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STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Notes) | 12 Months Ended
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Dec. 31, 2019
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 February 2018, FCX’s Board of Directors (the Board) reinstated a cash dividend on FCX’s common stock at an annual rate of $0.20 per share. On December 18, 2019, FCX declared a quarterly cash dividend of $0.05 per share, which was paid on February 3, 2020, to common stockholders of record as of January 15, 2020. 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, 2017 | $ | (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 accounting standard for reclassification of income taxes | (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 | )
Amounts arising during the period a,b | (118 | ) |  | — |  |  | — |  |  | (118 | )
Amounts reclassified c | 47 |  |  | — |  |  | — |  |  | 47 |
Balance at December 31, 2019 | $ | (686 | ) |  | $ | — |  |  | $ | 10 |  |  | $ | (676 | )
a. | Includes net actuarial gains (losses), net of noncontrolling interest, totaling $52 million for 2017, $(87) million for 2018 and $(111) million for 2019.
b. | Includes tax provision (benefit) totaling $45 million for 2017, $4 million for 2018 and $(8) million for 2019.
c. | Includes amortization primarily related to actuarial losses, net of taxes of $5 million for 2017, and none for 2018 and 2019.
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, stock appreciation rights (SARs), restricted stock, RSUs, PSUs and other stock-based awards for up to 72 million common shares. As of December 31, 2019, 46.9 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:
| 2019 |  | 2018 |  | 2017 |
Selling, general and administrative expenses | $ | 48 |  |  | $ | 62 |  |  | $ | 55 |  |
Production and delivery | 15 |  |  | 12 |  |  | 16 |  |
Total stock-based compensation | 63 |  |  | 74 |  |  | 71 |  |
Tax benefit and noncontrolling interests’ share a | (4 | ) |  | (4 | ) |  | (4 | ) |
Impact on net (loss) income | $ | 59 |  |  | $ | 70 |  |  | $ | 67 |  |
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; 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, 2019, and activity during the year ended December 31, 2019, follows:
| Number of Options |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value |
Balance at January 1 | 46,806,364 |  |  | $ | 27.40 |  |  |  |  |  |
Granted | 6,425,500 |  |  | 11.88 |  |  |  |  |  |
Exercised | (391,075 | ) |  | 4.72 |  |  |  |  |  |
Expired/Forfeited | (4,528,736 | ) |  | 20.55 |  |  |  |  |  |
Balance at December 31 | 48,312,053 |  |  | 26.16 |  |  | 4.4 |  | $ | 60 |  |
Vested and exercisable at December 31 | 39,981,705 |  |  | 28.86 |  |  | 3.5 |  | $ | 51 |  |
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:
| 2019 |  | 2018 |  | 2017 |
Weighted-average assumptions used to value stock option awards: |  |  |  |  |  |
Expected volatility | 47.8 | % |  | 46.1 | % |  | 51.4 | % |
Expected life of options (in years) | 6.10 |  |  | 5.92 |  |  | 5.70 |  |
Expected dividend rate | 1.8 | % |  | 1.2 | % |  | — |  |
Risk-free interest rate | 2.5 | % |  | 2.6 | % |  | 2.0 | % |
Weighted-average grant-date fair value (per option) | $ | 4.87 |  |  | $ | 7.84 |  |  | $ | 7.61 |  |
Intrinsic value of options exercised | $ | 3 |  |  | $ | 7 |  |  | $ | 5 |  |
Fair value of options vested | $ | 26 |  |  | $ | 24 |  |  | $ | 25 |  |
As of December 31, 2019, 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 1.6 years. Stock-Settled PSUs and RSUs. Beginning in 2014, FCX’s executive officers received annual grants of PSUs that vest after three years. For the PSUs granted in 2017, the total grant date target shares related to the PSU grants were 0.6 million, 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 total shareholder return of a peer group. For the PSUs granted in 2018 and 2019, the total grant date target shares related to the PSU grants were 0.5 million for 2018 and 0.7 million for 2019, 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 the total shareholder return of 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 or at the end of three years to certain employees. Some award agreements allow for participants to receive the following year’s vesting upon retirement. Therefore, on the date of grant of these RSU awards, FCX accelerates one year of amortization for retirement-eligible employees. FCX also grants RSUs to its directors, which vest on the first anniversary of the date of grant. 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, 2019, and activity during the year ended December 31, 2019, follows:
| Number of Awards |  | Weighted-Average Grant-Date Fair Value Per Award |  | Aggregate Intrinsic Value
Balance at January 1 | 5,804,637 |  |  | $ | 19.97 |  |  |
Granted | 2,135,224 |  |  | 11.13 |  |  |
Vested | (2,191,743 | ) |  | 14.99 |  |  |
Forfeited | (157,433 | ) |  | 17.58 |  |  |
Balance at December 31 | 5,590,685 |  |  | 18.61 |  |  | $ | 73 |
The total fair value of stock-settled RSUs and PSUs granted was $24 million during 2019, $41 million during 2018 and $32 million during 2017. The total intrinsic value of stock-settled RSUs vested was $26 million during 2019, $14 million during 2018 and $45 million during 2017. As of December 31, 2019, FCX had $13 million of total unrecognized compensation cost related to unvested stock-settled RSUs expected to be recognized over approximately 1.7 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. These cash-settled RSUs generally vest over three years of service. Some award agreements allow for participants to receive the following year’s vesting upon retirement. Therefore, on the date of grant of these cash-settled RSU awards, FCX accelerates one year of amortization for retirement-eligible employees. The cash-settled RSUs are classified as liability awards, and the fair value of these awards is remeasured each reporting period until the vesting dates. 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. Dividends attributable to cash-settled RSUs accrue and are paid if the award vests. A summary of outstanding cash-settled RSUs as of December 31, 2019, and activity during the year ended December 31, 2019, follows:
| Number of Awards |  | Weighted-Average Grant-Date Fair Value Per Award |  | Aggregate Intrinsic Value
Balance at January 1 | 1,486,866 |  |  | $ | 15.61 |  |  |
Granted | 819,000 |  |  | 11.88 |  |  |
Vested | (698,817 | ) |  | 13.70 |  |  |
Forfeited | (24,162 | ) |  | 14.43 |  |  |
Balance at December 31 | 1,582,887 |  |  | 14.54 |  |  | $ | 21 |
The total grant-date fair value of cash-settled RSUs was $10 million during 2019, $16 million during 2018 and $10 million during 2017. The intrinsic value of cash-settled RSUs vested was $8 million during 2019, $11 million during 2018 and $24 million during 2017. The accrued liability associated with cash-settled RSUs consisted of a current portion of $11 million (included in accounts payable and accrued liabilities) and a long-term portion of $3 million (included in other liabilities) at December 31, 2019, and a current portion of $7 million and a long-term portion of $3 million at December 31, 2018. Other Information. The following table includes amounts related to exercises of stock options and vesting of RSUs during the years ended December 31:
| 2019 |  | 2018 |  | 2017 |
FCX shares tendered to pay the exercise price |  |  |  |  |  |
and/or the minimum required taxes a | 670,508 |  |  | 195,322 |  |  | 1,041,937 |  |
Cash received from stock option exercises | $ | 2 |  |  | $ | 8 |  |  | $ | 5 |  |
Actual tax benefit realized for tax deductions | $ | 1 |  |  | $ | 3 |  |  | $ | 1 |  |
Amounts FCX paid for employee taxes | $ | 8 |  |  | $ | 4 |  |  | $ | 15 |  |
a. Under terms of the related plans, upon exercise of stock options, vesting of stock-settled RSUs and payout of PSUs, employees may tender FCX shares to pay the exercise price and/or the minimum required taxes.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + 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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