Freeport-McMoRan (FCX +5.57%) announced today that it has restructured its employment agreement with CEO Richard Adkerson, tying his compensation to the stock's peformance.
Under the new agreement, Adkerson has agreed to "terminate his rights to any specified salary, bonus or other compensation" as well as any rights to "severance or change-of-control payments" that he was guaranteed under his previous employment agreement. Adkerson will continue in his current role as president and CEO of the company. In exchange for agreeing to terminate these rights he was given a special retention award of restricted stock units representing 1 million shares of Freeport-McMoRan's common stock. That award has a present value of over $35 million, which represents about half of his total compensation last year.
According to a statement from lead director Gerald Ford, this agreement is another step of progress as Freeport-McMoRan seeks to "strengthen the company's corporate governance practices." He noted that further actions are being planned, including, "modifications to our executive compensation program."
What this move does is further align Adkerson with Freeport-McMoRan's shareholders as his net worth will rise and fall with the company's stock price. That's strengthened by the fact that prior to this agreement, Adkerson already beneficially owned nearly 6 million shares, according to the company's last proxy. By giving up any additional entitlements, Adkerson's sole focus would be on creating lasting value for Freeport-McMoRan's investors.
