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STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2013
Stockholders' Equity Note [Abstract] |
Stockholders' Equity and Stock-Based Compensation | STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION FCX’s authorized shares of capital stock total 1.85 billion shares, consisting of 1.8 billion shares of common stock and 50 million shares of preferred stock. Common Stock. At December 31, 2013, 23.7 million shares remain available for purchase under FCX's open-market share purchase program, which does not have an expiration date. There have been no purchases under this program since 2008. The timing of future purchases of FCX’s common stock is dependent on many factors, including FCX’s operating results, cash flows and financial position; copper, molybdenum, gold, crude oil and natural gas prices; the price of FCX’s common stock; and general economic and market conditions. FCX’s Board of Directors (the Board) authorized an increase in the cash dividend on FCX’s common stock in February 2012 to the current annual rate of $1.25 per share. The Board declared supplemental cash dividends of $0.50 per share, which was paid in June 2011, and $1.00 per share, which was paid in July 2013. On December 20, 2013, the Board declared a regular quarterly dividend of $0.3125 per share, which was paid on February 3, 2014, to common shareholders of record at the close of business on January 15, 2014. The declaration of dividends is at the discretion of the Board and will depend on FCX's financial results, cash requirements, future prospects and other factors deemed relevant by the Board. Accumulated Other Comprehensive Loss. A summary of changes in the balances of each component of accumulated other comprehensive loss follows:
| Unrealized Losses on Securities |  | Translation Adjustment |  | Defined Benefit Plans |  | Deferred Tax Valuation Allowance |  | Total
Balance at January 1, 2011 | $ | (3 | ) |  | $ | 8 |  |  | $ | (269 | ) |  | $ | (59 | ) |  | $ | (323 | )
Amounts arising during the period a,b | (1 | ) |  | (2 | ) |  | (134 | ) |  | (20 | ) |  | (157 | )
Amounts reclassified c | — |  |  | — |  |  | 15 |  |  | — |  |  | 15 |
Balance at December 31, 2011 | (4 | ) |  | 6 |  |  | (388 | ) |  | (79 | ) |  | (465 | )
Amounts arising during the period a,b | — |  |  | (1 | ) |  | (65 | ) |  | (1 | ) |  | (67 | )
Amounts reclassified c | — |  |  | — |  |  | 26 |  |  | — |  |  | 26 |
Balance at December 31, 2012 | (4 | ) |  | 5 |  |  | (427 | ) |  | (80 | ) |  | (506 | )
Amounts arising during the period a,b | (1 | ) |  | — |  |  | 67 |  |  | — |  |  | 66 |
Amounts reclassified c | — |  |  | 5 |  |  | 30 |  |  | — |  |  | 35 |
Balance at December 31, 2013 | $ | (5 | ) |  | $ | 10 |  |  | $ | (330 | ) |  | $ | (80 | ) |  | $ | (405 | )
a. | Included net actuarial gains (losses), net of noncontrolling interest, totaling $(215) million for 2011, $(103) million for 2012 and $137 million for 2013. The year 2013 also included $33 million for prior service costs.
b. | Included tax benefits (provision) totaling $81 million for 2011, $39 million for 2012 and $(37) million for 2013.
c. | Included amortization primarily related to actuarial losses that were net of taxes of $8 million for 2011, $15 million for 2012 and $17 million for 2013.
Stock Award Plans. FCX currently has awards outstanding under its stock-based compensation plans. As of December 31, 2013, only one plan, which was stockholder approved and is discussed below, has awards available for grant. The 2006 Stock Incentive Plan (the 2006 Plan) provides for the issuance of stock options, SARs, restricted stock, RSUs and other stock-based awards for up to 74 million common shares. FCX’s stockholders approved amendments to the plan in 2007 primarily to increase the number of shares available for grants and in 2010 to permit grants to outside directors. As of December 31, 2013, shares available for grant totaled 24.5 million under the 2006 Plan. In connection with the PXP and MMR acquisitions, former PXP and MMR share-based awards were exchanged or settled. Each unvested PXP and MMR share-based award outstanding prior to the acquisitions' announcement on December 5, 2012, immediately vested at the closing of each transaction, except for MMR share-based awards held by certain officers. In accordance with the terms of the respective plans, share-based awards granted after the acquisitions' announcement did not automatically vest upon closing but retain the same terms and conditions as the original awards, as provided in the merger agreements. In connection with the PXP acquisition, former PXP stock-settled RSUs, cash-settled RSUs and SARs were converted into 1,238,685 FCX stock-settled RSUs, 2,259,708 FCX cash-settled RSUs, and 2,374,601 FCX SARs. The SARs carry a maximum term of five years with 1,490,998 vested upon acquisition of PXP and 883,603 that vest ratably over a three-year period. In connection with the MMR acquisition, former MMR stock options and RSUs were converted into 7,203,392 FCX stock options and 13,500 FCX RSUs. The MMR-related stock options carry a maximum term of 10 years with 6,336,422 stock options vested upon acquisition of MMR and 866,970 stock options that vest ratably over a four-year period. In connection with the restructuring of an executive employment arrangement, a special retention award of one million RSUs was granted in December 2013. The RSUs are fully vested and the related shares of common stock will be delivered to the executive upon separation of service, along with a cash payment for accumulated dividends. With respect to stock options previously granted to this executive, such awards became fully vested. With respect to performance-based awards previously granted to this executive, the service requirements are considered to have been satisfied and the vesting of any such awards shall continue to be contingent upon the achievement of all performance conditions set forth in the award agreements. In connection with the restructuring, FCX recorded a $37 million charge to selling, general and administrative expenses in 2013. Stock-Based Compensation Cost. Compensation cost charged against earnings for stock-based awards for the years ended December 31 follows:
|  | 2013 |  | 2012 |  | 2011
Selling, general and administrative expenses |  | $ | 145 |  |  | $ | 77 |  |  | $ | 90 |
Production and delivery |  | 28 |  |  | 23 |  |  | 25 |
Capitalized costs |  | 13 |  |  | — |  |  | — |
Total stock-based compensation |  | 186 |  |  | 100 |  |  | 115 |
Less: capitalized costs |  | (13 | ) |  | — |  |  | — |
Tax benefit and noncontrolling interests' shares |  | (66 | ) |  | (39 | ) |  | (46 | )
Impact on net income |  | $ | 107 |  |  | $ | 61 |  |  | $ | 69 |
Stock Options and SARs. Stock options granted under the plans generally expire 10 years after the date of grant and vest in 25 percent annual increments beginning one year from the date of grant. The plans and award agreements provide that participants will receive the following year’s vesting after retirement. Therefore, FCX accelerates one year of amortization for retirement-eligible employees. Stock options granted prior to February 2012 provide for accelerated vesting if there is a change in control (as defined in the award agreements). Stock options granted after that date provide for accelerated vesting only upon certain qualifying termination of employment within one year following a change in control. SARs that were converted in connection with the PXP acquisition generally expire within five years after the date of grant and vest in one-third annual increments beginning one year from the date of grant. SARs are similar to stock options, but are settled in cash rather than in shares of common stock and are classified as liability awards. A summary of options and SARs outstanding as of December 31, 2013, including 1,927,037 SARs, and changes during the year ended December 31, 2013, follows:
| Number of Options and SARs |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Balance at January 1 | 31,472,559 |  |  | $ | 37.40 |  |  |  |  |
Conversion of MMR options | 7,203,392 |  |  | 27.64 |  |  |  |  |
Conversion of PXP SARs | 2,374,601 |  |  | 27.34 |  |  |  |  |
Granted | 5,479,930 |  |  | 35.00 |  |  |  |  |
Exercised | (976,220 | ) |  | 18.77 |  |  |  |  |
Expired/Forfeited | (423,601 | ) |  | 41.83 |  |  |  |  |
Balance at December 31 | 45,130,661 |  |  | 35.39 |  |  | 5.6 |  | $ | 239 |
Vested and exercisable at December 31 | 31,748,346 |  |  | $ | 33.40 |  |  | 4.7 |  | $ | 210 |
Summaries of options and SARs outstanding and changes during the years ended December 31 follow:
| 2012 |  | 2011
| Number of Options and SARs |  | Weighted- Average Exercise Price |  | Number of Options and SARs |  | Weighted- Average Exercise Price
Balance at January 1 | 27,967,145 |  |  | $ | 34.90 |  |  | 26,930,444 |  |  | $ | 30.22 |
Granted | 5,050,500 |  |  | 46.32 |  |  | 4,230,500 |  |  | 55.43 |
Exercised | (1,300,273 | ) |  | 16.68 |  |  | (3,044,174 | ) |  | 21.88 |
Expired/Forfeited | (244,813 | ) |  | 45.23 |  |  | (149,625 | ) |  | 37.61 |
Balance at December 31 | 31,472,559 |  | a | 37.40 |  |  | 27,967,145 |  | a | 34.90 |
a. | Included 39,336 SARs at December 31, 2012, and 69,672 SARs at December 31, 2011.
The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option valuation model. The fair value of each SAR is determined using the Black-Scholes-Merton option valuation model and remeasured at each reporting date until the date of settlement. Expected volatility is based on implied volatilities from traded options on FCX’s common stock and historical volatility of FCX’s common stock. FCX uses historical data to estimate future option and SARs exercises, forfeitures and expected life. When appropriate, separate groups of employees who have similar historical exercise behavior are considered separately for valuation purposes. The expected dividend rate is calculated using the annual dividend (excluding supplemental dividends) at the date of grant. The risk-free interest rate is based on Federal Reserve rates in effect for bonds with maturity dates equal to the expected term of the option or SAR. Information related to stock options during the years ended December 31 follows:
| 2013 |  | 2012 |  | 2011
Weighted-average assumptions used to value stock option awards: |  |  |  |  |
Expected volatility | 48.9 | % |  | 52.0 | % |  | 50.9 | %
Expected life of options (in years) | 4.66 |  |  | 4.54 |  |  | 4.34 |
Expected dividend rate | 3.3 | % |  | 3.1 | % |  | 1.8 | %
Risk-free interest rate | 0.7 | % |  | 0.7 | % |  | 1.6 | %
Weighted-average grant date fair value (per share) | $ | 10.98 |  |  | $ | 15.60 |  |  | $ | 20.58 |
Intrinsic value of options exercised | $ | 10 |  |  | $ | 34 |  |  | $ | 101 |
Fair value of options vested | $ | 101 |  |  | $ | 77 |  |  | $ | 89 |
As of December 31, 2013, FCX had $76 million of total unrecognized compensation cost related to unvested stock options expected to be recognized over a weighted-average period of 1.5 years. The assumptions used to value SARs as of December 31, 2013, ranged from 28.8 percent to 34.8 percent for expected volatility; one to four years for expected life; 0.1 percent to 1.1 percent for expected risk-free interest rate; and an expected dividend rate of 3.6 percent. The weighted-average grant-date fair value of SARs granted was $7.00 for the period from June 1, 2013, to December 31, 2013, and $7.94 for the PXP awards that were converted to FCX SARs based on the acquisition-date fair value. The total intrinsic value of SARs exercised during 2013 was $3 million. As of December 31, 2013, FCX had $6 million of total unrecognized compensation cost related to unvested SARs expected to be recognized over a weighted-average period of 2.1 years. As of December 31, 2013, FCX had $16.0 million associated with SARs included in accounts payable and accrued liabilities. Stock-Settled RSUs. FCX has an annual incentive plan for its executive officers that requires a portion of each executive officer's annual bonus be paid in performance-based RSUs. The maximum annual incentive award pool is a percentage of FCX’s consolidated operating cash flows adjusted for changes in working capital and other tax payments for the preceding year and funding of the pool is subject to a performance condition. Grants of RSUs before 2012 vest ratably over three years and provide that the FCX executive officers will receive the following year’s vesting upon retirement provided the performance condition is met. The fair value of these restricted stock unit grants was estimated based on projected operating cash flows for the applicable year and was charged to expense ratably over three years, beginning with the year during which the cash flows were generated, as performance of services commenced in the calendar year preceding the date of grant. In February 2012, the terms of RSU awards under the annual incentive plan were revised. For grants in 2012 and 2013, the level of RSUs granted continued to be based on FCX's consolidated operating cash flows adjusted for changes in working capital and other tax payments for the preceding year, but the award will vest after three years, subject to FCX attaining a five-year average return on investment (a performance condition defined in the award agreement) of at least six percent. The awards will also be subject to a 20 percent reduction if FCX performs below a group of its peers as defined in the award agreement. The fair value of the awards is estimated using an appropriate valuation model. The awards continue to vest after the recipients' retirement or death; therefore, since all of FCX's executive officers are retirement eligible, FCX charges the cost of these awards to expense in the year the cash flows are generated, as performance of services is only required in the calendar year preceding the date of grant. In February 2013, FCX granted RSUs to key employees that cliff-vest at the end of three years. The fair value of the RSUs is amortized ratably over the three-year vesting period. FCX also grants other RSUs that vest over a period of four years to its directors. The plans and award agreements provide for accelerated vesting of all RSUs if there is a change of control (as defined in the plans). The fair value of the RSUs is amortized over the four-year vesting period or the period until the director becomes retirement eligible, whichever is shorter. Upon a director’s retirement, all of their unvested RSUs immediately vest. For retirement-eligible directors, the fair value of RSUs is recognized in earnings on the date of grant. Dividends and interest on most RSUs accrue and are paid if the award vests. A summary of outstanding stock-settled RSUs as of December 31, 2013, and activity during the year ended December 31, 2013, follows:
| Number of Stock-Settled RSUs |  | Weighted-Average Grant-Date Fair Value |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Balance at January 1 | 889,698 |  |  | $ | 44.35 |  |  |  |  |
Granted | 2,492,600 |  |  | 34.84 |  |  |  |  |
Conversion of PXP and MMR RSUs | 1,252,185 |  |  | 31.05 |  |  |  |  |
Vested | (356,275 | ) |  | 41.96 |  |  |  |  |
Forfeited | (22,732 | ) |  | 31.92 |  |  |  |  |
Balance at December 31 | 4,255,476 |  |  | 35.13 |  |  | 4.1 |  | $ | 161 |
The total fair value of stock-settled RSUs granted during the year ended December 31, 2013, was $125 million, including $38 million for PXP awards that were converted to FCX stock-settled RSUs based on the acquisition-date fair value. The total intrinsic value of RSUs vested was $12 million during 2013, $28 million during 2012 and $69 million during 2011. As of December 31, 2013, FCX had $38 million of total unrecognized compensation cost related to unvested stock-settled RSUs expected to be recognized over 2.1 years. Cash-Settled RSUs. Cash-settled RSUs are similar to stock-settled RSUs, but are settled in cash rather than in shares of common stock and are classified as liability awards. These cash-settled RSUs generally vest over periods ranging from three to five years of service. The fair value of these awards is remeasured each reporting period until the vesting dates. A summary of outstanding cash-settled RSUs as of December 31, 2013, and activity from June 1, 2013, to December 31, 2013, follows:
| Number of Cash-Settled RSUs |  | Weighted-Average Grant-Date Fair Value |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Conversion of PXP RSUs | 2,259,708 |  |  | $ | 31.05 |  |  |  |  |
Granted | 1,430 |  |  | 32.94 |  |  |  |  |
Vested | (1,430 | ) |  | 31.05 |  |  |  |  |
Forfeited | (39,896 | ) |  | 31.05 |  |  |  |  |
Balance at December 31 | 2,219,812 |  |  | 31.05 |  |  | 1.9 |  | $ | 84 |
The total fair value of PXP awards that were converted to FCX cash-settled RSUs was $70 million at the acquisition date. As of December 31, 2013, the accrued liability associated with cash-settled RSUs consisted of a current portion of $17 million (included in accounts payable and accrued liabilities) and a long-term portion of $19 million (included in other liabilities). Other Information. The following table includes amounts related to exercises of stock options and vesting of RSUs during the years ended December 31:
| 2013 |  | 2012 |  | 2011
FCX shares tendered to pay the exercise price |  |  |  |  |
and/or the minimum required taxes a | 3,294,624 |  |  | 515,558 |  |  | 936,811 |
Cash received from stock option exercises | $ | 8 |  |  | $ | 15 |  |  | $ | 48 |
Actual tax benefit realized for tax deductions | $ | 8 |  |  | $ | 16 |  |  | $ | 45 |
Amounts FCX paid for employee taxes | $ | 105 |  |  | $ | 16 |  |  | $ | 45 |
a. | Under terms of the related plans, upon exercise of stock options and vesting of RSUs, employees may tender existing FCX shares to FCX to pay the exercise price and/or the minimum required taxes.

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- Definition Disclosures related to accounts comprising shareholders' equity. Disclosure of compensation-related costs for share-based compensation which may include disclosure of policies, compensation plan details, allocation of stock compensation, incentive distributions, share-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References No definition available. + Details
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