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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Freeport-McMoRan Sulphur Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO
FREEPORT-MCMORAN
SULPHUR]
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998
------------------
March 24, 1998
The Annual Meeting of Stockholders of Freeport-McMoRan Sulphur Inc. will be
held at the office of the corporation, 1615 Poydras Street, New Orleans,
Louisiana, on Tuesday, May 12, 1998, at 11:00 a.m., for the following purposes:
(1) To elect two of the seven directors to hold office for three years
and until their successors are respectively elected and qualified;
(2) To ratify the appointment of Arthur Andersen LLP as the independent
auditors to audit the financial statements of the corporation and its
subsidiaries for the year 1998;
(3) To act upon a proposal to approve the corporation's 1997 Stock Option
Plan; and
(4) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 16, 1998 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting.
Your vote is important. Whether or not you plan to attend the meeting, please
complete, sign and date the enclosed proxy card and return it promptly in the
enclosed envelope. Your cooperation will be appreciated.
By Order of the Board of
Directors.
/s/ Michael C. Kilanowski, Jr.
Michael C. Kilanowski, Jr.
Secretary
<PAGE>
FREEPORT-MCMORAN SULPHUR INC.
1615 POYDRAS STREET
NEW ORLEANS, LOUISIANA 70112
The 1997 Annual Report to Stockholders, including financial statements, is
being mailed to stockholders together with these proxy materials on or about
March 24, 1998.
PROXY STATEMENT
This proxy statement is furnished in connection with a solicitation of
proxies by the Board of Directors (the "Board of Directors" or the "Board") of
Freeport-McMoRan Sulphur Inc. (the "Company") for use at its Annual Meeting of
Stockholders to be held on May 12, 1998, and at any adjournments thereof (the
"Meeting").
The Company was formed in August 1997 to succeed to the sulphur and certain
oil and gas operations of Freeport-McMoRan Resource Partners, Limited
Partnership, a Delaware limited partnership presently named Phosphate Resource
Partners Limited Partnership ("PLP"). At the time of the Company's formation,
Freeport-McMoRan Inc. ("FTX") owned a majority of the units of beneficial
interest in PLP. In connection with the merger (the "Merger") of FTX into IMC
Global Inc. ("IGL"), the shares of the Company's common stock were distributed
by PLP to its unitholders, including FTX (the "PLP Distribution"), and the
shares of the Company's common stock received by FTX were immediately
redistributed to the FTX stockholders (the "FTX Stockholder Distribution," and
together with the PLP Distribution, the "Distributions"). Following the Merger
and the Distributions on December 22, 1997, the Company's common stock began
trading on the New York Stock Exchange and the Company began operations as an
independent public corporation (the "Spin-Off").
VOTING PROCEDURE
Stockholders of record at the close of business on March 16, 1998 (the
"Record Date") will be entitled to vote at the Meeting. On the Record Date,
there were 9,848,430 shares of common stock (the "Common Stock") outstanding.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting, present in person or
represented by proxy, will constitute a quorum at the Meeting. The persons
appointed by the Company to act as inspectors of election will treat shares of
Common Stock represented by a properly executed and returned proxy as present
at the Meeting for purposes of determining a quorum. The shares of Common
Stock present at the Meeting that are abstained from voting or that are the
subject of broker non-votes will be counted as present for purposes of
determining a quorum. A broker non-vote occurs when a nominee holding Common
<PAGE>
Stock for a beneficial owner does not vote on a particular matter because the
nominee does not have discretionary voting power with respect to that item and
has not received voting instructions from the beneficial owner.
Each share of Common Stock will entitle the holder to one vote at the
Meeting, and votes cast will be counted by the inspectors of election. The
Company's directors are elected by a plurality vote. Except as otherwise
provided by statute, the Company's Certificate of Incorporation or the
Company's By-Laws, all other matters coming before the Meeting will be decided
by the vote of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the Meeting. Abstentions and
broker non-votes will have no effect upon the election of directors.
Abstentions as to all other matters to come before the Meeting will have the
same effect as votes against those matters, but broker non-votes as to those
matters will not be deemed to be a part of the voting power present with
respect to, will not count as votes for or against, and will not be included
in calculating the number of votes necessary for approval of those matters.
The Board of Directors is soliciting a proxy in the enclosed form to provide
you with an opportunity to vote on all matters scheduled to come before the
Meeting, whether or not you attend in person. If you properly execute and
return a proxy in the enclosed form, your shares will be voted as you specify.
If you make no specifications, the proxy will be voted in favor of the
proposed nominees, for the ratification of the appointment of auditors, and
for the approval of the Company's 1997 Stock Option Plan. If you submit a
proxy, you may subsequently revoke it or submit a revised proxy at any time
before it is voted. You may also attend the Meeting in person and vote by
ballot, which would cancel any proxy that you previously gave. Management
expects no matters to be presented for action at the Meeting other than the
items described in this Proxy Statement. If, however, any other matters
properly come before the Meeting, the persons named as proxies in the enclosed
form of proxy intend to vote in accordance with their judgment on the matters
presented.
PROXY SOLICITATION
The Company will pay all expenses of soliciting proxies for the Meeting. In
addition to solicitations by mail, arrangements have been made for brokers and
nominees to send proxy materials to their principals, and the Company will
reimburse them for their reasonable expenses in doing so. The Company has
retained Georgeson & Co. Inc., Wall Street Plaza, New York, New York to assist
with the solicitation of proxies from brokers and nominees. It is estimated
that the fees for Georgeson's services will be $6,500 plus its reasonable out-
of-pocket expenses. Certain representatives of the Company, who will receive
no compensation for their services, may also solicit proxies by telephone,
telegram, telex, telecopy or personal interview.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's 1999 proxy
materials, stockholder proposals must be received by the Company no later than
November 24, 1998. In addition, the
2
<PAGE>
Company's By-Laws provide that stockholders intending to nominate a director
or bring any other matter before a stockholders' meeting must furnish timely
written notice containing specified information concerning, among other
things, the matters to be brought before the meeting and the stockholder
proposing the matters. In general, to be timely a stockholder's notice must be
received by the Company's Secretary between August 15, 1998 and March 15,
1999. If the date of the 1999 annual meeting is more than 30 days earlier or
later than May 12, 1999, the Secretary must receive the stockholder's notice
within 15 days of the earlier of the mailing of the meeting notice or public
disclosure of the meeting date. The Company will be permitted to disregard any
nomination or other matter that fails to comply with these By-Law procedures.
CORPORATE GOVERNANCE
The Board of Directors, which held no meetings during 1997, has primary
responsibility for directing the management of the business and affairs of the
Company. The Board currently consists of seven members. To provide for
effective direction and management of the Company's business, the Board of
Directors has established two committees, the Audit Committee and the
Corporate Personnel Committee. The Board has no standing nominating committee.
The Audit Committee reviews the Company's financial statements and exercises
general oversight with respect to the activities of the Company's independent
auditors and principal accounting officer and related matters. The Audit
Committee currently consists of Mr. Clark, as Chairman, and Messrs. Brown and
Rankin, none of whom is an officer or employee of the Company or any of its
subsidiaries. The Audit Committee did not meet during 1997.
The Corporate Personnel Committee, which is described further below,
currently consists of Mr. Brown, as Chairman, and Mr. Clark. The Corporate
Personnel Committee met once during 1997.
ELECTION OF DIRECTORS
At the Meeting, two directors are to be elected to a three-year term, each
to hold office until his successor is elected and qualified. J. Terrell Brown
and Rene L. Latiolais have been nominated for election to the Board of
Directors at the Meeting. The Board of Directors consists of three classes,
each of which serves for three years, with one class being elected each year.
The persons named in the enclosed form of proxy intend to vote your proxy,
unless otherwise directed, for the election of Messrs. Brown and Latiolais as
members of the class to serve until the 2001 Annual Meeting of Stockholders.
Messrs. Clark and Wohleber are members of the class to serve until the 1999
Annual Meeting of Stockholders, and Messrs. Adkerson, Moffett and Rankin are
members of the class to serve until the 2000 Annual Meeting of Stockholders.
If, contrary to present expectation, any of the nominees should become
unavailable for any reason, the Board of Directors may reduce the size of the
Board or votes may be cast pursuant to the accompanying form of proxy for a
substitute nominee designated by the Board.
3
<PAGE>
INFORMATION ABOUT NOMINEES AND DIRECTORS
The following table provides certain information as of March 2, 1998 with
respect to each nominee and each other director whose term will continue after
the Meeting. Each nominee and director was elected a director during the last
half of 1997. Unless otherwise indicated, each person has been engaged in the
principal occupation shown for the past five years.
<TABLE>
<CAPTION>
NAME OF NOMINEE PRINCIPAL OCCUPATIONS, OTHER DIRECTORSHIPS
OR DIRECTOR AGE AND POSITIONS WITH THE COMPANY
--------------- --- -----------------------------------------------------
<C> <C> <S>
Richard C. Adkerson 51 Vice Chairman of the Board of the Company. President,
Chief Operating Officer and Chief Financial Officer
of Freeport-McMoRan Copper & Gold Inc. ("FCX"), a
mining company. Director, Co-Chairman of the Board
and Chief Executive Officer of McMoRan Oil & Gas Co.
("MOXY"), an oil and gas exploration, development,
and production company. Director, Chairman of the
Board and Chief Executive Officer of FM Properties
Inc., a real estate company. Vice Chairman of the
Board of FTX, a global agricultural resource
company, until December 1997. Senior Vice President
and Chief Financial Officer of FTX until 1995.
J. Terrell Brown 58 Chairman of the Board and Chief Executive Officer of
United Companies Financial Corp., a provider of non-
traditional consumer and mortgage lending, and each
of its subsidiaries. Director of Hibernia
Corporation and Sizeler Corp.
Thomas D. Clark, Jr. 57 Dean and Ourso Distinguished Professor of Business of
Louisiana State University E.J. Ourso College of
Business Administration. Chairman of Information and
Management Sciences and Director of the Center for
Information Systems Research at the Florida State
University College of Business until 1995. Director
of Ocean Energy, Inc.
Rene L. Latiolais 55 Co-Chairman of the Board of the Company. Director and
Vice Chairman of the Board of FCX. President and
Chief Executive Officer of FTX until December 1997.
President and Chief Operating Officer of FTX until
1995. Executive Vice President of FTX until 1993.
Director of IGL.
James R. Moffett 59 Co-Chairman of the Board of the Company. Director,
Chairman of the Board and Chief Executive Officer of
FCX. Director and Co-Chairman of the Board of MOXY.
Chairman of the Board of FTX until December 1997.
Director of IGL.
B.M. Rankin, Jr. 68 Private investor. Director of FCX and MOXY.
Robert M. Wohleber 47 President and Chief Executive Officer of the Company.
Senior Vice President of FCX. Vice President of FCX
until 1997, and Treasurer of FCX until 1994. Senior
Vice President and Chief Financial Officer of FTX
until 1997. Vice President of FTX until 1996, and
Treasurer of FTX until 1994.
</TABLE>
4
<PAGE>
DIRECTOR COMPENSATION
Each non-employee and non-officer director receives an annual fee of $15,000
and a fee of $500 for attending each committee meeting. Each director receives
a fee of $1,000 for attending each Board meeting and is also reimbursed for
reasonable out-of-pocket expenses incurred in attending Board and committee
meetings.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Each non-employee and non-officer director is eligible for the grant of
options under the 1997 Stock Option Plan for Non-Employee Directors (the "1997
Plan"). On December 23, 1998, each eligible director was granted an option to
purchase 5,000 shares of Common Stock at an exercise price of $11.5625, which
was 100% of the fair market value of the shares on the grant date. On May 1,
1998 and on May 1 for each subsequent year that the 1997 Plan is in effect,
each eligible director will be granted an option to purchase 1,000 shares of
Common Stock at 100% of the fair market value of the shares on the grant date.
Each option granted under the 1997 Plan expires ten years after the grant
date, and each eligible director may transfer his options during his lifetime
to his immediate family members or certain entities owned by or for the
benefit of his immediate family members or pursuant to a domestic relations
order. During 1997, none of the current non-employee and non-officer directors
exercised options granted under the 1997 Plan.
ADJUSTED STOCK AWARD PLAN
In connection with the Distributions, all outstanding awards granted under
the stock option and incentive unit plans of FTX held by the Company's
directors, officers and employees were converted into an adjusted FTX award
(which was then converted into an IGL award in connection with the Merger) and
a new non-qualified option to purchase Common Stock (a "Company Option") under
the Company's Adjusted Stock Award Plan. The number of shares of Common Stock
subject to a Company Option is the number of shares of Common Stock that a
record holder of the number of shares of FTX common stock subject to the
related FTX award would have received in the FTX Stockholder Distribution. If
the FTX award contained a "tax-offset" payment right feature, the Company
Option derived from it relates to a number of shares of Common Stock
determined as described above multiplied by a factor of 1.6556. No Company
Option contains a "tax-offset" payment right feature. Each Company Option has,
however, in-tandem "limited rights" equal in number to the number of shares of
Common Stock subject to the Company Option. The exercise price of each FTX
award was allocated between the adjusted FTX award and the Company Option
based on the relative fair market values of FTX common stock and Common Stock
at the time of the Merger. Each Company Option became fully exercisable as a
result of the Merger and has the same remaining duration and other provisions
as the FTX award from which it was derived.
5
<PAGE>
The following table sets forth information with respect to all Company
Options granted to each non-officer director of the Company pursuant to the
terms of the Adjusted Stock Award Plan on December 23, 1997. Information
regarding grants to officer directors is set forth in the table entitled
"Option Grants in 1997" under the heading "Executive Officer Compensation"
below.
OPTION GRANTS TO NON-OFFICER DIRECTORS
UNDER THE ADJUSTED STOCK AWARD PLAN
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS EXERCISE EXPIRATION
NAME GRANTED PRICE DATE
---- ---------- -------- -----------
<S> <C> <C> <C>
J. Terrell Brown 0 -- --
Thomas D. Clark, Jr. 0 -- --
B.M. Rankin, Jr. 644 5.1733 May 2, 1998
622 7.2251 May 2, 1999
622 6.0824 May 2, 2000
622 6.3158 May 2, 2001
622 7.8395 May 2, 2002
617 7.9339 May 2, 2003
617 7.5867 May 2, 2004
583 7.5596 May 1, 2005
582 13.8382 May 1, 2006
582 11.0564 May 1, 2007
</TABLE>
------------------
6
<PAGE>
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the ownership of the
Common Stock by (i) each director and nominee for director of the Company,
(ii) each executive officer for whom compensation information is disclosed
under the heading "Executive Officer Compensation" and (iii) all directors and
executive officers of the Company as a group, determined in accordance with
Rule 13d-3 of the Securities and Exchange Commission ("SEC") based on
information furnished by them. Unless otherwise indicated, all information is
presented as of January 31, 1998, and all shares shown are held with sole
voting and investment power.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1)(2)
------------------------ ------------------------
<S> <C>
Richard C. Adkerson 28,186
J. Terrell Brown 0
Thomas D. Clark, Jr. 500
Rene L. Latiolais 110,820
James R. Moffett 130,670(3)
B.M. Rankin, Jr. 37,736(4)
Robert M. Wohleber 9,694
All directors and executive officers as a group (8
persons) 376,708(5)
</TABLE>
- ---------
(1) With the exception of Mr. Latiolais (who beneficially owns 1.1% of the
outstanding shares) and Mr. Moffett (who beneficially owns 1.3% of the
outstanding shares), each individual holds less than 1% of the outstanding
shares, respectively.
(2) Includes shares that could be acquired within sixty days after January 31,
1998, upon the exercise of options granted pursuant to Company stock
option plans, as follows: Mr. Adkerson, 28,186 shares; Mr. Latiolais,
110,820 shares; Mr. Moffett, 76,937 shares; Mr. Rankin, 6,113 shares; Mr.
Wohleber, 9,694 shares; all directors and executive officers as a group,
264,890 shares.
(3) Includes (a) 45,944 shares held by a limited liability company with
respect to which Mr. Moffett, as a member, shares voting and investment
power and (b) 7,789 shares held for the benefit of a trust with respect to
which Mr. Moffett and an executive officer of the Company, as co-trustees,
have sole voting and investment power but as to which each disclaims
beneficial ownership.
(4) Includes 12,219 shares with respect to which Mr. Rankin has sole voting
and investment power under a power of attorney but as to which he
disclaims beneficial ownership.
(5) Includes (a) 3 shares held in a retirement trust for the benefit of the
spouse of an executive officer but as to which he disclaims beneficial
ownership, (b) 823 shares held by an executive officer as custodian for
his children but as to which he disclaims beneficial ownership, (c) 633
shares held by an executive officer as president of a charitable
foundation but as to which he disclaims beneficial ownership, and (d)
7,082 shares held for the benefit of trusts with respect to which an
executive officer, as co-trustee, shares voting and investment power but
as to which he disclaims beneficial ownership. Total represents
approximately 3.6% of the outstanding shares.
------------------
7
<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the ownership of Common
Stock by each person known to the Company to be a beneficial owner of more
than 5% of the outstanding Common Stock, determined in accordance with Rule
13d-3 of the SEC based on information furnished by them. Unless otherwise
indicated, all information is presented as of January 20, 1998, and all shares
indicated as beneficially owned are held with sole voting and investment
power.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED OF CLASS
---------------- ------------------ --------
<S> <C> <C>
Gotham Partners, L.P. 878,000(1) 8.6%
Gotham Partners II, L.P.
Gotham International Advisors, L.L.C.
110 East 42nd Street, 18th Floor
New York, New York 10017
</TABLE>
- ---------
(1) Based on the Schedule 13D dated January 20, 1998 filed jointly by Gotham
Partners, L.P., Gotham Partners II, L.P., and Gotham International
Advisors, L.L.C. with the SEC. According to the Schedule 13D, Gotham
Partners, L.P. is the beneficial owner of 739,714 of the shares, Gotham
Partners II, L.P. is the beneficial owner of 6,586 of the shares, and
Gotham International Advisors, L.L.C. is the beneficial owner of 131,700
of the shares. William A. Ackman and David P. Berkowitz each owns,
respectively, two entities that are the sole general partners in the
partnership that is the sole general partner in Gotham Partners, L.P. and
Gotham Partners II, L.P. Messrs. Ackman and Berkowitz are the senior
managing members of Gotham International Advisors, L.L.C.
------------------
EXECUTIVE OFFICER COMPENSATION
Throughout 1997, each of the Company's executive officers, including Robert
M. Wohleber, its President and Chief Executive Officer, was employed by other
entities or self-employed and performed duties for the Company in accordance
with a Services Agreement dated December 23, 1997 between the Company and a
corporation in which the Company owns a 25% equity interest (the "Services
Company"). Under the Services Agreement, the Services Company provides the
Company with executive, technical, administrative, accounting, financial, tax
and other services and the Company pays the Services Company (i) the expenses
incurred by the Services Company that are readily identifiable as having been
incurred on behalf of the Company, (ii) the cost of goods, services and other
items paid by the Services Company on behalf of the Company, and (iii) an
allocable portion of all other expenses incurred by the Services Company in
connection with providing services to the Company. The Company paid the
Services Company approximately $200,000 under the Services Agreement for
services rendered from December 23 to December 31, 1997.
8
<PAGE>
The amount of compensation that each of the Company's executive officers
earned after the Spin-Off and that was allocated to the Company pursuant to
the Services Agreement was less than $100,000. The following table shows
compensation that was earned by Messrs. Wohleber, Moffett and Adkerson after
the Spin-Off on December 22, 1997 and allocated to the Company pursuant to the
Services Agreement. For information with respect to Mr. Latiolais' consulting
arrangement, see "Certain Transactions" below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
-------------------------------- ------------
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
------------------ ---- ------ ------ --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Wohleber 1997 $6,164 $7,767(3) $101 109,694 $224
President and
Chief Executive Officer
James R. Moffett 1997 1,541 -- 65 126,937 115
Co-Chairman of the
Board
Richard C. Adkerson 1997 1,320 -- 100 75,862 102(4)
Vice Chairman of the
Board
</TABLE>
- ---------
(1) Consists of payment of taxes in connection with certain benefits provided
to the listed officers. Does not include perquisites provided to the
listed officers in 1997, the aggregate amount of which did not exceed
$50,000 for any officer.
(2) Comprised of contributions to defined contribution plans and premium
payments for universal life insurance policies as follows:
<TABLE>
<CAPTION>
LIFE
PLAN INSURANCE
NAME CONTRIBUTIONS PREMIUMS
---- ------------- ---------
<S> <C> <C>
Mr. Wohleber $224 $--
Mr. Moffett 78 37
Mr. Adkerson 66 14
</TABLE>
(3) The amount of the bonus was determined by FTX and, prior to the Merger,
FTX transferred to the Company funds equal to that amount. For additional
information concerning Company bonuses, see "Corporate Personnel
Committee Report on Executive Compensation" below.
(4) Includes $22 for a scholarship provided for the benefit of Mr. Adkerson's
child.
------------------
9
<PAGE>
The following table sets forth information with respect to the grant of
stock options to Messrs. Wohleber, Moffett, Adkerson and Latiolais during
1997.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED (1) 1997 PRICE DATE VALUE
---- ---------- ------------ -------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Robert M. Wohleber 465(2) .06% $6.9850 May 3, 1999 $ 2,390(3)
465(2) .06% 6.7824 Nov. 7, 2000 2,720(3)
659(2) .08% 7.6406 May 5, 2002 3,769(3)
691(2) .09% 6.9990 Dec. 7, 2003 4,581(3)
864(2) .11% 7.4799 May 3, 2004 5,599(3)
211(2) .03% 13.7910 April 30, 2006 893(3)
6,339(2) .80% 10.9150 April 29, 2007 36,259(3)
100,000(4) 12.65% 11.5625 Dec. 23, 2007 562,000(5)
James R. Moffett 7,205(2) .91% 7.4319 Aug. 4, 2002 43,518(3)
69,732(2) 8.82% 13.1309 May 14, 2006 311,702(3)
50,000(4) 6.32% 11.5625 Dec. 23, 2007 281,000(5)
Richard C. Adkerson 1,442(2) .18% 7.4319 Aug. 4, 2002 8,710(3)
1,591(2) .20% 6.9990 Dec. 7, 2003 10,548(3)
3,811(2) .48% 7.4799 May 3, 2004 24,695(3)
19,018(2) 2.41% 13.1309 May 14, 2006 85,010(3)
50,000(4) 6.32% 11.5625 Dec. 23, 2007 281,000(5)
Rene L. Latiolais 12,967(2) 1.64% 7.4319 Aug. 4, 2002 78,321(3)
4,771(2) .60% 6.9990 Dec. 7, 2003 31,632(3)
81,353(2) 10.29% 13.1309 May 14, 2006 363,648(3)
25,000(4) 3.16% 11.5625 Dec. 23, 2007 140,500(5)
</TABLE>
- ---------
(1) Each stock option has an equal number of tandem "limited rights," which
may be exercisable only for a limited period in the event of a tender
offer, exchange offer, a series of purchases or other acquisitions or any
combination thereof resulting in a person or group of persons becoming a
beneficial owner of shares representing 40% or more of the Company's total
voting power. Each limited right entitles the holder to receive cash equal
to the amount by which the highest price paid in such transaction exceeds
the exercise price.
(2) The options were granted pursuant to the Company's Adjusted Stock Award
Plan and were immediately exercisable upon grant. See "Adjusted Stock
Award Plan" above.
10
<PAGE>
(3) The Black-Scholes option pricing model was used to determine the grant date
present value of the options that the Company granted to the listed
officers. The following facts and assumptions were used in making this
calculation: (a) an exercise price for each option as set forth under the
column labeled "Exercise Price"; (b) a fair market value of $11.5625 for
one share of Common Stock on the grant date; (c) a term for options as set
forth under the column labeled "Expiration Date"; (d) a stock volatility of
21.2%, based on an analysis of weekly closing stock prices of FTX common
stock over a 78-week period ending before the announcement in July, 1997,
of the Merger; and (e) an assumed risk-free interest rate that ranges from
5.67% to 5.83%, each rate being equivalent to the yield on the grant date
on a treasury note with a maturity date comparable to the expiration date
of the options. No other discounts or restrictions related to vesting or
the likelihood of vesting of the options were applied. The resulting grant
date present value for the options was multiplied by the total number of
shares covered by the options granted to the listed officers.
(4) The options will become exercisable over a four-year period. The options
will become immediately exercisable in their entirety if (a) any person or
group of persons acquires beneficial ownership of shares representing 20%
or more of the Company's total voting power or (b) under certain
circumstances, the composition of the Board of Directors is changed after a
tender offer, exchange offer, merger, consolidation, sale of assets or
contested election or any combination thereof. The options granted to each
of the listed officers may be transferred by him during his lifetime to his
immediate family members or certain entities owned by or for the benefit of
his immediate family members or pursuant to a domestic relations order.
(5) The Black-Scholes option pricing model was used to determine the grant date
present value of the options that the Company granted to the listed
officers. Under the Black-Scholes option pricing model, the grant date
present value of the options was calculated to be $5.62. The following
facts and assumptions were used in making this calculation: (a) an exercise
price for each option of $11.5625; (b) a fair market value of $11.5625 for
one share of Common Stock on the grant date; (c) a term for options as set
forth under the column labeled "Expiration Date"; (d) a stock volatility of
21.2%, based on an analysis of weekly closing stock prices of FTX common
stock over a 78-week period ending before the announcement in July, 1997,
of the Merger; and (e) an assumed risk-free interest rate of 5.83%, this
rate being equivalent to the yield on the grant date on a treasury note
with a maturity date comparable to the expiration date of the options. No
other discounts or restrictions related to vesting or the likelihood of
vesting of the options were applied. The resulting grant date present value
for the options was multiplied by the total number of shares covered by the
options granted to the listed officers.
------------------
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The following table sets forth information with respect to all outstanding
Company stock options held by Messrs. Wohleber, Moffett, Adkerson and
Latiolais as of December 31, 1997. None of the listed officers exercised any
Company stock options during 1997.
OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
Robert M. Wohleber 9,694/100,000 $19,499/$18,750
James R. Moffett 76,937/ 50,000 $31,112/$ 9,375
Richard C. Adkerson 25,862/ 50,000 $30,059/$ 9,375
Rene L. Latiolais 99,091/ 25,000 $78,660/$ 4,688
</TABLE>
CORPORATE PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Corporate Personnel Committee is composed of two independent directors,
neither of whom is an officer or employee of the Company or any of its
subsidiaries. The Committee met once in 1997. The Committee determines the
compensation of the Company's Chief Executive Officer and other executives and
administers the Company's performance incentive awards program, adjusted stock
award plan and stock option plan.
James R. Moffett and Rene L. Latiolais are each Co-Chairman of the Board of
the Company; Richard C. Adkerson is Vice Chairman of the Board of the Company;
and Robert M. Wohleber is President and Chief Executive Officer of the
Company. During 1997, Messrs. Moffett, Latiolais, Adkerson, and Wohleber
provided services to the Company pursuant to a services agreement between the
Company and the Services Company. Messrs. Moffett, Latiolais, Adkerson, and
Wohleber participate in the Company's stock option plan and adjusted stock
award plan.
Under the Company's performance incentive awards program, the Committee
determines the amount of annual cash incentives or bonuses for certain key
executives of the Company. Each executive employed by the Company is assigned
a guideline amount, expressed as a percentage of base salary, which generally
will be paid if Company performance and individual performance for the year
meet expectations set for that year.
In connection with the Merger, which occurred on December 22, 1997, the
shares of the Company's common stock were distributed to FTX's former
stockholders and to the public unitholders of PLP. Following the Merger, the
Company's common stock commenced trading on the New York Stock Exchange and
the Company began operations as an independent public company. The FTX
Corporate Personnel Committee at its last meeting on December 9, 1997,
established the
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total amount available for incentive awards in 1997 for participants in the
Company's performance incentive awards program and, prior to the Merger, FTX
transferred to the Company funds equal to the approved amount. Following the
Merger, the Committee approved the payment of the 1997 incentive awards to the
Company's performance incentive awards program participants.
The Company grants long-term incentives to executive officers in the form of
stock options. The stock option award guidelines are intended to provide a
significant potential value to reinforce the importance of shareholder value
creation. Stock option award guidelines for 1997 were established by the
Committee based upon the position level of each participating executive
officer.
In connection with the Merger, adjusted stock options were granted to
replace partially FTX stock options, stock appreciation rights and stock
incentive units that terminated as a result of the Merger. The number of
shares and exercise price of the adjusted options were based entirely upon the
number of shares and exercise price of the FTX stock awards being replaced.
The purpose of the grant of the adjusted options was to ensure that holders of
FTX stock awards were placed in an equivalent position as holders of FTX
common stock at the time of the Merger. The stock options granted to certain
executive officers during 1997, including the Co-Chairmen of the Board, the
Vice Chairman of the Board, and the President and Chief Executive Officer, are
shown in the table entitled "Option Grants in 1997."
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for compensation paid to certain highly compensated executive
officers. Qualified performance based compensation is excluded from this
deduction limitation if certain requirements are met. The Committee believes
that the stock options granted to executive officers, as discussed above,
qualify for the exclusion from the deduction limitation under Section 162(m).
The Board of Directors recommends that stockholders approve the 1997 Stock
Option Plan, which was designed to qualify compensation payable thereunder for
deductibility under Section 162(m). The Committee anticipates that the
components of individual executive compensation that do not qualify for an
exclusion from Section 162(m) should not exceed $1 million in any given year
and therefore will qualify for deductibility.
J. Terrell Brown, Chairman Thomas D. Clark, Jr.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Corporate Personnel Committee are
Messrs. Brown and Clark. In 1997, no Company executive officer served as a
director or member of the compensation committee of another entity, where one
of the other entity's executive officers served as a Company director or on
the Company's Corporate Personnel Committee.
CERTAIN TRANSACTIONS
Prior to the Spin-Off, Messrs. Adkerson, Latiolais, Moffett, Rankin, and
Wohleber were affiliates of FTX and PLP, which beneficially owned all the
Common Stock, and following the Spin-Off and Merger, Messrs. Latiolais and
Moffett joined the Board of Directors of IGL. In 1997, contemporaneously with
the execution of the agreement and plan of merger between FTX and IGL pursuant
to which the Merger was consummated, FTX, PLP and the Company entered into a
distribution agreement (the "Distribution Agreement"), pursuant to which PLP
contributed substantially all the assets used by PLP in the production,
marketing and distribution of sulphur and its oil and gas production
operations to the Company, and the Company assumed generally those liabilities
associated with the ownership, acquisition, conduct or past operation of the
assets received from PLP (the "Transferred Businesses"). In connection
therewith, PLP obtained all the issued and outstanding shares of Common Stock,
which it distributed in the PLP Distribution. The portion received by FTX was
subsequently distributed by FTX in the FTX Stockholder Distribution. The
Distribution Agreement provides that FTX and PLP, on the one hand, and the
Company, on the other hand, will indemnify one another against certain losses,
damages, claims and liabilities assumed or retained by the indemnifying party.
In 1997, the Company, FTX and PLP entered into an employee benefits
agreement (the "Employee Benefits Agreement") that provided for the transfer
to the Company of assets and liabilities pertaining to certain employee
benefits plans maintained by FTX for the benefit of FTX employees who
performed services to PLP in connection with the Transferred Businesses and
who became Company employees (the "Transferred Employees"). Assets sufficient
to fund the transferred qualified plan liabilities were transferred from the
FTX plans to the comparable Company plans, and assets sufficient to fund the
transferred non-qualified plan liabilities were transferred from FTX to the
Company. FTX paid the Company an amount to cover the liability that FTX
accrued prior to the Merger to pay post-retirement medical benefits for
Transferred Employees. FTX retained liability for retiree medical benefits for
employees who retired prior to the Merger, but the Company agreed to reimburse
FTX quarterly for a portion of those expenses for former employees who
provided services primarily for the Transferred Businesses. In addition, the
Company will reimburse FTX for claims and premiums related to "COBRA" coverage
for certain employees who lose medical coverage as a result of the Merger and
related transactions.
Pursuant to the Employee Benefits Agreement, certain outstanding stock
options, stock appreciation rights, and stock incentive units relating to FTX
common stock that had been granted
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under an FTX stock option or stock incentive plan were converted into, among
other things, a Company Option. For information with respect to Company
Options, see "Adjusted Stock Award Plan" above.
In accordance with the terms of the Employee Benefits Agreement, FTX
calculated, as of the date of the FTX Stockholder Distribution, its liability
under various non-qualified incentive plans in respect of the deferred
compensation of the Transferred Employees. In consideration of a cash payment
by FTX to the Company in an amount equal to that liability, the Company
assumed that liability in respect of the Transferred Employees. Similarly, FTX
determined the total amount of cash bonus payments that it would have made to
the Transferred Employees as a group under non-qualified incentive plans for
1997, and, in consideration of a cash payment by FTX to the Company in an
amount equal thereto, the Company assumed the payment of those amounts to the
Transferred Employees.
The Company and IMC-Agrico Company ("IMC-Agrico"), a joint venture between
IGL and PLP, are parties to a sulphur supply agreement (the "Sulphur Supply
Agreement"). At the time that the Sulphur Supply Agreement was negotiated and
executed, the Company was a wholly-owned subsidiary of PLP, which currently
owns a 41.45% interest in IMC-Agrico. Pursuant to the Sulphur Supply
Agreement, the Company has agreed to supply and IMC-Agrico has agreed to
purchase approximately 75% of IMC-Agrico's annual sulphur consumption for as
long as IMC-Agrico has an operational need for sulphur. The price per ton for
all sulphur delivered under this agreement is based upon the weighted average
market price for sulphur delivered by other sources to IMC-Agrico's New Wales
production plants in central Florida, except that the Company is entitled to a
premium with respect to approximately 40% of the sulphur that it delivers
under this agreement. IMC-Agrico also pays a portion of the freight costs
associated with the delivery of sulphur under this agreement.
The Company and MOXY, a corporation of which John G. Amato, General Counsel
of the Company, and Messrs. Moffett and Adkerson are executive officers, have
entered into an agreement effective as of the Spin-Off pursuant to which MOXY
will market all of the Company's oil and gas production.
In December 1997, the Services Company entered into an agreement pursuant to
which Mr. Latiolais will provide consulting services relating to the
businesses, operations, and prospects of the Company and other entities during
1998. Under this agreement, Mr. Latiolais will receive an annual fee of
$230,000, and reimbursement of reasonable out-of-pocket expenses incurred in
connection with rendering consulting services. Pursuant to this agreement, Mr.
Latiolais receives no annual fee for serving on the Board, no Board attendance
fees and no stock options under the 1997 Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, controller and beneficial owners of more than
10% of the Common Stock to file
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<PAGE>
certain beneficial ownership reports with the SEC. PLP, IGL (as successor in
interest to FTX), and FMRP Inc., formerly beneficial owners of more than 10%
of the Common Stock, failed to report timely after the Spin-Off two
transactions that occurred in 1997 in connection with the Distributions, which
were reported on an annual statement on Form 5.
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors seeks stockholder ratification of the Board's
appointment of Arthur Andersen LLP to act as the independent auditors of the
financial statements of the Company and its subsidiaries for the year 1998.
The Board has not determined what, if any, action would be taken should the
appointment of Arthur Andersen LLP not be ratified. One or more
representatives of Arthur Andersen LLP will be available at the Meeting to
respond to appropriate questions, and those representatives will also have an
opportunity to make a statement.
APPROVAL OF THE 1997 STOCK OPTION PLAN
The Board of Directors unanimously proposes that the stockholders approve
the 1997 Stock Option Plan (the "Stock Plan"), which is summarized below. The
summary is qualified in its entirety by reference to the text of the Stock
Plan, which is attached to this Proxy Statement as Exhibit A.
REASONS FOR THE PROPOSAL
The Stock Plan was adopted by the Board of Directors and approved by the
sole stockholder of the Company in 1997 prior to the Spin-Off. Pursuant to its
authority, the Corporate Personnel Committee granted in 1997 under the Stock
Plan non-qualified stock options to purchase a total of 367,000 shares of
Common Stock to 35 participants, including the Chief Executive Officer and
other executive officers of the Company. The non-qualified stock options
granted in 1997 are covered by binding and enforceable contracts and are not
subject to stockholder approval.
Under Section 162(m) of the Internal Revenue Code (the "Code"), the
allowable deduction for compensation paid or accrued with respect to the Chief
Executive Officer and the four other most highly compensated executive
officers of the Company is limited to $1 million per year. An exclusion from
the $1 million limitation is available for compensation that satisfies the
requirements provided in Section 162(m) of the Code for qualified performance-
based compensation. Awards granted under the Stock Plan will qualify as
performance-based compensation if, in addition to the satisfaction of other
requirements, the material terms of the performance goals are disclosed to and
approved by the stockholders. The purpose of submitting the Stock Plan to the
stockholders for approval is to satisfy the stockholder approval requirement
of Section 162(m) for future performance-based awards granted under the Stock
Plan. To meet this requirement and protect the Company's deduction for
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<PAGE>
performance-based compensation paid pursuant to future awards, the Company is
submitting the Stock Plan to the stockholders for approval. If the
stockholders do not approve the Stock Plan at the Meeting, no additional
awards will be made under the Stock Plan to the Chief Executive Officer and
other executive officers whose compensation is subject to deduction
limitations under Section 162(m).
SUMMARY OF THE STOCK PLAN
Administration
Awards under the Stock Plan are made by the Corporate Personnel Committee
(the "Committee"), which currently consists of two members of the Board, each
of whom is a "non-employee director" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Exchange Act") and qualifies as an
"outside director" under Section 162(m) of the Code. The Committee has full
power and authority to designate participants, set the terms of awards and to
make any determinations necessary or desirable for the administration of the
Stock Plan.
Eligible Participants
Employees and officers (whether or not employees) of the Company and its
existing or future subsidiaries, employees and officers (whether or not
employees) of any entity with which the Company has contracted to receive
executive, management or legal services and who provide services to the
Company under such arrangement, consultants, advisers and any person who has
agreed in writing to become a person otherwise eligible to participate within
not more than 30 days are eligible to participate in the Stock Plan. The
Committee has delegated to the Co-Chairmen of the Board and Chief Executive
Officer of the Company the power to make awards to eligible persons who are
not executive officers or directors of the Company, subject to the limitations
established by the Committee. It is anticipated that the Committee's
determinations of which eligible individuals will be granted awards and the
terms thereof will be based on each individual's present and potential
contribution to the success of the Company and its subsidiaries. Approximately
650 persons are eligible for awards under the Stock Plan; however, only 35
persons have outstanding awards under the Stock Plan.
Number of Shares
The maximum number of shares of Common Stock with respect to which awards
payable in shares of Common Stock may be granted under the Stock Plan is
1,000,000. Awards that may be paid only in cash are not counted against the
1,000,000-share limit. However, grants of stock appreciation rights, limited
rights and other stock-based awards not granted in tandem with options and
payable only in cash may relate to no more than 1,000,000 shares. No
individual may receive in
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<PAGE>
any year awards under the Stock Plan, whether payable in cash or shares, that
relate to more than 200,000 shares of Common Stock. Shares subject to awards
that are forfeited or cancelled will again be available for award. In
addition, to the extent that shares are delivered to pay the exercise price of
options or are delivered or withheld by the Company in payment of the
withholding taxes relating to an award under the Stock Plan, the number of
shares withheld or delivered will again be available for grant under the Stock
Plan. The shares to be delivered under the Stock Plan will be made available
from the authorized but unissued shares of Common Stock or from treasury
shares. Options with respect to 357,000 shares of Common Stock were granted in
1997 and are outstanding under the Stock Plan; thus, 643,000 shares of Common
Stock are presently available for future awards under the Stock Plan.
On March 19, 1998, the closing price of a share of Common Stock on the New
York Stock Exchange was $13.375.
Types of Awards
Stock options, stock appreciation rights, limited rights and other stock-
based awards may be granted under the Stock Plan in the discretion of the
Committee. Options granted under the Stock Plan may be either non-qualified or
incentive stock options. Only employees of the Company and its subsidiaries
will be eligible to receive incentive stock options. Stock appreciation rights
and limited rights may be granted in conjunction with or unrelated to other
awards and, if in conjunction with an outstanding option or other award, may
be granted at the time of the award or thereafter, at the exercise price of
the other award. The Committee has discretion to fix the exercise price of
options, stock appreciation rights and limited rights at a price not less than
100% of the fair market value of the underlying Common Stock at the time of
grant (or at the time of grant of the related award in the case of a stock
appreciation right or limited right granted in conjunction with an outstanding
award), except that this limitation on the Committee's discretion does not
apply in the case of awards granted in substitution for outstanding awards
previously granted by an acquired company or a company with which the Company
combines. The Committee has broad discretion as to the terms and conditions
upon which options and stock appreciation rights are exercisable, but under no
circumstances will an option, a stock appreciation right or a limited right
have a term exceeding ten years.
The option exercise price may be satisfied in cash, or in the discretion of
the Committee, by exchanging Common Stock owned by the optionee or by a
combination of cash and Common Stock. The ability to pay the option exercise
price in Common Stock would permit an optionee to engage in a series of
successive stock-for-stock exercises of an option (sometimes referred to as
"pyramiding") and thereby fully exercise an option with little or no cash
investment; however, the Committee's current policy requires any stock
tendered in payment of the exercise price of an option to be in certificated
form and to have been held by the exercising optionee for such time as is
sufficient to avoid any adverse accounting consequences to the Company
resulting from the permitting of stock-for-stock exercises.
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<PAGE>
Upon the exercise of a stock appreciation right with respect to Common
Stock, a participant would be entitled to receive, for each share subject to
the right, the excess of the fair market value of the shares on the exercise
date over the exercise price of the right. The Committee has the authority to
determine whether the value of a stock appreciation right is paid in cash or
Common Stock or a combination thereof.
Limited rights generally are exercisable only during a period beginning not
earlier than one day and ending not later than 90 days after the expiration
date of any tender offer, exchange offer or similar transaction that results
in any person or group becoming the beneficial owner of more than 40% of all
classes and series of the Company's stock outstanding, taken as a whole that
have voting rights with respect to the election of directors of the Company
(not including preferred shares which may be issued in the future that have
the right to elect directors only if the Company fails to pay dividends). Upon
the exercise of a limited right granted under the Stock Plan, a participant
would be entitled to receive, for each share of Common Stock subject to the
right, the excess, if any, of the highest price paid in or in connection with
the transaction over the grant price of the limited right.
The Stock Plan also authorizes the Committee to grant to participants awards
of Common Stock and other awards that are denominated in, payable in, valued
in whole or in part by reference to, or are otherwise based on the value of,
Common Stock ("Other Stock-Based Awards"). The Committee has discretion to
determine the participants to whom Other Stock-Based Awards are to be made,
the times at which these awards are to be made, the size of these awards, the
form of payment, and all other conditions of these awards, including any
restrictions, deferral periods or performance requirements. The terms of the
Other Stock-Based Awards will be subject to rules and regulations as the
Committee determines.
Any award under the Stock Plan may provide that the participant has the
right to receive currently or on a deferred basis dividends or dividend
equivalents or other cash payments in addition to or in lieu of such awards,
all as the Committee determines.
Transferability
No award granted under the Stock Plan may be transferred, pledged, assigned,
or encumbered except by will, by the laws of descent and distribution, or, if
permitted by the Committee, pursuant to a domestic relations order, as defined
in the Code. If permitted by the Committee, stock options and limited rights
granted in tandem with stock options under the Stock Plan may also be
transferred or assigned by the grantee to immediate family members of the
grantee or certain entities owned by or for the benefit of immediate family
members of the grantee.
Adjustments
If the Committee determines that any dividend or other distribution (whether
in the form of Common Stock, cash, securities or other property),
recapitalization, stock split, reverse stock split,
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reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of shares, issuance of warrants or other rights to
purchase shares or other securities of the Company, or other similar corporate
event affects the Common Stock such that an adjustment is appropriate to
preserve or prevent enlargement of the benefits intended under the Stock Plan,
then the Committee has discretion to (i) make equitable adjustments in (a) the
number and kind of shares that may be the subject of future awards under the
Stock Plan and (b) the number and kind of shares (or other securities or
property) subject to outstanding awards and the respective grant or exercise
prices thereof and (ii) if appropriate, provide for the payment of cash to a
participant.
Amendment or Termination
The Stock Plan may be amended or terminated at any time by the Board of
Directors, except that no amendment may be made without stockholder approval
if such approval is necessary to comply with any tax or regulatory
requirement, including any approval that is necessary to qualify awards as
"performance-based" compensation under Section 162(m) of the Code, if deemed
advisable by the Committee.
FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTIONS
Generally, the grant of a stock option under the Stock Plan will not result
in any tax consequence to the participant or the Company. When an optionee
exercises a non-qualified option, the difference between the exercise price
and any higher fair market value of the Common Stock on the date of exercise
will be ordinary income to the optionee (subject to withholding) and, subject
to Section 162(m) of the Code, will generally be allowed as a deduction at
that time for federal income tax purposes to the Company.
Any gain or loss realized by an optionee on disposition of the Common Stock
acquired upon exercise of a non-qualified option will generally be capital
gain or loss to the optionee, long-term or short-term depending on the holding
period, and will not result in any additional federal income tax consequences
to the Company. The optionee's basis in the Common Stock for determining gain
or loss on the disposition will be the fair market value of the Common Stock
determined generally at the time of exercise.
When an optionee exercises an incentive stock option while employed by the
Company or a subsidiary or within three months (one year for disability) after
termination of employment, no ordinary income will be recognized by the
optionee at that time, but the excess (if any) of the fair market value of the
Common Stock acquired upon such exercise over the option price will be an
adjustment to taxable income for purposes of the federal alternative minimum
tax applicable to individuals. If the Common Stock acquired upon exercise of
the incentive stock option is not disposed of prior to the expiration of one
year after the date of acquisition and two years after the date of grant of
the option, the excess (if any) of the sale proceeds over the aggregate option
exercise
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price of the Common Stock will be long-term capital gain, but the Company will
not be entitled to any tax deduction with respect to the gain. Generally, if
the Common Stock is disposed of prior to the expiration of those periods (a
"Disqualifying Disposition"), the excess of the fair market value of the
Common Stock at the time of exercise over the aggregate option exercise price
(but not more than the gain on the disposition if the disposition is a
transaction on which a loss, if realized, would be recognized) will be
ordinary income at the time of such Disqualifying Disposition (and the Company
will generally be entitled to a federal income tax deduction in a like
amount). Any gain realized by the optionee as the result of a Disqualifying
Disposition that exceeds the amount treated as ordinary income will be capital
in nature, long-term or short-term depending on the holding period. If an
incentive stock option is exercised more than three months (one year for
disability) after termination of employment, the federal income tax
consequences are the same as described above for non-qualified stock options.
If the exercise price of an option is paid by the surrender of previously
owned shares, the basis of the previously owned shares carries over to the
shares received in replacement. If the option is a non-qualified option, the
income recognized on exercise is added to the basis. If the option is an
incentive stock option, the optionee will recognize gain if the shares
surrendered were acquired through the exercise of an incentive stock option
and have not been held for the applicable holding period. This gain will be
added to the basis of the shares received in replacement of the previously
owned shares.
If the Stock Plan is approved by the stockholders at the Meeting, the
Company believes that taxable compensation arising in connection with all
stock options granted under the Stock Plan should be fully deductible to the
Company for purposes of Section 162(m) of the Code. Section 162(m) may limit
the deductibility of an executive's compensation in excess of $1,000,000 per
year.
Awards under the Stock Plan that are granted, accelerated or enhanced upon
the occurrence of a change of control may give rise, in whole or in part, to
excess parachute payments within the meaning of Section 280G of the Code to
the extent that such payments, when aggregated with other payments subject to
Section 280G, exceed the limitations contained therein. Excess parachute
payments will be nondeductible to the Company and subject the recipient of the
payments to a 20% excise tax.
If permitted by the Committee, at any time that a participant is required to
pay to the Company the amount required to be withheld under applicable tax
laws in connection with the exercise of a stock option, the participant may
elect to have the Company withhold from the shares that the participant would
otherwise receive shares of Common Stock having a value equal to the amount to
be withheld. This election must be made prior to the date on which the amount
of tax to be withheld is determined.
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The foregoing discussion summarizes the federal income tax consequences
applicable to stock options granted under the Stock Plan based on current
provisions of the Code, which are subject to change. This summary does not
cover any foreign, state or local tax consequences or participation in the
Stock Plan.
AWARDS TO BE GRANTED
The grant of future awards under the Stock Plan is entirely in the
discretion of the Committee. The Committee has not yet made a determination as
to the awards to be granted in the future under the Stock Plan.
VOTE REQUIRED FOR APPROVAL OF THE STOCK PLAN
Approval of the Stock Plan requires the affirmative vote of a majority of
the shares of Common Stock present and entitled to vote at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
STOCK PLAN.
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EXHIBIT A
FREEPORT-MCMORAN SULPHUR INC.
1997 STOCK OPTION PLAN
SECTION 1
Purpose. The purpose of the Freeport-McMoRan Sulphur Inc. 1997 Stock Option
Plan (the "Plan") is to motivate and reward key employees, consultants and
advisers by giving them a proprietary interest in the Company's continued
success.
SECTION 2
Definitions. As used in the Plan, the following terms shall have the
meanings set forth below:
"Award" shall mean any Option, Stock Appreciation Right, Limited Right or
Other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean a committee of the Board designated by the Board
to administer the Plan and composed of not fewer than two directors, each
of whom, to the extent necessary to comply with Rule 16b-3 only, is a "non-
employee director" within the meaning of Rule 16b-3 and, to the extent
necessary to comply with Section 162(m) only, is an "outside director"
under Section 162(m). Until otherwise determined by the Board, the
Committee shall be the Corporate Personnel Committee of the Board.
"Company" shall mean Freeport-McMoRan Sulphur Inc.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive the
benefits due the Participant under the Plan in the event of the
Participant's death. In the absence of an effective designation by the
Participant, Designated Beneficiary shall mean the Participant's estate.
"Eligible Individual" shall mean (i) any person providing services as an
officer of the Company or a Subsidiary, whether or not employed by such
entity, including any such person who is also a director of the Company,
(ii) any employee of the Company or a Subsidiary, including any director
who is also an employee of the Company or a Subsidiary, (iii) any officer
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or employee of an entity with which the Company has contracted to receive
executive, management or legal services who provides services to the
Company or a Subsidiary through such arrangement, (iv) any consultant or
adviser to the Company, a Subsidiary or to an entity described in clause
(iii) hereof who provides services to the Company or a Subsidiary through
such arrangement and (v) any person who has agreed in writing to become a
person described in clauses (i), (ii), (iii) or (iv) within not more than
30 days following the date of grant of such person's first Award under the
Plan.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Incentive Stock Option" shall mean an option granted under Section 6 of
the Plan that is intended to meet the requirements of Section 422 of the
Code or any successor provision thereto.
"Limited Right" shall mean any right granted under Section 8 of the Plan.
"Nonqualified Stock Option" shall mean an option granted under Section 6
of the Plan that is not intended to be an Incentive Stock Option.
"Offer" shall mean any tender offer, exchange offer or series of
purchases or other acquisitions, or any combination of those transactions,
as a result of which any person, or any two or more persons acting as a
group, and all affiliates of such person or persons, shall beneficially own
more than 40% of all classes and series of the Company's stock outstanding,
taken as a whole, that has voting rights with respect to the election of
directors of the Company (not including any series of preferred stock of
the Company that has the right to elect directors only upon the failure of
the Company to pay dividends).
"Offer Price" shall mean the highest price per Share paid in any Offer
that is in effect at any time during the period beginning on the ninetieth
day prior to the date on which a Limited Right is exercised and ending on
and including the date of exercise of such Limited Right. Any securities or
property that comprise all or a portion of the consideration paid for
Shares in the Offer shall be valued in determining the Offer Price at the
higher of (i) the valuation placed on such securities or property by the
person or persons making such Offer, or (ii) the valuation, if any, placed
on such securities or property by the Committee or the Board.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.
"Other Stock-Based Award" shall mean any right or award granted under
Section 9 of the Plan.
"Participant" shall mean any Eligible Individual granted an Award under
the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
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"Rule 16b-3" shall mean Rule 16b-3 under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time.
"SAR" shall mean any Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange Commission, including the
staff thereof, or any successor thereto.
"Section 162(m)" shall mean Section 162(m) of the Code and all
regulations promulgated thereunder as in effect from time to time.
"Shares" shall mean the shares of Common Stock, par value $0.01 per
share, of the Company and such other securities of the Company or a
Subsidiary as the Committee may from time to time designate.
"Stock Appreciation Right" shall mean any right granted under Section 7
of the Plan.
"Subsidiary" shall mean (i) any corporation or other entity in which the
Company possesses directly or indirectly equity interests representing at
least 50% of the total ordinary voting power or at least 50% of the total
value of all classes of equity interests of such corporation or other
entity and (ii) any other entity in which the Company has a direct or
indirect economic interest that is designated as a Subsidiary by the
Committee.
SECTION 3
(a) Administration. The Plan shall be administered by the Committee. Subject
to the terms of the Plan and applicable law, and in addition to other express
powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to an Eligible
Individual; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, whole Shares, other whole securities, other
Awards, other property or other cash amounts payable by the Company upon the
exercise of that or other Awards, or canceled, forfeited or suspended and the
method or methods by which Awards may be settled, exercised, canceled,
forfeited or suspended; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other property,
and other amounts payable by the Company with respect to an Award shall be
deferred either automatically or at the election of the holder thereof or of
the Committee; (vii) interpret and administer the Plan and any instrument or
agreement relating to, or Award made under, the Plan; (viii) establish, amend,
suspend or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and (ix)
make any other determination and take any other action that the
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Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive and binding upon all
Persons, including the Company, any Subsidiary, any Participant, any holder or
beneficiary of any Award, any stockholder of the Company and any Eligible
Individual.
(b) Delegation. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers of the Company the authority,
subject to such terms and limitations as the Committee shall determine, to
grant Awards to, or to cancel, modify or waive rights with respect to, or to
alter, discontinue, suspend, or terminate Awards held by, Eligible Individuals
who are not officers or directors of the Company for purposes of Section 16 of
the Exchange Act, or any successor section thereto, or who are otherwise not
subject to such Section.
SECTION 4
Eligibility. Any Eligible Individual shall be eligible to be granted an
Award.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as provided in
Section 5(b):
(i) Calculation of Number of Shares Available.
(A) The number of Shares with respect to which Awards payable in
Shares may be granted under the Plan shall be 1,000,000. Awards that by
their terms may be settled only in cash shall not be counted against
the maximum number of Shares provided herein.
(B) Grants of Stock Appreciation Rights, Limited Rights and Other
Stock-Based Awards not granted in tandem with Options and payable only
in cash may relate to no more than 1,000,000 Shares.
(C) Any Shares granted under the Plan that are forfeited because of
failure to meet an Award contingency or condition shall again be
available for grant pursuant to new Awards under the Plan.
(D) To the extent any Shares covered by an Award are not issued
because the Award is forfeited or cancelled or the Award is settled in
cash, such Shares shall again be available for grant pursuant to new
Awards under the Plan.
(E) To the extent that Shares are delivered to pay the exercise price
of an Option or are delivered or withheld by the Company in payment of
the withholding taxes relating to
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an Award, the number of Shares so delivered or withheld shall become
Shares with respect to which Awards may be granted.
(ii) Substitute Awards. Any Shares delivered by the Company, any Shares
with respect to which Awards are made by the Company, or any Shares with
respect to which the Company becomes obligated to make Awards, through the
assumption of, or in substitution for, outstanding awards previously
granted by an acquired company or a company with which the Company
combines, shall not be counted against the Shares available for Awards
under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist of authorized and unissued Shares or of
treasury Shares, including Shares held by the Company or a Subsidiary and
Shares acquired in the open market or otherwise obtained by the Company or
a Subsidiary.
(iv) Individual Limit. Any provision of the Plan to the contrary
notwithstanding, no individual may receive in any year Awards under the
Plan, whether payable in cash or Shares, that relate to more than 200,000
Shares.
(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares,
Subsidiary securities, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is determined
by the Committee to be appropriate to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee may, in its sole discretion and in such manner as it may
deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) with respect to which Awards may be granted,
(ii) the number and type of Shares (or other securities or property) subject
to outstanding Awards, and (iii) the grant or exercise price with respect to
any Award and, if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award and, if deemed appropriate, adjust outstanding
Awards to provide the rights contemplated by Section 9(b) hereof; provided, in
each case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would cause
the Plan to violate Section 422(b)(1) of the Code or any successor provision
thereto and, with respect to all Awards under the Plan, no such adjustment
shall be authorized to the extent that such authority would be inconsistent
with the requirements for full deductibility under Section 162(m); and
provided further, that the number of Shares subject to any Award denominated
in Shares shall always be a whole number.
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SECTION 6
(a) Stock Options. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Eligible Individuals
to whom Options shall be granted, the number of Shares to be covered by each
Option, the option price therefor and the conditions and limitations
applicable to the exercise of the Option. The Committee shall have the
authority to grant Incentive Stock Options, Nonqualified Stock Options or
both. In the case of Incentive Stock Options, the terms and conditions of such
grants shall be subject to and comply with such rules as may be required by
Section 422 of the Code, as from time to time amended, and any implementing
regulations. Except in the case of an Option granted in assumption of or
substitution for an outstanding award of a company acquired by the Company or
with which the Company combines, the exercise price of any Option granted
under this Plan shall not be less than 100% of the fair market value of the
underlying Shares on the date of grant.
(b) Exercise. Each Option shall be exercisable at such times and subject to
such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter, provided, however,
that in no event may any Option granted hereunder be exercisable after the
expiration of 10 years after the date of such grant. The Committee may impose
such conditions with respect to the exercise of Options, including without
limitation, any condition relating to the application of Federal or state
securities laws, as it may deem necessary or advisable.
(c) Payment. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by the
Company. Such payment may be made in cash, or its equivalent, or, if and to
the extent permitted by the Committee, by applying cash amounts payable by the
Company upon the exercise of such Option or other Awards by the holder thereof
or by exchanging whole Shares owned by such holder (which are not the subject
of any pledge or other security interest), or by a combination of the
foregoing, provided that the combined value of all cash, cash equivalents,
cash amounts so payable by the Company upon exercises of Awards and the fair
market value of any such whole Shares so tendered to the Company, valued (in
accordance with procedures established by the Committee) as of the effective
date of such exercise, is at least equal to such option price.
SECTION 7
(a) Stock Appreciation Rights. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Eligible
Individuals to whom Stock Appreciation Rights shall be granted, the number of
Shares to be covered by each Award of Stock Appreciation Rights, the grant
price thereof and the conditions and limitations applicable to the exercise
thereof. Stock Appreciation Rights may be granted in tandem with another
Award, in addition to another Award, or freestanding and unrelated to any
other Award. Stock Appreciation Rights granted in tandem with or
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in addition to an Option or other Award may be granted either at the same time
as the Option or other Award or at a later time. Stock Appreciation Rights
shall not be exercisable after the expiration of 10 years after the date of
grant. Except in the case of a Stock Appreciation Right granted in assumption
of or substitution for an outstanding award of a company acquired by the
Company or with which the Company combines, the grant price of any Stock
Appreciation Right granted under this Plan shall not be less than 100% of the
fair market value of the Shares covered by such Stock Appreciation Right on
the date of grant or, in the case of a Stock Appreciation Right granted in
tandem with a then outstanding Option or other Award, on the date of grant of
such related Option or Award.
(b) A Stock Appreciation Right shall entitle the holder thereof to receive
upon exercise, for each Share to which the SAR relates, an amount equal to the
excess, if any, of the fair market value of a Share on the date of exercise of
the Stock Appreciation Right over the grant price. Any Stock Appreciation
Right shall be settled in cash, unless the Committee shall determine at the
time of grant of a Stock Appreciation Right that it shall or may be settled in
cash, Shares or a combination of cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Eligible Individuals
to whom Limited Rights shall be granted, the number of Shares to be covered by
each Award of Limited Rights, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Limited Rights may be granted
in tandem with another Award, in addition to another Award, or freestanding
and unrelated to any Award. Limited Rights granted in tandem with or in
addition to an Award may be granted either at the same time as the Award or at
a later time. Limited Rights shall not be exercisable after the expiration of
10 years after the date of grant and shall only be exercisable during a period
determined at the time of grant by the Committee beginning not earlier than
one day and ending not more than ninety days after the expiration date of an
Offer. Except in the case of a Limited Right granted in assumption of or
substitution for an outstanding award of a company acquired by the Company or
with which the Company combines, the grant price of any Limited Right granted
under this Plan shall not be less than 100% of the fair market value of the
Shares covered by such Limited Right on the date of grant or, in the case of a
Limited Right granted in tandem with a then outstanding Option or other Award,
on the date of grant of such related Option or Award.
(b) A Limited Right shall entitle the holder thereof to receive upon
exercise, for each Share to which the Limited Right relates, an amount equal
to the excess, if any, of the Offer Price on the date of exercise of the
Limited Right over the grant price. Any Limited Right shall be settled in
cash, unless the Committee shall determine at the time of grant of a Limited
Right that it shall or may be settled in cash, Shares or a combination of cash
and Shares.
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SECTION 9
(a) Other Stock-Based Awards. The Committee is hereby authorized to grant to
Eligible Individuals an "Other Stock-Based Award", which shall consist of an
Award, the value of which is based in whole or in part on the value of Shares,
that is not an instrument or Award specified in Sections 6 through 8 of this
Plan. Other Stock-Based Awards may be awards of Shares or may be denominated
or payable in, valued in whole or in part by reference to, or otherwise based
on or related to, Shares (including, without limitation, securities
convertible or exchangeable into or exercisable for Shares), as deemed by the
Committee consistent with the purposes of the Plan. The Committee shall
determine the terms and conditions of any such Other Stock-Based Award and may
provide that such awards would be payable in whole or in part in cash. Except
in the case of an Other Stock-Based Award granted in assumption of or in
substitution for an outstanding award of a company acquired by the Company or
with which the Company combines, the price at which securities may be
purchased pursuant to any Other Stock-Based Award granted under this Plan, or
the provision, if any, of any such Award that is analogous to the purchase or
exercise price, shall not be less than 100% of the fair market value of the
securities to which such Award relates on the date of grant.
(b) Dividend Equivalents. In the sole and complete discretion of the
Committee, an Award, whether made as an Other Stock-Based Award under this
Section 9 or as an Award granted pursuant to Sections 6 through 8 hereof, may
provide the holder thereof with dividends or dividend equivalents, payable in
cash, Shares, Subsidiary securities, other securities or other property on a
current or deferred basis.
SECTION 10
(a) Amendments to the Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that no amendment shall be
made without stockholder approval if such approval is necessary to comply with
any tax or regulatory requirement, including for these purposes any approval
necessary to qualify Awards as "performance based" compensation under Section
162(m) or any successor provision if such qualification is deemed necessary or
advisable by the Committee. Notwithstanding anything to the contrary contained
herein, the Committee may amend the Plan in such manner as may be necessary
for the Plan to conform with local rules and regulations in any jurisdiction
outside the United States.
(b) Amendments to Awards. The Committee may amend, modify or terminate any
outstanding Award at any time prior to payment or exercise in any manner not
inconsistent with the terms of the Plan, including without limitation, to
change the date or dates as of which an Award becomes exercisable.
Notwithstanding the foregoing, no amendment, modification or termination may
impair the rights of a holder of an Award under such Award without the consent
of the holder.
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(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 5(b) hereof) affecting the Company, or the
financial statements of the Company or any Subsidiary, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan.
(d) Cancellation. Any provision of this Plan or any Award Agreement to the
contrary notwithstanding, the Committee may cause any Award granted hereunder
to be canceled in consideration of a cash payment or alternative Award made to
the holder of such canceled Award equal in value to such canceled Award. The
determinations of value under this subparagraph shall be made by the Committee
in its sole discretion.
SECTION 11
(a) Award Agreements. Each Award hereunder shall be evidenced by a writing
delivered to the Participant that shall specify the terms and conditions
thereof and any rules applicable thereto, including but not limited to the
effect on such Award of the death, retirement or other termination of
employment of the Participant and the effect thereon, if any, of a change in
control of the Company.
(b) Withholding. (i) A Participant may be required to pay to the Company,
and the Company shall have the right to deduct from all amounts paid to a
Participant (whether under the Plan or otherwise), any taxes required by law
to be paid or withheld in respect of Awards hereunder to such Participant. The
Committee may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting, exercise or payment
of any Award.
(ii) At any time that a Participant is required to pay to the Company an
amount required to be withheld under the applicable tax laws in connection
with the issuance of shares of Common Stock under the Plan, the Participant
may, if permitted by the Committee, satisfy this obligation in whole or in
part by electing (the "Election") to have the Company withhold from the
issuance shares of Common Stock having a value equal to the amount required
to be withheld. The value of the shares withheld shall be based on the fair
market value of the Common Stock on the date that the amount of tax to be
withheld shall be determined in accordance with applicable tax laws (the
"Tax Date").
(iii) Each Election must be made prior to the Tax Date. The Committee may
suspend or terminate the right to make Elections at any time.
(iv) A Participant may also satisfy his or her total tax liability
related to the Award by delivering Shares owned by the Participant. The
value of the Shares delivered shall be based on the fair market value of
the Shares on the Tax Date.
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(c) Transferability. No Awards granted hereunder may be transferred,
pledged, assigned or otherwise encumbered by a Participant except: (i) by
will; (ii) by the laws of descent and distribution; (iii) pursuant to a
domestic relations order, as defined in the Code, if permitted by the
Committee and so provided in the Award Agreement or an amendment thereto; or
(iv) if permitted by the Committee and so provided in the Award Agreement or
an amendment thereto, Options and Limited Rights granted in tandem therewith
may be transferred or assigned (a) to Immediate Family Members, (b) to a
partnership in which Immediate Family Members, or entities in which Immediate
Family Members are the owners, members or beneficiaries, as appropriate, are
the partners, (c) to a limited liability company in which Immediate Family
Members, or entities in which Immediate Family Members are the owners, members
or beneficiaries, as appropriate, are the members, or (d) to a trust for the
benefit of Immediate Family Members; provided, however, that no more than a de
minimis beneficial interest in a partnership, limited liability company or
trust described in (b), (c) or (d) above may be owned by a person who is not
an Immediate Family Member or by an entity that is not beneficially owned
solely by Immediate Family Members. "Immediate Family Members" shall be
defined as the spouse and natural or adopted children or grandchildren of the
Participant and their spouses. To the extent that an Incentive Stock Option is
permitted to be transferred during the lifetime of the Participant, it shall
be treated thereafter as a Nonqualified Stock Option. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of Awards, or
levy of attachment or similar process upon Awards not specifically permitted
herein, shall be null and void and without effect. The designation of a
Designated Beneficiary shall not be a violation of this Section 11(c).
(d) Share Certificates. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall
be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the SEC, any stock exchange upon which such Shares or
other securities are then listed, and any applicable federal or state laws,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(e) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company from adopting or continuing in effect other
compensation arrangements, which may, but need not, provide for the grant of
options, stock appreciation rights and other types of Awards provided for
hereunder (subject to stockholder approval of any such arrangement if approval
is required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(f) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of or as a
consultant or adviser to the Company or any Subsidiary or in the employ of or
as a consultant or adviser to any other entity providing services to the
Company. The Company or any Subsidiary or any such entity may at any time
dismiss a
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Participant from employment, or terminate any arrangement pursuant to which
the Participant provides services to the Company or a Subsidiary, free from
any liability or any claim under the Plan, unless otherwise expressly provided
in the Plan or in any Award Agreement. No Eligible Individual or other person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Eligible Individuals, Participants or holders or
beneficiaries of Awards.
(g) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware.
(h) Severability. If any provision of the Plan or any Award is or becomes or
is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from the Company
pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Company.
(j) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(k) Headings. Headings are given to the subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of the Plan or
any provision thereof.
SECTION 12
Term of the Plan. Subject to Section 10(a), the Plan shall remain in effect
until all Awards permitted to be granted under the Plan have either been
satisfied, expired or cancelled under the terms of the Plan and any
restrictions imposed on Shares in connection with their issuance under the
Plan have lapsed.
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FREEPORT-MCMORAN SULPHUR INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERS, MAY 12, 1998
The undersigned hereby appoints James R. Moffett, Richard C. Adkerson, and
Robert M. Wohleber as proxies, with full power of substitution, to vote the
shares of the undersigned in Freeport-McMoRan Sulphur Inc. at the Annual
Meeting of Stockholders to be held on Tuesday, May 12, 1998, at 11:00 a.m., and
at any adjournment thereof, on all matters coming before the meeting. THE
PROXIES WILL VOTE: (1) AS YOU SPECIFY ON THE BACK OF THIS CARD, (2) AS THE
BOARD OF DIRECTORS RECOMMENDS WHERE YOU DO NOT SPECIFY YOUR VOTE ON A MATTER
LISTED ON THE BACK OF THIS CARD, AND (3) AS THE PROXIES DECIDE ON ANY OTHER
MATTER.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY
IN THE ENCLOSED ENVELOPE
______________________________________________________________________
(continued on reverse side)
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^ FOLD AND DETACH HERE ^
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Please mark
your votes [X]
as indicated
in this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
FOR WITHHELD FOR AGAINST ABSTAIN
ITEM 1--Election of the nominees for directors. [ ] [ ] ITEM 2-- Ratification of appointment [ ] [ ] [ ]
Nominees for directors of Freeport-McMoRan of Arthur Andersen LLP as
Sulphur Inc. independent auditors.
J. Terrell Brown FOR AGAINST ABSTAIN
Rene L. Latiolais ITEM 3--Approval of the 1997 Stock [ ] [ ] [ ]
Option Plan.
[ ] FOR, EXCEPT WITHHELD FROM:
______________________________________________________________
(Write nominee name(s) in the space provided above to withhold authority.)
SIGNATURE(S)_________________________________________________________________________________ DATED:____________________ 1998
YOU MAY SPECIFY YOUR VOTES BY MARKING THE APPROPRIATE BOXES ABOVE. YOU NEED NOT MARK ANY BOXES, HOWEVER, IF YOU WISH TO VOTE ALL
ITEMS IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION. IF YOUR VOTES ARE NOT SPECIFIED, YOUR SHARES WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES FOR DIRECTORS AND FOR PROPOSALS 2 AND 3.
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</TABLE>
