Exhibit 10.1

2005 ANNUAL INCENTIVE PLAN
OF FREEPORT-McMoRan COPPER & GOLD INC.

ARTICLE I  
Purpose of Plan
 
Section 1.1.  The purpose of the 2005 Annual Incentive Plan of Freeport-McMoRan
Copper & Gold Inc. (the “Plan”) is to provide incentives for senior executives
whose performance in fulfilling the responsibilities of their positions can have
a major impact on the profitability and future growth of Freeport-McMoRan Copper
& Gold Inc. (the “Company”) and its subsidiaries.
 
ARTICLE II  
Administration of the Plan
 
Section 2.1.  Subject to the authority and powers of the Board of Directors in
relation to the Plan as hereinafter provided, the Plan shall be administered by
a Committee designated by the Board of Directors consisting of two or more
members of the Board each of whom is a “non-employee director” within the
meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission (the
“SEC”) under the Securities Exchange Act of 1934. The Committee shall have full
authority to interpret the Plan and from time to time to adopt such rules and
regulations for carrying out the Plan as it may deem best; provided, however,
that except for increases in the Plan Funding Amount provided for in Section
4.2(b), the Committee may not exercise any authority otherwise granted to it
hereunder if such action would have the effect of increasing the amount of an
Award to any Covered Officer. All determinations by the Committee shall be made
by the affirmative vote of a majority of its members, but any determination
reduced to writing and signed by a majority of the members shall be fully as
effective as if it had been made by a majority vote at a meeting duly called and
held. All decisions by the Committee pursuant to the provisions of the Plan and
all orders or resolutions of the Board of Directors pursuant thereto shall be
final, conclusive and binding on all persons, including the Participants, the
Company and its subsidiaries and their respective equity holders.
 
ARTICLE III  
Eligibility for and Payment of Awards
 
Section 3.1.  Subject to the provisions of the Plan, in each calendar year the
Committee may select any of the following to receive Awards under the Plan with
respect to such year and determine the amounts of such Awards: (a) any person
providing services as an officer of the Company or a Subsidiary, whether or not
employed by such entity, including any person who is also a director of the
Company, and (b) any person who has agreed in writing to become a person
described in clause (a) within not more than 30 days following the date of grant
of such person’s first Award under the Plan.
 
Section 3.2.  Subject to the provisions of the Plan, Awards with respect to any
year shall be paid to each Participant at such time established by the Committee
following the determination of the amounts of such Awards, which payment shall
in no event be later than February 28th of the year following such Award Year.
 
Section 3.3.  Notwithstanding the provisions of Section 3.2, if, prior to
December 31st of the year preceding any Award Year (or June 30th of the Award
Year if the Award is deemed “performance-based” under Section 409A), a
Participant shall so elect, in accordance with procedures established by the
Committee, all or any part of an Award payable in cash to such Participant with
respect to such Award Year shall be deferred and paid in one or more periodic
installments, not in excess of three, at such time or times before or after the
date of such Participant’s Separation from Service, as shall be specified in
such election; provided, however, if periodic installments are triggered by the
Participant’s Separation from Service, such payments may not begin until six
months following the date of the Participant’s Separation from Service. If and
only if any Award or portion thereof payable in cash is so deferred for payment
after December 31 of the year following such Award Year, such Award or portion
thereof payable in cash, as the case may be, shall, commencing with January 1st
of the year following such Award Year, accrue interest at a rate equal to the
prime commercial lending rate announced from time to time by JP Morgan Chase
Bank (compounded quarterly) or by another major national bank headquartered in
New York, New York and designated by the Committee. Notwithstanding a
Participant’s election to defer Awards hereunder, all installments of Awards
payable in cash and accrued interest thereon that remain unpaid as of the third
anniversary of the Participant’s Separation from Service shall be paid in a lump
sum payment as soon as administratively possible following such anniversary.
 
Section 3.4.  (a) Notwithstanding the provisions of Sections 3.1, 3.2, 3.3,
4.2(a), 4.2(b), and 4.2(c) hereof, any Award to any Covered Officer shall be
granted in accordance with the provisions of this Section 3.4.
 
(b)  All Awards to Covered Officers under the Plan will be made and administered
by two or more members of the Committee who are also “outside directors” within
the meaning of Section 162(m).
 
(c)  Within the first 90 days of each Award Year, the Committee shall assign
Participant Shares of the Plan Funding Amount to those Covered Officers whom the
Committee designates as Participants for that Award Year (which Participant
Shares in the aggregate may not exceed 100% of the Plan Funding Amount). The
maximum annual Award that may be made to any Covered Officer for an Award Year
is 60% of the Plan Funding Amount.
 
(d)  If the Plan Funding Amount with respect to an Award Year is to be adjusted
to exclude the effect of material changes in accounting policies or practices,
material acquisitions or dispositions of property or other unusual items on the
Plan Funding Amount, the Committee must clearly identify and describe such
exclusions at the time that the Participant Shares of the Plan Funding Amount
for that Award Year are assigned, if permitted under Section 162(m).
 
(e)  Any provision of the Plan to the contrary notwithstanding, no Covered
Officer shall be entitled to any payment of an Award with respect to a calendar
year unless the members of the Committee referred to in Section 3.4(b) hereof
shall have certified the Participant Share for each Covered Officer, the Plan
Funding Amount for such year and that the condition of Section 4.1 hereof has
been met for such year.
 
Section 3.5.  An Award shall be made wholly in cash unless the Committee shall
determine that a portion thereof shall be payable, at the election of the
recipient of such Award, in an alternative form selected by the Committee. Such
election shall be made by the recipient of the Award prior to December 31st of
the year preceding the applicable Award Year (or June 30th of the Award Year if
the Award is deemed “performance-based” under Section 409A). The alternative
form of payment may consist of either shares of stock (including restricted
stock) of the Company or rights to receive shares of stock (including restricted
stock units) of the Company, and the Committee shall determine the number of
such shares or rights that are equivalent in value to the portion of such Award
subject to such payment election. The portion of such Award subject to such
payment election shall be, at the option of the Committee, either a fixed
percentage selected by the Committee or a percentage selected by the Participant
from a range of percentages determined by the Committee. All shares of stock or
rights to receive shares of stock of the Company authorized under this Section
3.5 shall be issued pursuant to the terms of the Company’s stock incentive
plans, shall contain such terms, conditions, and limitations as determined by
the Committee pursuant to the stock incentive plans, and shall be subject to all
other applicable terms, conditions, and limitations of the stock incentive
plans.
 
ARTICLE IV  
General Provisions
 
Section 4.1.  Any provision of the Plan to the contrary notwithstanding, no
Award shall be made pursuant to Section 3.1 or 3.4 with respect to any calendar
year if the average of the Return on Investment for such calendar year and each
of the four preceding calendar years, after giving effect to the aggregate
amount (if any) that was awarded or credited with respect to such prior years
and the aggregate amount that would otherwise have been so awarded or credited
with respect to such calendar year, would be less than 6%.
 
Section 4.2.  (a) The aggregate amount of all Awards granted with respect to any
calendar year shall not exceed 2.5% of Net Cash Provided by Operating Activities
for such year; provided, however, that pursuant to Section 4.2(b), the Committee
may determine that the aggregate amount of all Awards granted with respect to
any calendar year may not exceed 2.75% of Net Cash Provided by Operating
Activities for such year if the applicable safety performance goals are
exceeded.
 
(b)  For each Award Year, 0.5% of the 2.5% of Net Cash Provided by Operating
Activities for such year shall be set aside as a Safety Incentive Pool. Within
the first 90 days of the Award Year, the Committee will designate one or more
objective safety performance goals applicable for the given year and establish
the targets applicable to each. Based upon its determination of whether the
Company has failed to meet, has met, or has exceeded the applicable safety
performance goals, the Committee will include between 0% and 150% of the Safety
Incentive Pool as part of the Plan Funding Amount for that Award Year. The
safety performance goals are designed to assess the Company’s safety performance
and may include any or all of the following: the reportable rate (or the number
and type of accidents reported), number of fatalities, improvement in safety
performance, lost time incident rate, financial benefits related to safety
performance improvement and implementation of safety programs. The safety
performance goals may be measured on an absolute basis or relative to a group of
peer companies or other industry group selected by the Committee, relative to
internal goals, or relative to levels attained in prior years. The Committee may
change the safety performance goals each year to any of those listed above and
may also change the targets applicable to the safety performance goals from year
to year.
 
(c)  If Managed Net Income or Total Investment of Capital for any year shall
have been affected by special factors (including material changes in accounting
policies or practices, material acquisitions or dispositions of property, or
other unusual items) which in the Committee’s judgment should or should not be
taken into account, in whole or in part, in the equitable administration of the
Plan, the Committee may, for any purpose of the Plan, adjust Managed Net Income
or Total Investment of Capital and make payments and reductions accordingly
under the Plan; provided that, except for adjustments specified in advance as
provided in Section 3.4(d) hereof, the Committee shall not take any such
adjustment into account in calculating Awards to Covered Officers if the effect
of such adjustment (i) would be to increase the Plan Funding Amount or (ii)
would result in payments to Covered Officers hereunder that would otherwise not
be made because of failure to meet the Return on Investment level specified on
Section 4.1.
 
(d)  Notwithstanding the provisions of subparagraphs (a) and (c) above, the
amount available for the grant of Awards under the Plan to Covered Officers with
respect to a calendar year shall be equal to the Plan Funding Amount for such
year and, except for adjustments specified under Section 3.4(d), any adjustments
made in accordance with or for the purposes of subparagraphs (a) or (c) that
would have the effect of increasing the Plan Funding Amount shall be disregarded
for purposes of calculating Awards to Covered Officers. The Committee may, in
the exercise of its discretion, determine that the aggregate amount of all
Awards granted to Covered Officers with respect to a calendar year shall be less
than the Plan Funding Amount for such year, but the excess of such Plan Funding
Amount over such aggregate amount of Awards granted to Covered Officers shall
not be available for any Awards to Covered Officers with respect to future
years. In addition, the Committee may, in the exercise of its discretion, reduce
or eliminate the amount of an Award to a Covered Officer otherwise calculated in
accordance with the provisions of Section 3.4 prior to payment thereof. Any
reduction of an Award shall not accrue to the benefit of any other Covered
Officer.
 
Section 4.3.  A Participant may designate in writing a beneficiary (including
the trustee or trustees of a trust) who shall upon the death of such Participant
be entitled to receive all benefits that would have been payable hereunder to
such Participant. A Participant may rescind or change any such designation at
any time. Except as provided in this Section 4.3, none of the benefits that may
be payable under the Plan may be assigned or transferred otherwise than by will
or by the laws of descent and distribution.
 
Section 4.4.  All payments made pursuant to the Plan shall be subject to
withholding in respect of income and other taxes required by law to be withheld,
in accordance with procedures to be established by the Committee.
 
Section 4.5.  The selection of an individual for participation in the Plan shall
not give such Participant any right to be retained in the employ of the Company
or any of its subsidiaries, and the right of the Company or any such subsidiary
to dismiss or discharge any such Participant, or to terminate any arrangement
pursuant to which any such Participant provides services to the Company, is
specifically reserved. The benefits provided for Participants under the Plan
shall be in addition to, and shall in no way preclude, other forms of
compensation to or in respect of such Participants.
 
Section 4.6.  The Board of Directors and the Committee shall be entitled to rely
on the advice of counsel and other experts, including the independent registered
public accounting firm for the Company regarding accounting matters. No member
of the Board of Directors or of the Committee or any officers of the Company or
its subsidiaries shall be liable for any act or failure to act under the Plan,
except in circumstances involving bad faith on the part of such member or
officer.
 
Section 4.7.  Nothing contained in the Plan shall prevent the Company or any
subsidiary or affiliate of the Company from adopting or continuing in effect
other compensation arrangements, which arrangements may be either generally
applicable or applicable only in specific cases.
 
ARTICLE V  
Amendment or Termination of the Plan
 
Section 5.1.  The Board of Directors may at any time terminate, in whole or in
part, or from time to time amend the Plan, provided that, except as otherwise
provided in the Plan, no such amendment or termination shall adversely affect
any Awards previously made to a Participant and deferred by such Participant
pursuant to Section 3.3. The Board may at any time and from time to time
delegate to the Committee any or all of its authority under this Section 5.1.
 
ARTICLE VI  
Definitions
 
Section 6.1.  For the purposes of the Plan, the following terms shall have the
meanings indicated:
 
(a)  Award: The grant of an award by the Committee to a Participant pursuant to
Section 3.1 or 3.4.
 
(b)  Award Year: Any calendar year or portion thereof with respect to which an
Award may be granted.
 
(c)  Board or Board of Directors: The Board of Directors of the Company.
 
(d)  Committee: The Committee designated pursuant to Section 2.1. Until
otherwise determined by the Board of Directors, the Corporate Personnel
Committee designated by such Board shall be the Committee under the Plan.
 
(e)  Covered Officer: At any date, (i) any individual who, with respect to the
previous taxable year of the Company, was a “covered employee” of the Company
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the rules promulgated thereunder by the Internal Revenue Service of
the Department of the Treasury, provided, however, the term “Covered Officer”
shall not include any such individual who is designated by the Committee, in its
discretion, at the time of any grant or at any subsequent time, as reasonably
expected not to be such a “covered employee” with respect to the current taxable
year of the Company and (ii) any individual who is designated by the Committee,
in its discretion, at the time of any grant or at any subsequent time, as
reasonably expected to be such a “covered employee” with respect to the current
taxable year of the Company or with respect to the taxable year of the Company
in which any Award will be paid to such individual.
 
(f)  Managed Net Income: With respect to any year, the sum of (i) the net income
(or net loss) of the Company and its consolidated subsidiaries for such year as
reviewed by the Company’s independent registered public accounting firm,
released by the Company to the public and approved by the Board; plus (or minus)
(ii) the minority interests’ share in the net income (or net loss) of the
Company’s consolidated subsidiaries for such year as reviewed by the Company’s
independent registered public accounting firm, released by the Company to the
public and approved by the Board; plus (or minus) (iii) the effect of changes in
accounting principles of the Company and its consolidated subsidiaries for such
year plus (or minus) the minority interests’ share in such changes in accounting
principles as reviewed by the Company’s independent registered public accounting
firm, released by the Company to the public and approved by the Board.
 
(g)  Net Cash Provided by Operating Activities: With respect to any year, the
net cash provided by operating activities of the Company and its consolidated
subsidiaries for such year as reviewed by the Company’s independent registered
public accounting firm, released by the Company to the public and approved by
the Board.
 
(h)  Net Interest Expense: With respect to any year, the net interest expense of
the Company and its consolidated subsidiaries for such year as reviewed by the
Company’s independent registered public accounting firm, released by the Company
to the public and approved by the Board.
 
(i)  Participant: An individual who has been selected by the Committee to
receive an Award.
 
(j)  Participant Share: The percentage of the Plan Funding Amount assigned to a
Covered Officer by the Committee.
 
(k)  Plan Funding Amount: With respect to any year, 2.5% of Net Cash Provided by
Operating Activities for such year, as adjusted as provided in Section 4.2(b),
but not to exceed 2.75% of Net Cash Provided by Operating Activities for such
year.

 
(l)  Return on Investment: With respect to any year, the result (expressed as a
percentage) calculated according to the following formula:
 
a + (b - c)
d

in which “a” equals Managed Net Income for such year, “b” equals Net Interest
Expense for such year, “c” equals Tax on Net Interest Expense for such year, and
“d” equals Total Investment of Capital for such year.

(m)  Safety Incentive Pool: The portion of the Plan Funding Amount for a given
year that is determined based on the Company’s performance with regard to the
safety performance goals established by the Committee pursuant to Section 4.2(b)
hereof. The Safety Incentive Pool for a given year is initially equal to 0.5% of
Net Cash Provided by Operating Activities for such year, but may be decreased to
a minimum of 0% or increased to a maximum of 0.75% of Net Cash Provided by
Operating Activities in accordance with Section 4.2(b) hereof.
 
(n)  Section 162(m): Section 162(m) of the Internal Revenue Code of 1986, as
amended, and rules promulgated by the Internal Revenue Service thereunder.
 
(o)  Section 409A: Section 409A of the Internal Revenue Code of 1986, as
amended, and rules and guidance promulgated by the Internal Revenue Service
thereunder.
 
(p)  Separation from Service: “Separation from service” as determined in
accordance with Section 409A.
 
(q)  Subsidiary: (i) Any corporation or other entity in which the Company
possesses directly or indirectly equity interests representing at least 50% of
the total ordinary voting power or at least 50% of the total value of all
classes of equity interests of such corporation or other entity and (ii) any
other entity in which the Company has a direct or indirect economic interest
that is designated as a Subsidiary by the Committee.
 
(r)  Tax on Net Interest Expense: With respect to any year, the tax on the net
interest expense of the Company and its consolidated subsidiaries for such year
calculated at the appropriate statutory income tax rate for such year as
reviewed by the Company’s independent registered public accounting firm.
 
(s)  Total Investment of Capital: With respect to any year, the sum of (i) the
weighted average of the stockholders’ equity in the Company and its consolidated
subsidiaries for such year, (ii) the weighted average of the minority interests
in the consolidated subsidiaries of the Company for such year, (iii) the
weighted average of the redeemable preferred stock of the Company for such year
and (iv) the weighted average of the long-term debt of the Company and its
consolidated subsidiaries for such year, all as shown in the quarterly balance
sheets of the Company and its consolidated subsidiaries for such year.