Management at Freeport is long-term, with many of the senior team having nine or more years of experience at the company. With the exception of 2008 (when it took an asset and goodwill impairment thanks to low copper and molybdenum prices), since 2001 its return on equity has been in excess of 20% every year. Cash flow from operations has handily exceeded net income for the past decade, and management has spent more in capital expenditures each year than has been expensed as depreciation, meaning it's investing new funds into the business and driving growth. Capital allocation is a key job of senior management, and this tells me that they're doing a good job of it.
Management and the board do listen to shareholders. At the beginning of the 2012 proxy statement was a description of how the company had learned that large shareholders were unhappy with executive compensation, followed by ways that the company had modified its compensation in response. As a result, CEO and chairman compensation decreased by 40% in 2011 versus 2010, despite the company putting up some very strong numbers in 2011 — something you don't see every day. This encourages me to believe that management is interested in at least some of the precepts of conscious capitalism, ensuring that all stakeholders in a business (customers, communities, employees, shareholders, and suppliers) are satisfied.
At the time of publication, Jim Mueller owned shares of Freeport-McMoRan Copper & Gold. The Motley Fool also owns shares. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.