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STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Notes) | 12 Months Ended
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Dec. 31, 2016
Stockholders' Equity Note [Abstract] |
Stockholders' Equity and Stock-Based Compensation | STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION FCX’s authorized shares of capital stock total 3.05 billion shares, consisting of 3 billion shares of common stock and 50 million shares of preferred stock. Common Stock. In November 2016, FCX completed a $1.5 billion registered at-the-market equity offering of common stock that was announced on July 27, 2016. FCX sold 116.5 million shares of its common stock at an average price of $12.87 per share, which generated gross proceeds of $1.5 billion (net proceeds of $1.48 billion after $15 million of commissions and expenses). During 2016, FCX issued 48.1 million shares of its common stock (with a value of $540 million, excluding $5 million of commissions paid by FCX) in connection with the settlement of two drilling rig contracts. Also during 2016, FCX negotiated private exchange transactions exempt from registration under the Securities Act of 1933, as amended, whereby 27.7 million shares of FCX's common stock were issued (with an aggregate value of $311 million), in exchange for $369 million principal amount of FCX’s senior notes. In September 2015, FCX completed a $1.0 billion at-the-market equity program and announced an additional $1.0 billion at-the-market equity program. Through December 31, 2015, FCX sold 205.7 million shares of its common stock at an average price of $9.53 per share under these programs, which generated gross proceeds of $1.96 billion (net proceeds of $1.94 billion after $20 million of commissions and expenses). From January 1, 2016, through January 5, 2016, FCX sold 4.3 million shares of its common stock, which generated proceeds of $29 million (after $0.3 million of commissions and expenses). FCX used the proceeds to repay indebtedness. The Board declared a one-time special cash dividend of $0.1105 per share related to the settlement of the shareholder derivative litigation (refer to Note 12 for further discussion), which was paid in August 2015. In response to the impact of lower commodity prices, the Board authorized a decrease in the cash dividend on FCX’s common stock from an annual rate of $1.25 per share to an annual rate of $0.20 per share in March 2015, and then suspended the cash dividend in December 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. Under its revolving credit facility, as amended, FCX is not permitted to pay dividends on common stock on or prior to March 31, 2017. Accumulated Other Comprehensive Loss. A summary of changes in the balances of each component of accumulated other comprehensive loss, net of tax, follows:
| Defined Benefit Plans |  | Unrealized Losses on Securities |  | Translation Adjustment |  | Total
Balance at January 1, 2014 | $ | (410 | ) |  | $ | (5 | ) |  | $ | 10 |  |  | $ | (405 | )
Amounts arising during the perioda,b | (162 | ) |  | (1 | ) |  | — |  |  | (163 | )
Amounts reclassifiedc | 24 |  |  | — |  |  | — |  |  | 24 |
Balance at December 31, 2014 | (548 | ) |  | (6 | ) |  | 10 |  |  | (544 | )
Amounts arising during the perioda,b | 3 |  |  | — |  |  | — |  |  | 3 |
Amounts reclassifiedc | 38 |  |  | — |  |  | — |  |  | 38 |
Balance at December 31, 2015 | (507 | ) |  | (6 | ) |  | 10 |  |  | (503 | )
Amounts arising during the perioda,b | (91 | ) |  | 2 |  |  | — |  |  | (89 | )
Amounts reclassifiedc | 44 |  |  | — |  |  | — |  |  | 44 |
Balance at December 31, 2016 | $ | (554 | ) |  | $ | (4 | ) |  | $ | 10 |  |  | $ | (548 | )
a. | Includes net actuarial losses, net of noncontrolling interest, totaling $252 million for 2014, $7 million for 2015 and $79 million for 2016.
b. | Includes tax benefits (provision) totaling $89 million for 2014, $2 million for 2015 and $(11) million for 2016.
c. | Includes amortization primarily related to actuarial losses, net of taxes, of $14 million for 2014, $16 million for 2015 and $4 million for 2016.
Stock Award Plans. FCX currently has awards outstanding under various stock-based compensation plans. The stockholder-approved 2016 Stock Incentive Plan (the 2016 Plan) provides for the issuance of stock options, SARs, restricted stock, RSUs, PSUs and other stock-based awards for up to 72 million common shares. As of December 31, 2016, 71.9 million shares were available for grant under the 2016 Plan, and no shares were available under other plans. Stock-Based Compensation Cost. Compensation cost charged against earnings for stock-based awards for the years ended December 31 follows:
|  | 2016 |  | 2015 |  | 2014
Selling, general and administrative expenses |  | $ | 69 |  |  | $ | 67 |  |  | $ | 79 |
Production and delivery |  | 16 |  |  | 17 |  |  | 26 |
Capitalized costs |  | 4 |  |  | 11 |  |  | 23 |
Total stock-based compensation |  | 89 |  |  | 95 |  |  | 128 |
Less capitalized costs |  | (4 | ) |  | (11 | ) |  | (23 | )
Tax benefit and noncontrolling interests' share |  | (3 | ) | a | (31 | ) |  | (41 | )
Impact on net loss from continuing operations |  | $ | 82 |  |  | $ | 53 |  |  | $ | 64 |
a. Charges in the U.S. are not currently expected to generate a future tax benefit. 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 upon 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 terminations 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, 2016, including 1,034,153 SARs, and activity during the year ended December 31, 2016, 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 | 49,303,879 |  |  | $ | 34.10 |  |  |  |  |  |
Granted | 7,167,000 |  |  | 4.35 |  |  |  |  |  |
Exercised | (14,750 | ) |  | 12.12 |  |  |  |  |  |
Expired/Forfeited | (2,661,894 | ) |  | 31.80 |  |  |  |  |  |
Balance at December 31 | 53,794,235 |  |  | 30.25 |  |  | 4.6 |  | $ | 66 |  |
Vested and exercisable at December 31 | 44,314,195 |  |  | 34.20 |  |  | 3.8 |  | $ | 14 |  |
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 SAR 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:
| 2016 |  | 2015 |  | 2014
Weighted-average assumptions used to value stock option awards: |  |  |  |  |
Expected volatility | 71.6 | % |  | 37.9 | % |  | 36.6 | %
Expected life of options (in years) | 5.34 |  |  | 5.17 |  |  | 4.92 |
Expected dividend rate | — |  |  | 4.5 | % |  | 3.5 | %
Risk-free interest rate | 1.3 | % |  | 1.7 | % |  | 1.7 | %
Weighted-average grant-date fair value (per share) | $ | 2.64 |  |  | $ | 4.30 |  |  | $ | 7.43 |
Intrinsic value of options exercised | $ | — |  | a | $ | 1 |  |  | $ | 17 |
Fair value of options vested | $ | 43 |  |  | $ | 50 |  |  | $ | 76 |
a. Rounds to less than $1 million. As of December 31, 2016, FCX had $19 million of total unrecognized compensation cost related to unvested stock options expected to be recognized over a weighted-average period of approximately 1.9 years. Stock-Settled PSUs and RSUs. Beginning in 2014, FCX's executive officers were granted PSUs that vest after three years. For the PSU's granted in 2016, the final number of shares to be issued to the executive officers will be determined based on (i) FCX's achievement of certain financial and operational performance metrics and (ii) FCX's total shareholder return compared to the shareholder return of a peer group. The total grant date target for the 2016 PSU grant was 1.5 million shares, of which the executive officers will earn (i) between 0 percent and 175 percent of the target shares based on achievement of financial and operating metrics and (ii) +/- 25 percent of the target shares based on FCX's total shareholder return compared to the peer group. For the PSU's granted to the executive officers in 2014 and 2015, the final number of shares to be issued to the executive officers 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 PSU grants were 755 thousand in 2015 and 344 thousand in 2014, of which the executive officers will earn from 0 percent to 200 percent. All of FCX's executive officers are retirement eligible, and for the 2016, 2015 and 2014 awards, FCX charged the cost of the PSU awards to expense in the year of grant because they are non-forfeitable. FCX grants RSUs that vest over a period of three years to certain employees. FCX also grants RSU's to its directors. Beginning in December 2015, RSUs granted to directors vest on the first anniversary of the grant. Prior to December 2015, RSUs granted to directors generally vest over a period of four years. The fair value of the RSUs is amortized over the 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 attributable to RSUs and PSUs accrue and are paid if the award vests. In addition, for those awards granted prior to 2015, interest accrues on accumulated dividends and is paid if the stock-settled RSUs vest. A summary of outstanding stock-settled RSUs and PSUs as of December 31, 2016, and activity during the year ended December 31, 2016, follows:
| Number of Awards |  | Weighted-Average Grant-Date Fair Value Per Award |  | Aggregate Intrinsic Value
Balance at January 1 | 7,220,300 |  |  | $ | 27.12 |  |  |
Granted | 3,557,366 |  | a | 10.46 |  |  |
Vested | (3,042,860 | ) |  | 28.81 |  |  |
Forfeited | (516,579 | ) |  | 25.91 |  |  |
Balance at December 31 | 7,218,227 |  |  | 18.08 |  |  | $ | 95 |
a. Excludes 993 thousand PSUs granted in 2016 for which the performance metrics have not yet been established. The total fair value of stock-settled RSUs and PSUs granted was $37 million during 2016, $46 million during 2015 and $67 million during 2014. The total intrinsic value of stock-settled RSUs vested was $22 million during both 2016 and 2015 and $15 million during 2014. As of December 31, 2016, FCX had $15 million of total unrecognized compensation cost related to unvested stock-settled RSUs expected to be recognized over approximately 1.9 years. Cash-Settled PSUs and RSUs. In 2015, certain members of FM O&G's senior management were granted cash-settled PSUs that vest over three years. The total grant date target related to the 2015 cash-settled PSU grant was 582 thousand shares, of which FM O&G's senior management will earn from 50 percent to 200 percent. Cash-settled RSUs are similar to stock-settled RSUs, but are settled in cash rather than in shares of common stock. 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 terminations of employment within one year following a change of control (as defined in the award agreements). The cash-settled PSUs and RSUs are classified as liability awards, and the fair value of these awards is remeasured each reporting period until the vesting dates. Dividends attributable to cash-settled RSUs and PSUs accrue and are paid if the award vests. In addition, for those awards granted prior to 2015, interest accrues on accumulated dividends and is paid if the cash-settled RSUs vest. A summary of outstanding cash-settled RSUs and PSUs as of December 31, 2016, and activity during the year ended December 31, 2016, follows:
| Number of Awards |  | Weighted-Average Grant-Date Fair Value Per Award |  | Aggregate Intrinsic Value
Balance at January 1 | 4,612,536 |  |  | $ | 24.89 |  |  |
Granted | 676,000 |  |  | 6.05 |  |  |
Vested | (2,148,558 | ) |  | 25.83 |  |  |
Forfeited | (608,234 | ) |  | 23.92 |  |  |
Balance at December 31 | 2,531,744 |  |  | 19.30 |  |  | $ | 33 |
The total grant-date fair value of cash-settled RSUs was $4 million during 2016, $44 million during 2015 and $68 million during 2014. The intrinsic value of cash-settled RSUs vested was $15 million during 2016 and $24 million during 2015. The accrued liability associated with cash-settled RSUs and PSUs consisted of a current portion of $23 million (included in accounts payable and accrued liabilities) and a long-term portion of $4 million (included in other liabilities) at December 31, 2016, and a current portion of $10 million and a long-term portion of $8 million at December 31, 2015. Other Information. The following table includes amounts related to exercises of stock options and vesting of RSUs during the years ended December 31:
| 2016 |  | 2015 |  | 2014
FCX shares tendered to pay the exercise price |  |  |  |  |
and/or the minimum required taxesa | 906,120 |  |  | 349,122 |  |  | 474,480 |
Cash received from stock option exercises | $ | — |  | b | $ | 3 |  |  | $ | 12 |
Actual tax benefit realized for tax deductions | $ | — |  | b | $ | 11 |  |  | $ | 16 |
Amounts FCX paid for employee taxes | $ | 6 |  |  | $ | 7 |  |  | $ | 8 |
a. | Under terms of the related plans, upon exercise of stock options and vesting of RSUs, employees may tender FCX shares to pay the exercise price and/or the minimum required taxes.
b. | Rounds to less than $1 million.

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