DEF 14A of Freeport-Mcmoran Inc, Apr 25, 2019

DEF 14A of Freeport-Mcmoran Inc

Filed Apr 25, 2019 · FY20180001193125-19-119070

Open on EDGAR

  1. Director Nominee Highlights (page 17)

    Director Nominee Highlights (page 17)

  2. Director Nominee Highlights (page 17)

    | Name | Age | Director Since | Principal Occupation | Independent | Board Committees | | Richard C. Adkerson Vice Chairman of the Board, President and Chief Executive Officer | 72 | 2006 | Vice Chairman of the Board, President and Chief Executive Officer Freeport-McMoRan Inc. | No | None | | Gerald J. Ford Non-Executive Chairman | 74 | 2000 | Chairman of the Board Hilltop Holdings Inc. | ✓ | • Audit (Chair) • Nominating and Corporate Governance (Chair) | | Lydia H. Kennard | 64 | 2013 | President and Chief Executive Officer KDG Construction Consulting | ✓ | • Audit • Corporate Responsibility • Nominating and Corporate Governance | | Dustan E. McCoy | 69 | 2007 | Retired Chairman and Chief Executive Officer Brunswick Corporation | ✓ | • Compensation (Chair) • Audit • Corporate Responsibility | | Frances Fragos Townsend | 57 | 2013 | Executive Vice President of Worldwide Government, Legal and Business Affairs MacAndrews & Forbes Incorporated | ✓ | • Corporate Responsibility (Chair) • Compensation |

  3. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    PROPOSAL NO. 1: ELECTION OF DIRECTORS Upon the recommendation of our nominating and corporate governance committee, the board has nominated five directors for election at our 2019 annual meeting to hold office until our next annual meeting and the election of their successors. All of the nominees currently serve as directors of the company. Each nominee has consented to being named as a nominee in this proxy statement and to serve as a director if elected. The persons named as proxies on the proxy card intend to vote your proxy for the election of each such nominee, unless otherwise directed. If, contrary to our expectations, any nominee is unable to serve or for good cause will not serve, your proxy will be voted for a substitute nominee designated by the board or the board may reduce its size. The experience, qualifications, attributes and skills that led the board and the nominating and corporate governance committee to conclude that each of the nominees should serve as a director of the company are set forth in the below table, which our nominating and corporate governance committee has used for the past three years. For additional information regarding each nominee, see “Information About Director Nominees” beginning on page 17.

  4. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    | Experience, Qualifications, Attributes & Skills |

  5. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    | | Adkerson | Ford | Kennard | McCoy | Townsend | | Senior leadership experience | ✓ | ✓ | ✓ | ✓ | | | Accounting/financial expertise | ✓ | ✓ | ✓ | | | | Public company board experience | ✓ | ✓ | ✓ | ✓ | ✓ | | Operational management | ✓ | ✓ | ✓ | ✓ | | | International business | ✓ | | | ✓ | ✓ | | Capital markets/banking | ✓ | ✓ | | ✓ | | | Environmental/sustainability/corporate responsibility | ✓ | | ✓ | ✓ | ✓ | | Government, legal and regulatory compliance | ✓ | ✓ | ✓ | ✓ | ✓ | | Diversity (gender, race) | | | ✓ | | ✓ |

  6. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    For more information regarding director nominations and qualifications, see the sections titled “Corporate Governance – Director Nominations and Qualifications” and “Corporate Governance – Director Candidates Submitted by Stockholders” beginning on pages 8 and 14, respectively.

  7. Vote Required to Elect Director Nominees

    Vote Required to Elect Director Nominees Under our by-laws, in uncontested elections, directors are elected by a majority of the votes cast. In contested elections where the number of nominees exceeds the number of directors to be elected, directors are elected by a plurality vote, meaning that the director nominees who receive the most votes will be elected. In an uncontested election, any nominee for director who receives a greater number of votes “against” his or her election than votes “for” such election will be required to promptly tender his or her resignation to the board. Our nominating and corporate governance committee will recommend to the board whether to accept or reject the tendered resignation. The board will act on the committee’s recommendation and publicly disclose its decision within 90 days from the date of the annual meeting of stockholders. Any director who tenders his or her resignation will not participate in the committee’s recommendation or the board action regarding whether to accept or reject the tendered resignation. In addition, if each member of the nominating and corporate governance committee fails to be elected at the same election, the independent directors who were elected will appoint a committee to consider the tendered resignations and recommend to the board whether to accept or reject them. Any vacancies on the board may be filled by a majority of the directors then in office. Each director elected in this manner will hold office until his or her successor is elected and duly qualified. For more information on the voting requirements, see “Questions and Answers About the Proxy Materials, Annual Meeting and Voting.” OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL OF THE DIRECTOR NOMINEES LISTED BELOW.

  8. Information About Director Nominees

    Information About Director Nominees The following table provides certain information as of April 15, 2019, with respect to each director nominee, including information regarding business experience, director positions with other public companies held currently or at any time during the last five years, and the experiences, qualifications, attributes and skills that led our nominating and corporate governance committee and the board to determine that such person should be nominated at our 2019 annual meeting of stockholders to serve as a director of the company. Unless otherwise indicated, each person has been engaged in the principal occupation shown for the past five years. Former public company directorships reflect positions held in the last five years.

  9. Information About Director Nominees

    | Richard C. Adkerson Vice Chairman of the Board, President and Chief Executive Officer of Freeport-McMoRan Inc. Age: 72 Director since: 2006 | Business Experience: 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. Vice Chairman of the Board of the company since May 2013. Vice Chairman of our former parent company from 1995 to 1997. Partner in Arthur Andersen & Co. from 1978 to 1989 where he served as a Managing Director and head of the firm’s global oil and gas industry services. Professional Accounting Fellow with the Securities and Exchange Commission and Presidential Exchange Executive from 1976 to 1978. Skills and Qualifications: Mr. Adkerson is a recognized business leader in the mining industry, making him highly qualified to serve as a Vice Chairman of the Board of the company. As President and Chief Executive Officer 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, having served as past Chairman of the International Council on Mining and Metals and on the Executive Board of the International Copper Association. Mr. Adkerson’s strong leadership skills and executive management experiences are instrumental in fostering strong relationships with business partners, key customers, suppliers and host governments, thereby enabling him to guide the company’s business strategy. He holds a B.S. in Accounting with highest honors and an M.B.A. from Mississippi State University and completed the Advanced Management Program at Harvard Business School. |

  10. Information About Director Nominees

    | Gerald J. Ford Non-Executive Chairman of the Board of Freeport- McMoRan Inc.; Chairman of the Board of Hilltop Holdings Inc. Independent Age: 74 Director since: 2000 Committees: • Audit (Chair) • Nominating and Corporate Governance (Chair) | Business Experience: Non-Executive Chairman of the Board from January 2016 to present. Principal stockholder and Chairman of the Board of Hilltop Holdings Inc., a Texas-based, publicly traded, diversified financial holding company, since 2007, and a director of Hilltop Holdings Inc. since 2005. General Partner of Ford Financial II, L.P., a private equity firm, from 2010 to present and of Ford Financial Fund, L.P., a private equity firm, from 2010 to 2016. Chairman of the Board and Chief Executive Officer of Golden State Bancorp, Inc. and its wholly owned subsidiary, California Federal Bank, FSB, a Federal Savings Bank, from 1998 through its 2002 merger with Citigroup Inc. Chairman of the Board of First Acceptance Corporation from 1996 to 2010 and Chief Executive Officer of First Acceptance Corporation from 1996 to 2002. Skills and Qualifications: Mr. Ford is a banking and financial institutions entrepreneur who has been involved in numerous mergers and acquisitions of private and public sector financial institutions over the past 40 years. In that capacity, he acquired and consolidated 30 commercial banks from 1975 to 1993, forming First United Bank Group, Inc., a multi-bank holding company for which he served as Chairman of the Board and Chief Executive Officer until its sale in 1994. During this period, he also led investment consortiums that acquired numerous financial institutions, forming in succession, First Gibraltar Bank, FSB, First Madison Bank, FSB and First Nationwide Bank. His extensive banking industry experience and educational background provide him with expertise in financial, accounting and regulatory matters, making him a valuable member of the board of directors. In addition, Mr. Ford’s 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 and positions him well to serve as our non-executive chairman of the board, and chair of our nominating and corporate governance and audit committees. He holds a B.A. in Economics and a J.D. from Southern Methodist University. Current Public Company Directorships: Hilltop Holdings Inc. and Scientific Games Corporation Former Public Company Directorships: Pacific Capital Bancorp and SWS Group, Inc. |

  11. Information About Director Nominees

    | Lydia H. Kennard President and Chief Executive Officer of KDG Construction Consulting Independent Age: 64 Director since: 2013 Committees: • Audit • Corporate Responsibility • Nominating and Corporate Governance | Business Experience: President and Chief Executive Officer of KDG Construction Consulting, a construction and program management firm, from 2011 to present. Principal of Airport Property Ventures, LLC, a developer and operator of aviation facilities, from 2007 to present. Principal of 3801-3825 N. Mission Rd., LA, LLC, a single-purpose real estate entity from 2015 to present. Executive Director of Los Angeles World Airports, from 1999 to 2003, and again from 2005 to 2007. Member of the California Air Resources Board from 2004 to 2011. Skills and Qualifications: Ms. Kennard’s over 30 years of executive and operational experience in aviation, construction management and real estate development enables her to contribute to the board her leadership skills and her critical insights into the operational requirements of a large public company. As a result of her former involvement with the California Air Resources Board, she is able to share her understanding of environmental management and pollution control matters, which is valuable in enhancing the board’s insight with respect to our company’s environmental policies and practices. She holds a B.A. in Urban Planning and Management from Stanford University, a Master in City Planning from Massachusetts Institute of Technology and a J.D. from Harvard Law School. Current Public Company Directorships: Prologis, Inc. and HCP, Inc. Former Public Company Directorships: Intermec, Inc. and URS Corporation | | Dustan E. McCoy Retired Chairman and Chief Executive Officer of Brunswick Corporation Independent Age: 69 Director since: 2007 Committees: • Compensation (Chair) • Audit • Corporate Responsibility | Business Experience: Retired Chairman and Chief Executive Officer of Brunswick Corporation, a leading, publicly traded, global manufacturer and marketer of recreation products including marine engines, boats, fitness equipment and billiards equipment, having held such positions from December 2005 to February 2016. 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. Skills and Qualifications: Mr. McCoy’s extensive experience in legal and compliance matters generally, and more specifically his experience in corporate governance and disclosure matters for publicly traded companies makes him well-suited to serve on the board of directors. Mr. McCoy’s executive management experience provides him with a broad understanding of the operational, financial and strategic issues facing large global companies, enabling him to chair our compensation committee and to provide valuable strategic advice to the board and management in advancing the company’s interests. He holds a B.A. in Political Science from Eastern Kentucky University and a J.D. from Salmon P. Chase College of Law at Northern Kentucky University. Current Public Company Directorships: Louisiana-Pacific Corporation and YETI Holdings, Inc. Former Public Company Directorships: Brunswick Corporation |

  12. Information About Director Nominees

    | Frances Fragos Townsend Executive Vice President of Worldwide Government, Legal and Business Affairs at MacAndrews & Forbes Incorporated Independent Age: 57 Director since: 2013 Committees: • Corporate Responsibility (Chair) • Compensation | Business Experience: Executive Vice President of Worldwide Government, Legal and Business Affairs at MacAndrews & Forbes Incorporated from 2013 to present and Senior Vice President from 2010 to 2013. Partner at Baker Botts L.L.P. from 2009 to 2010. Homeland Security and Counterterrorism Advisor to President George W. Bush from 2005 until 2008 and Chair of the Homeland Security Council from 2004 to 2008. Deputy Assistant to President George W. Bush and Deputy National Security Advisor for Combatting Terrorism from 2003 until 2004. Prior to serving the President, Ms. Townsend was the first Assistant Commandant for Intelligence for the U.S. Coast Guard. Before that, Ms. Townsend spent 13 years at the U.S. Department of Justice under the administrations of President George H.W. Bush, President William J. Clinton and President George W. Bush. Ms. Townsend is a member of the Council on Foreign Relations and the Trilateral Commission. Skills and Qualifications: Ms. Townsend brings to the board over 25 years of domestic and international experience in legal, law enforcement and security. Her extensive public policy, government and regulatory experience enables her to provide valuable insight with respect to complex international and regulatory matters addressed at the board level. She holds a B.A. in Political Science and a B.S. in Psychology from American University and a J.D. from the University of San Diego School of Law. Current Public Company Directorships: Scientific Games Corporation and The Western Union Company Former Public Company Directorships: SIGA Technologies, Inc. |

  13. Performance Highlights

    | • | In December 2018, we completed our transaction with the Indonesian government to provide long-term stability to our operations in Indonesia after complex negotiations spanning seven years. |

  14. Stockholder Engagement and Continued Evolution of Our Executive Compensation Program

    Stockholder Engagement and Continued Evolution of Our Executive Compensation Program Our board has a history of seeking our stockholders’ feedback regarding our practices, including our compensation program, and highly values the insights we receive through this open dialogue. Over the past two years, the board led a multi-stage stockholder engagement program to ensure the continuation of this process of using stockholder feedback to inform the board’s response to potential changes to our long-term program. Most recently, based on stockholder feedback discussed above, our review of current market practices, as well as our committee’s continual evaluation of our program in order to ensure we appropriately align our executives’ incentives with our long-term strategy, we adopted a new LTI program structure for 2018. In the lead-up to the 2018 annual meeting, we had engagement calls with several of our stockholders who were generally supportive of our compensation program’s structure, including the revised structure of our performance share unit program (using ROI and maintaining relative TSR as a modifier). We adopted this new structure following a significant stockholder engagement initiative in 2017, which we initiated after our 2017 say-on-pay proposal passed with only 52% support. The committee was pleased to see the say-on-pay outcome improve to over 86% at our 2018 annual meeting. What We Heard in 2017 and How We Refined Our Compensation Program in 2018

  15. Stockholder Engagement and Continued Evolution of Our Executive Compensation Program

    | Compensation Element | Stockholder Feedback | | Direct Response | | Performance Share Units (PSUs) (50% of LTI award) | Frequently cited ROI as a long-term metric to consider | | Adopted ROI metric | | | Generally supported TSR modifier | | Maintained relative TSR modifier | | | Preferred a metric that applied over three-year performance period | | Vesting based on metric over three-year performance period | | Other Equity Vehicles (50% of LTI award) | Suggested awarding RSUs in place of a portion of stock options | | Adjusted program to include RSUs (25% of LTI award) and stock options (now 25% of LTI award instead of 50%) |

  16. Stockholder Engagement and Continued Evolution of Our Executive Compensation Program

    The revised equity mix in our LTI program is consistent with S&P 500 companies, which have an average mix of 53% PSUs, 22% stock options and 25% RSUs. The committee believes these compensation program changes enhance the alignment between our incentive program and our evolving business, and are directly responsive to the concerns cited by our stockholders.

  17. Target Direct Compensation

    Target Direct Compensation Our executive compensation program is significantly performance-based – linking executive pay, company performance and results for stockholders – and is appropriately balanced with short- and long-term measures. The primary components of our executive compensation program are (1) base salary, (2) annual incentive awards and (3) long-term incentive awards (which we collectively refer to as our executives’ “direct compensation”). The annual incentive awards and long-term incentive awards, which comprise the majority of our executives’ target direct compensation, are at-risk, with a significant percentage of the target direct compensation (70% for our CEO) based on measureable performance objectives, both annual and long-term (PSUs), and increases in our stock price (stock options). Using these compensation components, in February 2018 the committee established the following target compensation framework for our executive officers for 2018:

  18. 2018 Target Compensation Framework

    | Executive | Annual Base Salary | Target Cash Annual Incentive (0-175%) | Target LTI Award Values | | | | | | | | PSUs | Options | RSUs | Total Target Direct Compensation | | Mr. Adkerson | $1,600,000 | $2,400,000 | $4,000,000 | $2,000,000 | $2,000,000 | $12,000,000 | | Ms. Quirk | 800,000 | 1,400,000 | 2,000,000 | 1,000,000 | 1,000,000 | 6,200,000 | | Mr. Conger | 550,000 | 962,500 | 1,375,000 | 687,500 | 687,500 | 4,262,500 | | Mr. Arnold | 550,000 | 962,500 | 1,375,000 | 687,500 | 687,500 | 4,262,500 |

  19. Compensation Governance and Best Practices

    | ✓ Responding to Stockholder Feedback – Since 2014, the committee has actively engaged with our investors in order to fully understand our stockholders’ perspectives regarding our executive compensation program and has taken action in response to concerns raised. Most recently, we adopted a new LTI program structure for 2018. Considering stockholder feedback and current market practices, the committee adopted an ROI metric, maintained the relative TSR modifier, and replaced a portion of stock options with time vested RSUs. | | ✓ Paying for Performance – a significant portion of target direct compensation for our executive officers (70% for our CEO in 2018) is tied to performance of our company and our stock price. | | ✓ Clawback Policies – we may recover incentive awards paid based on restated financial statements under certain circumstances. | | ✓ Requiring Stock Ownership – we require our executive officers and directors to maintain ownership of our securities through our use of equity-based compensation and our stock ownership guidelines, with Mr. Adkerson required to maintain ownership equal to 6x his base salary. |

  20. Compensation Governance and Best Practices

    | x Excise Tax Gross-Ups – we do not provide any excise tax gross-ups to our executive officers. | | x Single Trigger Vesting of Equity and Cash Payments – our company’s equity-based awards will only accelerate upon the recipient’s actual or constructive termination of employment within one year of a change of control; similarly, change of control cash payments will only be payable upon the recipient’s actual or constructive termination of employment within one year of a change of control. | | x Hedging of Company Stock – our insider trading policy prohibits our executives and directors from entering into hedging arrangements with respect to our securities. | | x Excessive Pledging of Company Stock – our insider trading policy limits the ability of our executives and directors to pledge our securities as follows: • our securities may not be pledged as collateral for a margin loan; • the executive or director must notify the company prior to execution of the pledge; • the executive or director must establish that he or she has the financial capacity to repay the loan without resorting to the pledged securities; and • any shares pledged will not be considered as owned for purposes of the stock ownership guidelines applicable to the executive or the director. |

  21. Executive Compensation Philosophy

    | • | pay for performance by emphasizing performance-based compensation that balances rewards for both short- and long-term results, |

  22. Overview of Principal Components of Executive Compensation

    Overview of Principal Components of Executive Compensation The principal components of executive officer compensation for 2018 were (1) base salaries, (2) annual incentive awards and (3) LTI awards in the form of PSUs, stock options and RSUs. In addition, we provide our executives with certain personal benefits and perquisites, as well as post-employment compensation. The principal components are summarized as follows:

  23. Overview of Principal Components of Executive Compensation

    | 2018 Executive Compensation Program | | | | Compensation Component | Characteristics | | | Base Salary | • Fixed cash compensation • Used to calculate other compensation elements | | | Annual Incentive Program (AIP) | • Annual variable cash compensation based on pre-established performance metrics • Formula-driven plan using the following metrics (weighted as indicated) to determine target and earned awards: | | | | Financial - Consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) - Operating cash flow - Capital expenditures - Total PT-FI cash distributions | 48% | | | Operational - North America and South America copper sales - PT-FI gold sales - North America and South America unit net cash costs | 27% | | | Safety | 15% | | | Environmental & Social Responsibility | 10% | | | • Annual cash awards capped at a multiple of base salary (for our CEO in 2018, target = 1.5x base salary; maximum = 1.75x target) | | | Long-Term Incentive (LTI) Program | • PSU award (50% of LTI program awards) – payable in shares of stock after a three-year performance period, all of which is at risk based on performance measured by a combination of achievement of ROI metrics during the performance period and our relative TSR - Range of payout of the PSUs is 0% to 225% depending on our achievement of the performance goals • Stock options (25% of LTI program awards) – vest ratably over a three-year period following date of grant • RSU award (25% of LTI program awards) – vest ratably over a three-year period following date of grant | |

  24. Annual Incentive Awards

    Annual Incentive Awards

  25. Annual Incentive Awards

    | How the overall design of the AIP supports our compensation philosophy and objectives: | | • Our AIP is designed to provide performance-based cash awards to our executive officers, each of whose performance has a significant impact on our financial stability, profitability and future growth. • Our AIP encourages the alignment of executive management with stockholder objectives. • The 2018 AIP’s financial and operational metrics reflect our business goals and objectives, while its inclusion of safety and environmental and social responsibility metrics promote the goals of operating the business in a safe and responsible manner. • Our focus on generating cash flows to reduce debt and strengthen our balance sheet closely aligns management and stockholder interests. |

  26. Annual Incentive Awards

    General Structure of the AIP for 2018. For 2018, the committee established target performance goals in three categories that it believes effectively measure the performance of the company, with each category accounting for a specific percentage of the target award. In these categories, the committee chose the following metrics to measure performance:

  27. Annual Incentive Awards

    | Performance Category | Performance Metrics | Purpose | | Financial | Consolidated Adjusted EBITDA | Reflects our goal of generating cash flows | | | Operating Cash Flow | Reflects our goal of generating cash flows | | | Capital Expenditures | Reflects our focus on capital discipline and our goal of strengthening our balance sheet | | | Total PT-FI Cash Distributions | Reflects our goal of generating cash flows | | Operational | North America and South America Copper Sales | Reflects our goal of generating cash flows | | | PT-FI Gold Sales | Reflects our goal of generating cash flows | | | North America and South America Unit Net Cash Costs | Reflects our goal of operating efficiently and controlling production costs | | Safety and Environmental/Social Responsibility | Safety | Aligns with our highest priority – safety of our people | | | Environmental & Social Responsibility | Supports our significant focus on working toward sustainable development |

  28. Annual Incentive Awards

    Following the end of the year, each performance metric is evaluated against the target goal, with payout levels defined for threshold, target and maximum levels of performance. If performance falls within these levels, a sliding scale is used to determine the appropriate payout.

  29. Annual Incentive Awards

    | 2018 Highlights: Annual Incentive Program | | • Under the 2018 AIP, each executive had a target award based on a multiple of salary, and was eligible to earn an annual cash award based on the company’s performance relative to defined goals established by the committee in February 2018. o The target annual incentive award for Mr. Adkerson was 150% of base salary, or $2.4 million. o The target annual incentive award for each of Ms. Quirk and Messrs. Conger and Arnold was 175% of base salary. o Annual cash incentive payments for threshold performance started at 50% of target with maximum performance earning 175% of target, although the committee retained the discretion to reduce the payment to 0% of target. • Based on the company’s performance relative to the pre-established goals, the executives earned a payout amount equal to 89.4% of the target award. |

  30. Annual Incentive Awards

    Review of 2018 AIP Results. In February 2019, the committee evaluated the company’s performance against the AIP targets, which were as follows:

  31. Annual Incentive Awards

    | Performance Category | Performance Metrics | Weighting | Threshold | Target | Maximum | Weighted Payout as a % of Target | | Financial | Consolidated Adjusted EBITDA ($ in billions) | 15% | $6.00 | $7.50 | $9.00 | 13.4% | | | | | Actual $7.17 | | | | | | Operating Cash Flow ($ in billions) | 8% | $4.20 | $5.30 | $6.40 | 0.0% | | | | | Actual $3.86 | | | | | | Capital Expenditures ($ in billions) | 10% | $2.40 | $2.10 | $1.80 | 13.2% | | | | | | Actual $1.97 | | | | | Total PT-FI Cash Distributions ($ in billions) | 15% | $1.00 | $2.00 | $2.50 | 14.4% | | | | | Actual $1.93 | | | | | Operational | North America and South America Copper Sales (billion pounds) | 12% | 2.40 | 2.70 | 2.95 | 11.6% | | | | | Actual 2.68 | | | | | | PT-FI Gold Sales (million ounces) | 7.5% | 1.80 | 2.40 | 2.70 | 7.3% | | | | | Actual 2.37 | | | | | | North America and South America Unit Net Cash Costs ($/pound) | 7.5% | $1.82 | $1.65 | $1.50 | 4.9% | | | | | Actual $1.77 | | | | | Safety | Total Reportable Incident Rate (TRIR) | 15% | 0.88 | 0.70 | 0.63 | 14.6% | | | | | Actual 0.71 | | | | | Environmental/Social Responsibility | Environmental/Social Responsibility (Score) | 10% | 1 | 3 | 5 | 10.0% | | | | | | Actual 3 | | | | | | Formulaic Performance Result Total | | | | 89.4% |

  32. Annual Incentive Awards

    | 2018 Metrics and Goals | | In establishing the metrics and goals in February 2018, the committee chose: • metrics designed to focus our executives’ efforts on the critical elements of the company’s strategic plans for 2018 – focusing on production, cost and capital discipline, and generating cash flows, while strengthening the balance sheet and refocusing our business on our leading position in the global copper industry; and • target goals that were consistent with the company’s budget for the year. |

  33. Annual Incentive Awards

    The committee also approved the method for calculating results under each metric. In connection with the committee’s review of our results in early 2019, the committee made no adjustments to the reported results under the financial metrics. In connection with the calculation of unit net cash costs per pound of copper, we use the “by-product” method in our calculation in our annual report on Form 10-K for the year ended December 31, 2018. Under this method, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs. Our calculation of consolidated unit net cash costs per pound of copper excludes noncash and other costs, including stock-based compensation costs, start-up costs, inventory adjustments, long-lived asset impairments, restructuring and/or unusual charges. The committee determined that the company performed above the target level for the capital expenditures metric, just below threshold for the operating cash flow metric, and just below target for each of the other financial and operational metrics. The consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) metric is a non-GAAP measure determined in accordance with the covenant calculation in the company’s bank credit facility. Please refer to Annex A to this proxy statement for a reconciliation and other information regarding our calculation of consolidated adjusted EBITDA. With regard to the safety metric, the company’s TRIR resulted in a payout just below target for that metric. With regard to the environmental and social responsibility metric, the committee evaluated the company’s performance relative to a scorecard it approved in February 2018. The committee considered the environmental performance with respect to environmental events and penalties, reportable spills and releases, and notices of violation. With regard to the social responsibility category, the committee considered further integration of the United Nations Guiding Principles on Business and Human Rights into our programs and performance with respect to our company-wide goal of incurring zero gross human rights violations at our operations caused by employees or contractors as reported in our annual Working Toward Sustainable Development Report, investment in community programs, completion of third-party assurance of our sustainability programs according to the International Council on Mining and Metals Assurance Procedure, and stakeholder feedback and recognition of our sustainability programs. As a result of its assessment, the committee determined that the executives had earned 100% of the target level of the environmental/social responsibility metric.

  34. Long-Term Incentive (LTI) Awards

    Long-Term Incentive (LTI) Awards

  35. Long-Term Incentive (LTI) Awards

    | How our LTI awards support our compensation philosophy and objectives: | | • LTI awards are 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. • PSUs granted in February 2018 pay out based in part on our achievement of cumulative ROI goals and in part on our relative TSR compared to our peers over a three-year performance period. This design directly links our executives’ earnings to our performance and stockholders’ returns. • Stock options align our executives’ interests with those of our stockholders, as the stock option’s value is dependent on the performance of our stock price. Our committee believes that stock options are an effective performance-based compensation vehicle that links executive compensation to stockholder return. • Equity-based LTI awards also strengthen focus on stock price performance and encourage executive ownership of our stock. |

  36. 2018 Highlights: LTI Program

    2018 Highlights: LTI Program

  37. 2018 Highlights: LTI Program

    | • | Total target LTI award values for each executive are based on a multiple of 5x salary. |

  38. 2018 Highlights: LTI Program

    | • | As discussed in detail in the “Executive Summary” on page 22, in response to stockholder feedback and current market practices, the committee revised the design of our LTI program in 2018 as follows: |

  39. 2018 Highlights: LTI Program

    | ◾ | PSUs (50% of LTI program awards) – payable in shares of stock after a three-year performance period, which award is entirely at risk based on performance measured against cumulative ROI goals set at the beginning of the performance period ROI and a relative TSR modifier. |

  40. 2018 Highlights: LTI Program

    | ¡ | Cumulative ROI target is 9%, with threshold goal equal to 6% and maximum goal equal to 20%, with preliminary payouts based on this metric ranging from 0% to 200% of the target award |

  41. 2018 Highlights: LTI Program

    | ✓ | In establishing the ROI target, the committee considered the most recent three-year ROI average of 6.64% and the most recent five-year ROI average of 7.25% |

  42. 2018 Highlights: LTI Program

    | ¡ | The “TSR modifier” operates similarly to our 2017 PSUs, resulting in an increase or decrease to the preliminary payout of up to 25% of the target award based on our TSR over the performance period compared to the TSR of the eight-company peer group listed on page 33) |

  43. 2018 Highlights: LTI Program

    | FCX TSR Rank | Impact on Preliminary Earned PSUs | | 1-2 | +25% | | 3-4 | +12.5% | | 5 | No Change | | 6-7 | -12.5% | | 8-9 | -25% |

  44. 2018 Highlights: LTI Program

    | ¡ | Overall range of payout of the PSUs is 0% to 225% of the target award depending on our achievement of the performance goals. |

  45. 2018 Highlights: LTI Program

    | ◾ | Stock Options (25% of LTI program awards) – vest ratably over a three-year period following date of grant. |

  46. 2018 Highlights: LTI Program

    | ◾ | RSUs (25% of LTI program awards) – vest ratably over a three-year period following date of grant. |

  47. 2018 Highlights: LTI Program

    Determination and Design of 2018 LTI Awards. At its meeting on February 6, 2018, the committee determined the total target LTI award value for each of the executive officers based on five times the executive’s base salary. The committee determined to award 50% of the total target LTI value in PSUs, 25% in stock options and 25% in RSUs, and calculated the number of target PSUs, stock options and RSUs to be granted to each as follows:

  48. 2018 Highlights: LTI Program

    | Executive | Total Target LTI Award Value | Target Number of PSUs Granted | Estimated Value of PSUs on 2/6/18 (1) | Number of Options Granted | Estimated Value of Options on 2/6/18 (2) | Number of RSUs Granted | Estimated Value of RSUs on 2/6/18 (3) | | Mr. Adkerson | $8,000,000 | 213,000 | $3,991,620 | 255,000 | $1,999,200 | 106,500 | $1,995,810 | | Ms. Quirk | 4,000,000 | 106,500 | 1,995,810 | 127,500 | 999,600 | 53,000 | 993,220 | | Mr. Conger | 2,750,000 | 73,000 | 1,368,020 | 87,500 | 686,000 | 36,500 | 684,010 | | Mr. Arnold | 2,750,000 | 73,000 | 1,368,020 | 87,500 | 686,000 | 36,500 | 684,010 |

  49. 2018 Highlights: LTI Program

    | The target number of PSUs awarded was determined using the grant date closing stock price of $18.74. The final fair value of the PSUs for accounting purposes based on the Monte Carlo valuation increased to $20.608 and reflected a probable payout of 118% of target, which is the amount reflected in the “Summary Compensation Table” on page 36.(1) |

  50. 2018 Highlights: LTI Program

    | Based on an estimated Black-Scholes-Merton value of $7.84.(2) |

  51. 2018 Highlights: LTI Program

    | Based on grant date closing stock price of $18.74.(3) |

  52. 2018 Highlights: LTI Program

    Settlement of 2017 Performance-Based RSUs and 2016 PSU Award. In February 2019, the board reviewed the performance-based RSUs granted to Mr. Adkerson in 2017, which award would vest when the board (with Mr. Adkerson abstaining) approved the satisfactory resolution of PT-FI’s long-term mining rights with the Indonesian government. The board noted that on December 21, 2018, we completed a positive transaction with the Indonesian government to provide long-term stability to our operations in Indonesia. As a result, the board (with Mr. Adkerson abstaining) determined that the performance condition had been met and Mr. Adkerson’s 64,000 performance-based RSUs were fully vested. In addition, in February 2019, the committee certified the results of the PSUs granted in 2016 to our executive officers. These PSUs had a three-year performance period ending December 31, 2018, with vesting and payout based on performance measured by a combination of annual achievement of financial and operational objectives during the performance period and the company’s TSR compared to the TSR of our peer group (see page 33 for information about the companies in the peer group applicable to the 2016 PSUs). The executives could earn between 0% and 200% of the target PSU award based on the level of achievement of these metrics. Following the end of the performance period, the committee determined that the three-year average of the achievements with respect to the annual financial and operational goals resulted in a preliminary payout of 117% of the target PSUs. However, because our TSR ranked 8th relative to our peer group, the payout percentage was reduced by 25%, resulting in the executives earning 92.0% of their target PSUs from 2016, as follows:

  53. 2018 Highlights: LTI Program

    | | | Achievement of Annual Metrics | | | | | | | Grant Date | Three-Year Performance Period | 2016 | 2017 | 2018 | % Earned Before TSR | TSR Peer Ranking | Award % Earned | | March 30, 2016 | 2016-2018 | 138.5% | 126.7% | 85.9% | 117.0% | 8th | 92.0% |

  54. 2018 Highlights: LTI Program

    The table below details the grant date fair value of the 2017 performance-based RSUs and the 2016 PSUs reflected in the applicable “Summary Compensation Table” and the value of the common stock received upon settlement of the awards in February 2019.

  55. 2018 Highlights: LTI Program

    | Executive | Award Type | Target Number of Performance- Based RSUs and PSUs Granted | Value of Awards Reported as Compensation in Year of Grant | Number of Performance- Based RSUs and PSUs Earned | Realized Value of Awards | | Mr. Adkerson | 2016 PSUs | 600,000 | $6,874,440 | 552,000 | $6,546,720 | | | 2017 Performance-Based RSUs | 64,000 | 993,280 | 64,000 | 759,040 | | Ms. Quirk | 2016 PSUs | 390,000 | 4,468,386 | 358,800 | 4,255,368 | | Mr. Conger | 2016 PSUs | 170,000 | 1,947,758 | 156,400 | 1,854,904 | | Mr. Arnold | 2016 PSUs | 330,000 | 3,780,942 | 303,600 | 3,600,696 | | Totals | | 1,554,000 | $18,064,806 | 1,434,800 | $17,016,728 |

  56. Post-Termination Compensation

    Post-Termination Compensation In addition to the compensation received by our executive officers during 2018 and benefits under our tax-qualified defined contribution plans, which we provide to all qualified employees, we also provide certain post-employment benefits to our executive officers, including a nonqualified defined contribution plan, as well as supplemental retirement plans and change of control and severance benefits to certain executives.

  57. Change of Control and Severance Benefits for Continuing Executives

    Change of Control and Severance Benefits for Continuing Executives We provide Ms. Quirk with contractual protections in the event of certain terminations of employment outside of the change of control context, as well as in connection with a change of control. In addition, Mr. Conger is an eligible participant in certain severance and change of control severance plans maintained by the company and our subsidiaries for the benefit of officers and employees. We believe that severance protections, particularly in connection with a change of control transaction, can play a valuable role in attracting and retaining key executive officers by providing protections commonly provided in the market. In addition, we believe these benefits also serve the company’s and stockholders’ interests by promoting a continuity of management in the context of an actual or threatened change of control transaction. The existence of these arrangements does not impact our decisions regarding other components of our executive compensation program, although we consider these severance protections an important part of our executives’ compensation packages. We believe that the occurrence, or potential occurrence, of a change of control transaction would create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change of control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage certain executive officers to remain employed with the company during an important time when their prospects for continued employment following a transaction are often uncertain, we may provide certain executive officers with enhanced severance benefits if their employment is terminated by the company without cause or, in certain cases, by the executive in connection with a change of control. Because we believe that a termination by the executive for good reason may be conceptually the same as a termination by the company without cause, and because we believe that in the context of a change of control, potential acquirers would otherwise have an incentive to constructively terminate the executive’s employment to avoid paying severance, we believe it is appropriate to provide severance benefits in these circumstances. We do not provide excise tax gross-up protections under any change of control arrangements with our executive officers. We also do not believe that our executive officers should be entitled to receive cash severance benefits merely because a change of control transaction occurs. The payment of cash severance benefits is only triggered by an actual or constructive termination of employment following a change of control (i.e., a “double trigger”). In addition, our LTI awards, including the stock options, RSUs and PSUs granted to our executives and all of our employees, provide for accelerated vesting of the award following a change of control only if the recipient also experiences an actual or constructive termination of employment within one year after a change of control. Ms. Quirk is also entitled to severance benefits under her employment agreement in the event of a termination of employment by the company without cause or by her for good reason. Our committee determined that it is appropriate to continue to provide Ms. Quirk with severance benefits under these circumstances in light of her position with the company and as part of her overall compensation package. For more information regarding these benefits, see the section titled “Executive Officer Compensation – Executive Compensation Tables – Potential Payments Upon Termination or Change of Control” beginning on page 44.

  58. Peer Group

    Peer Group In March 2016, in connection with the company’s exit from the oil and gas business and refocus of our business on our leading position in the global copper industry, the committee, with input from Pay Governance, developed a new group of peer companies that we use to compare our performance (including for purposes of the PSUs granted since 2016). This group of peers consists solely of mining companies and is set forth below:

  59. Peer Group

    | Anglo American plc | | Antofagasta plc | | BHP Billiton Limited | | Glencore Xstrata plc | | Rio Tinto plc | | Southern Copper Corporation | | Teck Resources Limited | | Vale S.A. |

  60. Peer Group

    In February 2018, with input from Pay Governance, the compensation committee determined that while the mining company peer group above is appropriate for measuring our performance, because it is substantially comprised of non-U.S. based companies, it is not an appropriate peer group for compensation comparisons for the following reasons: (1) international companies have significantly different pay structures than U.S. based companies, and (2) international companies have different reporting requirements making it difficult to obtain comparable data. Accordingly, the committee concluded that the S&P 250 was an appropriate peer group for purposes of comparing our compensation programs and pay levels.

  61. Risks Arising from Compensation Policies and Practices

    Risks Arising from Compensation Policies and Practices After reviewing the company’s compensation program, management and our committee believe that the risks arising from our compensation policies and practices for our employees, including our executive officers, are not reasonably likely to have a material adverse effect on the company. In reaching this conclusion, we have taken into account the purpose and structure of these programs and the following design elements of our compensation programs and policies: our balance and amount of annual and long-term compensation elements at the executive and management levels; our selection of performance metrics under our annual and long-term programs that focus our executives and management level employees on the critical elements of our strategic plans, which in turn drive performance; the multi-year vesting of equity awards and three-year performance period of our PSUs that promote focus on the long-term financial performance of our company; and bonus arrangements for most employees that are not guaranteed and are ultimately at the discretion of either our committee (for our executive officers and senior management) or senior management (for other employees). These features, as well as the stock ownership requirements applicable to our executive officers, result in a compensation program that aligns our executives’ interests with those of our stockholders and does not promote excessive risk-taking on the part of our executives or other employees.

  62. Summary Compensation Table

    Summary Compensation Table

  63. Summary Compensation Table

    | Name and Principal Position | Year | Salary | Bonus | Stock Awards (1) | Option Awards (2) | Non-Equity Incentive Plan Compensation (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (4) | All Other Compensation (5) | Total | | Richard C. Adkerson Vice Chairman of the Board, President and Chief Executive Officer | 2018 2017 2016 | $1,600,000 1,541,667 1,250,000 | — — $1,000,000 | $7,175,425 7,286,646 6,874,440 | $1,999,200 3,919,150 2,864,400 | $2,145,600 2,704,800 1,385,000 | $2,642,995 2,201,935 2,029,631 | $860,815 741,839 579,195 | $16,424,035 18,396,037 15,982,666 | | Kathleen L. Quirk Executive Vice President and Chief Financial Officer | 2018 2017 2016 | 800,000 775,000 650,000 | — — — | 3,583,027 4,131,584 4,468,386 | 999,600 1,955,770 1,861,200 | 1,251,600 1,577,800 1,260,350 | 18,280 — — | 130,709 111,668 69,637 | 6,783,216 8,551,822 8,309,573 | | Harry M. “Red” Conger, IV President and Chief Operating Officer – Americas | 2018 2017 2016 | 550,000 541,666 500,000 | — — — | 2,459,183 1,474,704 1,947,758 | 686,000 1,346,970 818,400 | 860,475 1,084,738 1,114,925 | 4,548 76,006 — | 176,422 129,091 137,651 | 4,736,628 4,653,175 4,518,734 | | Michael J. Arnold (6) Former Executive Vice President and Chief Administrative Officer | 2018 2017 2016 | 550,000 550,000 550,000 | — — — | 2,459,183 1,971,344 3,780,942 | 686,000 1,346,970 1,570,800 | 860,475 1,084,738 1,066,450 | 37,798 — — | 1,480,133 128,568 95,790 | 6,073,589 5,081,620 7,063,982 |

  64. Summary Compensation Table

    | The amounts reported in the table for 2018 reflect the aggregate grant date fair value of the RSUs and PSUs awarded on February 6, 2018, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718. The grant date fair value of the RSUs was determined based on the closing price of our common stock on the grant date ($18.74). The PSUs represent a contingent right to receive shares of our common stock, with the final number of shares to be issued based on the level of the company’s achievement of cumulative ROI over a three-year performance period, subject to a “TSR modifier,” which may increase or decrease the payout by up to 25% of the target award based on our TSR relative to a peer group. The grant date fair value of the PSUs with respect to the cumulative ROI metric was determined by reference to the closing price of our common stock on the grant date ($18.74), and the TSR modifier was valued using a Monte-Carlo valuation model. The Monte-Carlo model utilizes multiple inputs to produce distributions of TSR for the company and each of the applicable peer companies to calculate the fair value of the TSR modifier component of each award. Specifically, for the 2018 awards, the simulation model applied a risk-free interest rate of 2.26% and an expected volatility assumption for the company’s stock price of 65.14%. The risk-free rate is assumed to equal the yield on an approximate three-year treasury bond on the grant date. Volatility is based on historical volatility for the approximate three-year period preceding the grant date. Using these assumptions, the TSR modifier component of the PSUs was valued at $1.868 per unit, which, when combined with the closing price of our common stock on the grant date ($18.74), resulted in a per unit value of $20.608, applied to a probable payout of 118%, which is reflected in the table. The grant date value of the 2018 PSUs for each of the NEOs assuming maximum payout of the PSUs, and based on the closing stock price on the date of grant, is as follows: for Mr. Adkerson – $8,981,145, for Ms. Quirk – $4,490,573, for Mr. Conger – $3,078,045 and for Mr. Arnold – $3,078,045.(1) |

  65. Summary Compensation Table

    | Reflects the aggregate grant date fair value of the options granted to the NEOs in the year reflected, determined using the Black-Scholes-Merton option valuation model price, which was $7.84 per option in 2018. For information relating to the assumptions made by us in valuing the option awards made to our NEOs, refer to Notes 1 and 10 of our financial statements in our annual report on Form 10-K for the year ended December 31, 2018. For more information regarding options granted to the NEOs, see the section titled “Executive Officer Compensation – Compensation Discussion and Analysis” beginning on page 21.(2) |

  66. Summary Compensation Table

    | Reflects the annual incentive award payments received under our AIP based on the achievement of pre-established goals. See the section titled “Executive Officer Compensation – Compensation Discussion and Analysis” beginning on page 21 for more information.(3) |

  67. Summary Compensation Table

    | Includes (a) the aggregate change in actuarial present value during 2018 of Mr. Adkerson’s SERP benefit of $2,396,127 and Mr. Conger’s SRP benefit of $0 (reflecting a decrease of $124,417), and (b) earnings under the NQDC plan in excess of 120% of the applicable monthly long-term federal rate at the time the compensation committee established the formula, as follows: for Mr. Adkerson – $246,868, for Ms. Quirk – $18,280, for Mr. Conger – $4,548 and for Mr. Arnold – $37,798. As determined by the compensation committee in January 2009, the assets in the NQDC plan are treated as if invested to produce a rate of interest equal to the prime rate, as published in the Federal Reserve Statistical Report at the beginning of each month. The 2017 amount reflected in this column for Mr. Conger was not included in the Summary Compensation Table in our 2018 proxy statement, and Mr. Conger’s “Total” compensation for 2017 has been adjusted accordingly. See the section titled “Executive Officer Compensation – Executive Compensation Tables – Retirement Benefit Programs” beginning on page 41 for more information.(4) |

  68. Summary Compensation Table

    | The amounts reported for 2018, which reflect the incremental cost to the company, are shown in the table below and reflect all perquisites and other personal benefits and (a) amounts contributed by the company to defined contribution plans, which include amounts contributed to the ECAP and the nonqualified defined contribution plan; (b) the dollar value of life insurance premiums paid by the company; and (c) the dollar value of interest credited on dividend equivalents on outstanding RSUs (we discontinued crediting interest for awards granted after 2015). For Mr. Arnold, includes the value of equity-based awards that accelerated in connection with his retirement, which was effective December 31, 2018. See the “Potential Payments Upon Termination or Change of Control” table on page 46 for more information.(5) |

  69. Summary Compensation Table

    The perquisites and other personal benefits reported in the table below include (a) personal financial and tax advice under the company’s executive services program, (b) for Mr. Adkerson, personal use of fractionally owned company aircraft, which includes the hourly operating rate, fuel costs and incidental fees directly related to the flight, and for Messrs. Conger and Arnold, spousal travel expenses, including commercial airline tickets and meals, paid by the company in connection with the spouse accompanying the executive primarily for international business travel, (c) personal use of company facilities and personnel, (d) security services and use of company cars, which includes driver compensation and vehicle repair, maintenance, and fuel costs, (e) the company’s premium payments for personal excess liability insurance, and (f) the company’s premium payments for disability insurance. The amounts in the table reflect the incremental cost to the company.

  70. 2018 All Other Compensation

    2018 All Other Compensation

  71. 2018 All Other Compensation

    | | Perquisites and Other Personal Benefits | | | | | | Additional All Other Compensation | | | | | Name | Financial and Tax Advice | Aircraft Usage and Spousal Travel | Facilities and Personnel | Security and Cars | Personal Excess Liability Insurance Premiums | Disability Insurance Premiums | Plan Contributions | Life Insurance Premiums | Interest Credited on Dividend Equivalents | Retirement Benefits | | Mr. Adkerson | $20,000 | $146,547 | $53,280 | $122,764 | $6,802 | $8,602 | $363,290 | $33,200 | $106,330 | — | | Ms. Quirk | 2,300 | — | — | — | 3,337 | 8,402 | 116,670 | — | — | — | | Mr. Conger | 15,000 | 67,331 | — | — | 3,337 | 9,323 | 81,431 | — | — | — | | Mr. Arnold | 20,447 | 20,952 | — | — | 3,255 | 6,078 | 80,868 | — | — | $1,348,533 |

  72. 2018 All Other Compensation

    | Mr. Arnold retired from his positions as executive vice president and chief administrative officer of the company effective as of December 31, 2018.(6) |

  73. 2018 Grants of Plan-Based Awards

    2018 Grants of Plan-Based Awards

  74. 2018 Grants of Plan-Based Awards

    | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (3) | All Other Option Awards: Number of Securities Underlying Options (4) | Exercise or Base Price of Option Awards (5) | Grant Date Fair Value of Stock and Option Awards | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | | | Richard C. Adkerson AIP LTI Program – PSUs LTI Program – Options LTI Program – RSUs | 02/06/2018 02/06/2018 02/06/2018 02/06/2018 | $1,200,000 — — — | $2,400,000 — — — | $4,200,000 — — — | — 53,250 — — | — 213,000 — — | — 479,250 — — | — — — 106,500 | — — 255,000 — | — — $18.74 — | — $5,179,615 1,999,200 1,995,810 | | Kathleen L. Quirk AIP LTI Program – PSUs LTI Program – Options LTI Program – RSUs | 02/06/2018 02/06/2018 02/06/2018 02/06/2018 | 700,000 — — — | 1,400,000 — — — | 2,450,000 — — — | — 26,625 — — | — 106,500 — — | — 239,625 — — | — — — 53,000 | — — 127,500 — | — — 18.74 — | — 2,589,807 999,600 993,220 | | Harry M. “Red” Conger, IV AIP LTI Program – PSUs LTI Program – Options LTI Program – RSUs | 02/06/2018 02/06/2018 02/06/2018 02/06/2018 | 481,250 — — | 962,500 — — | 1,684,375 — — | — 18,250 — — | — 73,000 — | — 164,250 — | — — — 36,500 | — — 87,500 | — — 18.74 | — 1,775,173 686,000 684,010 | | Michael J. Arnold AIP LTI Program – PSUs LTI Program – Options LTI Program – RSUs | 02/06/2018 02/06/2018 02/06/2018 02/06/2018 | 481,250 — — — | 962,500 — — — | 1,684,375 — — — | — 18,250 — — | — 73,000 — — | — 164,250 — — | — — — 36,500 | — — 87,500 — | — — 18.74 — | — 1,775,173 686,000 684,010 |

  75. 2018 Grants of Plan-Based Awards

    | For 2018, under the AIP, each executive had a target award based on a multiple of salary, with the amount to be earned based on the company’s performance relative to defined goals established by the compensation committee. The amounts reported represent the estimated threshold, target and maximum possible annual cash incentive payments that could have been received by each NEO pursuant to the AIP for 2018. The estimated amounts in the “Target” column were approved by the compensation committee and reflect 150% of base salary for Mr. Adkerson and 175% of base salary for each of Ms. Quirk and Messrs. Conger and Arnold. Achievement of the threshold level of performance would result in a payout of 50% of the target award, and a maximum performance would result in 175% of target. For more information, see the section titled “Executive Officer Compensation – Compensation Discussion and Analysis” beginning on page 21.(1) |

  76. 2018 Grants of Plan-Based Awards

    | These awards represent PSUs awarded as part of our 2018 LTI program. Each of the NEOs received 50% of their 2018 target LTI program award in the form of PSUs based on estimated grant date fair values as of February 6, 2018. Each PSU granted in 2018 represents a contingent right to receive shares of our common stock, with the final number of shares to be issued to our NEOs based on the company’s level of achievement of a cumulative ROI metric and on our TSR compared to the TSR of our peer group during the three-year period ending on December 31, 2020. For the 2018 PSU awards, the executives may receive between 25% and 225% of the target PSU award based on achievement of the applicable performance goals. For more information regarding PSUs granted to the NEOs, see the section titled “Executive Officer Compensation – Compensation Discussion and Analysis” beginning on page 21.(2) |

  77. 2018 Grants of Plan-Based Awards

    | These awards represent RSUs awarded as part of our 2018 LTI program. Each of the NEOs received 25% of their 2018 target LTI program award in the form of RSUs based on the estimated grant date fair value as of February 6, 2018.(3) |

  78. 2018 Grants of Plan-Based Awards

    | These awards represent options awarded as part of our 2018 LTI program. Each of the NEOs received 25% of their 2018 LTI program award in the form of options based on the estimated grant date fair value as of February 6, 2018.(4) |

  79. 2018 Grants of Plan-Based Awards

    | 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 NYSE-listed stocks on the grant date.(5) |

  80. Outstanding Equity Awards at December 31, 2018

    Outstanding Equity Awards at December 31, 2018

  81. Outstanding Equity Awards at December 31, 2018

    | | Option Awards | | | | | Stock Awards | | | | | Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable (1) | Option Exercise Price (2) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (3) | Market Value of Shares or Units of Stock That Have Not Vested (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (4)(5) | | Richard C. Adkerson | 02/02/09 | 162,000 | — | 11.930 | 02/02/19 | 234,500 | $2,417,695 | 1,134,000 | $11,196,660 | | | 02/01/10 | 162,000 | — | 29.130 | 02/01/20 | | | | | | | 02/07/11 | 135,000 | — | 31.950 | 02/07/21 | | | | | | | 02/06/12 | 135,000 | — | 24.080 | 02/06/22 | | | | | | | 02/02/09 | 250,000 | — | 12.295 | 02/02/19 | | | | | | | 02/02/10 | 1,000,000 | — | 36.255 | 02/02/20 | | | | | | | 02/08/11 | 500,000 | — | 55.640 | 02/08/21 | | | | | | | 02/06/12 | 330,000 | — | 46.730 | 02/06/22 | | | | | | | 01/29/13 | 450,000 | — | 35.010 | 01/29/23 | | | | | | | 02/04/14 | 335,000 | — | 30.940 | 02/04/24 | | | | | | | 02/03/15 | 435,000 | 145,000 | 18.980 | 02/03/25 | | | | | | | 02/02/16 | 542,500 | 542,500 | 4.350 | 02/02/26 | | | | | | | 02/07/17 | 128,750 | 386,250 | 15.520 | 02/07/27 | | | | | | | 02/06/18 | — | 255,000 | 18.740 | 02/06/28 | | | | | | Kathleen L. Quirk | 02/02/09 | 40,500 | — | 11.930 | 02/02/19 | 181,000 | 1,866,110 | 624,500 | 6,116,923 | | | 02/01/10 | 40,500 | — | 29.130 | 02/01/20 | | | | | | | 02/07/11 | 40,500 | — | 31.950 | 02/07/21 | | | | | | | 02/06/12 | 40,500 | — | 24.080 | 02/06/22 | | | | | | | 02/02/09 | 300,000 | — | 12.295 | 02/02/19 | | | | | | | 02/02/10 | 300,000 | — | 36.255 | 02/02/20 | | | | | | | 02/08/11 | 150,000 | — | 55.640 | 02/08/21 | | | | | | | 02/06/12 | 110,000 | — | 46.730 | 02/06/22 | | | | | | | 01/29/13 | 150,000 | — | 35.010 | 01/29/23 | | | | | | | 02/04/14 | 220,000 | — | 30.940 | 02/04/24 | | | | | | | 02/03/15 | 285,000 | 95,000 | 18.980 | 02/03/25 | | | | | | | 02/02/16 | 352,500 | 352,500 | 4.350 | 02/02/26 | | | | | | | 02/07/17 | 64,250 | 192,750 | 15.520 | 02/07/27 | | | | | | | 02/06/18 | — | 127,500 | 18.740 | 02/06/28 | | | | | | Harry M. “Red” Conger, IV | 02/02/09 | 23,000 | — | 12.295 | 02/02/19 | 36,500 | 376,315 | 331,000 | 3,272,394 | | | 02/02/10 | 100,000 | — | 36.255 | 02/02/20 | | | | | | | 02/08/11 | 50,000 | — | 55.640 | 02/08/21 | | | | | | | 02/06/12 | 65,000 | — | 46.730 | 02/06/22 | | | | | | | 01/29/13 | 65,000 | — | 35.010 | 01/29/23 | | | | | | | 02/04/14 | 37,500 | — | 30.940 | 02/04/24 | | | | | | | 02/03/15 | 56,250 | 18,750 | 18.980 | 02/03/25 | | | | | | | 02/02/16 | 77,500 | 155,000 | 4.350 | 02/02/26 | | | | | | | 02/07/17 | 44,250 | 132,750 | 15.520 | 02/07/27 | | | | | | | 02/06/18 | — | 87,500 | 18.740 | 02/06/28 | | | | | | Michael J. Arnold | 02/02/09 | 180,000 | — | 12.295 | 02/02/19 | 68,500 | 706,235 | 491,000 | 4,790,026 | | | 02/02/10 | 240,000 | — | 36.255 | 02/02/20 | | | | | | | 02/08/11 | 120,000 | — | 55.640 | 02/08/21 | | | | | | | 02/06/12 | 100,000 | — | 46.730 | 02/06/22 | | | | | | | 01/29/13 | 135,000 | — | 35.010 | 01/29/23 | | | | | | | 02/04/14 | 185,000 | — | 30.940 | 02/04/24 | | | | | | | 02/03/15 | 240,000 | 80,000 | 18.980 | 02/03/25 | | | | | | | 02/02/16 | 297,500 | 297,500 | 4.350 | 02/02/26 | | | | | | | 02/07/17 | 44,250 | 132,750 | 15.520 | 02/07/27 | | | | | | | 02/06/18 | — | 87,500 | 18.740 | 02/06/28 | | | | |

  82. Outstanding Equity Awards at December 31, 2018

    | The stock options granted prior to 2018 become exercisable in 25% annual increments on each of the first four anniversaries of the date of grant and have a term of 10 years. Beginning with grants in 2018, the stock options become exercisable in 33% annual increments on each of the first three anniversaries of the date of grant and(1) |

  83. Outstanding Equity Awards at December 31, 2018

    | have a term of 10 years. The unvested stock options will become immediately exercisable if there is a qualifying termination of employment following a change of control. |

  84. Outstanding Equity Awards at December 31, 2018

    | The exercise price of the stock options granted by the company was determined by reference to the closing price of our common stock on the grant date.(2) |

  85. Outstanding Equity Awards at December 31, 2018

    | Represents time-vested RSUs held by the NEOs, as set forth in the table below, which will vest and be paid out in shares of our common stock, provided the applicable service conditions are satisfied.(3) |

  86. Outstanding Equity Awards at December 31, 2018

    | Name | RSUs | Vesting Date | | Mr. Adkerson | 35,500 | 02/15/19 | | | 35,500 | 02/15/20 | | | 35,500 | 02/15/21 | | | 128,000 | 02/15/21 | | Ms. Quirk | 17,667 | 02/15/19 | | | 17,666 | 02/15/20 | | | 17,667 | 02/15/21 | | | 128,000 | 02/15/21 | | Mr. Conger | 12,167 | 02/15/19 | | | 12,166 | 02/15/20 | | | 12,167 | 02/15/21 | | Mr. Arnold | 12,167 | 02/15/19 | | | 12,166 | 02/15/20 | | | 12,167 | 02/15/21 | | | 32,000 | 02/15/21 |

  87. Outstanding Equity Awards at December 31, 2018

    | The market value of the unvested RSUs and PSUs reflected in this table was based on the $10.31 closing market price per share of our common stock on December 31, 2018.(4) |

  88. Outstanding Equity Awards at December 31, 2018

    | Represents target PSUs held by the NEOs, as set forth in the table below. The PSUs will vest following the end of the applicable performance period and be paid out in shares of our common stock based on satisfaction of the applicable performance goals. With respect to the 2016 and 2017 PSU awards, the executives will earn between 0% and 175% of the target PSU award based on the company’s achievement of annual operational and financial metrics and up to an additional 25% of the target PSU award based on the company’s TSR compared to the TSR of the company’s peer group. With respect to the 2018 PSU awards, the executives will earn between 0% and 225% of the target PSU award based on the company’s average ROI and its relative TSR compared to the TSR of the company’s peer group over the three-year performance period ending December 31, 2020. Accordingly, the number of units reported in the table above represent the target number of all outstanding PSUs as of December 31, 2018, but the values reported reflect a 92.0% payout with respect to the 2016 PSU awards and a payout at the target amount with respect to the 2017 and 2018 PSU awards. In addition, Mr. Adkerson’s total includes 64,000 performance-based RSUs, which vest upon satisfaction of a performance condition, provided such performance occurs before February 7, 2022. The compensation committee certified that this condition was met and these performance-based RSUs were paid out in February 2019.(5) |

  89. Outstanding Equity Awards at December 31, 2018

    | Name | Grant Date | PSUs | | | Last Day of Performance Period | | | | Threshold* | Target | Maximum | | | Mr. Adkerson | 3/30/2016 | n/a | 600,000 | 1,200,000 | 12/31/18** | | | 2/7/2017 | n/a | 257,000 | 514,000 | 12/31/19 | | | 2/6/2018 | 53,250 | 213,000 | 479,250 | 12/31/20 | | Ms. Quirk | 3/30/2016 | n/a | 390,000 | 780,000 | 12/31/18** | | | 2/7/2017 | n/a | 128,000 | 256,000 | 12/31/19 | | | 2/6/2018 | 26,625 | 106,500 | 239,625 | 12/31/20 | | Mr. Conger | 3/30/2016 | n/a | 170,000 | 340,000 | 12/31/18** | | | 2/7/2017 | n/a | 88,000 | 176,000 | 12/31/19 | | | 2/6/2018 | 18,250 | 73,000 | 164,250 | 12/31/20 | | Mr. Arnold | 3/30/2016 | n/a | 330,000 | 660,000 | 12/31/18** | | | 2/7/2017 | n/a | 88,000 | 176,000 | 12/31/19 | | | 2/6/2018 | 18,250 | 73,000 | 164,250 | 12/31/20 |

  90. Outstanding Equity Awards at December 31, 2018

    | For the 2016 and 2017 PSU awards, each executive may receive between 0% and 200% of the target PSU award based on achievement of the applicable performance goals, thus there was no determinable threshold. For the 2018 PSU awards, each executive may receive between 25% and 225% of the target PSU award based on achievement of the applicable performance goals.* |

  91. Outstanding Equity Awards at December 31, 2018

    | In February 2019, the compensation committee certified a 92.0% payout with respect to the 2016 PSU awards.** |

  92. 2018 Stock Vested

    2018 Stock Vested

  93. 2018 Stock Vested

    | | Stock Awards (1) | | | Name | Number of Shares Acquired on Vesting | Value Realized on Vesting (2) | | Richard C. Adkerson | — | — | | Kathleen L. Quirk | — | — | | Harry M. “Red” Conger, IV | 5,000 | $95,600 | | Michael J. Arnold | — | — |

  94. 2018 Stock Vested

    | No options were exercised during 2018.(1) |

  95. 2018 Stock Vested

    | The value realized on vesting of RSUs is based on the closing sale price on the date of vesting of the RSUs or, if there were no reported sales on such date, on the last preceding date on which any reported sale occurred.(2) |

  96. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation

  97. Nonqualified Deferred Compensation

    | Name | Plan | Executive Contributions in Last Fiscal Year (1) | Registrant Contributions in Last Fiscal Year (2) | Aggregate Earnings in Last Fiscal Year (3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year End (4) | | Richard C. Adkerson | NQDC plan | $119,500 | $326,790 | $1,443,191 | — | $30,184,998 | | | Deferred RSUs | — | — | (6,343,958) | — | 12,616,042 | | Kathleen L. Quirk | NQDC plan | 55,500 | 89,170 | 104,712 | — | 2,247,515 | | Harry M. “Red” Conger, IV | NQDC plan | 13,750 | 53,931 | 26,039 | — | 576,335 | | Michael J. Arnold | NQDC plan | 25,000 | 53,368 | 220,726 | — | 4,629,643 |

  98. Nonqualified Deferred Compensation

    | The amounts reflected in this column are included in the “Salary” column for each NEO for 2018 reported in the “Summary Compensation Table.”(1) |

  99. Nonqualified Deferred Compensation

    | The amounts reflected in this column are included in the “All Other Compensation” column for each NEO for 2018 in the “Summary Compensation Table,” although the “Plan Contributions” reflected in footnote (5) to that table also include contributions to the company’s ECAP.(2) |

  100. Nonqualified Deferred Compensation

    | The assets in the NQDC plan are treated as if invested to produce a rate of interest equal to the prime rate, as published in the Federal Reserve Statistical Report at the beginning of each month. For 2018, that rate of interest was 4.5% during the period from January 1, 2018 to March 21, 2018; 4.75% during the period from March 22, 2018 to June 13, 2018; 5.00% during the period from June 14, 2018 to September 26, 2018; 5.25% during the period from September 27, 2018 to December 19, 2018; and 5.5% during the period from December 20, 2018 to December 31, 2018. A portion of the earnings reported for each NEO in this column are deemed preferential earnings and are included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table. With respect to Mr. Adkerson’s deferred RSUs, the amount represents (a) the number of deferred RSUs multiplied by the change in the price of our common stock from December 29, 2017 ($18.96) to December 31, 2018 ($10.31), and (b) accrued dividend equivalents and interest (calculated using the prime rate) on those RSUs of $2,306,042.(3) |

  101. Nonqualified Deferred Compensation

    | The following amounts reflected in this column were included in the 2017 “Total” compensation for each NEO in the “Summary Compensation Table”: Mr. Adkerson – $417,775, Ms. Quirk – $132,834, Mr. Conger – $67,944 and Mr. Arnold – $78,886. The following amounts reflected in this column were included in the 2016 “Total” compensation for each NEO in the “Summary Compensation Table”: Mr. Adkerson – $243,400, Ms. Quirk – $77,450, Mr. Conger – $47,162 and Mr. Arnold – $57,950.(4) |

  102. Nonqualified Deferred Compensation

    Supplemental Executive Retirement Plan – Mr. Adkerson. In February 2004, we established an unfunded SERP for Mr. Adkerson. The compensation committee, advised by its independent compensation consultant at that time, approved the SERP, which was then recommended to and approved by the board. The SERP provides for benefits payable in the form of a 100% joint and survivor annuity, life annuity or an equivalent lump sum. Mr. Adkerson has elected to receive an equivalent lump sum payment. The annuity will equal a percentage of Mr. Adkerson’s highest average base pay for any three of the five calendar years immediately preceding Mr. Adkerson’s completion of 25 years of credited service, plus his average annual incentive awards for the same three years; provided that such average amount cannot exceed 200% of the average base pay. The percentage used in this calculation is 2% for each year of credited service for the company and its predecessor beginning in 1981, but capped at 25 years. Mr. Adkerson has attained 25 years of credited service and his annuity was fixed as of January 1st of the year in which he completed 25 years of credited service, and will only increase at retirement as a result of mortality and interest adjustments. The SERP benefit is reduced by the value of all benefits from current and former retirement plans (qualified and nonqualified) sponsored by the company, by FM Services Company or by any predecessor employer (including our former parent company), except for benefits produced by accounts funded exclusively by deductions from the participant’s pay. The amount provided in the table below reflects these reductions. As of December 31, 2018, Mr. Adkerson was 100% vested under the SERP and has elected to receive his SERP benefit in a lump sum. Supplemental Retirement Plan – Mr. Conger. Mr. Conger is a participant in the SRP, which is an unfunded, supplemental retirement plan that we assumed in 2007 in connection with our acquisition of Phelps Dodge Corporation. Benefit accruals under the SRP were frozen effective December 31, 2008. Benefits are payable in the form of a life annuity, 25%, 50%, 75% and 100% joint and survivor annuity options, as specified by the participant. The benefit will be a monthly amount equal to the product of (1) the sum of 0.35% of the participant’s final average monthly compensation in excess of his social security benefit and (2) years of service as of December 31, 2008, the date the SRP was frozen, determined without applying the Internal Revenue Code compensation and annual addition limitations. The SRP benefit is reduced by the participant’s monthly retirement benefit under the qualified retirement plan. The SRP benefit is subject to a five-year cliff vesting schedule, and Mr. Conger is 100% vested under the SRP.

  103. Pension Benefits

    Pension Benefits

  104. Pension Benefits

    | Name | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit | | Richard C. Adkerson | Supplemental Executive Retirement Plan | 25(1) | $37,231,375(2) | | Harry M. “Red” Conger, IV | Supplemental Retirement Plan | 33 | 1,400,609(3) |

  105. Pension Benefits

    | The years of credited service under the SERP is the participant’s years of service with the company and its predecessor beginning in 1981, but capped at 25 years.(1) |

  106. Pension Benefits

    | The accrued benefit was fixed as of January 1st of the year Mr. Adkerson attained 25 years of credited service, but will continue to increase year to year due to actuarial increases based on (a) an assumed 6% interest component, and (b) a mortality adjustment based on the IRS mortality table (as published in Revenue Ruling 2001-62) and defined under the SERP. These actuarial increases compensate for the fact that the benefit is expected to be paid over a shorter timeframe (i.e., life expectancy). The actuarially increased benefit is then present valued to reflect a lump sum payment.(2) |

  107. Pension Benefits

    | As of December 31, 2018, the accrued benefit under the SRP was fixed (benefit accruals were frozen as of December 31, 2008), but the present value of the benefit will be adjusted from year to year resulting from the passage of time and from changes in actuarial assumptions. As of December 31, 2018, the significant assumptions used in the actuarial valuation were a discount rate of 4.4% and the mortality table and mortality improvement scale assumptions. The mortality tables were based on the Society of Actuaries tables that were published in 2014, but adjusted to remove the projected mortality improvement after 2006, for purposes of applying an alternative projection of mortality improvement after that date.(3) |

  108. Potential Payments Upon Termination or Change of Control

    Potential Payments Upon Termination or Change of Control Employment Agreement—Ms. Quirk. As of December 31, 2018, we had an employment agreement with Ms. Quirk, which was approved by our compensation committee and the board and which is described below. For additional information, see the section titled “Executive Officer Compensation – Compensation Discussion and Analysis” beginning on page 21. The employment agreement with Ms. Quirk provides for an annual base salary of at least $650,000 (her current base salary is $800,000), and provides that she is eligible to participate in our AIP. Ms. Quirk continues to be eligible for all other benefits and compensation generally provided to our most senior executives. The term of the agreement continues through January 1st, with automatic one-year extensions unless prior written notice is given by the compensation committee that it does not wish to extend the agreement. In the event of a change of control, the agreement will expire three years following the change of control. The agreement also contains non-competition, non-disclosure and other provisions intended to protect our interests if Ms. Quirk ceases to be employed by us. In addition to the post-employment benefits provided under the company’s retirement benefit programs described above, Ms. Quirk’s employment agreement entitles her to the following additional benefits. Severance Benefits. If, during the term of her employment agreement, we terminate Ms. Quirk’s employment without cause or she terminates employment for good reason, she will be entitled to the following:

  109. Potential Payments Upon Termination or Change of Control

    | • | payment of the amount of her base salary earned through the date of termination to the extent not previously paid and a pro rata annual incentive award for the year in which the termination of employment occurs, based on actual results under our AIP; |

  110. Potential Payments Upon Termination or Change of Control

    | • | a cash payment equal to three times the sum of (a) her base salary plus (b) the average of the annual incentive awards paid to her for the immediately preceding three years; |

  111. Potential Payments Upon Termination or Change of Control

    | • | continuation of insurance and welfare benefits for three years or until she accepts new employment, if earlier; |

  112. Potential Payments Upon Termination or Change of Control

    | • | acceleration of the vesting and payout of all outstanding stock options and RSUs; and |

  113. Potential Payments Upon Termination or Change of Control

    | • | under the PSU agreements, in the case of termination without cause, retention of outstanding PSUs, which will vest after the end of the applicable performance period based on the company’s achievement of the performance goal. |

  114. Potential Payments Upon Termination or Change of Control

    Under Ms. Quirk’s employment agreement, “cause” is generally defined as her (a) failure to perform substantially the executive’s duties with the company, (b) material breach of her employment agreement, (c) felony conviction or entering of a guilty plea or plea of no contest, (d) unauthorized acts or omissions resulting in harm to the company, (e) commission of an act of dishonesty resulting in her enrichment at the expense of the company or (f) falsification of financial records. “Good reason” is generally defined as (a) any failure by the company to materially comply with any of the provisions of the employment agreement or (b) the assignment to Ms. Quirk of any duties inconsistent in any material respect with her position, authority, duties or responsibilities under the agreement. If Ms. Quirk’s employment terminates as a result of death, disability or retirement during the term of her employment agreement, she (or her estate, as applicable) will be entitled to receive the amount of her base salary earned through the termination date to the extent not previously paid, payment of a pro rata annual incentive award for the year of termination (based on actual results under our AIP) and, in the case of retirement, the continuation of insurance and welfare benefits for three years or until she accepts new employment, if earlier. As a condition to receipt of these severance benefits, Ms. Quirk must retain in confidence all confidential information known to her concerning our business for a period of five years after termination. Ms. Quirk has agreed not to compete with us for a period of six months after termination of employment. Change of Control Severance Benefits. Ms. Quirk’s employment agreement provides that the terms and conditions of her employment (including position, compensation and benefits) will not be adversely changed until the third anniversary of the change of control. If Ms. Quirk is terminated without “cause,” as generally defined above, or if she terminates for “good reason” during the three-year period after a change of control, Ms. Quirk is generally entitled to receive the same payments and benefits that she would receive in the event of a similar termination under the employment agreement, described above, except that Ms. Quirk would receive a cash payment equal to three times the sum of her base salary plus the highest annual incentive award paid to her (rather than the average annual incentive award paid to her) for the immediately preceding three fiscal years. The term “good reason” includes the failure of the acquirer to provide the executive with substantially the same position, authority, duties and responsibilities held prior to the change of control, in addition to the reasons generally provided above. The confidentiality and non-competition provisions continue to apply after a change of control. If employment terminates as a result of death, disability or retirement following a change of control, Ms. Quirk will receive the same benefits described above under “Severance Benefits” in the event of death, disability or retirement. Severance and Change of Control Benefits—Other NEOs. We currently do not have severance or change of control agreements with Messrs. Adkerson or Conger. Mr. Conger is a participant in the company’s executive change of control severance plan, which is available to certain senior executives of the company and provides benefits if a participant is terminated without cause or with good reason within two years following a change of control. Under this plan, Mr. Conger would be entitled to receive a cash payment equal to the sum of his base salary plus the highest annual incentive award paid to him for the immediately preceding three fiscal years, and continuation of insurance and welfare benefits for one year. For additional information regarding the impact of retirement on the various awards, see the footnotes to the “Potential Payments Upon Termination or Change of Control” table on pages 46 and 47. Equity-Based Incentive Awards—Impact of Termination of Employment and Change of Control. The terms of our outstanding equity-based incentive award agreements (which include options, PSUs, and RSUs) generally provide that the subject award will be forfeited if the award recipient terminates employment prior to the vesting of the award, except under certain circumstances described below. In addition, a change of control alone will not automatically result in an acceleration of the vesting of outstanding awards. Unless otherwise provided in a separate agreement, the following summarizes the effect of a termination of employment under certain scenarios on the outstanding equity-based incentives held by our NEOs:

  115. Potential Payments Upon Termination or Change of Control

    | • | Performance Share Units (PSUs) – Upon a recipient’s termination of employment due to death during the performance period of a PSU award, the award (and any related accrued dividend equivalents) will vest in full and pay out at the target level. If the termination of employment is due to disability, retirement or, at the discretion of the compensation committee, termination without cause, the award will not be forfeited nor accelerate, but will remain outstanding and vest following the end of the performance period, provided the applicable performance conditions are met. In the event of a change of control, outstanding PSUs will convert into an equivalent number of RSUs (at the target amount), which award (and any related accrued dividend equivalents) will vest on the earlier of the last day of the applicable performance period or the date the recipient is terminated without cause or terminates for good reason. |

  116. Potential Payments Upon Termination or Change of Control

    | • | Stock Options – Upon a recipient’s termination due to disability or retirement, any unvested stock options scheduled to vest within one year will vest as of the termination of employment, and the holder will have the lesser of three years or the remaining term of the option to exercise. Upon a recipient’s death the option will vest in full if not previously vested. In connection with a change of control, any unvested options will vest in full if the recipient is terminated by the company without cause or terminates with good reason within one year of the change of control. |

  117. Potential Payments Upon Termination or Change of Control

    | • | Restricted Stock Units (RSUs) – Upon a recipient’s termination due to death, any outstanding RSUs (and any related accrued dividend equivalents) will vest in full. If the termination is due to disability or retirement, any RSUs scheduled to vest within one year (and any related accrued dividend equivalents) will vest as of the termination of employment. In connection with a change of control, the RSUs (and any related accrued dividend equivalents) will vest in full if the recipient is terminated by the company without cause or terminates with good reason within one year of the change of control. With respect to the special RSU grants made to certain executive officers in February 2017, the RSUs will fully vest upon a recipient’s termination due to death, disability or retirement, and the performance RSUs will fully vest upon a recipient’s termination due to death or disability. |

  118. Potential Payments Upon Termination or Change of Control

    The letter agreement between the company and Mr. Adkerson in December 2013 provides that with respect to Mr. Adkerson’s equity-based incentive awards, he will receive retirement treatment as set forth in the applicable award agreement following any termination of employment, except a termination due to death or termination by the company for cause. No Excise Tax Gross-Ups. We do not provide excise tax gross-up protections in any of our change of control arrangements with our executive officers. Under Ms. Quirk’s employment agreement, if any part of the payments or benefits received by Ms. Quirk in connection with a termination following a change of control constitutes an excess parachute payment under Section 4999 of the Internal Revenue Code, she will receive the greater of (a) the amount of such payments and benefits reduced so that none of the amount constitutes an excess parachute payment, net of income taxes, or (b) the amount of such payments and benefits, net of income taxes and net of excise taxes under Section 4999 of the Internal Revenue Code. The following table quantifies the potential payments to our named executive officers under the contracts, arrangements or plans discussed above for various scenarios involving a change of control or termination of employment of each of our named executive officers. In addition to the benefits identified, our named executive officers would be entitled to receive the retirement and pension benefits described above under “Executive Officer Compensation – Executive Compensation Tables – Retirement Benefit Programs,” and outstanding vested stock options, which amounts are reflected in footnote (4) to the “Potential Payments Upon Termination or Change of Control” table below. In accordance with SEC rules, the information below assumes a termination date of December 31, 2018, and reflects the arrangements in effect at that time. We have used the closing price of our common stock of $10.31 on December 31, 2018, as reported on the NYSE, for purposes of calculating the value of the unvested and accelerated options, RSUs and PSUs. For Mr. Arnold, who retired effective December 31, 2018, the table reflects the benefits accrued to him in connection with his retirement only.

  119. Potential Payments Upon Termination or Change of Control

    Potential Payments Upon Termination or Change of Control

  120. Potential Payments Upon Termination or Change of Control

    | Name | Lump Sum Payment | Options (Unvested and Accelerated) (1) | Restricted Stock Units (Unvested and Accelerated) (2) | Accumulated Dividends and Interest Payable on Accelerated RSUs | Performance Share Units (Unvested and Accelerated) (3) | Accumulated Dividends Payable on Accelerated PSUs | Health and Welfare Benefits | Total (4) | | Richard C. Adkerson | | | | | | | | | | • Retirement/Termination – No Cause | n/a | $1,616,650 | $1,685,685 | $24,525 | — | n/a | n/a | $3,326,860 | | • Disability | n/a | 1,616,650 | 2,345,525 | 34,125 | — | n/a | n/a | 3,996,300 | | • Death | n/a | 3,233,300 | 3,077,535 | 44,775 | $4,845,700 | $70,500 | | 11,271,810 | | • Qualifying Termination after Change of Control (5) | n/a | 3,233,300 | 3,077,535 | 44,775 | 4,845,700 | 70,500 | n/a | 11,271,810 | | Kathleen L. Quirk | | | | | | | | | | • Retirement | n/a | 1,050,450 | 1,501,823 | 21,850 | — | n/a | $43,761 | 2,617,884 | | • Disability | n/a | 1,050,450 | 1,501,823 | 21,850 | — | n/a | n/a | 2,574,123 | | • Death | n/a | 2,100,900 | 1,866,110 | 27,150 | 2,417,695 | 35,175 | n/a | 6,447,030 | | • Termination – Good Reason | $5,238,150 | 2,100,900 | 1,866,110 | 27,150 | n/a | n/a | 43,761 | 9,276,071 | | • Termination – No Cause | 5,238,150 | 2,100,900 | 1,866,110 | 27,150 | n/a | n/a | 43,761 | 9,276,071 | | • Qualifying Termination after Change of Control (5)(6) | 7,133,400 | 2,100,900 | 1,866,110 | 27,150 | 2,417,695 | 35,175 | 43,761 | 13,624,191 | | Harry M. “Red” Conger, IV | | | | | | | | | | • Retirement | n/a | 461,900 | 125,438 | 1,825 | — | n/a | n/a | 589,163 | | • Disability | n/a | 461,900 | 125,438 | 1,825 | — | n/a | n/a | 589,163 | | • Death | n/a | 923,800 | 376,315 | 5,475 | 1,659,910 | 24,150 | n/a | 2,989,650 | | • Termination – No Cause (7) | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | • Qualifying Termination after Change of Control (5) | 1,664,925 | 923,800 | 376,315 | 5,475 | 1,659,910 | 24,150 | 27,077 | 4,681,652 | | Michael J. Arnold | | | | | | | | | | • Retirement | n/a | 886,550 | 455,358 | 6,625 | — | n/a | n/a | 1,348,533 |

  121. Potential Payments Upon Termination or Change of Control

    | “n/a” means that the benefit is not provided to the executive or the executive did not have any of the referenced awards as of December 31, 2018.* |

  122. Potential Payments Upon Termination or Change of Control

    | The value of the accelerated options is determined by multiplying (a) the difference between the December 31, 2018 closing price of our common stock and the applicable exercise price of each option, by (b) the number of unvested and accelerated options under each scenario.(1) |

  123. Potential Payments Upon Termination or Change of Control

    | The values of the RSUs were determined by multiplying the December 31, 2018 closing price of our common stock by the number of RSUs to be vested under each scenario. The values reflected for Mr. Adkerson include 64,000 performance-based RSUs, which vest upon satisfaction of a performance condition, provided such performance occurs before February 7, 2022. The compensation committee certified that this condition was met and these performance RSUs were paid out in February 2019.(2) |

  124. Potential Payments Upon Termination or Change of Control

    | The values of the PSUs in connection with death or a qualifying termination after a change of control were determined by multiplying the December 31, 2018 closing price of our common stock by the target number of PSUs with performance periods ending after December 31, 2018. No value is reflected for awards of PSUs granted in 2017 and 2018 in the event of termination upon retirement, disability, or for Mr. Adkerson, termination with no cause, because the PSU agreements do not provide for automatic vesting of outstanding PSUs and the related dividend equivalent credits in those circumstances. Instead, the awards will remain outstanding through the performance period and vest if the applicable performance conditions are met. For more information, see the “Outstanding Equity Awards at December 31, 2018” table on page 39.(3) |

  125. Potential Payments Upon Termination or Change of Control

    | In addition to the amounts reflected in this column, upon the occurrence of each event of termination listed in the table, each NEO would be entitled to the following additional benefits, as applicable: outstanding, in-the-money stock options that were vested at the time of termination, the executive’s aggregate balance in the NQDC plan (as reflected on page 42), and, for Mr. Adkerson and Mr. Conger, the present value of the executive’s supplemental retirement plan (as reflected on page 43). The aggregate value of these additional benefits for each of our NEOs, assuming a termination on December 31, 2018, is as follows: Mr. Adkerson – $72,955,715, Ms. Quirk – $4,348,415 and Mr. Conger – $2,438,844. These amounts do not include benefits under our ECAP or life insurance policies generally available to all employees. In addition to the standard life insurance policy generally available to employees, Mr. Adkerson has an executive life insurance policy providing for a death benefit of $1.5 million.(4) |

  126. Potential Payments Upon Termination or Change of Control

    | With respect to our equity awards, the agreements provide for the benefits described in the table following a change of control only if the recipient is terminated without cause or terminated with good reason within one year after the change of control. The amounts stated in the rows titled “Qualifying Termination after Change of Control” assume the full vesting of all outstanding options and RSUs and full vesting and payout at target for PSUs granted in 2017 and 2018.(5) |

  127. Potential Payments Upon Termination or Change of Control

    | Pursuant to the terms of Ms. Quirk’s employment agreement, the total payments may be subject to reduction if such payments result in the imposition of an excise tax under Section 280G of the Internal Revenue Code.(6) |

  128. Potential Payments Upon Termination or Change of Control

    | Mr. Conger is entitled to certain severance benefits in the event of his termination without cause under the company’s severance plan, which is generally available to certain eligible employees.(7) |

  129. CEO Pay Ratio

    CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our median employee and the annual total compensation of our CEO. We believe the pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. There has been no change in our employee population or employee compensation arrangements since the end of 2017 that we reasonably believe would significantly impact our pay ratio disclosure. As a result, in accordance with applicable SEC rules, we intended to calculate our CEO pay ratio for 2018 using the same median employee used for our 2017 pay ratio calculation; however, the median employee identified for our 2017 calculation received a promotion in November of 2018. As a result, in accordance with the applicable SEC rules, we are calculating our CEO pay ratio for 2018 using another employee who had substantially similar compensation for 2017 to that of the employee used for our 2017 pay ratio calculation and whose compensation did not change in 2018. The process that we used in 2017 to identify our median employee is set forth below. As previously disclosed in our 2018 proxy statement, we identified the median employee by examining the total earnings for the nine-month period ending September 30, 2017 for all individuals, excluding our CEO, who were employed by us and our consolidated subsidiaries on October 1, 2017, whether employed on a full-time, part-time, seasonal or temporary basis, with the following adjustments:

  130. CEO Pay Ratio

    | • | As of October 1, 2017, our employee population consisted of 25,124 individuals, with 43% of these individuals located in the U.S., 30% located in Indonesia, 19% located in Peru, and the remaining 8% located in other foreign jurisdictions. To reduce administrative costs and as permitted by SEC rules, we have excluded from the calculation each foreign jurisdiction where we employ less than 100 individuals, namely the employees in each of Australia, Bulgaria, Canada, China, the Democratic Republic of the Congo, Germany, Japan, the Netherlands, the Philippines, the Russian Federation, South Africa, Taiwan and the United Kingdom. This adjustment resulted in the exclusion from the calculation of approximately 300 total employees, representing approximately 1% of our employee population. |

  131. CEO Pay Ratio

    | • | With respect to permanent employees hired after January 1, 2017, we assumed for purposes of the calculation that those employees worked the full nine-month period in 2017. |

  132. CEO Pay Ratio

    | • | With respect to employees in foreign jurisdictions, we applied a foreign currency to U.S. dollar exchange rate to the compensation paid in foreign currency based on an average exchange rate for the period from July 1, 2017 to September 30, 2017. We did not make any cost of living adjustments. |

  133. CEO Pay Ratio

    | • | Of the possible median employees, we selected the employee without atypical elements of pay in his or her earnings, such as disability payments or special earnings while on leave. |

  134. CEO Pay Ratio

    We calculated annual total compensation for our median employee using the same methodology we use for our named executive officers as set forth in the “Summary Compensation Table” on page 36. The annual total compensation of our median employee (other than our CEO) for 2018 was $75,158. As disclosed in the “Summary Compensation Table,” our CEO’s annual total compensation for 2018 was $16,424,035. Based on the foregoing, our estimate of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was 219 to 1. Given the different methodologies that various public companies use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.

  135. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION

  136. Director Compensation Philosophy

    Director Compensation Philosophy 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, the board is guided by the following principles:

  137. Director Compensation Philosophy

    | • | Compensation should fairly pay directors for work required in a company of our size and scope, and differentiate among directors where appropriate to reflect different levels of work and responsibilities; |

  138. Director Compensation Philosophy

    | • | A significant portion of the total compensation should be paid in common stock to align directors’ interests with the long-term interests of our stockholders; and |

  139. Director Compensation Philosophy

    | • | The structure of the compensation program should be simple and transparent. |

  140. Process of Setting Director Compensation

    Process of Setting Director Compensation The compensation committee has oversight of director compensation, including the authority to grant equity-based awards. The compensation committee conducts an annual review and assessment of all compensation, cash and equity-based, paid to our non-management directors under our director compensation program in light of the principles set forth under “Director Compensation – Director Compensation Philosophy.” In December 2017, the compensation committee engaged Pay Governance, the board’s independent compensation consultant, to conduct a market review of non-management director remuneration practices and evaluate the company’s program in light of the review. After this review, the compensation committee decided to maintain the company’s current director compensation program. The compensation committee will continue to seek advice from the board’s independent compensation consultant at least every other year, or more often as needed, in connection with evaluating our director compensation program relative to relevant market data and formulating its recommendations to the full board. In December 2018, the compensation committee again engaged Pay Governance to conduct a market review of non-management director remuneration practices, which will be presented to the compensation committee during 2019. In addition, under the 2016 Stock Incentive Plan, our stockholders have placed a limit on the cash and equity compensation that may be paid to a non-management director each year. Under the terms of the plan, an annual limit of $750,000 per calendar year applies to the sum of all cash, equity-based awards (calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes), and other compensation granted to each non-management director for services as a member of the board, although the maximum number of shares subject to equity-based awards that may be granted during a single fiscal year may not exceed $500,000 of such annual limit.

  141. Director Compensation Table

    Director Compensation Table The table below summarizes the total compensation paid to or earned by our non-management directors during 2018.

  142. Director Compensation

    Director Compensation

  143. Director Compensation

    | Name of Director | Fees Earned or Paid in Cash (1) | Stock Awards (2)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (4) | All Other Compensation (5) | Total | | Gerald J. Ford | $157,493 | $169,488 | $0 | $51 | $327,032 | | Lydia H. Kennard | 94,993 | 169,488 | n/a | 58 | 264,539 | | Andrew Langham (6) | 23,125 | n/a | n/a | — | 23,125 | | Jon C. Madonna (7) | 58,750 | n/a | n/a | 2,643 | 61,393 | | Courtney Mather (8) | 87,500 | 169,488 | n/a | — | 256,988 | | Dustan E. McCoy | 102,500 | 169,488 | 0 | 5,513 | 277,501 | | Frances Fragos Townsend | 100,000 | 169,488 | n/a | 58 | 269,546 |

  144. Director Compensation

    | During 2018, each of Messrs. Ford and Mather elected to receive an equivalent number of shares of our common stock in lieu of 100% of his annual fee, and Mr. Langham elected to receive an equivalent number of shares of our common stock in lieu of 50% of his annual fee and to defer 50% of his annual fee to be paid in one installment after his separation from the board. The amounts reflected in this column include the fees used to purchase shares of our common stock and fees deferred by the directors. In addition, the $50,000 fee paid to Mr. Ford in connection with his service as non-executive chairman of the board was paid in shares of our common stock.(1) |

  145. Director Compensation

    | On June 1, 2018, each non-management director was granted 9,900 RSUs. Amounts reflect the aggregate grant date fair value of the RSUs, which are valued on the date of grant, or the previous trading day if no sales occur on that date, at the closing sale price per share of our common stock.(2) |

  146. Director Compensation

    | Beginning in June 2013, our non-management directors received annual equity awards payable solely in RSUs. The following table sets forth the total number of outstanding RSUs (including vested but deferred RSUs) and stock options held by each non-management director as of December 31, 2018:(3) |

  147. Director Compensation

    | Name of Director | RSUs | Options | | Gerald J. Ford | 13,375 | 76,200 | | Lydia H. Kennard | 13,375 | — | | Courtney Mather | 24,700 | — | | Dustan E. McCoy | 77,100 | 60,000 | | Frances Fragos Townsend | 23,800 | — |

  148. Director Compensation

    | Amounts reflect a decrease 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 as follows: Mr. Ford ($29,810) and Mr. McCoy ($37,950). As noted above, the director retirement plan was terminated in 2008 for any future directors.(4) |

  149. Director Compensation

    | Includes (a) interest credited on dividend equivalents on unvested RSUs during 2018 (beginning with RSU grants in 2015, interest credits on dividend equivalents are no longer provided) and (b) the dollar value of life insurance premiums and the related tax reimbursement paid by the company pursuant to an arrangement assumed in 2007 in connection with our acquisition of Phelps Dodge, as set forth in the table below.(5) |

  150. Director Compensation

    | Name of Director | Interest Credited on Dividend Equivalents | Life Insurance Premium and Tax Paid | | Gerald J. Ford | $51 | — | | Lydia H. Kennard | 58 | — | | Andrew Langham | — | — | | Jon C. Madonna | 2,157 | $486 | | Courtney Mather | — | — | | Dustan E. McCoy | 4,823 | 690 | | Frances Fragos Townsend | 58 | — |

  151. Director Compensation

    | Mr. Langham resigned from the board effective March 5, 2018 following a decrease in the Icahn group’s share ownership.(6) |

  152. Director Compensation

    | Mr. Madonna passed away on May 30, 2018.(7) |

  153. Director Compensation

    | Mr. Mather resigned from the board effective March 12, 2019 following a decrease in the Icahn group’s share ownership.(8) |

  154. STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

    | For more information regarding the RSUs and PSUs, see the sections titled “Director Compensation” and “Executive Officer Compensation – Compensation Discussion and Analysis,” and the “2018 Grants of Plan-Based Awards” table. |