<PAGE>
                                                                   Exhibit 10.14


                              RETIREMENT AGREEMENT

     This Retirement Agreement ("Agreement") is entered into by and between
     Phelps Dodge Corporation ("Company") and Manuel J. Iraola ("Iraola"). This
     Agreement is entered into in order to (i) provide Iraola with special pay
     and benefits upon his retirement from the Company, the payment of which
     shall be contingent on Iraola executing a waiver and general release on or
     after his retirement date with the Company; and (ii) resolve all matters
     relating to Iraola's retirement from the Company.

     The Company and Iraola, therefore, agree as follows:

     1.   Company previously announced its intentions to consider various
          strategic options with respect to Phelps Dodge Industries ("PDI") (the
          "Strategic Options"). After carefully evaluating those options Company
          has determined that at the present time it will discontinue the
          process of soliciting Strategic Option proposals with respect to PDI.
          Based on these circumstances and Iraola's expressed desire to spend
          more time on personal matters, Iraola has elected to retire from the
          Company on June 30, 2002 (the "Retirement Date"). As of the Retirement
          Date, Iraola will resign from all positions he holds with the Company,
          and, as may be applicable, with each of the Company's subsidiaries and
          affiliated entities. At the request of the Company, Iraola agrees to
          execute any documents to effectuate or to facilitate his resignations.
          Iraola acknowledges and agrees that all of the special benefits he
          will receive under this Agreement are specifically contingent on him
          executing a waiver and general release agreement, and otherwise
          meeting his obligations under this Agreement. In addition, Iraola
          agrees that the benefits provided under this Agreement are in lieu of
          any and all benefits he may have been entitled to under the terms and
          conditions of that certain Severance Agreement entered into by and
          between Iraola and the Company dated October 27, 1997 ("Severance
          Agreement"). Iraola acknowledges and agrees that upon the effective
          date of this Agreement (as set forth in Paragraph 19 below), the
          Severance Agreement will terminate and that neither he nor the Company
          will have any further rights or obligations under that agreement.

     2.   Iraola agrees that until his Retirement Date he will continue to carry
          out his duties for the Company faithfully, industriously, and to the
          best of his ability, experience, and talents, and that he will
          otherwise perform his duties and responsibilities to the reasonable
          satisfaction of the Company. Except as otherwise modified by Paragraph
          7 of this Agreement, between the execution date of this Agreement (as
          set forth below) and the Retirement Date, Iraola will be entitled to
          receive any salary increases, and stock option grants, to which he may
          be entitled based on his service and performance and as are consistent
          with Company's consistently applied plans, policies and procedures for
          similarly situated AICP participants.

     3.   The Company will pay Iraola a special payment in the gross amount of
          $859,947.50. In addition, the gross amount of this payment is subject
          to further adjustment, either as an increase or decrease, based on the
          actual Fair Market Value, as of the Retirement Date, of the 2,500
<PAGE>
Iraola Agreement
Page 2


          shares of Restricted Stock referenced in Paragraph 8 below. To the
          extent the Fair Market value of the 2,500 shares of Restricted Stock
          is greater than $137,500.00, then the gross amount of this special
          payment will be decreased from the $859,947.50 amount set forth above
          in an amount equal to the excess. [EXAMPLE: If as of the Retirement
          Date, the Fair Market Value of the 2,500 Restricted Shares is $138,750
          then the gross amount of this special payment will be reduced by
          $1,250.00 ($138,750 - $137,500 = $1,250.00). In this example this
          would result in the gross amount of the special payment being
          $858,697.50 ($859,947.50 - $1,250 = $858,697.50).] To the extent the
          Fair Market Value of the 2,500 shares of Restricted Stock is less than
          $137,500.00, then the gross amount of the special payment will be
          increased from the $859,947.50 amount set forth above in an amount
          equal to the shortfall. [EXAMPLE: If as of the Retirement Date, the
          Fair Market Value of the 2,500 Restricted Shares is $136,250 then the
          gross amount of this special payment will be increased by $1,250.00
          ($137,500 - $136,250 = $1,250.00). In this example this would result
          in the gross amount of the special payment being $861,197.50
          ($859,947.50 + $1,250 = $861,197.50).] All necessary taxes and
          withholdings will be deducted from this amount. This special payment
          will be paid to Iraola within 15 calendar days after his Retirement
          Date or the effective date of that certain Waiver and Release
          Agreement ("Waiver and Release") described in Paragraph 19 below,
          whichever is later.

     4.   Until Iraola reaches age 65, and subject to him making those
          contributions, if any, required of employees to participate in the
          Company's medical and dental plans for active employees, Iraola and
          his eligible dependents will be eligible to participate in the similar
          group health and dental plans sponsored by the Company ("Similar
          Active Plan"). At age 65, Iraola may elect, for himself and his
          eligible dependents, to continue participation in a group medical plan
          sponsored by Company, which is similar to the Company's retiree
          medical plan then in effect (if the Company continues such a plan for
          retirees) ("Similar Retiree Plan"), and subject to any changes in the
          retiree medical plan that may be adopted from time to time. Any
          election to participate in the Similar Retiree Plan is subject to
          Iraola making the required payments to participate in the plan.
          Iraola's cost to participate in the Similar Retiree Plan shall be
          determined by the provisions and costs of the applicable retiree
          medical plan in which he would have participated had he remained in
          the employ of the Company until such time as he reached age 65. To the
          extent Iraola, prior to age 65, is required to make contributions to
          the Similar Active Plan, Company will notify him in writing of his
          obligation to do so and the amount of the monthly contribution.
          Company and Iraola agree that should Iraola predecease his spouse, she
          may continue to participate in the similar plans contemplated by this
          Paragraph 4. Iraola, upon his retirement, will have all of the rights
          to which he is entitled under COBRA, including the election of up to
          18 months of continuation coverage for himself, his spouse, and
          eligible dependents. To obtain his COBRA continuation coverage he must
          elect such coverage in accordance with the election notices provided
          to him and he must be eligible for the coverage elected under the
          rules of COBRA. Iraola will be responsible for making the monthly
          premium payments required for any elected COBRA continuation coverage
          and the cost of any other benefits he desires to continue.
<PAGE>
Iraola Agreement
Page 3


     5.   Until Iraola reaches age 55, the Company will provide him with a
          special, nonqualified monthly retirement benefit of $24,000.00,
          subject to all applicable tax and other withholdings. When Iraola
          reaches age 55 he will retire under the Phelps Dodge Retirement Plan
          and he will receive the qualified monthly retirement benefit to which
          he is entitled under that plan. In addition, he will receive a
          special, nonqualified monthly retirement benefit in an amount
          sufficient to bring his combined qualified and nonqualified monthly
          retirement benefit after age 55 to $24,000.00, subject to all
          applicable tax and other withholdings. (The retirement benefit amounts
          set forth in this Paragraph have been calculated on the basis of a
          single life annuity. Should Iraola elect a payment option other than
          as a single life annuity this monthly amount will be reduced in
          accordance with the applicable provisions of the Phelps Dodge
          Retirement Plan.) Monthly payment of this special, nonqualified
          monthly retirement benefit will begin the month following Iraola's
          Retirement Date or the effective date of the Waiver and Release,
          whichever is later.

     6.   In accordance with the terms of the Annual Incentive Compensation Plan
          ("AICP"), Iraola shall receive an AICP payment for the calendar year
          in which his Retirement Date occurs. This payment will be calculated
          based upon Iraola's salary earned through his Retirement Date, the
          actual performance level of the Company and Phelps Dodge Industries,
          and the target performance level for Iraola's support goals. This AICP
          payment will be paid to Iraola in the calendar year following the year
          in which his Retirement Date occurs at the same time that the AICP
          payments are made to other AICP eligible individuals. Any AICP payment
          made under this Paragraph 6 shall be subject to all applicable tax and
          other withholdings.

     7.   In accordance with the Phelps Dodge 1998 Stock Option and Restricted
          Stock Plan, as amended ("Restricted Stock Plan") and notwithstanding
          Iraola's election to retire as of the Retirement Date, each of
          Iraola's currently outstanding stock options that is exercisable as of
          his Retirement Date will remain exercisable until the earlier of the
          option's expiration date or one month after his Retirement Date. Any
          of his exercisable options that are not exercised as of the date
          specified above will terminate, and any of his outstanding stock
          options that are not exercisable as of his Retirement Date will
          terminate on that date (collectively, the "Cancelled Options"). To
          compensate Iraola for the loss of value associated with his Cancelled
          Options, the Company hereby grants to him a number of stock
          appreciation units (the "Units") equal to the number of Cancelled
          Options. The "Expiration Date" of the particular Units shall be the
          earlier of the expiration dates of the Cancelled Options that were the
          basis for the issuance of the particular Units or five years after his
          Retirement Date ("Retirement Date + 5"). At any time prior to the
          occurrence of an Expiration Date, Iraola may notify the Company of his
          desire to "exercise" all or part of the Units. Any Units that he does
          not exercise as of the Expiration Date for the applicable Units will
          be deemed to be exercised for him on the applicable Expiration Date.
          Each such Unit shall entitle Iraola to receive, upon the exercise
          thereof, a lump-sum cash payment, less any required tax withholdings,
          equal to the excess, if any, of (i) the Fair Market Value (as defined
          below) of a Common Share on the date of exercise over (ii) the Base
          Value (as defined below) for such Unit. For purposes of this
          Agreement:
<PAGE>
Iraola Agreement
Page 4


                    The "Base Value" of each Unit shall be an amount equal to
                    the per share exercise price of the Cancelled Option to
                    which such Unit corresponds. Because he has more than one
                    Option Agreement, the Base Value of his Units will vary as
                    shown in the following table:

<TABLE>
<CAPTION>
                       ---------------------------------------------------
                        Units     Base Value     Expiration Date
                       ---------------------------------------------------
<S>                    <C>        <C>            <C>
                         6,567    $47.1250       December 2, 2002
                        15,000    $57.8750       December 7, 2004
                        15,000    $53.1250       February 1, 2005
                        35,000    $67.3750       December 6, 2005
                        30,000    $71.6250       December 4, 2006
                         4,933    $82.1250       December 1, 2003
                        32,000    $65.3750       June 30, 2007
                         4,204    $66.5000       December 2, 2002
                         3,210    $66.5000       December 1, 2003
                        45,000    $55.2500       June 30, 2007
                        63,000    $51.8125       June 30, 2007
                        60,000    $51.9375       June 30, 2007
                        55,000    $34.6700       June 30, 2007
</TABLE>

                    The "Fair Market Value" of a Common Share on any date shall
                    mean the mean of the high and low prices thereof on such
                    date as reported on the New York Stock Exchange Consolidated
                    Trading Tape (or if there are no reported trades on such
                    date, on the next preceding day on which such trades are
                    reported). If the Base Value for a Unit exceeds the Fair
                    Market Value, the value of the Unit will be zero.

          Iraola may exercise his Units by written notice to the Company (which
          shall be delivered to the attention of Manager - Executive
          Compensation, Phelps Dodge Corporation, One North Central Avenue,
          Phoenix, Arizona 85004), specifically identifying the Unit being
          exercised and the date as of which such Unit is to be exercised (which
          may not be earlier than the date of such notice). A Unit does not
          entitle Iraola to receive shares of the Company's stock as a result of
          an exercise. Rather, the Company will only pay him in cash any
          difference between the Fair Market Value and the Base Value of a Unit,
          less any required tax withholdings. Iraola acknowledges that Company
          may take action that reprices or otherwise affects the price of the
          stock options of those individuals participating in the Restricted
          Stock Plan
<PAGE>
Iraola Agreement
Page 5


          ("Repricing Action"). Company agrees that if such action materially
          affects the Base Value of the Units prior to the their respective
          Expiration Date, it will take such action with respect to those Units,
          for which the Expiration Date has not passed, consistent with the
          affect that the Repricing Action had on the outstanding stock options
          of those individuals participating in the Restricted Stock Plan.
          Iraola understands that the Company is considering whether it is
          appropriate for the Company to adopt a plan or program (which may
          include an amendment to the Restricted Stock Plan), that may allow
          participants in the Restricted Stock Plan to possibly exchange certain
          of their current exercisable stock options for restricted stock of the
          Company (the "Exchange Program"). Iraola understands that the Company
          has made no final determination on whether it may adopt any such
          Exchange Program and that this Agreement has been negotiated based on
          certain specific terms of understanding between the parties, which are
          not speculative. Iraola also understands that those terms of
          understanding did not include the consideration of any speculative
          economic value that may be related to any Exchange Program that may be
          under consideration by the Company, and that the consideration of any
          such speculative economic benefit for purposes of this Agreement would
          directly affect the other terms and conditions of this Agreement.
          Therefore, Company and Iraola acknowledge and agree that,
          notwithstanding any other provision of this Agreement or any of the
          terms and conditions that may be included in any Exchange Program that
          may be adopted by Company (if any), Iraola will not be entitled to
          participate in any manner in any such Exchange Program if adopted.
          Company and Iraola acknowledge and agree that, should the Company
          eventually determine that it is appropriate to adopt any such Exchange
          Program, such action shall not be deemed to be a Repricing Action for
          purposes of this Agreement and as defined above.

     8.   In accordance with the terms and conditions of the Restricted Stock
          Plan and notwithstanding his election to retire as of the Retirement
          Date, Iraola's 2,500 shares of Restricted Stock (as that term is
          defined in the Restricted Stock Plan) will revert to the Company on
          the Retirement Date. To compensate Iraola for the value of this
          Restricted Stock, Company agrees to pay Iraola a cash amount equal to
          the Fair Market Value (as that phrase is defined in Paragraph 7 above)
          of these 2,500 shares of Restricted Stock as of his Retirement Date.
          Iraola acknowledges and agrees that this payment will be subject to
          all applicable tax and other withholdings. This payment will be made
          to Iraola within 15 calendar days after his Retirement Date or the
          effective date of the Waiver and Release, whichever is later.

     9.   The Company will, at its cost, provide Iraola with a reasonable amount
          of the services of AYCO Corporation through April 15 of the calendar
          year following Iraola's Retirement Date. The services of AYCO will be
          provided to Iraola under the same conditions and at the same level as
          those services are provided to similarly situated active employees of
          the Company during that time.

     10.  The Company will provide Iraola with sufficient payments to fund an
          ELIP death benefit equal to one-times his annual base salary. These
          payments will be as required following his Retirement Date and shall
          be reduced by required tax and other withholdings.
<PAGE>
Iraola Agreement
Page 6


     11.  Company will make a special cash payment to Iraola with respect to his
          contributions to the Strategic Options process in the gross amount of
          $532,000. This cash payment amount will be subject to all applicable
          tax and other withholdings and will be paid to Iraola in the same
          manner as the payment described in Paragraph 3 above.

     12.  Iraola shall deliver to the Company (a) any and all documents,
          materials, files, or computer files, or copies, reproductions,
          duplicates, transcriptions, or replicas thereof, relating to the
          Company's business or affairs, which are in Iraola's possession or
          control, or of which Iraola is aware, and (b) any and all documents,
          materials, files, computer files or copies, reproductions, duplicates,
          transcriptions or replicas thereof, which are in Iraola's possession
          or control, or of which Iraola is aware, belonging to the Company or
          any other affiliated entities. Iraola will make a diligent search for
          such documents, materials, files, computer files and other property.
          Iraola will deliver these items to the Company by his Retirement Date.

     13.  Iraola agrees that during the course of his employment with the
          Company, he had access to confidential and proprietary information
          concerning the Company including but not limited to such matters as
          the Company's trade secrets, strategic plans, financial data, programs
          (including, without limitation, the Company's computer software
          programs), procedures, manuals, confidential reports and
          communications, lists of customers, sources of supply, patents, and
          new technology developments. That information was disclosed to Iraola
          in confidence and solely for use by or on behalf of the Company.
          Iraola has no ownership right or interest in that confidential and
          proprietary information. Iraola agrees that he will keep that
          information confidential at all times after his employment, and that
          he will not, directly or indirectly, disclose, divulge, reveal,
          report, publish, transfer, or use, for any purpose whatsoever, that
          information on his own behalf or on behalf of any other person or
          entity. This obligation is in addition to any other obligation that
          Iraola, by virtue of his position with the Company, may have under the
          applicable law to not disclose confidential, trade secret, or
          proprietary information of the Company.

     14.  Iraola acknowledges that all of the following information and
          materials are "Protected Information" belonging to the Company and
          shall be subject to the provisions of Paragraph 13 of this Agreement
          and shall be kept strictly confidential, even if not physically marked
          as such:

               a.   Production processes, strategic plans, marketing techniques
                    and arrangements, mailing lists, purchasing information,
                    pricing policies, quoting procedures, financial information,
                    customer and prospect names and requirements, employee,
                    customer, supplier and distributor data, and other materials
                    and information relating to the Company's business and
                    activities and the manner in which the Company does
                    business;

               b.   Discoveries, concepts, and ideas including, without
                    limitation, the nature and
<PAGE>
Iraola Agreement
Page 7


                    results of research and development activities, processes,
                    formulas, inventions, equipment or technology, techniques,
                    "know-how," designs, drawings and specifications, and patent
                    applications;

                    c. Any other materials or information related to the
                    Company's business or activities which are not generally
                    known to others engaged in similar businesses or activities
                    and which are not in the public domain; and

                    d. All ideas which are derived from or relate to Iraola's
                    access to or knowledge of any of the above enumerated
                    materials and information.

     15.  Iraola acknowledges that in the course of his employment with the
          Company, he has had direct or indirect contact with the Company's
          existing and prospective customers and others having business dealings
          with the Company and has thereby had the opportunity to meet and
          develop, on the Company's behalf, goodwill and working relationships
          with those persons, firms, or entities. Iraola acknowledges that such
          goodwill and relationships are valuable assets of the Company, and he
          understands and agrees that, because of the nature of the Company's
          business, it is necessary to afford fair protection to the Company for
          those assets. Therefore, Iraola covenants and agrees that, for the
          period beginning on the date of this Agreement and ending two (2)
          years after his Retirement Date, he shall not compete with the
          business of the Company by: (i) engaging in the business of copper
          mining; molybdenum mining; the milling, smelting, or refining of
          copper or molybdenum; the producing of copper rod or molybdenum
          products; energy wire and cable; magnet wire; high performance
          conductor; or carbon black, whether international or domestic, whether
          as a proprietor, partner, co-venturer, director, officer, employer,
          employee, servant, agent, or representative of an operation engaging
          in such business; (ii) soliciting, directly or indirectly, any
          existing or prospective customer of the Company with whom he has
          gained significant business contacts while employed by the Company;
          (iii) advising, directly or indirectly, any existing or prospective
          customer of the Company with whom he has gained significant business
          contacts while employed by the Company, to withdraw, curtail, or
          cancel business or negotiations with the Company; or (iv) serving as a
          consultant or contractor to any entity engaged in the business of
          copper mining; molybdenum mining; the milling, smelting, refining of
          copper or molybdenum; the producing of copper rod or molybdenum
          products; energy wire and cable; magnet wire; high performance
          conductor; or carbon black, whether international or domestic. Iraola
          acknowledges and agrees that the geographic scope of this provision
          has not been limited because the Company's business and customers are
          worldwide and the Company has a legitimate, protectible business
          interest in its goodwill and relationships with its customers in
          preventing the solicitation of its customers regardless of the
          geographical location of its customers or where Iraola is employed.
          Company and Iraola acknowledge that in the event of the closing of a
          Strategic Option, the entity entering into that transaction with
          Company may request that Iraola consult with it on a periodic basis
          with respect to the continued operations of the business. In the event
          Iraola wishes to provide such services, Iraola agrees to submit a
          written request to Company asking for a waiver of the provisions of
<PAGE>
Iraola Agreement
Page 8


          this Paragraph. This request will include a full disclosure of the
          facts related to the consulting opportunity for which he is seeking a
          waiver. The granting of any waiver contemplated by this Paragraph
          shall be at Company's sole discretion; provided, however, that the
          granting of any such waiver by Company shall not be unreasonably
          withheld. Notwithstanding any other provision of this Paragraph 15 to
          the contrary, Company and Iraola agree that in the event of a Change
          of Control (as defined in Paragraph 26 below) occurring after the
          effective date of this Agreement, Iraola shall not be bound by any of
          the non-compete provisions of this Paragraph 15.

     16.  Iraola acknowledges that the Company's employees are an integral part
          of the Company's business, and he understands and agrees that, because
          of the nature of the Company's business, it is necessary to afford
          fair protection to the Company from the loss of any such employees.
          Therefore, Iraola agrees that, for the period beginning on his
          Retirement Date and ending two years after his Retirement Date, he
          shall not, directly or indirectly, hire or engage, or attempt to hire
          or engage any individual who shall have been an employee of the
          Company at any time during the one-year period before the date of this
          Agreement, whether for or on his behalf or for any entity in which he
          shall have a direct or indirect interest (or any subsidiary or
          affiliate of any such entity), whether as a proprietor, partner,
          co-venturer, financier, investor or stockholder, director, officer,
          employer, employee, servant, agent, representative, or otherwise. Any
          failure by Iraola to comply with this provision, after receiving
          written notice from Company of any violation, or potential violation,
          of this provision and giving Iraola a reasonable opportunity to
          correct any such violation (not to exceed 15 days), shall constitute a
          material breach of this Agreement and shall entitle the Company to
          full reimbursement of the pay and benefits he received pursuant to
          this Agreement, in addition to any other damages and relief to which
          the Company may be entitled. Notwithstanding any other provision of
          this Paragraph 16 to the contrary, Company and Iraola agree that in
          the event of a Change of Control (as defined in Paragraph 26 below)
          occurring after the effective date of this Agreement, Iraola shall not
          be bound by any of the prohibitions on hiring set forth in this
          Paragraph 16.

     17.  Iraola understands that the special pay and benefits he will receive
          by this Agreement are not required by the Company's policies. Iraola
          also understands that if he and the Company had not entered into this
          Agreement, and do not enter into the contemplated Waiver and Release,
          he will not receive the special pay and benefits set forth in this
          Agreement. Iraola and the Company agree that the fact that they are
          making this Agreement and the Agreement and General release does not
          mean that the Company had any obligation or liability to Iraola.

     18.  Iraola will keep this Agreement confidential. He will only talk about
          it with his immediate family, his attorney, and his accountant or tax
          and financial advisor, and they will not discuss it with anyone else.

     19.  Company and Iraola acknowledge and agree that this Agreement, and the
          obligations of the parties pursuant to this Agreement, shall not
          become effective unless and until such time as
<PAGE>
Iraola Agreement
Page 9


          Company and Iraola execute and deliver the Waiver and Release
          contemplated by this Agreement, and the Waiver and Release becomes
          effective pursuant to its terms and conditions. Company and Iraola
          agree that this Waiver and Release will not be executed by the parties
          until his Retirement Date or thereafter. This Waiver and Release shall
          be in substantially such form as is attached hereto as Exhibit 1.
          Company and Iraola acknowledge and agree that this Agreement will not
          become effective should he die after execution of this Agreement, but
          before his Retirement Date and this Agreement becomes effective as
          described above. Accordingly, in the event of such death no benefits
          will be paid under this Agreement to any person or entity, including
          his estate, spouse, beneficiaries, heirs, executors, or personal
          administrators.

     20.  This Agreement may not be changed orally, but only by a written
          agreement signed by Iraola and the Company.

     21.  Iraola understands and agrees that the Company will suffer irreparable
          harm in the event that he breaches any of his obligations under this
          Agreement and that monetary damages will be inadequate to compensate
          the Company for such breach. Accordingly, Iraola agrees that, in the
          event of his breach or threatened breach of any of the provisions of
          this Agreement, the Company, after providing Iraola written notice of
          any breach or threatened breach of this Agreement and giving Iraola a
          reasonable period of time to correct any such breach or threatened
          breach (not to exceed 15 days), in addition to and not in limitation
          of any other rights, remedies, or damages available to the Company at
          law or in equity, shall be entitled to a temporary restraining order,
          preliminary injunction, and permanent injunction in order to prevent
          or to restrain any such breach by Iraola or by any or all of his
          partners, co-venturers, employers, employees, servants, agents,
          representatives, and any and all persons directly or indirectly acting
          for, or on behalf of, or with him. The Company may seek such relief
          pursuant to a court action notwithstanding the arbitration provision
          set forth in Paragraph 24 of this Agreement.

     22.  The provisions of this Agreement are severable. This means that if any
          provision is invalid, it will not affect the validity of the other
          provisions. If the scope of any restrictions of this Agreement should
          ever be deemed to exceed that permitted by applicable law or be
          otherwise overbroad, Iraola agrees that a court of competent
          jurisdiction shall enforce that restriction to the maximum scope
          permitted by law under the circumstances.

     23.  The laws of the State of Arizona will apply to this Agreement.

     24.  Any disputes arising in connection with this Agreement, other than
          disputes arising under Paragraphs 13, 14, 15, 16, 17, and 24 shall be
          resolved by binding arbitration in accordance with the rules and
          procedures of the American Arbitration Association. Judgment upon any
          award rendered by the arbitrator may be entered in any court having
          jurisdiction of this matter. Costs of the arbitration shall be borne
          equally by the parties. Unless the arbitrator otherwise determines,
          the party that does not prevail in any such action shall reimburse the
<PAGE>
Iraola Agreement
Page 10


          other party for his or its reasonable attorneys' fees incurred with
          respect to such arbitration.

     25.  This agreement supercedes and replaces all prior discussions,
          understandings, and agreements between the parties, whether oral or
          written, and contains the entire agreement between them on the matters
          herein contained.

     26.  Iraola acknowledges that he has entered in to that certain Change of
          Control Agreement dated January 16, 1999 ("Change of Control
          Agreement"), by which he will receive certain benefits and payments in
          the event of a change of control as that term is defined in that
          agreement (a "Change of Control"). Iraola understands and agrees that
          it is the intent of the parties to this Agreement that he shall not be
          entitled to receive, and the Company shall not be obligated to pay,
          benefits and payments under both this Agreement and his Change of
          Control Agreement. Therefore, Company and Iraola agree that upon the
          effective date of this Agreement (as described in Paragraph 19 above),
          his Change of Control Agreement shall terminate, be of no further
          force and effect, and the Company shall have no further obligation to
          pay him any amounts under his Change of Control Agreement. In the
          event of a Change of Control prior to the effective date of this
          Agreement (as described in Paragraph 19 above), Company and Iraola
          acknowledge and agree that this Agreement shall be immediately
          terminated on such Change of Control, be of no further force and
          effect, and Company shall have no obligation to pay him any of the
          special pay and benefits provided by this Agreement.

     Company, by and through its duly authorized representative, and Iraola have
     executed this Agreement on the 6 day of March, 2002.

     Manuel J. Iraola                     Phelps Dodge Corporation


     ---------------------------          ---------------------------
                                          David L. Pulatie
                                          Senior Vice President, Human Resources
<PAGE>
EXHIBIT 1

                          WAIVER AND RELEASE AGREEMENT

         This Waiver and Release Agreement ("Agreement") is entered into by and
between Phelps Dodge Corporation ("Company") and Manuel J. Iraola ("Iraola").
This Agreement is entered into for the purpose of providing Company with
protection against any claims by Iraola.

         WHEREAS, Company and Iraola have entered into that certain Retirement
Agreement, dated ______________, 2002; and

         WHEREAS, among other things, the Retirement Agreement provides that
Company will pay Iraola certain special pay and benefits as a result of Iraola's
retirement from the Company; and

         WHEREAS, pursuant to the terms and conditions of the Retirement
Agreement, the Company's payment of any such special pay and benefits to Iraola,
and all other obligations of the parties under the Retirement Agreement, are
specifically contingent on Company and Iraola executing and delivering this
Agreement.

         NOW THEREFORE, in consideration of the obligations set forth in the
Retirement Agreement, the payment of the special pay and benefits described
therein, and such other good and valuable consideration, the adequacy and
sufficiency of which are hereby acknowledged by the parties, Company and Iraola
agree as follows:

         1.       Consideration for Agreement. Iraola acknowledges and agrees
                  that the payment of the special pay and benefits as provided
                  for under the terms and conditions of the Retirement Agreement
                  are fair and adequate consideration for this waiver, release,
                  agreement not to sue, and other obligations of Iraola under
                  this Agreement. Iraola acknowledges and agrees that the
                  special pay and benefits to be provided under the terms and
                  conditions of the Retirement Agreement are not required by
                  Company policy and that Iraola is not otherwise entitled to
                  the receipt of any such special pay and benefits.

         2.       Waiver and Release. Iraola agrees not to bring any suit or
                  claim against the Company or any of its related entities or
                  individuals with respect to any matter, including those
                  related to his employment with the Company or his retirement
                  from the Company . Therefore, Iraola, for himself and his
                  heirs, executors, administrators, representatives, agents, and
                  assigns, forever releases the Company and its parents,
                  subsidiaries, successors, predecessors, and affiliated
                  entities, and their officers, directors, agents, employees,
                  shareholders, attorneys, and representatives, from any and all
                  claims, demands, liabilities, obligations, suits, charges,
                  actions, and causes of action, whether known or unknown, past
                  or present, accrued or not accrued, as of the date Iraola
                  signs this Agreement. The items released
<PAGE>
                  include, but are not limited to, matters relating to or
                  arising out of his employment or retirement from the Company .
                  Some examples of items released are claims under federal,
                  state, or local laws, such as the Age Discrimination in
                  Employment Act, as amended; Title VII of the Civil Rights Act
                  of 1964, as amended; the Employee Retirement Income Security
                  Act of 1974, as amended; the Americans with Disabilities Act,
                  the Family and Medical Leave Act, the Arizona Civil Rights Act
                  (or any similar statute of any other jurisdiction that may be
                  applicable in this case), any common law, tort, or contract
                  claims, and any claims for attorneys' fees and costs. This
                  provision, of course, does not affect Iraola's rights, if any,
                  to benefits under the Company's benefit plans in accordance
                  with the terms of those plans, or to make a complaint to any
                  state or federal agency with respect to issues related to his
                  employment with the Company.

         3.       Agreement not to Challenge. Iraola agrees not to challenge
                  this Agreement. If he attempts to do so, he must first return
                  to the Company all of the pay and benefits he received as
                  consideration for entering into this Agreement within 14 days
                  of the Company's written demand for payment. Notwithstanding
                  any other provision of this Paragraph 3 to the contrary, the
                  parties acknowledge and agree that Iraola's rights to
                  challenge the validity of this Agreement under the ADEA, as
                  amended by the Older Workers Benefit Protection Act, including
                  any challenge of the knowing and voluntary nature of this
                  Agreement, are not otherwise affected by the above provisions
                  of this Paragraph 3 or any other provision of this Agreement.
                  Company and Iraola acknowledge and agree that Iraola is not
                  required to return or tender back any consideration received
                  for this Agreement in the event he brings a claim challenging
                  the validity of this Agreement under the ADEA, as amended. In
                  the event Iraola successfully challenges the validity of this
                  Agreement and prevails on the merits of any ADEA claim, the
                  Company is entitled to set-off, recoupment, or restitution
                  against any consideration paid Iraola under this Agreement or
                  the Retirement Agreement to the extent of the consideration
                  paid or the damages awarded, whichever is the lesser.

         4.       Consultation with an Attorney. Iraola has been advised by the
                  Company to talk with an attorney of his choice before signing
                  this Agreement. He has been given a period of at least 21 days
                  to consider this Agreement, and he has had an opportunity to
                  talk with an attorney about this Agreement.

         5.       Revocation of Agreement. Iraola may revoke this Agreement.
                  Iraola may do so during the seven calendar days after the date
                  he signs it. The Agreement will not become effective until the
                  eighth calendar day after Iraola signs it. If Iraola wishes to
                  revoke the Agreement, he must do so in writing and his written
                  notice of revocation must be sent to David L. Pulatie
                  ("Pulatie"), Senior Vice President, Human Resources, Phelps


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<PAGE>
                  Dodge Corporation, One North Central Avenue, Phoenix, AZ
                  85004. To be effective, Pulatie must receive the revocation of
                  the Agreement during the seven calendar days after the day
                  Iraola signs it.

         6.       Understanding of Purpose. Iraola has carefully considered his
                  obligations as stated in this Agreement and agrees that the
                  restrictions contained in this Agreement are fair and
                  reasonable and are reasonably required for the Company's
                  protection. Iraola has carefully read this Agreement, he has
                  had an opportunity to ask questions about it, he understands
                  it, and he agrees to all of its provisions. Iraola understands
                  that by signing this Agreement, he agrees not to sue or bring
                  any claim against the Company or any other entity or person he
                  has released from claims. Iraola has made this Agreement
                  voluntarily and without any duress.

         7.       Miscellaneous.

                  a.       The provisions of this Agreement are severable. This
                           means that if any provision is invalid, it will not
                           affect the validity of the other provisions. If the
                           scope of any restrictions of this Agreement should
                           ever be deemed to exceed that permitted by applicable
                           law or be otherwise overbroad, Iraola agrees that a
                           court of competent jurisdiction shall enforce that
                           restriction to the maximum scope permitted by law
                           under the circumstances.

                  b.       The laws of the State of Arizona will apply to this
                           Agreement.

                  c.       This agreement supercedes and replaces all prior
                           discussions, understandings, and oral agreements
                           between the parties and contains the entire agreement
                           between them on the matters herein contained.

                  d.       This Agreement may not be changed orally, but only by
                           a written agreement signed by Iraola and Company.


         Manuel J. Iraola                            Phelps Dodge Corporation


         ---------------------------                 ---------------------------
                                                     David L. Pulatie
                                                     Senior Vice President

         ---------------------------                 ---------------------------
                    Date                                        Date


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