Mining company Freeport McMoRan to modify executive pay to boost governance

Sets up panel to advise on environment, human rights and sustainability

Freeport McMoRan Copper & Gold, the mine operator that is one of the world’s most excluded companies, says it plans to “modify” its executive pay practices to boost its corporate governance.

The company, on responsible investors’ radar screens over its controversial operations in Indonesia, is also setting up a panel to advise its board on a range of issues including environmental, human rights and sustainability matters.

The New York-listed company said in a filing: “Additional actions are being planned, including modification of executive compensation practices and other initiatives to further strengthen the company’s corporate governance practices.” No further details were disclosed.

The new advisory body from January 2014 will replace the current advisory directors who previously were invited to attend all board meetings. It will meet separately from the board and advise “on international and public policy issues, business and commercial activities, and environmental, human rights and sustainability matters.”

The group will initially comprise advisory directors Bennett Johnston, the former US senator who runs his own consulting firm, Gabrielle McDonald, the former president of the of the International Criminal Tribunal for the Former Yugoslavia in The Hague, and Stapleton Roy, the former US ambassador to China.The move was approved at a board meeting at the end of October and follows the appointment of former bank executive Gerald Ford as lead independent director in June. Other changes include the naming of an independent executive committee of the board comprising five directors.

Freeport was identified last year by Novethic, the French sustainability research and media company, as one of the three most excluded companies from the investor portfolios of a sample of 15 major European investors, alongside Vedanta Resources and Wal-Mart.

In September this year Freeport was excluded, after years of engagement, by four of the Swedish state AP funds (AP1, AP2, AP3 and AP4) over its controversial Grasberg facility, the world’s largest gold mine, in Papua, Indonesia. The Ethical Council which advises the funds concluded that further dialogue with Freeport would be “ineffectual”. The New Zealand Superannuation Fund exited Freeport over Grasberg in October last year.
At the company’s annual meeting this July a proposal filed by the American Federation of State, County and Municipal Employees (AFSCME) calling for an independent chairman at the mining company gained 56% support. It also faced shareholder resolutions on board environmental expertise (from the New York State Common Retirement Fund) and board diversity (New York City Pension Funds).