PHELPS DODGE CORPORATION 2006 EXECUTIVE PERFORMANCE INCENTIVE PLAN

Exhibit 10.1

PHELPS DODGE CORPORATION

2006 EXECUTIVE PERFORMANCE INCENTIVE PLAN

ARTICLE I

PURPOSE OF PLAN

     SECTION 1.1. The purpose of the Phelps Dodge Corporation 2006 Executive Performance Incentive Plan (the “Plan”) is to qualify certain restricted stock awards under the Phelps Dodge 2003 Stock Option and Restricted Stock Plan (the “2003 Plan”) and awards under the Corporation’s annual incentive compensation plan (collectively the “Awards”), as performance based compensation pursuant to section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

ARTICLE II

ADMINISTRATION OF THE PLAN

     SECTION 2.1. Subject to the authority and powers of the Board of Directors in relation to the Plan as hereinafter provided, the Plan shall be administered by a Committee designated by the Board of Directors. The Committee will consist of at least two directors, each of whom shall qualify as an “outside director” as defined by Code Section 162(m) and the New York Stock Exchange and a “non-employee director” as defined in Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Committee shall have the power and full authority to interpret the Plan; from time to time to adopt, modify, and rescind such rules and regulations for carrying out the Plan as it may deem appropriate in its sole discretion; to select Participants to participate in the Plan; to grant Awards from the Plan Funding Amount; provided, however, that the Committee may not exercise any authority otherwise granted to it hereunder if such action would have the effect of increasing the amount of an Award to any Covered Officer. All determinations by the Committee shall be made by the affirmative vote of a majority of its members, but any determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. All decisions by the Committee pursuant to the provisions of the Plan and all orders or resolutions of the Board of Directors pursuant thereto shall be final, conclusive and binding on all persons, including the Participants, the Company and its subsidiaries and their respective equity holders.

ARTICLE III

ELIGIBILITY FOR AND PAYMENT OF AWARDS

     SECTION 3.1. Subject to the provisions of the Plan, in each Performance Period the Committee may select members of the Company’s Senior Management Team, including those who are deemed to be Covered Officers, to be Participants in the Plan for the applicable Performance Period. Those individuals eligible to participate in the Plan for any given Performance Period will be designated by the Committee no later than the time when 25% of the Performance Period has elapsed and in no event shall this designation take place later than 90 days after the Performance Period has commenced.

     SECTION 3.2. After completion of each Performance Period under the Plan, the Committee will certify in writing the amount of the Plan Funding Amount and the amount of the Awards payable to each Participant. As soon as administratively feasible after such certification, each Participant will receive payment in either a cash lump sum or an equivalent equity interest with an award of restricted stock under the 2003 Plan, as determined in the sole discretion of the Committee. In no event shall the awards or payments under this section be made later than 2 1/2 months after the end of the Performance Period for which the Awards are made.

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     SECTION 3.3. Notwithstanding the provisions of Section 3.2, a Participant may elect to defer payment of all or any portion of an Award payable in cash (a “Cash Award”) as of (i) a