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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
McMoran Exploration Co.
- --------------------------------------------------------------------------------
(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):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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
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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
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[McMoRan MCMORAN EXPLORATION CO.
EXPLORATION
CO. LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 2000
------------------------
March 30, 2000
DATE: Thursday, May 4, 2000
TIME: 2:30 p.m., Eastern Time
PLACE: 1209 Orange Street
Wilmington, Delaware
PURPOSE: - To elect four directors;
- To ratify the appointment of the independent auditors;
- To vote on a new stock incentive plan; and
- To transact such other business as may properly come
before the meeting.
RECORD DATE: Close of business on March 16, 2000.
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.
/s/ NANCY D. PARMELEE
NANCY D. PARMELEE
Senior Vice President, Chief
Financial Officer
and Secretary
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INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
If you plan to ATTEND the meeting, please bring the following:
1. Proper identification.
2. Proof of Ownership if your shares are held in "Street Name."
Street Name means your shares are held of record by brokers, banks or other
institutions.
Acceptable Proof of Ownership is a letter from your broker stating that you
owned McMoRan Exploration stock on the record date OR an account statement
showing that you owned McMoRan Exploration stock on the record date.
Only stockholders of record on the record date may attend or vote at the annual
meeting.
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MCMORAN EXPLORATION CO.
1615 POYDRAS STREET
NEW ORLEANS, LOUISIANA 70112
The 1999 Annual Report to Stockholders, including financial statements, is
being mailed to stockholders together with these proxy materials on or about
March 30, 2000.
This proxy statement is furnished in connection with a solicitation of
proxies by the board of directors of McMoRan Exploration Co. for use at our
Annual Meeting of Stockholders to be held on May 4, 2000, and at any
adjournments (the meeting).
Our company was created on November 17, 1998 when McMoRan Oil & Gas Co. and
Freeport-McMoRan Sulphur Inc. combined their operations (the Merger) and became
our wholly owned subsidiaries. In connection with the Merger, McMoRan Oil & Gas
and Freeport-McMoRan Sulphur stockholders received shares of our common stock in
exchange for their shares of McMoRan Oil & Gas and Freeport-McMoRan Sulphur.
WHO CAN VOTE
Each share of our common stock that you held on the record date entitles
you to one vote at the meeting. On the record date, there were 12,325,200 shares
of common stock outstanding.
VOTING RIGHTS
Inspectors of election will count votes cast at the meeting. Directors are
elected by plurality vote. All other matters are decided by majority vote
present at the meeting, except as otherwise provided by statute, our certificate
of incorporation or our by-laws.
Abstentions and broker non-votes will have no effect on the election of
directors. Abstentions as to all other matters to come before the meeting will
be counted as votes against those matters. Broker non-votes as to those other
matters will not be counted as votes for or against and will not be included in
calculating the number of votes necessary for approval of those matters.
QUORUM
A quorum at the meeting is a majority of the common stock entitled to vote,
present in person or represented by proxy. The persons whom we appoint to act as
inspectors of election will determine whether a quorum exists. Shares of common
stock represented by properly executed and returned proxies will be treated as
present. Shares of common stock present at the meeting that abstain from voting
or are the subject of broker non-votes will be counted as present for purposes
of determining a quorum. A broker non-vote occurs when a nominee holding common
stock for a beneficial owner does not vote on a particular matter because the
nominee does not have discretionary voting power with respect to that item and
has not received voting instructions from the beneficial owner.
HOW YOUR PROXY WILL BE VOTED
The board of directors is soliciting a proxy in the enclosed form to
provide you with an opportunity to vote on all matters scheduled to come before
the meeting, whether or not you attend in person.
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Granting Your Proxy. If you properly execute and return a proxy in the
enclosed form, your stock will be voted as you specify. If you make no
specifications, your proxy will be voted:
- in favor of the proposed director nominees,
- for the ratification of the appointment of auditors, and
- for the adoption of the 2000 Stock Incentive Plan.
We expect no matters to be presented for action at the meeting other than
the items described in this proxy statement. The enclosed proxy will, however,
confer discretionary authority with respect to any other matter that may
properly come before the meeting. The persons named as proxies in the enclosed
proxy intend to vote in accordance with their judgment on any other matters that
may properly come before the meeting.
Revoking Your Proxy. If you submit a proxy, you may subsequently revoke it
or submit a revised proxy at any time before it is voted. You may also attend
the meeting in person and vote by ballot, which would cancel any proxy that you
previously submitted.
PROXY SOLICITATION
We 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 we will reimburse them for
their reasonable expenses. We have retained Georgeson Shareholder Communications
Inc., 17 State Street, New York, New York to assist with the solicitation of
proxies from brokers and nominees. It is estimated that the fees for Georgeson's
services will be $6,500 plus its reasonable out-of-pocket expenses. We may also
have our representatives, who will receive no compensation for their services,
solicit proxies by telephone, telecopy, personal interview or other means.
STOCKHOLDER PROPOSALS
If you want us to consider including a proposal in next year's proxy
statement, you must deliver it in writing to the Corporate Secretary, McMoRan
Exploration Co., 1615 Poydras St., New Orleans, LA 70112 by November 30, 2000.
If you want to present a proposal at the next annual meeting but do not
wish to have it included in our proxy statement, you must submit it in writing
to the Corporate Secretary at the above address, by January 11, 2001, in
accordance with specific procedural requirements in our by-laws. If you would
like a copy of these procedures, please contact the Corporate Secretary. Failure
to comply with our by-law procedures and deadlines may preclude presentation of
the matter at the meeting.
CORPORATE GOVERNANCE
The board of directors, which held four meetings during 1999, has primary
responsibility for directing the management of our business and affairs. The
board currently consists of ten members. To provide for effective direction and
management of our business, the board of directors has established an audit
committee, a
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corporate personnel committee and a nominating committee. The board established
the nominating committee on January 31, 2000.
MEETINGS
AUDIT COMMITTEE MEMBERS FUNCTIONS OF THE COMMITTEE IN 1999
- ----------------------- -------------------------- --------
Robert A. Day, Chairman - reviews our financial statements 3
Morrison C. Bethea
Gerald J. Ford - exercises general oversight of the integrity and
H. Devon Graham, Jr. reliability of our accounting and financial reporting
Gabrielle K. McDonald practices and the effective-ness of our system of
B. M. Rankin, Jr. internal controls
- exercises general oversight of the activities of our
independent auditors and principal financial and
accounting officers, internal auditors and related
matters
CORPORATE PERSONNEL MEETINGS
COMMITTEE MEMBERS FUNCTIONS OF THE COMMITTEE IN 1999
- ------------------- -------------------------- --------
Gerald J. Ford, Chairman - please refer to the Corporate Personnel Committee 2
H. Devon Graham, Jr. Report on Executive Compensation
J. Taylor Wharton
MEETINGS
NOMINATING COMMITTEE MEMBERS FUNCTIONS OF THE COMMITTEE IN 1999
- ---------------------------- -------------------------- --------
B. M. Rankin, Jr., Chairman - makes recommendations to the board concerning the N/A
Gerald J. Ford structure of the board, corporate governance and proposed
James R. Moffett new members of the board
- nominates individuals to stand for election as
directors
ELECTION OF DIRECTORS
The board of directors has fixed the number of directors at ten. The board
consists of three classes, each of which serves for three years, with one class
being elected each year. This table shows the members of the different classes
of the board and the expiration of their terms.
CLASS EXPIRATION OF TERM CLASS MEMBERS
----- ------------------ -------------
Class I 2002 Annual Meeting of Stockholders Morrison C. Bethea
Gerald J. Ford
H. Devon Graham, Jr.
Class II 2000 Annual Meeting of Stockholders Robert A. Day
Rene L. Latiolais
Gabrielle K. McDonald
J. Taylor Wharton
Class III 2001 Annual Meeting of Stockholders Richard C. Adkerson
James R. Moffett
B. M. Rankin, Jr.
The board has nominated each of the Class II directors named above for an
additional three-year term. The persons named as proxies in the enclosed form of
proxy intend to vote your proxy for the re-election of each of the Class II
directors, unless otherwise directed. If, contrary to our expectations, a
nominee should become unavailable for any reason, votes may be cast pursuant to
the accompanying form of proxy for a substitute nominee designated by the board.
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INFORMATION ABOUT NOMINEES AND DIRECTORS
This table provides certain information as of February 4, 2000 with respect
to each director 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. The year in the "Year First
Elected a Director" includes the period that the person served as a director of
either McMoRan Oil & Gas or Freeport-McMoRan Sulphur.
YEAR FIRST
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS ELECTED A
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY DIRECTOR
- --------------------- --- ------------------------------------------------------ ----------
Richard C. Adkerson 53 Co-Chairman of the Board, President and Chief 1994
Executive Officer of the Company. President and
Chief Operating Officer of Freeport-McMoRan Copper &
Gold Inc. (FCX), a mining company. Co-Chairman of
the Board and Chief Executive Officer of McMoRan Oil
& Gas until 1998. Vice Chairman of the Board of
Freeport-McMoRan Sulphur until 1998. Chairman of the
Board and Chief Executive Officer of Stratus
Properties Inc., a real estate company, until 1998.
Vice Chairman of the Board of Freeport-McMoRan Inc.
(FTX), a global agricultural resource company, until
1997. Senior Vice President and Chief Financial
Officer of FTX until 1995.
Morrison C. Bethea 54 Cardiac, Thoracic and Vascular Surgeon. Clinical 2000
Professor of Surgery, Tulane University Medical
Center. Chief of Thoracic Surgery, Tenet Memorial
Medical Center.
Robert A. Day 56 Chairman of the Board of Trust Company of the West, an 1994
investment management company. Chairman and
President of W. M. Keck Foundation, a national
philanthropic organization. Director of Fisher
Scientific International Inc. and FCX.
Gerald J. Ford 55 Director, Chairman of the Board and Chief Executive 1998
Officer of California Federal Bank, A Federal
Savings Bank and its predecessors since 1988.
Director, Chairman of the Board and Chief Executive
Officer of Golden State Bancorp Inc., a bank holding
company, and its affiliates Golden State Holdings
Inc. and California Federal Preferred Capital
Corporation. Director, Chairman of the Board and
Chief Executive Officer of Liberte Investors Inc.
Director and Chairman of the Board of First
Nationwide Mortgage Corporation. Director of FCX.
H. Devon Graham, Jr. 65 President of R.E. Smith Interests, an asset management 1999
company. United States Regional Manager
Partner-Southwest of Arthur Andersen LLP from 1985
until 1997. Director of FCX.
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YEAR FIRST
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS ELECTED A
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY DIRECTOR
- --------------------- --- ------------------------------------------------------ ----------
Rene L. Latiolais 57 Vice Chairman of the Board of the Company. Vice 1997
Chairman of the Board of FCX. Co-Chairman of the
Board of Freeport-McMoRan Sulphur until 1998.
President and Chief Executive Officer of FTX until
1997. President and Chief Operating Officer of FTX
until 1995.
Gabrielle K. McDonald 57 Special Counsel on Human Rights to the Chairman of the 2000
Board of FCX. Judge, International Criminal Tribunal
for the Former Yugoslavia from 1993 until November
1999. Director of Golden State Bancorp Inc.,
California Federal Bank, A Federal Savings Bank, and
FCX.
James R. Moffett 61 Co-Chairman of the Board of the Company. Chairman of 1994
the Board and Chief Executive Officer of FCX.
Co-Chairman of the Board of McMoRan Oil & Gas and of
Freeport-McMoRan Sulphur until 1998. Chairman of the
Board of FTX until 1997.
B. M. Rankin, Jr. 70 Private investor. Director of Golden State Bancorp 1994
Inc., California Federal Bank, A Federal Savings
Bank and FCX.
J. Taylor Wharton 61 Special Assistant to the President for Patient 2000
Affairs, Professor, Gynecologic Oncology, The
University of Texas M.D. Anderson Cancer Center.
Director of FCX.
DIRECTOR COMPENSATION
Cash Compensation
Each non-officer director receives an annual fee of $15,000 and a fee of
$500 for attending each board committee meeting. Each director receives a fee of
$1,000 for attending each board meeting and is also reimbursed for reasonable
out-of-pocket expenses incurred in attending board and board committee meetings.
Stock Option Plan for Non-Employee Directors
Each non-employee and non-officer director is eligible for the grant of
options under the 1998 Stock Option Plan for Non-Employee Directors. On June 1
of each year that this plan is in effect, each eligible director is granted an
option to purchase 1,000 shares of common stock at 100% of the fair market value
of the shares on the grant date. Each option granted under this plan expires ten
years after the grant date. In accordance with this plan, on June 1, 1999, each
eligible director was granted an option to purchase 1,000 shares of common stock
at an exercise price of $18.0938.
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STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Unless otherwise indicated, this table shows the amount of common stock
each director and each named officer beneficially owned on February 4, 2000 and
all shares shown are held with sole voting and investment power.
NUMBER OF TOTAL
NUMBER OF SHARES NUMBER OF
SHARES NOT SUBJECT TO SHARES PERCENT
SUBJECT TO EXERCISABLE BENEFICIALLY OF
NAME OF BENEFICIAL OWNER OPTIONS OPTIONS(1) OWNED CLASS
- ------------------------ ---------- ----------- ------------ -------
Richard C. Adkerson 44,795 212,509 257,304 2.0%
Morrison C. Bethea 8,000 -- 8,000 *
Robert A. Day (2) 15,356 8,359 23,715 *
Gerald J. Ford (3) 1,135,617 1,000 1,136,617 9.1%
H. Devon Graham, Jr. 2,000 -- 2,000 *
Rene L. Latiolais 12,574 96,937 109,511 *
Gabrielle K. McDonald 5 3,684 3,689 *
James R. Moffett (4) 338,522 255,510 594,032 4.6%
C. Howard Murrish (5) 35,093 182,824 217,917 1.7%
Nancy D. Parmelee 548 8,932 9,480 *
B. M. Rankin, Jr. (6) 387,033 14,412 401,445 3.2%
J. Taylor Wharton (7) 28,994 4,511 33,505 *
All directors and executive officers as a
group (16 persons)(8) 2,107,991 933,287 3,041,278 22.6%
- ------------
* Ownership is less than 1%
(1) Shares that could be acquired as of April 4, 2000 upon the exercise of
options granted pursuant to company stock option plans. In 1999 some options
were accelerated. Five officers have agreed to exercise some of the
accelerated options in accordance with the original vesting schedule. Please
refer to the table of Aggregate Option Exercises in 1999 and Option Values
at December 31, 1999 for more details.
(2) Includes 2,461 shares held by accounts and funds managed by affiliates of a
corporation with respect to which Mr. Day, as chief executive officer and a
stockholder, shares voting and investment power but as to which he disclaims
beneficial ownership. Amounts reported reflect Mr. Day's ownership as of
December 31, 1999.
(3) Shares held by Mr. Ford as trustee of a trust.
(4) Shares held by a limited liability company with respect to which Mr.
Moffett, as a member, shares voting and investment power.
(5) Includes (a) 3,293 shares held in Mr. Murrish's IRA, (b) 412 shares held in
his spouse's IRA, (c) 9,000 shares held by Mr. Murrish as trustee of a trust
for the benefit of one of his sons, (d) 424 shares owned by an adult son who
shares the same home as Mr. Murrish but as to which he disclaims beneficial
ownership, (e) 444 shares held by Mr. Murrish as a custodian for one of his
sons, and (f) 200 shares held by Mr. Murrish as custodian for his grandson.
(6) Includes (a) 123,895 shares held by a limited partnership in which Mr.
Rankin is the sole stockholder of the sole general partner of this limited
partnership and (b) 14,644 shares with respect to which Mr. Rankin has
shared investment power under a power of attorney but as to which he
disclaims beneficial ownership.
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(7) Includes (a) 12,667 shares held by Mr. Wharton's wife, and (b) 10 shares
held by Mr. Wharton as a custodian for his daughter as to which he disclaims
beneficial ownership.
(8) Includes (a) 15,481 shares held in an executive officer's IRA, (b) 1,201
shares held in an IRA of the spouse of an executive officer, (c) 3,026
shares held by an executive officer as custodian for his son as to which he
disclaims beneficial ownership, (d) 1,952 shares held by an executive
officer as custodian for his daughter as to which he disclaims beneficial
ownership, (e) 4,395 shares held by an executive officer as president of a
charitable foundation as to which he disclaims beneficial ownership, (f)
11,330 shares held for the benefit of trusts with respect to which an
executive officer, as trustee, has sole voting and investment power but as
to which he disclaims beneficial ownership, and (g) 20 shares held by an
executive officer's spouse as trustee of a trust.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
This table shows beneficial owners of more than 5% of our outstanding
common stock as of February 4, 2000. Unless otherwise indicated, all shares
beneficially owned are held with sole voting and investment power.
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED CLASS(1)
---------------- ------------------ ----------
Alpine Capital, L.P. 3,480,887(2) 27.7%
Robert W. Bruce III
Algenpar, Inc.
J. Taylor Crandall
Robert M. Bass
201 Main Street, Suite 3100
Fort Worth, TX 76102
Gerald J. Ford 1,136,617(3) 9.1%
200 Crescent Court, Suite 1350
Dallas, TX 75201
- ------------
(1) On February 4, 2000, there were 12,535,359 shares of common stock
outstanding.
(2) Based on the amended Schedule 13D dated October 1, 1999 filed with the SEC
jointly by Alpine Capital, L.P., Robert W. Bruce III, Algenpar, Inc., J.
Taylor Crandall, Robert M. Bass and others and the Form 4s dated February 9,
2000 filed with the SEC by The Ann T. and Robert M. Bass Foundation and
Keystone, Inc. According to the Schedule 13D and the Form 4s (a) Alpine
Capital, L.P. beneficially owns 2,356,023 shares, and Mr. Crandall, as the
sole owner of Algenpar, Inc., and Algenpar, Inc. and Mr. Bruce, as the
general partners in Alpine Capital, L.P., have shared voting and investment
power with respect to the shares beneficially owned by Alpine Capital, L.P.,
(b) Mr. Bruce beneficially owns 2,871,072 shares and has sole voting and
investment power with respect to 169,349 of those shares, (c) Mr. Bruce
could acquire 7,013 shares upon the exercise of options, (d) Mr. Crandall
beneficially owns 2,701,723 shares of which he shares voting and investment
power with respect to 345,700 shares owned by a foundation of which he is a
director, and (e) Mr. Bass beneficially owns 910,415 shares, as to which he
has sole voting and investment power with respect to 564,715 of those shares
in his capacity as president and sole director of Keystone, Inc., and shares
voting and investment power with respect to 345,700 shares owned by a
foundation of which he is a director.
(3) Includes 1,135,617 shares held by Mr. Ford as trustee of a trust and 1,000
shares Mr. Ford could acquire upon the exercise of options.
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EXECUTIVE OFFICER COMPENSATION
This table shows the compensation paid to our chief executive officer and
each of our four most highly compensated executive officers (with respect to
salary and bonus only) other than the chief executive officer (collectively, the
named officers). In 1997, 1998 and 1999, we and our predecessor, McMoRan Oil &
Gas, paid the compensation of Mr. Murrish directly, whereas we paid the
compensation of the other named officers through an allocation arrangement under
a services agreement with a corporation in which we own 45% (Services Company).
See "Certain Transactions." During 1997, 1998 and 1999, Messrs. Adkerson,
Moffett, Wohleber and Ms. Parmelee also provided services to and received
compensation from FCX. Ms. Parmelee was elected an executive officer in 1999.
The named officers, other than Ms. Parmelee, served as executive officers of one
or both of our predecessors.
SUMMARY COMPENSATION TABLE(1)
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) OPTIONS(3) COMPENSATION(4)
------------------ ---- -------- -------- --------------- ------------ ---------------
James R. Moffett 1999 $250,000 $ -- $11,694 100,000 $ 24,944
Co-Chairman of the Board 1998 250,000 -- 8,082 309,950 29,008
1997 1,541 -- 65 -- 115
Richard C. Adkerson 1999 250,000 -- 7,664 85,000 22,035
Co-Chairman of the Board, 1998 250,000 -- 6,904 208,247 25,812
President and Chief 1997 1,320 -- 100 -- 80
Executive Officer
C. Howard Murrish 1999 255,000 325,000 8,841 55,000 12,750
Executive Vice President 1998 254,033 250,000 8,340 176,574 20,000
1997 243,400 175,000 7,131 -- 22,658
Robert M. Wohleber(5) 1999 150,195 -- 5,151 25,000 818,488(6)
Executive Vice President
and 1998 225,000 250,000 3,272 68,823 16,197
Chief Financial Officer 1997 6,164 7,767(7) 101 -- 224
Nancy D. Parmelee 1999 105,687 99,750 1,139 32,500 5,284
Senior Vice President,
Chief Financial Officer
and Secretary
- ------------
(1) Although Messrs. Adkerson and Moffett were executive officers of McMoRan Oil
& Gas during 1997, they did not receive any cash compensation from McMoRan
Oil & Gas during that time. Messrs. Adkerson and Moffett performed their
duties for McMoRan Oil & Gas in accordance with a services agreement between
McMoRan Oil & Gas and the Services Company and McMoRan Oil & Gas paid a
fixed fee of $1,000,000 in 1997 for all services under the services
agreement, including the services provided by Messrs. Adkerson and Moffett.
The services agreement was amended effective January 1, 1998 to provide that
McMoRan Oil & Gas would pay for future services on a cost reimbursement
basis. Messrs Adkerson, Moffett and Wohleber performed their duties for
Freeport-McMoRan Sulphur in accordance with a services agreement between
Freeport-McMoRan Sulphur and the Services Company,
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which provided that Freeport-McMoRan Sulphur would pay for services on a
cost reimbursement basis. Freeport-McMoRan Sulphur became a public entity as
a result of a spin-off on December 22, 1997. Accordingly, the 1997 figures
in this table for Messrs. Adkerson, Moffett and Wohleber only reflect
compensation that was allocated to Freeport-McMoRan Sulphur from December
22, 1997 to December 31, 1997.
(2) Consists of payment of taxes in connection with certain benefits provided to
the named officers. Does not include total amount of perquisites provided to
the named officers because the threshold for disclosure under the SEC rules
was not met.
(3) The 1998 amounts represent company options that were substituted for McMoRan
Oil & Gas and Freeport-McMoRan Sulphur options at the time of the Merger.
(4) Comprised of contributions to defined contribution plans, premium payments
for universal life insurance policies and director fees as follows:
LIFE
PLAN INSURANCE DIRECTOR
NAME DATE CONTRIBUTIONS PREMIUMS FEES
- ---- ---- ------------- --------- --------
Mr. Moffett 1999 $12,500 $7,444 $ 5,000
1998 12,046 5,962 11,000
1997 78 37 --
Mr. Adkerson 1999 12,488 4,547 5,000
1998 12,020 2,792 11,000
1997 66 14 --
Mr. Murrish 1999 12,750 -- --
1998 20,000 -- --
1997 20,500 2,158 --
Mr. Wohleber 1999 7,510 -- 2,000
1998 11,197 -- 5,000
1997 224 -- --
Ms. Parmelee 1999 5,284 -- --
(5) Mr. Wohleber retired from the company on September 1, 1999.
(6) Includes (a) $442,954 severance and separation payment, (b) $171,875 payment
for options and (c) $194,149 from accumulated retirement benefits.
(7) The amount of the bonus was determined by FTX prior to the spin-off that
created Freeport-McMoRan Sulphur in December 1997. FTX transferred to
Freeport-McMoRan Sulphur funds equal to that amount.
------------------------
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This table shows all stock options that we granted to each of the named
officers in 1999.
OPTION GRANTS IN 1999
NUMBER OF PERCENT OF
SECURITIES OPTIONS GRANTED EXERCISE
UNDERLYING OPTIONS TO EMPLOYEES IN OR BASE GRANT DATE
NAME GRANTED(1) 1999 PRICE EXPIRATION DATE PRESENT VALUE
---- ------------------ ----------------- -------- --------------- -------------
James R. Moffett 50,000 7.78% $13.8750 Feb 1, 2009 $380,500(2)
50,000 7.78% 22.1250 Nov 2, 2009 653,500(3)
Richard C. Adkerson 50,000 7.78% 13.8750 Feb 1, 2009 380,500(2)
35,000 5.44% 22.1250 Nov 2, 2009 457,450(3)
C. Howard Murrish 25,000 3.89% 13.8750 Feb 1, 2009 190,250(2)
30,000 4.67% 22.1250 Nov 2, 2009 392,100(3)
Robert M. Wohleber 25,000 3.89% 13.8750 Feb 1, 2009 190,250(2)
Nancy D. Parmelee 7,500 1.17% 13.8750 Feb 1, 2009 57,075(2)
25,000 3.89% 22.1250 Nov 2, 2009 326,750(3)
- ------------
(1) The stock options will become exercisable over a four-year period. The stock
options will become immediately exercisable in their entirety if, under
certain circumstances, (a) any person or group of persons acquires
beneficial ownership of shares in excess of certain thresholds or (b) 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 of these transactions. In addition, 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 model was used to determine the grant date present
value of the options that we granted to the named officers. The grant date
present value was calculated to be $7.61 per option. The following facts and
assumptions were used in making this calculation: (a) an exercise price for
each option of $13.8750; (b) a fair market value of $13.8750 for one share
of common stock; (c) a term for the stock options as set forth under the
column headed "Expiration Date"; (d) a stock volatility of 33.4% based on an
analysis of daily closing prices of our common stock since November 1998
through the grant date; and (e) an assumed risk free interest rate of 5.01%
this rate being equivalent to the yield on the grant date on a zero coupon
US Treasury note with a maturity date comparable to the expiration date of
the options. No other discounts or restrictions related to vesting or the
likelihood of vesting of the options were applied.
(3) The Black-Scholes option model was used to determine the grant date present
value of the options that we granted to the named officers. The grant date
present value was calculated to be $13.07 per option. The following facts
and assumptions were used in making this calculation: (a) an exercise price
for each option of $22.1250; (b) a fair market value of $22.1250 for one
share of common stock; (c) a term for the stock options as set forth under
the column headed "Expiration Date"; (d) a stock volatility of 34.0% based
on an analysis of daily closing prices of our common stock since November
1998 through the grant date; and (e) an assumed risk free interest rate of
6.42% this rate being equivalent to the yield on the grant date on a zero
coupon US Treasury note with a maturity date comparable to the expiration
date of the options. No other discounts or restrictions related to vesting
or the likelihood of vesting of the options was applied.
------------------------
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This table sets forth the information regarding stock option exercises in
1999 by each of the named officers and all outstanding company stock options
held by each of the named officers as of December 31, 1999.
AGGREGATE OPTION EXERCISES IN 1999 AND OPTION VALUES AT DECEMBER 31, 1999(1)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
James R. Moffett -- $ -- 301,712/100,000 $1,426,840/$362,250
Richard C. Adkerson 8,238 5,106 200,009/ 85,000 935,315/ 362,250
C. Howard Murrish -- -- 176,574/ 55,000 879,784/ 181,125
Nancy D. Parmelee -- -- 7,057/ 32,500 30,800/ 54,338
Robert M. Wohleber 43,493 225,596 --/-- --/--
- ------------
(1) In early 1999, an investor group's beneficial ownership of our stock
increased to a level that exceeded the 20% threshold that triggers
acceleration of the vesting periods under the provision of our Adjusted
Stock Award Plan. As a result, all options issued under this plan became
fully exercisable. Messrs. Moffett, Adkerson and Murrish and two other
officers have agreed to adhere to the original vesting schedule of certain
of these options. Accordingly, at December 31, 1999, the number of
exercisable/unexercisable securities underlying unexercised options for
these officers was as follows: Mr. Moffett 261,712/140,000, Mr. Adkerson
160,009/125,000 and Mr. Murrish 126,574/105,000.
------------------------
Retirement Benefit Programs. Under both our retirement benefit program and
that of the Services Company, each participant, including each of the named
officers (other than Messrs. Moffett and Adkerson), is entitled to benefits
based upon the balance of the participant's "account." Those participants who
were participating under a predecessor program when the current programs were
adopted were credited with a starting account balance. Otherwise, the account
balance consists of annual benefit credits and annual interest credits. 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. The interest credit was 4.65%
for 1999. 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
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participant. A participant's "earnings" are comprised of annual base salary (see
"Salary" in the Summary Compensation Table above), plus 50% of certain bonuses
(See "Bonus" in the Summary Compensation Table above). Years of service include
not only years with us or the Services Company, but also any years with our
predecessors.
Under a predecessor retirement benefit program, the retirement benefit was
determined primarily by a participant's final average compensation and years of
service. Benefits payable to a participant under our and the Services Company's
retirement benefit programs are no longer determined that way. However, if a
participant also participated under the predecessor retirement benefit program,
and his age plus service recognized under the predecessor plan equaled 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 officers (other than Messrs. Moffett and
Adkerson), assuming retirement at age 60, and allowing for reasonable annual
increases in earnings until retirement: Mr. Murrish $15,023 and Ms. Parmelee,
$142,480. As reflected in the Summary Compensation Table, Mr. Wohleber received
his retirement benefits as a lump sum payment in connection with his retirement
from the company.
CORPORATE PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The corporate personnel committee determines the compensation of our
executive officers and administers our annual performance incentive and stock
option plans. The committee's executive compensation philosophy is to:
- Emphasize performance-based compensation that balances rewards for
short- and long-term results;
- Tie compensation to the interests of stockholders; and
- Provide a competitive level of total compensation that will attract and
retain talented executives.
The committee was composed of two independent directors when it made its 1999
executive compensation decisions and is now composed of three independent
directors.
Overview of 1999 Compensation
We employ two of our executive officers, C. Howard Murrish, Executive Vice
President, and Theodore P. Fowler, Senior Vice President. The other executive
officers provide services to us through a services agreement between the
Services Company and us. Executive officer compensation for 1999 included base
salaries, annual incentive awards and stock options.
Base Salaries
Base salaries of the executive officers were established at appropriate
levels after consideration of each executive officer's responsibilities and
market salaries for similarly situated executive officers in comparable
organizations. In order to place more emphasis on performance-based
compensation, we did not increase base salaries of any executive officers in
1999, except in the case of Ms. Parmelee, whose salary was increased upon her
assumption of increased responsibilities when she was appointed Senior Vice
President and Chief Financial Officer in August 1999.
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Annual Incentive Awards
Richard C. Adkerson, Co-Chairman of the Board, President and Chief
Executive Officer, and James R. Moffett, Co-Chairman of the Board, did not
receive an annual incentive bonus from us for 1999. In 1999, Messrs. Adkerson
and Moffett received annual incentive awards from FCX.
The other executive officers and certain managers participated in our
performance incentive awards program, which is designed to provide
performance-based annual cash awards. In 1999, each participant in the
performance incentive awards program was assigned a target award based upon
level of responsibility. After a review of our operational and strategic
accomplishments during 1999, including accomplishments in the areas of
exploration, production, management, and strategic planning, the committee
established an award pool for 1999 that totaled $1.585 million. When determining
the actual amounts awarded to participants for any year, the committee makes a
subjective determination after considering both individual performance and
company performance as measured by operational and financial accomplishments.
Stock Options
Stock option awards are intended to provide a significant potential value
that reinforces the importance of creation of value for stockholders. We grant
long-term incentives to executive officers as well as other officers and
managers in the form of stock options. In 1999, we made an annual stock option
grant to our officers and managers. In addition, we made a special grant of
stock options to selected officers in order to recognize the significant
accomplishments of McMoRan Oil & Gas. Stock option grant levels were based upon
the position and level of responsibility of the individual. The exercise price
of each stock option is equal to the fair market value of a share of common
stock on the grant date.
Stock options are an important component of executive compensation and help
to attract and retain top executive talent. In 1999, the stock option grant
authority under our 1998 Stock Option Plan was exhausted. As a result, we are
presenting to stockholders for approval the 2000 Stock Incentive Plan, which is
summarized below.
Section 162(m)
Section 162(m) limits to $1 million a public company's annual tax deduction
for compensation paid to each of its most highly compensated executive officers.
Qualified performance-based compensation is excluded from this deduction
limitation if certain requirements are met. The committee's policy is to
structure compensation awards that will be deductible where doing so will
further the purposes of our executive compensation programs. However, the
committee is not precluded from paying compensation under different terms, even
if it would not qualify for tax deductibility under Section 162(m). The
committee believes that our stock options qualify for deduction under Section
162(m).
Gerald J. Ford, Chairman
H. Devon Graham, Jr.
J. Taylor Wharton
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of our corporate personnel committee are Messrs. Ford,
Graham and Wharton. In 1999, none of our executive officers served as a director
or member of the compensation committee of another entity, where an executive
officer of the entity served as our director or on our corporate personnel
committee.
Gerald J. Ford and McMoRan Oil & Gas, one of our wholly owned subsidiaries,
are parties to a $210 million multi-year exploration program to explore and
identify prospects for oil and gas primarily in the Gulf of Mexico and onshore
in the Gulf Coast area. McMoRan Oil & Gas manages the exploration program,
selects all prospects and drilling opportunities, and serves as operator of the
exploration program. Most exploration expenditures under the exploration program
are shared 6% by Mr. Ford and 94% by McMoRan Oil & Gas, with all other costs and
revenues shared 5% by Mr. Ford and 95% by McMoRan Oil & Gas. The exploration
program will terminate after initial exploration program expenditures of $210
million have been committed or on March 31, 2002, whichever is earlier. Mr. Ford
has contributed approximately $5.7 million for his proportionate share of
exploration program and related development costs through December 31, 1999.
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PERFORMANCE GRAPH
The following graph compares the change in the cumulative total stockholder
return on our common stock with the cumulative total return of the S&P 500 Stock
Index and the Media General Independent Oil & Gas Industry Group during 1999 and
the portion of 1998 that our common stock was registered under Section 12 of the
Securities Exchange Act of 1934. This comparison assumes $100 investment on
November 18, 1998 in (a) our common stock, (b) S&P 500 Stock Index and (c) Media
General Independent Oil & Gas Industry Group.
COMPARISON OF CUMULATIVE TOTAL RETURN*
MCMORAN EXPLORATION CO., S&P 500 STOCK INDEX AND
MEDIA GENERAL INDEPENDENT OIL & GAS INDUSTRY GROUP
PERFORMANCE GRAPH
NOVEMBER 18, DECEMBER 31, DECEMBER 31,
1998 1998 1999
------------ ------------ ------------
McMoRan Exploration Co.................................. $100.00 $ 91.80 $138.52
S&P 500 Stock Index..................................... 100.00 93.30 130.71
Media General Independent Oil & Gas Industry Group...... 100.00 105.76 128.02
* Total Return Assumes Reinvestment of Dividends
CERTAIN TRANSACTIONS
During 1999, Robert A. Day participated directly or indirectly through
various entities, on substantially the same basis as other parties, in
exploration and development operations on certain properties owned or operated
by us, through McMoRan Oil & Gas. Mr. Day and these entities have working
interests in the properties ranging generally from 8.75% to 25%. Mr. Day's and
these entities' share of expenditures for exploration and development operations
during 1999 amounted to approximately $1.2 million, and Mr. Day's
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and these entities' share of revenues generated from the production operations
on the properties during 1999 amounted to approximately $7.5 million.
We and FCX each own 45% of the Services Company; Stratus Properties Inc., a
publicly held real estate company, owns the remaining 10% of the Services
Company. One of the Services Company's two directors is also a director and
executive officer of our company. We are parties to a services agreement with
the Services Company under which the Services Company provides us with
executive, technical, administrative, accounting, financial, tax and other
services. The Services Company also provides these services to FCX and Stratus
Properties Inc. We reimburse the Services Company for an allocable portion of
expenses from consulting arrangements it has entered into, some of which are
described below.
B. M. Rankin, Jr. and the Services Company are parties to an agreement,
renewable in December 2000, under which Mr. Rankin renders services to us, FCX,
Stratus Properties Inc. and our affiliates relating to finance, accounting and
business development. The Services Company provides Mr. Rankin compensation, and
medical coverage and reimbursement for taxes in connection with those medical
benefits. In 1999, the Services Company paid Mr. Rankin $240,000 ($120,000 of
which was allocated to us) pursuant to this agreement. Mr. Rankin also received
reimbursement of $96,979 for a portion of his office rent and the service of an
executive secretary employed by the Services Company.
Rene L. Latiolais and the Services Company are parties to an agreement,
renewable annually, under which Mr. Latiolais provides consulting services
relating to our businesses, operations, and prospects and that of our
affiliates. Under this agreement, Mr. Latiolais receives no annual fee for
serving on the board, no board attendance fees and no stock options under our
director stock option plan. In 1999, the Services Company paid Mr. Latiolais
$413,333, excluding reasonable out-of-pocket expenses, pursuant to this
agreement, all of which was allocated to us. In addition, we paid Mr. Latiolais
$20,000 of financial and tax planning benefits and $13,988 of tax gross-ups.
Gabrielle K. McDonald and the Services Company are parties to an agreement,
renewable in December 2002, under which Ms. McDonald renders consulting services
to the Services Company and FCX and their subsidiaries and affiliates in
connection with her role as Special Counsel on Human Rights to the Chairman of
the Board of FCX. Under this agreement, Ms. McDonald receives an annual fee of
$250,000 and reimbursement of reasonable out-of-pocket expenses incurred in
connection with rendering consulting services. In 1999, the Services Company
paid Ms. McDonald $41,667, exclusive of reasonable out-of-pocket expenses,
pursuant to this agreement, none of which was allocated to us.
Dr. Morrison C. Bethea and the Services Company are parties to an
agreement, renewable annually, under which Dr. Bethea provides certain medical
consulting services to us and our affiliates. Under this agreement, Dr. Bethea
will receive an annual retainer of $135,000. In 1999, the Services Company paid
Dr. Bethea $130,000 ($48,100 of which was allocated to us) pursuant to this
agreement.
APPROVAL OF THE 2000 STOCK INCENTIVE PLAN
Our board of directors unanimously proposes that our stockholders approve
the 2000 Stock Incentive Plan, which is summarized below and attached as Exhibit
A. Because this is a summary, it does not contain all the information that may
be important to you. You should read Exhibit A carefully before you decide how
to vote.
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REASONS FOR THE PROPOSAL
We believe that our growth depends significantly upon the efforts of our
officers, key employees and other service providers and that such individuals
are best motivated to put forth maximum effort on our behalf if they own an
equity interest in our company. Only a very small number of shares of common
stock remain available for grant under our current stock option plan. In order
that we may continue to motivate and reward our key personnel with stock-based
awards at an appropriate level, our board believes that it is important that we
establish a new equity-based plan at this time.
SUMMARY OF THE 2000 STOCK INCENTIVE PLAN
Administration
Awards under the 2000 Stock Incentive Plan will be made by the corporate
personnel committee of our board of directors, which is currently made up of
three members of the board. The corporate personnel committee has full power and
authority to designate participants, to set the terms of awards and to make any
determinations necessary or desirable for the administration of the plan.
Eligible Participants
The following persons are eligible to participate in the 2000 Stock
Incentive Plan:
- our officers (including non-employee officers and officers who are also
directors) and key employees
- officers and key employees of existing or future subsidiaries
- officers and employees of any entity with which we or a subsidiary has
contracted to receive executive, management or legal services and who
provide services to us or a subsidiary under such arrangement
- consultants and advisers who provide services to us or a subsidiary
- any person who has agreed in writing to become an eligible participant
within 30 days
A subsidiary is defined to include an entity in which we have a direct or
indirect economic interest that is designated as a subsidiary by the corporate
personnel committee. The corporate personnel committee may delegate to one or
more of our officers the power to make awards to eligible persons who are not
our executive officers or directors, subject to limitations to be established by
the corporate personnel committee. It is anticipated that the corporate
personnel committee's determinations as to which eligible individuals will be
granted awards and the terms of the awards will be based on each individual's
present and potential contributions to our success. While all employees,
consultants and executive, management and legal service providers will be
eligible for awards under this plan, we anticipate that awards will be granted
to approximately 55 persons, consisting of 15 officers and 40 employees of our
company and the Services Company.
Number of Shares
The maximum number of shares of common stock with respect to which we will
be permitted to grant awards under the 2000 Stock Incentive Plan is 600,000, or
4.9% of the outstanding common stock as of the record date.
Awards that may be paid only in cash are not counted against the 600,000
share limit. No individual may receive in any year awards under this plan,
whether payable in cash or shares, that relate to more than 250,000 shares of
common stock.
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Shares subject to awards that are forfeited or canceled will again be
available for awards, as will shares issued as restricted stock or other
stock-based awards that are forfeited or reacquired by us by their terms. In
addition, to the extent that shares are delivered to pay the exercise price of
options under the 2000 Stock Incentive Plan, the number of shares delivered will
again be available for the grant of awards under this plan, other than the grant
of incentive stock options under Section 422 of the Internal Revenue Code. Under
no circumstances may the number of shares issued pursuant to incentive stock
options exceed 400,000 shares. The number of shares with respect to which awards
of restricted stock and other stock-based awards for which a per share purchase
price of less than 100% of fair market value is paid may not exceed 400,000
shares. The shares to be delivered under this plan will be made available from
the authorized but unissued shares of common stock, from treasury shares or from
shares acquired by us on the open market or otherwise. Subject to the terms of
this plan, shares of common stock issuable under this plan may also be used as
the form of payment of compensation under other plans or arrangements that we
offer or that we assume in a business combination.
On March 20, 2000, the closing price on the New York Stock Exchange of a
share of common stock was $18.8750.
Types of Awards
Stock options, stock appreciation rights, limited rights, restricted stock
and other stock-based awards may be granted under the 2000 Stock Incentive Plan
in the discretion of the corporate personnel committee. Options granted under
this plan may be either nonqualified or incentive stock options. Only our
employees or employees of our subsidiaries will be eligible to receive incentive
stock options. Stock appreciation rights and limited rights may be granted in
conjunction with or unrelated to other awards and, if in conjunction with an
outstanding option or other award, may be granted at the time of the award or
thereafter, at the exercise price of the other award.
The corporate personnel committee has discretion to fix the exercise price
of stock options at a price not less than 100% of the fair market value of the
underlying common stock at the time of grant (or at the time of grant of the
related award in the case of a stock appreciation right or limited right granted
in conjunction with an outstanding award). This limitation on the corporate
personnel committee's discretion, however, does not apply in the case of awards
granted in substitution for outstanding awards previously granted by an acquired
company or a company with which we combine. The corporate personnel committee
has broad discretion as to the terms and conditions upon which options and stock
appreciation rights are exercisable, but under no circumstances will an option,
a stock appreciation right or a limited right have a term exceeding 10 years.
This plan prohibits the repricing of stock options without stockholder approval.
The option exercise price may be paid
- in cash
- by check
- in shares of common stock that, unless otherwise determined by the
corporate personnel committee, have been held by the optionee for six
months
- if permitted by the corporate personnel committee, through a
broker-assisted cashless exercise or
- in any other manner authorized by the corporate personnel committee.
Upon the exercise of a stock appreciation right with respect to common
stock, a participant will be entitled to receive, for each share subject to the
right, the excess of the fair market value of the shares on the
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date of exercise over the exercise price. The corporate personnel committee has
the authority to determine whether the value of a stock appreciation right is
paid in cash or common stock or a combination of the two.
Limited rights generally are exercisable only during a period beginning not
earlier than one day and ending not later than 90 days after the expiration date
of any tender offer, exchange offer or similar transaction which results in any
person or group becoming the beneficial owner of more than 40% of all classes
and series of our outstanding stock, taken as a whole, that have voting rights
with respect to the election of our directors (not including preferred shares
that may be issued in the future that have the right to elect directors only if
we fail to pay dividends). Upon the exercise of a limited right granted under
the 2000 Stock Incentive Plan, a participant would be entitled to receive, for
each share of common stock subject to that right, the excess, if any, of the
highest price paid in or in connection with the transaction over the grant price
of the limited right.
The corporate personnel committee may grant restricted shares of common
stock to a participant that are subject to restrictions regarding the sale,
pledge or other transfer by the employee for a specified period. All shares of
restricted stock will be subject to the restrictions that the corporate
personnel committee may designate in an agreement with the participant,
including, among other things, that the shares are required to be forfeited or
resold to us in the event of termination of employment or in the event specified
performance goals or targets are not met. A restricted period of at least three
years is generally required, except that if the vesting or grant of shares of
restricted stock is subject to the attainment of performance goals, the
restricted period may be one year or more. Subject to the restrictions provided
in the participant's agreement, a participant receiving restricted stock will
have all of the rights of a stockholder as to the restricted stock, including
dividend and voting rights.
The corporate personnel committee may also grant participants awards of
common stock and other awards, including restricted stock units, that are
denominated in, payable in, valued in whole or in part by reference to, or are
otherwise based on the value of, common stock (Other Stock-Based Awards). The
corporate personnel committee has discretion to determine the participants to
whom Other Stock-Based Awards are to be made, the times at which the awards are
to be made, the size of such awards, the form of payment, and all other
conditions of the awards, including any restrictions, deferral periods or
performance requirements. The terms of the Other Stock-Based Awards will be
subject to the rules and regulations that the corporate personnel committee
determines.
Any award under the 2000 Stock Incentive Plan may provide that the
participant has the right to receive currently or on a deferred basis dividends
or dividend equivalents, all as the corporate personnel committee determines.
Performance-Based Compensation under Section 162(m)
Stock options, stock appreciation rights and limited rights, if granted in
accordance with the terms of the 2000 Stock Incentive Plan, are intended to
qualify as performance based compensation under Section 162(m). For grants of
restricted stock and Other Stock-Based Awards that are intended to qualify as
performance-based compensation under Section 162(m), the corporate personnel
committee will establish specific performance goals for each performance period
not later than 90 days after the beginning of the performance period. The
corporate personnel committee will also establish a schedule, setting forth the
portion of the award that will be earned or forfeited based on the degree of
achievement of the performance goals by our company, a division or a subsidiary
at the end of the performance period. The corporate personnel committee will use
any or a combination of the following performance measures: earnings, share
price, return on assets, an economic value added measure, stockholder return,
earnings per share, return on equity, return on investment, return on
fully-employed capital, reduction of expenses, containment of expenses within
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budget, reserve recognition, addition to reserves, cash provided by operating
activities, increase in cash flow, cash flow per equivalent barrel, finding cost
per equivalent barrel, or increase in production, of our company, a division or
a subsidiary. For any performance period, the performance objectives may be
measured on an absolute basis or relative to a group of peer companies selected
by the corporate personnel committee, relative to internal goals, or relative to
levels attained in prior years.
If there is a change of control of our company or if a participant retires,
dies or becomes disabled during the performance period, the corporate personnel
committee may provide that all or a portion of the restricted stock and Other
Stock-Based Awards will automatically vest. If an award of restricted stock or
an Other Stock-Based Award is intended to qualify as performance-based
compensation under Section 162(m), the corporate personnel committee must
certify in writing that the performance goals and all applicable conditions have
been met prior to payment.
The corporate personnel committee retains authority to change the
performance goal objectives with respect to future grants to any of those
provided in the 2000 Stock Incentive Plan. As a result, the regulations under
Section 162(m) require that the material terms of the performance goals be
reapproved by the stockholders within five years following initial stockholder
approval.
Adjustments
If the corporate personnel committee determines that any stock split, stock
dividend or other distribution (whether in the form of cash, securities or other
property), recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase or exchange of shares, issuance of warrants or
other rights to purchase shares or other securities of our company, or other
similar corporate event affects the common stock in such a way that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits intended to be granted and available for grant under the 2000 Stock
Incentive Plan, then the corporate personnel committee has discretion to:
- make equitable adjustments in
- the number and kind of shares (or other securities or property) that
may be the subject of future awards under this plan and
- the number and kind of shares (or other securities or property)
subject to outstanding awards and the respective grant or exercise
prices and
- if appropriate, provide for the payment of cash to a participant.
The corporate personnel committee may also adjust awards to reflect unusual
or nonrecurring events that affect us or our financial statements or to reflect
changes in applicable laws or accounting principles.
Amendment or Termination
The 2000 Stock Incentive Plan may be amended or terminated at any time by
the board of directors, except that no amendment may be made without stockholder
approval if the amendment would
- materially increase the benefits accruing to participants under this
plan,
- materially increase the number of shares of common stock that may be
issued under this plan,
- materially expand the classes of persons eligible to participate in this
plan, or
- permit repricing of options.
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FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTIONS
The grant of nonqualified or incentive stock options will not generally
result in tax consequences to our company or to the optionee. When an optionee
exercises a nonqualified option, the difference between the exercise price and
any higher fair market value of the common stock on the date of exercise will be
ordinary income to the optionee (subject to withholding) and, subject to Section
162(m), will generally be allowed as a deduction at that time for federal income
tax purposes to his or her employer.
Any gain or loss realized by an optionee on disposition of the common stock
acquired upon exercise of a nonqualified option will generally be capital gain
or loss to the optionee, long-term or short-term depending on the holding
period, and will not result in any additional federal income tax consequences to
the employer. The optionee's basis in the common stock for determining gain or
loss on the disposition will be the fair market value of the common stock
determined generally at the time of exercise.
When an optionee exercises an incentive stock option while employed by us
or within three months (one year for disability) after termination of
employment, no ordinary income will be recognized by the optionee at that time,
but the excess (if any) of the fair market value of the common stock acquired
upon such exercise over the option price will be an adjustment to taxable income
for purposes of the federal alternative minimum tax. If the common stock
acquired upon exercise of the incentive stock option is not disposed of prior to
the expiration of one year after the date of acquisition and two years after the
date of grant of the option, the excess (if any) of the sale proceeds over the
aggregate option exercise price of such common stock will be long-term capital
gain, but the employer will not be entitled to any tax deduction with respect to
such gain. Generally, if the common stock is disposed of prior to the expiration
of such periods (a Disqualifying Disposition), the excess of the fair market
value of such common stock at the time of exercise over the aggregate option
exercise price (but not more than the gain on the disposition if the disposition
is a transaction on which a loss, if realized, would be recognized) will be
ordinary income at the time of such Disqualifying Disposition (and the employer
will generally be entitled to a federal income tax deduction in a like amount).
Any gain realized by the optionee as the result of a Disqualifying Disposition
that exceeds the amount treated as ordinary income will be capital in nature,
long-term or short-term depending on the holding period. If an incentive stock
option is exercised more than three months (one year for disability) after
termination of employment, the federal income tax consequences are the same as
described above for nonqualified stock options.
If the exercise price of an option is paid by the surrender of previously
owned shares, the basis of the previously owned shares carries over to an equal
number of shares received in replacement. If the option is a nonqualified
option, the income recognized on exercise is added to the basis. If the option
is an incentive stock option, the optionee will recognize gain if the shares
surrendered were acquired through the exercise of an incentive stock option and
have not been held for the applicable holding period. This gain will be added to
the basis of the shares received in replacement of the previously owned shares.
We believe that taxable compensation arising in connection with stock
options granted under the 2000 Stock Incentive Plan should be fully deductible
by the employer for purposes of Section 162(m). Section 162(m) may limit the
deductibility of an executive's compensation in excess of $1,000,000 per year.
The acceleration of the exercisability of stock options upon the occurrence
of a change of control may give rise, in whole or in part, to excess parachute
payments within the meaning of Section 280G of the Internal Revenue Code to the
extent that the payments, when aggregated with other payments subject to Section
280G, exceed certain limitations. Excess parachute payments will be
nondeductible to the employer and subject the recipient of the payments to a 20%
excise tax.
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If permitted by the corporate personnel committee, at any time that a
participant is required to pay to us the amount required to be withheld under
applicable tax laws in connection with the exercise of a stock option or the
issuance of common stock under the 2000 Stock Incentive Plan, the participant
may elect to have us withhold from the shares that the participant would
otherwise receive shares of common stock having a value equal to the amount to
be withheld. This election must be made prior to the date on which the amount of
tax to be withheld is determined.
This discussion summarizes the federal income tax consequences of the stock
options that may be granted under the 2000 Stock Incentive Plan based on current
provisions of the Internal Revenue Code, which are subject to change. This
summary does not cover any foreign, state or local tax consequences of the stock
options.
AWARDS TO BE GRANTED
The grant of awards under the 2000 Stock Incentive Plan is entirely in the
discretion of the corporate personnel committee. The corporate personnel
committee has not yet made a determination as to the awards to be granted under
the 2000 Stock Incentive Plan, if it is approved by our stockholders at the
meeting.
VOTE REQUIRED FOR APPROVAL OF THE STOCK PLAN
Approval of the 2000 Stock Incentive Plan requires the affirmative vote of
the holders of a majority of the shares of common stock present in person or by
proxy at the meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
2000 STOCK INCENTIVE PLAN.
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The board of directors seeks stockholder ratification of the board's
appointment of Arthur Andersen LLP to act as the independent auditors of our and
our subsidiaries' financial statements for the year 2000. The board has not
determined what, if any, action would be taken should the appointment of Arthur
Andersen not be ratified. One or more representatives of Arthur Andersen will be
available at the meeting to respond to appropriate questions, and those
representatives also will have an opportunity to make a statement.
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EXHIBIT A
MCMORAN EXPLORATION CO.
2000 STOCK INCENTIVE PLAN
SECTION 1
Purpose. The purpose of the McMoRan Exploration Co. 2000 Stock Incentive
Plan (the "Plan") is to motivate and reward key employees, consultants and
advisers by giving them a proprietary interest in the Company's continued and
future success.
SECTION 2
Definitions. As used in the Plan, the following terms shall have the
meanings set forth below:
"Award" shall mean any Option, Stock Appreciation Right, Limited Right,
Restricted Stock or Other Stock-Based Award.
"Award Agreement" shall mean any notice of grant, written agreement,
contract or other instrument or document evidencing any Award, which may, but
need not, be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean, until otherwise determined by the Board, the
Corporate Personnel Committee of the Board.
"Company" shall mean McMoRan Exploration Co.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive the benefits
due the Participant under the Plan in the event of the Participant's death. In
the absence of an effective designation by the Participant, Designated
Beneficiary shall mean the Participant's estate.
"Eligible Individual" shall mean (i) any person providing services as an
officer of the Company or a Subsidiary, whether or not employed by such entity,
including any such person who is also a director of the Company, (ii) any
employee of the Company or a Subsidiary, including any director who is also an
employee of the Company or a Subsidiary, (iii) any officer or 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, (iv) any consultant or adviser to the Company, a Subsidiary or to
an entity described in clause (iii) hereof who provides services to the Company
or a Subsidiary through such arrangement and (v) any person who has agreed in
writing to become a person described in clauses (i), (ii), (iii) or (iv) within
not more than 30 days following the date of grant of such person's first Award
under the Plan.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Incentive Stock Option" shall mean an option granted under Section 6 of
the Plan that is intended to meet the requirements of Section 422 of the Code or
any successor provision thereto.
"Limited Right" shall mean any right granted under Section 8 of the Plan.
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"Nonqualified Stock Option" shall mean an option granted under Section 6 of
the Plan that is not intended to be an Incentive Stock Option.
"Offer" shall mean any tender offer, exchange offer or series of purchases
or other acquisitions, or any combination of those transactions, as a result of
which any person, or any two or more persons acting as a group, and all
affiliates of such person or persons, shall beneficially own more than 40% 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).
"Offer Price" shall mean the highest price per Share paid in any Offer that
is in effect at any time during the period beginning on the ninetieth day prior
to the date on which a Limited Right is exercised and ending on and including
the date of exercise of such Limited Right. Any securities or property that
comprise all or a portion of the consideration paid for Shares in the Offer
shall be valued in determining the Offer Price at the higher of (i) the
valuation placed on such securities or property by the person or persons making
such Offer, or (ii) the valuation, if any, placed on such securities or property
by the Committee or the Board.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.
"Other Stock-Based Award" shall mean any right or award granted under
Section 10 of the Plan.
"Participant" shall mean any Eligible Individual granted an Award under the
Plan.
"Person" shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
"Restricted Stock" shall mean any restricted stock granted under Section 9
of the Plan.
"Section 162(m)" shall mean Section 162(m) of the Code and all regulations
promulgated thereunder as in effect from time to time.
"Shares" shall mean the shares of Common Stock, par value $0.01 per share,
of the Company and such other securities of the Company or a Subsidiary as the
Committee may from time to time designate.
"Stock Appreciation Right" shall mean any right granted under Section 7 of
the Plan.
"Subsidiary" shall mean (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.
SECTION 3
(a) Administration. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to an Eligible
Individual; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, whole Shares, other whole securities, other
Awards, other property or other cash amounts payable by the Company upon the
exercise of that or
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other Awards, or canceled, forfeited or suspended and the method or methods by
which Awards may be settled, exercised, canceled, forfeited or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable by the
Company with respect to an Award shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (viii) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon all Persons, including the Company, any Subsidiary, any Participant, any
holder or beneficiary of any Award, any stockholder of the Company and any
Eligible Individual.
(b) Delegation. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers of the Company the authority,
subject to such terms and limitations as the Committee shall determine, to grant
and set the terms of Awards, to cancel, modify or waive rights with respect to,
or to alter, discontinue, suspend, or terminate Awards held by, Eligible
Individuals who are not officers or directors of the Company for purposes of
Section 16 of the Exchange Act, or any successor section thereto, or who are
otherwise not subject to such Section.
SECTION 4
Eligibility. Any Eligible Individual shall be eligible to be granted an
Award.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as provided in
Section 5(b):
(i) Calculation of Number of Shares Available.
(A) Subject to the other provisions of this Section 5(a), the
number of Shares with respect to which Awards payable in Shares may be
granted under the Plan shall be 600,000. Awards that by their terms may
be settled only in cash shall not be counted against the maximum number
of Shares provided herein.
(B) The number of Shares that may be issued pursuant to Incentive
Stock Options may not exceed 400,000 Shares.
(C) Subject to the other provisions of this Section 5(a), the
maximum number of Shares with respect to which Awards in the form of
Restricted Stock or Other Stock-Based Awards payable in Shares for which
a per share purchase price that is less than 100% of the fair market
value of the securities to which the Award relates shall be 400,000
Shares.
(D) To the extent any Shares covered by an Award are not issued
because the Award is forfeited or canceled or the Award is settled in
cash, such Shares shall again be available for grant pursuant to new
Awards under the Plan.
(E) In the event that Shares are issued as Restricted Stock or
Other Stock-Based Awards under the Plan and thereafter are forfeited or
reacquired by the Company pursuant to rights reserved
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upon issuance thereof, such Shares shall again be available for grant
pursuant to new Awards under the Plan.
(F) If the exercise price of any Option is satisfied by tendering
Shares to the Company, only the number of Shares issued net of the
Shares tendered shall be deemed issued for purposes of determining the
maximum number of Shares available for issuance under Section
5(a)(i)(A). However, all of the Shares issued upon exercise shall be
deemed issued for purposes of determining the maximum number of Shares
that may be issued pursuant to Incentive Stock Options.
(ii) Shares Deliverable Under Awards. Any Shares delivered pursuant to
an Award may consist of authorized and unissued Shares or of treasury
Shares, including Shares held by the Company or a Subsidiary and Shares
acquired in the open market or otherwise obtained by the Company or a
Subsidiary. The issuance of Shares may be effected on a non-certificated
basis, to the extent not prohibited by applicable law or the applicable
rules of any stock exchange.
(iii) Individual Limit. Any provision of the Plan to the contrary
notwithstanding, no individual may receive in any year Awards under the
Plan, whether payable in cash or Shares, that relate to more than 250,000
Shares.
(iv) Use of Shares. Subject to the terms of the Plan and the overall
limitation on the number of Shares that may be delivered under the Plan,
the Committee may use available Shares as the form of payment for
compensation, grants or rights earned or due under any other compensation
plans or arrangements of the Company or a Subsidiary and the plans or
arrangements of the Company or a Subsidiary assumed in business
combinations.
(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, Subsidiary
securities, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Committee may,
in its sole discretion and in such manner as it may deem equitable, adjust any
or all of (i) the number and type of Shares (or other securities or property)
with respect to which Awards may be granted, (ii) the number and type of Shares
(or other securities or property) subject to outstanding Awards, and (iii) the
grant or exercise price with respect to any Award and, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Award and, if
deemed appropriate, adjust outstanding Awards to provide the rights contemplated
by Section 11(b) hereof; provided, in each case, that with respect to Awards of
Incentive Stock Options no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 422(b)(1) of the
Code or any successor provision thereto and, with respect to all Awards under
the Plan, no such adjustment shall be authorized to the extent that such
authority would be inconsistent with the requirements for full deductibility
under Section 162(m); and provided further, that the number of Shares subject to
any Award denominated in Shares shall always be a whole number.
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SECTION 6
(a) Stock Options. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Eligible Individuals to
whom Options shall be granted, the number of Shares to be covered by each
Option, the option price thereof, the conditions and limitations applicable to
the exercise of the Option and the other terms thereof. The Committee shall have
the authority to grant Incentive Stock Options, Nonqualified Stock Options or
both and the other terms thereof. In the case of Incentive Stock Options, the
terms and conditions of such grants shall be subject to and comply with such
rules as may be required by Section 422 of the Code, as from time to time
amended, and any implementing regulations. Except in the case of an Option
granted in assumption of or substitution for an outstanding award of a company
acquired by the Company or with which the Company combines, the exercise price
of any Option granted under this Plan shall not be less than 100% of the fair
market value of the underlying Shares on the date of grant.
(b) Exercise. Each Option shall be exercisable at such times and subject to
such terms and conditions as the Committee may, in its sole discretion, specify
in the applicable Award Agreement or thereafter, provided, however, that in no
event may any Option granted hereunder be exercisable after the expiration of 10
years after the date of such grant. The Committee may impose such conditions
with respect to the exercise of Options, including without limitation, any
condition relating to the application of Federal or state securities laws, as it
may deem necessary or advisable. An Option may be exercised, in whole or in
part, by giving written notice to the Company, specifying the number of Shares
to be purchased. The exercise notice shall be accompanied by the full purchase
price for the Shares.
(c) Payment. The Option price shall be payable in United States dollars and
may be paid by (i) cash; (ii) check; (iii) delivery of shares of Common Stock,
which shares shall be valued for this purpose at the Fair Market Value on the
business day immediately preceding the date such Option is exercised and, unless
otherwise determined by the Committee, shall have been held by the optionee for
at least six months; (iv) if permitted by the Committee, delivery (including by
facsimile) of a properly executed exercise notice together with irrevocable
instructions to a broker approved by the Company (with a copy to the Company) to
sell a sufficient number of Shares and to deliver promptly to the Company the
amount of sale proceeds to pay the exercise price; or (v) in such other manner
as may be authorized from time to time by the Committee. In the case of delivery
of an uncertified check upon exercise of an Option, no Shares shall be issued
until the check has been paid in full. If the Committee permits cashless
exercises through a broker, as described in (iv) above, the par value of such
shares shall be deemed paid in services previously provided to the Company by
the Participant. Prior to the issuance of Shares upon the exercise of an Option,
a Participant shall have no rights as a shareholder.
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SECTION 7
(a) Stock Appreciation Rights. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Eligible
Individuals to whom Stock Appreciation Rights shall be granted, the number of
Shares to be covered by each Award of Stock Appreciation Rights, the grant price
thereof, the conditions and limitations applicable to the exercise of the Stock
Appreciation Right and the other terms thereof. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to any other Award. Stock Appreciation Rights granted
in tandem with or in addition to an Option or other Award may be granted either
at the same time as the Option or other Award or at a later time. Stock
Appreciation Rights shall not be exercisable after the expiration of 10 years
after the date of grant. Except in the case of a Stock Appreciation Right
granted in assumption of or substitution for an outstanding award of a company
acquired by the Company or with which the Company combines, the grant price of
any Stock Appreciation Right granted under this Plan shall not be less than 100%
of the fair market value of the Shares covered by such Stock Appreciation Right
on the date of grant or, in the case of a Stock Appreciation Right granted in
tandem with a then outstanding Option or other Award, on the date of grant of
such related Option or Award.
(b) A Stock Appreciation Right shall entitle the holder thereof to receive
upon exercise, for each Share to which the Stock Appreciation Right relates, an
amount equal to the excess, if any, of the fair market value of a Share on the
date of exercise of the Stock Appreciation Right over the grant price. Any Stock
Appreciation Right shall be settled in cash, unless the Committee shall
determine at the time of grant of a Stock Appreciation Right that it shall or
may be settled in cash, Shares or a combination of cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Eligible Individuals to
whom Limited Rights shall be granted, the number of Shares to be covered by each
Award of Limited Rights, the grant price thereof, the conditions and limitations
applicable to the exercise of the Limited Rights and the other terms thereof.
Limited Rights may be granted in tandem with another Award, in addition to
another Award, or freestanding and unrelated to any Award. Limited Rights
granted in tandem with or in addition to an Award may be granted either at the
same time as the Award or at a later time. Limited Rights shall not be
exercisable after the expiration of 10 years after the date of grant and shall
only be exercisable during a period determined at the time of grant by the
Committee beginning not earlier than one day and ending not more than ninety
days after the expiration date of an Offer. Except in the case of a Limited
Right granted in assumption of or substitution for an outstanding award of a
company acquired by the Company or with which the Company combines, the grant
price of any Limited Right granted under this Plan shall not be less than 100%
of the fair market value of the Shares covered by such Limited Right on the date
of grant or, in the case of a Limited Right granted in tandem with a then
outstanding Option or other Award, on the date of grant of such related Option
or Award.
(b) A Limited Right shall entitle the holder thereof to receive upon
exercise, for each Share to which the Limited Right relates, an amount equal to
the excess, if any, of the Offer Price on the date of exercise of the Limited
Right over the grant price. Any Limited Right shall be settled in cash, unless
the Committee shall determine at the time of grant of a Limited Right that it
shall or may be settled in cash, Shares or a combination of cash and Shares.
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SECTION 9
(a) Grant of Restricted Stock. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Eligible
Individuals to whom Restricted Stock shall be granted, the number of Shares to
be covered by each Award of Restricted Stock and the terms, conditions, and
limitations applicable thereto. The Committee shall also have authority to grant
restricted stock units. Restricted stock units shall be subject to the
requirements applicable to Other Stock-Based Awards under Section 10. An Award
of Restricted Stock may be subject to the attainment of specified performance
goals or targets, restrictions on transfer, forfeitability provisions and such
other terms and conditions as the Committee may determine, subject to the
provisions of the Plan. An award of Restricted Stock may be made in lieu of the
payment of cash compensation otherwise due to an Eligible Individual. To the
extent that Restricted Stock is intended to qualify as "performance-based
compensation" under Section 162(m), it must meet the additional requirements
imposed thereby.
(b) The Restricted Period. At the time that an Award of Restricted Stock is
made, the Committee shall establish a period of time during which the transfer
of the Shares of Restricted Stock shall be restricted (the "Restricted Period").
Each Award of Restricted Stock may have a different Restricted Period. A
Restricted Period of at least three years is required, except that if the grant
or vesting of the Shares is subject to the attainment of specified performance
goals, a Restricted Period of one year or more is permitted. The expiration of
the Restricted Period shall also occur as provided under Section 12(a) hereof.
(c) Escrow. The Participant receiving Restricted Stock shall enter into an
Award Agreement with the Company setting forth the conditions of the grant.
Certificates representing Shares of Restricted Stock shall be registered in the
name of the Participant and deposited with the Company, together with a stock
power endorsed in blank by the Participant. Each such certificate shall bear a
legend in substantially the following form:
The transferability of this certificate and the shares of Common Stock
represented by it are subject to the terms and conditions (including
conditions of forfeiture) contained in the McMoRan Exploration Co. 2000
Stock Incentive Plan (the "Plan") and a notice of grant issued
thereunder to the registered owner by McMoRan Exploration Co. Copies of
the Plan and the notice of grant are on file at the principal office of
McMoRan Exploration Co.
(d) Dividends on Restricted Stock. Any and all cash and stock dividends
paid with respect to the Shares of Restricted Stock shall be subject to any
restrictions on transfer, forfeitability provisions or reinvestment requirements
as the Committee may, in its discretion, prescribe in the Award Agreement.
(e) Forfeiture. In the event of the forfeiture of any Shares of Restricted
Stock under the terms provided in the Award Agreement (including any additional
Shares of Restricted Stock that may result from the reinvestment of cash and
stock dividends, if so provided in the Award Agreement), such forfeited shares
shall be surrendered and the certificates canceled. The Participants shall have
the same rights and privileges, and be subject to the same forfeiture
provisions, with respect to any additional Shares received pursuant to Section
5(b) or Section 11(b) due to a recapitalization, merger or other change in
capitalization.
(f) Expiration of Restricted Period. Upon the expiration or termination of
the Restricted Period and the satisfaction of any other conditions prescribed by
the Committee or at such earlier time as provided for in Section 9(b) and in the
Award Agreement or an amendment thereto, the restrictions applicable to the
Restricted Stock shall lapse and a stock certificate for the number of Shares of
Restricted Stock with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions and legends, except any that may be
imposed by law, to the Participant or the Participant's estate, as the case may
be.
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(g) Rights as a Shareholder. Subject to the terms and conditions of the
Plan and subject to any restrictions on the receipt of dividends that may be
imposed in the Award Agreement, each Participant receiving Restricted Stock
shall have all the rights of a shareholder with respect to Shares of stock
during any period in which such Shares are subject to forfeiture and
restrictions on transfer, including without limitation, the right to vote such
Shares.
(h) Performance-Based Restricted Stock under Section 162(m). The Committee
shall determine at the time of grant if a grant of Restricted Stock is intended
to qualify as "performance-based compensation" as that term is used in Section
162(m). Any such grant shall be conditioned on the achievement of one or more
performance measures. The performance measures pursuant to which the Restricted
Stock shall vest shall be any or a combination of the following: earnings per
share, return on assets, an economic value added measure, shareholder return,
earnings, share price, return on equity, return on investment, return on
fully-employed capital, reduction of expenses, containment of expenses within
budget, reserve recognition, addition to reserves, cash provided by operating
activities, increase in cash flow, cash flow per equivalent barrel, finding
costs per equivalent barrel, or increase in production, of the Company, a
division of the Company or a Subsidiary. For any performance period, such
performance objectives may be measured on an absolute basis or relative to a
group of peer companies selected by the Committee, relative to internal goals or
relative to levels attained in prior years. For grants of Restricted Stock
intended to qualify as "performance-based compensation," the grants of
Restricted Stock and the establishment of performance measures shall be made
during the period required under Section 162(m).
SECTION 10
(a) Other Stock-Based Awards. The Committee is hereby authorized to grant
to Eligible Individuals an "Other Stock-Based Award", which shall consist of an
Award, the value of which is based in whole or in part on the value of Shares,
that is not an instrument or Award specified in Sections 6 through 9 of this
Plan. Other Stock-Based Awards may be awards of Shares or may be denominated or
payable in, valued in whole or in part by reference to, or otherwise based on or
related to, Shares (including, without limitation, restricted stock units or
securities convertible or exchangeable into or exercisable for Shares), as
deemed by the Committee consistent with the purposes of the Plan. The Committee
shall determine the terms and conditions of any such Other Stock-Based Award and
may provide that such awards would be payable in whole or in part in cash. To
the extent that an Other Stock-Based Award is intended to qualify as
"performance-based compensation" under Section 162(m), it must be made subject
to the attainment of one or more of the performance goals specified in Section
10(b) hereof and meet the additional requirements imposed by Section 162(m).
(b) Performance-Based Other Stock-Based Awards under Section 162(m). The
Committee shall determine at the time of grant if the grant of an Other
Stock-Based Award is intended to qualify as "performance-based compensation" as
that term is used in Section 162(m). Any such grant shall be conditioned on the
achievement of one or more performance measures. The performance measures
pursuant to which the Other Stock-Based Award shall vest shall be any or a
combination of the following: earnings per share, return on assets, an economic
value added measure, shareholder return, earnings, share price, return on
equity, return on investment, return on fully-employed capital, reduction of
expenses, containment of expenses within budget, reserve recognition, addition
to reserves, cash provided by operating activities, increase in cash flow, cash
flow per equivalent barrel, finding costs per equivalent barrel, or increase in
production of the Company, a division of the Company or a Subsidiary. For any
performance period, such performance objectives may be measured on an absolute
basis or relative to a group of peer companies selected by the Committee,
relative to internal goals or relative to levels attained in prior years. For
grants of Other Stock-Based Awards intended to qualify as "performance-based
compensation," the grants of Other Stock-Based
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Awards and the establishment of performance measures shall be made during the
period required under Section 162(m).
(c) Dividend Equivalents. In the sole and complete discretion of the
Committee, an Award, whether made as an Other Stock-Based Award under this
Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may
provide the holder thereof with dividends or dividend equivalents, payable in
cash, Shares, Subsidiary securities, other securities or other property on a
current or deferred basis.
SECTION 11
(a) Amendment or Discontinuance of the Plan. The Board may amend or
discontinue the Plan at any time; provided, however, that no such amendment may
(i) without the approval of the stockholders, (i) increase, subject to
adjustments permitted herein, the maximum number of shares of Common Stock
that may be issued through the Plan, (ii) materially increase the benefits
accruing to participants under the Plan, (iii) materially expand the
classes of persons eligible to participate in the Plan, or (iv) amend
Section 11(c) to permit repricing of options; or
(ii) materially impair, without the consent of the recipient, an Award
previously granted.
(b) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 5(b) hereof) affecting the Company, or the financial
statements of the Company or any Subsidiary, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan.
(c) Cancellation. Any provision of this Plan or any Award Agreement to the
contrary notwithstanding, the Committee may cause any Award granted hereunder to
be canceled in consideration of a cash payment or alternative Award made to the
holder of such canceled Award equal in value to such canceled Award.
Notwithstanding the foregoing, no options granted under the Plan shall be
repriced without the approval of the stockholders of the Company. The
determinations of value under this subparagraph shall be made by the Committee
in its sole discretion.
SECTION 12
(a) Award Agreements. Each Award hereunder shall be evidenced by an
agreement or notice delivered to the Participant (by paper copy or
electronically) that shall specify the terms and conditions thereof and any
rules applicable thereto, including but not limited to the effect on such Award
of the death, retirement or other termination of employment or cessation of
consulting or advisory services of the Participant and the effect thereon, if
any, of a change in control of the Company.
(b) Withholding. (i) A Participant may be required to pay to the Company,
and the Company shall have the right to deduct from all amounts paid to a
Participant (whether under the Plan or otherwise), any taxes required by law to
be paid or withheld in respect of Awards hereunder to such Participant. The
Committee may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting, exercise or payment of
any Award.
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(ii) At any time that a Participant is required to pay to the Company
an amount required to be withheld under the applicable tax laws in
connection with the issuance of shares of Common Stock under the Plan, the
Participant may, if permitted by the Committee, satisfy this obligation in
whole or in part by electing (the "Election") to have the Company withhold
from the issuance shares of Common Stock having a value equal to the amount
required to be withheld. The value of the shares withheld shall be based on
the fair market value of the Common Stock on the date that the amount of
tax to be withheld shall be determined in accordance with applicable tax
laws (the "Tax Date").
(iii) Each Election must be made prior to the Tax Date. The Committee
may suspend or terminate the right to make Elections at any time.
(iv) A Participant may also satisfy his or her total tax liability
related to the Award by delivering Shares owned by the Participant. The
value of the Shares delivered shall be based on the fair market value of
the Shares on the Tax Date.
(c) Transferability. No Awards granted hereunder may be transferred,
pledged, assigned or otherwise encumbered by a Participant except: (i) by will;
(ii) by the laws of descent and distribution; (iii) pursuant to a domestic
relations order, as defined in the Code, if permitted by the Committee and so
provided in the Award Agreement or an amendment thereto; or (iv) if permitted by
the Committee and so provided in the Award Agreement or an amendment thereto,
Options and Limited Rights granted in tandem therewith may be transferred or
assigned (a) to Immediate Family Members, (b) to a partnership in which
Immediate Family Members, or entities in which Immediate Family Members are the
owners, members or beneficiaries, as appropriate, are the partners, (c) to a
limited liability company in which Immediate Family Members, or entities in
which Immediate Family Members are the owners, members or beneficiaries, as
appropriate, are the members, or (d) to a trust for the benefit of Immediate
Family Members; provided, however, that no more than a de minimus beneficial
interest in a partnership, limited liability company or trust described in (b),
(c) or (d) above may be owned by a person who is not an Immediate Family Member
or by an entity that is not beneficially owned solely by Immediate Family
Members. "Immediate Family Members" shall be defined as the spouse and natural
or adopted children or grandchildren of the Participant and their spouses. To
the extent that an Incentive Stock Option is permitted to be transferred during
the lifetime of the Participant, it shall be treated thereafter as a
Nonqualified Stock Option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of Awards, or levy of attachment or similar
process upon Awards not specifically permitted herein, shall be null and void
and without effect. The designation of a Designated Beneficiary shall not be a
violation of this Section 12(c).
(d) Share Certificates. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the Plan or the rules, regulations, and other requirements
of the SEC, any stock exchange upon which such Shares or other securities are
then listed, and any applicable federal or state laws, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(e) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company from adopting or continuing in effect other
compensation arrangements, which may, but need not, provide for the grant of
options, stock appreciation rights and other types of Awards provided for
hereunder (subject to stockholder approval of any such arrangement if approval
is required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(f) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of or as a
consultant or adviser to the Company or any Subsidiary or in the
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36
employ of or as a consultant or adviser to any other entity providing services
to the Company. The Company or any Subsidiary or any such entity may at any time
dismiss a Participant from employment, or terminate any arrangement pursuant to
which the Participant provides services to the Company or a Subsidiary, free
from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement. No Eligible Individual or other
person shall have any claim to be granted any Award, and there is no obligation
for uniformity of treatment of Eligible Individuals, Participants or holders or
beneficiaries of Awards.
(g) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware.
(h) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from the Company
pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Company.
(j) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities or other property shall be paid or transferred in lieu of
any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(k) Deferral Permitted. Payment of cash or distribution of any Shares to
which a Participant is entitled under any Award shall be made as provided in the
Award Agreement. Payment may be deferred at the option of the Participant if
provided in the Award Agreement.
(l) Headings. Headings are given to the subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of the Plan or
any provision thereof.
SECTION 13
Term of the Plan. Subject to Section 11(a), the Plan shall remain in effect
until all Awards permitted to be granted under the Plan have either been
satisfied, expired or canceled under the terms of the Plan and any restrictions
imposed on Shares in connection with their issuance under the Plan have lapsed.
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37
MCMORAN EXPLORATION CO.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERS, MAY 4, 2000
The undersigned hereby appoints James R. Moffett, Richard C. Adkerson, and
Nancy D. Parmelee, or any of them, as proxies, with full power of substitution,
to vote the shares of the undersigned in McMoRan Exploration Co. at the Annual
Meeting of Stockholders to be held on Thursday, May 4, 2000, at 2:30 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.
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
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(continued on reverse side)
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38
Please mark
your votes as [X]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
FOR WITHHOLD FOR AGAINST ABSTAIN
ITEM 1 - Election of the nominees for directors. [ ] [ ] ITEM 2 - Ratification of [ ] [ ] [ ]
Nominees for directors of McMoRan Exploration Co. appointment of
Robert A. Day Arthur Andersen
Rene' L. Latlolais LLP as indepen-
Gabrielle K. McDonald dent auditors.
J. Taylor Wharton FOR AGAINST ABSTAIN
ITEM 3 - Approval of the [ ] [ ] [ ]
2000 Stock
Incentive Plan.
FOR, EXCEPT WITHHOLD FROM:
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(Write nominee name(s) in the space provided above to withhold authority.)
SIGNATURE(S) DATED: , 2000
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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 ITEMS 2 AND 3.
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