Financial Policy. In February 2021, FCX’s Board of Directors (Board) adopted a financial policy for the allocation of cash flows aligned with FCX’s strategic objectives of maintaining a strong balance sheet and increasing cash returns to shareholders while advancing opportunities for future growth. The policy includes a base dividend and a performance-based payout framework, whereby up to 50 percent of available cash flows generated after planned capital spending and distributions to noncontrolling interests would be allocated to shareholder returns and the balance to debt reduction and investments in value enhancing growth projects, subject to FCX maintaining its net debt at a level not to exceed the net debt target of $3 billion to $4 billion (excluding project debt for additional smelting capacity in Indonesia).

In February 2021, the Board reinstated a cash dividend on FCX’s common stock (base dividend), and on November 1, 2021, the Board approved (i) a new share repurchase program authorizing repurchases of up to $3.0 billion of FCX common stock and (ii) a variable cash dividend on FCX’s common stock for 2022.

In fourth-quarter 2021, FCX acquired 12.7 million shares under the share repurchase program for a total cost of $488 million ($38.32 per share). Through February 15, 2022, FCX acquired 18.2 million shares of its common stock for a total cost of $710 million ($39.10 per share) and $2.3 billion remains available for repurchases.

On December 22, 2021, FCX declared dividends totaling $0.15 per share on its common stock, which was paid on February 1, 2022, to common stockholders of record as of January 14, 2022. This payment includes a $0.075 per share quarterly base cash dividend and a $0.075 per share quarterly variable cash dividend.

The declaration and payment of dividends (base or variable) and timing and amount of any share repurchases is at the discretion of FCX’s Board and management, respectively, and is subject to a number of factors, including maintaining FCX’s net debt target, capital availability, FCX’s financial results, cash requirements, business prospects, global economic conditions, changes in laws, contractual restrictions and other factors deemed relevant by FCX’s Board or management, as applicable. FCX’s share repurchase program may be modified, increased, suspended or terminated at any time at the Board’s discretion.

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		Translation Adjustment		Total
Balance at January 1, 2019	$	(615)	$	10	$	(605)

Amounts arising during the perioda,b	(118)		—		(118)
Amounts reclassifiedc	47		—		47

Balance at December 31, 2019	(686)		10		(676)

Amounts arising during the perioda,b	47		—		47
Amounts reclassifiedc	46		—		46

Balance at December 31, 2020	(593)		10		(583)

Amounts arising during the perioda,b	176		—		176
Amounts reclassifiedc	19		—		19

Balance at December 31, 2021	$	(398)	$	10	$	(388)

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, restricted stock, RSUs, PSUs and other stock-based awards for up to 72 million common shares. As of December 31, 2021, 30.7 million shares were available for grant under the 2016 Plan, and no shares were available under other plans.


	2021		2020		2019
Selling, general and administrative expenses	$	64	$	70	$	48
Production and delivery	34		29		15

Total stock-based compensation	98		99		63

Tax benefit and noncontrolling interests’ sharea	(5)		(5)		(4)
Impact on net income (loss)	$	93	$	94	$	59

Stock Options. Stock options granted under the plans generally expire 10 years after the date of grant. Stock options vest in one-third 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. The award agreements also provide for accelerated vesting upon certain qualifying terminations of employment within one year following a change of control.


	Number of Options	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Balance at January 1	37,100,098	$	25.58
Granted	598,000	28.14
Exercised	(11,527,957)	19.48
Expired/Forfeited	(4,347,579)	51.15
Balance at December 31	21,822,562	23.78		4.3	$	411

Vested and exercisable at December 31	17,119,081	26.62		3.4	$	278

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 expected annual dividend 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.


	2021			2020			2019
Weighted-average assumptions used to value stock option awards:
Expected volatility	58.1		%	47.7		%	47.8		%
Expected life of options (in years)	5.90			5.83			6.10
Expected dividend rate	2.5		%	1.7		%	1.8		%
Risk-free interest rate	0.6		%	1.5		%	2.5		%
Weighted-average grant-date fair value (per option)	$	11.92		$	4.72		$	4.87
Intrinsic value of options exercised	$	194		$	82		$	3
Fair value of options vested	$	16		$	28		$	26

As of December 31, 2021, FCX had $5 million of total unrecognized compensation cost related to unvested stock options expected to be recognized over a weighted-average period of approximately 1.0 years.

Stock-Settled PSUs and RSUs. Beginning in 2014, FCX’s executive officers received annual grants of PSUs that vest after three years. The total grant date target shares related to the PSU grants were 0.7 million for 2019, 0.8 million for 2020 and 0.3 million for 2021, 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) +/- up to 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 who hold PSUs 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, 2021, and activity during the year ended December 31, 2021, follows:


	Number of Awards	Weighted-Average Grant-Date Fair Value Per Award		Aggregate Intrinsic Value
Balance at January 1	7,523,022	$	16.79
Granted	2,121,755	29.15
Vested	(1,814,976)	15.72
Forfeited	(28,916)	20.29
Balance at December 31	7,800,885	20.38		$	326

The total fair value of stock-settled RSUs and PSUs granted was $62 million during 2021, $47 million during 2020 and $24 million during 2019. The total intrinsic value of stock-settled RSUs and PSUs vested was $56 million during 2021, $18 million during 2020 and $26 million during 2019. As of December 31, 2021, FCX had $17 million of total unrecognized compensation cost related to unvested stock-settled RSUs expected to be recognized over approximately 1.2 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, 2021, and activity during the year ended December 31, 2021, follows:


	Number of Awards	Weighted-Average Grant-Date Fair Value Per Award		Aggregate Intrinsic Value
Balance at January 1	1,521,097	$	12.92
Granted	308,600	28.00
Vested	(753,574)	13.94
Forfeited	(22,199)	15.37
Balance at December 31	1,053,924	16.56		$	44

The total grant-date fair value of cash-settled RSUs was $9 million during 2021, $11 million during 2020 and $10 million during 2019. The intrinsic value of cash-settled RSUs vested was $24 million during 2021, $11 million during 2020 and $8 million during 2019. The accrued liability associated with cash-settled RSUs consisted of a current portion of $26 million (included in accounts payable and accrued liabilities) and a long-term portion of $6 million (included in other liabilities) at December 31, 2021, and a current portion of $22 million and a long-term portion of $6 million at December 31, 2020.


	2021		2020		2019
FCX shares tendered to pay the exercise price
and/or the minimum required withholding taxesa	1,358,101		1,193,183		670,508
Cash received from stock option exercises	$	210	$	51	$	2
Actual tax benefit realized for tax deductions	$	9	$	2	$	1
Amounts FCX paid for employee taxes	$	29	$	17	$	8

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 withholding taxes.