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Strip-Mining the Company Coffers

Mining giant Freeport McMoRan Copper & Gold, Inc. (FCX) doesn—t have to keep scouring the world for new mineral properties — it’s got a juicy trough of gold that the Company’s Directors have been exploiting for years.

Near the end of the 2008 proxy FCX recently filed, there are several paragraphs describing Freeport’s —services agreement with the FM Services Company (the Services Company), under which the Services Company provides FCX with executive, technical, administrative, accounting, financial, tax and other services on a cost-reimbursement basis.

Director B.M. Rankin, Jr. has an agreement with the Services Company to render finance, accounting and business development services to Freeport. The Services Company provides Rankin compensation, medical coverage and reimbursement for taxes in connection with those medical benefits. The total received by Rankin during 2007 pursuant to this agreement was $783,484 — over half of the $1.4 million in total compensation Rankin received in 2007 for being an FCX Board Member. Of course, the proxy doesn—t disclose how many hours Rankin worked to provide these services.

Directors Bennett Johnston and Gabrielle McDonald each pulled down $225,000 in consulting fees under similar arrangements. Johnston’s services apparently relate to international relations and commercial matters, while McDonald’s services are in connection with her role as Special Counsel on Human Rights.

Director Stapleton Roy is Vice Chairman of Kissinger Associates, Inc, which provides FCX advice and consultation on specified world political, economic, strategic and social developments affecting our affairs. Under these agreements, Kissinger Associates receives an annual fee of $200,000, additional consulting fees based on the services rendered, and reimbursement of reasonable out-of-pocket expenses incurred in connection with providing such services.

Apparently, the getting was so good that another Director is digging into the trough as well. Effective January 11, 2008, Director Taylor Wharton and the Services Company are parties to an agreement under which Wharton renders consulting services in connection with all medical and health affairs affecting us, our affiliates and our respective directors, officers and employees. Under this agreement, Wharton will receive an annual fee of $400,000 for the initial term of the consulting agreement from January 11, 2008 through December 31, 2008.

Granted, these consulting fees made up only a tenth of the $14.7 million that FCX awarded its directors in 2007. But all of these Directors are well over retirement age and should have plenty of time to devote to furthering stockholder interests without those hefty consulting fees.