Freeport McMoRan hits back at ISS over say-on-pay

Mining giant blasts “flawed” analysis

Freeport-McMoRan Copper & Gold has hit back at proxy advisory firm ISS over what it says is “flawed” analysis on executive remuneration ahead of a “say-on-pay” vote at the mining company’s annual shareholder meeting later this month.

ISS Proxy Advisory Services, the arm of MSCI, has recommended its clients vote against approving the compensation of its named executive officers. Although the vote is not binding, Arizona-based Freeport has said it would consider the outcome of the vote, which takes place on June 15.

But, in a broadside to shareholders released yesterday, Freeport said its board “strongly disagrees with ISS’s analysis and resulting recommendation” and urged stockholders to back the pay proposal.

Freeport says ISS acknowledges its “strong performance” in 2010 but argues that it is basing its voting recommendation on a “flawed” stock option valuation and a “formulaic approach that fails to consider our company’s facts and circumstances”.Chief executive Richard Adkerson was awarded total pay of $17.77m in 2010 and $12.9m the year before.

Another Freeport complaint is ISS’s “newfound concerns” about its annual incentive plan, which it argues the proxy firm had recommended to investors in 2009.

Fellow proxy firm Glass Lewis has in the past said that Freeport’s “annual cost of director compensation significantly exceeds that of its peers”, among other governance issues.

Regardless of the pay spat, Freeport – the world’s largest publicly traded copper company – will also be facing institutional investor pressure over its controversial Grasberg mine operations in Papua New Guinea at the meeting.
The $140.6bn (€94.75bn) New York State Common Retirement Fund has filed a shareholder resolution calling on it to appoint an independent board director with environmental expertise and experience. The fund has 1.6m shares in Freeport worth $140.5m.