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STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2014
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, 2014, 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 a supplemental cash dividend of $1.00 per share, which was paid in July 2013. On December 19, 2014, the Board declared a regular quarterly dividend of $0.3125 per share, which was paid on February 2, 2015, to common shareholders of record at the close of business on January 15, 2015. 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, net of tax follows:
| Unrealized Losses on Securities |  | Translation Adjustment |  | Defined Benefit Plans |  | Total
Balance at January 1, 2012 | $ | (4 | ) |  | $ | 6 |  |  | $ | (467 | ) |  | $ | (465 | )
Amounts arising during the period a,b,c,d | — |  |  | (1 | ) |  | (66 | ) |  | (67 | )
Amounts reclassified e | — |  |  | — |  |  | 26 |  |  | 26 |
Balance at December 31, 2012 | (4 | ) |  | 5 |  |  | (507 | ) |  | (506 | )
Amounts arising during the period a,b,c | (1 | ) |  | — |  |  | 67 |  |  | 66 |
Amounts reclassified e | — |  |  | 5 |  |  | 30 |  |  | 35 |
Balance at December 31, 2013 | (5 | ) |  | 10 |  |  | (410 | ) |  | (405 | )
Amounts arising during the period a,b,c,d | (1 | ) |  | — |  |  | (162 | ) |  | (163 | )
Amounts reclassified e | — |  |  | — |  |  | 24 |  |  | 24 |
Balance at December 31, 2014 | $ | (6 | ) |  | $ | 10 |  |  | $ | (548 | ) |  | $ | (544 | )
a. | Includes net actuarial (losses) gains, net of noncontrolling interest, totaling $(106) million for 2012, $126 million for 2013 and $(252) million for 2014. The year 2013 also included $33 million for prior service costs.
b. | Includes foreign exchange gains (losses), net of noncontrolling interest, totaling $3 million for 2012, $11 million for 2013 and $1 million for 2014.
c. | Includes tax benefits (provision) totaling $39 million for 2012, $(37) million for 2013 and $94 million for 2014.
d. | Includes adjustments to deferred tax valuation allowance of $1 million for 2012 and $5 million for 2014.
e. | Includes amortization primarily related to actuarial losses that were net of taxes of $15 million for 2012, $17 million for 2013 and $14 million for 2014.
Stock Award Plans. FCX currently has awards outstanding under various stock-based compensation plans. The 2006 Stock Incentive Plan (the 2006 Plan), which was stockholder approved, 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, 2014, 19.6 million shares were available for grant under the 2006 Plan. During 2014, the Board approved an incentive plan that provides for the issuance of cash-settled RSUs to employees who are not executive officers. 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:
|  | 2014 |  | 2013 |  | 2012
Selling, general and administrative expenses |  | $ | 79 |  |  | $ | 145 |  |  | $ | 77 |
Production and delivery |  | 28 |  |  | 28 |  |  | 23 |
Capitalized costs |  | 23 |  |  | 13 |  |  | — |
Total stock-based compensation |  | 130 |  |  | 186 |  |  | 100 |
Less: capitalized costs |  | (23 | ) |  | (13 | ) |  | — |
Tax benefit and noncontrolling interests' share |  | (42 | ) |  | (66 | ) |  | (39 | )
Impact on net income |  | $ | 65 |  |  | $ | 107 |  |  | $ | 61 |
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 award agreements provide that participants will receive the following year’s vesting after retirement. Therefore, on the date of grant, 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 of 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 of control. SARs 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, 2014, including 1,413,153 SARs, and activity during the year ended December 31, 2014, follows:
| Number of Options and SARs |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Balance at January 1 | 45,130,661 |  |  | $ | 35.39 |  |  |  |  |
Granted | 3,276,000 |  |  | 31.01 |  |  |  |  |
Exercised | (1,950,130 | ) |  | 21.23 |  |  |  |  |
Expired/Forfeited | (526,792 | ) |  | 37.51 |  |  |  |  |
Balance at December 31 | 45,929,739 |  |  | 35.65 |  |  | 5.1 |  | $ | 38 |
Vested and exercisable at December 31 | 35,062,748 |  |  | $ | 35.15 |  |  | 4.2 |  | $ | 38 |
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:
| 2014 |  | 2013 |  | 2012
Weighted-average assumptions used to value stock option awards: |  |  |  |  |
Expected volatility | 36.6 | % |  | 48.9 | % |  | 52.0 | %
Expected life of options (in years) | 4.92 |  |  | 4.66 |  |  | 4.54 |
Expected dividend rate | 3.5 | % |  | 3.3 | % |  | 3.1 | %
Risk-free interest rate | 1.7 | % |  | 0.7 | % |  | 0.7 | %
Weighted-average grant date fair value (per share) | $ | 7.43 |  |  | $ | 10.98 |  |  | $ | 15.60 |
Intrinsic value of options exercised | $ | 17 |  |  | $ | 10 |  |  | $ | 34 |
Fair value of options vested | $ | 76 |  |  | $ | 101 |  |  | $ | 77 |
As of December 31, 2014, FCX had $48 million of total unrecognized compensation cost related to unvested stock options expected to be recognized over a weighted-average period of 1.4 years. The assumptions used to value SARs as of December 31, 2014, ranged from 30.2 percent to 32.4 percent for expected volatility; one to three years for expected life; 0.2 percent to 1.0 percent for expected risk-free interest rate; and an expected dividend rate of 4.3 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. The total intrinsic value of SARs exercised was $5 million during 2014 and $3 million during 2013. As of December 31, 2014, FCX had a minimal amount of unrecognized compensation cost related to unvested SARs expected to be recognized. As of December 31, 2014, FCX had $2 million associated with SARs included in accounts payable and accrued liabilities. Stock-Settled PSUs and RSUs. Beginning in 2014, FCX's executive officers were granted PSUs that vest after three years. The final number of shares to be issued to the executive officers (i.e., the target shares) will be based on FCX’s total shareholder return compared to the total shareholder return of a peer group. The total grant date target shares related to the 2014 PSU grants were 344 thousand, of which the executive officers will earn from 0 percent to 200 percent . Prior to 2014, a portion of each executive officer's annual bonus was to be paid in performance-based RSUs. The performance-based RSUs were a component of an annual incentive award pool that was calculated as a percentage of FCX’s consolidated operating cash flows adjusted for changes in working capital and other tax payments for the preceding year. Grants of these performance-based RSUs 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 and subject to a 20 percent reduction if FCX performs below a group of its peers as defined in the award agreement. All of FCX's executive officers are retirement eligible, and for the 2014 awards, FCX charged the cost of these awards to expense in the year of grant because they are non-forfeitable. For the performance-based RSUs, the cost was charged to expense in the year the related operating cash flows were generated, as performance of services was only required in the calendar year preceding the date of grant. In February 2014, FCX granted RSUs to certain employees that vest over a period of three years, and in February 2013, FCX granted RSUs to certain employees that cliff-vest at the end of three years. FCX also grants other RSUs that vest over a period of four years to its directors. 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. The award agreements provide for accelerated vesting of all RSUs held by directors if there is a change of control (as defined in the award agreements) and for accelerated vesting of all RSUs held by employees if they experience a qualifying termination within one year following a change of control. Dividends on PSUs, and dividends and interest on RSUs accrue and are paid if the award vests. A summary of outstanding stock-settled PSUs and RSUs as of December 31, 2014, and activity during the year ended December 31, 2014, follows:
| Number of Awards |  | Weighted-Average Grant-Date Fair Value |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Balance at January 1 | 4,255,476 |  |  | $ | 35.13 |  |  |  |  |
Granted | 2,161,700 |  |  | 31.17 |  |  |  |  |
Vested | (436,610 | ) |  | 37.93 |  |  |  |  |
Forfeited | (175,421 | ) |  | 31.46 |  |  |  |  |
Balance at December 31 | 5,805,145 |  |  | 33.57 |  |  | 4.7 |  | $ | 128 |
The total fair value of stock-settled PSUs and RSUs granted was $67 million during 2014, $125 million during 2013 and $14 million during 2012. The total intrinsic value of RSUs vested was $15 million during 2014, $12 million during 2013 and $28 million during 2012. As of December 31, 2014, FCX had $41 million of total unrecognized compensation cost related to unvested stock-settled RSUs expected to be recognized over 1.6 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 award agreements for cash-settled RSUs provide for accelerated vesting upon certain qualifying termination of employment within one year following a change of control (as defined in the award agreements). The fair value of these awards is remeasured each reporting period until the vesting dates. Dividends and interest on cash-settled RSUs accrue and are paid if the award vests. A summary of outstanding cash-settled RSUs as of December 31, 2014, and activity during the year ended December 31, 2014, follows:
| Number of Cash-Settled RSUs |  | Weighted-Average Grant-Date Fair Value |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Balance at January 1 | 2,219,812 |  |  | $ | 31.05 |  |  |  |  |
Granted | 2,204,986 |  |  | 30.95 |  |  |  |  |
Vested | (544,048 | ) |  | 31.05 |  |  |  |  |
Forfeited | (293,186 | ) |  | 31.01 |  |  |  |  |
Balance at December 31 | 3,587,564 |  |  | 30.99 |  |  | 1.3 |  | $ | 84 |
The total fair value of cash-settled RSUs granted was $68 million during 2014 and $70 million during 2013. The intrinsic value of cash-settled RSUs vested was $18 million during 2014. The accrued liability associated with cash-settled RSUs consisted of a current portion of $28 million (included in accounts payable and accrued liabilities) and a long-term portion of $29 million (included in other liabilities) at December 31, 2014, and a current portion of $17 million and a long-term portion of $19 million at December 31, 2013. Other Information. The following table includes amounts related to exercises of stock options and vesting of RSUs during the years ended December 31:
| 2014 |  | 2013 |  | 2012
FCX shares tendered to pay the exercise price |  |  |  |  |
and/or the minimum required taxes a | 474,480 |  |  | 3,294,624 |  |  | 515,558 |
Cash received from stock option exercises | $ | 12 |  |  | $ | 8 |  |  | $ | 15 |
Actual tax benefit realized for tax deductions | $ | 16 |  |  | $ | 8 |  |  | $ | 16 |
Amounts FCX paid for employee taxes | $ | 8 |  |  | $ | 105 |  |  | $ | 16 |
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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