SEC Info  
    Home      Search      My Interests      Help      Sign In      Please Sign In

Phelps Dodge Corp – ‘DEF 14A’ for 5/3/00

On:  Monday, 3/27/00   ·   As of:  3/28/00   ·   For:  5/3/00   ·   Accession #:  950153-0-414   ·   File #:  1-00082

Previous ‘DEF 14A’:  ‘DEF 14A’ on 3/31/99 for 5/5/99   ·   Next:  ‘DEF 14A’ on 3/30/01 for 5/1/01   ·   Latest:  ‘DEF 14A’ on 4/13/06 for 5/26/06

Magnifying glass tilted right emoji
 
  in    Show  and   Hints

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/28/00  Phelps Dodge Corp                 DEF 14A     5/03/00    1:211K                                   Bowne - BPX/FA

Definitive Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Solicitation Material              HTML    208K 


This is an HTML Document rendered as filed.  [ Alternative Formats ]




SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.   )

Filed by the Registrant  [X]

Filed by a Party other than the Registrant  [   ]

Check the appropriate box:

     
[   ]  Preliminary Proxy Statement [   ]  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X]  Definitive Proxy Statement
[   ]  Definitive Additional Materials
[   ]  Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-2.

Phelps Dodge Corporation


(Name of Registrant as Specified In Its Charter)


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[   ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.

     (1) Title of each class of securities to which transaction applies:


     (2) Aggregate number of securities to which transaction applies:


     (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):


     (4) Proposed maximum aggregate value of transaction:


     (5) Total fee paid:


[   ] Fee paid previously with preliminary materials.
 
[   ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

     (1) Amount Previously Paid:


     (2) Form, Schedule or Registration Statement No.:


     (3) Filing Party:


     (4) Date Filed:




[PHELPS DODGE LOGO]

  Notice of
  Annual Meeting
  of Shareholders
  and Proxy
  Statement
  May 3, 2000
 


[PHELPS DODGE LETTERHEAD TO COME]

Douglas C. Yearley

Chairman of the Board

April 1, 2000

Dear Shareholder:

      You are cordially invited to attend our annual meeting of shareholders to be held at 11:30 a.m. (MST) on Wednesday, May 3, 2000, at The Heard Museum, 2301 North Central Avenue, Phoenix, Arizona. Enclosed with this proxy statement are your proxy card and the 1999 annual report.

      Your vote is important. Whether you plan to attend or not, please sign, date, and return the enclosed proxy card in the envelope provided, or you may access electronic voting via the internet or the automated telephone voting feature which are described on your proxy card. If you plan to attend the meeting you may vote in person.

      Registration and seating will begin at 10:30 a.m. Each shareholder will be asked to sign an admittance card and may be asked to present a valid picture identification. Shareholders holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting stock ownership as of the March 15 record date. Cameras, recording devices and other electronic devices will not be permitted at the meeting.

      Last year, 87% of our outstanding shares were represented in person or by proxy, and we hope to increase our shareholder participation this year.

  Sincerely,

  [YEARLY SIGNATURE]


NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of Phelps Dodge Corporation:

      The annual meeting of shareholders of Phelps Dodge Corporation will be held at The Heard Museum, 2301 North Central Avenue, Phoenix, Arizona, on Wednesday, May 3, 2000, at 11:30 a.m., to consider and take action on the following:

        1.  Elect two directors;
 
        2.  Ratify the appointment of PricewaterhouseCoopers LLP as independent accountants for the Corporation for the year 2000; and
 
        3.  Transact any other business that may properly be brought before the annual meeting.

      Only holders of record of the Corporation’s common shares at the close of business on March 15, 2000, will be entitled to vote at the meeting or at any adjournments of our annual meeting. On March 15, 2000 we had 78,725,397 common shares outstanding.

      If you participate in the ChaseMellon Shareholder Services Investor Services Program for Phelps Dodge Shareholders, all common shares held for your account under that service will be voted in accordance with your proxy.

      Proxies are solicited by the Board of Directors. You may revoke your proxy before it is voted at the annual meeting by delivering a signed revocation letter or new proxy, dated later than your first proxy, to Robert C. Swan, Vice President and Secretary.

      Shareholders who do not expect to attend the meeting in person are asked to access electronic voting via the internet or telephone voting as described on the proxy card or date, sign and complete the enclosed proxy and return it without delay in the enclosed envelope, which requires no postage stamp if mailed in the United States. If you are attending in person and if you have mailed your proxy card, you may revoke your proxy and vote in person at the meeting.

      This proxy statement and accompanying materials are being first sent to shareholders on April 1, 2000.

  By order of the Board of Directors,
 
  Robert C. Swan
  Vice President and Secretary

Phoenix, Arizona

April 1, 2000


1.  ELECTION OF DIRECTORS

 
Board Structure The Corporation currently has eleven directors divided into three classes: four in Class I, four in Class II, and three in Class III. The terms of office of two Class III directors expire at the 2000 annual meeting of shareholders. Mr. Douglas C. Yearley, a Class III director, will retire on May 3, 2000 and will not stand for re-election.
 
Election of Directors The two nominees for election as Class III directors are listed below. If elected, the nominees will serve for a term of three years and until their successors are elected and qualify. Unless you direct us to vote differently, we will vote signed, returned proxies, internet and telephone votes FOR the election of such nominees. If for any reason any nominee cannot or will not serve as a director, we may vote such proxies for the election of a substitute nominee designated by the Board of Directors.
 
Director Nominees A nominee must receive a plurality of the votes cast at the annual meeting to be elected. Abstentions and broker non-votes, therefore, have no effect on the election of directors.
             
Age, Principal Occupation, Business Director
Nominee Experience And Other Directorships Held Since



Robert N. Burt (Class III) Mr. Burt has been Chairman of the Board and Chief Executive Officer of FMC Corporation (chemicals and machinery for industry, agriculture and government) since 1991. He is a director of FMC Corporation and Warner-Lambert Company. Age 62. 1993
Robert D. Krebs (Class III) Mr. Krebs has been Chairman and Chief Executive Officer of Burlington Northern Santa Fe Corporation (transportation) since June 1, 1999, and was Chairman, President and Chief Executive Officer from April 1997 to May 31, 1999. From September 1995 to April 1997 he was President and Chief Executive Officer of Burlington Northern Santa Fe Corporation. He is a director of Burlington Northern Santa Fe Corporation. Age 57. 1987
 
Continuing Directors The eight directors whose terms will continue after the annual meeting and will expire at the 2001 annual meeting (Class I) or the 2002 annual meeting (Class II) are listed below.
             
Age, Principal Occupation, Business Director
Director Experience and Other Directorships Held Since



Paul Hazen (Class I) Mr. Hazen has been Chairman of Wells Fargo & Co. since November 1998. He was Chairman and Chief Executive Officer of Wells Fargo & Co., San Francisco (bank holding company) and of Wells Fargo Bank, N.A. (national banking association) from January 1995 until November 1998. He is a director of Wells Fargo & Co., Vodafone AirTouch, Inc., E.piphany, Inc., Safeway, Inc. and Shanghai Commercial Bank, Ltd. Age 58. 1988

1



             
Age, Principal Occupation, Business Director
Director Experience and Other Directorships Held Since



Manuel J. Iraola (Class I) Mr. Iraola has been President of Phelps Dodge Industries, a division of the Corporation, and a Senior Vice President of the Corporation since 1995. From 1992 until 1995 he was President of Phelps Dodge International Corporation. Age 52. 1997
Marie L. Knowles (Class I) Mrs. Knowles has been Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (diversified energy company) since July 1996. From 1993 until 1996 she was Senior Vice President of Atlantic Richfield Company, and President of ARCO Transportation Company, a former subsidiary of Atlantic Richfield Company. Mrs. Knowles is a director of Vastar Resources, Inc., America West Holdings Corporation and URS Corporation. Age 53. 1994
Gordon R. Parker (Class I) Mr. Parker was Chairman of Newmont Mining Corporation from 1986 until his retirement in 1994. He was Chief Executive Officer from 1985 until 1993. Mr. Parker is a director of Caterpillar, Inc., Gold Fields of South Africa, Gold Fields Limited and The Williams Companies, Inc. Age 64. 1995
Archie W. Dunham (Class II) Mr. Dunham has been Chairman and Chief Executive Officer of Conoco, Inc. (integrated energy company) since August 1999, and President and Chief Executive Officer of Conoco, Inc. since January 1996. He was an Executive Vice President of E.I. du Pont de Nemours and Company, Conoco’s former parent, from 1995 to October 1998. Mr. Dunham is a director of Conoco, Inc., Louisiana Pacific Corporation and Chase Bank of Texas. Age 61. 1998
William A. Franke (Class II) Mr. Franke has been Chairman and Chief Executive Officer of America West Holdings Corporation since February 1997 and President since April 1999. He has been President and Chief Executive Officer of its principal subsidiary America West Airlines, Inc. (airline carrier) since April 1999, and has been Chairman of its Board from 1992 until the present. He has been President of Franke and Company, Inc., Phoenix, Arizona, an investment firm, since 1987. 1980
He is a director of America West Holdings Corporation, America West Airlines, Inc., Central Newspapers, Inc., Beringer Wine Estates, AerFiGroup Plc, and the Air Transport Association of America. Age 63.

2



             
Age, Principal Occupation, Business Director
Director Experience and Other Directorships Held Since



Southwood J. Morcott (Class II) Mr. Morcott has been Chairman of the Board of Dana Corporation (manufacturer and distributor of automotive and vehicular parts) since 1990. He was Chief Executive Officer of Dana Corporation from 1989 until February 1999, and President from 1986 until 1995. Mr. Morcott is a director of Dana Corporation, CSX Corporation and Johnson Controls, Inc. Age 62. 1991
J. Steven Whisler (Class II) Mr. Whisler became the Chief Executive Officer of the Corporation on January 1, 2000, and has been President and Chief Operating Officer since December 1997. He was President of Phelps Dodge Mining Company, a division of the Corporation, from 1991 to October 1998. He is a director of Burlington Northern Santa Fe Corporation and Southern Peru Copper Corporation. Age 45. 1995

3



INFORMATION CONCERNING THE

BOARD OF DIRECTORS AND ITS COMMITTEES
 
Board Meetings The Board of Directors met fifteen times during 1999. Various committees of the Board also met during the year. All directors attended at least 75% of all Board and committee meetings and the average attendance was  94%.
 
Board Committees The Audit Committee is comprised of Messrs. Dunham, Franke, Hazen (Chairman), (Mrs.) Knowles, and Krebs. The Board of Directors has adopted a written Charter for the Audit Committee, which is printed in full on pages 19 and 20 of this proxy. The primary duties and responsibilities of the Committee, which met five times during 1999, are to:
 
•  Serve as an independent and objective party to monitor the Corporation’s financial reporting process and internal control systems;
 
•  Review and appraise the audit efforts of the Corporation’s independent accountants and internal auditing function; and
 
•  Provide an open avenue of communication among the independent accountants, financial and senior management, the internal auditing function, and the Board of Directors.
 
The Compensation and Management Development Committee, comprised of Messrs. Burt, Dunham, Hazen and Morcott (Chairman), met six times during 1999. The Committee performs the following functions:
 
•  Reviews and approves the compensation for the Corporation’s senior officers;
 
•  Reviews management recommendations concerning the compensation of other officers and key personnel;
 
•  Reviews the Corporation’s program for management development; and
 
•  Reviews and approves incentive compensation awards, stock option grants and awards of restricted stock.
 
The Committee on Directors is comprised of Messrs. Franke, Krebs (Chairman), Morcott and Parker. The Committee, which met twice during 1999, performs the following functions:
 
•  Makes recommendations concerning the composition of the Board and its committees, and reviews director compensation; and
 
•  Reviews the qualifications of potential director candidates and recommends to the Board nominees for election as directors.
 
The Committee on Directors will consider potential nominees recommended by shareholders. Recommendations should be sent to the Secretary of the Corporation and should include the address and a brief description of the qualifications of the individual recommended.

4



 
The Environmental, Health and Safety Committee, comprised of Messrs. Burt (Chairman), (Mrs.) Knowles and Morcott, met four times in 1999. The Committee generally performs the following functions:
 
•  Reviews the Corporation’s environmental, health and safety policies;
 
•  Reviews management’s implementation of these policies; and
 
•  Makes reports and recommendations to the Board concerning the results of its reviews.
 
The Finance Committee is comprised of Messrs. Franke (Chairman), Hazen, Parker and Yearley. The Committee, which met four times during 1999, is responsible for:
 
•  Reviewing the financial affairs of the Corporation and its subsidiaries;
 
•  Recommending to the Board financial policies and actions to accommodate the Corporation’s goals and operating strategies while maintaining a sound financial condition; and
 
•  Reviewing the funding and management of assets for retirement income plans of the Corporation and its subsidiaries.
 
Directors Stock
Ownership Policy
The Board of Directors has adopted a policy that each director, within three years of his or her election, shall own a total of not less than 2,000 common shares of the Corporation. Stock units granted to a director under the Corporation’s Directors Stock Unit Plan or the Deferred Compensation Plan apply toward attainment of the requirement. All of our directors are in compliance with this policy.
 
 
Board Compensation
 
 
Retainer and Fees Directors who are not salaried employees of the Corporation (“non-employee directors”) receive the following annual compensation for their Board service:
     
Annual Retainer: $25,000
 
Annual Committee
Chair Stipend:
$3,000
 
Attendance Fees: $1,000 for each Board meeting
$1,000 for each Board Committee meeting
Expenses related to attendance
 
Shares of Stock: The foregoing retainer and fees, at the election of the director, may be received in an equivalent number of the Corporation’s common shares in lieu of cash.
 
Stock Units: 450 units

5



 
Directors Stock Unit Plan In order to encourage increased stock ownership, the Board of Directors adopted the Directors Stock Unit Plan. Pursuant to that Plan, each non-employee director receives an annual grant of 450 stock units having a value equal to 450 of the Corporation’s common shares. While stock units do not confer on a director the right to vote, each stock unit is credited on each dividend payment date with stock units equal to the applicable dividend payable on the Corporation’s common shares. Upon termination of service as a director, the director is entitled to payment of his or her accumulated stock units in an equivalent number of the Corporation’s common shares or in cash.
 
Directors Deferred
Compensation Plan
Directors may defer payment of retainer and/or meeting fees to future years and may elect to have such deferred compensation
 
•  receive interest at prevailing market rates
 
•  invested in the Corporation’s common shares, or
 
•  invested in one of several mutual funds designated for that purpose.
 
Expenses and Benefits All directors are reimbursed for travel and other related expenses incurred in attending shareholder, Board and committee meetings. The Corporation also provides non-employee directors with life insurance benefits and allows them to participate in its Matching Gifts Program by matching gifts from directors to qualified organizations up to a total of $10,000 per year.

Directors and Officers Liability Insurance

      The Corporation maintains directors’ and officers’ liability insurance policies and pension trust liability policies (placed on three year terms) issued by National Union Fire Insurance Company of Pittsburgh, Pa., Executive Risk Indemnity Inc., Continental Casualty Company, Federal Insurance Company and XL Insurance Company. The policies insure (i) directors, officers, division presidents and vice presidents of the Corporation and its subsidiaries, and employees who are fiduciaries of employee benefit plans of the Corporation and its subsidiaries, against certain liabilities they may incur in the performance of their duties and (ii) the Corporation against any obligation to indemnify such persons against such liabilities, and (iii) the Corporation for allegations related to securities claims. On June 1, 1999, the Corporation extended those policies to expire on June 1, 2002 at premiums of $459,666, $132,000, $115,000, $49,500 and $66,000, respectively.

6



COMPENSATION COMMITTEE INTERLOCKS

AND INSIDER PARTICIPATION

       The following directors served on the Compensation and Management Development Committee during 1999: Messrs. Burt, Dunham (appointed February 3, 1999), Hazen and Morcott (Chairman). None of these directors is or has been an officer or employee of the Corporation or any of its subsidiaries or has had any other relationship with the Corporation or any of its subsidiaries requiring disclosure under the applicable rules of the Securities and Exchange Commission.

SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

       The following table lists the common share ownership as of February 2, 2000 for our directors and the five named executive officers. “Beneficial Ownership” includes shares a director or officer has the power to vote or transfer, and stock options that were exercisable on February 2, 2000 or within 60 days thereafter. On February 2, 2000, the directors and the five named executive officers of the Corporation owned, in the aggregate, 1,377,929 shares of the Corporation’s common stock (approximately 1.75 percent of the shares outstanding). The Corporation’s directors also have interests in stock-based units under Corporation plans. While these units may not be voted or transferred, they are listed in the table below because they represent a component of the total economic interest of our directors in the Corporation’s stock.

                                 
Options
Shares Exercisable
Beneficially Within Stock
Name of Beneficial Owner Owned 60 Days Units(1) Total





Robert N. Burt 2,300 3,444 2,721 (2) 8,465
Archie W. Dunham 1,000 0 1,783 (2) 2,783
William A. Franke 2,000 9,184 2,866 14,050
Paul Hazen 587 9,184 6,696 (2) 16,467
Manuel J. Iraola 54,362 (3) 150,247 0 204,609
Marie L. Knowles 1,000 2,296 1,949 5,245
Robert D. Krebs 2,034 8,036 2,497 12,567
Southwood J. Morcott 1,935 5,740 6,305 (2) 13,980
Gordon R. Parker 1,469 2,296 2,080 5,845
Ramiro G. Peru 29,779 (3) 53,508 0 83,287
Timothy R. Snider 16,134 (3) 56,837 0 72,971
J. Steven Whisler 98,994 (3) 244,151 0 343,145
Douglas C. Yearley 113,078 508,334 0 621,412
Directors and executive officers as a group 324,672 1,053,257 26,897 1,404,826

(1) Represents stock units awarded under the Directors Stock Unit Plan.

(2)  Includes stock units awarded under the Directors Deferred Compensation Plan.
 
(3)  Includes the following shares of restricted stock awarded under the 1998 Stock Option and Restricted Stock Plan: Mr. Iraola, 27,500 shares, Mr. Whisler, 45,000 shares, Mr. Snider, 7,500 shares and Mr. Peru, 22,500 shares.

7



SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

       Based on a review of reports filed by our directors, executive officers and beneficial holders of 10% or more of our outstanding shares, and upon representations from those persons, all reports required to be filed by our reporting persons during 1999 were filed on time.

      To the knowledge of the Corporation, the following entities beneficially owned in excess of five percent of the Corporation’s common shares as of December 31, 1999:

                 
Number
of Percent of
Name and Address Shares Outstanding



Capital Research and Management Company(a) 7,554,060 9.60 %
333 South Hope Street
Los Angeles, CA 90071
 
AMVESCAP PLC; AVZ, Inc.; AIM Management Group, Inc.; 7,359,590 9.35 %
AMVESCAP Group Services, Inc.; INVESCO, Inc.;
INVESCO North American Holdings, Inc.; and
INVESCO Capital Management, Inc.(b)
11 Devonshire Square
London, EC2M 4YR England
 
Morgan Stanley Dean Witter & Co.(c) 4,200,723 5.34 %
1585 Broadway
New York, NY 10036

(a)  A report on Schedule 13G, dated February 10, 2000, disclosed that this entity, as a registered investment advisor, had sole dispositive power over 7,554,060 shares which represented 9.60% of the outstanding common shares at December 31, 1999.
 
(b)  A report on Schedule 13G, dated February 4, 2000, disclosed that these entities, filing jointly as parent holding companies and as a registered investment advisor (INVESCO Capital Management, Inc.), had shared voting power over 7,359,590 shares and shared dispositive power over 7,359,590 shares which represented 9.35% of the outstanding common shares at December 31, 1999.
 
(c)  A report on Schedule 13G, dated February 4, 2000, disclosed that this entity, as a registered investment advisor, had shared voting power over 3,980,426 shares and shared dispositive power over 4,200,723 shares which represented 5.34% of the outstanding common shares at December 31, 1999.

8



EXECUTIVE COMPENSATION

       The following table summarizes the compensation we paid our Chairman and Chief Executive Officer and each of the four other most highly compensated executive officers in 1999, 1998 and 1997.

Summary Compensation Table

                                                         
Long-Term
Annual Compensation Compensation


Other Restricted
Base Annual Stock Options All Other
Salary Bonus Compensation Awards Granted Compensation
Name And Principal Position Year ($) ($)(1) ($)(2) ($)(3) (#)(4) (5)($)








Douglas C. Yearley 1999 800,000 1,950,000 58,801 –0– 100,000 128,761
Chairman of the Board, Chief 1998 800,000 440,000 136,262 –0– 100,000 151,246
Executive Officer and Director 1997 750,000 860,300 152,248 –0– 242,660 125,765
J. Steven Whisler 1999 480,000 235,000 27,422 1,036,250 150,000 45,112
President and Chief Operating 1998 480,000 240,000 13,240 –0– 80,000 50,110
Officer and Director 1997 400,000 309,900 18,349 –0– 121,960 43,602
Manuel J. Iraola 1999 390,000 176,740 11,345 –0– 63,000 39,096
Senior Vice President; President, 1998 390,000 340,000 64,057 –0– 52,414 48,031
PDI and Director 1997 360,000 247,800 22,064 –0– 36,933 41,604
Timothy R. Snider(6) 1999 310,000 158,472 14,841 –0– 64,811 26,113
Senior Vice President, PDC; 1998 285,000 100,000 7,138 –0– 55,000 28,888
President, PDMC
Ramiro G. Peru(7) 1999 247,500 92,993 7,916 1,400,624 45,000 20,573
Senior Vice President and Chief Financial Officer

(1)  Amounts shown under “Bonus” were paid under the Annual Incentive Compensation Plan and include special bonuses paid due to the acquisition of Cyprus Amax Minerals Company. Amounts shown under “Base Salary” and “Bonus” include any salary or bonus deferred by the executive under the Phelps Dodge Employee Savings Plan (the “Savings Plan”) and the Phelps Dodge Corporation Supplemental Savings Plan (the “Supplemental Savings Plan”).
 
(2)  Amounts shown under “Other Annual Compensation” include tax payment reimbursements and personal benefits for all reported executives.
 
(3)  Dividends are paid on the restricted shares in the same amount and at the same time as dividends paid to all other owners of common shares.
 
(4)  The option grants denoted by “(3)” include reload options, as well as normal compensatory options. See Stock Options on page 10.
 
(5)  Amounts shown include the following contributions and accruals by the Corporation for 1999 to the Savings Plan and 1999 accruals under the Supplemental Savings Plan, and for premium payments for life insurance policies issued through the Executive Life Insurance Plan for the reported executives:
                         
Employee Supplemental Executive Life
Name Savings Plan Savings Plan Insurance Plan




Douglas C. Yearley 11,603 55,744 61,414
J. Steven Whisler 11,936 27,872 5,304
Manuel J. Iraola 11,686 20,033 7,377
Timothy R. Snider 13,686 7,425 5,002
Ramiro G. Peru 12,905 5,226 2,442

(6)  Effective September 2, 1998, Mr. Snider was elected a Senior Vice President of the Corporation, and President of Phelps Dodge Mining Company.
 
(7)  Effective May 5, 1999, Mr. Peru was elected the Chief Financial Officer of the Corporation.

9



Stock Options

      Each of the executives listed in the Summary Compensation Table was eligible to receive two types of option grants during 1999: normal option grants and reload option grants. The first type of grant is a compensatory award normally made on an annual basis which is intended to reward each named executive based on the Corporation’s future performance. Normal option grants customarily include the right to receive reload options.

      A reload option is granted to an employee who exercises an option with already-owned shares. It replaces the opportunity for future appreciation that the employee would otherwise lose by exercising the original option, while encouraging the employee to increase his share ownership. Reload options provide only limited incremental value to the employee as compared to the options they replace. Reload option grants customarily include the right to receive additional reload options.

      The following table contains information with respect to the normal compensatory option grants and reload option grants made to each named executive during 1999 and the hypothetical value at the time of grant based on a variation of the Black-Scholes model (see footnote (3) below). The Corporation is not aware of any option pricing model which can provide a true assessment of the value of the options. Over their lives, the options could have a greater or a lesser value than that shown in the table, and under some circumstances they could have zero value.

Option Grants in 1999

                                                 
Normal % of Total
and Reload Options Granted
Options to Employees Expiration Grant Date
Name Granted(1) In 1999(2) Price Date Present Value(3)






Douglas C. Yearley Normal 100,000 8.28 $ 59.5938 6/23/09 $ 1,315,000
J. Steven Whisler Normal 150,000 12.42 51.8125 12/2/09 1,818,000
Manuel J. Iraola Normal 63,000 5.21 51.8125 12/2/09 763,560
Timothy R. Snider Reload 4,811 0.40 69.2188 12/6/04 40,364
Normal 60,000 4.97 51.8125 12/2/09 727,200
Ramiro G. Peru Normal 45,000 3.72 51.8125 12/2/09 545,400

(1)  Normal options expire no later than the tenth anniversary of the date of grant, plus one day. If an employee retires on his normal retirement date, or retires early under any pension or retirement plan maintained by the Corporation or any subsidiary, or dies, his exercisable options terminate no later than the fifth anniversary of his retirement or death. If an optionee’s employment terminates for any reason other than retirement or death, his exercisable options terminate no later than 30 days following the termination of his employment.
 
     Normal options generally become exercisable in three or four substantially equal annual installments beginning on the first anniversary of the date of grant or earlier as the Compensation and Management Development Committee in its discretion may determine. The Committee may also approve provisions making installments exercisable (a) upon the employee’s retirement, (b) six months from the date an option is granted if it is the result of a previous exercise in which pre-owned shares were used in payment of the exercise, and (c) as the Committee deems appropriate in a change of control of the Corporation but not later than two years after the employee ceases employment.
 
     Options include the right to receive reload options in the event the optionee exercises an option with already-owned shares. Reload options contain the same expiration dates and other terms as the options they replace except that they have an exercise price per share equal to the fair market value of a common share on the date the reload option is granted and become exercisable in full six months after they are granted. Reload options customarily include the right to receive additional reload options.

10



(2)  Illustrates the total number of normal and reload options granted as a percent of the aggregate number of 1999 normal options (1,193,900 shares) and 1999 reload options (14,276 shares) granted to all employees.
 
(3)  The hypothetical present value of the options at the date of grant was determined using a variation of the Black-Scholes option pricing model. The Black-Scholes model is a complicated mathematical formula which is widely used to value options traded on the stock exchanges. However, executive stock options differ from exchange-traded options in several key respects. Executive options are long-term, non-transferable and subject to vesting restrictions, whereas exchange-traded options are short-term and can be exercised or sold immediately in a liquid market. The model used here is adapted to estimate the present value of an executive option and considers a number of factors, including the grant price of the option, the volatility of the Corporation’s common shares, the dividend rate, the term of the option, the time it is expected to be outstanding and interest rates. The Black-Scholes values were derived using as assumptions the following financial factors which existed at or about the time that the options were granted: volatility of .3194, dividend yield of 3.09%, and interest rates of 5.993% for normal options and 4.788% for reload options. In view of the Corporation’s historic exercise experience and the inherent motivation to exercise options early in their terms because of the reload option feature, normal options were assumed to be outstanding for three years at time of exercise and reload options for one year. No downward adjustments were made to the resulting grant-date option values to account for potential forfeiture or non-transferability of the options in question. Because the Black-Scholes model was not developed for executive options and requires the use of assumptions primarily based on conditions in effect at the time of grant (and not over the term of the option), it provides only a theoretical estimate of the value of these options.
 
     Reload option grants are part of the Corporation’s overall program to increase the number of common shares owned by its executive officers and other key employees. Traditional option programs generally do not encourage optionees to exercise options prior to the end of their term or to hold the shares received upon such exercise. The Compensation and Management Development Committee adopted the reload option program, with shareholder approval, to encourage option exercises and stock retention by permitting an optionee to exercise an option with already-owned common shares and to be restored to the same economic opportunity available immediately prior to such exercise.
 
     Under the reload program, an employee who exercises an option (the “Original Option”) with already-owned shares prior to the end of the option term will receive an additional option (the “Reload Option”) covering a number of shares equal to the number used to exercise the Original Option. The Reload Option will be exercisable, beginning six months after grant and continuing for the remaining term of the Original Option, at a price equal to the fair market value of the shares on the date the Original Option is exercised. As a result of the exercise of the Original Option with already-owned shares, the net number of common shares held by the employee will increase by the number of shares that has an aggregate market value equal to the “spread” on the option (the “spread” equals the aggregate market price of the option shares on the day of exercise less the aggregate exercise price). Thus, the number of shares covered by the Reload Option plus the number of additional shares received on the exercise of the Original Option will equal the number of shares covered by the Original Option. The program thereby serves to replace the opportunity for future appreciation that an optionee would otherwise lose by exercising an option using already-owned shares. In addition, by inducing option exercises and stock retention, the reload feature offers optionees the opportunity to receive dividends on a greater number of shares than would be the case without such a feature.

11



Aggregated Option Exercises in 1999 and December 31, 1999 Option Values

       The following table provides information concerning options exercised in 1999 by the named executives and the options held by them at the end of 1999:

                                 
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares 12/31/99 12/31/99
Acquired On Value (Exercisable/ (Exercisable/
Name Exercise(1) Realized Unexercisable) Unexercisable)(2)





Douglas C. Yearley 0 0 533,497/ 193,334 785,712/ 1,349,790
J. Steven Whisler 0 0 255,325/ 221,001 492,249/ 2,684,882
Manuel J. Iraola 0 0 150,247/ 103,667 604,422/ 1,210,012
Timothy R. Snider 5,755 65,284 56,837/ 100,734 242,448/ 1,322,557
Ramiro G. Peru 0 0 51,841/  73,667 129,298/  848,812

(1)  Options for 5,755 were exercised by Mr. Snider using shares already owned to pay the exercise price of the options exercised in 1999. The number of shares acquired upon exercise of these options in excess of the shares used to pay the exercise price and associated taxes was 505. He acquired reload options to purchase 4,811 shares.
 
(2)  Value is based on the mean of the high and low of the common shares on the Consolidated Trading Tape on December 31, 1999 ($65.8750).

PENSION AND OTHER RETIREMENT BENEFITS

Retirement Plans

      The following pension table shows the estimated aggregate annual benefits payable in the form of a straight life annuity commencing at age 65 under the Phelps Dodge Retirement Plan for Salaried Employees (the “Retirement Plan”) as supplemented by the Phelps Dodge Corporation Supplemental Retirement Plan (the “Supplemental Retirement Plan”) that make up amounts limited by the Internal Revenue Code (the “Code”).

Pension Plan Table

                                                                     
Estimated Annual Benefits for Years of Service Indicated(c)
Final Average
Compensation(a)(b) 10 15 20 25 30 35 40 45









$ 200,000 $ 29,942 $ 44,913 $ 59,884 $ 74,855 $ 89,826 $ 104,797 $ 119,768 $ 134,739
$ 300,000 $ 45,942 $ 68,913 $ 91,884 $ 114,855 $ 137,826 $ 160,797 $ 183,768 $ 206,739
$ 400,000 $ 61,942 $ 92,913 $ 123,884 $ 154,855 $ 185,826 $ 216,797 $ 247,768 $ 278,739
$ 500,000 $ 77,942 $ 116,913 $ 155,884 $ 194,855 $ 233,826 $ 272,797 $ 311,768 $ 350,739
$ 600,000 $ 93,942 $ 140,913 $ 187,884 $ 234,855 $ 281,826 $ 328,797 $ 375,768 $ 422,739
$ 700,000 $ 109,942 $ 164,913 $ 219,884 $ 274,855 $ 329,826 $ 384,797 $ 439,768 $ 494,739
$ 800,000 $ 125,942 $ 188,913 $ 251,884 $ 314,855 $ 377,826 $ 440,797 $ 503,768 $ 566,739
$ 900,000 $ 141,942 $ 212,913 $ 283,884 $ 354,855 $ 425,826 $ 496,797 $ 567,768 $ 638,739
$ 1,000,000 $ 157,942 $ 236,913 $ 315,884 $ 394,855 $ 473,826 $ 552,797 $ 631,768 $ 710,739
$ 1,100,000 $ 173,942 $ 260,913 $ 347,884 $ 434,855 $ 521,826 $ 608,797 $ 695,768 $ 782,739
$ 1,200,000 $ 189,942 $ 284,913 $ 379,884 $ 474,855 $ 569,826 $ 664,797 $ 759,768 $ 854,739
$ 1,300,000 $ 205,942 $ 308,913 $ 411,884 $ 514,855 $ 617,826 $ 720,797 $ 823,768 $ 926,739
$ 1,400,000 $ 221,942 $ 332,913 $ 443,884 $ 554,855 $ 665,826 $ 776,797 $ 887,768 $ 998,739

12



                                                                     
Estimated Annual Benefits for Years of Service Indicated(c)
Final Average
Compensation(a)(b) 10 15 20 25 30 35 40 45









$ 1,500,000 $ 237,942 $ 356,913 $ 475,884 $ 594,855 $ 713,826 $ 832,797 $ 951,768 $ 1,070,739
$ 1,600,000 $ 253,942 $ 380,913 $ 507,884 $ 634,855 $ 761,826 $ 888,797 $ 1,015,768 $ 1,142,739
$ 1,700,000 $ 269,942 $ 404,913 $ 539,884 $ 674,855 $ 809,826 $ 944,797 $ 1,079,768 $ 1,214,739

(a)  The Retirement Plan provides a member upon retirement at age 65 with a pension for life in a defined amount based upon final average salary and length of benefit service. Under the Retirement Plan, final average salary (“Final Average Salary”) is the highest average annual base salary for any consecutive 36-month period plus the highest average annual incentive compensation for any consecutive 60-month period during a member’s last 120  months of employment. Benefit service includes all periods of employment with the Corporation or its participating subsidiaries. Benefits under the Retirement Plan are subject to certain limitations under the Code, and to the extent the result of such limitations would be a benefit less than would otherwise be paid under such Plan, the difference is provided under the supplementary retirement provisions of the Supplemental Retirement Plan. The formula for determining benefits payable under the Retirement Plan takes into account estimated social security benefits payable. The amounts set forth in the table assume maximum social security benefits payable in 1999.
 
(b)  Amounts of annual incentive compensation have been estimated based on the five-year average annual incentive compensation awarded to participating employees for 1995 through 1999. The actual amount of incentive compensation for an individual at any level of Final Average Salary could vary.
 
(c)  The expected credited years of benefit service at normal retirement for the Corporation’s five current named executive officers as of December 31, 1999 are as follows: Mr. Yearley, 41  years; Mr. Whisler, 43 years; Mr. Iraola, 30 years; Mr. Peru, 42 years; and Mr. Snider, 45 years. The years of service are based on normal retirement for all executive officers under the Retirement Plan and the applicable provisions of the Supplemental Retirement Plan.

SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS

Severance Agreements With Our Executives

      The Corporation has severance agreements with each of its five named executive officers under which the executive would receive a lump sum payment equal to his annual base salary in the event the Corporation terminates his employment, other than for cause or mandatory retirement, or the executive voluntarily terminates his employment because of material reductions in his salary or his position, duties and responsibilities. The terminated executive would also receive (i) outplacement services at a cost up to 15% of his base salary and (ii) the cost of continued coverage for a limited period under the Corporation’s group health, life insurance and disability plans.

Change of Control Agreements With Our Executives

      The Corporation also has agreements with such executives under which each executive would receive, in the event he ceases to be employed by the Corporation within two years following a change of control of the Corporation (for a reason other than death, disability, willful misconduct, normal retirement or under certain circumstances a voluntary termination of employment by the executive), a lump sum equal to (i) three times the executive’s highest base salary during that year and the prior two years plus (ii) three times the executive’s average bonus paid under the Annual Incentive Compensation Plan for the two calendar years preceding the year in which the change of control occurs, less (iii) any severance payable under his Severance Agreement. The amount of such payments, when combined with any other payments that are contingent upon a change of control, may be capped at the maximum amount that can be paid without triggering an excise tax under the Internal Revenue Code. This “Cap” on payments does not apply if the amount of such payments, calculated without the Cap, is at least 20% more than the amount of such payments calculated with the Cap. If the

13



payments are not subject to the Cap, the Corporation will provide the executive with a tax gross-up payment to reimburse the executive for any excise taxes as well as the presumed income taxes on the gross-up. The terminated executive would also receive the cost of continued coverage for a limited period under the Corporation’s group health, life insurance and disability plans. Except under certain circumstances, these change of control agreements expire on December 31, 2002.

Other Change Of Control Provisions

      Although normal compensatory options granted by the Corporation generally become exercisable in three or four substantially equal annual installments beginning on the first anniversary of the date of grant, they also become exercisable in certain change of control situations. Specifically, such options are exercisable (but not earlier than six months from the date of grant) for a period of 30 days beginning on the date the Corporation’s common shares are purchased pursuant to a third party tender offer or the Corporation’s shareholders approve a merger or similar transaction which the Corporation will not survive as a publicly held corporation or, in the case of the five named executive officers and certain other employees, the date the employee ceases to be employed if he/she ceases to be employed within two years following a change of control.

      The Supplemental Retirement Plan provides for the payment of unreduced benefits to employees who meet liberalized age and length of service requirements and whose employment is terminated by the Corporation or any of its subsidiaries within two years following a change of control of the Corporation. The Supplemental Retirement Plan also provides an additional 36 months of service credit to an executive who, due to his termination of employment within two years following a change of control of the Corporation, becomes entitled to receive payments under his change of control agreement with the Corporation. The Supplemental Savings Plan obligates the Corporation to transfer an amount equal to the deficiency in the assets of the Plan’s trust fund, if any, prior to the day on which a change of control occurs.

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE

REPORT ON EXECUTIVE COMPENSATION

The Committee

      The Committee is composed solely of directors (currently four) who are not employees of the Corporation. It has periodically retained respected independent compensation consultants to advise and assist it in connection with various compensation matters.

Corporate Goals

      The Corporation’s goal is to be the leader in each of the domestic and international mining and manufacturing activities in which it competes. It also seeks to achieve and sustain progressive increases in value for its shareholders, while balancing appropriately the short- and long-term opportunities for the Corporation.

      To meet these goals, the Corporation employs high caliber, dedicated senior managers who are well trained and results oriented. The Board of Directors established the Compensation and Management Development Committee to oversee the Corporation’s compensation and management development programs and to ensure that these programs maximize the Corporation’s ability to attract, retain and motivate employees to meet these stated objectives.

      The Committee believes it can motivate senior managers participating in these programs by:

  •  Emphasizing the relationship between pay and performance by rewarding managers who bring about solid achievement with regard to key business strategies and specific operational objectives and by increasing the relative amount of compensation at risk as management responsibilities increase.
 
  •  Assuring that the elements of variable compensation are linked as directly as practicable to measurable financial, operational and other forms of performance.

14



  •  Encouraging stock ownership by executives.
 
  •  Tying pay for performance as closely as possible to success in maximizing the value of the Corporation’s stock over the long term.

Elements of Executive Compensation

      The executive officers are compensated by salaries, annual incentive awards and long-term incentive compensation, with the greatest emphasis on long-term incentives in the form of stock options. Each element focuses on performance in a different but complementary way. Salaries focus on individual performance, competence and the Corporation’s performance during the officer’s tenure. Annual incentives relate to corporate, division and, where appropriate, unit and individual performance. Long-term incentive awards, which are paid in the form of stock options, and, from time to time, in restricted stock, create a long-term identity of interest with the shareholders based on the Corporation’s performance and related growth of shareholder value. The Committee believes that the Corporation competes for its executive talent primarily with similarly sized industrial companies located in the United States. Accordingly, where possible, the Committee compares the compensation for the top five executives, at least annually, to the compensation paid to executives holding similar positions at 16 publicly held industrial corporations of an average size, measured by revenues and market capital, similar to that of the Corporation (referred to below as the “comparison group”). For other executives, comparisons to similar positions are based on a much larger group of companies of similar size to the Corporation measured by revenues. The Committee believes that the competitive data used is generally representative of the competitive level of compensation paid to executive officers in companies the size of Phelps Dodge. Thus, the companies used for comparison purposes in connection with the compensation paid to the Corporation’s executive officers are different from the companies included in the peer group used in the performance graphs on pages 21 and 22 to compare shareholder returns.

Executive Salaries

      Individual salaries for executive officers are established by the Committee to reflect the officer’s performance and competence, existing general economic and industry conditions and the Corporation’s performance during the executive officer’s tenure. Generally, salary adjustments are targeted to move salaries to competitive levels over time for sustained and expected performance and competence. The salaries of executive officers who have performed exceptionally well over sustained periods of time may be adjusted to exceed competitive levels. Based on available information, the Committee believes salaries in 1999 for the executive officers were at or near these competitive levels when compared to employees in similar positions in the comparison group. The Committee determined that over the last decade Phelps Dodge stock has significantly outperformed the S&P Metals Mining index and the individual executives named in the Summary Compensation Table have sustained excellent individual performance, and given the increased size and scope of their duties subsequent to the acquisition of Cyprus Amax Minerals Company, salaries for the named executives should be adjusted upward in 2000 to bring their salaries to competitive levels.

Annual Incentives

      The Annual Incentive Compensation Plan provides the executive officers and certain other officers and managers with compensation based on success in achieving annual corporate, division and, where appropriate, unit and individual goals. For each executive officer, a target award is determined approximating the 60th percentile of the annual incentive compensation paid by the comparison group to individuals holding comparable positions. Lower threshold awards and higher maximum awards are also established. Corporate goals are set using return on equity and net operating cash flow return on invested capital, both of which are fundamental indicators of the Corporation’s performance. In 1999, the Corporation’s performance with respect to both return on equity and net operating cash flow return on invested capital were below the threshold goal. Based on these results and the Committee’s evaluation of performance relative to individual and, where appropriate, division and unit goals, the Committee approved Annual Incentive Compensation awards for 1999 below the targeted amounts for the listed executives.

15



Long-Term Incentive Compensation

      The Committee uses stock options as the principal method of providing long-term incentive compensation primarily because employees benefit from options, if at all, only to the extent of increases in the value of the Corporation’s common shares. To further the identity of interest with the shareholders, the executive officers are expected to acquire and own significant numbers of the Corporation’s shares.

      The Committee has determined that to focus the executives’ attention to an appropriate extent on the long-term growth of shareholder value, the targeted compensation levels with respect to the present value of stock options should be approximately midway between the 50th and 75th percentiles of the long-term incentive awards made to executives holding similar positions in the comparison group. Adjustments are made from these levels based on the performance, career potential, critical skills and prior grant history of the executive officer. Of the stock options granted to executive officers in 1999, three approximated targeted levels and one was above the targeted level. All of the option grants for 1999 were approved by the Committee.

Grants of Restricted Stock

      The Committee also made grants of restricted stock to a limited number of other employees under the Corporation’s 1998 Stock Option and Restricted Stock Plan. Grants were made to two executives named in the Summary Compensation Table. The principal purpose of these grants was to retain the services of key executives and skilled personnel through a means that also provides a meaningful economic incentive to increase the value of the Corporation’s common shares. The size of each award was determined based on the Committee’s subjective determination of the recipient’s expected contribution to the Corporation over the stated vesting period, the significance of the recipient’s position with the Corporation, and the importance of maintaining continuity of management and critical skills in the recipient’s function.

Stock Ownership Guidelines

      To underscore the connection between the interests of management and stockholders, the Corporation, several years ago, established informal stock ownership guidelines for its executive officers. In 1996, the Corporation formalized this program and established stock ownership targets for officers of the Corporation who hold the position of Vice President and above and certain senior executives within the Phelps Dodge Mining Company and Phelps Dodge Industries divisions. The targets are expressed in terms of the value of the Corporation’s common shares held by the executive as a multiple of salary grade midpoint. The targets range from one and one-half times salary midpoint up to five times salary midpoint for the CEO. Many Vice Presidents and other executives already hold a substantial amount of common shares, but those who do not hold sufficient shares have 5 years from the date they became subject to the ownership requirements to reach their personal ownership targets.

Tax Code Issues

      Section 162(m) of the Internal Revenue Code generally places a $1 million per person limit on the deduction a publicly held corporation may take for compensation paid to its chief executive officer and its four other highest compensated “covered employees,” excluding for this purpose deferred compensation and, in general, compensation constituting “performance-based” compensation. In 1998, the Corporation obtained shareholder approval for the 1998 Stock Option and Restricted Stock Plan which continues to exclude the compensation from stock options from the $1 million deductibility limit. Other elements of the compensation payable to executive officers, such as salary, annual incentive compensation and restricted stock, are not excludable from such limit. Mr. Yearley deferred $673,620 of his salary in 1999. However, as a result of the Corporation’s successful acquisition of Cyprus Amax Minerals Company and the related $1,500,000 bonus award received by Mr. Yearley in 1999, his compensation subject to Section 162(m) exceeded $1 million. This resulted in the loss of a federal income tax deduction with respect to approximately $1,194,751 of his compensation.

16



CEO Compensation

      Douglas C. Yearley, the Chief Executive Officer of the Corporation in 1999, received a base salary of $800,000 in 1999, an Annual Incentive Compensation Plan award of $450,000 for 1999 performance compared to stated corporate and individual performance goals, an additional bonus award of $1,500,000 as a result of the Corporation’s successful acquisition of Cyprus Amax Minerals Company, and a stock option grant in 1999 to purchase 100,000 common shares.

      The Committee believes that Mr. Yearley’s 1999 salary was at or near the 1999 competitive level paid by comparable companies to their CEOs. Mr. Yearley’s Annual Incentive Compensation Plan award was determined on the basis of the Corporation’s actual return on equity and net operating cash flow return on invested capital as compared to goals set at the beginning of the year and the Committee’s subjective evaluation of his performance with regard to established individual goals. Based on its judgment as to Mr. Yearley’s performance in these respects, the Committee approved a below target award. Mr. Yearley’s stock option grant, which was below the targeted level but equal to his 1998 grant, was based on the policy discussed above.

Conclusion

      The Committee will continue to evaluate the Corporation’s compensation programs to best enable the Corporation to employ and motivate high caliber, dedicated people. Such employees, properly motivated, are believed to be key to achievement of the Corporation’s goal to be the international leader in the mining and manufacturing activities in which it competes and the related enhancement of shareholder value over the long term.

  THE COMPENSATION AND MANAGEMENT
  DEVELOPMENT COMMITTEE
 
  Southwood J. Morcott, Chairman
 
  Robert N. Burt
 
  Archie W. Dunham
 
  Paul Hazen

17



AUDIT COMMITTEE REPORT

       The Committee has reviewed and discussed with management of the Corporation the audited financial statements of the Corporation for the fiscal year ended December 31, 1999 (the “Audited Financial Statements”).

      The Committee has discussed with PricewaterhouseCoopers LLP, independent accountants for the Corporation, the matters required to be discussed by Statement on Auditing Standards No. 61, as in effect on the date of this proxy statement.

      The Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the Independence Standards Board Standard No. 1, as in effect on the date of this proxy statement, and has discussed with PricewaterhouseCoopers LLP its independence.

      Based on the review and discussions described above, the Committee recommended to the Board of Directors of the Corporation that the Audited Financial Statements be included in the Corporation’s Annual Report on Form 10-K for the last fiscal year for filing with the Securities and Exchange Commission.

  THE AUDIT COMMITTEE
 
  Paul Hazen, Chairman
 
  Archie W. Dunham
 
  William A. Franke
 
  Marie L. Knowles
 
  Robert D. Krebs

18



AUDIT COMMITTEE CHARTER

I.  Purpose

      The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing the quality and integrity of the Corporation’s financial reports; the Corporation’s systems of internal controls regarding finance and accounting; and the Corporation’s auditing, accounting and financial reporting processes generally. The Committee’s primary duties and responsibilities are to:

  •  Serve as an independent and objective party to monitor the Corporation’s financial reporting process and internal control systems.
 
  •  Review and appraise the audit efforts of the Corporation’s independent accountants and internal auditing function.
 
  •  Provide an open avenue of communication among the independent accountants, financial and senior management, the internal auditing function, and the Board of Directors.

The Audit Committee will primarily fulfill these responsibilities by carrying out the activities enumerated in Section III of this Charter.

II.  Composition

      The Committee shall be comprised of three or more directors, each of whom shall be independent directors, and free from any relationship that, in the opinion of the Board, may interfere with the exercise of his or her independent judgment as a member of the Committee or independence from management and the Corporation. All members of the Committee shall be financially literate as this qualification is interpreted by the Board (or must become financially literate within a reasonable period of time after his or her appointment), and at least one member of the Committee shall have accounting or related financial management expertise.

III.  Responsibilities and Duties

      To fulfill its responsibilities and duties, the Committee shall:

  Review Financial Reports

  1.  Review and discuss the Corporation’s audited financial statements with the Corporation’s management.

  2.  Review, with the Corporation’s director of corporate audit, the scope and results of the Corporation’s internal audit activity.
 
  3.  Review with management and the independent accountants the interim financial statements prior to filing the 10-Q and publicly releasing quarterly earnings. The Chair of the Committee may represent the entire Committee for purposes of this review.

  Independent Accountants

  4.  Review and recommend to the Board of Directors the engagement of independent accountants including approval of their fee and the scope and timing of their audit of the Corporation’s financial statements.

  5.  Review, with the independent accountants, the accountants’ report on the Corporation’s financial statements.
 
  6.  Evaluate the performance of the independent accountants; where appropriate, recommend that the Board of Directors replace the independent accountants and approve any proposed discharge of the independent accountants.

19



    7.  On an annual basis, obtain from the Corporation’s independent public accountants written disclosure delineating all relationships between such accountants and the Corporation and its affiliates, including the written disclosure and letter required by Independence Standards Board (ISB) Standard No. 1, as it may be modified or supplemented.
 
    8.  From time to time, as appropriate, actively engage the Corporation’s independent public accountants in a dialogue with respect to any disclosed relationships or services that may impact the objectivity and independence of such accountants and recommend to the Board of Directors appropriate action in response to the outside accountants’ report to satisfy itself of the accountants’ independence.
 
    9.  Inform the independent accountants that they are ultimately accountable to the Board of Directors and the Audit Committee, as representatives of the shareholders.

  10.  Periodically discuss with the independent accountants out of the presence of management the Corporation’s internal controls, including their recommendations, if any, for improvements in the Corporation’s internal controls and the implementation of such recommendations, the fullness and accuracy of the Corporation’s financial statements and certain other matters required to be discussed by Statement on Auditing Standards No. 61 (SAS 61)*, as it may be modified.

  Reviewing and Improving Processes

  11.  As part of its job to foster open communication, the Committee should meet at least annually with the Corporation’s management, the Corporation’s director of corporate audit and the independent accountants in separate executive sessions to discuss any matters that the Committee or each of these groups believe should be discussed confidentially.
 
  12.  In consultation with the independent accountants and the internal auditors, review the integrity and quality of the organization’s financial reporting processes, both internal and external, and the independent accountants’ perception of the Corporation’s financial and accounting personnel.
 
  13.  Consider the independent accountants’ judgments about the quality and appropriateness of the Corporation’s accounting principles as applied and significant judgments affecting its financial reporting.
 
  14.  Consider and recommend to the Board of Directors, if appropriate, major changes to the Corporation’s financial reporting, auditing and accounting principles and practices as suggested by the independent accountants, management, or the internal auditing function.

  Ethical and Legal Compliance

  15.  Review the adequacy and appropriateness of the Corporation’s Code of Business Conduct.
 
  16.  State in the Audit Committee’s Report in the Corporation’s annual proxy statement whether, based on the review and discussions referred to in items 1, 8, 10 and 11 above, the Committee recommended to the Board of Directors that the audited financial statements be included in the Corporation’s Annual Report on Form 10-K for the last fiscal year.

  Other

  17.  Review and, if appropriate, recommend updates of this Charter annually.
 
  18.  Perform any other activities consistent with this Charter, the Corporation’s By-laws and applicable law, as the Committee or the Board deems necessary or appropriate.
_______________
SAS 61 requires independent auditors to communicate certain matters related to the conduct of an audit to those who have responsibility for oversight of the financial reporting process, specifically the Audit Committee. Among the matters to be communicated to the Audit Committee are: (1) methods used to account for significant unusual transactions; (2) the effect of authoritative guidance or consensus; (3) the process used by management in formulating particularly sensitive accounting estimates and the basis for the accountants’ conclusions regarding the reasonableness of those estimates; and (4) disagreements with management over the application of accounting principles, the basis for management’s accounting estimates, and the disclosures in the financial statements.

20



COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN

AMONG PHELPS DODGE CORPORATION, THE S & P 500 INDEX
AND THE S & P METALS MINING INDEX

[COMPARISON CHART]

      The chart above reflects $100 invested at 12/31/94 in Phelps Dodge common stock, the S&P 500, and in a peer group represented by the S&P Metals Mining index, which until late 1999, was comprised of Phelps Dodge, ASARCO Incorporated, Cyprus Amax Minerals Company, Freeport-McMoRan Copper & Gold Inc., and Inco Ltd.

Fiscal Year Ended

                                                 

 December 31 1994 1995 1996 1997 1998 1999  

Phelps Dodge Corporation 100 111 113 110 93 127
S&P 500 100 138 169 226 290 351
S&P METALS MINING 100 104 116 76 55 104

21



COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN

AMONG PHELPS DODGE CORPORATION, THE S & P 500 INDEX
AND THE S & P METALS MINING INDEX

[COMPARISON CHART]

                         
Phelps Dodge Corporation S & P 500 S & P METALS MINING



12/31/89 100 100 100
12/31/90 97 101 95
12/31/91 126 125 107
12/31/92 188 136 115
12/31/93 195 150 128
12/31/94 255 152 150
12/31/95 264 209 165
12/31/96 295 257 169
12/31/97 342 280 113
12/31/98 236 440 82
12/31/99 325 533 155

      The chart above reflects $100 invested at 12/31/89 in Phelps Dodge common stock, the S&P 500, and in a peer group represented by the S&P Metals Mining index, which until late 1999, was comprised of Phelps Dodge, ASARCO Incorporated, Cyprus Amax Minerals Company, Freeport-McMoRan Copper & Gold Inc., and Inco Ltd. This 10-year graph illustrates the relative stock performances over a period that more closely represents the longer business cycle generally associated with the industry of the Corporation and is especially meaningful because the business focus and growth strategies of the Corporation have been and continue to be long term.

Fiscal Year Ended

                                                                                         

 December 31 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Phelps Dodge Corporation 100 97 126 188 195 255 264 295 342 236 325
S & P 500 100 101 125 136 150 152 209 257 280 440 533
S & P METALS MINING 100 95 107 115 128 150 165 169 113 82 155

22



2.  RATIFICATION OF APPOINTMENT OF ACCOUNTANTS

       On the recommendation of the Audit Committee, the Board of Directors has appointed PricewaterhouseCoopers LLP as independent accountants for the Corporation for the year 2000.

      PricewaterhouseCoopers LLP or a predecessor firm has been the independent accountants for the Corporation since 1915. A representative of PricewaterhouseCoopers LLP will be present at the annual meeting with the opportunity to make a statement if he so desires and to respond to appropriate questions.

      The Board of Directors recommends a vote FOR ratification of the appointment of PricewaterhouseCoopers LLP as independent accountants.

OTHER BUSINESS

       The Board of Directors is not aware of any other matters to be presented at the annual meeting. If any other matter proper for action at the meeting should be presented, the holders of the accompanying proxy will vote the shares represented by the proxy on such matter in accordance with their best judgment. If any matter not proper for action at the meeting should be presented, the holders of the proxy will vote against consideration of the matter or the proposed action.

VOTING PROCEDURES

       All shares represented by the accompanying proxy, if the proxy is duly executed and received by the Corporation at or prior to the annual meeting, will be voted at the meeting in accordance with any instructions specified on such proxy. Where no instruction is specified, the shares may be voted according to the printed instructions on the proxy.

      It is the policy of the Corporation that, except under limited circumstances, each shareholder proxy card, ballot and voting tabulation that identifies any shareholder will be kept confidential and that the receipt and tabulation of such votes will be conducted by independent third parties, including the Corporation’s transfer agent and its proxy solicitation firm, and not by employees of the Corporation.

      The cost of soliciting proxies for the meeting will be borne by the Corporation. The Corporation has retained Morrow & Co., Inc., 445 Park Avenue. New York, NY 10022 to assist in soliciting proxies for a fee estimated at $12,500 plus reasonable expenses. Morrow & Co., Inc. and some officers and other employees of the Corporation may solicit proxies in person and by telephone or otherwise. The Corporation may also reimburse brokers and others who are record holders of the Corporation’s shares for their reasonable expenses incurred in obtaining voting instructions from beneficial owners of such shares.

PROPOSALS FOR 2001

       The Corporation will review for inclusion in next year’s proxy statement shareholder proposals received by December 1, 2000. Proposals should be sent to the Secretary of the Corporation, 2600 North Central Avenue, Phoenix, Arizona 85004-3014.

      Shareholder proposals not included in next year’s proxy statement may be brought before the May 2, 2001 annual meeting of shareholders by a shareholder of the Corporation who is entitled to vote at the meeting, who has given a written notice to the Secretary of the Corporation containing certain information specified in the By-Laws and who was a shareholder of record at the time such notice was given. Such notice must be delivered or mailed and received at the address in the preceding paragraph no earlier than February 2, 2001 and no later than March 2, 2001.

23



      If a shareholder notifies the Corporation after February 15, 2001 of an intention to present a proposal at the Corporation’s May 2, 2001 annual meeting (and for any reason the proposal is voted on at such meeting), the Corporation’s proxy holders will have the right to exercise discretionary voting authority with respect to such proposal.

ANNUAL REPORT FOR 1999

       The annual report of the Corporation for the year 1999, including financial statements, is being furnished concurrently with this proxy statement to persons who were shareholders of record as of March 15, 2000, the record date for the annual meeting. The annual report does not form part of the material for the solicitation of proxies.

  By order of the Board of Directors,
 
  Robert C. Swan
  Vice President and Secretary

Phoenix, Arizona

April 1, 2000

24



PHELPS DODGE CORPORATION

SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PHELPS DODGE CORPORATION

     The undersigned shareholder of Phelps Dodge Corporation hereby appoints ARCHIE W. DUNHAM, WILLIAM A. FRANKE, SOUTHWOOD J. MORCOTT and J. STEVEN WHISLER, or any of them, proxies of the undersigned, each with power of substitution, at the annual meeting of shareholders of the Corporation to be held at the Heard Museum, 2301 North Central Avenue, Phoenix, Arizona, on Wednesday, May 3, 2000 at 11:30 a.m., and at any adjournments thereof, to vote all Common Shares of the Corporation held or owned by the undersigned, including any which may be held for the undersigned’s account under the ChaseMellon Shareholder Services Investor Services Program for Phelps Dodge Common Shares administered by ChaseMellon Shareholder Services, L.L.C.

     The proxies are instructed to vote as directed below, and in their discretion on all other matters. Where no direction is specified, this proxy will be voted FOR Management Proposals 1 and 2 as recommended by the Board of Directors.

Management Proposals:

     The Board of Directors recommends you vote FOR Management Proposals 1 and 2

     Proposal 1: Election of Directors for the respective terms specified in the Proxy Statement: Messrs. Burt and Krebs.

         
FOR all
nominees

[   ]
WITHHELD
for all nominees

[   ]
WITHHELD for the following only
(write name(s) of nominee(s) below)

PLEASE SIGN ON REVERSE SIDE AND RETURN PROMPTLY



PROXY
 
Proposal 2: Ratification of Independent Public Accountants      FOR  [   ] AGAINST  [   ] ABSTAIN  [   ]    

  Dated: 
  Signature 
  Signature 

Please sign exactly as name appears above. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.



PROXY

PHELPS DODGE CORPORATION

Solicited on Behalf of the Board of Directors of Phelps Dodge Corporation

      The undersigned shareholder of PHELPS DODGE CORPORATION hereby appoints Archie W. Dunham, William A. Franke, Southwood J. Morcott and J. Steven Whisler or any of them, proxies of the undersigned, each with power of substitution, at the annual meeting of shareholders of the Corporation to be held at The Heard Museum, 2301 North Central Avenue, Phoenix, Arizona, on Wednesday, May 3, 2000 at 11:30 a.m., and at any adjournments thereof, to vote all Common Shares of the Corporation held or owned by the undersigned, including any which may be held for the undersigned’s account under the Phelps Dodge Corporation Common Stock Investor Services Program administered by ChaseMellon Shareholder Services, L.L.C.

      For those participants who hold accounts with Common Shares through the Phelps Dodge Employee Savings Plan and/or The Phelps Dodge Corporation Supplemental Savings Plan: The undersigned instructs the UMB Bank, N.A. as Trustee for the Plans, to vote all shares or fractions of shares credited to the account as of the latest available processing date on or before May 3, 2000, as directed on the reverse side of this proxy. For those participants who hold accounts with Common Shares through the Cyprus Amax Minerals Company Savings Plan and Trust and/or the Cyprus Amax Minerals Company Thrift Plan for Bargaining Unit Employees: The undersigned instructs T. Rowe Price Retirement Plan Services, Inc. as Trustee for the Plans, to vote all shares or fractions of shares credited to the account as of the latest available processing date on or before May 3, 2000, as directed on the reverse side of this proxy. Those shares for which no directions are received will be voted by the Trustee in its sole discretion.

THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY


- FOLD AND DETACH HERE -

YOUR VOTE IS IMPORTANT!

You can vote in one of three ways:

1.   Mark, sign and date your proxy card and return it promptly in the enclosed envelope.

or

2.   Call toll free 1-800-840-1208 on a Touch Tone telephone and follow the instructions on the reverse side. There is NO CHARGE to you for this call.

or

3.   Vote by Internet at our Internet Address: http://www.eproxy.com/pd

PLEASE VOTE

If you wish to view future Phelps Dodge Corporation Annual Reports and Proxy Statements on-line instead of receiving the printed documents, which will assist the Corporation in reducing future printing and mailing costs, please

  visit ChaseMellon’s web site registration page at http://www.eproxy.com/pd

or

  call toll free 1-800-840-1208 on a Touch-Tone Telephone and follow the instructions on the reverse side

or

  check the box on the signature side of the enclosed proxy card and return in the postage paid envelope provided.

 



Please mark   /X/
your votes as        
indicated in        
this example.        

                   
FOR WITHHELD
ALL FOR ALL


PROPOSAL 1: Election of Directors for the term specified in the Proxy Statement: /  / /  /
01 R.N. Burt
02 R.D. Krebs
 
WITHHELD FOR: (Write name(s) of nominee(s) below).
__________________________________
                           
FOR AGAINST ABSTAIN



PROPOSAL 2: Ratification of Independent Public Accountants /  / /  / /  /
 
The Board of Directors recommends you vote
FOR MANAGEMENT PROPOSALS 1 AND 2.
 
The proxies are instructed to vote as directed above, and in their discretion on all other matters. Where no direction is specified, this proxy will be voted FOR Management Proposals 1 and 2 as recommended by the Board of Directors.
         
WILL
ATTEND

If you plan to attend the Annual Meeting, please mark the Will Attend box. /  /
 
I consent to future access of the Annual Reports and Proxy Statements electronically via the Internet. I understand that the Corporation may no longer distribute printed materials to me for any future shareholder meeting until such consent is revoked. I understand that I may revoke my consent at any time. /  /

IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET PLEASE READ THE INSTRUCTIONS BELOW

Signature(s) _________________________________________ Date ________________

NOTE: Please sign name exactly as it appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.


- FOLD AND DETACH HERE -

[TELEPHONE] VOTE BY TELEPHONE OR INTERNET [COMPUTER]
QUICK *** EASY *** IMMEDIATE

YOUR VOTE IS IMPORTANT! — YOU CAN VOTE IN ONE OF THREE WAYS:

1.   TO VOTE BY PHONE: Call toll-tree 1-800-840-1208 on a touch tone telephone 24 hours a day-7 days a week

There is NO CHARGE to you for this call. — Have your proxy card in hand.

You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form

OPTION 1:         To vote as the Board of Directors recommends on ALL proposals, press 1

When asked, please confirm by Pressing 1.

OPTION 2:         If you choose to vote on each proposal separately, press 0. You will hear these instructions:

  Proposal 1 — To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9
 
  To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions
 
  Proposal 2 — To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0

When asked, please confirm by Pressing 1.

  CONSENT TO VIEW ANNUAL REPORTS AND PROXY STATEMENTS ONLINE
 
  Press 1 to consent to view future Annual Reports and Proxy Statements for this account via the Internet. You may revoke this consent at any time by giving written notice to the Corporation. When asked, please confirm your consent by pressing 1.
 
  The instructions are the same for all remaining proposals.

or

2.   VOTE BY INTERNET: Follow the instructions at our Website Address: http://www.eproxy.com/pd.

or

3.   VOTE BY PROXY CARD: Mark, sign and date your proxy card and return promptly in the enclosed envelope.

        NOTE: If you vote by telephone or Internet, THERE IS

        NO NEED TO MAIL BACK your Proxy Card.

        THANK YOU FOR VOTING.

 


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘DEF 14A’ Filing    Date    Other Filings
12/31/0210-K,  10-K/A,  11-K,  NT 10-K
6/1/02
5/2/01
3/2/01
2/15/01
2/2/01
12/1/00
For Period End:5/3/00
4/1/00
Filed as of:3/28/00
Filed on:3/27/00
3/15/00
2/10/00SC 13G/A
2/4/00SC 13G/A
2/2/00
1/1/00
12/31/9910-K405,  11-K,  5/A
6/1/99
5/31/99
5/5/99DEF 14A
2/3/99
9/2/98
 List all Filings 
Top
Filing Submission 0000950153-00-000414   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Copyright © 2020 Fran Finnegan & Company LLC – All Rights Reserved.
AboutPrivacyRedactionsHelp — Sat., Oct. 24, 7:31:56.1pm ET