.
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 by any stockholder, furnish information
concerning the procedures required to be followed in connection with such
recommendations. The Nominating Committee currently consists of Mr. Rankin, as
Chairman, and Messrs. Day and Moffett. The Nominating Committee held two
meetings during 1996.
The Corporate Personnel Committee, which is described further below,
currently consists of Mr. Bruce as Chairman, and Messrs. Harrison, Putnam and
Wharton. The Corporate Personnel Committee met nine times during 1996.
Each of the current directors attended at least 75% of the aggregate number
of meetings held during 1996 of the Board and Board committees of which he or
she served, except Mr. Harrison.
ELECTION OF DIRECTORS
At the Meeting four directors are to be elected to a three-year term, each
to hold office until his successor is elected and qualified. The Board of
Directors consists of three classes, each having a three-year term of office,
with one class being elected each year. The persons named in the enclosed form
of proxy intend to vote such proxy, unless otherwise directed, for the
election of Messrs. Harrison, Kissinger, Latiolais and Wharton as members of
the class to serve until the 2000 Annual Meeting of Stockholders. Messrs.
Adkerson, Moffett, Putnam and Rankin and Ms. McDonald are members of the class
to serve until the 1998 Annual Meeting of Stockholders, and Messrs. Bruce, Day
and Lackey are members of the class to serve until the 1999 Annual Meeting of
Stockholders. If, contrary to present expectation, any of the nominees to be
elected at the Meeting should become unavailable for any reason, the Board of
Directors may reduce the size of the Board or votes may be cast pursuant to
the accompanying form of proxy for a substitute nominee designated by the
Nominating Committee.
INFORMATION ABOUT NOMINEES AND DIRECTORS
The following table provides certain information as of December 31, 1996,
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. If
3
the year first elected a director is prior to 1981, the person's present
continuous term of office includes a period served as a director of a
predecessor of the Company.
YEAR FIRST
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS ELECTED
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY A DIRECTOR
--------------- --- --------------------------------------------- ----------
Richard C. Adkerson 50 Vice Chairman of the Board of the Company. 1995
Senior Vice President and Chief Financial
Officer of the Company until 1995. Vice
President of the Company until 1992.
Executive Vice President and Chief Financial
Officer of Freeport-McMoRan Copper & Gold
Inc. ("FCX"). Co-Chairman of the Board and
Chief Executive Officer of McMoRan Oil & Gas
Co. ("MOXY"). Chairman of the Board and
Chief Executive Officer of FM Properties
Inc. Director of Hi-Lo Automotive, Inc.
Robert W. Bruce III 52 President, The Robert Bruce Management Co., 1989
Inc., investment managers. Managing Partner,
Steamboat Group, until 1992. Director of FCX
and MOXY.
Robert A. Day 53 Chairman of the Board of Trust Company of the 1984
West, an investment management company.
Chairman and President of W.M. Keck
Foundation. Director of Fisher Scientific
International, Inc., FCX and MOXY.
William B. Harrison, Jr. 53 Vice Chairman of The Chase Manhattan 1992
Corporation and its subsidiary, The Chase
Manhattan Bank. Director of Dillard
Department Stores, Inc., FCX and MOXY.
Henry A. Kissinger 73 Chairman of the Board and Chief Executive 1988
Officer, Kissinger Associates, Inc.,
international consultants and consultants to
the Company. Director of Revlon, Inc.,
Hollinger International Inc. and FCX.
Bobby Lee Lackey 59 President and Chief Executive Officer of J.S. 1987
McManus Produce Company, Inc., grower of
vegetables and shipper of fruits and
vegetables. Director of FCX and MOXY.
4
YEAR FIRST
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS ELECTED
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY A DIRECTOR
--------------- --- --------------------------------------------- ----------
Rene L. Latiolais 54 President and Chief Executive Officer of the 1993
Company. Chief Operating Officer of the
Company until 1995. Executive Vice President
of the Company until 1993. Senior Vice
President of the Company until 1992.
Commissioner of P.T. Freeport Indonesia
Company ("PT-FI"), an operating subsidiary
of FCX, since 1993. President and Chief
Executive Officer of Freeport-McMoRan
Resource Partners, Limited Partnership
("FRP"). Director and Vice Chairman of the
Board of FCX.
Gabrielle K. McDonald 54 Judge, International Criminal Tribunal for 1993
the 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. Director of FCX and MOXY.
James R. Moffett 58 Chairman of the Board of the Company. Chief 1969
Executive Officer until 1995. President
Commissioner of PT-FI. Chairman of the Board
and Chief Executive Officer of FCX and Co-
Chairman of the Board of MOXY.
George Putnam 70 Chairman of The Putnam Investment Management 1978
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, Houghton-Mifflin
Company, Marsh-McLennan Companies Inc.,
Rockefeller Group, Inc., FCX and MOXY.
B. M. Rankin, Jr. 66 Private investor. Consultant to the Company. 1969
Director of FCX and MOXY.
J. Taylor Wharton 58 Chairman of the Department of Gynecology at 1992
the University of Texas M.D. Anderson Cancer
Center. Director of FCX and MOXY.
The directors of the Company who also serve as directors of FCX and MOXY
constitute a majority of the directors of each of those corporations.
5
DIRECTOR COMPENSATION
Each director who is not an officer or employee of the Company or any of its
subsidiaries receives an annual fee of $20,000 and attendance fees of $1,000
for each meeting of the Board or committee attended. Each director who is also
an officer or employee of the Company or any of its subsidiaries receives
$1,000 for attending each Board meeting.
PLAN FOR DEFERRAL OF DIRECTORS' FEES
Under the 1991 Plan for Deferral of Directors' Fees (the "Deferral Plan"), a
participating director may elect to defer the payment of any director fees.
The deferred amounts are, at the direction of the participant, credited to one
or two accounts in specified percentages. Fees credited to the deferred cash
account earn interest at a rate equal to the prime lending rate announced from
time to time by The Chase Manhattan Bank, compounded quarterly. Fees credited
to the deferred stock account are converted to stock units relating to Common
Stock and earn dividend equivalents relating to dividends on Common Stock.
Dividend equivalents credited are converted into additional stock units
determined on the basis of the fair market value of Common Stock. One or more
cash payments of the total amounts credited to a participant's accounts will
be made following the cessation of the participant's service as a director of
the Company, in accordance with a payment schedule selected by the
participant.
RETIREMENT PLAN FOR NON-OFFICER DIRECTORS
The Company has a retirement plan for the benefit of non-officer directors
who reach age sixty-five. Under the retirement plan, an eligible director will
be entitled to an annual benefit equal to a percentage of the standard portion
of the annual fee for a director at the time of his or her retirement. The
amount of such percentage, which is at least 50% but not greater than 100%,
will depend on the number of years the retiree served as a non-officer
director of the Company or its predecessors. The benefit is payable from the
date of retirement until the retiree's death.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Each director who is not an employee of the Company is eligible for the
grant of options under the 1988 Stock Option Plan for Non-Employee Directors
(the "1988 Plan"). On May 1 of each year through 1997, each eligible director
will be granted a non-qualified option to purchase 1,664 shares of Common
Stock at 100% of the fair market value of such shares on the date of grant.
Each option granted under the 1988 Plan expires ten years after the date of
grant. In accordance with the 1988 Plan, on May 1, 1996, each non-employee
director was granted an option to purchase 1,664 shares of Common Stock at an
exercise price of $36.6875. During 1996 none of the current non-employee
directors exercised options granted under the 1988 Plan.
6
DIRECTORS' CHARITABLE GIFT PROGRAM
Until February 1996, each director was entitled under the Company's
Directors' Charitable Gift Program to designate up to four eligible charities
to receive a donation in the aggregate amount of $1,000,000 from the Company
upon the director's death, provided the termination of the director's service
occurred as a result of death, disability, retirement or a change in the
composition of the Board after certain corporate transactions. Eligible
charities included educational institutions, educational associations,
educational funds, cultural institutions, social service community
organizations, hospital organizations and environmental organizations. The
program was funded by Company assets and life insurance policies on the lives
of the directors purchased and owned by the Company.
In February 1996 the Company terminated the program (except with respect to
one former director) in conjunction with the establishment of the Freeport-
McMoRan Foundation (the "Foundation"), and transferred to the Foundation all
of the life insurance policies previously purchased by the Company. The
Foundation has no obligation to make gifts to designated institutions upon the
death of individual directors but, in consideration for the transfer to the
Foundation of the life insurance policies, the Company has requested that the
Foundation consider directors' requests.
MATCHING GIFTS PROGRAM
The Foundation administers a matching gifts program in which the Company
participates. The program is available to the Company's directors, officers,
employees, full-time consultants and retirees. Under the program, the
Foundation will match gifts made by a participant to eligible institutions,
including educational institutions, educational associations, educational
funds, cultural institutions, social service community organizations, hospital
organizations and environmental organizations. The Foundation provides the
gifts directly to the institution. The Foundation double matches gifts by a
director not in excess of $1,000 and gifts by any other participant not in
excess of $500. The annual amount of Company matching gifts for any director
may not exceed $40,000, and for any other participant may not exceed $20,000.
The matching gifts made by the Foundation on behalf of the Company in 1996 for
each of the participating directors were as follows: $40,000 for Mr. Adkerson;
$40,000 for Mr. Bruce; $28,200 for Mr. Harrison; $38,500 for Mr. Kissinger;
$9,775 for Mr. Lackey; $3,675 for Mr. Latiolais; $2,000 for Ms. McDonald;
$40,000 for Mr. Moffett; $40,000 for Mr. Putnam; $26,170 for Mr. Rankin; and
$4,500 for Mr. Wharton.
SECURITIES OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the ownership of the
Company's Common Stock and depositary units representing limited partnership
interests in FRP ("FRP Units") 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
7
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. The Company serves as a managing
general partner of FRP and, as of December 31, 1996, owned approximately 51.6%
of the outstanding partnership interests of FRP. Unless otherwise indicated,
all information is presented as of December 31, 1996 and all shares or units
shown are held with sole voting and investment power.
NUMBER OF SHARES OF
COMMON STOCK NUMBER OF FRP UNITS
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1)(2) BENEFICIALLY OWNED(1)
------------------------ ------------------------ --------------------
Richard C. Adkerson 23,726(3)(4) --
Robert W. Bruce III 934,620(5) --
Robert A. Day 11,505 62
Charles W. Goodyear 68,459(3)(6) --
William B. Harrison, Jr. 3,317(7) --
W. Russell King 18,645 990
Henry A. Kissinger 10,533 --
Bobby Lee Lackey 12,017(8) 85(8)
Rene L. Latiolais 122,886(3) 707(9)
Gabrielle K. McDonald 1,339 --
James R. Moffett 280,298(3)(10) 39,600(10)
George Putnam 14,364(11) --
B.M. Rankin, Jr. 161,235(12) --
J. Taylor Wharton 8,087(13) 15,080(13)
All directors and executive
officers as a group
(17 persons) 1,703,475(14) 70,797(14)
- - ---------
(1) With the exception of Mr. Bruce (who beneficially owns 3.9% of the
outstanding Common Stock) and Mr. Moffett (who beneficially owns 1.2% of
the outstanding Common Stock), each individual holds less than 1% of the
outstanding Common Stock and FRP Units, respectively.
(2) Includes shares that could be acquired within sixty days after December
31, 1996, upon the exercise of options granted pursuant to the Company's
stock option plans, as follows: Mr. Adkerson, 12,862 shares; Mr. Bruce,
7,954 shares; Mr. Day, 10,654 shares; Mr. Goodyear, 67,729 shares; Mr.
Harrison, 2,617 shares; Mr. King, 7,508 shares; Mr. Kissinger, 9,733
shares; Mr. Lackey, 11,575 shares; Mr. Latiolais, 64,771 shares; Ms.
McDonald, 1,296 shares; Mr. Moffett, 22,729 shares; Mr. Putnam, 11,575
shares; Mr. Rankin, 11,575 shares; Mr. Wharton, 2,617 shares; all
directors and executive officers as a group, 275,995 shares.
(3) Includes shares held by the trustee under the Company's Employee Capital
Accumulation Program for the benefit of such individuals, as follows: Mr.
Adkerson, 838 shares; Mr. Goodyear, 720 shares; Mr. Latiolais, 3,009
shares; Mr. Moffett, 4,318 shares.
8
(4) Includes 149 shares held in a retirement trust for the benefit of Mr.
Adkerson.
(5) Includes 925,000 shares held by a limited partnership with respect to
which Mr. Bruce shares voting and investment power.
(6) Includes 10 shares held in a retirement trust for the benefit of Mr.
Goodyear.
(7) Includes 200 shares owned by Mr. Harrison's wife.
(8) Includes 239 shares of Common Stock and 25 FRP Units held in a retirement
trust for the benefit of Mr. Lackey and 60 FRP Units held for the benefit
of Mr. Lackey under the FRP Reinvestment Plan.
(9) Includes 573 FRP Units held for the benefit of Mr. Latiolais under the
FRP Reinvestment Plan.
(10) Includes 26,624 shares of Common Stock and 39,600 FRP Units held for the
benefit of trusts with respect to which Mr. Moffett, as a co-trustee,
shares voting and investment power but as to which he disclaims
beneficial ownership.
(11) Includes 538 shares of Common Stock held by a charitable trust with
respect to which Mr. Putnam, as co-trustee, shares voting and investment
power but as to which Mr. Putnam disclaims beneficial ownership.
(12) Includes 57,831 shares of Common Stock with respect to which Mr. Rankin
has sole voting and investment power under a power of attorney but as to
which he disclaims beneficial ownership.
(13) Includes 2,119 shares of Common Stock and 14,000 FRP Units held by Mr.
Wharton's wife and 1,129 shares of Common Stock held by Mr. Wharton as
custodian for his daughters. Includes 1,080 FRP Units held under the FRP
Reinvestment Plan as follows: 469 FRP Units for the benefit of Mr.
Wharton, 325 FRP Units for the benefit of Mr. Wharton's wife and 286 FRP
Units for the benefit of Mr. Wharton as custodian for his daughters.
(14) Represents approximately 7.0% of the outstanding Common Stock and less
than 1% of the outstanding FRP Units.
9
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the ownership of the
Company's Common Stock by each person known to the Company to be a beneficial
owner of more than 5% of the outstanding Common Stock, 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, 1996, and all shares indicated as beneficially owned are held
with sole voting and investment power.
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED OF CLASS
---------------- ------------------ --------
David J. Greene and Company 1,728,782(1) 7.1%
599 Lexington Avenue
New York, New York 10022
Merrill Lynch & Co., Inc. 4,317,511(2) 17.8%
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Oppenheimer Group, Inc. 2,267,884(3) 9.4%
Oppenheimer Tower
World Financial Center
New York, New York 10281
The Equitable Companies Incorporated 1,855,875(4) 7.7%
787 Seventh Avenue
New York, New York 10019
- - ---------
(1) Based on the Schedule 13G dated February 7, 1997 that David J. Greene and
Company filed with the SEC. David J. Greene and Company has sole voting
and investment power with respect to 76,075 shares, shares voting power
with respect to 1,069,424 shares and shares investment power with respect
to 1,652,707 shares.
(2) Based on the Schedule 13G dated February 13, 1997 that Merrill Lynch &
Co., Inc. filed with the SEC. Merrill Lynch & Co., Inc., through its
affiliates, shares voting and investment power with respect to all shares
shown but disclaims beneficial ownership of such shares.
(3) Based on the Schedule 13G dated January 15, 1997 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.
(4) Based on the Schedule 13G dated February 12, 1997 that The Equitable
Companies Incorporated filed with the SEC. The Equitable Companies
Incorporated, through its affiliates, has sole voting power with respect
to 1,649,410 shares, shares voting power with respect to 117,000 shares
and has sole investment power with respect to all shares shown but
disclaims beneficial ownership of such shares.
------------------
10
EXECUTIVE OFFICER COMPENSATION
The following table sets forth certain information regarding the
compensation that the Company paid to its chief executive officer and each of
its four most highly compensated executive officers (with respect to salary
and bonus only) other than the chief executive officer (collectively, the
"Named Executive Officers"). During 1996, the Named Executive Officers also
provided services to and received compensation from FCX.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ------------ --------
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS PAYOUTS COMPENSATION(2)
------------------ ---- ---------- ---------- --------------- ------------ -------- ---------------
James R. Moffett 1996 $ 180,556 $1,025,000 $ 60,464(3) 330,000 $614,151 $ 19,333
Chairman of the 1995 1,250,000 2,480,664 499,822(3) -- 730,988 100,308
Board 1994 1,250,000 3,149,900 538,418(3) -- 566,500 83,553
Rene L. Latiolais 1996 630,000 1,955,000 137,951(4) 385,000 245,651 44,543
President and Chief 1995 700,000 2,167,953 69,305(4) -- 292,388 50,825
Executive Officer 1994 700,000 2,263,900 85,464(4) -- 226,600 44,303
Richard C. Adkerson 1996 102,273 567,000 3,811 90,000 122,826 13,320(6)
Vice Chairman of 1995 500,000 950,340 89,617(5) -- 146,194 39,346(6)
the Board 1994 500,000 1,476,500 8,914 110,100 113,300 31,830(6)
Charles W. Goodyear(7) 1996 350,000 689,000 3,301 220,000 122,826 17,500
Executive Vice 1995 500,000 1,077,493 3,494 -- 146,194 25,000
President 1994 500,000 1,476,500 6,113 110,100 113,300 23,250
W. Russell King 1996 150,000 162,500 5,546 4,000 36,850 8,207
Senior Vice President 1995 300,000 300,000 11,092 -- 43,860 16,416
1995 300,000 268,200 9,757 107,600 50,985 13,457
- - ---------
(1) In addition to items disclosed in notes 3, 4 and 5, includes the Company's
payments of taxes in connection with certain benefits the Company provided
to each Named Executive Officer in the following respective amounts for
1996, 1995 and 1994: Mr. Moffett, $6,552, $40,422 and $38,398; Mr.
Latiolais, $39,121, $26,496 and $23,402; Mr. Adkerson $3,811, $32,909 and
$8,914; Mr. Goodyear, $3,301, $3,494 and $6,113; and Mr. King, $5,546,
$11,092 and $9,757. Does not include perquisites that the Company provided
to each Named Executive Officer unless the aggregate amount in any year
exceeded $50,000.
11
(2) Comprised of the Company's contributions to defined contribution plans,
the Company's premium payments for universal life insurance policies and
director fees as follows:
LIFE
PLAN INSURANCE DIRECTOR
NAME YEAR CONTRIBUTIONS PREMIUMS FEES
---- ---- ------------- --------- --------
Mr. Moffett 1996 $ 9,027 $ 4,306 $6,000
1995 62,500 29,808 8,000
1994 60,766 15,787 7,000
Mr. Latiolais 1996 31,500 7,043 6,000
1995 35,000 7,825 8,000
1994 33,273 5,030 6,000
Mr. Adkerson 1996 5,114 483 6,000
1995 25,000 2,646 4,000
1994 23,250 1,180 --
Mr. Goodyear 1996 17,500 -- --
1995 25,000 -- --
1994 23,250 -- --
Mr. King 1996 7,500 707 --
1995 15,000 1,416 --
1994 13,258 199 --
(3) Includes $53,912, $459,400 and $500,020 of perquisites that the Company
provided to Mr. Moffett in 1996, 1995 and 1994, respectively, consisting
of (a) $270,000 of principal payments of a non-interest bearing loan to
Mr. Moffett from the Company that were forgiven in 1995 and 1994, (b)
$62,606 and $80,793 of imputed interest in 1995 and 1994, respectively, on
such loan, (c) $40,000 of matching gifts under the matching gifts program
during each year, (d) $2,745 in 1996 and $19,000 in each of 1995 and 1994
for financial counseling and tax return preparation and certification
services, and (e) $11,167, $67,794 and $90,227 of additional income
recognized for federal income tax purposes by Mr. Moffett for use of the
Company's aircraft in 1996, 1995 and 1994, respectively.
(4) Includes $98,830, $42,809 and $62,062 of perquisites that the Company
provided to Mr. Latiolais in 1996, 1995 and 1994, respectively, consisting
of (a) $3,675, $2,549 and $4,849 of matching gifts under the matching
gifts program during 1996, 1995 and 1994, respectively, (b) $19,587,
$20,000 and $20,360 for financial counseling and tax return preparation
and certification services in 1996, 1995 and 1994, respectively, and (c)
$75,568, $20,260 and $36,853 of additional income recognized for federal
income tax purposes by Mr. Latiolais for his use of the Company's aircraft
in 1996, 1995 and 1994, respectively.
(5) Includes $56,708 of perquisites that the Company provided to Mr. Adkerson
in 1995 consisting of (a) $26,300 of matching gifts under the matching
gifts program, (b) $4,717 for financial counseling and tax return
preparation and certification services and (c) $25,691 of additional
income recognized for federal income tax purposes by Mr. Adkerson for his
use of the Company's aircraft.
12
(6) Includes $1,723, $7,700 and $7,400 of scholarships that the Company
provided in 1996, 1995 and 1994, respectively, for the benefit of Mr.
Adkerson's son.
(7) Effective as of January 1, 1997, Mr. Goodyear resigned from the Company
and, pursuant to an agreement described in the section titled "Certain
Transactions," he forfeited two-thirds of the stock options that the
Company granted to him in 1996 and will receive $8,333 per month over a
three-year period.
------------------
The following table sets forth information with respect to all stock options
and SARs that the Company granted to each of the Named Executive Officers in
1996.
OPTION/SAR GRANTS IN 1996
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) 1996 PRICE DATE VALUE(2)
---- ------------ ------------ -------- ------------- ----------
James R. Moffett 330,000 30.37% $34.81 May 14, 2006 $5,375,700
Rene L. Latiolais 385,000 35.43% 34.81 May 14, 2006 6,271,650
Richard C. Adkerson 90,000 8.28% 34.81 May 14, 2006 1,466,100
Charles W. Goodyear(3) 220,000 20.25% 34.81 May 14, 2006 3,583,800
W. Russell King 4,000 0.37% 36.56 Apr. 30, 2006 69,000
- - ---------
(1) The stock options granted to Messrs. Moffett, Latiolais, Adkerson and
Goodyear will become exercisable over a five-year period and the stock
options granted to Mr. King will become exercisable over a four-year
period. The stock options will become immediately exercisable in their
entirety if (a) any person 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.
(2) The Black-Scholes option pricing model was used to determine the grant
date present value of the stock options granted by the Company to the
Named Executive Officers. Under the Black-Scholes option pricing model,
the grant date present value of each stock option and SAR referred to in
the table was calculated to be $17.25 on April 30, 1996 and $16.29 on May
14, 1996. The following facts and assumptions were used in making such
calculations: (a) an unadjusted exercise price for each such stock option
as set forth under the column labeled
13
"Exercise or Base Price;" (b) a fair market value of $36.5625 and $34.8125
for one share of Common Stock on April 30, 1996 and May 14, 1996,
respectively; (c) dividend yields of 0.98% and 1.03%, respectively, derived
from dividing (i) $0.36, which is the value of the dividend currently being
paid on one share of Common Stock, by (ii) the fair market value of one
share of Common Stock on the dates of grant; (d) a term for such stock
options as set forth under the column labeled "Expiration Date;" (e) a stock
volatility of 27.5%, based on an analysis of weekly closing stock prices of
the Common Stock over a 36-week period; and (f) an assumed risk-free
interest rate of 6.61%, such rate being equivalent to the yield on the dates
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 were applied. The
resulting grant date present value for each stock option was multiplied by
the total number of stock options granted to each of the Named Executive
Officers to determine their total grant date present values.
(3) Effective January 1, 1997, Mr. Goodyear resigned from the Company and
forfeited two-thirds of these stock options pursuant to an agreement
described in the section titled "Certain Transactions."
-----------------
The following table sets forth information with respect to any exercises of
Company stock options and SARs in 1996 by each of the Named Executive Officers
and all outstanding Company stock options and SARs held by each of the Named
Executive Officers as of December 31, 1996.
AGGREGATE OPTION/SAR EXERCISES IN 1996
AND OPTION/SAR VALUES AT DECEMBER 31, 1996
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES DECEMBER 31, 1996 AT DECEMBER 31, 1996
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ---------- ------------------------- -------------------------
James R. Moffett -- $ -- 34,094/330,000 $ 423,502/$ --
Rene L. Latiolais 90,661 1,934,636 78,298/390,649 992,021/ 76,653
Richard C. Adkerson 84,988 1,629,958 18,607/103,780 234,426/174,221
Charles W. Goodyear 14,675 290,732 85,252/233,780 1,172,080/174,221
W. Russell King -- -- 11,824/ 16,794 152,648/161,133
14
The following table sets forth information with respect to all long-term
incentive plan awards made in 1996 by the Company to each of the Named
Executive Officers.
LONG-TERM INCENTIVE PLANS--AWARDS IN 1996
PERFORMANCE
NUMBER OF OR OTHER ESTIMATED
SHARES, PERIOD FUTURE PAYOUTS
UNITS OR UNTIL UNDER NON-
OTHER MATURATION STOCK PRICE-
NAME RIGHTS(1) OR PAYOUT BASED PLANS(2)
---- --------- ----------- --------------
James R. Moffett 20,000 12/31/99 $442,400
Rene L. Latiolais 35,000 12/31/99 774,200
Richard C. Adkerson 7,000 12/31/99 154,840
Charles W. Goodyear 13,000 12/31/99 287,560
W. Russell King 5,500 12/31/99 121,660
- - ---------
(1) Represents the number of performance units covered by the Company's
performance awards granted in 1996 under the Company's 1992 Long-Term
Performance Incentive Plan (the "Long-Term Plan"). 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 its
discretion, prior to crediting the Named Executive 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 after
December 31 of the year in which the third anniversary of the award
occurs.
(2) The amounts represent the annual earnings per share for 1996, as
determined by the Corporate Personnel Committee, applied over a four-year
period.
------------------
15
Retirement Benefit Program. The Company's retirement benefit program was
amended effective July 1, 1996, to incorporate a "cash-balance plan" design.
Under the amended program, each participant, including the Named Executive
Officers, is entitled to benefits based upon the sum of his starting account
balance, annual benefit credits and annual interest credits allocated to his
"account." The starting account balance is equal to the value of the
participant's accrued benefit as of June 30, 1996, under the prior plan. The
annual benefit credit consists of two parts: (1) 4% of the participant's
earnings for the year in excess of the social security wage base for the year;
and (2) a percentage of the participant's total earnings for the year. The
percentage of total earnings is determined as follows:
. 15%, if as of January 1, 1997, the participant's age plus service totaled
65 or more, he was at least 50 years old and had at least 10 years of
service;
. 10%, if as of January 1, 1997, the participant's age plus service totaled
55 or more, he had at least 10 years of service, and he did not meet the
requirements for a 15% allocation;
. 7%, if as of January 1, 1997, the participant's age plus service totaled
45 or more, he had at least 5 years of service, and he did not meet the
requirements for a greater allocation;
. 4%, if the participant did not meet the requirements for a greater
allocation.
The annual interest credit is equal to the account balance at the end of the
prior year multiplied by the annual yield on 10-year U.S. Treasury securities
on the last day of the preceding year. For the first half-year of the cash-
balance plan design, ending December 31, 1996, the annual benefit credits were
based on compensation for the second half of the year, and the interest credit
was 2.79% (equal to half the annual yield rate of 5.58%). Interest credits
stop at the end of the year in which the participant reaches age 60. Upon
retirement a participant's account balance is payable either in a lump sum or
an annuity, as selected by the participant. A participant's "earnings" are
comprised of annual base salary (see "Salary" in the Summary Compensation
Table above), plus a percentage of certain bonuses (See "Bonus" in the Summary
Compensation Table above), which percentage is the lesser of 50% or the
percentage of the bonus not deferred. Years of service include not only years
with the Company but also any years with the Company's predecessors.
Benefits payable to a participant under the Company's retirement benefit
program are no longer determined primarily by such individual's final average
compensation and years of service. However, if a participant's age plus
service equalled 65 or more as of January 1, 1997, and as of that date the
participant had both attained age 50 and had at least 10 years of service, the
participant is "grandfathered" into a benefit of no less than the benefit
under the former retirement benefit formula based on years of service and
final average earnings.
The following is the estimated annual retirement benefit, payable as an
annuity for life, of each of the Named Executive Officers assuming retirement
at age 60, and allowing for reasonable annual increases in earnings until
retirement: Mr. Moffett, $1,204,481; Mr. Adkerson, $197,292; Mr. Latiolais,
$1,283,955; and Mr. King, $262,110. Mr. King participates in the retirement
benefit program of FM Services Company ("FMS"), a corporation 50% owned by
each of the Company and
16
FCX. Mr. Goodyear resigned effective January 1, 1997 and his estimated annual
benefit under the retirement benefit program, if the benefit is paid as an
annuity for life commencing at age 60, is $115,229.
CORPORATE PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Corporate Personnel Committee is composed of four independent directors,
none of whom is an officer or employee of the Company or any of its
subsidiaries. The Committee met nine times in 1996. The Committee determines
the compensation of the Chief Executive Officer and other executives (the
"Executive Officers") of the Company and administers the annual incentive
plan, performance incentive awards programs, long-term incentive plans, and
the stock option plans of the Company.
In 1996, the Committee reviewed the results of an annual comparison of
Company performance relative to the group of chemical companies comprising the
group of peer issuers (the "Peer Group"), which group is comprised of those
companies included in the Media General Sulfur and Nitrate Index and whose
cumulative total shareholder return is compared in the performance graph
included in this Proxy Statement under the heading "Performance Graph." An
independent executive compensation consultant conducted this review to help
the Committee ensure that overall executive compensation levels 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 the annual comparison
of Company performance and a summary of the Company's operational and
strategic accomplishments during 1996 that the Committee reviewed and
considered.
The Committee uses the policies described below as a framework for the
compensation programs in which the Company's Executive Officers participate.
Base Salaries
Base salaries of the Executive Officers are established at appropriate
levels after consideration of each executive's responsibilities and market
salaries for similarly situated Executive Officers in other organizations.
Such organizations generally are not included in the Peer Group, but are
organizations whose operational, corporate financing and other activities are
considered comparable to those that the Company accomplished in recent years
under the direction of the Executive Officers. The Company increased base
salaries for certain Executive Officers in 1996 in recognition of significant
changes in their responsibilities during 1996. The Chief Executive Officer did
not receive a base salary increase during 1996.
Annual Cash Awards
The Company's annual incentive plan is designed to provide incentives, in
the form of annual cash awards, to certain Executive Officers whose
performance can have a major impact on the profitability and future growth of
the Company.
17
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 1996, the average return on
investment was 15.4%. When determining the aggregate total of awards granted
under the annual incentive plan for 1996, the Committee considered as a
guideline 2.5% of net cash provided by operating activities for such year,
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 under section 162(m) of the Internal Revenue Code.
The Company's performance incentive awards program is designed to provide
incentives, in the form of annual cash awards, to certain middle managers and
Executive Officers who do not participate in the annual incentive plan. In
1996, each participant in the performance incentive awards program was
assigned a guideline amount, expressed as a percentage of base salary, which
when combined with base salary is generally designed to achieve total annual
cash compensation substantially equal to 75th percentile Peer Group levels.
Actual performance incentive awards have ranged from zero to a multiple of the
target awards. As a result, the competitive position of total annual cash
compensation for participants in the performance incentive awards program has
varied substantially from year to year depending on performance.
To determine the total amount available for incentive awards in 1996 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 1996. These performance factors were not
individually weighted.
The financial performance factors considered 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) over
the prior year, return on managed equity, and return on investment. Results of
these performance factors for 1996 were compared to the Company's historical
results during each of the last four fiscal years, and to the Peer Group's
estimated 1996 results and actual results during such four-year period.
Operational and strategic accomplishments of the Company and its
subsidiaries during 1996 considered by the Committee included: (i) the
increasing of FRP's interest in IMC-Agrico by 0.85 percentage points though
negotiations with IMC Global in connection with their acquisition of Vigoro;
(ii) the modification of pricing provisions between IMC-Agrico and IMC Global
affiliates, allowing improved realizations for IMC-Agrico on products sold to
these affiliates; (iii) the public sale of $150 million of long-term 7% Senior
Notes, which interest rate was 1.75 percentage points lower than the previous
Senior Notes issued in 1994; (iv) the renegotiation of the FTX/FRP bank
18
credit facility to increase the facility to $350 million, reduce the interest
rate, and lengthen the term; (v) the repurchase through the stock buy-back
program of over $130 million of FTX common stock during 1996; (vi) the
Faustina and Uncle Sam gypsum stack cover projects' greater than anticipated
success at reducing "Toxic Release Inventory" discharges to the Mississippi
River, with a total decline of 96% since 1993; (vii) the generation of
distributable cash from phosphate fertilizer operations in excess of $400
million over the past twelve months; (viii) the management of the sulphur
business to maintain cash flow at near 1996 plan level despite reduced
production to balance the market and significantly lower prices; (ix) the
development of Main Pass carbon management methods to facilitate the
elimination of $20 million in planned capital expenditures; (x) maintaining
Main Pass average unit cost at plan level for the entire year, and the
achievement of Culberson unit cost at plan levels for the second half of 1996
despite reduced production at both sulphur mines; (xi) achieving $3 million in
reductions to annual transgulf sulphur transportation costs and annualized
Culberson rail transportation costs; (xii) the improvement of phosphate export
marketing performance with a twelve month contract with the Chinese, which
included no price ceiling limitations; (xiii) increased presence in China
through the establishment of an alliance with Chinese authorities to explore
phosphate opportunities in that country; (xiv) the effective management of
phosphate fertilizer production levels which reduced market price volatility
and avoided costly inventory buildup; (xv) the successful integration into
IMC-Agrico of the animal feed ingredients business acquired in late 1995,
which contributed $44 million in cash flow over the past twelve months (more
than 40% above expectations); (xvi) the purchase of the Pine Level property
for $31 million cash plus future potential royalties, increasing IMC-Agrico's
phosphate rock reserve position by 25%; (xvii) the acquisition of the Big Four
rock reserve in a cashless transaction, adding 2.5 million tons of high
quality rock reserves and extending the life of the Kingsford mine; (xviii)
the selection of IMC-Agrico by the government of Saudi Arabia to pursue
opportunities to develop a phosphate project; (xix) approval from the Sri
Lankan Cabinet to proceed with the development of the Eppawala phosphate
deposit with a feasibility study expected to commence in early 1997; (xx) the
development of the technology to exploit the remaining "G" sand reserves of
approximately 18.5 million barrels of oil at Main Pass; (xxi) the completion
of exploitation plan and arrangements for oil production from sulphur
platforms, with a cost savings of $4.4 million for the Northwest Structure
alone; and (xxii) the achievement of production near plan level of 4.0 million
barrels of oil and increased cash flow, while deferring capital development to
optimize exploitation methods.
For purposes of comparing the financial performance factors for 1996 to the
Company's 1995 results and to the Peer Group, the Committee adjusted prior
years' results to reflect the Company's continuing operations and thus provide
a more meaningful comparison. After reviewing these performance factors, the
Committee concluded that the Company's overall financial results for 1996
exceeded the Company's 1995 adjusted results and that operational and
strategic accomplishments exceeded expectations. The Committee also concluded
that the Company's financial results exceeded Peer Group medians for financial
performance factors considered, with the exception of the percentage change in
net cash provided by operating activities.
19
Based on its review, the Committee approved an incentive pool for the annual
incentive plan of 1.8% of net cash provided by operating activities, which
amount is less than the maximum amount permitted under the plan and each
individual award under the annual incentive plan for 1996 was below the
individual award maximum. Performance awards for those Executive Officers
participating in the performance incentive awards program in 1996 on average
approximated 220% of their guideline amounts. The specific amounts awarded
under the annual incentive plan and the performance incentive awards program
to the Company's five most highly compensated Executive Officers for 1996,
including the Chief Executive Officer, are as shown in the "Summary
Compensation Table."
Stock Options and Long-Term Incentives
Stock option and cash long-term incentive award guidelines are intended to
provide a total potential value that is greater than the value of annual cash
compensation to reinforce the importance of shareholder value creation.
Executive Officers are eligible to participate in three long-term incentives:
stock options, freestanding stock appreciation rights ("SARs"), and
performance units. Award guidelines for these incentives are expressed as a
fixed number of options, rights, or units, as the case may be, that vary
according to the position level of each participating Executive Officer. The
guidelines were developed originally by the Committee and confirmed by a
review of compensation practices of the Peer Group conducted by an independent
executive compensation consultant. The total value of long-term incentive
awards is generally intended to produce total compensation based on future
performance that exceeds 75th percentile levels of the Peer Group for the
Executive Officers. Stock options are generally emphasized over performance
units.
The Committee encourages Executive Officers to accumulate significant equity
ownership in the Company by granting stock options. The Committee believes
that large periodic stock option awards rather than smaller, annual awards
provide a more powerful incentive to Executive Officers to achieve sustained
growth in shareholder value over the long term. The exercise price of a stock
option is equal to the fair market value of a share of the Company's Common
Stock on the date of grant. The stock options granted to certain Executive
Officers for 1996, including the Chief Executive Officer, are shown in the
"Summary Compensation Table." No SAR grants were made in 1996 to Executive
Officers.
The Committee supplements stock option grants to Executive Officers with
annual grants of performance units. Performance units are designed to link a
portion of executive compensation to cumulative earnings per share because the
Company believes that sustained profit performance will help support increases
in shareholder value. Each outstanding performance unit is annually credited
with an amount equal to the annual earnings per share (or net loss per share)
until the valuation date for such performance award, which is generally
December 31 of the year in which the third anniversary of the grant occurs.
Such credits are generally paid as soon as practicable after such
20
valuation date. The performance units granted to certain Executive Officers
for 1996, including the Chief Executive Officer, are shown in the table
entitled "Long-Term Incentive Plans--Awards in 1996."
Under Section 162(m) no deduction by a publicly held corporation is allowed
for compensation paid by the corporation to its most highly compensated
executive officers to the extent that the amount of such compensation for the
taxable year for any such individual exceeds $1 million. Section 162(m)
exempts "performance based" compensation from the deduction limitation. The
Company believes that the components of executive compensation that are
inherently performance based should qualify for such exclusion from the
deduction limitation under Section 162(m). Those components consist of the
annual cash incentive awards, stock options, SARs, and performance units. The
Company's Board of Directors recommended, and stockholders approved at their
1994 annual meeting, amendments to the annual incentive plan and the long-term
performance incentive plan that were designed to qualify compensation payable
thereunder for deductibility under Section 162(m). The Company anticipates
that the 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 Executive Officers, and should therefore qualify for
deductibility in most instances.
Robert W. Bruce III, Chairman William B. Harrison, Jr.
George Putnam J. Taylor Wharton
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Corporate Personnel Committee are
Messrs. Bruce, Harrison, Putnam and Wharton. No Executive Officer served in
1996 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.
21
PERFORMANCE GRAPH
The following graph compares the change in the cumulative total stockholder
return on Common Stock with the cumulative total return of the Standard &
Poor's 500 Stock Index and the cumulative total return of two groups of peer
issuers from 1992 through 1996. The current peer group, the Media General
Sulphur & Nitrate Index ("MG Group Index"), reflected in the performance graph
has been changed from the peer group used in performance graphs reflected in
the Company's proxy statements for prior years. The former peer group is a
custom peer group and includes mining companies, which encompassed the
industry of FCX, a subsidiary of the Company until July 1995. The MG Group
Index was used to more closely reflect the industry in which the Company
currently operates.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
FREEPORT-MCMORAN INC.,
S&P 500 STOCK INDEX, MG GROUP INDEX
AND FORMER PEER GROUP
[GRAPH APPEARS HERE]
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------
Freeport-McMoRan Inc. $100.00 $118.22 $182.69 $176.33 $293.31 $257.28
S&P 500 Stock Index $100.00 $107.62 $118.46 $120.03 $165.13 $203.05
MG Group Index $100.00 $ 91.09 $113.73 $132.53 $170.30 $181.35
Former Peer Group $100.00 $111.01 $123.19 $131.88 $163.40 $186.61
ASSUMES $100 INVESTED ON DECEMBER 31,
1991 IN FREEPORT-McMoRan INC. COMMON
STOCK, S&P 500 STOCK INDEX & EACH
PEER GROUP
* FREEPORT-MCMORAN INC.
* TOTAL RETURN INCLUDES THE ASSUMED
REINVESTMENT IN THE COMPANY'S COMMON . S&P 500 STOCK INDEX
STOCK OF ALL CASH DIVIDENDS AND THE
CASH VALUE, AS DETERMINED BY THE
BOARD OF DIRECTORS, OF ALL PROPERTY + MG GROUP INDEX
DIVIDENDS. PROPERTY DIVIDENDS DURING
THE PERIOD SHOWN CONSISTED OF SHARES [ ] FORMER PEER GROUP
OF COMMON STOCK OF FORMER
SUBSIDIARIES OF THE COMPANY THAT WERE
DISTRIBUTED ON A PRO RATA BASIS TO
THE COMPANY'S STOCKHOLDERS IN 1992,
1994 AND 1995, AND WERE VALUED AT
$1.05, $7.768 AND $108.41 PER SHARE
OF THE COMPANY'S COMMON STOCK,
RESPECTIVELY.
22
The members of the MG Group Index referred to in the performance graph above
are Agrium Inc., Alcide Corp., Arcadian Corp., Consep Inc., First Mississippi
Corp., Freeport-McMoRan Resource Partners, Limited Partnership, IMC Global
Inc., Lesco Inc., Mycogen Corp., Norsk Hydro As Adr, Rich Coast Inc., Ringer
Corp., Terra Industries Inc., Terra Nitrogen Co., L.P., U.S. Home & Garden
Inc., and U.S. Lime and Minerals Inc.
The members of the former peer group referred to in the performance graph
above are Air Products & Chemicals Inc., Aluminum Co. of America, Amerada Hess
Corp., Amoco Corp., Ashland Oil Inc., Burlington Northern Inc., Cyprus Amax
Minerals Company, Dexter Corp., Dow Chemical Company, FMC Corp., Hercules
Inc., Louisiana Land & Exploration Co., Murphy Oil Corp., Occidental Petroleum
Corp., Olin Corp., Owens Corning Fiberglass Corp., Pennzoil Co., PPG
Industries Inc., Union Pacific Corp., Unocal Corp., Pharmacia & Upjohn Inc.,
Valero Energy Corp. and The Williams Companies.
CERTAIN TRANSACTIONS
During 1996, Mr. Rankin received certain compensation consisting of
reimbursement for a portion of his office rent and the service of an executive
secretary employed by FMS. The aggregate amount of such compensation in 1996
was $86,540. FMS and Mr. Rankin are parties to an agreement renewable annually
under which Mr. Rankin renders services to the Company and FCX relating to
finance, accounting and business development. In consideration for such
services, FMS pays Mr. Rankin an annual retainer of $56,000. FMS and a
corporation wholly owned by Mr. Rankin are parties to an arrangement under
which FMS, the Company and FCX are entitled to the use of a Cessna Citation V
Ultra aircraft in which such corporation has an interest. Under the
arrangement, FMS pays charges, assessments and an annual fee to such
corporation that are directly related to the Company's and FCX's use of the
plane and an additional fixed monthly fee. In 1996, FMS paid the corporation
$368,218.
Kissinger Associates, Inc. ("Kissinger Associates"), a corporation of which
Mr. Kissinger is Chairman of the Board and the sole stockholder, and FMS are
parties to agreements (the "Kissinger Consulting Agreements") pursuant to
which Kissinger Associates provides to the Company and FCX advice and
consultation on specified world political, economic, strategic and social
developments affecting the Company's and FCX's affairs. As compensation for
such services, FMS pays Kissinger Associates an annual fee of $200,000,
additional consulting fees based on the services rendered and reasonable out-
of-pocket expenses incurred in connection with providing such services in
proportion to the amount of services received by each. In 1996, FMS paid
Kissinger Associates $200,000 for all services under this arrangement.
Upon his resignation from the Company, FCX, MOXY, FRP, FMS and FM Properties
Inc. (collectively, the "Freeport Entities") as of January 1, 1997, Mr.
Goodyear forfeited two-thirds of
23
the stock options that the Freeport Entities granted to him in 1996. The stock
options that the Company granted to Mr. Goodyear in 1996 are shown in the
table entitled "Option/SAR Grants in 1996." In consideration for such
forfeiture, Mr. Goodyear is entitled to receive $8,333 per month from the
Freeport Entities starting on January 1, 1997 and continuing through December
1, 1999. Such payments may be discontinued or accelerated under certain
circumstances if the consulting arrangement with FMS described below is
terminated.
In December 1996, FMS entered into an agreement with Goodyear Capital
Corporation ("GCC"), a corporation of which Mr. Goodyear is President and the
sole stockholder, under which GCC has agreed to provide consulting services
relating to the financial aspects of the businesses, operations and prospects
of FMS and its corporate affiliates, including the Company and FCX, from
January 1, 1997 through December 31, 1999. Under the agreement, GCC will
receive an annual consulting fee of $1,400,000, reimbursement of reasonable
out-of-pocket expenses incurred in connection with providing such services,
certain perquisites, and incentive bonuses, in amounts to be determined, for
providing material assistance to any of the Freeport Entities on any major
transactions that may be successfully consummated. In 1996, Mr. Goodyear
received $15,674 as reimbursement for certain fees incurred in connection with
the negotiation of this agreement.
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 1997.
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.
24
FREEPORT-MCMORAN INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERS, APRIL 29, 1997
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 Inc. at the Annual Meeting of
Stockholders to be held on Tuesday, April 29, 1997, at 1:30 p.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.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE
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(continued on reverse side)
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FOLD AND DETACH HERE
Please
mark
your
votes
as
indicated
in
this
example
X
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
FOR WITHHELD FOR AGAINST ABSTAIN
ITEM 1--Election of the ITEM 2--Ratification of
nominees for directors. appointment of
Nominees for Arthur Andersen
directors of LLP as
Freeport-McMoRan Inc. independent
auditors.
William B. Harrison, Jr.
Henry A. Kissinger
Rene L. Latiolais
J. Taylor Wharton
FOR, EXCEPT WITHHELD FROM:
______________________________________________________________
(Write nominee name(s) in the space provided above to withhold
authority.)
SIGNATURE(S) ____________________________________________________ DATED: __________ 1997
YOU MAY SPECIFY YOUR VOTES BY MARKING THE APPROPRIATE BOXES ABOVE. 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, YOUR SHARES WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR
DIRECTORS AND FOR PROPOSAL 2.
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