2018 Guide to Effective Proxies

2.3 Table of contents | 55 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES FIRST AMERICAN FINANCIAL CORPORATION FIRSTENERGY CORP FLIR SYSTEMS, INC. FREEPORT-MCMORAN, INC. FirstAmericanFinancialCorporation 2018ProxyStatement| i Table of Contents Page PROXYSTATEMENT ....................................................................................................................... 1 I. PROPOSALS .............................................................................................................................. 2 Item1.ElectionofClassIIDirectors ....................................................................................... 6 Item2.AdvisoryVote toApproveExecutive Compensation ............................................... 7 Item3.Ratificationof Selectionof IndependentAuditor ...................................................... 9 II. REQUIREDINFORMATION ....................................................................................................... 10 SecurityOwnershipofManagement........................................................................................... 10 BoardandCommitteeMeetings................................................................................................. 11 IndependenceofDirectors.......................................................................................................... 13 BoardLeadershipStructure;MeetingsofIndependentDirectors............................................... 14 RiskOversight............................................................................................................................. 14 DirectorAttendanceatAnnualMeetings.................................................................................... 15 Stockholderand InterestedPartyCommunicationswithDirectors............................................. 16 Transactionswith ManagementandOthers............................................................................... 16 ExecutiveOfficers....................................................................................................................... 16 ExecutiveCompensation ......................................................................................................... 18 CompensationDiscussionandAnalysis.............................................................................. 18 Introduction................................................................................................................... 18 ExecutiveSummary...................................................................................................... 18 ExecutiveCompensationPrograminDetail................................................................. 23 CompensationDecisionProcess................................................................................. 25 PayElements............................................................................................................... 26 ImpactofTaxandAccounting...................................................................................... 40 CompensationCommitteeReport....................................................................................... 40 ExecutiveCompensationTables ............................................................................................. 41 2017SummaryCompensationTable.................................................................................. 41 2017GrantsofPlan-BasedAwards.................................................................................... 42 OutstandingEquityAwardsat2017FiscalYear-End......................................................... 43 2017OptionExercisesandStockVested........................................................................... 44 2017PensionBenefits......................................................................................................... 44 2017NonqualifiedDeferred Compensation........................................................................ 46 Total of 02 pages in section Table of Contents Proxy Statement Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i Environmental, Social & Governance (“ESG”) Overview . . . . . . . . . . . . . . v 1 Information About the Meeting QuestionsandAnswersabouttheAnnualMeeting ................... 1 ProxyMaterials ............................................ 1 VotingMatters ............................................. 4 HowYouCanVote ......................................... 7 AttendingtheAnnualMeeting ................................ 9 ShareholderProposalsfor 201 9 .............................. 11 ObtainingAdditionalInformation .............................. 11 2 Corporate Governance & Board of Directors CorporateGovernanceandBoardofDirectorsInformation ............ 12 AuditCommitteeReport ......................................... 2 4 MattersRelatingtotheIndependentRegisteredPublicAccounting Firm ........................................................ 2 5 DirectorCompensationinFiscalYear 201 7 ......................... 2 6 3 Items to Be Voted On ReviewofDirectorNominees ..................................... 2 9 BiographicalInformationandQualificationsofNomineesforElectionas Directors .................................................... 3 1 ItemstoBeVotedOn ........................................... 3 8 4 Executive Compensation ExecutiveCompensation ........................................ 49 CompensationCommitteeReport ............................. 49 CompensationDiscussionandAnalysis ........................ 49 ExecutiveSummary .................................... 5 1 CompensationTables ........................................... 79 5 Security Ownership & Other Important Matters SecurityOwnershipofManagement ............................... 97 SecurityOwnershipofCertainBeneficialOwners .................... 9 8 CompensationCommitteeInterlocksandInsiderParticipation .......... 99 Section 1 6(a)BeneficialOwnershipReportingCompliance ............ 99 CertainRelationshipsandRelatedPersonTransactions............... 99 Note About Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Appendices ProposedAmendmentstoAmendedArticlesofIncorporationandAmendedCodeofRegulations RelatingtotheReplacementofExistingSupermajorityVotingRequirementswithaMajorityVoting PowerThresholdasPermittedunderOhioLaw ............................................... A- 1 ProposedAmendmentstoAmendedArticlesofIncorporationandAmendedCodeofRegulationsto ImplementMajorityVotingforUncontestedDirectorElections ................................... B- 1 ProposedAmendmenttoAmendedCodeofRegulationstoImplementProxyAccess ............... C- 1 TABLE OF CONTENTS ProxySummary 1 2018AnnualMeetingofStockholders 1 AgendaandVotingRecommendations 1 PerformanceHighlights 1 StockholderEngagementHighlights 2 ExecutiveCompensationHighlights 3 DirectorNomineeHighlights 3 CorporateGovernanceHighlights 4 StockholderEngagement 5 HistoryofResponsivenesstoStockholders 5 OngoingDialogueRegardingSocialandEnvironmentalSustainability 6 SustainabilityProgramHighlights 6 CorporateGovernance 8 CorporateGovernanceGuidelines;PrinciplesofBusinessConduct 8 BoardCompositionandBoardRefreshment 8 BoardLeadershipStructure 9 Board’sRoleinOversightofRiskManagement 9 SuccessionPlanningforSeniorExecutives 11 DirectorandExecutiveOfficerStockOwnershipGuidelines 11 DirectorNominationsandQualifications 11 BoardEvaluationProcess 12 BoardCommittees 12 BoardandCommitteeMeetingAttendance 13 BoardandCommitteeIndependence;AuditCommitteeFinancialExperts 13 CompensationCommitteeProcedures 14 CompensationCommitteeInterlocksandInsiderParticipation 15 DirectorCandidatesSubmittedbyStockholders 15 CommunicationswiththeBoard 16 ProposalNo.1:ElectionofDirectors 17 InformationAboutDirectorNominees 18 Freeport-McMoRan ⎪ 2018ProxyStatement i Total of 02 pages in section TABLE OF CONTENTS PROXYSTATEMENTSUMMARY i CORPORATEGOVERNANCEANDRELATED MATTERS 1 CommunicationswithDirectors ...................... 1 Meetings .......................................... 1 BoardofDirectorsIndependence .................... 1 BoardofDirectorsCommittees ...................... 1 ShareholderNominationsandProxyAccess.......... 2 CorporateGovernance ............................. 3 BoardLeadershipStructureandRoleinRisk Oversight.......................................... 3 CompensationRisk................................. 4 NomineesandContinuingDirectors.................. 5 RecommendationoftheBoardofDirectors ........... 9 MANAGEMENT 10 ExecutiveOfficers .................................. 10 COMPENSATIONDISCUSSIONANDANALYSIS 12 Introduction........................................ 12 ExecutiveSummary ................................ 12 PayforPerformanceOverview ...................... 15 OtherKeyCompensationPractices .................. 17 CorporateGovernanceandDecision-Making ......... 18 ComponentsofourExecutiveCompensation Program........................................... 20 CompensationSettingandElementsof Compensation ..................................... 20 EmploymentAgreements ........................... 28 Post-TerminationCompensation..................... 29 ClawbackPolicy ................................... 30 InsiderTradingPolicy............................... 30 ImpactofTaxonCompensationDecisions ........... 30 COMPENSATIONCOMMITTEEREPORT 31 COMPENSATIONOFNAMEDEXECUTIVEOFFICERS 32 2017SummaryCompensationTable................. 32 2017AllOtherCompensationTable ................. 34 2017GrantsofPlan-BasedAwards .................. 35 OutstandingEquityAwardsatFiscalYear-End2017 .. 37 2017OptionExercisesandStockVested............. 39 2017PensionBenefits.............................. 40 2017Non-QualifiedDeferredCompensation .......... 41 PotentialPaymentsuponTerminationorChangeof Control ............................................ 42 CEOPayRatio .................................... 45 DIRECTORCOMPENSATION 46 EQUITYCOMPENSATIONPLANINFORMATION 47 SECTION16(a)BENEFICIALOWNERSHIP REPORTINGCOMPLIANCE 47 STOCKOWNEDBYMANAGEMENT 48 STOCKOWNEDBYPRINCIPALSHAREHOLDERS 49 CERTAINRELATIONSHIPSANDRELATED TRANSACTIONS 49 PROPOSAL1: ELECTIONOFDIRECTORS .......................... 50 PROPOSAL2: RATIFICATIONOFAPPOINTMENTOFTHE INDEPENDENTREGISTEREDPUBLICACCOUNTING FIRMANDRELATEDINFORMATION ................. 51 PROPOSAL3: ADVISORYVOTEONEXECUTIVECOMPENSATION .. 52 AUDITCOMMITTEEREPORT 53 DATESFORSUBMISSIONOFSHAREHOLDER PROPOSALSFOR2019ANNUALMEETINGOF SHAREHOLDERS 54 OTHERMATTERS 54 COSTOFSOLICITATION 54 ADDITIONALINFORMATION 55