FREEPORT MCMORAN INC, DEF 14A, 1994-03-31

FREEPORT MCMORAN INC
DEF 14A, 1994-03-31
AGRICULTURAL CHEMICALS

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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

[x] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

Freeport-McMoRan Inc.
(Name of Registrant as Specified In Its Charter)

Freeport-McMoRan Inc.
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

[_] 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:(1)
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(1) Set forth the amount on which the filing is calculated and state how it was
determined.

[_] 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:
------------------------------------------------------------------------

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[LOGO OF FREEPORT-MCMORAN INC. APPEARS HERE]

------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

MAY 3, 1994

------------------

March 31, 1994

The Annual Meeting of Stockholders of Freeport-McMoRan Inc. will be held at
the office of the corporation, 1615 Poydras Street, New Orleans, Louisiana, on
Tuesday, May 3, 1994, at 9:00 a.m., for the following purposes:

(1) To elect six of the sixteen directors to hold office for three years
and until their successors are respectively elected and qualified;

(2) To ratify the appointment of Arthur Andersen & Co. as the independent
auditors to audit the financial statements of the corporation and its
subsidiaries for the year 1994;

(3) To act upon a proposal to amend the Annual Incentive Plan of the
corporation in several respects so as to qualify compensation payable
thereunder for deductibility in accordance with Section 162(m) of the
Internal Revenue Code of 1986, as amended;

(4) To act upon a proposal to approve the 1992 Long-Term Performance
Incentive Plan, as amended, of the corporation; and

(5) To transact such other business as may properly come before the
meeting.

The Board of Directors has fixed March 10, 1994, as the record date for the
determination of stockholders entitled to vote at the meeting.

If you will be unable to attend the meeting, kindly mark, sign, date and
return the enclosed proxy. A postage prepaid envelope is enclosed for your use.
Prompt response is helpful, and your cooperation will be appreciated.

By Order of the Board of
Directors.

MICHAEL C. KILANOWSKI, JR.
Secretary
<PAGE>

FREEPORT-MCMORAN INC.
1615 POYDRAS STREET
NEW ORLEANS, LOUISIANA 70112

The Annual Report to Stockholders for the year 1993, including financial
statements, is being mailed to stockholders together with these proxy materials
on or about March 31, 1994.

PROXY STATEMENT

This 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 Inc. (the "Company") to be used at the Annual Meeting of Stockholders
of the Company (the "Meeting"), to be held on May 3, 1994.

VOTING PROCEDURE

Stockholders of record at the close of business on March 10, 1994, will be
entitled to vote at the Meeting. On the record date, there were 140,158,377
shares of Common Stock outstanding, and each of such shares will be entitled to
one vote at the Meeting.

The By-Laws of the Company (the "By-Laws") provide that the holders of a
majority of the shares of Common Stock of the Company issued and outstanding
and entitled to vote at the Annual Meeting, present in person or represented by
proxy, shall constitute a quorum at the Annual Meeting. The By-Laws further
provide that directors of the Company shall be elected by a plurality vote and
that, except as otherwise provided by statute, the Certificate of Incorporation
of the Company, or the By-Laws, all other matters coming before the Annual
Meeting shall be decided by the vote of a majority of the number of shares of
Common Stock present in person or represented by proxy at the Annual Meeting
and entitled to vote thereat.

Votes cast at the Annual Meeting will be counted by the persons appointed by
the Company to act as inspectors of election for the Annual Meeting. The
inspectors of election will treat shares of Common Stock represented by a
properly executed and returned proxy as present at the Annual Meeting for
purposes of determining a quorum. Abstentions and broker non-votes with respect
to particular proposals will not affect the determination of a quorum. Thus
shares of Common Stock pursuant to which abstentions are properly cast will be
counted as present for purposes of determining a quorum.

Directors will be elected by a plurality vote of the shares of Common Stock
present, in person or by proxy, and entitled to vote at the Annual Meeting.
Accordingly, abstentions and broker non-votes as to the election of directors
will have no effect thereon. All other matters to come
<PAGE>

before the Annual Meeting require the approval of a majority of the shares of
Common Stock present and entitled to vote thereat; therefore, abstentions as to
particular proposals will have the same effect as votes against such proposals.
Broker non-votes as to particular proposals will not, however, be deemed to be
a part of the voting power present with respect to such proposals and will not
therefore count as votes for or against such proposals and will not be included
in calculating the number of votes necessary for approval of such proposals.

Proxies in the enclosed form are solicited by the Board of Directors of the
Company to provide an opportunity to every stockholder to vote on all matters
scheduled to come before the Meeting, whether or not he or she attends in
person. If proxies in the enclosed form are properly executed and returned, the
shares represented thereby will be voted at the Meeting in accordance with
stockholder direction. Proxies in the enclosed form will be voted for the
election of directors, for the ratification of the appointment of auditors, for
the proposal to amend the Annual Incentive Plan of the Company, and for the
proposal to approve the 1992 Long-Term Performance Incentive Plan, as amended,
of the Company unless contrary specification is made. Any stockholder executing
a proxy may revoke that proxy or submit a revised one at any time before it is
voted. A stockholder may also attend the Meeting in person and vote by ballot,
thereby cancelling any proxy previously given. Except for the election of
directors, the ratification of the appointment of auditors, the proposal to
amend the Annual Incentive Plan of the Company, and the proposal to approve the
1992 Long-Term Performance Incentive Plan, as amended, of the Company,
management expects no other matters to be presented for action at the Meeting.
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 cost of soliciting proxies will be borne by the Company. In addition to
solicitations by mail, arrangements have been made for brokers and nominees to
send proxy material 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 it in the
solicitation of proxies from brokers and nominees. It is estimated that the
fees for the services of that firm will be $8,500; the Company will also
reimburse the firm for its reasonable out-of-pocket expenses incurred in
connection with providing the services. Certain employees of the Company, who
will receive no compensation for their services other than their regular
remuneration, may also solicit proxies by telephone, telegram, telex, telecopy,
or personal interview.

STOCKHOLDER PROPOSALS

Any proposal of a stockholder intended to be presented at the Company's 1995
Annual Meeting of Stockholders must be received by the Company for inclusion in
the proxy statement and form of proxy for that meeting no later than December
1, 1994.

2
<PAGE>

CORPORATE GOVERNANCE

The Board of Directors of the Company, which held seven meetings during 1993,
has primary responsibility for directing the management of the business and
affairs of the Company. The Board currently consists of sixteen members. To
provide for effective direction and management of the Company's business, the
Board of Directors has established seven committees of the Board, including the
Audit Committee, the Nominating Committee, and the Corporate Personnel
Committee.

The Audit Committee reviews the financial statements of the Company and
exercises general oversight with respect to the activities of the Company's
independent auditors and Controller and related matters. The Audit Committee
currently consists of Mr. Day as Chairman, and Messrs. Bruce, Coleman,
Harrison, Kissinger, Lackey, and Rankin, none of whom is an officer or an
employee of the Company or any of its subsidiaries. The Audit Committee met
three times during 1993.

The Nominating Committee makes recommendations to the Board concerning the
structure of the Board, corporate governance, and proposed new members of the
Board and nominates individuals to stand for election as directors. The
Nominating Committee will consider recommendations by stockholders of the
Company of potential nominees for election as directors. The Secretary of the
Company will, upon written request by any stockholder, furnish information
concerning the procedures required in connection with such recommendations. The
Nominating Committee currently consists of Mr. Rankin, as Chairman, and Messrs.
Day, Moffett, Schmidt, and Woods. The Nominating Committee met twice during
1993.

The Corporate Personnel Committee (sometimes hereinafter referred to as the
"Compensation Committee" or the "Committee") reviews and makes recommendations
to the Board with respect to management personnel policies, plans and programs
and employee and officer compensation. The Corporate Personnel Committee
currently consists of Mr. Cunningham, as Chairman, and Messrs. Bruce, Harrison,
Putnam, Wharton, and Woods. The Corporate Personnel Committee met three times
during 1993.

Each of the present directors attended 75% or more of the 1993 meetings of
the Board and of the committees on which he or she served during the periods of
his or her Board membership and committee service.

The address of each member of the Board is c/o Freeport-McMoRan Inc., 1615
Poydras Street, New Orleans, Louisiana 70112.

3
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ELECTION OF DIRECTORS

At the Meeting six directors are to be elected to a three-year term, each to
hold office until his successor is elected and qualified. 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 such proxy, unless otherwise directed, for the election of
Messrs. Coleman, Harrison, Kissinger, Latiolais, Wharton, and Woods as members
of the class to serve until the 1997 Annual Meeting of Stockholders. Messrs.
McWilliams, Moffett, Putnam, and Rankin and Mrs. McDonald are members of the
class to serve until the 1995 Annual Meeting of Stockholders, and Messrs.
Bruce, Cunningham, Day, Lackey, and Schmidt are members of the class to serve
until the 1996 Annual Meeting of Stockholders. In accordance with the terms of
the Company's retirement policy for non-officer directors, Mr. Kissinger will
retire on May 27, 1995, whereupon the Board of Directors will reduce the size
of the Board to fifteen members. If, contrary to present expectation, any of
the nominees to be elected at the Meeting 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 Nominating Committee.

INFORMATION ABOUT NOMINEES AND DIRECTORS

The following table shows, as of December 31, 1993, the age, principal
occupations and employment during the past five years, other directorships and
positions with the Company of each of the nominees and directors, and the year
in which each such person's present continuous term of office as a director of
the Company began. If the year shown is prior to 1981, the person's present
continuous term of office as a director of the Company was immediately preceded
by a continuous term of office, beginning in such year, as a director of either
Freeport Minerals Company ("Freeport") or of McMoRan Oil & Gas Co. ("McMoRan"),
the predecessor corporations of the Company. Except for Freeport-McMoRan Copper
& Gold Inc. ("FCX") and Freeport-McMoRan Resource Partners, Limited Partnership
("FRP"), none of the organizations referred to in such table is an affiliate of
the Company.

4
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<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS, YEAR PRESENT
NAME OF OTHER DIRECTORSHIPS AND TERM OF OFFICE
NOMINEE OR DIRECTOR AGE POSITIONS WITH THE COMPANY AS DIRECTOR BEGAN
------------------------ --- ----------------------------- -----------------
<C> <C> <S> <C>
Thomas B. Coleman 50 Managing Partner and Chief 1987
Executive Officer,
International-Matex Tank
Terminals, bulk liquid
storage.
William H. Cunningham 49 Chancellor of the University 1987
of Texas System. President
of the University of Texas
at Austin until 1992.
Director of Jefferson-Pilot
Corporation, La Quinta Motor
Inns, Inc., and each of the
members of the Transamerica
Fund Management Company
group of mutual funds.
Robert A. Day 50 Chairman of the Board of 1984
Trust Company of the West.
Director of Abex Inc.
William B. Harrison, Jr. 50 Vice Chairman of Chemical 1992
Banking Corporation and its
subsidiary, Chemical Bank.
Executive Vice President of
Chemical Bank until 1990.
Director of Chemical Banking
Corporation and Dillard
Department Stores, Inc.
Henry A. Kissinger 70 Chairman of the Board and 1988
Chief Executive Officer,
Kissinger Associates, Inc.,
international consultants
and consultants to the
Company. Director of
American Express Company and
CBS Inc.
Bobby Lee Lackey 56 President and Chief Executive 1987
Officer of J.S. McManus
Produce Company, Inc.,
grower of vegetables and
shipper of fruits and
vegetables.
Rene L. Latiolais 51 President and Chief Operating 1993
Officer of the Company.
President and Chief
Executive Officer of FRP.
Executive Vice President of
the Company until 1993.
Senior Vice President of the
Company until 1992. Director
of FCX.
</TABLE>

5
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<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS, YEAR PRESENT
NAME OF OTHER DIRECTORSHIPS AND TERM OF OFFICE
NOMINEE OR DIRECTOR AGE POSITIONS WITH THE COMPANY AS DIRECTOR BEGAN
--------------------- --- ------------------------------- -----------------
<C> <C> <S> <C>
Gabrielle K. McDonald 51 Judge, International Criminal 1993
Tribunal for the Former
Yugoslavia, and Distinguished
Visiting Professor of Law,
Texas Southern University
Thurgood Marshall School of
Law. Visiting Professor of
Law, St. Mary's University
School of Law, and of counsel,
Walker & Satterthwaite, law
firm, until 1993. Shareholder,
Matthews & Branscomb, law
firm, until 1991.
W.K. McWilliams, Jr. 71 Private investor. 1969
James R. Moffett 55 Chairman of the Board, Chief 1969
Executive Officer, and member
of the Office of the Chairman
of the Company. Director of
FCX.
George Putnam 67 Chairman of The Putnam 1978
Investment Management Company,
Inc. and of each of the
members of the Putnam group of
mutual funds. Director of The
Boston Company, Inc., Boston
Safe Deposit and Trust
Company, General Mills, Inc.,
Houghton-Mifflin Company,
Marsh-McLennan Companies Inc.,
and Rockefeller Group, Inc.
B.M. Rankin, Jr. 63 Private investor. Consultant to 1969
the Company.
Benno C. Schmidt 80 Senior Partner, J.H. Whitney & 1954
Co., private venture capital
investment firm. Consultant to
the Company. Managing Partner
of J.H. Whitney & Co. until
1992. Director of Genetics
Institute, Inc., Gilead
Sciences, Inc., Matrix
Pharmaceutical, Inc., and
Vertex Pharmaceuticals
Incorporated. Mr. Schmidt was
formerly a Director and
Chairman of the Board of
Vitarine Pharmaceuticals,
Inc., which filed a voluntary
petition for bankruptcy under
Chapter 11 of the United
States Bankruptcy Code with
the United States Bankruptcy
Court for the Southern
District of New York on May
24, 1991.
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
NAME OF PRINCIPAL OCCUPATIONS, YEAR PRESENT
NOMINEE OR OTHER DIRECTORSHIPS AND TERM OF OFFICE
DIRECTOR AGE POSITIONS WITH THE COMPANY AS DIRECTOR BEGAN
------------------ --- ---------------------------------- -----------------
<C> <C> <S> <C>
J. Taylor Wharton 55 Chairman of the Department of 1992
Gynecology at the University of
Texas M.D. Anderson Cancer
Center.
Ward W. Woods, Jr. 51 President and Chief Executive 1974
Officer of Bessemer Securities
Corporation, private investment
firm. Director of BCP/Essex
Holdings Inc., Boise Cascade
Corporation, Essex Group, Inc.,
Overhead Door Corporation, and
Stant Corporation.
</TABLE>

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

According to (i) the Forms 3 and 4 and any amendments thereto filed pursuant
to Section 16(a) of the Securities Exchange Act of 1934 ("Section 16") and
furnished to the Company during 1993 by persons subject to Section 16 at any
time during 1993 with respect to securities of the Company ("Company Section 16
Insiders"), (ii) the Forms 5 with respect to 1993 and any amendments thereto
filed pursuant to Section 16 and furnished to the Company by Company Section 16
Insiders, and (iii) the written representations from certain Company Section 16
Insiders that no Form 5 with respect to the securities of the Company was
required to be filed by such Company Section 16 Insider, respectively, with
respect to 1993, no Company Section 16 Insider failed to file altogether or
timely any Forms 3, 4, or 5 required by Section 16 with respect to the
securities of the Company or to disclose on such Forms transactions required to
be reported thereon.

7
<PAGE>

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

According to information furnished by each of the directors and executive
officers of the Company, the number of shares of the Company's Common Stock
("Company Shares"), the number of shares of FCX Class A Common Stock ("FCX
Shares"), and the number of Depositary Units ("FRP Units") representing limited
partnership interests in FRP beneficially owned by each of them as of December
31, 1993, was as follows:

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF
NAME OF COMPANY SHARES FCX SHARES FRP UNITS
INDIVIDUAL OR BENEFICIALLY BENEFICIALLY BENEFICIALLY
IDENTITY OF GROUP OWNED (A) OWNED (A) OWNED (A)
----------------- -------------- ------------ ------------
<S> <C> <C> <C>
Richard C. Adkerson 192,651(b)(c)(d) 5,503(d) 0
Robert W. Bruce III 25,132(b) 0 0
Thomas B. Coleman 65,097(b)(e) 11,760(e) 7,625(b)(e)
William H. Cunningham 36,905(b) 0 155(b)
Robert A. Day 35,541(b)(f) 909,426(f) 124(b)
Charles W. Goodyear 188,597(b)(c)(g) 0 0
William B. Harrison, Jr. 4,200(h) 0 0
Henry A. Kissinger 30,020(b) 0 0
Bobby Lee Lackey 38,107(b)(i) 0 196(b)(i)
Rene L. Latiolais 517,590(b)(c) 4,000 539(j)
Gabrielle K. McDonald 0 0 0
W.K. McWilliams, Jr. 676,922(b)(k) 146,552(k) 77,795(b)(k)
George A. Mealey 254,799(b)(c) 16,000 2,269
James R. Moffett 3,313,162(b)(c)(l) 56,712(l) 65,439(l)
George Putnam 2,047,608(b)(m) 1,947,775(m) 125(b)
B.M. Rankin, Jr. 886,041(b)(n) 41,912(n) 4,139(b)(n)
Benno C. Schmidt 718,382(b) 0 125(b)
J. Taylor Wharton 31,484(o) 2,965(o) 822(o)
Ward W. Woods, Jr. 95,865(b) 0 125(b)
23 directors and
executive officers as a
group, including those
persons named above 9,634,611(p) 3,213,415(p) 167,658(p)
</TABLE>
- ---------
(a) Except as otherwise noted, the individuals referred to have sole voting and
investment power with respect to such Shares and Units. With the exceptions
of Mr. Day (who beneficially owns 1.4% of the outstanding FCX Shares), Mr.
Moffett (who beneficially owns 2.3% of the outstanding Company Shares), and
Mr. Putnam (who beneficially owns 1.5% of the outstanding Company Shares
and 3.0% of the outstanding FCX Shares), each of the individuals referred
to holds less than 1% of the outstanding Company Shares, FCX Shares, and
FRP Units, respectively. An affiliate of Mr. Day owns 5 common shares
(which is 5%) of the capital stock of Freeport-McMoRan Canada Exploration
Inc. and 5 common shares (which is 5%) of the capital stock of Freeport-
McMoRan Canada Oil & Gas Inc., the remaining outstanding shares of which
are owned by the Company.

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<PAGE>

(b) Includes Company Shares and FRP Units that could be acquired within sixty
days after December 31, 1993, upon the exercise of options granted pursuant
to the Company's stock option plans, as follows: Mr. Adkerson, 186,420
Company Shares; Mr. Bruce, 15,132 Company Shares; Mr. Coleman, 35,465
Company Shares and 125 FRP Units; Mr. Cunningham, 35,465 Company Shares and
125 FRP Units; Mr. Day, 30,343 Company Shares and 62 FRP Units; Mr.
Goodyear, 186,420 Company Shares; Mr. Kissinger, 25,220 Company Shares; Mr.
Lackey, 35,465 Company Shares and 125 FRP Units; Mr. Latiolais, 332,426
Company Shares; Mr. McWilliams, 35,465 Company Shares and 125 FRP Units;
Mr. Mealey, 229,386 Company Shares; Mr. Moffett, 1,764,434 Company Shares;
Mr. Putnam, 35,465 Company Shares and 125 FRP Units; Mr. Rankin, 35,465
Company Shares and 125 FRP Units; Mr. Schmidt, 35,465 Company Shares and
125 FRP Units; Mr. Woods, 35,465 Company Shares and 125 FRP Units; all
directors and executive officers as a group (20 persons), 3,362,546 Company
Shares and 1,062 FRP Units.
(c) Includes Company Shares held by the trustee under the Company's Employee
Capital Accumulation Program, as follows: Mr. Adkerson, 2,735 Company
Shares; Mr. Goodyear, 2,113 Company Shares; Mr. Latiolais, 15,191 Company
Shares; Mr. Mealey, 9,513 Company Shares; Mr. Moffett, 21,293 Company
Shares; all directors and executive officers as a group (8 persons), 77,093
Company Shares.
(d) Includes 724 Company Shares that may be acquired upon the conversion of
6.55% Convertible Subordinated Notes due January 15, 2001 of the Company
("Company Notes") held in trust for the benefit of Mr. Adkerson, 2,682
Company Shares that may be acquired upon the conversion of Zero Coupon
Convertible Subordinated Debentures due 2006 of the Company ("Company
Debentures") held in trust for the benefit of Mr. Adkerson, 90 Company
Shares that may be acquired upon the conversion of Company Notes held in
trust for the benefit of the spouse of Mr. Adkerson, and 5,503 FCX Shares
held in trust for the benefit of Mr. Adkerson.
(e) Includes 27,762 Company Shares, 11,760 FCX Shares, and 7,500 FRP Units held
by three trusts established for the benefit of Mr. Coleman's three
daughters with respect to which Mr. Coleman holds sole voting and
investment power but with respect to which he disclaims beneficial
ownership.
(f) Includes 909,426 FCX Shares that may be acquired upon the conversion of
Depositary Shares representing Step-Up Convertible Preferred Stock of FCX
("FCX Step-Up Convertible Preferred Stock") held by accounts and funds
managed by affiliates of a corporation of which Mr. Day is the chief
executive officer and in which he is a stockholder. Mr. Day has shared
voting and investment power with respect to such Shares but disclaims
beneficial ownership thereof. Mr. Day is a beneficiary of a trust that
holds 600,000 Company Shares. Mr. Day has no voting or investment power
with respect to such Shares and disclaims beneficial ownership thereof.
(g) Includes 64 Company Shares held in a retirement trust for the benefit of
Mr. Goodyear.

9
<PAGE>

(h) Includes 1,200 Company Shares owned by Mr. Harrison's wife.
(i) Includes 1,434 Company Shares and 25 FRP Units held in a retirement trust
for the benefit of Mr. Lackey, 364 Company Shares held for the benefit of
Mr. Lackey by the custodian under the Company's Automatic Stock Purchase
Plan, and 46 FRP Units held for the benefit of Mr. Lackey by the custodian
under FRP's Depositary Unit Reinvestment Plan.
(j) Includes 405 FRP Units held for the benefit of Mr. Latiolais by the
custodian under FRP's Depositary Unit Reinvestment Plan.
(k) Includes 1,652 FCX Shares that may be acquired upon the conversion of FCX
Step-Up Convertible Preferred Stock. Includes 5,776 Company Shares, 10,000
FCX Shares, and 2,500 FRP Units owned by Mr. McWilliams' wife with respect
to which Shares and Units he disclaims beneficial ownership. Includes
35,012 FRP Units held for the benefit of Mr. McWilliams by the custodian
under FRP's Depositary Unit Reinvestment Plan. Does not include any of the
Shares or Units referred to in note (l) below.
(l) Includes a total of 85,140 Company Shares, 30,102 FCX Shares, and 25,839
FRP Units held for the benefit of two trusts created by Mr. Moffett for the
benefit of his two children, who are adults. Mr. McWilliams and an
executive officer of the Company, as co-trustees of the two trusts, have
sole voting and investment power with respect to such Shares and Units held
for the benefit of such trusts but have no beneficial interest therein.
Messrs. McWilliams and Moffett and such executive officer disclaim
beneficial ownership of such Shares and Units held for the benefit of such
trusts. Includes a total of 214,648 Company Shares, 26,610 FCX Shares, and
39,600 FRP Units held for the benefit of a trust created by Mr. McWilliams
for the benefit of an educational fund and his six children, who are
adults. Mr. Moffett and an executive officer of the Company, as co-trustees
of such trust, have sole voting and investment power with respect to such
Shares and Units held for the benefit of such trust but have no beneficial
interest therein. Messrs. McWilliams and Moffett and such executive officer
disclaim beneficial ownership of such Shares and Units held for the benefit
of such trust. Includes a total of 88,000 Company Shares held for the
benefit of a trust created by Mr. Moffett for the benefit of an educational
fund and his two children, who are adults. Mr. McWilliams and an executive
officer of the Company, as co-trustees of such trust, have sole voting and
investment power with respect to such Company Shares held for the benefit
of such trust but have no beneficial interest therein. Messrs. McWilliams
and Moffett and such executive officer disclaim beneficial ownership of
such Company Shares held for the benefit of such trust.
(m) Includes 3,230 Company Shares held by a charitable trust with respect to
which Mr. Putnam holds as co-trustee shared voting and investment power but
with respect to which he disclaims beneficial ownership. Includes 2,200
Company Shares held by a trust with respect to which Mr. Putnam holds as
co-trustee shared voting and investment power but with respect to which he
disclaims beneficial ownership. Includes 2,000 Company Shares held by a
trust with respect to which Mr. Putnam holds as trustee sole voting and
investment power.

10
<PAGE>

Includes 1,560,500 Company Shares and 1,342,730 FCX Shares held by mutual
funds with respect to which Mr. Putnam holds shared voting and investment
power but with respect to which he disclaims beneficial ownership. Includes
222,847 Company Shares that may be acquired upon the conversion of $4.375
Convertible Exchangeable Preferred Stock of the Company ("Company Preferred
Stock"), 207,858 Company Shares that may be acquired upon the conversion of
Company Debentures, and 605,045 FCX Shares that may be acquired upon the
conversion of FCX Step-Up Convertible Preferred Stock held by such mutual
funds with respect to which Mr. Putnam holds shared voting and investment
power but with respect to which he disclaims beneficial ownership.
(n) Includes 3,304 FCX Shares that may be acquired upon the conversion of FCX
Step-Up Convertible Preferred Stock. Includes 348,372 Company Shares,
32,000 FCX Shares, and 4,000 FRP Units with respect to which Shares and
Units Mr. Rankin has under a power of attorney sole voting and investment
power but with respect to which he disclaims beneficial ownership. Includes
6,608 FCX Shares that may be acquired upon the conversion of FCX Step-Up
Convertible Preferred Stock with respect to which Mr. Rankin has under
powers of attorney sole voting and investment power but with respect to
which he disclaims beneficial ownership. Includes 14 FRP Units held by the
custodian under FRP's Depositary Unit Reinvestment Plan with respect to
which Mr. Rankin has under a power of attorney voting and investment power
but with respect to which he disclaims beneficial ownership.
(o) Includes 420 FCX Shares held in a retirement trust for the benefit of Mr.
Wharton, 8,930 Company Shares and 2,385 FCX Shares held by Mr. Wharton's
wife, 160 FCX Shares held in a retirement trust for the benefit of Mr.
Wharton's wife, and a total of 4,736 Company Shares held by Mr. Wharton as
custodian for his daughters. Includes Company Shares held by the custodian
under the Company's Automatic Stock Purchase Plan as follows: 4,192 Company
Shares for the benefit of Mr. Wharton, 3,392 Company Shares for the benefit
of Mr. Wharton's wife, and a total of 1,940 Company Shares for the benefit
of Mr. Wharton as custodian for his daughters. Includes FRP Units held by
the custodian under FRP's Depositary Unit Reinvestment Plan as follows: 357
Units for the benefit of Mr. Wharton, 247 Units for the benefit of Mr.
Wharton's wife, and a total of 218 Units for the benefit of Mr. Wharton as
custodian for his daughters.
(p) See notes (b) through (o) above. Includes 1,516 Company Shares, 8,420 FCX
Shares, and 6 FRP Units held in trust for the benefit of one of the
executive officers, 92 Company Shares and a total of 2,180 FCX Shares held
by or in trust for the benefit of the spouse of such executive officer as
to which beneficial ownership is disclaimed, and 1,000 Company Shares and a
total of 13,210 FCX Shares held by such executive officer as custodian as
to which beneficial ownership is disclaimed. These total numbers represent
approximately 6.7% of the outstanding Company Shares, approximately 4.9% of
the outstanding FCX Shares, and less than 1% of the outstanding FRP Units.

11
<PAGE>

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

According to information furnished by each of the persons known to the
Company to be a beneficial owner of more than five percent of Company Shares,
the number of Company Shares beneficially owned by each of them as of December
31, 1993, was as follows:

<TABLE>
<CAPTION>
NUMBER OF
COMPANY SHARES PERCENT
NAME AND ADDRESS OF PERSON BENEFICIALLY OWNED OF CLASS
-------------------------- ------------------ --------
<S> <C> <C>
Delaware Management Company, Inc. 8,667,138(a) 6.2%
1818 Market Street
Philadelphia, Pennsylvania 19103
Oppenheimer Group, Inc. 24,600,880(b) 17.6%
Oppenheimer Tower
World Financial Center
New York, New York 10281
The Capital Group, Inc. 13,365,490(c) 9.4%
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- ---------
(a) Delaware Management Company, Inc. has sole voting power as to 6,007,400 of
such Company Shares, sole investment power as to 8,517,138 of such Company
Shares, shared voting power as to 51,700 of such Company Shares, and shared
investment power as to 150,000 of such Company Shares.
(b) Oppenheimer Group, Inc. has, indirectly through subsidiaries, shared voting
and investment power as to all 24,600,880 Company Shares. Oppenheimer
Group, Inc. disclaims beneficial ownership of all 24,600,880 Company
Shares.
(c) The Capital Group, Inc. has, indirectly through five subsidiaries, sole
voting power as to 6,108,580 of such Company Shares and sole investment
power as to all 13,365,490 Company Shares. Of such 13,365,490 Company
Shares, 849,220 may be acquired upon the conversion of Company Preferred
Stock, 393,400 may be acquired upon the conversion of Company Notes, and
517,840 may be acquired upon the conversion of Company Debentures. The
Capital Group, Inc. disclaims beneficial ownership of all 13,365,490
Company Shares.

COMPENSATION OF DIRECTORS AND RELATED TRANSACTIONS

Each director who is not an officer of the Company or its subsidiaries
receives a fee of $1,000 for attendance at each meeting of the Board or any of
its committees and an annual fee consisting of (i) $25,000 for serving on the
Board (the "standard portion of the annual fee"), (ii) $3,000 for each
committee of which he or she is a member, and (iii) $3,000 for each committee
of which he

12
<PAGE>

or she is the chairman. Directors who are also officers of the Company or its
subsidiaries receive a $1,000 fee for each Board meeting that they attend, but
they are not entitled to an annual fee or to fees for attendance at meetings of
committees of the Board.

The additional taxable income recognized by Messrs. Coleman, Kissinger,
McWilliams, and Woods for their nonbusiness use in 1993 of aircraft owned or
leased by the Company was approximately $7,371, $1,376, $13,764, and $807,
respectively.

In addition to the cash compensation referred to above, Mr. McWilliams
received during 1993 certain other compensation consisting of the use of a
Company automobile and the services of a secretary employed by the Company and
a consultant under contract with the Company. The aggregate amount of such
compensation in 1993 was $45,250.

In addition to the cash compensation referred to above, Mr. Rankin received
during 1993 certain other compensation consisting of reimbursement for a
portion of his office rent and the services of an executive secretary employed
by the Company. The aggregate amount of such compensation in 1993 was $67,400.

The Company and Mr. Rankin entered into an agreement pursuant to which Mr.
Rankin renders from time to time services to the Company relating to finance,
accounting, and business development. In consideration for such services, the
Company pays Mr. Rankin an annual retainer totalling $56,000.

The Company and a corporation wholly owned by Mr. Rankin have entered into an
arrangement whereby the Company is entitled to the use of a Cessna Citation
S/II aircraft in which such corporation has an interest. Under the arrangement,
the Company has agreed to pay such corporation charges, assessments, and an
annual fee that are directly related to the Company's use of the plane and a
fixed monthly fee. In 1993 the Company paid such corporation $213,844 under
this arrangement.

Kissinger Associates, Inc. ("Kissinger Associates"), a corporation of which
Mr. Kissinger is Chairman of the Board and the sole stockholder, provides to
the Company advice and consultation on world political, economic, strategic,
and social developments affecting the Company's affairs. As compensation for
such services, the Company has agreed to pay Kissinger Associates $200,000 per
annum and all reasonable out-of-pocket expenses incurred in connection with
providing such services.

Kissinger Associates also provides to the Company consulting and related
advisory services of Mr. Kissinger on international matters. The Company paid
Kissinger Associates $300,000 for services in 1993 under this additional
arrangement.

13
<PAGE>

The Company and Mr. Schmidt entered into an agreement pursuant to which Mr.
Schmidt renders from time to time services to the Company with respect to
technical, business, and governmental activities. In consideration for such
services, the Company pays Mr. Schmidt an annual retainer of $100,000.

The Company and a corporation wholly owned by Mr. Schmidt have entered into
an arrangement whereby the Company is entitled to the use of a Jetstar II
aircraft owned by such corporation. Under the arrangement, the Company has
agreed to bear 40% of all actual costs incurred in connection with the
operation of the aircraft other than fuel costs, the obligation for which is
determined by the Company's actual percentage use of the plane. In 1993 the
Company incurred $370,290 in costs under this arrangement.

During 1993 Mr. Day participated directly or indirectly through various
entities, on substantially the same basis as other parties, in exploration,
development, and production operations on certain properties and in certain
programs operated by the Company. Mr. Day and such entities have ownership
interests in such programs or activities on the covered properties ranging from
.71% to 25%, and are responsible for from .71% to 25% of the exploration and
development costs associated with such programs or activities on these specific
properties. During 1993 the total revenues received by Mr. Day and such
entities under such programs or activities on such properties amounted to
approximately $14,852,500, and their share of expenditures for exploration,
development and production operations amounted to approximately $1,177,021.

In recognition of the services of Mr. Moffett as Chairman of the Board of the
Company, and to enhance the probability that such services will continue in the
future, the Company made a non-interest bearing, non-transferable demand loan
to him in 1988. The balance as of January 1, 1993, of the principal amount on
such loan was $1,350,000. As additional compensation for services, the Company
forgave in 1993 $270,000 of the principal amount of such loan. The remaining
balance as of December 31, 1993, of the principal amount on such loan was
$1,080,000.

John G. Amato, who was appointed General Counsel of the Company by the Board
in 1989, is not an employee of the Company. Under his arrangement with the
Company, Mr. Amato is furnished with an office suite in the Company
headquarters, certain office equipment, and the services of an executive
secretary employed by the Company. In consideration for the legal services
rendered to the Company and its subsidiaries and affiliates, Mr. Amato was paid
$1,000,000. The Company provides Mr. Amato with financial counseling services;
the amount of such compensation in 1993 was $38,000. The additional taxable
income recognized by Mr. Amato for his nonbusiness use in 1993 of the aircraft
owned or leased by the Company was approximately $1,152. The amount of matching
gifts made by the Company in regard to Mr. Amato during 1993 under the Matching
Gifts Program of the Company was $15,500.

14
<PAGE>

PLAN FOR DEFERRAL OF DIRECTORS' FEES

Under the 1991 Plan for Deferral of Directors' Fees (the "Deferral Plan"), a
participating director may elect to defer the payment of either or both such
participant's annual fees and such participant's attendance fees for services
as a member of the Board and any committee of the Board. The deferred amounts
are, at the direction of the participant, credited to one or two accounts in
specified percentages. Fees credited to the deferred cash account earn interest
at a rate equal to the prime lending rate announced from time to time by The
Chase Manhattan Bank, N.A., compounded quarterly. Fees credited to the deferred
stock account are converted to stock units, which are related to Company Shares
and earn dividend equivalents, which are related to dividends on Company
Shares. Dividend equivalents so credited are converted into additional stock
units, determined on the basis of the fair market value of Company Shares. One
or more cash payments of the total amounts credited to a participant's accounts
will be made following the cessation of the participant's service as a director
of the Company, in accordance with a payment schedule selected by the
participant.

RETIREMENT PLAN FOR NON-OFFICER DIRECTORS

The Company has a retirement plan for the benefit of non-officer directors
age sixty-five or over who have completed five or more years of service on the
Board. Under the retirement plan, an eligible Board member will be entitled to
an annual benefit equal to a percentage of the standard portion of the annual
fee for a Board member at the time of his or her retirement. The amount of such
percentage, which would be at least 50% but not greater than 100%, will depend
on the number of years the retiree served as a non-officer member of the Board
and the number of years, if any, the retiree served as a non-officer member of
the board of Freeport or McMoRan prior to April 7, 1981. The benefit would be
payable from the date of retirement until the retiree's death.

STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

Each present director of the Company who is not an employee of the Company is
an "Eligible Director" for the grant of options under the 1988 Stock Option
Plan for Non-Employee Directors (the "1988 Plan"). On May 1 of each year
through 1997, each individual who is on such date an Eligible Director will be
granted a nonqualified option to purchase 10,000 Company Shares at 100% of the
fair market value of Company Shares on the date of such grant. All options
granted under the 1988 Plan expire ten years and two days after their
respective dates of grants.

On May 1, 1993, each of the directors of the Company other than Messrs.
Latiolais and Moffett and Mrs. McDonald were granted under the 1988 Plan an
option for 10,000 Company Shares at an option price of $20. In 1993 none of the
directors exercised options granted under the 1988 Plan.

15
<PAGE>

DIRECTORS' CHARITABLE GIFT PROGRAM

Under the Directors' Charitable Gift Program of the Company, each of the
directors of the Company is entitled to designate no more than four eligible
charities to receive a charitable donation in the aggregate amount of
$1,000,000 from the Company upon such director's death, provided the
termination of such director's service occurs as a result of death, disability,
retirement, or a change in the composition of the Board after certain corporate
transactions. Eligible charities include educational institutions, educational
associations, educational funds, cultural institutions, social service
community organizations, hospital organizations, and environmental
organizations. General Company assets and life insurance policies on the lives
of the directors, which policies are purchased and owned by the Company, will
provide the funding for the charitable gifts to be made under the Directors'
Charitable Gift Program.

MATCHING GIFTS PROGRAM

The Matching Gifts Program of the Company is available to the directors,
full-time consultants, and employees of the Company. Under the Matching Gifts
Program, the Company will match gifts made by a participant to eligible
institutions including educational institutions, educational associations,
educational funds, cultural institutions, social service community
organizations, hospital organizations, and environmental organizations. Such
gifts are made by the Company directly to the institution. Gifts made by a
director to an eligible institution not in excess of $1,000 will be double
matched by the Company, and gifts made by any other participant to an eligible
institution not in excess of $500 will be double matched by the Company. The
annual amount of matching gifts made by the Company in regard to a director may
not exceed $40,000, and the annual amount of matching gifts made by the Company
in regard to any other participant may not exceed $20,000. The amounts of the
matching gifts made by the Company in 1993 in regard to each of the
participating directors were as follows: $10,000 for Mr. Bruce, $26,667 for Mr.
Coleman, $17,497 for Mr. Cunningham, $40,000 for Mr. Day, $6,500 for Mr.
Harrison, $40,000 for Mr. Kissinger, $13,000 for Mr. Lackey, $4,672 for Mr.
Latiolais, $9,000 for Mr. McWilliams, $40,000 for Mr. Moffett, $40,000 for Mr.
Putnam, $38,287 for Mr. Rankin, $500 for Mr. Schmidt, and $40,000 for Mr.
Woods.

16
<PAGE>

COMPENSATION OF EXECUTIVE OFFICERS

The following table shows plan and non-plan compensation awarded to, earned
by, or paid to the chief executive officer of the Company and each of the four
most highly compensated executive officers of the Company other than such chief
executive officer who served as executive officers of the Company at the end of
1993 (collectively, the "Named Executive Officers") for all services rendered
in all capacities to the Company and its subsidiaries in 1993, 1992, and 1991.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- ---------------------- -------------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)($) SARS(#) PAYOUTS($)(1) COMPENSATION($)
------------------ ---- --------- -------- --------------- ----------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Moffett, 1993 661,500 0 543,999(2) 0 0 891,345(3) 48,332(4)
Chairman of the 1992 661,500 875,000 646,635(2) 0 750,000 3,427,588(3) 45,796(4)
Board and Chief 1991 661,500 500,000 0 0 1,930,246(3)
Executive Officer
Rene L. Latiolais, 1993 325,000 300,000 410,734(5) 0 124,200 345,918(6) 23,992(7)
President and Chief 1992 279,583 400,000 9,678(5) 0 450,000 1,037,346(6) 15,285(7)
Operating Officer 1991 265,000 250,000 0 0 594,503(6)
George A. Mealey, 1993 300,000 250,000 10,255(8) 0 0 162,340 22,984(9)
Executive Vice 1992 270,833 400,000 81,625(8) 0 450,000 185,609(10) 19,763(9)
President 1991 250,000 250,000 0 0 248,873(10)
Richard C. Adkerson, 1993 250,000 200,000 8,776(11) 0 82,800 162,340 28,367(12)
Senior Vice President 1992 250,000 150,000 6,235(11) 0 150,000 178,030 13,731(12)
and Chief Financial 1991
Officer
Charles W. Goodyear, 1993 250,000 200,000 4,415(13) 0 82,800 162,340 12,500(14)
Senior Vice President 1992 250,000 150,000 2,370(13) 0 150,000 178,030 12,500(14)
and Chief Investment 1991
Officer
</TABLE>
- ---------
(1) In 1987 the Company granted for the last time performance units pursuant to
a long-term incentive plan adopted in 1981 (the "1981 LTIP"), under which
amounts were credited during a six-year period. In 1988 the Company granted
for the first time performance units pursuant to a long-term incentive plan
adopted in 1987 (the "1987 LTIP"), under which amounts are credited during
a shorter, four-year period. Thus, as a result of the reduction of the
period during which credits are made with respect to units, those executive
officers fully participating in both the 1981 LTIP and the 1987 LTIP
received payouts under both plans in 1991 and 1992, as reflected in certain
of the amounts set forth in column (h) of this table

17
<PAGE>

for such years (see notes (3), (6), and (10) below). The last payouts under
the 1981 LTIP were made with respect to 1992; therefore, the executive
officers of the Company will no longer receive credits and payouts under the
1981 LTIP.
(2) These reported amounts for 1993 and 1992 consist, respectively, of (i)
$23,471 and $23,730, which were the amounts paid by the Company to or on
behalf of Mr. Moffett during 1993 and 1992, respectively, for taxes in
connection with certain benefits provided by the Company to Mr. Moffett,
and (ii) $520,528 and $622,905, which were the total amounts of the
perquisites provided by the Company to Mr. Moffett in 1993 and 1992,
respectively. Such perquisites for 1993 and 1992 consist, respectively, of
(a) $270,000 and $270,000, which were the portions of the principal amount
of a non-interest bearing loan to Mr. Moffett from the Company that were
forgiven in 1993 and 1992, respectively, (b) $92,925 and $125,723, which
were the amounts of the imputed interest in 1993 and 1992, respectively, on
such loan to Mr. Moffett from the Company, (c) $40,000 and $40,000, which
were the amounts of matching gifts made by the Company in regard to Mr.
Moffett during 1993 and 1992, respectively, under the Matching Gifts
Program of the Company, (d) $19,000 and $19,000, which were the amounts
paid by the Company during 1993 and 1992, respectively, for financial
counseling and tax return preparation and certification services provided
to Mr. Moffett, and (e) $98,603 and $168,182, which were the amounts of the
additional federal income recognized for federal income tax purposes by Mr.
Moffett for his use of the Company's aircraft in 1993 and 1992,
respectively.
(3) Of the amount reported for 1993, $79,645 was paid to Mr. Moffett under the
1981 LTIP and $811,700 was paid to Mr. Moffett under the 1987 LTIP. Of the
amount reported for 1992, $2,504,118 was paid to Mr. Moffett under the 1981
LTIP and $923,470 was paid to Mr. Moffett under the 1987 LTIP. Of the
amount reported for 1991, $1,237,316 was paid to Mr. Moffett under the 1981
LTIP and $692,930 was paid to Mr. Moffett under the 1987 LTIP.
(4) These reported amounts for 1993 and 1992 consist, respectively, of (i)
$33,075 and $33,075, which were the aggregate amounts of contributions made
by the Company in 1993 and 1992, respectively, to the accounts of Mr.
Moffett under defined contribution plans of the Company; (ii) $8,257 and
$7,721, which were the amounts of the insurance premiums paid by the
Company in 1993 and 1992, respectively, with respect to an individual
universal life insurance policy for the benefit of Mr. Moffett; and (iii)
$7,000 and $5,000, which were the amounts of the fees paid by the Company
in 1993 and 1992, respectively, to Mr. Moffett for attendance at Board
meetings.
(5) These reported amounts for 1993 and 1992 are, respectively, the aggregate
amounts paid by the Company to or on behalf of Mr. Latiolais during 1993
and 1992, respectively, for taxes in connection with certain benefits
provided by the Company to Mr. Latiolais, including, with respect to 1993
only, $395,533 in "tax-offset payments" made by the Company to
Mr. Latiolais upon the exercise of Company stock options by Mr. Latiolais
in 1993. These reported amounts for 1993 and 1992 do not include the total
amounts of the perquisites

18
<PAGE>

provided by the Company to Mr. Latiolais in 1993 and 1992, respectively,
which were less than $50,000 in each such year.
(6) Of the amount reported for 1993, $21,238 was paid to Mr. Latiolais under
the 1981 LTIP and $324,680 was paid to Mr. Latiolais under the 1987 LTIP.
Of the amount reported for 1992, $667,006 was paid to Mr. Latiolais under
the 1981 LTIP and $370,340 was paid to Mr. Latiolais under the 1987 LTIP.
Of the amount reported for 1991, $297,533 was paid to Mr. Latiolais under
the 1981 LTIP and $296,970 was paid to Mr. Latiolais under the 1987 LTIP.
(7) These reported amounts for 1993 and 1992 consist, respectively, of (i)
$16,250 and $13,980, which were the aggregate amounts of contributions made
by the Company in 1993 and 1992, respectively, to the accounts of Mr.
Latiolais under defined contribution plans of the Company; (ii) $3,742 and
$1,305, which were the amounts of the insurance premiums paid by the
Company in 1993 and 1992, respectively, with respect to an individual
universal life insurance policy for the benefit of Mr. Latiolais; and, with
respect to 1993 only, (iii) $4,000, which was the amount of the fees paid
by the Company in 1993 to Mr. Latiolais for attendance at Board meetings.
(8) These reported amounts for 1993 and 1992 are, respectively, the aggregate
amounts paid by the Company to or on behalf of Mr. Mealey during 1993 and
1992, respectively, for taxes in connection with certain benefits provided
by the Company to Mr. Mealey, including, with respect to 1992 only, $74,273
in "tax-offset payments" made by the Company to Mr. Mealey upon the
exercise of Company stock options by Mr. Mealey in 1992. These reported
amounts for 1993 and 1992 do not include the total amounts of the
perquisites provided by the Company to Mr. Mealey in 1993 and 1992,
respectively, which were less than $50,000 in each such year.
(9) These reported amounts for 1993 and 1992 consist, respectively, of (i)
$15,001 and $13,542, which were the aggregate amounts of contributions made
by the Company in 1993 and 1992, respectively, to the accounts of Mr.
Mealey under defined contribution plans of the Company, and (ii) $7,983 and
$6,221, which were the amounts of the insurance premiums paid by the
Company in 1993 and 1992, respectively, with respect to an individual
universal life insurance policy for the benefit of Mr. Mealey.
(10) Of the amount reported for 1992, $1,867 was paid to Mr. Mealey under the
1981 LTIP and $183,742 was paid to Mr. Mealey under the 1987 LTIP. Of the
amount reported for 1991, $130,085 was paid to Mr. Mealey under the 1981
LTIP and $118,788 was paid to Mr. Mealey under the 1987 LTIP.
(11) These reported amounts for 1993 and 1992 are, respectively, the aggregate
amounts paid by the Company to or on behalf of Mr. Adkerson during 1993
and 1992, respectively, for taxes in connection with certain benefits
provided by the Company to Mr. Adkerson. These reported amounts for 1993
and 1992 do not include the total amounts of the perquisites

19
<PAGE>

provided by the Company to Mr. Adkerson in 1993 and 1992, respectively,
which were less than $50,000 in each such year.
(12) These reported amounts for 1993 and 1992 consist, respectively, of (i)
$12,500 and $12,500, which were the aggregate amounts of contributions
made by the Company in 1993 and 1992, respectively, to the accounts of Mr.
Adkerson under defined contribution plans of the Company; (ii) $1,317 and
$1,231, which were the amounts of the insurance premiums paid by the
Company in 1993 and 1992, respectively, with respect to an individual
universal life insurance policy for the benefit of Mr. Adkerson; and, with
respect to 1993 only, (iii) $14,550, which was the amount of the
scholarships provided by the Company for the benefit of two of Mr.
Adkerson's sons.
(13) These reported amounts for 1993 and 1992 are, respectively, the aggregate
amounts paid by the Company to or on behalf of Mr. Goodyear during 1993
and 1992, respectively, for taxes in connection with certain benefits
provided by the Company to Mr. Goodyear. These reported amounts for 1993
and 1992 do not include the total amounts of the perquisites provided by
the Company to Mr. Goodyear in 1993 and 1992, respectively, which were
less than $50,000 in each such year.
(14) These reported amounts for 1993 and 1992 consist, respectively, of the
aggregate amounts of contributions made by the Company in 1993 and 1992,
respectively, to the accounts of Mr. Goodyear under defined contribution
plans of the Company.

The following table sets forth information with respect to all stock options
and freestanding stock appreciation rights ("SARs") granted in 1993 by the
Company to each of the Named Executive Officers.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- ---------------------------------------------------------------------- ----------
(A) (B) (C) (D) (E) (F)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS GRANT DATE
UNDERLYING GRANTED TO EXERCISE OR PRESENT
OPTIONS/SARS EMPLOYEES IN BASE EXPIRATION VALUE
NAME GRANTED(#)(I) FISCAL YEAR PRICE($/SH) DATE $(II)
---- ------------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James R. Moffett 0 -- -- -- --
Rene L. Latiolais 124,200 11.7% $18.1875 12/07/03 $271,998
George A. Mealey 0 -- -- -- --
Richard C. Adkerson 82,800 7.8% $18.1875 12/07/03 $181,332
Charles W. Goodyear 82,800 7.8% $18.1875 12/07/03 $181,332
</TABLE>
- --------
(i) Each of the stock options and SARs granted in 1993 by the Company to the
Named Executive Officers is not immediately exercisable. Twenty-five
percent of the number of stock

20
<PAGE>

options or SARs covered by each such grant will become exercisable on the
first, second, third, and fourth anniversaries of the respective date of
grant thereof. Such stock options and SARs will, however, become immediately
exercisable in their entirety at such time as there shall be a "Change in
Control" in the Company, as that term is defined in the agreements
evidencing such stock options and SARs.
Each of the stock options granted in 1993 by the Company to the Named
Executive Officers has an equal number of "Limited Rights" granted in
tandem therewith. Each such "Limited Right" may be exercisable only for a
limited period in the event of any tender offer, exchange offer, or series
of purchases or other acquisitions, or any combination of those
transactions, as a result of which more than 40% of the Company Shares
outstanding are acquired in such offer. Each such "Limited Right" entitles
the holder thereof to receive an amount in cash equal to the excess of the
highest price paid in such offer over the exercise price of the stock
option with which it is in tandem.
(ii) The Black-Scholes option pricing model was used to determine the grant
date present value of the stock options and SARs granted in 1993 by the
Company to the Named Executive Officers. Under the Black-Scholes option
pricing model, the grant date present value of each stock option and SAR
referred to in the table was calculated to be $2.19. The following facts
and assumptions were used in making such calculation: (i) an exercise
price of $18.1875 for each such stock option and SAR; (ii) a fair market
value of $18.1875 for one Company Share on the date of grant; (iii) a
dividend yield of 6.9%, derived from dividing (x) $1.25, which was the
amount of the dividend paid on one Company Share in 1993, by (y) $18.1875,
which was the fair market value of one Company Share on the date of grant;
(iv) a stock option or SAR term of 10 years; (v) a stock volatility of
21.5%, based on an analysis of weekly closing stock prices of Company
Shares and dividends paid on Company Shares during the three-year period
prior to the date of grant; and (vi) an assumed risk-free interest rate of
5.8%, which is equivalent to the yield on a ten-year treasury note on the
date of grant. No other discounts or restrictions related to vesting or
the likelihood of vesting of stock options or SARs were applied. The
resulting grant date present value of $2.19 for each stock option and SAR
was multiplied by the total number of stock options and SARs granted to
each of the Named Executive Officers to determine the total grant date
present value of such stock options and SARs granted to each Named
Executive Officer, respectively.

21
<PAGE>

The following table sets forth information with respect to all exercises of
Company stock options and SARs in 1993 by each of the Named Executive Officers
and all outstanding Company stock options and SARs held by each of the Named
Executive Officers as of December 31, 1993.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
James R. Moffett 0 -- 2,107,525 $8,411,718
1,101,626 $2,861,394
Rene L. Latiolais 85,631 $880,379 439,933 $1,145,420
520,406 $ 626,502
George A. Mealey 0 -- 340,060 $ 597,015
390,660 $ 260,632
Richard C. Adkerson 0 -- 279,630 $ 778,486
255,834 $ 369,119
Charles W. Goodyear 0 -- 259,452 $ 714,978
255,834 $ 369,119
</TABLE>

22
<PAGE>

The following table sets forth information with respect to all long-term
incentive plan awards made in 1993 by the Company to each of the Named
Executive Officers.

LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED PLANS
-----------------------------------------
(A) (B) (C) (D) (E) (F)
PERFORMANCE
OR OTHER
NUMBER OF PERIOD
SHARES, UNITS UNTIL
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#) OR PAYOUT ($ OR #) (II) ($ OR #) (II) ($ OR #) (II)
---- ------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
James R. Moffett 100,000(i) 12/31/96 N/A $264,000 N/A
Rene L. Latiolais 40,000(i) 12/31/96 N/A $105,600 N/A
George A. Mealey 40,000(i) 12/31/96 N/A $105,600 N/A
Richard C. Adkerson 20,000(i) 12/31/96 N/A $ 52,800 N/A
Charles W. Goodyear 20,000(i) 12/31/96 N/A $ 52,800 N/A
</TABLE>
- ---------
(i) This amount is the number of performance units covered by the performance
award granted in 1993 by the Company to such Named Executive Officer, which
performance units were credited to the performance award account of such
Named Executive Officer. The performance award account of such Named
Executive Officer will be credited, as of December 31 of each year, with an
amount equal to the "Annual Earnings Per Share" (or "Net Loss Per Share")
of the Company's common stock for that year multiplied by the number of
performance units then credited to such performance award account. For
purposes of determining "Annual Earnings Per Share" or "Net Loss Per
Share," the net income or net loss of each majority-owned subsidiary of the
Company that is attributable to equity interests that are not owned by the
Company is included; furthermore, if "Annual Earnings Per Share" or "Net
Loss Per Share" are affected by special factors, including material changes
in accounting policies or practices, material acquisitions or dispositions
of property, or other unusual items such as restructuring charges, that in
the judgment of the Corporate Personnel Committee of the Board of Directors
should not be taken into account, in whole or in part, the Committee may
adjust "Annual Earnings Per Share" or "Net Loss Per Share" accordingly. The
balance with respect to performance units in such performance award account
is generally paid as soon as practicable on or after December 31 of the
year in which the third anniversary of the grant of such performance units
occurs.
(ii) There are no "threshold," "target," or "maximum" amounts payable with
respect to long-term incentive plan awards made by the Company. The
amounts set forth in column (e) of this table are representative amounts
based on the adjusted "Annual Earnings Per Share" of the Company's common
stock for 1993, as determined by the Committee. See footnote (i)
immediately above with respect to the determination of "Annual Earnings
Per Share," including adjustments thereto by the Committee.

23
<PAGE>

The following table sets forth the estimated annual benefits payable upon
retirement at the age of 65 under the defined benefit plans of the Company to
an employee hired prior to January 1, 1986, in the compensation and years of
service classifications specified. Such benefits payable to an employee hired
prior to January 1, 1986, are set forth below without parentheses, and such
benefits payable to an employee hired on or after January 1, 1986, are set
forth below within parentheses.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
125,000 37,500 50,000 62,500 68,750 75,000 81,250
(30,469) (40,625) (50,781) (60,938) (71,094) (81,250)
150,000 45,000 60,000 75,000 82,500 90,000 97,500
(36,563) (48,750) (60,938) (73,125) (85,313) (97,500)
175,000 52,500 70,000 87,500 96,250 105,000 113,750
(42,656) (56,875) (71,094) (85,313) (99,531) (113,750)
200,000 60,000 80,000 100,000 110,000 120,000 130,000
(48,750) (65,000) (81,250) (97,500) (113,750) (130,000)
225,000 67,500 90,000 112,500 123,750 135,000 146,250
(54,844) (73,125) (91,406) (109,688) (127,969) (146,250)
250,000 75,000 100,000 125,000 137,500 150,000 162,500
(60,938) (81,250) (101,563) (121,875) (142,188) (162,500)
300,000 90,000 120,000 150,000 165,000 180,000 195,000
(73,125) (97,500) (121,875) (146,250) (170,625) (195,000)
400,000 120,000 160,000 200,000 220,000 240,000 260,000
(97,500) (130,000) (162,500) (195,000) (227,500) (260,000)
450,000 135,000 180,000 225,000 247,500 270,000 292,500
(109,688) (146,250) (182,813) (219,375) (255,938) (292,500)
500,000 150,000 200,000 250,000 275,000 300,000 325,000
(121,875) (162,500) (203,125) (243,750) (284,375) (325,000)
750,000 225,000 300,000 375,000 412,500 450,000 487,500
(182,813) (243,750) (304,688) (365,625) (426,563) (487,500)
1,000,000 300,000 400,000 500,000 550,000 600,000 650,000
(243,750) (325,000) (406,250) (487,500) (568,750) (650,000)
1,250,000 375,000 500,000 625,000 687,500 750,000 812,500
(304,688) (406,250) (507,813) (609,375) (710,938) (812,500)
1,350,000 405,000 540,000 675,000 742,500 810,000 877,500
(329,063) (438,750) (548,438) (658,125) (767,813) (877,500)
</TABLE>

24
<PAGE>

Under the defined benefit plans of the Company, each employee who retires on
or after reaching the normal retirement age of sixty-five becomes entitled to a
life annuity in an amount dependent on length of service and "average annual
earnings," offset by a percentage of the employee's covered compensation
multiplied by the number of the employee's years of service, as calculated in
accordance with the Internal Revenue Code of 1986, as amended. "Average annual
earnings" is defined as the average earnings in the three calendar years out of
the last 10 calendar years of employment prior to the employee's retirement or
normal retirement date, whichever occurs first, for which such employee
received the highest earnings. Earnings for this purpose generally include
annual base salary (see "Salary" in the Summary Compensation Table above) for
the year in question plus 50% of bonuses (see "Bonus" in the Summary
Compensation Table above) for the previous year to the extent not deferred by
the employee. The compensation classifications set forth in the Pension Plan
Table immediately above are "average annual earnings." The length of service of
certain officers and employees includes for these purposes the number of years
such person served with Freeport or McMoRan, respectively.

The respective annual earnings for 1993 only (not "average annual earnings")
covered by the defined benefit plans and arrangements of the Company, which are
based on the amount of the salary for 1993 reported in the Summary Compensation
Table above and 50% of the amount of the bonus for 1992 reported in the Summary
Compensation Table above to the extent not deferred, for the Named Executive
Officers were as follows, with their respective years of credited service under
the defined benefit plans of the Company at December 31, 1993 being shown in
parentheses: Mr. Moffett, $1,099,000 (13 years); Mr. Latiolais, $525,000 (29
years); Mr. Mealey, $500,000 (18 years); Mr. Adkerson, $325,000 (5 years); Mr.
Goodyear, $325,000 (5 years). Messrs. Moffett, Latiolais, and Mealey were hired
prior to January 1, 1986, and Messrs. Adkerson and Goodyear were hired after
January 1, 1986.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

James C. Dudley, who retired as a director of the Company in 1993, and
Messrs. Bruce, Cunningham, Harrison, McWilliams, Putnam, Rankin, Wharton, and
Woods (collectively, the "1993 Corporate Personnel Committee Members") served
as the members of the Corporate Personnel Committee of the Board during all or
a portion of 1993. None of the 1993 Corporate Personnel Committee Members was
an officer or employee of the Company or any of its subsidiaries during 1993 or
formerly an officer of the Company or any of its subsidiaries, and none of the
1993 Corporate Personnel Committee Members is affiliated with an entity that
has or had in 1993 a significant business relationship with the Company and its
subsidiaries. Messrs. McWilliams and Rankin were, however, co-founders and
officers of McMoRan Oil & Gas Co., a predecessor corporation of the Company.
None of the executive officers of the Company served during 1993 as a director
or as a member of the compensation committee of another entity (other than a
subsidiary of the Company), one of whose executive officers served as a
director or as a member of the Corporate Personnel Committee of the Company.

25
<PAGE>

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Corporate Personnel Committee is composed of six independent directors,
none of whom are employees of the Company. The Committee met three times in
1993. Specific duties of the Committee include determining the compensation of
the chief executive officer (the "Chief Executive Officer") and senior
executive officers of the Company and administering the annual incentive plan,
the long-term incentive plans, and the stock option plans of the Company.

In addition, the Committee reviews the results of an annual comparison of
Company performance and executive compensation relative to the group of oil,
chemical and mining companies comprising the group of peer issuers (the "Peer
Group") whose cumulative total shareholder return is compared in the
performance graph included in the 1994 proxy statement of the Company. The
review is conducted by an independent executive compensation consultant to help
ensure that overall executive compensation levels track Company performance
relative to the Peer Group.

The Committee uses the policies described below as a framework for the
compensation program in which the Company's senior executive officers
participate.

Base salaries of the executive officers have been frozen except for increases
to recognize increased responsibilities through promotions or to recognize
significant changes in market salaries among the members of the Peer Group.
Consistent with this practice, the Chief Executive Officer's base salary did
not increase in 1993, staying at the rate last adjusted in 1990.

The annual incentive plan of the Company is generally designed to provide
above-average variable incentive award opportunities so that total annual cash
compensation is either above Peer Group averages when performance exceeds
certain internal and peer performance standards described below or below such
averages when Company performance is below these standards. The annual
incentive plan is also generally designed to give the Committee considerable
latitude in assessing performance and determining the total amount available
for awards and the size of awards to individual officers.

In 1993 each executive officer was assigned a target award, expressed as a
percentage of base salary, which served as a guideline amount. The combination
of base salaries and target incentive awards is generally designed to achieve
total annual cash compensation substantially equal to 75th percentile Peer
Group levels. Actual annual incentive awards have ranged from zero to a
multiple of the target awards. As a result, the competitive position of total
annual cash compensation has varied substantially from year to year depending
on performance.

Under the terms of the annual incentive plan, no awards will be made for any
year if the five-year average "Return on Investment" is less than 6%. During
the five-year period ending in

26
<PAGE>

1993, the average "Return on Investment" was 10.3%. When determining the total
amount awarded to executive officers for 1993, the Committee considered as a
guideline a limit on the total amount awarded of one and one-half percent of
"Managed Net Income" for such year, which includes net income earned by the
Company and its affiliates whose securities are publicly traded.

During the second quarter of 1993, the Company undertook a restructuring of
its administrative organization. This restructuring represented a major step by
the Company to lower its costs of operating and administering its businesses in
response to weak market prices of the commodities produced by its operating
units. As part of this restructuring, the Company significantly reduced the
number of employees engaged in administrative functions, changed its management
information systems environment to achieve efficiencies, reduced its needs for
office space, "outsourced" a number of administrative functions, and
implemented other actions to lower costs. As a result of this restructuring
process, the level of the Company's administrative cost has been reduced
substantially over what it would have been otherwise, which benefit will
continue in the future; however, the restructuring process entailed incurring
certain one-time costs by the Company. In conjunction with the restructuring
project, the Company changed its accounting systems and undertook a detailed
review of its accounting records and valuation of various assets and
liabilities.

The Company's 1993 earnings reflect charges relating to the restructuring of
the administrative organization, reductions in the book carrying value of
certain assets to estimated recoverable amounts, adjustments to general and
administrative expenses and production and delivery costs resulting from
restructuring activities, and changes in accounting principles. As a result, the
Company reported a net loss per share in 1993, although the Committee believes
that the strategic position of the Company and its ability to maximize future
earnings improved. To avoid penalizing management for taking actions that the
Committee believes are in the best long-term interests of shareholders, the
Committee approved an adjustment to "Managed Net Income" to exclude these
expenses in 1993, with the adjustment to be taken into account in determining
bonuses in future years.

To determine the total amount available for incentive awards in 1993, the
Committee considered certain Company performance factors and operational and
strategic accomplishments achieved in 1993. These performance factors were not
individually weighted.

The financial performance factors included the percentage change in total
"Managed Net Income" over the prior year, return on managed equity, and "Return
on Investment." Estimated 1993 results of these performance factors, before and
after the impact of the adjustments to "Managed Net Income" described above,
were compared to the Company's historical results during each of the last three
fiscal years and to the estimated and actual results of the Peer Group

27
<PAGE>

during the same periods. Operational and strategic accomplishments of the
Company and its subsidiaries during 1993 considered by the Committee included:
(i) the completion of the joint venture formed by an affiliate of the Company
and IMC Fertilizer, Inc., which is anticipated to result in shared annual cost
savings by the parties of at least $95 million; (ii) the expansion of mining
and milling production facilities in Indonesia significantly ahead of plan;
(iii) the addition of 5.9 billion pounds of copper, 7.0 million ounces of gold,
and 39.1 million ounces of silver to Indonesian mineral reserves as a result of
exploration efforts; (iv) the anticipated additional annual cost reductions of
$27 million as a result of organizational restructuring; (v) the increased
sulphur and oil and gas production at Main Pass Block 299, offshore Louisiana
in the Gulf of Mexico; (vi) the acquisition of a corporation that owns a copper
smelter in Spain with an annual production capacity of approximately 150,000
metric tons of metal, and the execution of a management services agreement
pertaining to the operation of a nitrogen and phosphate fertilizer business in
Spain; (vii) the sale of certain enhanced infrastructure assets in Indonesia;
(viii) the sales of certain other assets; and (ix) the elimination of certain
subsidiary bank indebtedness by the use of proceeds from public offerings of
equity securities.

After reviewing these performance factors, the Committee concluded that,
although the current year's financial results were below historical levels and
generally below Peer Group medians, operational and strategic accomplishments
exceeded expectations. Balancing these performance factors, and considering
that certain strategic moves in the best long-term interests of the Company and
shareholders have reduced earnings in the short-term, the Committee approved an
incentive pool of 1.3% of adjusted "Managed Net Income." This percentage is
below the guideline amount and the percentages reserved for incentive awards in
prior years. The dollar amount of the incentive pool declined by 67% from the
prior year, reflecting the decline in total "Managed Net Income" and the
reduced percentage of income reserved for incentive awards.

Although the Committee believes that management should be recognized for
strategic accomplishments in 1993, the Chief Executive Officer asked the
Committee to exclude him from bonus considerations for the year. As a result of
the Chief Executive Officer declining an annual incentive in 1993, his annual
cash compensation was limited to base salary only and is expected to fall in
the lower quartile of cash compensation levels of the Company's Peer Group.
Incentive awards for other named executive officers in 1993 generally
approximated their target annual incentive awards.

Stock and cash long-term incentives award guidelines are intended to provide
a total potential value that is greater than the value of annual cash
compensation to reinforce the importance of shareholder value creation.
Executive officers participate in three long-term incentives: stock options,
freestanding stock appreciation rights ("Freestanding SARs"), and performance
units. Award guidelines for these incentives are expressed as a fixed number of
options, rights, or units, as the case may be, that vary according to the
position level of each participating executive officer. The guidelines were
originally developed by the Committee and confirmed by a competitive review

28
<PAGE>

of compensation practices of the Peer Group conducted by an independent
executive compensation consultant. The total value of long-term incentive
awards is generally intended to produce total compensation based on future
performance that exceeds 75th percentile levels of the Peer Group for the Chief
Executive Officer and substantially equals 75th percentile levels of the Peer
Group for other executive officers. Stock options and Freestanding SARs are
emphasized over performance units.

The Committee encourages executive officers to accumulate significant equity
ownership in the Company by granting stock options. Grants of Freestanding SARs
are also made to provide senior executive officers the means to hold the shares
of Company Common Stock acquired upon their stock option exercises and to add
to their ownership position in the Company. Each Freestanding SAR represents
the right to receive a cash payment equal to the excess of the fair market
value of a share of Company Common Stock on the date of exercise of the
Freestanding SAR over the exercise price of the Freestanding SAR. The exercise
price of a stock option or a Freestanding SAR is equal to the fair market value
of a share of Company Common Stock on the date of grant of such stock option or
Freestanding SAR.

The stock option and Freestanding SAR grants made in 1993 to senior executive
officers were based on the award guidelines described above. The number of
previously granted stock options was also taken into account by the Committee
when administering the guidelines. To increase the incentive and retention
value of stock option and Freestanding SAR grants, the Committee decided to
make larger, less frequent grants of stock options and Freestanding SARs to
senior executive officers in 1992 instead of smaller, annual grants.
Accordingly, no grants of stock options and Freestanding SARs were made by the
Committee in 1993 to the Chief Executive Officer and certain executive
officers. Other executive officers received grants based on the award
guidelines, the number of their previously granted stock options, and the
Committee's desire to recognize their promotions and increased
responsibilities.

The Committee supplements stock option grants to senior executive officers
with annual grants of performance units. Although the Committee generally has
the authority to adjust actual awards above or below the guideline amounts,
actual awards of performance units to the Chief Executive Officer and other
executive officers in 1993 equaled the guideline amounts and did not reflect
any other factors.

Performance units are designed to link a portion of executive compensation to
cumulative earnings per share because the Company believes that sustained
profit performance will help support increases in shareholder value. Each
performance unit covered by a performance award is annually credited with an
amount equal to the "Annual Earnings Per Share" (or "Net Loss Per Share") of
Company Common Stock until the "Award Valuation Date" for such performance
award, which is generally December 31 of the year in which the third
anniversary of the grant of such performance award occurs. Such credits are
generally paid as soon as practicable after such

29
<PAGE>

"Award Valuation Date." The adjustments to "Managed Net Income" approved by the
Committee in determining annual incentives were also made to "Annual Earnings
Per Share" for purposes of 1993 credits to outstanding performance units.

Under new section 162(m) ("Section 162(m)") of the Internal Revenue Code of
1986, as amended, no deduction by a publicly held corporation shall be allowed
for "applicable employee remuneration" made by the corporation to certain
highly compensated employees to the extent that the amount of such remuneration
for the taxable year for any such individual exceeds $1,000,000. Section 162(m)
provides for the exclusion of performance based compensation from the
"applicable employee remuneration" that is subject to such deduction
limitation. It is the policy of the Company that the components of executive
compensation that are inherently performance based should qualify for such
exclusion from the deduction limitation under Section 162(m). Those components
consist of the annual incentive awards, stock options, Freestanding SARs, and
performance units discussed hereinabove. In connection therewith, the Board of
Directors of the Company has recommended that, at their 1994 annual meeting,
the stockholders of the Company approve amendments to the Annual Incentive Plan
and the 1992 Long-Term Performance Incentive Plan of the Company that are
designed to qualify compensation payable thereunder for deductibility under
Section 162(m). Under proposed regulations, including transition rules,
promulgated by the Internal Revenue Service of the Department of the Treasury
pursuant to Section 162(m), it is not necessary that the 1992 Stock Option Plan
of the Company be amended at this time to maintain the deductibility of
compensation payable thereunder upon the exercise of stock options and
Freestanding SARs. The Company anticipates that the remaining components of
individual executive compensation for each highly compensated employee of the
Company that do not qualify for any exclusion from the deduction limitation of
Section 162(m) should not exceed $1,000,000 in any given year for most of such
employees, respectively, and should therefore qualify for deductibility in most
instances.

William H. Cunningham, Chairman

Robert W. Bruce III

William B. Harrison, Jr.

George Putnam

J. Taylor Wharton

Ward W. Woods, Jr.

30
<PAGE>

PERFORMANCE GRAPH

The following graph compares the change in the cumulative total shareholder
return on Company Shares with the cumulative total return of the Standard &
Poor's 500 Stock Index and the cumulative total return of a group of peer
issuers during 1989, 1990, 1991, 1992, and 1993.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
FREEPORT-MCMORAN INC.,
S&P 500 INDEX & PEER GROUP

[PERFORMANCE GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
FREEPORT-
Measurement period MCMORAN PEER
(Fiscal year Covered) INC. S&P 500 GROUP
- --------------------- --------- --------- -------
<S> <C> <C> <C>
Measurement PT-12/31/88 $100.00 $100.00 $100.00
FYE 12/31/89 $125.91 $131.69 $134.66
FYE 12/31/90 $147.18 $127.60 $119.64
FYE 12/31/91 $178.16 $166.47 $134.30
FYE 12/31/92 $168.93 $179.15 $146.35
FYE 12/31/93 $205.18 $197.21 $161.58
</TABLE>

ASSUMES $100 INVESTED ON DECEMBER
31, 1988 IN FREEPORT-McMoRan INC.
COMMON STOCK, S&P 500 INDEX &
PEER GROUP

* TOTAL RETURN ASSUMES
REINVESTMENT OF DIVIDENDS

31
<PAGE>

On June 30, 1992, the Company distributed to the holders of its Common Stock
all the outstanding shares of common stock of FM Properties Inc. ("FMPO") at
the rate of one share of FMPO common stock for every ten shares of Company
Common Stock. The value of each such share of FMPO common stock on the date of
such distribution was determined by the Company to be equal to $1.75, or $.175
for each Company Share. The performance graph above was prepared under the
assumption that a special dividend of $.175 was paid on each Company Share and
reinvested in Company Shares as of June 30, 1992.

The members of the peer group referred to in the performance graph above are
Air Products & Chemicals Inc., Aluminum Co. of America, Amerada Hess Corp.,
Amoco Corp., Ashland Oil Inc., Burlington Northern Inc., Cyprus Amax Minerals
Company, Dexter Corp., Dow Chemical Company, FMC Corp., Hercules Inc.,
Louisiana Land & Exploration Co., Maxus Energy Corp., Murphy Oil Corp.,
Occidental Petroleum Corp., Olin Corp., Owens Corning Fiberglass Corp.,
Pennzoil Co., PPG Industries Inc., Union Pacific Corp., Unocal Corp., Upjohn
Co., Valero Energy Corp., and The Williams Companies. AMAX Inc. was a member of
the peer group referred to in the performance graph appearing in the proxy
statement of the Company for 1993. In November, 1993, AMAX Inc. was merged with
and into Cyprus Minerals Company, and Cyprus Minerals Company survived the
merger and changed its name to Cyprus Amax Minerals Company. Shareholder return
information with respect to AMAX Inc. is no longer available; so Cyprus Amax
Minerals Company has been substituted for AMAX Inc. in the peer group of the
Company and its cumulative total shareholder return is included in that of the
peer group reflected in the performance graph above.

RATIFICATION OF AUDITORS

The Board of Directors of the Company seeks ratification by the stockholders
of the Board's appointment of Arthur Andersen & Co. to act as the independent
auditors of the financial statements of the Company and its subsidiaries for
the year 1994. The Board has not determined what, if any, action would be taken
should the appointment of Arthur Andersen & Co. not be ratified. One or more
representatives of the firm will be available at the Meeting to respond to
appropriate questions, and those representatives will also have an opportunity
to make a statement.

PROPOSED AMENDMENTS TO THE ANNUAL INCENTIVE PLAN

The Board of Directors of the Company unanimously proposes that stockholders
approve the adoption of amendments to the Company's Annual Incentive Plan (the
"Annual Plan"). The major changes currently proposed to be made in the Annual
Plan are summarized below. The following summaries of the Plan and proposed
changes are qualified in their entirety by reference to the text of the Annual
Plan, as it is proposed to be amended, which is attached to the Proxy Statement
as Exhibit A.

32
<PAGE>

REASONS FOR PROPOSED CHANGES

Section 162(m) of the Internal Revenue Code of 1986, as amended, limits tax
deductions for executive compensation under certain circumstances. The
deduction restrictions relate to the compensation of "covered employees" as
defined in Section 162(m), which are the chief executive officer and the four
other highest paid executive officers of the Company for the previous fiscal
year. Under Section 162(m), certain performance-based compensation will be tax
deductible without regard to the limitation imposed by Section 162(m) if the
compensation is paid upon the achievement of preestablished performance goals
and the material terms of the arrangements are approved by shareholders of the
taxpaying corporation.

The Board proposes to amend the Annual Plan in such a manner as to qualify
Annual Plan awards as performance-based compensation in compliance with Section
162(m) and proposed regulations thereunder and to maximize the Company's
ability to grant awards under the Annual Plan to covered employees that will be
deductible as compensation.

SUMMARY OF ANNUAL PLAN

The Annual Plan was adopted by the stockholders of the Company in 1987. The
purpose of the Annual Plan is to provide annual cash incentive bonuses for
senior executives of the Company whose performance in fulfilling the
responsibilities of their positions can have a major impact on the Company's
profitability and future growth.

Salaried officers or employees of the Company or any of its subsidiaries
(including officers or employees who are also directors) are eligible to
receive awards. Currently, approximately 7,570 employees would be eligible to
receive awards; however, as of December 31, 1993, only 9 active officers and
employees were participating in the Annual Plan. Awards are made by the
Corporate Personnel Committee of the Board of Directors, which currently
consists of six members of the Board each of whom is a "disinterested person"
with the meaning of Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and
Exchange Commission under the Securities Act of 1934. It is also expected that
Committee members will qualify as "outside directors" for purposes of meeting
the requirements for performance-based compensation under Section 162(m).

Awards will be made for any year and will be paid in cash by the following
year unless and to the extent that a participant has made an effective election
to defer payment for up to ten years. Generally, unpaid deferred amounts will
bear interest at a rate that, pursuant to Committee determination in accordance
with the terms of the Annual Plan, is currently equal to the prime commercial
lending rate announced from time to time by The Chase Manhattan Bank, N.A.

No awards will be made with respect to any calendar year if the average of
the "Return on Investment" (as defined in the Annual Plan) for such year and
each of the four preceding calendar

33
<PAGE>

years, after giving effect to any amounts awarded or credited with respect to
such prior years and the amounts that would have been so awarded or credited in
such year, is less than six percent (the "Return on Investment Test").

The Annual Plan may be terminated at any time, in whole or in part, and may
be amended from time to time by the Board or, upon delegation, by the
Committee. No such amendment or termination shall, however, adversely affect
any awards previously made to a participant and deferred by such participant
pursuant to the Annual Plan.

The adoption of the Annual Plan, as proposed to be amended, does not preclude
the Company from adopting or continuing in effect other compensation
arrangements, which may be either generally applicable or applicable only in
specific cases.

SUMMARY OF PROPOSED CHANGES TO THE ANNUAL PLAN

The Annual Plan currently provides that the Committee shall, from time to
time in its sole discretion, determine which officers and employees shall be
granted awards under the Annual Plan and the amount of such awards to be
granted. The proposed amendments would provide that the amount of any award
made by the Committee with respect to any year to a "Covered Employee" (as
defined in the proposed amendments to the Annual Plan) shall be equal to a
specified percentage of "Net Cash Provided by Operating Activities" (as defined
in the Annual Plan) for such year, although the Committee retains the
discretion to reduce or eliminate the amount of any such award to any "Covered
Employee." The definition of "Covered Employee" provided in the proposed
amendments is intended generally to include all "covered employees" as defined
in Section 162(m).

The Annual Plan currently provides that the Committee should consider 1.5% of
"Managed Net Income" as a guideline when determining the maximum aggregate
amount of awards made to all participants under the Annual Plan for any
calendar year. The proposed amendments would replace such guideline with a
guideline of 2.5% of "Net Cash Provided by Operating Activities" for purposes
of determining the maximum aggregate amount of awards made to all participants
under the Annual Plan for any calendar year. The proposed amendments would also
affirmatively limit the maximum annual aggregate amount of possible awards to
"Covered Employees" made under the Annual Plan to such percentage of "Net Cash
Provided by Operating Activities." The Board of Directors believes that "Net
Cash Provided by Operating Activities" is a critical factor in the success of
the business of the Company and that, in preference to the "Managed Net Income"
guideline, it would provide a better guideline in determining bonus awards more
commensurate with management performance.

The Annual Plan currently permits the Committee to make adjustments to
"Managed Net Income" and the Company's "Total Investment of Capital" (as
defined in the Annual Plan) as it

34
<PAGE>

deems appropriate in its judgment when calculating "Return on Investment" for
purposes of the Return on Investment Test under the Annual Plan. The proposed
amendments would eliminate the ability of the Committee to make such
adjustments with respect to awards to Covered Employees.

The Committee and the Board believe that the effects of the proposed
amendments will be to restrict the discretion of the Committee in such a manner
as to preserve the ability of the Company to grant awards under the Annual Plan
that will qualify as deductible compensation under Section 162(m).

For information with respect to the benefits or amounts under the Annual
Plan, as proposed to be amended, that would have been received by or allocated
to each of the Named Executive Officers, all current executive officers as a
group, all current directors who are not executive officers as a group, and all
employees, including all current officers who are not executive officers, as a
group, for 1993 if the Annual Plan, as proposed to be amended, had been in
effect, see the table under the caption "Summary of the Long-Term Plan" below.

VOTE REQUIRED FOR APPROVAL OF THE AMENDMENTS TO THE ANNUAL PLAN

Approval of the proposed amendments to the Annual Plan requires the
affirmative vote of the holders of at least a majority of the Company Shares
present or represented and entitled to vote at the 1994 Annual Meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE AMENDMENTS TO THE ANNUAL PLAN.

PROPOSED 1992 LONG-TERM PERFORMANCE INCENTIVE PLAN

The Board of Directors of the Company unanimously proposes that stockholders
approve the Company's 1992 Long-Term Performance Incentive Plan (the "Long-Term
Plan"). The following summary of the Long-Term Plan is qualified in its
entirety by reference to the text of the Long-Term Plan, which is attached to
the Proxy Statement as Exhibit B.

REASONS FOR PROPOSAL

35
<PAGE>

without regard to the limitation imposed by Section 162(m) if the compensation
is paid upon the achievement of pre-established performance goals and the
material terms of the arrangement are approved by shareholders of the taxpaying
corporation.

The Long-Term Plan was adopted by the Board of Directors in 1992. Subsequent
to the enactment of Section 162(m) and in accordance with requirements thereof,
the Board amended the Long-Term Plan in 1994 and proposes that the stockholders
of the Company adopt the Long-Term Plan, as amended, so as to qualify
performance awards under the Long-Term Plan as performance-based compensation
in compliance with Section 162(m) and proposed regulations thereunder and to
maximize the Company's ability to grant performance awards under the Long-Term
Plan to covered employees that will be deductible as compensation.

SUMMARY OF THE LONG-TERM PLAN

The purpose of the Long-Term Plan is to provide incentive awards based on
long-term performance for senior executives of the Company whose performance in
fulfilling the responsibilities of their positions can have a major impact on
the Company's profitability and future growth.

Salaried officers or employees of the Company or any of its subsidiaries
(including officers or employees who are also directors) are eligible to be
granted performance awards. Currently, approximately 7,570 employees would be
eligible to receive performance awards; however, as of December 31, 1993, only
35 active officers and employees were participating in the Long-Term Plan.
Performance awards are made by the Corporate Personnel Committee of the Board
of Directors, which currently consists of six members of the Board each of whom
is a "disinterested person" within the meaning of Rule 16b-3. It is also
expected that Committee members will qualify as "outside directors" for
purposes of meeting the requirements for performance-based compensation under
Section 162(m). A participant may hold more than one outstanding performance
award at any time.

A performance award consists of a number of performance units, which are
credited to a performance award account. Each such account is credited, as of
December 31 of each year, with an amount equal to the "Annual Earnings Per
Share" or "Net Loss Per Share," as defined in the Long-Term Plan, of the
Company's Common Stock for each performance unit then credited to such account.
The balance in the account is paid to the participant in cash as soon as
practicable after December 31 of the third year following the date of grant,
unless the participant's employment with the Company terminates prior to that
date.

If a participant's employment with the Company or one of its subsidiaries
terminates prior to December 31 of the third year following the date of grant
for any reason other than death, disability or retirement (and other than
within two years of a change in control of the Company),

36
<PAGE>

the balances in such participant's performance award accounts are forfeited. If
such termination is as a result of an event other than a "Discharge for Cause,"
as defined in the Long-Term Plan, the Committee has, however, the discretion to
determine that, as a result of special mitigating circumstances, no forfeiture
shall occur. If such termination of employment is by virtue of death,
disability or retirement, or is within two years following a change in control,
performance award account balances shall be paid to such participant as soon as
practicable after December 31 of the year in which such termination occurs. In
addition, notwithstanding the foregoing, the Committee may pay a supplemental
amount to a former participant, determined as if the term of a performance
award of such former participant had been extended for up to an additional
three years after the date of termination of such participant's employment with
the Company.

Under the Long-Term Plan, the Committee may suspend the making of any or all
credits that would otherwise have been made to performance award accounts
belonging to all or certain participants. The Committee may determine that
account balances shall bear interest during any such suspension period.

A participant may elect to defer for up to ten years the payment of all or a
portion of any amount to which he has become entitled. Unpaid deferred amounts
will bear interest at a rate that, pursuant to Committee determination in
accordance with the terms of the Long-Term Plan, is currently equal to the
prime commercial lending rate announced from time to time by The Chase
Manhattan Bank, N.A.

The number of performance units outstanding at any time under the Long-Term
Plan may not exceed 3,000,000. Performance units that have been forfeited, or
in respect of which payment has been made or deferred, as provided in the Long-
Term Plan, are no longer considered to be outstanding under the Long-Term Plan
and may be re-granted. The Long-Term Plan will expire on December 31, 1997, and
no performance awards may be granted under the Long-Term Plan after such date.

The Long-Term Plan may be terminated at any time, in whole or in part, and
may be amended from time to time by the Board or, upon delegation, by the
Committee. No such amendment or termination shall, however, adversely affect
the amounts credited to the performance award account of a participant with
respect to performance awards previously made to such participant.

The adoption of the Long-Term Plan, as amended, does not preclude the Company
from adopting or continuing in effect other compensation arrangements, which
may be either generally applicable or applicable only in specific cases.

The Long-Term Plan provides that the Committee shall, from time to time in
its sole discretion, determine which officers and employees shall be granted
performance awards under

37
<PAGE>

the Long-Term Plan and the number of performance units covered by such
performance awards; however, with respect to any performance award made by the
Committee in any year to a "Covered Employee" (as defined the Long-Term Plan),
the Long-Term Plan specifies the number of performance units to be covered by
such performance award in any such year. Such specified annual numbers are,
respectively, 100,000 for the chief executive officer, 75,000 for the chief
operating officer, and 40,000 for any other "Covered Employee" of the Company.
The definition of "Covered Employee" provided in the Long-Term Plan is intended
generally to include all "covered employees" as defined in Section 162(m).

The Long-Term Plan currently permits the Committee to make adjustments to
"Net Income," "Annual Earnings Per Share," or "Net Loss Per Share" (as such
terms are defined in the Long-Term Plan) as it deems appropriate in its
judgment when making credits or payments in respect of performance awards under
the Long-Term Plan. The Committee is prohibited, however, from making such
adjustments to payments with respect to performance awards of, or credits to
performance award accounts of, any "Covered Employee."

The Committee and the Board believe that the discretion of the Committee is
restricted in such a manner as to preserve the ability of the Company to deduct
amounts paid in respect of performance awards under the Long-Term Plan as
compensation under Section 162(m).

38
<PAGE>

The following table sets forth information with respect to the maximum
benefits or amounts under the Annual Plan, as proposed to be amended, and the
Long-Term Plan, as proposed to be approved, that would have been received by or
allocated to each of the Named Executive Officers, all current executive
officers as a group, all current directors who are not executive officers as a
group, and all employees, including all current officers who are not executive
officers, as a group, for 1993 if the Annual Plan, as proposed to be amended,
and the Long-Term Plan, as proposed to be approved, had been in effect.

NEW BENEFIT PLANS

<TABLE>
<CAPTION>
1992 LONG-TERM PERFORMANCE
ANNUAL INCENTIVE PLAN INCENTIVE PLAN
--------------------------- --------------------------
DOLLAR NUMBER DOLLAR NUMBER
NAME AND POSITION VALUE ($) (A) OF UNITS (B) VALUE ($) (C) OF UNITS (D)
----------------- -------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
James R. Moffett,
Chairman of the Board
and Chief Executive
Officer $938,312 0 (c) 100,000
Rene L. Latiolais,
President and
Chief Operating
Officer $674,412 0 (c) 75,000
George A. Mealey,
Executive Vice
President $439,834 0 (c) 40,000
Richard C. Adkerson,
Senior Vice President
and Chief Financial
Officer $439,834 0 (c) 40,000
Charles W. Goodyear,
Senior Vice President
and Chief Investment
Officer $439,834 0 (c) 40,000
Executive Group (e) 0 (c) (e)
Non-Executive Officer
Director Group(f) 0 0 0 0
Non-Executive Officer
Employee Group (e) 0 (c) (e)
</TABLE>
- ---------
(a) The amounts of awards that may be granted under the Annual Plan in 1994
will be determined by reference to "Net Cash Provided by Operating
Activities" for 1994 and are thus not determinable at this time. The
amounts set forth in this column of this table are the maximum amounts of
awards that would have been received or allocated in 1993 if the Annual
Plan, as proposed to be amended, had been in effect in 1993 and if the
Committee had determined to award the maximum amount possible under the
Annual Plan, as proposed to be amended, to each of the "Covered Employees"
as defined therein.

39
<PAGE>

(b) No units are awarded under the Annual Plan.
(c) The amounts of payments that may be made with respect to performance awards
that may be granted under the Long-Term Plan in 1994 will be determined by
reference to "Annual Earnings Per Share" or "Net Loss Per Share" for 1994,
1995, 1996, and 1997 and are thus not determinable at this time. Similarly,
the amounts of payments that would be made with respect to performance
awards that would have been granted in 1993 if the Long-Term Plan, as
proposed to be approved, had been in effect in 1993 would be determined by
reference to "Annual Earnings Per Share" or "Net Loss Per Share" for 1993,
1994, 1995, and 1996 and would thus not be determinable at this time.
(d) The numbers of units set forth in this column of this table are the maximum
numbers of performance units that would be granted in 1994 in accordance
with the terms of the Long-Term Plan, as proposed to be approved, if the
Committee were to award in 1994 the maximum number of performance units
possible under the Long-Term Plan, as proposed to be approved, to each of
the "Covered Employees" as defined therein.
(e) The members of the referenced group are subject to change and the amounts
of awards and performance units that may be granted to persons other than
"Covered Employees" are not precisely specified in the Annual Plan and the
Long-Term Plan, respectively; thus these benefits or amounts for the
referenced group are not determinable.
(f) The current directors who are not executive officers are not eligible to
participate in the Annual Plan or the Long-Term Plan.

VOTE REQUIRED FOR APPROVAL OF THE 1992 LONG-TERM PERFORMANCE INCENTIVE PLAN

Approval of the Long-Term Plan requires the affirmative vote of the holders
of at least a majority of the Company Shares present or represented and
entitled to vote at the 1994 Annual Meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE LONG-TERM PLAN.

40
<PAGE>

EXHIBIT A

SET FORTH BELOW IS THE TEXT OF THE ANNUAL INCENTIVE PLAN OF FREEPORT-MCMORAN
INC., AS PROPOSED TO BE AMENDED. MATERIAL TO BE ADDED AS A RESULT OF THE
AMENDMENTS IS SHOWN IN BOLDFACE TYPE, AND MATERIAL TO BE DELETED IS SHOWN IN
BRACKETS.

ANNUAL INCENTIVE PLAN

OF FREEPORT-MCMORAN INC.

ARTICLE I

PURPOSE OF PLAN

SECTION 1.1. The purpose of the Annual Incentive Plan of Freeport-McMoRan
Inc. (the "Plan") is to provide incentives for senior executives whose
performance in fulfilling the responsibilities of their positions can have a
major impact on the profitability and future growth of Freeport-McMoRan Inc.
(the "Company") and its subsidiaries.

ARTICLE II

ADMINISTRATION OF THE PLAN

SECTION 2.1. Subject to the authority and powers of the Board of Directors in
relation to the Plan as hereinafter provided, the Plan shall be administered by
a Committee designated by the Board of Directors consisting of two or more
members of the Board each of whom is a "disinterested person" within the
meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934. The Committees shall have full
authority to interpret the Plan and from time to time to adopt such rules and
regulations for carrying out the Plan as it may deem best. All determinations
by the Committee shall be made by the affirmative vote of a majority of its
members, but any determination reduced to writing and signed by a majority of
the members shall be fully as effective as if it had been made by a majority
vote at a meeting duly called and held. All decisions by the Committee pursuant
to the provisions of the Plan and all orders or resolutions of the Board of
Directors pursuant thereto shall be final, conclusive and binding on all
persons, including the Participants, the Company and its subsidiaries and their
respective equity holders.

A-1
<PAGE>

ARTICLE III

ELIGIBILITY FOR AND PAYMENT OF AWARDS

SECTION 3.1. Subject to the provisions of the Plan, in each calendar year the
Committee may select salaried officers or employees (including officers or
employees who are also directors) of the Company or any of its subsidiaries to
receive Awards under the Plan with respect to such year, and determine the
amount of such Awards.

SECTION 3.2. SUBJECT TO THE PROVISIONS OF THE PLAN, Awards with respect to
any year shall be paid to each Participant at such time established by the
Committee following the determination of the amounts of such Awards, which
PAYMENT shall in no event be later than FEBRUARY 28 [January 31] of the year
following such Award Year.

SECTION 3.3. Notwithstanding the provisions of Section 3.2, if, prior to the
date established by the Committee for any Award Year, a Participant shall so
elect, in accordance with procedures established by the Committee, all or any
part of an Award to such Participant with respect to such Award Year shall be
deferred and paid in one or more periodic installments, not in excess of ten,
at such time or times before or after the date of such Participant's
termination of employment, but not later than ten years after such date of
termination of employment, as shall be specified in such election. If and only
if any Award or portion thereof is so deferred for payment after December 31 of
the year following such Award Year, such Award or portion thereof, as the case
may be, shall, commencing with January 1 of the year following such Award Year,
be increased at a rate equal to the prime commercial lending rate announced
from time to time by The Chase Manhattan Bank, N.A. (compounded quarterly) or
at such other rate and in such manner as shall be determined from time to time
by the Committee. If such Participant's employment is terminated otherwise than
by death, retirement under the Company's retirement plan, or retirement with
the consent of the Company outside the Company's retirement plan and if, on the
date of such termination, there remain unpaid any installments of Awards which
have been deferred as provided in this Section 3.3, the Committee may, in its
sole discretion, authorize payment to the Participant of the aggregate amount
of such unpaid installments in a lump sum, notwithstanding such election.

SECTION 3.4. (A) NOTWITHSTANDING THE PROVISIONS OF SECTIONS 3.1, 3.2, 3.3,
4.2(A), AND 4.2(B) HEREOF, ANY AWARD TO ANY COVERED EMPLOYEE SHALL BE GRANTED
IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 3.4. SUBJECT TO THE
DISCRETION OF THE COMMITTEE AS SET FORTH IN SECTION 4.2(C) HEREOF, THE AMOUNT
OF THE AWARD THAT MAY BE GRANTED WITH RESPECT TO ANY CALENDAR YEAR TO THE
COVERED EMPLOYEE WHO IS THE CHIEF EXECUTIVE OFFICER OF THE COMPANY AT THE TIME
OF SUCH GRANT SHALL BE 32% OF THE PLAN FUNDING AMOUNT FOR SUCH YEAR, THE AMOUNT
OF THE AWARD THAT MAY BE GRANTED WITH RESPECT TO ANY CALENDAR YEAR TO THE
COVERED EMPLOYEE WHO IS THE CHIEF OPERATING OFFICER OF

A-2
<PAGE>

THE COMPANY AT THE TIME OF SUCH GRANT SHALL BE 23% OF THE PLAN FUNDING AMOUNT
FOR SUCH YEAR, AND THE AMOUNT OF THE AWARD THAT MAY BE GRANTED WITH RESPECT TO
ANY CALENDAR YEAR TO ANY OTHER COVERED EMPLOYEE SHALL BE, AS TO EACH SUCH
INDIVIDUAL, 15% OF THE PLAN FUNDING AMOUNT FOR SUCH YEAR.

(B) ALL AWARDS TO COVERED EMPLOYEES UNDER THE PLAN WILL BE MADE AND
ADMINISTERED BY TWO OR MORE MEMBERS OF THE COMMITTEE WHO ARE ALSO "OUTSIDE
DIRECTORS" WITHIN THE MEANING OF SECTION 162(M) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, AND RULES PROMULGATED BY THE INTERNAL REVENUE SERVICE OF THE
DEPARTMENT OF THE TREASURY THEREUNDER.

(C) ANY PROVISION OF THE PLAN TO THE CONTRARY NOTWITHSTANDING, NO COVERED
EMPLOYEE SHALL BE ENTITLED TO ANY PAYMENT OF AN AWARD WITH RESPECT TO A
CALENDAR YEAR UNLESS THE MEMBERS OF THE COMMITTEE REFERRED TO IN SECTION 3.4(B)
HEREOF SHALL HAVE CERTIFIED THE PLAN FUNDING AMOUNT FOR SUCH YEAR AND THAT THE
CONDITION OF SECTION 4.1 HEREOF HAS BEEN MET FOR SUCH YEAR.

ARTICLE IV

GENERAL PROVISIONS

SECTION 4.1. Any provision of the Plan to the contrary notwithstanding, no
Award shall be made pursuant to Section 3.1 OR 3.4 with respect to any calendar
year if the average of the Return on Investment for such calendar year and each
of the four preceding calendar years, after giving effect to the aggregate
amount (if any) that was awarded or credited with respect to such prior years
and the aggregate amount that would otherwise have been so awarded or credited
with respect to such calendar year, would be less than six percent.

SECTION 4.2. (a) In determining the aggregate amount awarded to Participants
under the Plan for any calendar year, the Committee shall consider as a
guideline that the aggregate amount of all Awards granted with respect to any
calendar year should not exceed TWO [one] and one-half percent of NET CASH
PROVIDED BY OPERATING ACTIVITIES [Managed Net Income] for such year.

(b) If Managed Net Income or Total Investment of Capital for any year shall
have been affected by special factors (including material changes in accounting
policies or practices, material acquisitions or dispositions of property, or
other unusual items) which in the Committee's judgment should or should not be
taken into account, in whole or in part, in the equitable administration of the
Plan, the Committee may, for any purpose of the Plan, adjust Managed Net Income
or Total Investment of Capital and make payments and reductions accordingly
under the Plan.

A-3
<PAGE>

(C) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPHS (A) AND (B) ABOVE, THE
AMOUNT AVAILABLE FOR THE GRANT OF AWARDS UNDER THE PLAN TO COVERED EMPLOYEES
WITH RESPECT TO A CALENDAR YEAR SHALL BE EQUAL TO THE PLAN FUNDING AMOUNT FOR
SUCH YEAR AND ANY ADJUSTMENTS MADE IN ACCORDANCE WITH OR FOR THE PURPOSES OF
SUBPARAGRAPHS (A) OR (B) SHALL BE DISREGARDED FOR PURPOSES OF CALCULATING THE
PLAN FUNDING AMOUNT. THE COMMITTEE MAY, IN THE EXERCISE OF ITS DISCRETION,
DETERMINE THAT THE AGGREGATE AMOUNT OF ALL AWARDS GRANTED TO COVERED EMPLOYEES
WITH RESPECT TO A CALENDAR YEAR SHALL BE LESS THAN THE PLAN FUNDING AMOUNT FOR
SUCH YEAR, BUT THE EXCESS OF SUCH PLAN FUNDING AMOUNT OVER SUCH AGGREGATE
AMOUNT COVERED BY AWARDS GRANTED TO COVERED EMPLOYEES SHALL NOT BE AVAILABLE
FOR ANY AWARDS TO COVERED EMPLOYEES WITH RESPECT TO FUTURE YEARS. IN ADDITION,
THE COMMITTEE MAY, IN THE EXERCISE OF ITS DISCRETION, REDUCE OR ELIMINATE THE
AMOUNT OF AN AWARD TO A COVERED EMPLOYEE OTHERWISE CALCULATED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 3.4 PRIOR TO PAYMENT THEREOF.

SECTION 4.3. A Participant may designate in writing a beneficiary (including
the trustee or trustees of a trust) who shall upon the death of such
Participant be entitled to receive all amounts which would have been payable
hereunder to such Participant. A Participant may rescind or change any such
designation at any time. Except as provided in this Section 4.3, none of the
amounts which may be payable under the Plan may be assigned or transferred
otherwise than by will or by the laws of descent and distribution.

SECTION 4.4. All payments made pursuant to the Plan shall be subject to
withholding in respect of income and other taxes required by law to be
withheld, in accordance with procedures to be established by the Committee.

SECTION 4.5. The selection of an individual for participation in the Plan
shall not give such Participant any right to be retained in the employ of the
Company or any of its subsidiaries, and the right of the Company and of any
such subsidiary to dismiss or discharge any such Participant is specifically
reserved. The benefits provided for Participants under the Plan shall be in
addition to, and shall in no way preclude, other forms of compensation to or in
respect of such Participants.

SECTION 4.6. The Board of Directors and the Committee shall be entitled to
rely on the advice of counsel and other experts, including the independent
public accountants for the Company. No member of the Board of Directors or of
the Committee or any officers of the Company or its subsidiaries shall be
liable for any act or failure to act under the Plan, except in circumstances
involving bad faith on the part of such member or officer.

SECTION 4.7. NOTHING CONTAINED IN THE PLAN SHALL PREVENT THE COMPANY OR ANY
SUBSIDIARY OR AFFILIATE OF THE COMPANY FROM ADOPTING OR CONTINUING IN EFFECT
OTHER COMPENSATION ARRANGEMENTS, WHICH ARRANGEMENTS MAY BE EITHER GENERALLY
APPLICABLE OR APPLICABLE ONLY IN SPECIFIC CASES.

A-4
<PAGE>

ARTICLE V

AMENDMENT OR TERMINATION OF THE PLAN

SECTION 5.1. The Board of Directors may at any time terminate, in whole or in
part, or from time to time amend the Plan, provided that, except as otherwise
provided in the Plan, no such amendment or termination shall adversely affect
any Awards previously made to a Participant and deferred by such Participant
pursuant to Section 3.3. In the event of such termination, in whole or in part,
of the Plan, the Committee may in its sole discretion direct the payment to
Participants of any Awards not theretofore paid out prior to the respective
dates upon which payments would otherwise be made hereunder to such
Participants, and in a lump sum or installments as the Committee shall
prescribe with respect to each such Participant. The Board may at any time and
from time to time delegate to the Committee any or all of its authority under
this Section 5.1.

ARTICLE VI

DEFINITIONS

SECTION 6.1. For the purposes of the Plan, the following terms shall have the
meanings indicated:

(a) Award: The grant of an award of cash by the Committee to a
Participant pursuant to Section 3.1 OR 3.4.

(b) Award Year: Any calendar year with respect to which an Award may be
granted.

(d) Committee: The Committee designated pursuant to Section 2.1. Until
otherwise determined by the Board of Directors, the Corporate Personnel
Committee designated by such Board shall be the Committee under the Plan.

(E) COVERED EMPLOYEE: AT ANY DATE, (I) ANY INDIVIDUAL WHO, WITH RESPECT
TO THE PREVIOUS TAXABLE YEAR OF THE COMPANY, WAS A "COVERED EMPLOYEE" OF
THE COMPANY WITHIN THE MEANING OF SECTION 162(M) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES PROMULGATED THEREUNDER BY THE
INTERNAL REVENUE SERVICE OF THE DEPARTMENT OF THE TREASURY, PROVIDED,
HOWEVER, THE TERM "COVERED EMPLOYEE" SHALL NOT INCLUDE ANY SUCH INDIVIDUAL
WHO IS DESIGNATED BY THE COMMITTEE, IN ITS DISCRETION, AT THE TIME OF ANY
GRANT AS REASONABLY EXPECTED NOT TO BE SUCH A "COVERED EMPLOYEE" WITH
RESPECT TO THE CURRENT TAXABLE YEAR OF THE COMPANY AND (II) ANY INDIVIDUAL
WHO IS DESIGNATED BY THE COMMITTEE, IN ITS DISCRETION, AT THE TIME OF ANY
GRANT AS REASONABLY EXPECTED TO BE SUCH A "COVERED EMPLOYEE" WITH RESPECT
TO THE CURRENT TAXABLE YEAR OF THE COMPANY. NOTWITHSTANDING THE FOREGOING,
AT ANY DATE IN

A-5
<PAGE>

FISCAL YEAR 1994, "COVERED EMPLOYEE" SHALL MEAN ANY INDIVIDUAL DESIGNATED
BY THE COMMITTEE, IN ITS DISCRETION, AT THE TIME OF ANY GRANT AS REASONABLY
EXPECTED TO BE A "COVERED EMPLOYEE" WITH RESPECT TO THE COMPANY'S TAXABLE
YEAR 1994.

(F) [(e)] Managed Net Income: With respect to any year, the sum of (i)
the net income (or net loss) of the Company and its consolidated
subsidiaries for such year as shown in the Company's Annual Report to
Stockholders for such year; plus (or minus) (ii) the minority interests'
share in the net income (or net loss) of the Company's consolidated
subsidiaries for such year as shown in the Company's Annual Report to
Stockholders for such year; PLUS (OR MINUS) (III) CHANGES IN ACCOUNTING
PRINCIPLES OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES FOR SUCH YEAR
PLUS (OR MINUS) THE MINORITY INTERESTS' SHARE IN SUCH CHANGES IN ACCOUNTING
PRINCIPLES AS SHOWN IN THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR SUCH
YEAR; PLUS (IV) THE PORTION FOR SUCH YEAR OF THE DEFERRED GAIN ON THE 1992
SALE OF NEWLY ISSUED FREEPORT-MCMORAN RESOURCE PARTNERS, LIMITED
PARTNERSHIP DEPOSITARY UNITS AS SHOWN IN THE COMPANY'S ANNUAL REPORT TO
STOCKHOLDERS FOR SUCH YEAR.

(G) NET CASH PROVIDED BY OPERATING ACTIVITIES: WITH RESPECT TO ANY YEAR,
THE NET CASH PROVIDED BY OPERATING ACTIVITIES OF THE COMPANY AND ITS
CONSOLIDATED SUBSIDIARIES FOR SUCH YEAR AS SHOWN IN THE COMPANY'S ANNUAL
REPORT TO STOCKHOLDERS FOR SUCH YEAR.

(H) [(f)] Net Interest Expense: With respect to any year, the net
interest expense of the Company and its consolidated subsidiaries for such
year as shown in the Company's Annual Report to Stockholders for such year.

(I) [(g)] Participant: An individual who has been selected by the
Committee to receive an Award.

(J) PLAN FUNDING AMOUNT: WITH RESPECT TO ANY YEAR, TWO AND ONE-HALF
PERCENT OF NET CASH PROVIDED BY OPERATING ACTIVITIES FOR SUCH YEAR.

(K) [(h)] Return on Investment: With respect to any year, the result
(expressed as a percentage) calculated according to the following formula:

a + (b - c)
-----------
d

in which "a" equals Managed Net Income for such year, "b" equals Net
Interest Expense for such year, "c" equals Tax on Net Interest Expense for
such year, and "d" equals Total Investment of Capital for such year.

(L) [(i)] Tax on Net Interest Expense: With respect to any year, the tax
on the net interest expense of the Company and its consolidated
subsidiaries for such year calculated at the statutory federal income tax
rate for such year as shown in the Company's Annual Report to Stockholders
for such year.

A-6
<PAGE>

(M) [(j)] Total Investment of Capital: With respect to any year, the sum
of (i) the weighted average of the stockholders' equity in the Company and
its consolidated subsidiaries for such year, (ii) the weighted average of
the minority interests in the consolidated subsidiaries of the Company for
such year, and (iii) the weighted average of the long-term debt of the
Company and its consolidated subsidiaries for such year, all as shown in
the QUARTERLY [monthly] balance sheets of the Company and its consolidated
subsidiaries for such year.

A-7
<PAGE>

EXHIBIT B

SET FORTH BELOW IS THE TEXT OF THE 1992 LONG-TERM PERFORMANCE INCENTIVE PLAN
OF FREEPORT-MCMORAN INC., AS AMENDED, AS PROPOSED TO BE APPROVED.

1992 LONG-TERM PERFORMANCE INCENTIVE PLAN

OF FREEPORT-McMoRan INC.

ARTICLE I

PURPOSE OF PLAN

SECTION 1.1. The purpose of the 1992 Long-Term Performance Incentive Plan of
Freeport-McMoRan Inc. (the "Plan") is to provide incentives for senior
executives whose performance in fulfilling the responsibilities of their
positions can have a major impact on the profitability and future growth of
Freeport-McMoRan Inc. (the "Company") and its subsidiaries.

ARTICLE II

ADMINISTRATION OF THE PLAN

SECTION 2.1. Subject to the authority and powers of the Board of Directors in
relation to the Plan as hereinafter provided, the Plan shall be administered by
a Committee designated by the Board of Directors consisting of two or more
members of the Board each of whom is a "disinterested person" within the
meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934. The Committee shall have full
authority to interpret the Plan and from time to time to adopt such rules and
regulations for carrying out the Plan as it may deem best. All determinations
by the Committee shall be made by the affirmative vote of a majority of its
members, but any determination reduced to writing and signed by a majority of
the members shall be fully as effective as if it had been made by a majority
vote at a meeting duly called and held. All decisions by the Committee pursuant
to the provisions of the Plan and all orders or resolutions of the Board of
Directors pursuant thereto shall be final, conclusive and binding on all
persons, including but not limited to the Participants, the Company and its
Subsidiaries and their respective equity holders.

B-1
<PAGE>

ARTICLE III

ELIGIBILITY FOR AND GRANT OF PERFORMANCE AWARDS

SECTION 3.1. Subject to the provisions of the Plan, the Committee may from
time to time select salaried officers or employees (including officers or
employees who are also directors) of the Company or of any of its Subsidiaries
to be granted Performance Awards under the Plan, and determine the number of
Performance Units covered by each such Performance Award. Performance Awards
may be granted at different times to the same individual. The Plan shall expire
on December 31, 1997 and no Performance Awards shall be granted hereunder after
such date.

SECTION 3.2. Upon the grant of a Performance Award to a Participant, the
Company shall establish a Performance Award Account for such Participant and
shall credit to such Performance Award Account the number of Performance Units
covered by such Performance Award.

SECTION 3.3. The number of Performance Units outstanding at any time shall
not exceed 3,000,000. Performance Units that shall have been forfeited or with
respect to which payment has been made pursuant to Section 4.2 or deferred
pursuant to Section 4.4 shall not thereafter be deemed to be credited or
outstanding for any purpose of the Plan and may again be the subject of
Performance Awards.

SECTION 3.4. (a) Notwithstanding the provisions of Section 3.1, 3.2, and 3.3
hereof, the number of Performance Units covered by an annual Performance Award
that may be granted to the Covered Employee who is the chief executive officer
of the Company at the time of such grant shall be 100,000; the number of
Performance Units covered by an annual Performance Award that may be granted to
the Covered Employee who is the chief operating officer of the Company at the
time of such grant shall be 75,000; and the number of Performance Units covered
by an annual Performance Award that may be granted to any other Covered
Employee shall be, as to each such individual, 40,000.

(b) All Performance Awards to Covered Employees under the Plan will be made
and administered by two or more members of the Committee who are also "outside
directors" within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended, and rules promulgated by the Internal Revenue Service of the
Department of the Treasury thereunder.

B-2
<PAGE>

ARTICLE IV

CREDITS TO AND PAYMENTS FROM PARTICIPANTS'
PERFORMANCE AWARD ACCOUNTS

SECTION 4.1. Subject to the provisions of the Plan, the Performance Award
Account or Accounts of each Participant at December 31 of any year shall be
credited, as of such December 31, with an amount equal to the Annual Earnings
Per Share (or Net Loss Per Share) for such year times the number of Performance
Units then credited to each such Performance Award Account; provided that, if
in any year there shall be any outstanding Net Loss Carryforward applicable to
such Performance Award Account, such Net Loss Carryforward shall be applied to
reduce any amount which would otherwise be credited to such Performance Award
Account pursuant to this Section 4.1 in such year until such Net Loss
Carryforward has been fully so applied.

SECTION 4.2. (a) Subject to the provisions of the Plan, the balance credited
to a Participant's Performance Award Account shall be paid to such Participant
as soon as practicable on or after the Award Valuation Date with respect to
such Performance Award.

(b) Payments pursuant to Section 4.2(a) shall be in cash.

(c) Notwithstanding any other provision of the Plan to the contrary, no
Covered Employee shall be entitled to any payment with respect to a Performance
Award unless the members of the Committee referred to in Section 3.4(b) hereof
shall have certified the amount of the Annual Earnings Per Share (or Net Loss
Per Share) for each year covered by such Performance Award.

SECTION 4.3. In addition to any amounts payable pursuant to Section 4.2, the
Committee may in its sole discretion determine that there shall be payable to a
former Participant a supplemental amount not exceeding the excess, if any, of
(i) the amount determined in accordance with Section 4.1 which would have been
payable to such former Participant if the Award Valuation Date with respect to
a Performance Award of such Participant had been December 31 of the first,
second or third calendar year next following the year in which such
Participant's employment terminated (the selection of such first, second or
third calendar year to be in the sole discretion of the Committee subject only
to the last sentence of this Section 4.3) over (ii) the amount determined in
accordance with said Section 4.1 as of December 31 of the calendar year in
which such termination of employment actually occurred. Any such supplemental
amount so payable shall be paid in a lump sum as promptly as practicable on or
after December 31 of the calendar year so selected by the Committee or in one
or more installments ending not later than five years after such December 31,
as the Committee may in its discretion direct. In no event shall any payment
under this Section 4.3 be made with respect to any calendar year after the year
in which such former Participant reaches his normal retirement date under the
Company's retirement plan.

B-3
<PAGE>

SECTION 4.4. (a) Prior to January 1 of any calendar year in which it is
anticipated that an Award Valuation Date with respect to any Performance Award
may occur, a Participant may elect, in accordance with procedures established
by the Committee, to defer, as and to the extent hereinafter provided, the
payment of the amount, if any, which shall be paid pursuant to Section 4.2.

(b) All payments deferred pursuant to Section 4.4(a) shall be paid in one or
more periodic installments, not in excess of ten, at such time or times after
the applicable Award Valuation Date, but not later than ten years after such
Award Valuation Date, as shall be specified in such Participant's election
pursuant to Section 4.4(a).

(c) In the case of payments deferred as provided in Section 4.4(a), the
unpaid amounts shall, commencing with the applicable Award Valuation Date, be
increased at a rate equal to the prime commercial lending rate announced from
time to time by The Chase Manhattan Bank, N.A. (compounded quarterly) or at
such other rate and in such manner as shall be determined from time to time by
the Committee. If subsequent to such Participant's election pursuant to
Section 4.4(a) such Participant's employment is terminated otherwise than by
death, Disability, retirement under the Company's retirement plan, or
retirement with the consent of the Company outside the Company's retirement
plan, the Committee may, in its sole discretion, pay to such Participant in a
lump sum the aggregate amount of any payments so deferred, notwithstanding such
election.

SECTION 4.5. Anything contained in the Plan to the contrary notwithstanding:

(a) The Committee may, in its sole discretion, suspend, permanently or for a
specified period of time or until further determination by the Committee, the
making of any part or all of the credits which would otherwise have been made
to the Performance Award Accounts of all the Participants or to such Accounts
of one or more Participants as shall be designated by the Committee.

(b) All Performance Units and other amounts credited to a Participant's
Performance Award Account with respect to or arising from any Performance Award
shall be forfeited in the event of the Discharge for Cause of such Participant
prior to December 31 of the third year following the year of grant of such
Performance Award.

(c) All Performance Units and other amounts credited to a Participant's
Performance Award Account with respect to or arising from a Performance Award
shall, unless and to the extent that the Committee shall in its absolute
discretion otherwise determine by reason of special mitigating circumstances,
be forfeited in the event that such Participant's employment shall terminate
otherwise than by death, Disability, retirement under the Company's retirement
plan, or retirement with the consent of the Company outside the Company's
retirement plan, at any time (except within two years after the date on which a
Change in Control shall have occurred) prior to December 31 of the third year
following the year of grant of such Performance Award.

B-4
<PAGE>

(d) If any suspension is in effect pursuant to Section 4.5(a) on a date when
a credit would otherwise have been made pursuant to Section 4.1, the amounts
which would have been credited but for such suspension shall be forfeited and
no credits shall thereafter be made in lieu thereof. If the Committee shall so
determine in its sole discretion, the amounts theretofore credited to any
Performance Award Account or Accounts shall be increased, during the suspension
period, at a rate equal to the prime commercial lending rate announced from
time to time by The Chase Manhattan Bank, N.A. (compounded quarterly) or at
such other rate and in such manner as shall be determined from time to time by
the Committee.

ARTICLE V

GENERAL INFORMATION

SECTION 5.1. If Net Income, Annual Earnings Per Share or Net Loss Per Share
for any year shall have been affected by special factors (including material
changes in accounting policies or practices, material acquisitions or
dispositions of property, or other unusual items) which in the Committee's
judgment should or should not be taken into account, in whole or in part, in
the equitable administration of the Plan, the Committee may, for any purpose of
the Plan, adjust Net Income, Annual Earnings Per Share or Net Loss Per Share,
as the case may be, for such year (and subsequent years as appropriate), or any
combination of them, and make credits, payments and reductions accordingly
under the Plan; provided, however, the Committee shall not have the authority
to make any such adjustments to payments with respect to the Performance Awards
of, or credits to the Performance Award Accounts of, any Participant who is at
such time a Covered Employee.

SECTION 5.2. The Committee shall for purposes of Articles III and IV make
appropriate adjustments in the number of Performance Units which shall remain
subject to Performance Awards and in the number of Performance Units which
shall have been credited to Participants' accounts, in order to reflect any
merger or consolidation to which the Company is a party or any stock dividend,
split-up, combination or reclassification of the outstanding shares of Company
Common Stock or any other relevant change in the capitalization of the Company.

SECTION 5.3. A Participant may designate in writing a beneficiary (including
the trustee or trustees of a trust) who shall upon the death of such
Participant be entitled to receive all amounts which would have been payable
hereunder to such Participant. A Participant may rescind or change any such
designation at any time. Except as provided in this Section 5.3, none of the
amounts which may be payable under the Plan may be assigned or transferred
otherwise than by will or by the laws of descent and distribution.

SECTION 5.4. All payments made pursuant to the Plan shall be subject to
withholding in respect of income and other taxes required by law to be
withheld, in accordance with procedures to be established by the Committee.

B-5
<PAGE>

SECTION 5.5. The selection of an individual for participation in the Plan
shall not give such Participant any right to be retained in the employ of the
Company or any of its Subsidiaries, and the right of the Company and of such
Subsidiary to dismiss or discharge any such Participant is specifically
reserved. The benefits provided for Participants under the Plan shall be in
addition to, and shall in no way preclude, other forms of compensation to or in
respect of such Participants.

SECTION 5.6. The Board of Directors and the Committee shall be entitled to
rely on the advice of counsel and other experts, including the independent
public accountants for the Company. No member of the Board of Directors or of
the Committee or any officers of the Company or its Subsidiaries shall be
liable for any act or failure to act under the Plan, except in circumstances
involving bad faith on the part of such member or officer.

SECTION 5.7. Nothing contained in the Plan shall prevent the Company or any
subsidiary or affiliate of the Company from adopting or continuing in effect
other compensation arrangements, which arrangements may be either generally
applicable or applicable only in specific cases.

ARTICLE VI

AMENDMENT OR TERMINATION OF THE PLAN

SECTION 6.1. The Board of Directors may at any time terminate, in whole or in
part, or from time to time amend the Plan, provided that, except as otherwise
provided in the Plan, no such amendment or termination shall adversely affect
the amounts credited to the Performance Award Account of a Participant with
respect to Performance Awards previously made to such Participant. In the event
of such termination, in whole or in part, of the Plan, the Committee may in its
sole discretion direct the payment to Participants of any amounts specified in
Article IV and not theretofore paid out, prior to the respective dates upon
which payments would otherwise be made hereunder to such Participants, and in a
lump sum or installments as the Committee shall prescribe with respect to each
such Participant. The Board may at any time and from time to time delegate to
the Committee any or all of its authority under this Article VI.

ARTICLE VII

DEFINITIONS

SECTION 7.1. For the purposes of the Plan, the following terms shall have the
meanings indicated:

(a) Annual Earnings Per Share: With respect to any year, the result obtained
by dividing (i) Net Income for such year by (ii) the average number of issued
and outstanding shares (excluding treasury shares and shares held by any
Subsidiaries) of Company Common Stock during such year as shown in the
Company's Annual Report to Stockholders for such year.

B-6
<PAGE>

(b) Award Valuation Date: With respect to any Performance Award, (i) December
31 of the year in which the third anniversary of the grant of such Performance
Award to a Participant shall occur or, (ii) if earlier, December 31 of the year
in which such Participant's employment shall terminate, if such employment is
terminated (x) within two years after a Change in Control or (y) by death,
Disability, retirement under the Company's retirement plan or retirement with
the consent of the Company outside the Company's retirement plan.

(d) Change in Control: A Change in Control shall be deemed to have occurred
if either (i) any person, or any two or more persons acting as a group, and all
affiliates of such person or persons, shall own beneficially more than 20% of
the Company Common Stock outstanding (exclusive of shares held in the Company's
treasury or by the Company's Subsidiaries) pursuant to a tender offer, exchange
offer or series of purchases or other acquisitions, or any combination of those
transactions, or (ii) there shall be a change in the composition of the Board
of Directors of the Company at any time within two years after any tender
offer, exchange offer, merger, consolidation, sale of assets or contested
election, or any combination of those transactions (a "Transaction"), so that
(A) the persons who were directors of the Company immediately before the first
such Transaction cease to constitute a majority of the Board of Directors of
the corporation which shall thereafter be in control of the companies that were
parties to or otherwise involved in such first Transaction, or (B) the number
of persons who shall thereafter be directors of such corporation shall be fewer
than two-thirds of the number of directors of the Company immediately prior to
such first Transaction. A Change in Control shall be deemed to take place upon
the first to occur of the events specified in the foregoing clauses (i) and
(ii).

(e) Committee: The Committee designated pursuant to Section 2.1. Until
otherwise determined by the Board of Directors, the Corporate Personnel
Committee designated by such Board shall be the Committee under the Plan.

(f) Company Common Stock: Common Stock, par value $1, of the Company.

(g) Covered Employee: At any date, (i) any individual who, with respect to
the previous taxable year of the Company, was a "covered employee" of the
Company within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended, and the rules promulgated thereunder by the Internal Revenue
Service of the Department of the Treasury, provided, however, the term "Covered
Employee" shall not include any such individual who is designated by the
Committee, in its discretion, at the time of any grant or at any subsequent
time as reasonably expected not to be such a "covered employee" with respect to
the current taxable year of the Company and (ii) any individual who is
designated by the Committee, in its discretion, at the time of any grant or at
any subsequent time as reasonably expected to be such a "covered employee" with
respect to the current taxable year of the Company. Notwithstanding the
foregoing, at any date in fiscal year 1994, "Covered Employee" shall mean any
individual designated by the Committee, in its discretion, as reasonably
expected to be a "covered employee" with respect to the Company's taxable year
1994.

B-7
<PAGE>

(h) Disability: In the case of any Participant, disability which after the
expiration of more than 26 weeks after its commencement is determined to be
total and permanent by a physician selected by the Company and acceptable to
such Participant or his legal representatives.

(i) Discharge for Cause: Involuntary termination of employment as a result of
dishonesty or similar serious misconduct directly related to the performance of
duties for the Company or a Subsidiary.

(j) Net Income: With respect to any year, the sum of (i) the net income (or
net loss) of the Company and its consolidated subsidiaries for such year as
shown in the Company's Annual Report to Stockholders for such year; plus (or
minus) (ii) the minority interests' share in the net income (or net loss) of
the Company's consolidated subsidiaries for such year as shown in the Company's
Annual Report to Stockholders for such year; plus (or minus) (iii) changes in
accounting principles of the Company and its consolidated subsidiaries for such
year plus (or minus) the minority interests' share in such changes in
accounting principles as shown in the Company's Annual Report to Stockholders
for such year; plus (iv) the portion for such year of the deferred gain on the
1992 sale of newly issued Freeport-McMoRan Resource Partners, Limited
Partnership depositary units as shown in the Company's Annual Report to
Stockholders for such year.

(k) Net Loss Carryforward: With respect to any Performance Award Account, (i)
an amount equal to the Net Loss per Share for any year times the number of
Performance Units then outstanding and credited to such Performance Award
Account, reduced by (ii) any portion thereof which has been applied in any
prior year as provided in Section 4.1.

(l) Net Loss Per Share: The amount obtained when the calculation of Annual
Earnings Per Share results in a number that is less than zero.

(m) Participant: An individual who has been selected by the Committee to
receive a Performance Award and in respect of whose Performance Award Account
any amounts remain payable.

(n) Performance Award: The grant of Performance Units by the Committee to a
Participant pursuant to Section 3.1 or 3.4.

(o) Performance Award Account: An account established for a Participant
pursuant to Section 3.2.

(p) Performance Unit: A unit covered by Performance Awards granted or subject
to grant pursuant to Article III.

(q) Subsidiary: (i) Freeport-McMoRan Copper & Gold Inc. and Freeport-McMoRan
Resource Partners, Limited Partnership, in each case for as long as Freeport-
McMoRan Inc. shall own any equity interest in such entity, and (ii) any
corporation or other entity in which Freeport-McMoRan Inc. 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.

B-8
<PAGE>

FREEPORT-MCMORAN INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERS, MAY 3, 1994

The undersigned hereby appoints James R. Moffett, Rene L. Latiolais, and
George A. Mealey as proxies, with full power of substitution, to vote the
shares of the undersigned in Freeport-McMoRan Inc. at the Annual Meeting of
Stockholders to be held on Tuesday, May 3, 1994, at 9:00 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.

DATED ___________________________________, 1994

_______________________________________________

_______________________________________________
(SIGNATURE)

IF YOU WISH TO VOTE ON ALL MATTERS AS THE
BOARD OF DIRECTORS RECOMMENDS, PLEASE SIGN,
DATE AND RETURN THIS CARD. IF YOU WISH TO VOTE
ON ITEMS INDIVIDUALLY, PLEASE ALSO MARK THE
APPROPRIATE BOXES ON THE BACK OF THIS CARD.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE

(CONTINUED FROM OTHER SIDE)

The Board of Directors recommends a vote FOR:
Nominees for directors of Freeport-
McMoRan Inc.

1. Election of the nominees for directors.
Thomas B. Coleman
[_] FOR[_] WITHHELD William B. Harrison, Jr.
Henry A. Kissinger
[_] FOR, EXCEPT WITHHELD FROM: Rene L. Latiolais
J. Taylor Wharton
Ward W. Woods, Jr.

------------------------------------
2. Ratification of appointment of Arthur Andersen & Co. as independent
auditors.
[_] FOR[_] AGAINST[_] ABSTAIN
3. Approval of proposal to amend the Annual Incentive Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
4. Approval of proposal to approve the 1992 Long-Term Performance Incentive
Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
- --------------------------------------------------------------------------------
You may specify your votes by marking the appropriate boxes on this side. 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,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS AND FOR
PROPOSALS 2, 3 AND 4.

PLEASE SIGN AND DATE ON OTHER SIDE

<PAGE>

ANNUAL INCENTIVE PLAN

OF FREEPORT-MCMORAN INC.

ARTICLE I

PURPOSE OF PLAN

ARTICLE II

ADMINISTRATION OF THE PLAN

<PAGE>

ARTICLE III

ELIGIBILITY FOR AND PAYMENT OF AWARDS

SECTION 3.2. Subject to the provisions of the Plan, Awards with respect to
any year shall be paid to each Participant at such time established by the
Committee following the determination of the amounts of such Awards, which
payment shall in no event be later than February 28 of the year following such
Award Year.

SECTION 3.4. (a) Notwithstanding the provisions of Sections 3.1, 3.2, 3.3,
4.2(a), and 4.2(b) hereof, any Award to any Covered Employee shall be granted in
accordance with the provisions of this Section 3.4. Subject to the discretion of
the Committee as set forth in Section 4.2(c) hereof, the amount of the Award
that may be granted with respect to any calendar year to the Covered Employee
who is the chief executive officer of the Company at the time of such grant
shall be 32% of the Plan Funding Amount for such year, the amount of the Award
that may be granted with respect to any calendar year to the Covered Employee
who is the chief operating officer of

2
<PAGE>

the Company at the time of such grant shall be 23% of the Plan Funding Amount
for such year, and the amount of the Award that may be granted with respect to
any calendar year to any other Covered Employee shall be, as to each such
individual, 15% of the Plan Funding Amount for such year.

(b) All Awards to Covered Employees under the Plan will be made and
administered by two or more members of the Committee who are also "outside
directors" within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended, and rules promulgated by the Internal Revenue Service of the
Department of the Treasury thereunder.

(c) Any provision of the Plan to the contrary notwithstanding, no Covered
Employee shall be entitled to any payment of an Award with respect to a
calendar year unless the members of the Committee referred to in Section 3.4(b)
hereof shall have certified the Plan Funding Amount for such year and that the
condition of Section 4.1 hereof has been met for such year.

ARTICLE IV

GENERAL PROVISIONS

SECTION 4.1. Any provision of the Plan to the contrary notwithstanding, no
Award shall be made pursuant to Section 3.1 or 3.4 with respect to any calendar
year if the average of the Return on Investment for such calendar year and each
of the four preceding calendar years, after giving effect to the aggregate
amount (if any) that was awarded or credited with respect to such prior years
and the aggregate amount that would otherwise have been so awarded or credited
with respect to such calendar year, would be less than six percent.

SECTION 4.2. (a) In determining the aggregate amount awarded to Participants
under the Plan for any calendar year, the Committee shall consider as a
guideline that the aggregate amount of all Awards granted with respect to any
calendar year should not exceed two and one-half percent of Net Cash Provided by
Operating Activities for such year.

3
<PAGE>

(c) Notwithstanding the provisions of subparagraphs (a) and (b) above, the
amount available for the grant of Awards under the Plan to Covered Employees
with respect to a calendar year shall be equal to the Plan Funding Amount for
such year and any adjustments made in accordance with or for the purposes of
subparagraphs (a) or (b) shall be disregarded for purposes of calculating the
Plan Funding Amount. The Committee may, in the exercise of its discretion,
determine that the aggregate amount of all Awards granted to Covered Employees
with respect to a calendar year shall be less than the Plan Funding Amount for
such year, but the excess of such Plan Funding Amount over such aggregate
amount covered by Awards granted to Covered Employees shall not be available
for any Awards to Covered Employees with respect to future years. In addition,
the Committee may, in the exercise of its discretion, reduce or eliminate the
amount of an Award to a Covered Employee otherwise calculated in accordance
with the provisions of Section 3.4 prior to payment thereof.

SECTION 4.7. Nothing contained in the Plan shall prevent the Company or any
subsidiary or affiliate of the Company from adopting or continuing in effect
other compensation arrangements, which arrangements may be either generally
applicable or applicable only in specific cases.

4
<PAGE>

ARTICLE V

AMENDMENT OR TERMINATION OF THE PLAN

ARTICLE VI

DEFINITIONS

SECTION 6.1. For the purposes of the Plan, the following terms shall have the
meanings indicated:

(a) Award: The grant of an award of cash by the Committee to a
Participant pursuant to Section 3.1 or 3.4.

(b) Award Year: Any calendar year with respect to which an Award may be
granted.

(e) Covered Employee: At any date, (i) any individual who, with respect
to the previous taxable year of the Company, was a "covered employee" of
the Company within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended, and the rules promulgated thereunder by the
Internal Revenue Service of the Department of the Treasury, provided,
however, the term "Covered Employee" shall not include any such individual
who is designated by the Committee, in its discretion, at the time of any
grant as reasonably expected not to be such a "covered employee" with
respect to the current taxable year of the Company and (ii) any individual
who is designated by the Committee, in its discretion, at the time of any
grant as reasonably expected to be such a "covered employee" with respect
to the current taxable year of the Company. Notwithstanding the foregoing,
at any date in

5
<PAGE>

fiscal year 1994, "Covered Employee" shall mean any individual designated
by the Committee, in its discretion, at the time of any grant as reasonably
expected to be a "Covered Employee" with respect to the Company's taxable
year 1994.

(f) Managed Net Income: With respect to any year, the sum of (i)
the net income (or net loss) of the Company and its consolidated
subsidiaries for such year as shown in the Company's Annual Report to
Stockholders for such year; plus (or minus) (ii) the minority interests'
share in the net income (or net loss) of the Company's consolidated
subsidiaries for such year as shown in the Company's Annual Report to
Stockholders for such year; plus (or minus) (iii) changes in accounting
principles of the Company and its consolidated subsidiaries for such year
plus (or minus) the minority interests' share in such changes in accounting
principles as shown in the Company's Annual Report to Stockholders for such
year; plus (iv) the portion for such year of the deferred gain on the 1992
sale of newly issued Freeport-McMoRan Resource Partners, Limited
Partnership depositary units as shown in the Company's Annual Report to
Stockholders for such year.

(g) Net Cash Provided by Operating Activities: With respect to any year,
the net cash provided by operating activities of the Company and its
consolidated subsidiaries for such year as shown in the Company's Annual
Report to Stockholders for such year.

(h) Net Interest Expense: With respect to any year, the net interest expense
of the Company and its consolidated subsidiaries for such year as shown in the
Company's Annual Report to Stockholders for such year.

(i) Participant: An individual who has been selected by the Committee to
receive an Award.

(j) Plan Funding Amount: With respect to any year, two and one-half
percent of Net Cash Provided by Operating Activities for such year.

(k) Return on Investment: With respect to any year, the result (expressed as
a percentage) calculated according to the following formula:

a + (b - c)
-----------
d

(l) Tax on Net Interest Expense: With respect to any year, the tax on the
net interest expense of the Company and its consolidated subsidiaries for such
year calculated at the statutory federal income tax rate for such year as
shown in the Company's Annual Report to Stockholders for such year.

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<PAGE>

(m) Total Investment of Capital: With respect to any year, the sum
of (i) the weighted average of the stockholders' equity in the Company and
its consolidated subsidiaries for such year, (ii) the weighted average of
the minority interests in the consolidated subsidiaries of the Company for
such year, and (iii) the weighted average of the long-term debt of the
Company and its consolidated subsidiaries for such year, all as shown in the
quarterly balance sheets of the Company and its consolidated subsidiaries for
such year.

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<PAGE>

1992 LONG-TERM PERFORMANCE INCENTIVE PLAN

OF FREEPORT-McMoRan INC.

ARTICLE I

PURPOSE OF PLAN

ARTICLE II

ADMINISTRATION OF THE PLAN

SECTION 2.1. Subject to the authority and powers of the Board of Directors in
relation to the Plan as hereinafter provided, the Plan shall be administered by
a Committee designated by the Board of Directors consisting of two or more
members of the Board each of whom is a "disinterested person" within the
meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934. The Committee shall have full
authority to interpret the Plan and from time to time to adopt such rules and
regulations for carrying out the Plan as it may deem best. All determinations
by the Committee shall be made by the affirmative vote of a majority of its
members, but any determination reduced to writing and signed by a majority of
the members shall be fully as effective as if it had been made by a majority
vote at a meeting duly called and held. All decisions by the Committee pursuant
to the provisions of the Plan and all orders or resolutions of the Board of
Directors pursuant thereto shall be final, conclusive and binding on all
persons, including but not limited to the Participants, the Company and its
Subsidiaries and their respective equity holders.

<PAGE>

ARTICLE III

ELIGIBILITY FOR AND GRANT OF PERFORMANCE AWARDS

2
<PAGE>

ARTICLE IV

CREDITS TO AND PAYMENTS FROM PARTICIPANTS'
PERFORMANCE AWARD ACCOUNTS

(b) Payments pursuant to Section 4.2(a) shall be in cash.

3
<PAGE>

SECTION 4.5. Anything contained in the Plan to the contrary notwithstanding:

4
<PAGE>

ARTICLE V

GENERAL INFORMATION

5
<PAGE>

ARTICLE VI

AMENDMENT OR TERMINATION OF THE PLAN

ARTICLE VII

DEFINITIONS

SECTION 7.1. For the purposes of the Plan, the following terms shall have the
meanings indicated:

6
<PAGE>

(f) Company Common Stock: Common Stock, par value $1, of the Company.

7
<PAGE>

(i) Discharge for Cause: Involuntary termination of employment as a result of
dishonesty or similar serious misconduct directly related to the performance of
duties for the Company or a Subsidiary.

(l) Net Loss Per Share: The amount obtained when the calculation of Annual
Earnings Per Share results in a number that is less than zero.

(m) Participant: An individual who has been selected by the Committee to
receive a Performance Award and in respect of whose Performance Award Account
any amounts remain payable.

(n) Performance Award: The grant of Performance Units by the Committee to a
Participant pursuant to Section 3.1 or 3.4.

(o) Performance Award Account: An account established for a Participant
pursuant to Section 3.2.

(p) Performance Unit: A unit covered by Performance Awards granted or subject
to grant pursuant to Article III.