Definitive Additional Materials

 

 

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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þ   Definitive Additional Materials
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Freeport-McMoRan Copper & Gold Inc.
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Explanatory Note - Commencing June 6, 2014, Freeport-McMoRan Copper & Gold Inc. will refer to the attached presentation in discussions with shareholders.


www.fcx.com
www.fcx.com
2014 Shareholder Engagement
June 2014


2
Engaged and Responsive Board
Engaged and Responsive Board
Shareholder Feedback from 2013 Engagement
Redesign Executive Compensation Program
Independent Board Leadership
Board Refreshment
Board Actions During Past Year
Established New Executive Compensation Program
Appointed Lead Independent Director
Added Four New Independent Directors
Actions Represent Significant Move Towards Best Practices
In March and April 2014, Our Lead Independent Director Met
with Shareholders Representing Approximately 25% of Our
Outstanding Common Stock to Review Board Actions


Robust Independent Board Leadership
3
Independent Directors Appointed Jerry Ford as Lead Independent
Director in Late June 2013 Shortly Before Annual Meeting
Mr. Ford Has Implemented Several Initiatives, Including New Approach
to Board Refreshment and Formation of a Fully Independent Executive
Committee
Mr. Ford’s Role Has Included: 
Providing Recommendations on New Directors
Providing Recommendations on Board Committee Memberships and
Chairman/Vice Chairman Roles
Working with the Chairman of Compensation Committee to Implement
New
Executive Compensation Program and Negotiate Revised Executive
Employment Arrangements


Appointment of Five
New Directors in Past Year
Appointment of Five
New Directors in Past Year
4
Former Plains Exploration & Production
Company directors joined the Board in
June 2013,
contributing valuable
backgrounds in oil & gas exploration
and production and banking  
Thomas Fry
Independent Director
Jim Flores
Inside Director
Lydia Kennard
Independent Director
Fran Townsend
Independent Director
Alan Buckwalter
Independent Director
The Shift in Composition of Our Board, Including Four New Independent
Directors and New Lead Independent Director Role, Has Introduced
New Perspectives and Reshaped Conversation in the Boardroom
New Independent Directors Appointed
to
Board
in
December
2013,
bringing
diverse professional experience in
executive management roles and deep
expertise as directors at public
companies


Well-Balanced Board
Well-Balanced Board
5
During Past Year, We Reduced Tenure of Our Directors to Average of
8.5 Years and Increased Percentage of Independent Directors
Independent
Directors
81.25%
Other
Directors
18.75%
Board Composition
Board Tenure
5 Directors
5 Directors
6 Directors
Less than 5 Years
5-10 Years
More than 10
Years


Board Has Wealth of
Expertise & Knowledge
Board Has Wealth of
Expertise & Knowledge
6
Invaluable Experience in Leading and
Managing Mining, Oil & Gas Companies,
Including Exploration and Production
In-depth Experience in Geology
and Development of Mines, Milling
Facilities and Infrastructure
Expertise in Legal, Regulatory and
Accounting Matters
Deep Understanding of Both Onshore
and Offshore Oil and Gas Operations
Public and Private Company Board
Service
Former Leadership Positions at
International Accounting Firms
Entrepreneurship and Innovation
Involvement in Trade Associations
and Federal Agencies
Former Leaders of Banking and
Financial Institutions
International Government Relations,
Public Policy, Sustainability and
Environmental Experience
Exceptional Leadership Abilities in
Developing and Executing Financial
Strategies
Strong Management, Administrative
and Operational Skills


7
Office of the Chairman –
Develop & Execute Operational and Financial Strategy
Office of the Chairman –
Develop & Execute Operational and Financial Strategy
James R. Moffett
Chairman of the Board
Richard C. Adkerson
Vice Chairman,
President and CEO
James C. Flores
Vice Chairman,
President and CEO
of Oil & Gas Business
Experienced Leadership –
Interests Aligned with Shareholders
Collectively Own Approximately 14 Million FCX Shares
Founder
50+ Years Experience in
Natural Resources Business
Accomplished Geologist
Leads Global Exploration
Program & Guides Strategy
Owns 3.2 Million Shares
40+ Years Experience in
Natural Resources Business
Leads Global Mining Business &
Corporate Functions
Owns 2.7 Million Shares,
Including Vested RSUs
30+ Years Experience in
Energy Business
Leads Oil & Gas Business
Owns 8.0 Million Shares


New Executive Compensation Program
New Executive Compensation Program
8
In Response to the 2013 Shareholder Vote on Executive Compensation, We
Transformed Our Approach to Executive Compensation
Restructured
the
Direct
Compensation
of
Members
of
Office
of
the
Chairman
with Each Being Paid at Same Level
Reduced by 50% the Base Salaries to $1.25 Million from $2.5 Million
Evaluated the Median Aggregate Compensation of Top Three Executives at Peer
Companies and Set Total Target Direct Compensation at $7.5 Million for Each of
Our Top Three Executives
Total Target Direct Compensation of $7.5 Million = Bottom 25th Percentile
for Peer Companies and CEOs at S&P 100 Companies
Of the $7.5 Million Target Compensation, $6.25 Million is at Risk
New Annual Incentive Program (AIP) and New Long-Term Incentive Program
Performance-Based Elements Tied to Enterprise Level Goals and Shareholder
Return Align Focus on Positive Outcomes that Deliver Value to Shareholders


New Executive Compensation Framework –
Office of the Chairman
New Executive Compensation Framework –
Office of the Chairman
9
Compensation Structure for Office of Chairman with Total Target Direct
Compensation of $7.5 Million (in millions):
AIP Awards are Earned Based on Performance vs. Defined Goals Established
Each Year
AIP 2014 Performance Metrics:
Performance Category
Performance Metric
Weighting
Financial
Operating Cash Flow Excluding Working
Capital Changes
50.0%
Operational
Copper Production Volumes
17.5%
Oil Equivalents Production Volumes
7.5%
Safety and
Environmental/Social
Responsibility
Safety (Reportable Rate)
15.0%
Environmental/SR (Score)
10.0%
Base Salary
$1.25
Annual Incentive
$1.25 (Min 0%; Max 2x Target)
Stock Options
$2.50 (No Value Unless Share Price > Strike Price When Vested)
Performance Shares
$2.50 (Min 0%; Max 2x Target)


Established New Performance Shares
Established New Performance Shares
FCX’s Total Shareholder Return (TSR) Will Be Compared to Peer
Group Companies After Three Years in Order to Determine FCX’s
Rank Within the Peer Group
Earned Awards Will Be Determined According to TSR Rank as
Specified in the Following Table:
FCX Rank
FCX TSR >0%
FCX TSR </=0%
Performance Share Payout %
Performance Share Payout %
1-2 (>87
th
percentile)
200%
100%
3
180%
100%
4
160%
100%
5
140%
100%
6
120%
100%
7 –
8 (50
th
56
th
percentile)
100%
100%
9
80%
80%
10
60%
60%
11
40%
40%
12-16 (< 25
th
percentile)
0%
0%
10


Restricted Stock Unit Grant to CEO
11
New Executive Management Structure Potentially Triggered Termination Provisions in
Mr. Adkerson’s Employment Agreement
Resulted
in
a
Potential
Claim
by
Mr.
Adkerson
of
a
“Good
Reason”
Termination
under
Employment Agreement and Right to Receive a $46M Cash Severance Payment
The
Board
Firmly
Believed
Retaining
Mr.
Adkerson,
an
Experienced
and
Skilled
CEO,
Was
in
the Best Interests of Our Shareholders
Board
Negotiated
with
Mr.
Adkerson
to
Reach
a
Mutually
Agreeable
Solution
and
Retain
Him
as CEO
Board Structured New Severance Arrangement as Restricted Stock Units to Ensure
Strong Link Between Pay and Corporate Performance
Agreed to a One-time Restricted Stock Unit Grant Valued at Less than 80% of the Prescribed
Payout, An Immediate Savings of $11M
Restricted
Stock
Units
Cannot
Be
Paid
Out
Until
Six
Months
After
Retirement
to
Avoid
Unintended Incentive for Short-Term Actions
Terminated Mr. Adkerson’s Employment Agreement; No Future Obligations for the Company
We Believe this Action Served the Best Interests of our Shareholders by Terminating
the More Expensive Payout Set Forth in the Employment Agreement while Retaining an
Experienced and Skilled CEO at a Time of Significant Transformation at the Company


Employment Agreement Changes
12
Terminated Mr. Adkerson’s Employment Agreement
Amended Mr. Flores’
Employment Agreement
Eliminated All Tax Gross-ups and Provision Providing for a Payout of Three Times the Sum
of Salary and Target Annual Bonus Upon Death or Disability, and Reduced Base Salary
Removed
Daily
Automatic
Renewal
Provision
Resulting
in
Mr.
Flores’
Agreement
Now
Having a Five-year Term Ending in February 2019, Subject to One-year Extensions Unless
the Company Provides Prior Notice that it Does Not Wish to Extend the Term
Amended Mr. Moffett’s Employment Agreement
Reduced Base Salary by 50%
Changes in Base Salary and Annual Bonus Reduced Potential Severance Payments
As of December 31, 2013
As of March 1, 2014
Lump Sum Payment (in millions)
James C. Flores
Retirement
None
None
Death/Disability
$15.0
None
Termination
Good
Reason/No
Cause
$15.0
$7.5
Termination
After
Change
of
Control
$15.0
$7.5
James R. Moffett
Retirement/Death/Disability
None
None
Termination
Good
Reason/No
Cause
$45.9
$25.6
Termination
After
Change
of
Control
$60.8
$36.0


No Equity Grants for 2013 Performance
13
No Long-Term Incentive Awards Were Granted for 2013 Performance, But
Proxy
Disclosure
Rules
Require
Reporting
of
Equity
Awards
in
the
Year
of
Grant
We
Historically
Granted
Equity
in
January
for
Performance
in
the
Prior
Year
The Summary Compensation Table in our 2014 Proxy Statement Therefore Reflects Equity
Awards Granted for 2012 Performance in February 2013 (prior to Annual Meeting)
Starting in 2014, Long-Term Incentive Awards will be Granted at the Beginning of the Applicable
Year, which will Align the Performance Period with Proxy Disclosure
Compensation
Awarded
for
2013
Performance
(a)
Name
Salary
Stock
Awards
Option
Awards
Non-Equity
Incentive Plan
Compensation
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
All Other
Compensation
Total
James R. Moffett
$2,500,000
$1,250,000
$1,644,729
$1,644,603
$7,039,332
Richard C. Adkerson
2,500,000
1,250,000
5,269,323
James
C.
Flores
1,461,795
1,250,000
353,190
3,064,985
Kathleen L. Quirk
650,000
1,100,000
159,822
1,909,822
Michael J. Arnold
550,000
1,000,000
156,706
1,706,706
(a) Please see page 38 of the 2014 FCX Proxy Statement for the 2013 Summary Compensation Table; this is not a substitute for that table.
(b) Excludes $35,190,000 aggregate grant date value of RSUs awarded in connection with the termination of Mr. Adkerson’s employment agreement.
1,519,323
(b)
(c)
Amounts reflect compensation to Mr. Flores from May 31, 2013 (date FCX acquired Plains Exploration) through December 31, 2013.
(c
)


Oversight of Environmental Risk
14
A Stockholder Has Proposed that the Board Appoint a Director Who
is a Recognized
Expert on Environmental Matters
The Restrictive Proposal Would Limit the Board’s Ability to Identify and Recruit the
Most Qualified Director Candidates
The Board Has a Strong Commitment to Environmental Management and Minimizing
the Environmental Impact of Our Operations
Two of Our Recently Appointed Directors, Mr. Fry and Ms. Kennard, Have Experience in
Environmental Management and Are Members of Our Corporate Responsibility Committee
The Nominating and Corporate Governance Committee Seeks to Maintain a Board with
the Right Mix of Skills and Experience; This Proposal Does Not Advance That Goal
All
Mining
Operations
Maintain
ISO
14001
Certified
Environmental
Management
Systems,
Independently
Audited
Annually
Grasberg Operation has Undergone Triennial Independent Environmental Audits by Recognized Industry Experts
Annual
External
Assurance
of
Our
Continued
Implementation
of
the
ICMM
Sustainable
Development
Framework,
Including Visits at Six Operations in 2013
Long Track Record of Independent Reviews of Our Environmental Management Systems
Mr. Fry is a Former Director of the Department of the Interior’s Bureau of Land Management
Ms. Kennard Served for Seven Years on the California Air Resources Board


Additional Disclosure
15
This information is being provided to certain shareholders in addition to Freeport-McMoRan
Copper & Gold Inc.’s proxy statement dated April 29, 2014, that has been available since
such date. Please read the complete proxy statement and accompanying materials carefully
before you make a voting decision. Even if voting instructions for your proxy have already
been given, you can change your vote at any time before the annual meeting by giving new
voting instructions as described in more detail in the proxy statement. The proxy statement,
and any other documents filed by Freeport-McMoRan Copper & Gold Inc. with the Securities
and Exchange Commission (“SEC”), may be obtained free of charge at the SEC web site at
www.sec.gov and from the Company’s web site at www.fcx.com.
Freeport-McMoRan Copper & Gold Inc. and its directors and officers may be
deemed to be
participants in the solicitation of proxies from Freeport-McMoRan Copper & Gold Inc.’s
shareholders in connection with the upcoming annual meeting of shareholders. Information
about Freeport-McMoRan Copper & Gold Inc.’s directors and executive officers and their
ownership of Freeport-McMoRan Copper & Gold Inc. stock is set forth in the proxy statement
for Freeport-McMoRan Copper & Gold Inc.’s 2014 annual meeting of shareholders.