UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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Freeport-McMoRan Copper & Gold Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notice of Annual Meeting of Stockholders

 

June 9, 2010

 

 

 

April 23, 2010

 

Your vote is important. Whether or not you plan to attend the meeting, please promptly vote online or complete, sign and date a proxy or voting instruction card and return it promptly. Your cooperation is appreciated.

 

By Order of the Board of Directors.

 

 

DOUGLAS N. CURRAULT II
Secretary

Information about Attending the Annual Meeting

 

Only stockholders of record on the record date are entitled to notice of and to attend or vote at our annual meeting. If you plan to attend the meeting in person, please bring the following:

 

1. Proper identification.

 

2. Acceptable 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 either (a) a letter from your broker stating that you beneficially owned Freeport-McMoRan Copper & Gold Inc. stock on the record date or (b) an account statement showing that you beneficially owned Freeport-McMoRan Copper & Gold Inc. stock on the record date.

 

Voting Results of the Annual Meeting

 

In the past we have made available on our web site a post-meeting report summarizing the proceedings of the annual meeting within 10 days following the annual meeting. In accordance with new rules promulgated by the Securities and Exchange Commission (SEC), this year we will instead report the voting results of our annual meeting on a Form 8-K that will be filed with the SEC within four business days of completion of the meeting and will also be available on our web site at www.fcx.com.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON JUNE 9, 2010.

 

This proxy statement and the 2009 annual report are available at
http://www.edocumentview.com/FCX_MTG

 

Table of Contents

 

FREEPORT-McMoRan COPPER & GOLD INC.
333 North Central Avenue
Phoenix, Arizona 85004

 

The 2009 Annual Report to Stockholders, including financial statements, is being made available to stockholders together with these proxy materials on or about April 23, 2010.

 

 

 

 

 

Why am I receiving these proxy materials?

 

Our board of directors is soliciting your proxy to vote at our 2010 annual meeting of stockholders because you owned shares of our common stock at the close of business on April 13, 2010, the record date for the annual meeting, and are therefore entitled to vote at the meeting. This proxy statement, along with a proxy card or a voting instruction card, is being made available to stockholders beginning April 23, 2010. We have made these materials available to you on the internet, and in some cases, have delivered printed proxy materials to you. This proxy statement summarizes the information that you need to know in order to cast your vote at the annual meeting. You do not need to attend the annual meeting in person to vote your shares.

 

Why did I receive a notice of internet availability of proxy materials instead of a full set of proxy materials?

 

In accordance with the rules of the SEC, we may furnish proxy materials, including this proxy statement and our 2009 Annual Report, to stockholders by providing access to these documents on the internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless requested. Instead, the notice will instruct you as to how you may access and review the proxy materials on the internet. The notice also instructs you as to how you may submit your vote via the internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting the materials in the notice.

 

When and where will the annual meeting be held?

 

The annual meeting will be held at 10:00 a.m. Eastern Time on Wednesday, June 9, 2010, at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801.

 

Who is soliciting my proxy?

 

Our board of directors is soliciting your proxy to vote on all matters scheduled to come before the 2010 annual meeting of stockholders, whether or not you attend in person. By completing and returning the proxy card or voting instruction card, or by casting your vote via the internet, you are authorizing the proxy holders to vote your shares at our annual meeting as you have instructed.

 

On what matters will I be voting? How does the board of directors recommend that I cast my vote?

 

At the annual meeting, our stockholders will be asked to elect our director nominees, ratify the appointment of our independent registered public accounting firm, adopt the Amended and Restated 2006 Stock Incentive Plan, consider two stockholder proposals included in this proxy statement, if presented at the meeting, and consider any other matter that properly comes before the meeting.

 

The board of directors unanimously recommends that you vote:

 

 

We do not expect any matters to be presented for action at the meeting other than the items described in this proxy statement. By signing and returning a proxy card, however, you will give to the persons named as proxies discretionary voting authority with respect to any other matter that may properly come before the annual meeting, and they intend to vote on any such other matter in accordance with their best judgment.

 

How many votes may I cast?

 

You have one vote for every share of our common stock that you owned on April 13, 2010, the record date.

 

How many votes can be cast by all stockholders?

 

As of the record date, we had 431,576,428 shares of common stock outstanding, each of which is entitled to one vote.

 

How many shares must be present to hold the annual meeting?

 

Our by-laws provide that the presence at the meeting, whether in person or by proxy, of a majority of our outstanding shares of common stock constitutes a quorum necessary to properly convene a meeting of our stockholders. The inspector of election will determine whether a quorum exists. Shares of our common stock present at the annual meeting that abstain from voting, that are the subject of broker non-votes, or for which voting authority is withheld will be counted as present for purposes of determining the existence of a quorum.

 

How do I vote?

 

Stockholders of Record

 

If your shares are registered directly in your name with our transfer agent, BNY Mellon Shareowner Services, you are considered the stockholder of record of those shares and these proxy materials have been made available or mailed to you by us. You may vote your shares by internet or by mail as further described below. Your vote authorizes each of James R. Moffett, Richard C. Adkerson and Kathleen L. Quirk, as proxies, each with the power to appoint his or her substitute, to represent and vote your shares as you directed.

 

 

 

 

Only the latest dated proxy received from you, whether by internet or mail, will be voted at the annual meeting. If you vote by internet, please do not mail your proxy card.

 

Beneficial Owners

 

If your shares are held in a stock brokerage account, by a bank, broker, trustee, or other nominee, you are considered the beneficial owner of shares held in street name and these proxy materials are being made available to you by your bank, broker, trustee or nominee that is considered the shareowner of record of those shares. As the beneficial owner, you have the right to direct your bank, broker, trustee or nominee on how to vote your shares via the internet or by telephone if the bank, broker, trustee or nominee offers these options or by signing and returning a proxy card. Your bank, broker, trustee or nominee will send you instructions for voting your shares. For a discussion of the rules regarding the voting of shares held by beneficial owners, please see the question entitled “What if I don’t vote for a proposal? What is discretionary voting? What is a broker non-vote?”

Participants in our Employee Capital Accumulation Program

 

If you hold shares of our common stock through our Employee Capital Accumulation Program (ECAP), you may only vote your shares by mail. Accordingly, please mark, sign and date your proxy card and return it in the postage-paid envelope provided to you.

 

What if I don’t vote for a proposal? What is discretionary voting? What is a broker non-vote?

 

If you properly execute and return a proxy or voting instruction card, your stock will be voted as you specify. If you are a stockholder of record and you make no specifications on your proxy card, your shares will be voted in accordance with the recommendations of our board of directors, as provided above.

 

If you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any proposal for which your broker does not have discretionary authority to vote. Rules of the New York Stock Exchange (NYSE) determine whether proposals presented at the stockholder meetings are “discretionary” or “non-discretionary.” If a proposal is determined to be discretionary, your broker, bank or other holder of record is permitted under NYSE rules to vote on the proposal without receiving voting instructions from you. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power under NYSE rules for that particular item and has not received voting instructions from the beneficial owner.

 

If you are a beneficial owner, your bank, broker or other holder of record is permitted under NYSE rules to vote your shares on the ratification of our independent registered public accounting firm, even if the record holder does not receive voting instructions from you. The record holder may not vote on the election of directors, the adoption of the Amended and Restated 2006 Stock Incentive Plan or the stockholder proposals, if presented at the meeting, without instructions from you. Without your voting instructions on these matters, a broker non-vote will occur. Shares subject to broker non-votes will not be counted as votes for or against and will not be included in calculating the number of votes necessary for the approval of such matters to be presented at the meeting; however, shares represented by proxies containing both broker non-votes and a vote on any matter will be considered present at the annual meeting for purposes of determining the existence of a quorum.

 

What are the voting requirements to elect the directors and to approve each of the proposals discussed in this proxy statement?

 

 

In uncontested elections, our directors are elected by the affirmative vote of the holders of a majority of the shares voted. In contested elections (where the number of nominees exceeds the number of directors to be elected), our directors are elected by a plurality of shares voted. Under our by-laws, all other matters require the affirmative vote of the holders of a majority of our common stock present in person or by proxy and entitled to vote on such matters, except as otherwise provided by statute, our certificate of incorporation or our by-laws. Abstentions as to all such matters to come before the annual meeting will be counted as votes against those matters.

Can I revoke or change my vote?

 

Yes. Your proxy can be revoked or changed at any time before it is voted by notice in writing to our corporate secretary, by our timely receipt of another proxy with a later date or by voting in person at the annual meeting.

 

Who pays for soliciting proxies?

 

We pay all expenses of soliciting proxies for the annual 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 Inc., 199 Water Street, 26th Floor, 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 $10,500 plus its reasonable out-of-pocket expenses. We may have our employees or other representatives (who will receive no additional compensation for their services) solicit proxies by telephone, e-mail, personal interview or other means.

 

Could other matters be considered and voted upon at the annual meeting?

 

Our board does not expect to bring any other matter before the annual meeting, and it is not aware of any other matter that may be considered at the meeting. In addition, pursuant to our by-laws, the time has elapsed for any stockholder to properly bring a matter before the meeting. However, if any other matter does properly come before the meeting, the proxy holders will vote the proxies in his or her discretion.

 

What happens if the annual meeting is postponed or adjourned?

 

Unless a new record date is fixed, your proxy will still be valid and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted.

 

If you want us to consider including a proposal in next year’s proxy statement, you must deliver it in writing to: Corporate Secretary, Freeport-McMoRan Copper & Gold Inc., 333 North Central Avenue, Phoenix, Arizona 85004 by December 24, 2010.

 

If you want to present a proposal at next year’s annual meeting but do not wish to have it included in our proxy statement, you must submit it in writing to our corporate secretary by February 9, 2011, in accordance with the specific procedural requirements in our by-laws. If you would like a copy of these procedures, please contact our corporate secretary, or access our by-laws on our web site at www.fcx.com under Investor Center — Corporate Governance. Failure to comply with our by-law procedures and deadlines may preclude presentation of the matter at the meeting.

 

Corporate Governance Guidelines; Principles of Business Conduct

 

Our corporate governance guidelines and our principles of business conduct are available at www.fcx.com under Investor Center — Corporate Governance. Both are available in print upon request. Amendments to or waivers of our principles of business conduct granted to any of our directors or executive officers will be published promptly on our web site.

 

Board and Committee Meeting Attendance

 

Our board of directors held six meetings during 2009. During 2009, each of our directors attended at least 75% of the aggregate of the total number of meetings of the board and the total number of meetings held by each committee of the board on which each such director served. Directors are invited but not required to attend annual meetings of our stockholders. Mr. Adkerson attended the last annual meeting of stockholders.

Board Composition and Leadership Structure

 

As of the date of this proxy statement, our board consists of sixteen members, nine of whom have no material relationship with the company and are independent within the meaning of our corporate governance guidelines, which comply with the NYSE director independence standards as currently in effect. Effective June 9, 2010 and assuming all of the director nominees are elected as directors at the annual meeting, our board will consist of twelve members, nine of whom have no material relationship with the company and are independent within the meaning of our corporate governance guidelines. We will also have four advisory directors who have been appointed by the board. For more information about our advisory directors, see “Advisory Directors” below. We also have one director emeritus, Henry A. Kissinger. The director emeritus does not vote.

 

James R. Moffett serves as chairman of our board and Richard C. Adkerson serves as president and chief executive officer. We separated the positions of chairman of the board and chief executive officer in 2003, when we named Mr. Moffett as chairman of the board and Mr. Adkerson as chief executive officer. Our board determined that the separation of these roles would maximize management’s efficiency. Separating these positions allows our chief executive officer to focus on our day-to-day business, while allowing the chairman of the board to lead the board in its fundamental role of providing guidance to and oversight of management.

 

As executive chairman, Mr. Moffett furthers our business strategy by applying his exceptional talents and experience as a geologist. He directs our global exploration programs. Mr. Moffett also has been, and continues to be, instrumental in fostering our relationship with the government of Indonesia, the location of our Grasberg mine. Mr. Moffett is not considered an independent director because he is part of our management team and receives compensation for services to our company in addition to his services as a director. Mr. Adkerson, as president and chief executive officer, is responsible for the executive management of our company. Mr. Adkerson has demonstrated exceptional leadership abilities in developing and executing a financial strategy that has benefited our stockholders, and in building an operational, financial and administrative organization that efficiently supports our business.

 

Our board of directors has concluded that its current leadership structure provides an appropriate framework for our directors to provide independent, objective and effective oversight of management. While our by-laws and corporate governance guidelines do not require our chairman and chief executive officer positions to be separate, the board believes that having separate positions is the appropriate leadership structure for our company at this time. Our board, however, periodically reviews its leadership structure and may make such changes in the future as it deems appropriate.

 

In accordance with our corporate governance guidelines, our non-management directors meet in executive session at the end of each regularly scheduled board meeting. The presiding director for executive session meetings rotates among the independent directors who are chairpersons of our four principal board committees (audit, corporate personnel, nominating and corporate governance, and public policy, discussed below), except as the directors may otherwise determine for a specific meeting. We believe that this approach effectively encourages full engagement of the non-management directors in executive sessions. Following each executive session of non-management directors, the presiding director serves as a liaison between the non-management directors and the chairman regarding any specific feedback or issues that have been discussed in executive session.

 

Advisory Directors

 

Advisory directors provide general policy advice to our board as determined from time to time by our board. Advisory directors, upon the invitation of the board, have the privilege to receive notice of and to attend regular meetings of the board or any board committee for which the advisory director has been appointed to serve as an advisor or consultant. Advisory directors serve at the pleasure of the board, are not entitled to vote on any matter brought before the board or any board committee and are not considered a director of the company for any purpose. Compensation paid to advisory directors is determined from time to time by the board, and advisory directors may have consulting agreements with our company. The board has appointed J. Bennett Johnston, Gabrielle K. McDonald, J. Stapleton Roy and J. Taylor Wharton, each of

whom is serving as a director of the company until the 2010 annual meeting of stockholders, to serve as advisory directors effective June 9, 2010.

 

J. Bennett Johnston is Chairman of Johnston & Associates, LLC, a business consulting firm and consultant to our company, and Chairman of Johnston Development Co. LLC, a project development firm. He served as United States Senator from 1972 to 1997.

 

Gabrielle K. McDonald has served as a judge on the Iran-United States Claims Tribunal, The Hague, The Netherlands since November 2001. Judge McDonald has also served as the Special Counsel on Human Rights to our company since 1999.

 

J. Stapleton Roy is Director of the Kissinger Institute on China and the United States at the Woodrow Wilson International Center for Scholars. He is Senior Advisor and previously served as Vice Chairman and Managing Director of Kissinger Associates, Inc., international consultants and consultants to our company. He previously served as Assistant Secretary of State for Intelligence and Research and United States Ambassador to Indonesia.

 

J. Taylor Wharton is the retired Special Assistant to the President for Patient Affairs and professor of Gynecologic Oncology at The University of Texas M. D. Anderson Cancer Center and a consultant to our company.

 

Board Committees

 

Our board has four standing committees: an audit committee, a corporate personnel committee, a nominating and corporate governance committee and a public policy committee. Each of our audit, corporate personnel and nominating and corporate governance committees are composed entirely of independent directors. Each committee operates under a written charter adopted by the board. All of the committee charters are available on our web site at www.fcx.com under Investor Center — Corporate Governance and are available in print upon request. The primary functions of each board committee are described below.

 

 

 

 

Corporate Personnel Committee Procedures

 

The corporate personnel committee has the sole authority to set annual compensation amounts and annual and long-term incentive plan criteria for executive officers, evaluate the performance of the executive officers, and make awards to executive officers under our stock incentive plans. The committee also reviews, approves and recommends to our board of directors any proposed plan or arrangement providing for incentive, retirement or other compensation to our executive officers, as well as any proposed contract under which compensation is awarded to an executive officer. The committee oversees our assessment of whether our compensation practices are reasonably likely to expose our company to material risks. The committee annually recommends to the board the slate of officers for the company, periodically reviews the functions of our executive officers and makes recommendations to the board concerning those functions.

 

To the extent stock options or other equity awards are granted in a given year, the committee’s historical practice has been to grant such awards at its first meeting of that year, which is usually held in January or February. Each July, the board establishes a meeting schedule for itself and its committees for the next calendar year. Thus, the first meeting of each year is scheduled approximately six months in advance and is scheduled to fall within the window period following the release of the company’s earnings for the fourth quarter of the previous year. The committee has a written policy stating that it will approve all regular annual equity awards at its first or second meeting of each fiscal year, and that to the extent the committee approves any out-of-cycle awards at other times during the year, such awards will be made during an open window period during which our executive officers and directors are permitted to trade.

 

The terms of our stock incentive plans provide that the exercise price of each stock option cannot be less than the fair market value of a share of our common stock on the grant date. Pursuant to the committee’s policies, for purposes of our stock incentive plans, the fair market value of our common stock will be determined by reference to the closing sale price on the grant date. In addition, our stock incentive plans

permit the committee to delegate to appropriate personnel its authority to make awards to employees other than those subject to Section 16 of the Securities Exchange Act of 1934, as amended. Our current equity grant policy provides that each of the chairman of the board and the chief executive officer of the company has authority to make or modify grants to such employees, subject to the following conditions:

 

 

The committee engages an independent executive compensation consultant to advise the committee on matters related to executive compensation. Please refer to “Compensation Discussion and Analysis” for more information. In addition, the board has its own independent legal counsel, with whom the committee consults on an as needed basis.

 

Compensation Committee Interlocks and Insider Participation

 

The current members of our corporate personnel committee are Messrs. Allison, Graham, Krulak and Lackey. In 2009, 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 one of our directors or on our corporate personnel committee.

 

Board’s Role in Oversight of Risk Management

 

The board of directors as a whole is responsible for risk oversight, with reviews of certain areas being conducted by the relevant board committees that report to the full board. In its risk oversight role, the board of directors reviews, evaluates and discusses with appropriate members of management whether the risk management processes designed and implemented by management are adequate in identifying, assessing, managing and mitigating material risks facing the company. In addition, as reflected in our principles of business conduct, our board seeks to establish a “tone at the top” communicating the board’s strong commitment to ethical behavior and compliance with the law.

 

The board believes that full and open communication between senior management and the board of directors is essential to effective risk oversight. Our chairman meets regularly with senior management to discuss a variety of matters including business strategies, opportunities, key challenges and risks facing the company, as well as management’s risk mitigation strategies. Senior management attends all regularly scheduled board meetings where they conduct presentations to the board on various strategic matters involving our operations and are available to address any questions or concerns raised by the board on risk management-related or any other matters. Our board oversees the strategic direction of our company, and in doing so considers the potential rewards and risks of our company’s business opportunities and challenges, and monitors the development and management of risks that impact our strategic goals.

 

While the board is ultimately responsible for risk oversight at our company, our four board committees assist the board in fulfilling its oversight responsibilities with respect to certain areas of risk. As part of its responsibilities as set forth in its charter, the audit committee is responsible for reviewing and discussing with management and the company’s independent registered public accounting firm the company’s major financial risk exposures and the measures management has taken to monitor, control and minimize such risks, including the company’s risk assessment and risk management policies. The audit committee assists the board in fulfilling its oversight responsibilities by monitoring the effectiveness of the company’s systems of financial reporting, auditing, internal controls and legal and regulatory compliance and monitoring the company’s significant insurance programs. Our internal auditor and independent registered public accounting firm meet

regularly in executive session with the audit committee. As part of its responsibilities as set forth in its charter, the corporate personnel committee is responsible for overseeing the company’s assessment of whether its compensation policies and practices are reasonably likely to expose the company to material risks and, in consultation with management, is also responsible for overseeing the company’s compliance with regulations governing executive compensation. The nominating and corporate governance committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with the company’s board leadership structure and corporate governance matters. The public policy committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with our environmental policy and implementation programs, governmental and community relations and information programs, human rights, social, community and employment policies and practices, health and safety programs and charitable and philanthropic contributions. Each committee regularly reports on these matters to the full board.

 

Board and Committee Independence and Audit Committee Financial Experts

 

On the basis of information solicited from each director, and upon the advice and recommendation of the nominating and corporate governance committee, the board has affirmatively determined that each of Messrs. Allison, Day, Ford, Graham, Krulak, Lackey, Madonna, McCoy and Siegele has no material relationship with the company and is independent within the meaning of our corporate governance guidelines, which comply with the applicable NYSE listing standards and SEC rules. In making this determination, the nominating and corporate governance committee, with assistance from the company’s legal counsel, evaluated responses to a questionnaire completed annually by each director regarding relationships and possible conflicts of interest between each director, the company and management. In its review of director independence, the committee considered the commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships any director may have with the company or management. The nominating and corporate governance committee recommended to the board that the nine directors named above be considered independent, which the board approved.

 

The board has determined that each of the members of the audit, corporate personnel, and nominating and corporate governance committees has no material relationship with the company and satisfies the independence criteria (including the enhanced criteria with respect to members of the audit committee) set forth in the applicable NYSE listing standards and SEC rules. In addition, the board has determined that each of the following members of the audit committee — Messrs. Day, Ford, Graham and Madonna — qualifies as an “audit committee financial expert,” as such term is defined by the rules of the SEC.

 

Director Stock Ownership Guidelines

 

In 2006, the nominating and corporate governance committee adopted stock ownership guidelines applicable to our directors. Under the guidelines, each non-management director is encouraged to maintain ownership of company stock valued at five times his or her annual retainer, determined by reference to the one-year or five-year trailing average monthly stock price. Shares of common stock currently owned by the directors are counted for purposes of the stock ownership guidelines, as are shares held in individual retirement accounts, shares issuable upon the vesting of outstanding restricted stock units, shares issuable upon conversion of mandatory convertible preferred stock and shares held in certain trusts. As of December 31, 2009, all of our non-management directors had reached or exceeded their target ownership levels.

 

Consideration of Director Nominees

 

In evaluating nominees for membership on the board, the nominating and corporate governance committee applies the board membership criteria set forth in our corporate governance guidelines. Under these criteria, the committee will take into account many factors, including personal and professional integrity, general understanding of our industry, corporate finance and other matters relevant to the successful management of a large publicly traded company in today’s business environment, educational and professional background, independence, and the ability and willingness to work cooperatively with other members of the board and with senior management. In selecting nominees, the committee seeks to have a board that represents

a diverse range of perspectives and experience relevant to our company. The committee will also evaluate each individual in the context of the board as a whole, with the objective of recommending nominees who can best perpetuate the success of the business, be an effective director in conjunction with the full board, and represent stockholder interests through the exercise of sound judgment using their experience in these various areas.

 

Our nominating and corporate governance committee regularly assesses the appropriate size of the board, and whether any vacancies on the board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the committee will consider various potential candidates who may come to the attention of the committee through current board members, professional search firms, stockholders or other persons. Each candidate brought to the attention of the committee, regardless of who recommended such candidate, is considered on the basis of the criteria set forth in our corporate governance guidelines.

 

As stated above, the nominating and corporate governance committee will consider candidates proposed for nomination by our stockholders. Stockholders may propose candidates by submitting the names and supporting information to: Corporate Secretary, Freeport-McMoRan Copper & Gold Inc., 333 North Central Avenue, Phoenix, Arizona 85004. Supporting information should include (a) the name and address of the candidate and the proposing stockholder, (b) a comprehensive biography of the candidate and an explanation of why the candidate is qualified to serve as a director taking into account the criteria identified in our corporate governance guidelines, (c) proof of ownership, the class and number of shares, and the length of time that the shares of our voting securities have been beneficially owned by each of the candidate and the proposing stockholder, and (d) a letter signed by the candidate stating his or her willingness to serve, if elected.

 

In addition, our by-laws permit stockholders to nominate candidates directly for consideration at next year’s annual meeting of stockholders. Any nomination must be in writing and received by our corporate secretary at our principal executive office no later than February 9, 2011. If the date of next year’s annual meeting is moved to a date more than 90 days after or 30 days before the anniversary of this year’s annual meeting, the nomination must be received no later than 90 days prior to the date of the 2011 annual meeting or 10 days following the public announcement of the date of the 2011 annual meeting. Any stockholder submitting a nomination under our by-law procedures must include (a) all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), and (b) the name and address (as they appear on the company’s books) of the nominating stockholder and the class and number of shares beneficially owned by such stockholder. Nominations should be addressed to: Corporate Secretary, Freeport-McMoRan Copper & Gold Inc., 333 North Central Avenue, Phoenix, Arizona 85004.

 

Communications with the Board

 

Stockholders or other interested parties may communicate directly with one or more members of our board, or the non-management directors as a group, by writing to the director or directors at the following address: Freeport-McMoRan Copper & Gold Inc., Attn: Board of Directors or the name of the individual director or directors, 333 North Central Avenue, Phoenix, Arizona 85004. The company will forward the communication to the appropriate directors.

 

We use a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on the board. In setting director compensation, we consider the significant amount of time directors dedicate in fulfilling their duties as directors as well as the skill-level required by the company to be an effective member of the board. The form and amount of director compensation is reviewed by the nominating and corporate governance committee, which makes recommendations to the full board.

 

Cash Compensation

 

Each non-management director receives an annual fee of $70,000. Committee chairs receive an additional annual fee as follows: audit committee, $20,000; corporate personnel committee, $15,000; and public policy committee and nominating and corporate governance committee, $10,000. Committee members, excluding the committee chairman, receive an additional annual fee as follows: audit committee, $10,000; corporate personnel committee, $7,500; and public policy committee and nominating and corporate governance committee, $5,000. Each non-management director receives a fee of $1,500 for attending each board and committee meeting (for which he or she is a member) and is reimbursed for reasonable out-of-pocket expenses incurred in attending such meetings. Effective May 2009, management directors do not receive a fee for attending board meetings. The compensation of each of Messrs. Moffett and Adkerson is reflected in the “Summary Compensation Table” included in this proxy statement.

 

Equity-Based Compensation

 

Non-management directors and advisory directors receive equity-based compensation under our stock incentive plans. Each non-management director receives an annual grant of options to acquire 10,000 shares of our common stock and 2,000 restricted stock units. The options are granted at fair market value on the grant date, vest ratably over the first four anniversaries of the grant date and expire on the tenth anniversary of the grant date. The restricted stock units also vest ratably over the first four anniversaries of the grant date. Each restricted stock unit entitles the director to receive one share of our common stock upon vesting. Dividend equivalents are accrued on the restricted stock units on the same basis as dividends are paid on our common stock and include market rate interest. The dividend equivalents are only paid upon vesting of the shares of our common stock. In addition, upon initial election to the board other than at an annual meeting, a director will receive a pro rata grant of options and restricted stock units. Since 2004, these equity awards have been made automatically pursuant to the 2004 Director Compensation Plan (2004 Plan). In June 2009, there were insufficient shares remaining available to grant these awards in full. Accordingly, on June 1, 2009, each non-management director was granted options to acquire 10,000 shares of common stock with an exercise price of $58.12 under the 2004 Plan, and on December 8, 2009, each non-management director was granted 2,000 restricted stock units under the proposed Amended and Restated 2006 Stock Incentive Plan, which awards are subject to approval of the Amended and Restated 2006 Stock Incentive Plan at the annual meeting. See “Proposal to Adopt the Amended and Restated 2006 Stock Incentive Plan” for more information.

 

The 2004 Plan provides that participants may elect to exchange all or a portion of their annual fee for an equivalent number of shares of our common stock on the payment date, based on the fair market value of our common stock on the date preceding the payment date. The 2004 Plan further provides that participants may elect to defer all or a portion of their annual fee and meeting fees, and that such deferred amounts will accrue interest at a rate equal to the prime commercial lending rate announced from time to time by JPMorgan Chase (compounded quarterly), and shall be paid out at such time or times as directed by the participant. See footnote (1) to the “Director Compensation” table for details regarding participation in this program by our directors.

 

Revised Retirement Plan for Current Non-Management Directors

 

In April 2008, we revised our retirement plan for non-management directors who reach age 65 and are entitled to a retirement benefit based on the annual director fees. We froze the benefit under this plan for our existing directors and terminated the plan for any future directors. Under the plan, as revised, an eligible

current director is entitled to an annual benefit up to a maximum of $40,000 (the prior level of annual director fees), depending on the number of years the retiree served as a non-management director for us or our predecessors. The percentage of the maximum annual benefit, which is at least 50% but not greater than 100%, will depend on the number of years the retiree served as a non-management director for us or our predecessors. The benefit is payable from the date of retirement until the retiree’s death. Each eligible director who was also a director of Freeport-McMoRan Inc., our former parent, and who did not retire from that board of directors, will receive upon retirement from our board an additional annual benefit of $20,000, which is also payable from the date of retirement until the retiree’s death.

 

The chart below identifies the current non-management directors who would have been eligible to participate in the retirement plan as of December 31, 2009, and summarizes the projected benefit to each assuming the director had retired from our board of directors on such date:

 

 

 

 

Matching Gifts Program

 

Our foundation (the Foundation) administers a matching gifts program, which is available to our directors, officers, employees, full-time consultants and certain retirees. Under the program, the Foundation will match a participant’s gifts to eligible institutions, including educational institutions, educational associations, educational funds, cultural institutions, social service community organizations, hospital organizations and environmental organizations. The Foundation provides the gifts directly to the institution. For directors, the Foundation double matches the first $1,000 of donations per year per eligible institution. Donations above $1,000 are single matched. The annual amount of our matching gifts for any director may not exceed $40,000.

2009 Director Compensation

 

The table below summarizes the total compensation paid to or earned by our non-management directors during 2009.

 

2009 Director Compensation

 

 

 

 

Name of Director		RSUs				Options				SARs(†)
Robert J. Allison, Jr.			7,000				69,400				—
Robert A. Day			3,000				100,000				26,224
Gerald J. Ford			3,000				100,000				26,224
H. Devon Graham, Jr.			8,000				47,500				—
Charles C. Krulak			3,500				35,000				—
Bobby Lee Lackey			3,500				35,000				—
Jon C. Madonna			3,500				35,000				—
Dustan E. McCoy			3,500				35,000				—
B. M. Rankin, Jr.			3,000				40,000				—
Stephen H. Siegele			3,000				40,000				—
J. Bennett Johnston			10,000				45,000				—
Gabrielle K. McDonald			3,000				47,500				4,917
J. Stapleton Roy			10,000				52,500				417
J. Taylor Wharton			7,500				72,500				8,195

(4)		Amounts reflect the aggregate change in the actuarial present value of each director’s accumulated benefit under the revised retirement plan as calculated in accordance with Item 402 of Regulation S-K. The following directors had a negative change in the actuarial present value of the pension benefit as follows: Messrs. Johnston $(4,928), Lackey $(1,584), Rankin $(5,864) and Wharton $(1,584). A negative change in actuarial present value of the pension benefit occurred in 2009 due to changes in the discount rate and/or decreasing life expectancies when the director continues to provide services past the normal retirement date age of 65. As noted above, the director retirement plan has been terminated for any future directors.
(5)		Includes (a) the company’s match pursuant to the matching gifts program, (b) consulting fees received in connection with the consulting arrangements described under “Certain Transactions” below, (c) interest credited on dividend equivalents on unvested RSUs during 2009 and (d) the dollar value of life insurance premiums and the related tax reimbursement paid by the company pursuant to an arrangement assumed by the company in connection with its acquisition of Phelps Dodge Corporation as follows:

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(6)		For Mr. Johnston and Ms. McDonald, the $75,000 annual fee for serving on our board and for serving as a member of our public policy committee is included in the consulting fees paid to each of Mr. Johnston and Ms. McDonald, which are reflected in the “All Other Compensation” column.
(7)		As described under “Certain Transactions,” Mr. Roy is Vice Chairman of Kissinger Associates, Inc., which received $200,000 in 2009 from FM Services Company (the Services Company), one of our wholly owned subsidiaries, for the provision of consulting services. Because these fees are not paid to Mr. Roy, we have not included them in this table.

 

Election of Directors

 

Information About Director Nominees

15

						Year First
				Principal Occupation, Business Experience, and		Elected a
Name of Director		Age		Other Directorships		Director
Richard C. Adkerson		63		Chief Executive Officer of the Company since December 2003. President of the Company since January 2008 and from April 1997 to March 2007. Chief Financial Officer of the Company from October 2000 to December 2003. Current Co-Chairman of the Board of McMoRan Exploration Co. (McMoRan). President and Chief Executive Officer of McMoRan from 1998 to 2004. Vice Chairman of Freeport-McMoRan Inc. from 1995 to 1997. Chairman, Chief Executive Officer & President of Stratus Properties Inc. from 1992 to 1998. Partner and Managing Director of Arthur Andersen & Co. from 1978 to 1989. Professional Accounting Fellow with the Securities and Exchange Commission and Presidential Exchange Executive from 1976 to 1978. Holds B.S. and M.B.A. in Accounting from Mississippi State University and completed Advanced Management Program at Harvard Business School.		2006
				Mr. Adkerson is an experienced business leader making him highly qualified to serve as a member of our board of directors. As President and Chief Executive Officer, he is responsible for the executive management of our company. He has demonstrated exceptional leadership abilities in developing and executing a financial strategy that has benefited our stockholders, and in building an operational, financial and administrative organization that efficiently supports our business. Mr. Adkerson is recognized as a mining industry leader, currently serving as Chairman of the International Council on Mining and Metals and on the Executive Board of the International Copper Association.
Robert J. Allison, Jr.		71		Director and Chairman Emeritus of Anadarko Petroleum Corporation. Chairman of the Board of Anadarko Petroleum Corporation from 1986 to 2005. President and Chief Executive Officer of Anadarko Petroleum Corporation from 1979 to 2002 and March 2003 to December 2003. Holds B.S. in Petroleum Engineering from The University of Kansas.		2001
				Mr. Allison’s experience serving as the former President and Chief Executive Officer and Chairman of the Board of one of the largest independent oil and gas exploration and production companies in the world provides him with a wealth of knowledge in dealing with operational, strategic, financial, regulatory and international matters at the board level. His business and board experience make him highly qualified to serve as the chairman of our nominating and corporate governance committee.

16

						Year First
				Principal Occupation, Business Experience, and		Elected a
Name of Director		Age		Other Directorships		Director
Robert A. Day		66		Chairman of the Board, Chief Executive Officer and founder of Trust Company of the West, an investment management company and one of the largest independent trust companies in the U.S. Chairman of the Board of TCW Group, a registered investment management company. Chairman of Oakmont Corporation, a registered investment advisor. Chairman, President and Chief Executive Officer of W. M. Keck Foundation, a national philanthropic organization. Holds B.S. in Economics from Claremont McKenna College. Current director of McMoRan. Former director of Fisher Scientific International, Syntroleum Corp. and Société Générale.		1995
				Mr. Day is an experienced entrepreneur and financial leader with the skills necessary to serve on our board of directors and to lead our audit committee. With his extensive experience in the financial services industry, Mr. Day is well-versed in accounting principles and financial reporting rules and regulations, and is equipped to evaluate financial results and generally oversee the financial reporting process of a large corporation. Mr. Day brings significant business and finance experience to our board and provides insight into strategies and solutions to address an increasingly complex business environment.
Gerald J. Ford		65		Chairman of the Board of Diamond-A Ford Corp. from 1994 to present. General Partner of Ford Financial Fund, L.P., a private equity firm, from January 2010 to present. Chairman of the Board and Chief Executive Officer of Golden State Bancorp, Inc. and its wholly owned subsidiary, California Federal Bank, a Federal Savings Bank, from 1998 through its 2002 merger with Citigroup Inc. Chief Executive Officer of First Acceptance Corporation from 1994 to 2002. Holds B.A. in Economics and J.D. from Southern Methodist University. Current director of McMoRan, First Acceptance Corporation, Hilltop Holdings Inc. and Scientific Games Corporation. Former director of Liberté Investors, Inc., Americredit Corp., and Affordable Residential Communities.		2000
				Mr. Ford has been a financial institutions entrepreneur and private investor involved in numerous mergers and acquisitions of private and public sector financial institutions over the past 30 years. His extensive banking industry experience and educational background provide him with significant knowledge in dealing with financial, accounting and regulatory matters, making him a valuable member of our board of directors. In addition, his service on the board of directors and audit and corporate governance committees of a variety of public companies gives him a deep understanding of the role of the board.

17

						Year First
				Principal Occupation, Business Experience, and		Elected a
Name of Director		Age		Other Directorships		Director
H. Devon Graham, Jr.		75		President of R. E. Smith Interests, an asset management company, from 1997 to present. U.S. Regional Managing Partner, Arthur Andersen & Co. from 1985 to 1997. Chairman of the Board of Partners of Arthur Andersen & Co. from 1984 to 1986. Holds B.S. in Accounting from Mississippi State University. Current director of McMoRan.		2000
				Mr. Graham’s 41-year career in public accounting with an international accounting firm, where he served in various leadership positions, including Chairman of the Board of Partners, member of the Worldwide Executive Committee, U.S. Regional Managing Partner, member of the U.S. Leadership Committee and Chairman of the Industry Steering Committee, make him a valuable member of our board of directors. In addition, his prior management experiences provide him with the necessary skills to lead our corporate personnel committee.
Charles C. Krulak		68		Former Commandant, United States Marine Corps, the Marine Corps’ highest-ranking officer. Retired from United States Marine Corps in 1999 after serving 35 years. Executive Vice Chairman and Head of Mergers and Acquisitions of MBNA Corp., a financial services company, from March 2004 to June 2005. Chief Executive Officer of MBNA Europe from January 2001 to March 2004, and Senior Vice Chairman of MBNA America from 1999 to 2001. Holds B.S. in Engineering from U.S. Naval Academy and M.S. in Labor Relations from George Washington University. Current director of Union Pacific Corporation and the Aston Villa Football Club, U.K. Former director of ConocoPhillips and Phelps Dodge Corporation.		2007
				As a retired Commandant of the United States Marine Corps, General Krulak brings a unique perspective to our board. His successful record of leadership and military service makes him highly suited to understand and oversee the complex managerial, strategic and international considerations addressed by our board. General Krulak’s service on the boards of other public companies allows him to provide our board with a variety of insights.
Bobby Lee Lackey		72		Consultant. President and Chief Executive Officer of McManus-Wyatt-Hidalgo Produce Marketing Co., shipper of fruits and vegetables from 1998 to 2000. Chairman of the Board and Chief Executive Officer of McManus Produce Co., Inc., McManus Cotton Gin, Inc. and McManus Ice Co., Inc. from 1968 to 1998. Former President of Texas Citrus and Vegetable Growers & Shippers Association. Attended The University of Texas at Austin.		1995
				Mr. Lackey’s 40-year career in the agricultural business where he served in various leadership positions, including President and Chief Executive Officer, makes him a valuable member of our board of directors. This experience provides him with a broad understanding of the operational, financial and strategic issues facing our company.

18

						Year First
				Principal Occupation, Business Experience, and		Elected a
Name of Director		Age		Other Directorships		Director
Jon C. Madonna		66		Retired Chairman and Chief Executive Officer of KPMG, an international accounting and consulting firm. Retired from KPMG in 1996 having held numerous senior leadership positions throughout his 28-year career. Chairman of DigitalThink, Inc. from April 2002 to May 2004 and Chief Executive Officer of DigitalThink, Inc. from 2001 to 2002. President and Chief Executive Officer of Carlson Wagonlit Corporate Travel, Inc. from 1999 to 2000 and Vice Chairman of Travelers Group, Inc. from 1997 to 1998. Holds B.S. in Accounting from The University of San Francisco. Current director of AT&T Inc. and Tidewater Inc. Former director of Albertson’s, Inc., Visa Inc., Jazz Technologies, Inc. and Phelps Dodge Corporation.		2007
				Mr. Madonna’s long career in public accounting with an international accounting firm and his service as an executive and a director for several publicly traded companies provides him with extensive experience in dealing with financial, accounting and regulatory matters at the board level and gives him a deep understanding of the role of the board and expectations of our directors. In addition, his service on the audit and nominating committees of public companies in a variety of industries positions him well to serve as a member of our audit committee and to provide insights into strategies and solutions to address the challenges of our business.
Dustan E. McCoy		60		Chairman and Chief Executive Officer since December 2005 of Brunswick Corporation, a leading, publicly traded, global manufacturer and marketer of recreation products including marine engines, boats, fitness equipment and bowling and billiards equipment. President of the Brunswick Boat Group from 2000 until 2005. Joined Brunswick in 1999 as Vice President, General Counsel and Corporate Secretary. Prior to joining Brunswick, served as Executive Vice President for Witco Corporation, a publicly traded specialty chemical products company, with operating responsibility for a variety of global businesses and functions and served as Senior Vice President, General Counsel and Corporate Secretary. Holds B.S. in Political Science from Eastern Kentucky University and J.D. in Law from Salmon P. Chase College of Law. Current director of Louisiana-Pacific Corporation. Former director of Phelps Dodge Corporation.		2007
				Mr. McCoy’s experience serving as Chairman and Chief Executive Officer of a large, global publicly traded company provides him with a broad understanding of the operational, financial and strategic issues facing our company. In addition, his experience and qualifications as a general counsel enable him to provide insight in addressing legal and regulatory matters.

19

						Year First
				Principal Occupation, Business Experience, and		Elected a
Name of Director		Age		Other Directorships		Director
James R. Moffett		71		Chairman of the Board of the Company from 1992 to present. Chief Executive Officer of the Company from 1995 to 2003. Co-Chairman of the Board of McMoRan. Received Horatio Alger Association of Distinguished Americans Award in 1990. Received Norman Vincent Peale Award in 2000 for exceptional humanitarian contributions to society. Holds B.S. with special honors in Geology from The University of Texas at Austin and M.S. in Geology from Tulane University.		1992
				Mr. Moffett, one of the founders of our company, has extensive expertise as a practicing geologist and with respect to our business operations, making him uniquely qualified to lead our board. In 1969, he and two associates founded McMoRan Oil & Gas Co., which developed into one of America’s leading independent oil and gas companies. In 1981, Mr. Moffett led the effort to merge McMoRan Oil & Gas Co. and Freeport Minerals Company. The merger resulted in the establishment of a new company, Freeport-McMoRan Inc., our former parent company, which became one of the world’s leading natural resource companies of which he served as Chairman and Chief Executive Officer from 1984 until 1997 when it was acquired. Through his leadership and skill as a geologist, Mr. Moffett has guided our growth through significant discoveries of metal reserves and the development of our mines, milling facilities and infrastructure. As executive chairman, he continues to further our business strategy by applying his exceptional talents and experience as a geologist. He directs our global exploration programs and continues to be instrumental in fostering our relationship with the government of Indonesia, the location of our Grasberg mine.

20

						Year First
				Principal Occupation, Business Experience, and		Elected a
Name of Director		Age		Other Directorships		Director
B. M. Rankin, Jr.		80		Private investor. Vice Chairman of the Board of the Company from 2001 to present. Current Vice Chairman of the Board of McMoRan. Chairman of U.S. Oil and Gas Association from 2008 to 2010. McCombs School of Business, The University of Texas at Austin Hall of Fame, 2006. Hunt Oil Company 1955 to 1967. Holds B.B.A. from The University of Texas at Austin. Former director of Texas Mid-Continent Oil and Gas Association.		1995
				Mr. Rankin is one of the founders of our company and has more than 50 years of experience in the natural resources industry. In 1969, along with Mr. Moffett and another associate, he founded McMoRan Oil & Gas Co., which developed into one of America’s leading independent oil and gas companies. In 1981, McMoRan Oil & Gas Co. and Freeport Minerals Company merged, resulting in the establishment of one of the world’s leading natural resource companies, Freeport-McMoRan Inc., our former parent company. As a founder, he has a comprehensive understanding of our company and its management, operations and financial requirements. With his detailed knowledge of our business and his perspectives regarding strategic and operational opportunities and challenges facing us, he continues to provide valuable insight to our board of directors.
Stephen H. Siegele		50		Private investor. Founder and Chief Executive of Advanced Delivery & Chemical Systems, Inc. (ADCS), a worldwide leader in advanced chemicals and delivery hardware serving markets in Asia, Europe and the U.S., from 1988 to 1997. In 1997, ADCS merged with Advanced Technology Materials, Inc., a public company, where Mr. Siegele became a divisional president and Vice Chairman of the Board of Directors until his retirement in 2000. He then founded Fluorine On Call, Ltd., a private company that designs and manufactures high purity fluorine generators. Mr. Siegele retired from Fluorine On Call, Ltd. in April 2006. Holds B.S. in Chemical Engineering from the University of Wisconsin-Madison, and is an inventor of numerous U.S. patents.		2006
				Mr. Siegele has extensive experience as an entrepreneur and inventor within the semiconductor, microelectronics and chemical industries, and as a director and senior manager of public and private companies. These experiences provide him with a strong background in addressing the strategic, operational, financial and technical matters presented to our board, and make him highly qualified to serve as chairman of our public policy committee.

21

Stock Ownership of Directors and Executive Officers

						Number of
		Number of				Shares Subject				Total Number
		Shares Not				to Exercisable				of Shares				Percent
		Subject to				Options and				Beneficially				of
Name of Beneficial Owner		Options				Vesting of RSUs(1)				Owned(2)				Class(3)
Richard C. Adkerson(4)			913,165				1,500,000				2,413,165				*
Robert J. Allison, Jr.(5)			65,553				59,900				125,453				*
Michael J. Arnold(6)			66,882				348,750				415,632				*
Robert A. Day(7)			633,000				86,500				719,500				*
Gerald J. Ford			23,291				86,500				109,791				*
H. Devon Graham, Jr.			4,000				39,000				43,000				*
J. Bennett Johnston			65,647				38,500				104,147				*
Charles C. Krulak			1,750				20,250				22,000				*
Bobby Lee Lackey			6,921				22,000				28,921				*
Jon C. Madonna			5,090				20,250				25,340				*
Dustan E. McCoy			1,750				20,250				22,000				*
Gabrielle K. McDonald			9,513				34,000				43,513				*
James R. Moffett(8)			1,609,078				750,000				2,359,078				*
Kathleen L. Quirk			92,939				643,250				736,189				*
B. M. Rankin, Jr.(9)			486,500				26,500				513,000				*
J. Stapleton Roy			21,941				46,000				67,941				*
Stephen H. Siegele(10)			108,583				23,500				132,083				*
J. Taylor Wharton(11)			45,734				63,500				109,234				*
Directors, named executive officers and executive officers as a group (18 persons)			4,161,337				3,828,650				7,989,987				1.8	%

*		Ownership is less than 1%
(1)		Reflects our common stock that could be acquired within sixty days of the record date upon the exercise of options, the vesting of RSUs granted pursuant to our stock incentive plans and the termination of deferrals on previously vested RSUs.

22

(2)		In addition to the RSUs included in “Number of Shares Subject to Exercisable Options and Vesting of RSUs,” each beneficial owner holds the following unvested RSUs, which are not included in the table above:

		For more information regarding the RSUs, see the sections titled “Director Compensation,” “Compensation Discussion and Analysis” and “Executive Officer Compensation — Grants of Plan Based Awards.”
(3)		Based on 431,576,428 shares of our common stock outstanding as of April 13, 2010.
(4)		Includes 8,248 shares of our common stock held in his individual retirement account (IRA). Mr. Adkerson has entered into a forward sale contract with a securities broker pursuant to which he agreed to sell up to 250,000 shares of common stock on August 6, 2011, with the exact number of shares to be delivered on the maturity date determined by the closing price on such date. Mr. Adkerson may elect to settle the contract in cash and retain ownership of the shares. Mr. Adkerson has pledged 250,000 shares to secure his obligations under this contract but continues to hold beneficial ownership and voting power with respect to the 250,000 shares. In addition, Mr. Adkerson has pledged 434,691 shares of our common stock to secure a line of credit.
(5)		Includes 29,622 shares of our common stock held by Mr. Allison through a Grantor Retained Annuity Trust (GRAT) and 29,622 shares of our common stock held by Mr. Allison’s spouse through a GRAT.
(6)		Includes 2,459 shares of our common stock held in our Employee Capital Accumulation Program (ECAP).
(7)		Includes 21,000 shares of our common stock held by his spouse, as to which he disclaims beneficial ownership.
(8)		Includes (a) 1,575,441 shares of our common stock held by a limited liability company with respect to which Mr. Moffett, as a member, shares voting and investment power, (b) 26,085 shares of our common stock held in our ECAP and (c) 7,552 shares of our common stock held by his spouse, as to which he disclaims beneficial ownership. The limited liability company through which Mr. Moffett owns his shares

23

		has entered into four forward sale contracts with a securities broker pursuant to which the limited liability company agreed to sell: (a) 300,000 shares of common stock on September 5, 2012, 85,799 shares of common stock on March 15, 2013, and 150,000 shares of common stock on November 3, 2014, with the sale price to be determined and paid on the respective maturity dates, and (b) up to 750,000 shares on November 3, 2014 with exact number of shares to be delivered on the maturity date determined by the closing price on such date, and in exchange for which the limited liability company received a payment upon execution of the contract. Under all four contracts, the limited liability company may elect to settle the contract in cash and retain ownership of the shares. The limited liability company has pledged a total of 1,285,799 shares in part to secure its obligations under these contracts but continues to hold beneficial ownership, voting power and the right to receive quarterly dividend payments of up to $0.3125 per share with respect to 385,799 of the shares.
(9)		Of the shares shown, 450,000 are held by a limited partnership in which Mr. Rankin is the sole shareholder of the sole general partner. The limited partnership through which Mr. Rankin owns his shares has entered into two contracts with a securities broker pursuant to which the limited partnership agreed to sell shares of our common stock, which contracts are described as follows: (a) a prepaid forward sale contract relating to 200,000 shares pursuant to which the limited partnership received a payment upon execution of the agreement, and the exact number of shares to be delivered on the settlement date, August 11, 2010, will be determined by the closing price on such date, and (b) a range forward sale contract pursuant to which the limited partnership agreed to sell 100,000 shares on March 3, 2011, with the sale price to be determined and paid on the maturity date, and under which the limited partnership may elect to settle the contract in cash and retain ownership of the shares. The limited partnership has pledged a total of 300,000 shares to secure its obligations under these contracts but continues to hold beneficial ownership, voting power and the right to receive quarterly dividend payments of up to $0.15 per share with respect to 100,000 shares and quarterly contractual dividend payments of $0.25 subject to certain broker adjustments with respect to 200,000 shares.
(10)		Includes 41,148 shares issuable upon conversion of 30,000 shares of our 63/4% Mandatory Convertible Preferred Stock.
(11)		Includes (a) 26,937 shares of our common stock held by Mr. Wharton’s spouse, (b) 160 shares of our common stock held in an IRA for Mr. Wharton’s spouse, (c) 420 shares of our common stock held in his IRA, and (d) 5,089 shares of our common stock held by Mr. Wharton as custodian for his daughter.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Stock Ownership of Certain Beneficial Owners

(1)		Based on 430,151,500 shares of our common stock outstanding as of December 31, 2009.
(2)		Based on a Schedule 13G filed with the SEC on January 29, 2010 by BlackRock, Inc. on its own behalf and on behalf of its subsidiaries identified therein.

24

 

Executive Officer Compensation

 

Compensation Discussion and Analysis

	•	pay for performance by emphasizing performance-based compensation that balances rewards for both short- and long-term results and provides our executives with high reward opportunities for high corporate performance,
	•	tie compensation to the interests of stockholders, and
	•	provide a competitive level of compensation that will attract and retain talented executives.

	•	Proposed a redesigned annual incentive plan, which was approved by our stockholders in 2009. See “Annual Incentive Awards” for more information.
	•	Eliminated the elective restricted stock unit program, which permitted our executive officers and other employees to elect to receive restricted stock units at a 50% premium in lieu of some or all of their annual cash incentive award.
	•	Revised our option grant policy for executives to provide annual grants rather than grants once every three years.
	•	Terminated our long-term performance incentive plan.
	•	Adopted a policy pursuant to which the company will no longer provide excise tax gross-up protections in change of control arrangements adopted, renewed or extended after December 2, 2008.
	•	Revised our executive perquisite program to eliminate all tax gross-ups on perquisites and all club dues.

25

	Ø	Successful implementation of our revised operating plans under volatile conditions
	Ø	Sales for both copper and gold exceeded targets

	o	4.1 billion pounds of copper (target: 3.9 billion pounds)
	o	2.6 million ounces of gold (target: 2.2 million ounces)

	Ø	Positive safety performance — total reportable rate more than 30% below target
	Ø	Significant reductions in our cost structure, particularly in North America where unit site production and delivery costs were reduced by 34% from 2008 ($1.25 per pound of copper for 2009 versus $1.88 per pound of copper for 2008)
	Ø	Positive exploration results resulting in net reserve additions on a consolidated basis of

	o	6.3 billion pounds of copper replacing approximately 150% of 2009 copper production
	o	164 million pounds of molybdenum replacing approximately 300% of 2009 molybdenum production

	Ø	Successful start-up of Tenke Fungurume operations

	o	Achieved design production rates for copper; continued to address start up of cobalt production
	o	Based on the 10-year average of current design operations, the initial phase will produce aggregate annual metal of 250 million pounds of copper and 18 million pounds of cobalt

	Ø	Effective management of challenging security issues at PT Freeport Indonesia’s operations
	Ø	Maintenance of future growth opportunities

	o	North America — positioned to initiate restart activities at curtailed operations as market conditions improve; continued exploration and studies for future expansion at North American sites; acquired Twin Buttes to enhance options in the Sierrita district; maintained Climax primary molybdenum development opportunity to resume construction rapidly as market conditions warrant
	o	South America — resumed construction activities for development of a large sulfide ore deposit at El Abra; commenced project to optimize throughput at the existing Cerro Verde concentrator operations; continued studies for major mill projects at Cerro Verde and El Abra
	o	Indonesia — continued development of the large-scale, high-grade underground ore bodies at Grasberg
	o	Africa — continued exploration activities for long range planning; initiated feasibility study for second phase expansion

	Ø	Strong stock performance

	o	229% increase in common stock price
	o	Top performing metal & mining company and top ten performer in S&P 500

	Ø	Enhanced financial and liquidity position

	o	Repaid $1 billion in debt during the year
	o	Successfully completed $750 million public offering of common stock in the first quarter of 2009

	Ø	Reinstatement of annual cash dividends to stockholders at $0.60 per share

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Principal Components of
Compensation		Summary and Purpose of the Component
Base Salaries		Base salaries provide fixed compensation to our executives. Each executive officer’s base salary is based on his or her level of responsibility. Pursuant to their employment agreements, the base salary of Mr. Moffett is contractually set through December 31, 2010, and the base salaries of Mr. Adkerson and Ms. Quirk are contractually set through January 1, 2012.
Annual Incentive Awards		Annual cash incentives payable under our annual incentive plan (AIP) are a variable component of compensation designed to reward our executives for maximizing annual operating performance, including safety performance. The aggregate plan funding amount for the annual cash awards is based on our net cash provided by operating activities, which we believe is a significant measure of our company’s success.

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Principal Components of
Compensation		Summary and Purpose of the Component
Long-Term Incentive Awards		Long-term incentives are also a variable component of compensation intended to reward our executives for the company’s success in achieving sustained, long-term profitability and increases in stock value. We provide long-term incentive awards in the form of performance-based restricted stock units and stock options, which provide a focus on stock price performance and encourage executive ownership of our stock.

	•	its design supports the entrepreneurial spirit of the organization;
	•	its focus on operating cash flow, the underlying metric of the plan, reflects our goal to maximize cash flows and long-term values for our stockholders; and
	•	our view that the variability of cash flows associated with changes in commodity prices, changes in production volumes, cost management and other changes in business conditions closely aligns management and stockholder interests.

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	•	the plan funding pool will be 0.625% of operating cash flow instead of 2.5%;
	•	payments to executives under the plan may not exceed eight times the executive’s base salary; and
	•	any payments over four times the executive’s base salary will be made in restricted stock units having an equivalent value, the vesting of which will be subject to our continued achievement of the 6% return on investment threshold, thus converting a portion of the annual award to a long-term incentive dependent upon the company’s continued performance.

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		2009 AIP												2008 AIP
										Aggregate Value				Aggregate Value of
		Dollar Value				Dollar Value				Awarded Based on				2008 AIP Cash
		Paid in Cash				Paid in RSUs				Adjusted Award Pool				Payments
Name		(in millions)				(in millions)				(in millions)				(in millions)
Mr. Moffett*		$	10.0			$	2.9			$	12.9			$	0.0
Mr. Adkerson*			10.0				2.9				12.9				0.0
Ms. Quirk			2.6				1.0				3.6				1.0
Mr. Arnold			2.2				0.7				2.9				1.0
Totals		$	24.8			$	7.5			$	32.3			$	2.0

*		Messrs. Moffett and Adkerson declined to receive any payments under our AIP for 2008.

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						Black-Scholes Value								Black-Scholes Value
						of Options								of Options
		Number of Options				Granted in				Number of Options				Granted
		Granted in				February 2009				Granted in				in February 2010
Executive		February 2009				(in millions)				February 2010				(in millions)
James R. Moffett			500,000			$	6.78				500,000			$	15.42
Richard C. Adkerson			500,000				6.78				500,000				15.42
Kathleen L. Quirk			150,000				2.03				150,000				4.63
Michael J. Arnold			120,000				1.63				120,000				3.70

										Black-Scholes
						Aggregate Value				Value of				Value of Restricted
						of AIP				Stock Options				Stock Units
Executive		Base Salary				Award(2)				Granted(3)				Granted(3)				Total
James R. Moffett		$	2.50			$	12.90			$	15.42			$	2.90			$	33.72
Richard C. Adkerson			2.50				12.90				15.42				2.90				33.72
Kathleen L. Quirk			0.65				3.60				4.63				1.02				9.90
Michael J. Arnold			0.55				2.90				3.70				1.02				8.17

(1)		Does not include the value of perquisites and personal benefits, as well as commitments for post-employment compensation, which amounts are included in the Summary Compensation Table and supplementary tables below.

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(2)		As discussed in more detail above, the committee exercised its discretion under our annual incentive plan to reduce the 2009 awards to the award limits under our new annual incentive plan, which will be effective for fiscal year 2010. As a result, each executive’s cash award was limited to four times his or her base salary, and amounts above that were awarded in an equivalent number of restricted stock units. See “Executive Compensation Program — Annual Incentive Awards” for more information.
(3)		In addition to the value of RSUs granted in connection with our annual incentive plan for 2009, the committee also made long-term equity awards to each executive officer in the form of stock options and performance-based restricted stock units. Although awarded in February 2010, the committee views these grants as part of the executives’ 2009 total direct compensation. See the description of these awards under “Executive Compensation Program — Long-Term Incentive Awards.”

	•	Personal use of company aircraft — this benefit is only provided to our chairman of the board and our chief executive officer and is designed to provide an added level of security to these executives and increase travel efficiencies, thus ensuring the executives’ ready availability on short notice and enabling the executives to focus more time and energy on company matters. Our provision of this benefit also recognizes the high degree of integration between the personal and professional lives of these executive officers, and ensures the security of the company’s proprietary information by enabling our officers to conduct business while traveling without concern that company information will be compromised.
	•	Personal use of company vehicles, and the provision of security services and personnel — these benefits are also designed to provide added levels of security to our executives and increase travel efficiencies, thus ensuring the executives’ ready availability on short notice and enabling the executives to focus more time and energy on company matters.
	•	Financial and tax advice and personal use of company facilities and personnel — these benefits are in place to provide executives with increased efficiencies in handling personal matters, which we believe also promotes the executives’ focus on company business. These benefits also recognize the high degree of integration between the personal and professional lives of our executive officers.
	•	Charitable matching contributions — this program is part of our overall contribution program, and is designed to encourage all employees, including our executives, to contribute to hospitals, community, educational and cultural institutions, and social service and environmental organizations, by providing that we will match such contributions up to certain limits.

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Corporate Personnel Committee Report

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Executive Compensation Tables

																						Change in
																						Pension
																						Value and
																						Nonqualified
																		Non-Equity				Deferred
										Stock				Option				Incentive Plan				Compensation				All Other
Name and						Salary				Awards				Awards				Compensation				Earnings				Compensation
Principal Position		Year				(1)				(2)				(3)				(4)				(5)				(6)				Total
James R. Moffett			2009			$	2,500,000				—			$	6,775,000			$	10,000,000			$	1,139,171			$	1,062,912			$	21,477,083
Chairman of the Board			2008				2,500,000			$	14,799,977				—				—				1,489,324				3,633,719				22,423,020
			2007				2,500,000				—				33,300,000				29,790,000				1,266,517				2,734,907				69,591,424
Richard C. Adkerson			2009				2,500,000				—				6,775,000				10,000,000				7,534,110				813,223				27,622,333
President & Chief			2008				2,500,000				66,549,903				—				—				5,011,710				3,203,774				77,265,387
Executive Officer			2007				2,083,333				21,689,955				33,300,000				5,432,000				2,623,389				2,688,390				67,817,067
Kathleen L. Quirk			2009				650,000				—				2,032,500				2,600,000				—				106,629				5,389,129
Executive Vice			2008				650,000				10,043,673				—				1,000,000				9,936				205,541				11,909,150
President, Chief			2007				566,667				1,574,994				11,100,000				2,879,600				8,057				197,807				16,327,125
Financial Officer & Treasurer
Michael J. Arnold			2009				550,000				—				1,626,000				2,200,000				—				109,354				4,485,354
Executive Vice			2008				550,000				2,637,391				—				1,000,000				28,622				281,051				4,497,064
President & Chief			2007				500,000				787,497				7,770,000				3,504,600				27,381				418,188				13,007,666
Administrative Officer

(1)		Messrs. Moffett and Adkerson and Ms. Quirk also provide services to and receive compensation from McMoRan. Until February 1, 2007, Ms. Quirk’s compensation was paid through an allocation arrangement under a services agreement with the Services Company, under which 75% of Ms. Quirk’s salary was allocated to us and 25% of Ms. Quirk’s salary was allocated to McMoRan. Accordingly, the amounts reflected in the “Summary Compensation Table” in 2007 represent only the portion allocated to us. Effective February 1, 2007, 100% of Ms. Quirk’s salary was allocated to us.
(2)		Restricted stock unit awards are valued on the date of grant at the closing sale price per share of our common stock.
(3)		These amounts reflect the grant date fair value of the options granted to the named executive officers, determined using the Black-Scholes option model. For information relating to the assumptions made by us in valuing the option awards made to our named executive officers in fiscal years 2007 through 2009, refer to Notes 1 and 12 of our financial statements in our annual report on Form 10-K for the year ended December 31, 2009.
(4)		The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect, for each named executive officer, the annual cash incentive payments received under our annual incentive plan for fiscal

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		years 2009, 2008 and 2007, and the cash payout of units granted under our discontinued long-term performance incentive plan that vested on December 31, 2007, as follows:

		For 2007, the amounts reported under Annual Incentive Plan Cash Payment do not include the performance-based RSUs that certain executive officers elected to receive in lieu of cash payments. The grant date fair value of these awards is reflected in the “Stock Awards” column.
(5)		The amounts reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column include (a) the change in actuarial value of our defined benefit program, (b) the change in actuarial value of our supplemental executive retirement plan for Messrs. Moffett and Adkerson, and (c) above-market or preferential nonqualified deferred compensation earnings, as set forth in the table below. See the “Retirement Benefit Programs” section for more information.

(6)		The amounts reported in the “All Other Compensation” column for 2009 reflect, for each named executive officer as applicable, the sum of the incremental cost to the company of all perquisites and other personal benefits and additional all other compensation required by the SEC rules to be separately quantified, including (A) amounts contributed by the company to defined contribution plans, (B) the dollar value of life insurance premiums paid by the company, (C) the dollar value of interest credited on dividend equivalents on unvested RSUs during 2009 and (D) director fees, which were discontinued in May 2009. The amounts reported include (a) matching gifts under the matching gifts program, (b) personal financial and tax advice under the company’s program, (c) the aggregate incremental cost to the company of the executive’s personal use of fractionally owned company aircraft, which includes the hourly operating rate, fuel costs and excise taxes, (d) personal use of company facilities and personnel, and (e) personal use of company cars and security services, as reflected in the table below. The aggregate incremental cost to the

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		company of Messrs. Moffett and Adkerson’s personal use of fractionally owned company aircraft does not include the lost tax deduction for expenses that exceeded the amounts reported as income for each executive, which for fiscal year 2009 was approximately $111,000 for Mr. Moffett and $64,000 for Mr. Adkerson. For Mr. Arnold, the amounts reported also include a tax adjustment for the prior year.

		Perquisites and Other Personal Benefits																									Additional All Other Compensation
																																			Interest
						Financial																													Credited on
		Matching				and Tax				Aircraft				Facilities and				Security and				Tax					Plan				Insurance				Dividend				Director
Name		Gifts				Advice				Usage				Personnel				Cars				Adjustment					Contributions				Premiums				Equivalents				Fees
Mr. Moffett		$	40,000			$	20,000			$	211,327			$	108,311			$	183,020				—				$	354,950			$	136,753			$	5,551			$	3,000
Mr. Adkerson			40,000				20,000				168,098				43,767				150,158				—					327,200				21,668				39,332				3,000
Ms. Quirk			20,000				2,300				—				—				—				—					77,340				2,543				4,446				—
Mr. Arnold			12,000				16,425				—				—				850			$	6,079					68,400				4,055				1,545				—

						Estimated Future
						Payouts Under				All Other Option
						Non-Equity				Awards:Number of				Exercise or Base				Grant Date Fair
						Incentive Plan				Securities				Price of Option				Value of Stock and
Name		Grant Date				Awards Target				Underlying Options				Awards(2)				Option Awards
James R. Moffett
AIP- Cash Award			—			$	33,720,000	(1)			—				—				—
Options			02/02/09				—				500,000			$	24.59			$	6,775,000
Richard C. Adkerson
AIP- Cash Award			—				33,720,000	(1)			—				—				—
Options			02/02/09				—				500,000				24.59				6,775,000
Kathleen L. Quirk
AIP- Cash Award			—				9,273,000	(1)			—				—				—
Options			02/02/09				—				150,000				24.59				2,032,500
Michael J. Arnold
AIP- Cash Award			—				7,587,000	(1)			—				—				—
Options			02/02/09				—				120,000				24.59				1,626,000

(1)		Represents the estimated maximum possible annual cash incentive payment that could have been received by each named executive officer pursuant to the annual incentive plan for fiscal year 2009. These estimated amounts were calculated by multiplying the percentage of the award pool under the plan allocated to each officer for 2009 by the maximum plan funding amount produced for the 2008 plan year (including adjustments made to the 2008 pool by the committee). The actual amounts paid in early 2010 to each of the named executive officers pursuant to the annual incentive plan for 2009 were significantly less than the estimated payments included in this table and are reflected in the “Summary Compensation Table.” See the discussion regarding our annual incentive plan in “Compensation Discussion and Analysis” for more information.
(2)		The exercise price of each stock option reflected in this table was determined by reference to the closing quoted per share sale price of our common stock on the Composite Tape for New York Stock Exchange-Listed Stocks on the grant date.

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