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STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Notes) | 12 Months Ended
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Dec. 31, 2018
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 3.0 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. 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. In February 2018, FCX’s Board of Directors (the Board) reinstated a cash dividend on FCX’s common stock with an annual rate of $0.20 per share. 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:
| Defined Benefit Plans |  | Unrealized Losses on Securities |  | Translation Adjustment |  | Total
Balance at January 1, 2016 | $ | (507 | ) |  | $ | (6 | ) |  | $ | 10 |  |  | $ | (503 | )
Amounts arising during the period a,b | (91 | ) |  | 2 |  |  | — |  |  | (89 | )
Amounts reclassified c | 44 |  |  | — |  |  | — |  |  | 44 |
Balance at December 31, 2016 | (554 | ) |  | (4 | ) |  | 10 |  |  | (548 | )
Amounts arising during the period a,b | 7 |  |  | 1 |  |  | — |  |  | 8 |
Amounts reclassified c | 53 |  |  | — |  |  | — |  |  | 53 |
Balance at December 31, 2017 | (494 | ) |  | (3 | ) |  | 10 |  |  | (487 | )
Adoption of new accounting standard for reclassification of income taxes (refer to Note 1) | (79 | ) |  | — |  |  | — |  |  | (79 | )
Amounts arising during the period a,b | (84 | ) |  | — |  |  | — |  |  | (84 | )
Amounts reclassified c | 48 |  |  | 3 |  |  | — |  |  | 51 |
Sale of interest in PT-FI (refer to Note 2) | (6 | ) |  | — |  |  | — |  |  | (6 | )
Balance at December 31, 2018 | $ | (615 | ) |  | $ | — |  |  | $ | 10 |  |  | $ | (605 | )
a. | Includes net actuarial (losses) gains, net of noncontrolling interest, totaling $(79) million for 2016, $52 million for 2017 and $(87) million for 2018.
b. | Includes tax provision totaling $11 million for 2016, $45 million for 2017 and $4 million for 2018.
c. | Includes amortization primarily related to actuarial losses, net of taxes of $4 million for 2016, $5 million for 2017 and none for 2018.
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, 2018, 58.6 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:
| 2018 |  | 2017 |  | 2016 |
Selling, general and administrative expenses | $ | 62 |  |  | $ | 55 |  |  | $ | 69 |  |
Production and delivery | 12 |  |  | 16 |  |  | 16 |  |
Capitalized costs | — |  |  | — |  |  | 4 |  |
Total stock-based compensation | 74 |  |  | 71 |  |  | 89 |  |
Less capitalized costs | — |  |  | — |  |  | (4 | ) |
Tax benefit and noncontrolling interests’ share | (4 | ) | a | (4 | ) | a | (3 | ) | a
Impact on net income (loss) from continuing operations | $ | 70 |  |  | $ | 67 |  |  | $ | 82 |  |
a. Charges in the U.S. are not expected to generate a future tax benefit. Stock Options. Stock options granted under the plans generally expire 10 years after the date of grant. Stock options granted prior to 2018 generally vest in 25 percent annual increments and beginning in 2018 awards granted vest in 33 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 provide for accelerated vesting only upon certain qualifying terminations of employment within one year following a change of control. A summary of stock options outstanding as of December 31, 2018, and activity during the year ended December 31, 2018, follows:
| Number of Options |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value |
Balance at January 1 | 48,014,688 |  |  | $ | 28.63 |  |  |  |  |  |
Granted | 3,315,000 |  |  | 18.74 |  |  |  |  |  |
Exercised | (801,706 | ) |  | 10.05 |  |  |  |  |  |
Expired/Forfeited | (3,721,618 | ) |  | 39.26 |  |  |  |  |  |
Balance at December 31 | 46,806,364 |  |  | 27.40 |  |  | 4.5 |  | $ | 38 |  |
Vested and exercisable at December 31 | 39,919,885 |  |  | 29.80 |  |  | 3.8 |  | $ | 26 |  |
The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option valuation model. 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 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. Information related to stock options during the years ended December 31 follows:
| 2018 |  | 2017 |  | 2016 |
Weighted-average assumptions used to value stock option awards: |  |  |  |  |  |
Expected volatility | 46.1 | % |  | 51.4 | % |  | 71.6 | % |
Expected life of options (in years) | 5.92 |  |  | 5.70 |  |  | 5.34 |  |
Expected dividend rate | 1.2 | % |  | — |  |  | — |  |
Risk-free interest rate | 2.6 | % |  | 2.0 | % |  | 1.3 | % |
Weighted-average grant-date fair value (per share) | $ | 7.84 |  |  | $ | 7.61 |  |  | $ | 2.64 |  |
Intrinsic value of options exercised | $ | 7 |  |  | $ | 5 |  |  | $ | — |  | a
Fair value of options vested | $ | 24 |  |  | $ | 25 |  |  | $ | 43 |  |
a. Rounds to less than $1 million. As of December 31, 2018, FCX had $23 million of total unrecognized compensation cost related to unvested stock options expected to be recognized over a weighted-average period of approximately 1.4 years. Stock-Settled PSUs and RSUs. Beginning in 2014, FCX’s executive officers were granted PSUs that vest after three years. For the PSUs granted in 2017 and 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 shares related to the PSU grants were 0.6 million for 2017 and 1.5 million for 2016, 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 a peer group. For the PSUs granted in 2018, the final number of shares to be issued to the executive officers will be determined based on (i) FCX’s achievement of certain financial metrics and (ii) FCX’s total shareholder return compared to the shareholder return of a peer group. The total grant date target shares related to the PSU grants were 0.5 million for 2018, of which the executive officers will earn (i) between 0 percent and 200 percent of the target shares based on achievement of financial metrics and (ii) +/- 25 percent of the target shares based on FCX’s total shareholder return compared to a peer group. All of FCX’s executive officers are retirement eligible, and their PSU awards are therefore non-forfeitable. As such, FCX charges the estimated fair value of the PSU awards to expense at the time the financial and operational, if applicable, metrics are established. FCX grants RSUs that vest over a period of three years to certain employees. FCX also grants RSUs 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. A summary of outstanding stock-settled RSUs and PSUs as of December 31, 2018, and activity during the year ended December 31, 2018, follows:
| Number of Awards |  | Weighted-Average Grant-Date Fair Value Per Award |  | Aggregate Intrinsic Value
Balance at January 1 | 5,206,624 |  |  | $ | 18.48 |  |  |
Granted | 2,127,785 |  | a | 19.11 |  |  |
Vested | (753,806 | ) |  | 15.53 |  |  |
Forfeited | (775,966 | ) |  | 11.91 |  |  |
Balance at December 31 | 5,804,637 |  |  | 19.97 |  |  | $ | 60 |
a. Excludes 187 thousand PSUs related to 2017 grants for which the performance metrics have not yet been established. The total fair value of stock-settled RSUs and PSUs granted was $41 million during 2018, $32 million during 2017 and $37 million during 2016. The total intrinsic value of stock-settled RSUs vested was $14 million during 2018, $45 million during 2017 and $22 million during 2016. As of December 31, 2018, FCX had $6 million of total unrecognized compensation cost related to unvested stock-settled RSUs expected to be recognized over approximately 1.1 years. Cash-Settled RSUs and PSUs. 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 three 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). In 2015, certain members of FM O&G’s senior management were granted cash-settled PSUs that vested over three years. The total grant date target shares related to the 2015 cash-settled PSU grants were 582 thousand shares, of which FM O&G’s senior management earned a total of 487 thousand shares at maturity during 2018 based on the achievement of applicable performance goals. The cash-settled RSUs and PSUs 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. A summary of outstanding cash-settled RSUs and PSUs as of December 31, 2018, and activity during the year ended December 31, 2018, follows:
| Number of Awards |  | Weighted-Average Grant-Date Fair Value Per Award |  | Aggregate Intrinsic Value
Balance at January 1 | 1,307,235 |  |  | $ | 13.32 |  |  |
Granted | 870,312 |  |  | 17.91 |  |  |
Vested | (666,975 | ) |  | 14.12 |  |  |
Forfeited | (23,706 | ) |  | 15.92 |  |  |
Balance at December 31 | 1,486,866 |  |  | 15.61 |  |  | $ | 15 |
The total grant-date fair value of cash-settled RSUs was $16 million during 2018, $10 million during 2017 and $4 million during 2016. The intrinsic value of cash-settled RSUs and PSUs vested was $12 million during 2018, $27 million during 2017 and $15 million during 2016. The accrued liability associated with cash-settled RSUs consisted of a current portion of $7 million (included in accounts payable and accrued liabilities) and a long-term portion of $3 million (included in other liabilities) at December 31, 2018, and a current portion of $11 million and a long-term portion of $5 million at December 31, 2017. Other Information. The following table includes amounts related to exercises of stock options and vesting of RSUs during the years ended December 31:
| 2018 |  | 2017 |  | 2016 |
FCX shares tendered to pay the exercise price |  |  |  |  |  |
and/or the minimum required taxes a | 195,322 |  |  | 1,041,937 |  |  | 906,120 |  |
Cash received from stock option exercises | $ | 8 |  |  | $ | 5 |  |  | $ | — |  | b
Actual tax benefit realized for tax deductions | $ | 3 |  |  | $ | 1 |  |  | $ | — |  | b
Amounts FCX paid for employee taxes | $ | 4 |  |  | $ | 15 |  |  | $ | 6 |  |
a. | Under terms of the related plans, upon exercise of stock options and vesting of stock-settled 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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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income, and compensation-related costs for equity-based compensation. Includes, but is not limited to, disclosure of policies, compensation plan details, equity-based arrangements to obtain goods and services, deferred compensation arrangements, and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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