Document:

Exhibit 10.1

Exhibit 10.1

AMENDMENT
NO. 1

TO

FREEPORT-McMoRan
COPPER & GOLD INC.

SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

WHEREAS,
Freeport-McMoRan Copper & Gold Inc., a corporation organized and existing
under the laws of the State of Louisiana (“Employer”), adopted the
Freeport-McMoRan Copper & Gold Supplemental Executive Retirement Plan on
February 26, 2004, to provide for the payment of pension benefits to two
highly-compensated executive management employees;

WHEREAS,
the Employer reserved in the Corporate Personnel Committee of its Board of
Directors, as Plan Administrator, the authority to amend the Plan document, and
the Plan Administrator has decided to amend the Plan regarding the method for
determining the amount of the benefit.

NOW,
THEREFORE, the Plan is hereby amended as follows, effective January 1,
2005:

I.  

 

Section 7
of Article 3 of the Plan document is hereby amended to read in its entirety as
follows:

 

Final
Average Pay means the
sum of (a) the Participant’s average base pay from the Employer for the 3
calendar years (not necessarily consecutive) during the 5 calendar years
immediately preceding the Participant’s Termination of Employment that produces
the highest average, plus (b) the Participant’s average Bonus for the same
three years; provided however, that if the Termination of Employment occurs in
the year 2005 the average Bonus cannot exceed 180% of the average base pay, and
if the Termination of Employment occurs on or after January 1, 2006, the average
Bonus can not exceed 200% of the average base pay.

 

II.  

 

The
definition of the term “Compensation”, at Section 4 of Article 3 of the Plan
document is suppressed, and is replaced by a new defined term, “Bonus” as
follows:

 

Bonus for a
year means any Employer-paid annual incentive bonuses applicable to that year,
whether or not deferred, but not including long-term incentive payments and
other extraordinary compensation.

 

III.  

 

In no
event shall the changes made by this Amendment reduce a Participant’s benefit to
less than it would have been if the Participant’s Termination of Employment had
occurred on the date this amendment is adopted.

 

IN
WITNESS WHEREOF, this
Amendment No. 1 is hereby executed on behalf of Freeport-McMoRan Copper &
Gold Inc., by the undersigned Chairman of the Corporate Personnel Committee, on
this 3rd day of May, 2005.

WITNESSES:

FREEPORT-McMoRan
COPPER

AND
GOLD INC.

/s/ C.
Donald Whitmire, Jr. 

/s/
Mina E. Meric      By: /s/ H.
Devon Graham, Jr. _____________

                                                                                                         
Chairman,
Corporate Personnel Committee

STATE OF
LOUISIANA

PARISH OF
ORLEANS

Before me
the undersigned Notary Public, personally came and appeared H. Devon Graham,
Jr., to me known, who being sworn did depose and state that he did sign the
above and foregoing Amendment No. 1 to the Freeport-McMoRan Copper & Gold
Supplemental Executive Retirement Plan, on behalf of Freeport-McMoRan Copper
& Gold Inc., and in his capacity of Chairman of the Corporate Personnel
Committee, Plan Administrator, for the purposes therein set forth.

/s/ H.
Devon Graham, Jr.  

Sworn to
and signed before me 

this
3rd day of
May, 2005.

/s/
Douglas N. Currault II_____

NOTARY
PUBLICexhibit 10.1

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.

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