SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Southern Peru Copper Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
[LOGO OF SOUTHERN PERU COPPER CORPORATION]
June ___, 2001
Dear Common Stockholder
You are cordially invited to attend the annual meeting of stockholders,
which will be held in the offices of Grupo Mexico, S.A. de C.V., Baja California
200, Fifth Floor, Colonia Roma Sur, Mexico City, Mexico, on Wednesday, July 25,
2001, at 1:00 P.M., Mexico City time. We hope you can be with us.
At the meeting, you will be asked to elect two directors, to approve an
amendment to the Company's Restated Certificate of Incorporation and to approve
the selection of independent accountants.
The meeting also provides an opportunity to discuss the activities of
the Company and its plans and prospects for the future.
It is important that your shares be represented at the meeting whether
or not you are able to attend in person. Therefore, you are asked to vote, sign,
date and mail the enclosed proxy. Please do so today. In Peru, you may deliver
your signed proxy to our offices in Lima.
Sincerely,
/s/ German Larrea Mota-Velasco /s/ Oscar Gonzalez Rocha
------------------------------- ----------------------------
German Larrea Mota-Velasco Oscar Gonzalez Rocha
Chairman of the Board and President
Chief Executive Officer
1150 N. 7TH AVENUE, TUCSON, AZ 85705-0747 (520) 798-7500
AVENIDA CAMINOS DEL INCA NO. 171, CHACARILLA DEL ESTANQUE,
SANTIAGO DE SURCO, LIMA 33, PERU
(511) 372-1414, EXT. 3312 (SPANISH), EXT. 3325 (ENGLISH)
[LOGO OF SOUTHERN PERU COPPER CORPORATION]
1150 N. 7TH AVENUE AVENIDA CAMINOS DEL INCA NO. 171
TUCSON, AZ. 85705-0747 CHACARILLA DEL ESTANQUE, SANTIAGO DE SURCO,
LIMA 33, PERU
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 25, 2001
To the Common Stockholders:
The annual meeting of stockholders of Southern Peru Copper Corporation
will be held at the offices of Grupo Mexico, S.A. de C.V., Baja California 200,
Fifth Floor, Colonia Roma Sur, Mexico City, Mexico, on Wednesday, July 25, 2001,
at 1:00 P.M., Mexico City time, for the following purposes:
(1) To elect two directors of the Company by the holders of Common Stock,
voting as a separate class, such directors to serve until the 2002
annual meeting.
(2) To approve an amendment to Section 4.9(a) of the Company's Restated
Certificate of Incorporation to substitute "Grupo Mexico S.A. de C.V."
for "ASARCO Incorporated" in the definition of "Founding Stockholder."
(3) To act upon a proposal to approve the selection by the Board of
Directors of Arthur Andersen L.L.P. as independent accountants for the
calendar year 2001.
(4) To transact such other business as may properly come before the
meeting.
In addition, the holders of Class A Common Stock, voting as a separate
class, will elect thirteen directors, such directors to serve until the 2002
annual meeting. The holders of Class A Common Stock will vote together with the
holders of Common Stock, as a single class, upon the proposals to adopt the
proposed amendment to the Restated Certificate of Incorporation and to approve
the selection of independent accountants for the calendar year 2001.
--------------------------------------------------
YOUR VOTE IS IMPORTANT
Please mark, sign, date and return your proxy.
--------------------------------------------------
Stockholders of record at the close of business on May 28, 2001 will be
entitled to vote at the annual meeting. Stockholders of record who attend the
annual meeting in person may withdraw their proxies and vote in person if they
wish.
By order of the Board of Directors,
Hans A. Flury,
Assistant Secretary
Tucson, Arizona, June __, 2001
PROXY STATEMENT
This proxy statement is furnished as part of the solicitation by the
Board of Directors of Southern Peru Copper Corporation, 1150 N. 7TH Avenue,
Tucson, AZ 85705-0747 and Avenida Caminos del Inca No. 171, Chacarilla del
Estanque, Santiago de Surco, Lima 33, Peru, of the proxies of all holders of
common stock, par value $0.01 per share (the "Common Stock") entitled to vote at
the annual meeting to be held on July 25, 2001 and at any adjournment thereof.
This proxy statement is not soliciting proxies from holders of Class A Common
Stock whose proxies are being solicited separately. This proxy statement and the
enclosed form of proxy are being mailed commencing on or about June __, 2001, to
holders of Common Stock of record on May 28, 2001. Additional copies will be
available at the Company's offices in Lima and other locations in Peru.
Southern Peru Copper Corporation was reorganized into a holding company
structure effective January 2, 1996, upon completion of a public offer to
exchange newly-issued Common Stock for outstanding labor shares (now referred to
as "investment shares") of the Company's Peruvian Branch. Effective December 31,
1998, the Company's predecessor and wholly-owned operating subsidiary, Southern
Peru Limited, was merged into the Company. Throughout this proxy statement,
unless the context otherwise requires, the terms "Southern Peru", "SPCC" and the
"Company" refer to the present corporation as well as its predecessor.
Any proxy in the enclosed form given pursuant to this solicitation and
received in time for the annual meeting will be voted with respect to all shares
represented by it and in accordance with the instructions, if any, given in such
proxy. If the Company receives a signed proxy with no voting instructions given,
such shares will be voted for the proposal to elect directors, for the
proposal to amend the Certificate of Incorporation and for the proposal to
approve the selection of accountants. Any proxy may be revoked at any time
prior to the exercise thereof by notice from the stockholder, received in
writing by the Secretary or Assistant Secretary, or by written ballot voted
at the meeting.
The outstanding shares of the Company consist of Common Stock and Class
A Common Stock, par value $0.01 per share (the "Class A Common Stock"). At the
close of business on May 28, 2001, the record date for the annual meeting, the
Company had outstanding 14,331,808 shares of Common Stock and 65,900,833 shares
of Class A Common Stock. Each such share of Common Stock is entitled to one vote
at the meeting, and each such share of Class A Common Stock is entitled to five
votes, except with respect to the election of directors, as described below
under "Voting Securities" or as required by law.
VOTING SECURITIES
The Company's Restated Certificate of Incorporation (the "Certificate")
provides for a Board of Directors composed of fifteen directors. Two directors
are elected by the holders of Common Stock (the "Common Stockholders") voting as
a separate class, with each share of Common Stock outstanding at the May 28,
2001 record date entitled to one vote at the annual meeting. Thirteen directors,
one of whom is the President, are nominated and elected by the holders of Class
A Common Stock, voting as a separate class and in accordance with the terms of
an agreement (the "Stockholders' Agreement") among ASARCO Incorporated
("Asarco"), Cerro Trading Company, Inc. ("Cerro") and Phelps Dodge Overseas
Capital Corporation ("Phelps Dodge"). Asarco, Cerro and Phelps Dodge are
hereinafter referred to collectively as the "Class A Common Stockholders." On
November 15, 1999, Asarco transferred all of its holdings of SPCC to Southern
Peru Holdings Corporation ("SPHC"), a wholly-owned subsidiary of Asarco. On
November 17, 1999, Grupo Mexico, S.A. de C.V. ("Grupo Mexico") acquired all the
holdings of Asarco following a tender offer and purchase of all outstanding
common stock of Asarco. Accordingly, SPHC became the holder of all Class A
Common Stock previously held by Asarco and pursuant to the Stockholders'
Agreement, SPHC and Asarco are entitled to nominate and elect directors to serve
on the SPCC Board.
2
In accordance with the Company's Certificate, except with respect to
the election of directors or as required by law, the Common Stockholders and
Class A Common Stockholders vote together as a single class. Each share of
Common Stock is entitled to one vote per share and each share of Class A Common
Stock is entitled to five votes per share on matters submitted to the vote of
stockholders voting as one class.
The Company's By-Laws provide that the presence in person or by proxy
of the Common Stockholders of record of a majority of the shares of Common Stock
entitled to vote at the meeting shall constitute a quorum for the purpose of
electing two directors to represent the holders of Common Stock. Abstentions,
votes withheld and broker non-votes are counted for quorum purposes but are not
counted either as votes cast "For" or "Against". A plurality of the votes cast
by Common Stockholders is required for the election of the two Common Stock
directors. The presence in person or by proxy of the holders of record of a
majority of the combined outstanding shares of Common Stock and Class A Common
Stock entitled to vote at the meeting shall constitute a quorum for purposes of
voting on proposals other than the election of directors. The affirmative vote
of a majority of the votes cast at the meeting by the holders of shares of
Common Stock and holders of shares of Class A Common Stock entitled to vote
thereon, voting as a single class, is required to adopt the proposed amendment
to the Certificate or to approve the independent accountant proposal described
in this proxy statement.
When a Common Stockholder participates in the Dividend Reinvestment
Plan applicable to the Company's Common Stock, his proxy to vote shares of
Common Stock will include the number of shares held for him by The Bank of New
York, the agent under the plan. If the Common Stockholder does not send any
proxy, the shares held for his account in the Dividend Reinvestment Plan will
not be voted. Shares of Common Stock owned under the Company's Savings Plan will
be voted by the trustee under the plan in accordance with the instructions
contained in the proxy submitted by the beneficial Common Stockholder. Any
shares held by the trustee for which no voting instructions are received will be
voted by the trustee in the same proportion as the shares for which voting
instructions have been received.
ELECTION OF DIRECTORS
Two nominees are proposed for election by the Common Stockholders at
the annual meeting. Ambassador Everett E. Briggs and John F. McGillicuddy are
the nominees designated to be voted on by the Common Stockholders. The nominees
to be voted on by the Class A Common Stockholders are Manuel Calderon Cardenas,
Hector Calva Ruiz, Jaime Claro, Hector Garcia de Quevedo Topete, Xavier Garcia
de Quevedo Topete, Oscar Gonzalez Rocha, Manuel J. Iraola, German Larrea
Mota-Velasco, Genaro Larrea Mota-Velasco, Jaime Serra Puche, Robert A. Pritzker,
Daniel Tellechea Salido and J. Steven Whisler.
All of the nominees are currently serving as directors.
Proxies in the enclosed form will be voted, unless authority is
withheld, for the election of the two nominees named below. If any person should
be unavailable for election, proxies will be voted for another individual chosen
by the Board of Directors as a substitute for the unavailable nominee.
3
NOMINEES FOR ELECTION AS DIRECTORS REPRESENTING COMMON STOCK
As a Common Stockholder, you will be asked to elect two directors at
the annual meeting. The following two individuals have been nominated for
election to the Board of Directors to represent you until the next annual
meeting of stockholders.
FOR COMMON STOCK DIRECTOR
DIRECTOR AGE SINCE
---------------- --- --------
Amb. Everett E. Briggs ........ Consultant, Latin American political and business issues; 66 1996
President and Chief Executive Officer of Council of
the Americas and Americas Society from October 1993
until December 1998. Between 1982 and 1993, Mr.
Briggs was United States Ambassador to Panama,
Honduras and Portugal. Prior to that he was Deputy
Assistant Secretary of State and Director of Mexican
Affairs at the State Department. In 1989 he served
as Special Assistant to the President and Senior
Advisor on Latin America at the National Security
Council. He currently is a Director of the Council
of Americas, the U.S.-Panama Business Council, and
the U.S.-Cuba Business Council.
John F. McGillicuddy .......... Director of UAL Corporation, USX Corporation and Empire 70 1996
HealthChoice, Inc. From December 1991 until
December 1993, Mr. McGillicuddy was Chairman of the
Board and Chief Executive Officer of the Chemical
Banking Corporation and Chemical Bank.
Mr. McGillicuddy was Chairman of the Board and Chief
Executive Officer of Manufacturers Hanover Trust
Company from 1979 to 1991.
4
NOMINEES FOR ELECTION AS DIRECTORS REPRESENTING CLASS A COMMON STOCK
The following thirteen individuals have been nominated for election to
the Board of Directors by the Class A Common Stockholders voting in accordance
with the terms of a Stockholders' Agreement in effect among them. This
information is being provided to Common Stockholders for informational purposes
only, as they will not be asked to vote with respect to these individuals.
CLASS A COMMON
STOCK DIRECTOR AGE POSITION
-------------- --- --------
German Larrea Mota-Velasco 47 Chairman of the Board, Chief Executive Officer
and Director
Oscar Gonzalez Rocha 62 President and Director
Manuel Calderon Cardenas 68 Director
Hector Calva Ruiz 63 Vice President and Director
Jaime Claro 64 Director
Hector Garcia de Quevedo Topete 50 Director
Xavier Garcia de Quevedo Topete 54 Director
Manuel J. Iraola 52 Director
Genaro Larrea Mota-Velasco 40 Vice President and Director
Jaime Serra Puche 50 Director
Robert A. Pritzker 74 Director
Daniel Tellechea Salido 55 Vice President and Director
J. Steven Whisler 46 Director
GERMAN LARREA MOTA-VELASCO, Director. Mr. Larrea has been Chairman of
the Board and Chief Executive Officer of the Company since December 1999 and
Director since November 1999. He has been Chairman of the Board of Directors,
President and Chief Executive Officer of Grupo Mexico (holding) since 1994. Mr.
Larrea has been chairman of the Board and Chief Executive Officer of Grupo
Minero Mexico (mining division) since 1994 and of Grupo Ferroviario Mexicano
(railroad division) since 1997. Mr. Larrea was previously Executive Vice
Chairman of Grupo Mexico and has been member of the Board of Directors since
1981. He is also Chairman of the Board of Directors and Chief Executive Officer
of Empresarios Industriales de Mexico (holding); Perforadora Mexico (drilling
company), Mexico Compania Constructora (construction company), Fondo
Inmobiliario (real estate company), since 1992. He founded Grupo Impresa, a
printing and publishing company in 1978, remaining as the Chairman and Chief
Executive Officer until 1989 when the Company was sold. He has been Chairman and
Chief Executive Officer of ASARCO Incorporated from November 1999 to present,
and its President from November 1999 to January 2000. He is also a director of
Grupo Comercial America, S.A., Grupo Bursatil Mexicano S.A., Bolsa Mexicana de
Valores, Grupo Televisa, S.A. de C.V. and Banco Nacional de Mexico, S.A.
OSCAR GONZALEZ ROCHA, Director. Mr. Gonzalez has been President of the
Company since December 1999 and Director since November 1999. He was Managing
Director for Mexicana de Cobre, S.A. de C.V. from 1986 to 1999 and of Mexicana
de Cananea, S.A. de C.V. from 1990 to 1999. He has been an Alternate Director of
Grupo Mexico since 1988 and a Director of ASARCO Incorporated since November
1999.
MANUEL CALDERON CARDENAS, Director. Mr. Calderon has been a Director of
the Company since November 1999. He has been the Director of Mine Planning and
Control of Grupo Mexico, S.A. de C.V. since 1994 and a director of ASARCO
Incorporated since November 1999.
HECTOR CALVA RUIZ, Director. Mr. Calva has been a Vice President,
Exploration and Projects of the Company since December 1999 and Director since
November 1999. He has been Managing Director for Exploration and Projects of
Grupo Mexico since 1997 and an Alternate Director since 1998. He was Managing
Director of Industrial Minera Mexico, S.A. de C.V. from 1984 to 1997 and has
been a Director of ASARCO Incorporated since November 1999.
5
JAIME CLARO, Director. Mr. Claro has been a Director of the Company
since September 1996. Mr. Claro has been an advisor to The Marmon Group since
October 1997, and he is also Vice Chairman of Cia. Electro Metalurgica S.A.
and Quemchi S.A., Chairman of Chilean Line Inc., and a Director of Cia. Sud
Americana de Vapores, S.A., Cristaleria de Chile S.A. and Navarino S.A., and
advisor to the Board of Compania Libra de Navegacao.
HECTOR GARCIA DE QUEVEDO TOPETE, Director. Mr. Garcia de Quevedo has
been a Treasurer and Director since May 9, 2000. He has also been Managing
Director for Grupo Mexico, S.A. de C.V. since 1999. He was Advisor to the
Chairman and Chief Executive Officer of Grupo Mexico from 1994 to 1998. He
and Mr. Xavier Garcia de Quevedo Topete are brothers.
XAVIER GARCIA DE QUEVEDO TOPETE, Director. Mr. Garcia de Quevedo has
been a Director of the Company since November 1999. He was Managing Director
of Grupo Ferroviario Mexicano, S.A. de C. V. and of Ferrocarril Mexicano,
S.A. de C.V. from December 1997 to December 1999, and acted as Managing
Director of Exploration and Development of Grupo Mexico, S.A. de C.V. from
1994 to 1997. He has been an alternate director of Grupo Mexico since 1998.
He has been a Director of ASARCO Incorporated since November 1999 and its
President since January 2000.
MANUEL J. IRAOLA, Director. Mr. Iraola has been a Director of the
Company since May 9, 2000. He has been the President of Phelps Dodge
Industries, a division of Phelps Dodge Corporation, and a Senior Vice
President of Phelps Dodge Corporation since 1995. From 1992 until 1995 he was
President of Phelps Dodge International Corporation. He is a Director of
Phelps Dodge Corporation since December 1997.
GENARO LARREA MOTA-VELASCO, Director. Mr. Larrea has been Vice
President, Commercial of the Company since December 1999 and Director since
November 1999. He has been Managing Director, Commercial and a Director of
Grupo Mexico since 1994. He has been a Director, Vice President and Chief
Commercial Officer of ASARCO Incorporated since November 1999. He and Mr.
German Larrea Mota-Velasco are brothers.
JAIME SERRA PUCHE, Director. Mr. Serra has been a Director of the
Company since June 12, 2001 when he was selected to fill a vacancy on the
Board of Directors. He is senior partner of Serra Associates International
and has served as Mexico's Undersecretary of Revenue, Secretary of Trade and
Industrial Development and Secretary of Finance. He serves on the Board of
Directors of Alcatel, S. A. de C. V., The Mexico Fund, Inc., Grupo
Ferroviario Mexicano, S.A. de C.V., and Tubos de Acero de Mexico, S. A. de C.
V. He is also a trustee of the Yale Corporation.
ROBERT A. PRITZKER, Director. Mr. Pritzker has been a Director of
the Company since 1983. He is President and Chief Executive Officer of The
Marmon Group, Inc., and has served in that position for over forty-seven
years. He holds executive positions in its more than sixty autonomous member
companies. He is also a director of Western General Insurance.
DANIEL TELLECHEA SALIDO, Director. Mr. Tellechea has been Vice
President, Finance of the Company since December 1999 and Director since
November 1999. He has been Managing Director for Administration and Finance
of Grupo Mexico since 1994 and an Alternate Director since 1998. He was
Managing Director of Mexicana de Cobre, S.A. de C.V. from 1986 to 1993 and
has been Director, Vice President and Chief Financial Officer of ASARCO
Incorporated since November 1999.
J. STEVEN WHISLER, Director. Mr. Whisler has been a Director of the
Company since June 1995. He has been Chairman, President and Chief Executive
Officer of Phelps Dodge Corporation since May 2000, and previously its
President and Chief Operating Officer since December 1997, and its Senior
Vice President from 1988 until December 1997. He was President of Phelps
Dodge Mining Company from 1991 until September 1998. He is a Director of
Phelps Dodge Corporation and Burlington Northern Santa Fe Corporation.
6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is certain information with respect to those persons
who are known by the Company to have been, as of December 31, 2000, the
beneficial owners of more than five percent of the Company's outstanding Common
Stock or Class A Common Stock.
COMMON STOCK CLASS A COMMON STOCK
-------------------------- -----------------------------
SHARES OF SHARES OF PERCENT OF
COMMON PERCENT OF CLASS A OUTSTANDING PERCENT OF
STOCK OUTSTANDING COMMON STOCK CLASS A OUTSTANDING VOTING
BENEFICIALLY COMMON BENEFICIALLY COMMON CAPITAL PERCENTAGE
OWNED STOCK OWNED STOCK STOCK (a)
------------ ------------ --------------- ------------ ------------ -----------
Southern Peru Holdings
Corporation (b)
1150 N. 7th Avenue -- -- 43,348,949 65.8% 54.2% 63.1%
Tucson, AZ 85705-0747 .....
Cerro Trading Company, Inc.
(c)
225 West Washington Street
Suite 1900 -- -- 11,378,088 17.3 14.2 16.6
Chicago, IL 60606 .........
Phelps Dodge Overseas
Capital Corporation(d)
2600 North Central Avenue
Phoenix, AZ 85004 ......... -- -- 11,173,796 16.9 14.0 16.3
The Pritzker Family
Philanthropic Fund
200 West Madison Street
Chicago, IL 60606 ......... 2,850,000 20.2% -- -- 3.6 0.8
- ----------
(a) The Company's Certificate provides that, except with respect to the
election of directors or as required by law, the Common Stock and the
Class A Common Stock vote together as a single class, with each share
of Common Stock entitled to one vote and each share of Class A Common
Stock entitled to five votes.
(b) A subsidiary of ASARCO Incorporated, an indirect wholly-owned indirect
subsidiary of Grupo Mexico, S.A. de C.V. On November 17, 1999 Grupo
Mexico acquired the outstanding common stock of Asarco following a
tender offer. The stock of Southern Peru Holdings Corporation was
pledged by Asarco to a syndicate of banks in connection with the
financing of the tender offer. Asarco is contemplating a transaction in
which Southern Peru Holdings Corporation would sell all its SPCC stock
to Asarco's immediate parent corporation, Americas Mining Corporation.
The sale may close prior to the date of the Company's annual meeting.
(c) A subsidiary of The Marmon Corporation.
(d) A subsidiary of Phelps Dodge Corporation.
The Class A Common Stockholders have entered into the Stockholders'
Agreement, which contemplates, among other things, a Board of Directors composed
of 15 members, one of whom is the President of the Company.
Under the terms of the Stockholders' Agreement, each Class A Common
Stockholder has the right to nominate that number of 12 directors which is in
proportion to the percentage of Class A Common Stock owned by it (or its
affiliates) out of the aggregate Class A Common Stock then owned by all holders
of Class A Common Stock (without any minimum required number of shares), rounded
to the nearest whole director, with 0.5 being rounded up. If this would result
in the Class A Common Stockholders, as a group, being entitled to elect a number
other than 12 directors, the Stockholders' Agreement contains a formula for
rounding up or rounding down as necessary to apportion the 12 directors among
the Class A Common Stockholders. The Class A Common Stockholders have also
agreed to nominate and vote for the President as a director.
7
The Stockholders' Agreement terminates, and each share of Class A
Common Stock automatically converts into one share of Common Stock (voting share
for share as a single class on all matters including election of directors), if
at any time the number of shares of Class A Common Stock owned by the Class A
Common Stockholders (or affiliates of the Class A Common Stockholders) is less
than 35% of the outstanding shares of Class A Common Stock and Common Stock of
the Company. In addition, the rights and obligations of each Class A Common
Stockholder under the Stockholders' Agreement terminate in the event such Class
A Common Stockholder (or its affiliates) ceases to own shares of Class A Common
Stock.
BENEFICIAL OWNERSHIP OF MANAGEMENT
The information set forth below as to the shares of Common Stock of the
Company beneficially owned by the nominees, directors and executive officers
named in the Summary Compensation Table below and by all nominees, directors and
officers as a group is stated as of December 31, 2000.
SOUTHERN PERU COPPER CORPORATION
SHARES OF THE
COMPANY'S
COMMON STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
OWNED (a) COMMON STOCK
------------- ------------
Everett E. Briggs (b) 1,651 (c)
Manuel Calderon Cardenas 400 (c)
Hector Calva Ruiz 400 (c)
Jaime Claro (b) 1,000 (c)
Hector Garcia Quevedo Topete 200 (c)
Xavier Garcia de Quevedo Topete 400 (c)
Oscar Gonzalez Rocha 200 (c)
Manuel J. Iraola 200 (c)
Genaro Larrea Mota-Velasco 400 (c)
German Larrea Mota-Velasco (d) 400 (c)
John F. McGillicuddy 1,200 (c)
Jaime Serra Puche 0 (c)
Robert A. Pritzker (e) 1,000 (c)
Daniel Tellechea Salido 400 (c)
J. Steven Whisler (b) 1,200 (c)
All nominees, directors and 9,451
officers as a group (17
individuals)
- -------------
(a) Information with respect to beneficial ownership is based upon
information furnished by each nominee, director or officer. Except as
noted below, all nominees, directors and officers have sole voting and
investment power over the shares beneficially owned by them.
(b) See also the information below on Common Stock Equivalents.
(c) Less than .5%
(d) Mr. Larrea disclaims beneficial ownership over the shares of the
Company owned by Asarco, which in turn is controlled by Grupo Mexico.
(e) Trusts created for the benefit of certain lineal descendants of
Nicholas J. Pritzker, deceased, may be deemed to indirectly control
Cerro, the record and beneficial owner of certain shares of the
Company. Mr. Robert A. Pritzker disclaims beneficial ownership of
shares of the Company beneficially owned by Cerro.
8
COMMON STOCK EQUIVALENTS
The following table sets forth the per share number of Common Stock
Equivalents credited as of December 31, 2000, to the accounts of the Company's
directors under the Company's Deferred Fee Plan for Directors. Under the Plan,
payments are made in cash following retirement depending on the market value of
the Common Stock at that time. Amounts shown reflect the number of share
equivalents credited under the Plan plus dividends credited. For additional
information regarding the Plan, see "Compensation of Directors" below.
DEFERRED FEE PLAN
DIRECTOR COMMON STOCK EQUIVALENTS
--------
Everett E. Briggs................... 7,065
Jaime Claro......................... 7,211
J. Steven Whisler................... 3,533
------
Total.............. 17,809
In addition, the following information is provided in satisfaction of
applicable rules of the Securities and Exchange Commission. Grupo Mexico, S.A.
de C.V. is a Mexican corporation with its principal executive offices located at
Baja California 200, Colonia Roma Sur, 06760 Mexico City, Mexico. Grupo Mexico's
principal business is to act as a holding company for shares of other
corporations engaged in the mining, processing, purchase and sale of minerals
and other products and railway services. Grupo Mexico's shares are listed on the
Mexican Stock Exchange.
The largest shareholder of Grupo Mexico is Empresarios Industriales de
Mexico, S.A. de C.V., a Mexican corporation ("EIM"). The principal business of
EIM is to act as a holding company for shares of other corporations engaged in a
variety of businesses including mining, construction, real estate and drilling.
The family of the late Jorge Larrea Ortega, including Mr. German Larrea,
directly controls the majority of the capital stock of EIM and directly and
indirectly controls a majority of the votes of the capital stock of Grupo
Mexico. Mr. Larrea disclaims beneficial ownership of such shares other than the
following shares held directly by him and certain directors and officers
(comprising approximately 3.06% of the outstanding shares of Grupo Mexico):
BENEFICIAL
DIRECTOR/OFFICER OWNERSHIP
---------------- ---------
Hector Calva Ruiz..................... 15,000
German Larrea Mota-Velasco ........... 17,050,229*
Genaro Larrea Mota-Velasco ........... 2,652,681
Oscar Gonzalez Rocha ................. 171,185
Daniel Tellechea Salido .............. 75,748
----------
Total .................. 19,964,843
- -------------
* Mr. Larrea has the right to acquire 2,000,000 additional shares of Grupo
Mexico under Grupo Mexico's stock option plan.
Except as set forth above, and to the knowledge of the Company, none of
the nominees, directors and executive officers named in the Summary Compensation
Table beneficially own any equity security of Grupo Mexico.
9
COMMITTEE REPORTS ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of the Company
furnished the following report on compensation of executive officers in 2000.
Since December 17, 1999, this Committee is composed of the entire Board of
Directors. The Committee did not meet in 2000.
In 2000 the only executive officer compensated by the Company was Mr.
Oscar Gonzalez Rocha, the President of the Company. The base salary of Mr.
Gonzalez Rocha was determined by Grupo Mexico, the controlling indirect
stockholder of the Company, and is reflected in an employee agreement mandated
by Peruvian law. The base salary of Mr. Gonzalez Rocha follows the guidelines of
salaries of other key employees of the Company in Peru. The other items of the
compensation paid in 2000 to Mr. Gonzalez Rocha are consistent with compensation
paid to other key employees of the Company in Peru or are mandated by Peruvian
law.
The Compensation Committee did not award cash incentive compensation to
be paid to each of the Company's executive officers with respect to 2000
performance. Annual cash incentive payments to key salaried employees of the
Company are determined by the Compensation Committee under the Southern Peru
Copper Corporation Incentive Compensation Plan. A target level of annual
incentive compensation is established for each eligible employee based on the
level of responsibility attached to such employee's position. For executive
officers these targets are set at competitive median levels. The officers'
levels of responsibility are determined by the Compensation Committee after
review of substantially equivalent positions among the Company's peers.
Under the Incentive Compensation Plan, awards to employees are
increased or decreased from a predetermined target level, based upon performance
measured in the areas of production, safety and environmental at two levels:
individual and Company-wide.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), the Company may not deduct, with certain
exceptions, compensation in excess of $1 million to the Chief Executive Officer
and the four other highest paid executive officers as required to be reported in
the Company's proxy statement. The Compensation Committee does not believe that
Section 162(m) will have any immediate material impact on the Company because,
among other things, the principal taxing jurisdiction is Peru. The Compensation
Committee will, however, continue to monitor the Company's executive
compensation programs to ensure their effectiveness and efficiency in light of
the Company's needs, including Section 162(m).
THE BOARD OF DIRECTORS:
Amb. Everett E. Briggs Manuel J. Iraola
Manuel Calderon Cardenas Genaro Larrea Mota-Velasco
Hector Calva Ruiz German Larrea Mota-Velasco
Jaime Claro John F. McGillicuddy
Hector Garcia de Quevedo Jaime Serra Puche
Topete Robert A. Pritzker
Xavier Garcia de Quevedo Daniel Tellechea Salido
Topete J. Steven Whisler
Oscar Gonzalez Rocha
10
STOCK INCENTIVE PLAN COMMITTEE
The Stock Incentive Plan Committee of the Board of Directors of the
Company administers the Company's Stock Incentive Plan. The members of the
Committee are Amb. Everett E. Briggs and Mr. John F. McGillicuddy. The Committee
did not meet in 2000.
The Committee selects officers and other employees for participation
and decides upon the timing, pricing and amount of awards and benefits granted
under the Stock Incentive Plan. The members of the Stock Incentive Plan
Committee are non-employee directors who satisfy the requirements of Rule 16b-3
under the Securities Exchange Act of 1934, as amended.
No long-term incentive compensation was awarded in 2000. Long-term
incentive compensation consists of awards of restricted stock and/or stock
options and are designed to link the interests of executive officers and
selected employees with those of stockholders by providing an incentive to
manage the business of the Company as an owner with an equity stake. Awards
generally are made to selected officers and employees, and are made within
long-term incentive targets based upon analyses by the Company's compensation
consultant and consideration of each executive's and employee's performance. In
the case of the Chief Executive Officer, the Committee also considers his
performance and responsibility in directing the Company's performance.
THE STOCK INCENTIVE PLAN COMMITTEE:
Everett E. Briggs
John F. McGillicuddy
11
AUDIT COMMITTEE REPORT
The Southern Peru Copper Corporation Audit Committee ("Audit
Committee") consists of three directors. None of the members has a relationship
to the Company that may interfere with the exercise of his independence from
management and the Company. None of the Audit Committee members is a former
employee of the Company or has a business relationship with the Company, or is a
partner, controlling shareholder or executive officer of an entity that has a
business relationship with the Company. In addition, there is no Audit Committee
member who is employed as an executive of another company where any of the
Company's executives serves on that company's compensation committee. No member
of the Audit Committee is an immediate family member of an individual who is an
executive officer of the Company or any of its affiliates.
Mr. Jaime Serra Puche has recently been elected to fill the vacancy
created on the Board of Directors by the resignation of Mr. Alberto de la Parra
Zavala and has been appointed as the third independent member of the Audit
Committee. Mr. Serra's consulting company, Serra Associates International, has
rendered consulting services from time to time to Grupo Mexico and he serves as
an independent Director of Grupo Ferroviario Mexicano, S.A. de C.V., a
subsidiary of Grupo Mexico. The Board of Directors of the Company was able to
conclude that Mr. Serra does not have a relationship with the Company that may
interfere with his independence from management and the Company.
Each member of the Audit Committee is financially literate, in
accordance with the qualifications set forth by the Company's Board of Directors
in its business judgment. In addition, at least one member of the Audit
Committee has accounting or related financial management expertise, as the board
of directors interprets this qualification in its business judgment.
The Board of Directors has adopted a written Charter for the Audit
Committee which is attached as an Annex I to this proxy statement. The Charter
for the Audit Committee sets forth the authority and responsibilities of the
Audit Committee. In connection with those responsibilities, the Audit Committee
has taken the following actions:
(1) reviewed and discussed the consolidated audited financial
statements with management and the independent auditors;
(2) discussed with the independent auditors, Arthur Andersen LLP
("AA"), the matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees);
(3) received the written disclosures and the letters from AA required
by the Independence Standards Board Standard No. 1, (Independence Discussions
with Audit Committees) and has discussed with AA its independence from the
Company and its management;
(4) discussed with the Company's internal and independent auditors, AA,
the overall scope and plans of their respective audits. The Committee meets with
the internal and independent auditors, with and without management present, to
discuss the results of their examinations, the evaluations of the Company's
internal controls and the overall quality of the Company's financial reporting;
(5) recommended, based on the reviews and discussions referred to
above, to the board of directors, and the Board has approved, that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000, for filing with the Securities and Exchange
Commission. The Committee and the Board also have recommended, subject to
shareholder approval, the selection of the Company's independent accountants.
12
AUDIT FEES
AA, the Company's independent accountant, billed $245,000 to the
Company for professional services rendered for the audit of the Company's annual
financial statements for 2000 and the reviews of the financial statements
included in its quarterly Forms 10-Q for 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
AA did not render any professional services to the Company for
financial information systems design and implementation in 2000.
ALL OTHER FEES
The aggregate fees billed for services rendered in 2000 by AA to the
Company, other than the services covered in the two preceding paragraphs
("non-audit services"), were $24,800, which included services related to taxes
and other matters in the amount of $4,800. The Audit Committee considered the
non-audit services provided by AA to the Company and determined that the
provision of those services is compatible with AA maintaining its independence
as the Company's principal accountant.
THE AUDIT COMMITTEE:
Ambassador Everett E. Briggs
John F. McGillicuddy
Jaime Serra Puche
EXECUTIVE COMPENSATION
Set forth below is certain information concerning the compensation for
services in all capacities to the Company for fiscal year 2000 of the Company's
President and Chief Operating Officer. Following the management restructure of
the Company, Mr. German Larrea Mota-Velasco became Chairman of the Board and
Chief Executive Officer, and Mr. Oscar Gonzalez Rocha became President of the
Company in December 1999. No compensation was received by Mr. Larrea from the
Company in 2000 for services other than as director. Mr. Oscar Gonzalez Rocha
received compensation from the Company commencing in March 2000. In addition, no
compensation for services rendered to the Company and its subsidiaries was
received by any executive officer of the Company during 2000, other than Mr.
Gonzalez Rocha.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------------------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY COMPENSATION (a) COMPENSATION (b)
------------------ ---- ------ ---------------- ----------------
Oscar Gonzalez Rocha 2000 $237,477 $49,643 $45,918
- ---------------
(a) Other Annual Compensation consists mainly of Company sponsored programs
or mandated by Peruvian law.
(b) Amounts shown reflect maintenance fee for a corporate residence in
Lima, Peru, profit participation mandated by Peruvian law in the
earnings of the Peruvian Branch of the Company and severance benefits.
Peruvian law requires one month of regular income each year to be
accrued for severance benefits for each employee (whether Peruvian or
expatriate) working in Peru. Peruvian law requires a deposit of one
twelfth of an employee's annual salary, vacation, travel, national
holidays, Christmas, dependents and service award bonus, as applicable,
in a bank account of the employee's choosing each year. The money
accrues interest until the employee terminates employment, at which
time the
13
employee is eligible to receive the funds. Under this program, $17,717
in severance benefits were deposited on behalf of Mr. Oscar Gonzalez
Rocha.
OPTION GRANTS, EXERCISES, AND FISCAL YEAR-END VALUES
No options were granted in 2000.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
No options were exercised in 2000.
14
RETIREMENT PLANS
None of the executive officers of the Company is covered by the
Company's pension plans.
SEVERANCE BENEFIT
As described in Note (b) to the Summary Compensation Table above, the
Company provides severance benefits as required by Peruvian law.
EMPLOYEE AGREEMENTS
Pursuant to Peruvian laws concerning expatriate employees, Mr. Oscar
Gonzalez Rocha has entered into an employment agreement. These contracts
generally are for terms of three years and may be extended for additional
periods. Pursuant to Peruvian law, the expatriate employees whose spouses and/or
children are Peruvian citizens have agreements for unlimited terms. In
accordance with the terms of the contracts, the Company agrees to provide
expatriate employees with benefits as required by Peruvian law. The contracts
provide that the Company may dismiss expatriate employees for certain serious
offenses. In other instances of termination, the Company is required to provide
90 days' notice of termination. Terminated employees are also entitled to
receive severance benefits as required by Peruvian law. Under the contracts,
employees may resign at any time by providing the Company with 30 days' notice.
15
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total return on the Company's Common Stock against
the cumulative total return on the S&P Composite 500 Stock Index and
the S&P Metals Miscellaneous Group Index for the Five-year period
ending December 31, 2000. The Company's Common Stock commenced trading
on the New York Stock Exchange on January 5, 1996. The chart below
analyzes the total return on SPCC's Common Stock for the period
commencing December 31, 1995 and ending December 31, 2000, compared to
the total return of the S&P 500 and the S&P Metals Miscellaneous Group
for the five-year period commencing December 31, 1995 and ending
December 31, 2000. In 1996, SPCC's stock gained 2.48% compared to
positive returns of 22.96% for the S&P 500 and 3.29% for the S&P Metals
Miscellaneous Group. In 1997, SPCC's stock declined 1.48% compared to a
positive return of 33.38% for the S&P 500 and a negative return of
35.13% for the S&P Metals Miscellaneous Group. In 1998, SPCC's Stock
provided a negative return of 26.23% compared to a positive return of
28.57% for the S&P 500 and a negative return of 38.39% for the S&P
Metals Miscellaneous Group. In 1999, SPCC's Stock provided a positive
return of 65.57% compared to a positive return of 21.03% and 190.63%
for the S&P 500 and the S&P Metals Miscellaneous Group, respectively.
In 2000, SPCC's stock fell 14.42% compared to a negative return of
9.09% for the S&P 500 and a decline of 25.05% for the S&P Metals Group.
Comparison of Five Year Cumulative Total Return*
SPCC, S&P 500 Index & S&P Metals Misc. Group Index**
1995 1996 1997 1998 1999 2000
SPCC 100 102.48 100.96 74.48 123.32 105.53
S&P 500 100 122.96 164.00 210.85 255.20 232.01
S&P Metals 100 103.29 67.00 41.28 119.97 89.92
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
** ASSUMES $100 INVESTED ON 01/05/96 IN SPCC COMMON STOCK, AND ON 12/31/95 IN
THE S&P INDEX AND S&P METALS GROUP INDEX
16
CERTAIN TRANSACTIONS
Grupo Mexico provides various support services to the Company. In 2000,
these activities were principally related to accounting, legal, tax, treasury,
price risk assessment and hedging and administrative support services. Grupo
Mexico is reimbursed for these support services. The total amount paid by the
Company to Grupo Mexico for such services in 2000 was $7 million.
The Class A Common Stockholders and/or their affiliates purchase copper
products from the Company from time to time at prices determined on an
arm's-length basis by reference to the LME market price for copper at such time.
Management believes these transactions to be on terms as favorable as could be
obtained from unaffiliated parties. The Company expects that its policy of
determining prices for related party transactions on an arm's-length basis by
reference to the LME or COMEX market prices for copper at the time of any such
transaction will be continued. Sales of copper to the Class A Common
Stockholders and/or their affiliates amounted to $98 million in 2000.
Minera Mexico Internacional, Inc. a subsidiary of Grupo Mexico and
Asarco purchased copper products from SPCC during 2000 in the amount of $26.7
million. German Larrea Mota Velasco, Manuel Calderon Cardenas, Hector Calva
Ruiz, Hector Garcia de Quevedo Topete, Xavier Garcia de Quevedo Topete, Genaro
Larrea Mota-Velasco and Daniel Tellechea Salido are executive officers of Grupo
Mexico and/or of Asarco. Each is a director of the Company.
Phelps Dodge Refining Corporation, an affiliate of Phelps Dodge and
Phelps Dodge Corporation, purchased copper products from the Company in the
amount of $68.3 million in 2000. J. Stephen Whisler is Chairman of the Board,
President and Chief Executive Officer of Phelps Dodge Corporation. Manuel J.
Iraola is President of Phelps Dodge Industries, a division of Phelps Dodge
Corporation. Messrs. Whisler and Iraola are directors of the Company.
Cerro Wire & Cable Co. and other affiliated companies of The Marmon
Group, Inc., an affiliated company of one of the shareholders of SPCC, purchased
copper products from the Company during 2000 in the amount of $13.2 million. Mr.
Robert A. Pritzker is President and Chief Executive Officer of The Marmon Group,
Inc., and has served in that position for over forty-seven years. Mr. Jaime
Claro has been an advisor to The Marmon Group since October 1997. Messrs.
Pritzker and Claro are directors of the Company.
During 2000, the Company contracted an aggregate of approximately $7.8
million for shipping services to and from Peru by Cia. Sud Americana de Vapores,
S.A. ("CSAV"), and a subsidiary company. CSAV is a company indirectly controlled
by Quemchi, S.A. Mr. Jaime Claro is Vice Chairman of Electro and Quemchi, S.A.,
and his direct and indirect family interests in both companies exceed 10%. Mr.
Claro is also Chairman of Chilean Line Inc., which is the agent for and is owned
by CSAV.
The Company believes that the foregoing transactions were entered into
on arm's-length bases on terms as favorable as could be obtained from other
third parties. It is anticipated that in the future the Company will enter into
similar transactions with the same parties.
ADDITIONAL INFORMATION
The functions of the Compensation Committee, include making
recommendations to the Board with respect to election of and title changes for
all corporate executive officers and is composed of members of the entire Board.
The Nominating Committee, composed of Messrs. German Larrea
Mota-Velasco, Genaro Larrea Mota-Velasco, Xavier Garcia de Quevedo Topete, Amb.
Everett E. Briggs and John F. McGillicuddy, did not meet in 2000. The Nominating
Committee considers and makes recommendations to the Board of Directors with
respect to the nominations, tenure policy and committee assignments for
directors representing the Common Stockholders. The Committee considers
recommendations for nominees to the Board of Directors from all sources.
Recommendations for nominees to represent the Common Stockholders should be sent
in writing
17
to the Secretary or Assistant Secretary of the Company. Common Stockholders
are entitled to elect two directors, voting as a separate class. The
Company's By-Laws define notice procedures to be followed by Common
Stockholders seeking to nominate directors for election. Under the By-Laws, a
Common Stockholder seeking to nominate a director for election by Common
Stockholders must give written notice to the Secretary or Assistant Secretary
of the Company at least 90 days in advance of the anniversary date of the
immediately preceding annual meeting, or within 10 days of the giving of
notice of a special meeting. The notice must provide specific biographical
data with respect to each nominee, including such information as is required
to be included in the Company's proxy statement, and a representation by the
Common Stockholder that he or she is a holder of record entitled to vote at
the meeting and that he or she intends to appear in person or by proxy to
make the nomination. Nominations for the Company's 2002 annual meeting of
stockholders must be received by April 26, 2002.
The Board of Directors met four times in 2000, with 100% attendance by
Messrs. Briggs and McGillicuddy, the two directors representing holders of
Common Stock. Of the 13 directors representing Class A Common Stock, all of the
directors standing for reelection by the holders of Class A Common Stock
attended at least 83% of the aggregate number of meetings of the Board and of
the committees on which they served, with the exception of Messrs. Pritzker and
Tellechea Salido, who each attended 75% of such meetings.
COMPENSATION OF DIRECTORS
During 2000 directors who were not compensated as employees of the
Company were paid a basic fee of $15,000 plus $1,000 for attendance at each
meeting of the Company's Board or of any Committee of the Board. The Company has
a Directors' Stock Award Plan pursuant to which directors who are not
compensated as employees of the Company are entitled to an award of 200 shares
of Common Stock upon election to the Board and 200 additional shares of Common
Stock following each annual meeting of stockholders thereafter.
Under the Deferred Fee Plan for Directors, a director may elect to
defer payment of 50% or 100% of the compensation payable to such director for
Board and Committee service for the calendar year for which deferral is elected.
Deferred amounts will be credited to a cash subaccount, a company common stock
subaccount or a combination thereof. Compensation deferred to the cash
subaccount will earn interest based on U.S. Treasury debt obligations with a
10-year maturity. Compensation deferred to the stock subaccount will be credited
as whole shares of Common Stock based on the stock's fair market value on the
date of such credit. Dividends and fractional share amounts will be aggregated
until at least one share of Common Stock may be credited at the then fair market
value. Payments will be made in cash in a lump sum upon retirement as a director
on January 15 of the calendar year following normal retirement, or promptly
following the date of termination if the termination of service occurs at a date
prior to his normal retirement date. The Plan permits early withdrawal or
further deferral of participant accounts, subject to financial hardship, prior
notice or penalty requirements.
PROPOSAL TO AMEND THE CERTIFICATE
Stockholders are asked to consider and vote upon the following proposal
to amend Section 4.9(a) of the Company's Certificate to substitute "Grupo Mexico
S.A. de C.V." for "ASARCO Incorporated" in the definition of "Founding
Stockholder." The proposed amendment has been unanimously approved by the Board
of Directors, and the Board of Directors recommends that the stockholders
approve the adoption of the proposed amendment as follows:
"RESOLVED, that the last paragraph of Section 4.9(a) of the Restated Certificate
of Incorporation shall be amended to read in its entirety:
18
For purposes of this Paragraph 4.9, the term "Affiliate" of a
Person shall mean any Person (other than the Corporation) that
directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with,
the first Person. For the purposes of the above definition,
the term "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), shall
mean the possession, directly or indirectly, of more than 50%
of the then outstanding voting stock entitled to elect
directors of such Person; the term "Person" shall mean any
natural person, firm, partnership, association, corporation,
company, trust, business trust, joint venture, unincorporated
organization or government or any department or agency
thereof. Additionally, for the purposes of this Paragraph 4.9,
the term "Founding Stockholder" shall mean each of Grupo
Mexico SA de CV, Cerro Trading Company, Inc. and Phelps Dodge
Overseas Capital Corporation and their respective successors;
PROVIDED that each of Cerro Trading Company, Inc. and Phelps
Dodge Overseas Capital Corporation shall remain a Founding
Stockholder for the purposes hereof only for such time as it
would also qualify as an Affiliate of the Marmon Corporation
or Marmon Holdings, Inc. or Phelps Dodge Corporation, or their
respective successors, as the case may be."
The Board of Directors believes that the proposed amendment is in the
best interests of the stockholders of SPCC because it helps maintain stability
in SPCC's corporate governance by giving recognition to changes that have
occurred in the ownership of Asarco.
Under the Certificate the Class A Common Stock has the right to elect
13 of SPCC's 15 directors and has five votes per share on all matters other than
the election of directors. Ownership of Class A Common Stock is, in effect,
restricted to the Founding Stockholders: Asarco, Cerro and Phelps Dodge and
their affiliates. Any Class A Common Stock held by a person other than these
parties and their affiliates is automatically converted into Common Stock, and
all the Class A Common Stock is converted into Common Stock if the Founding
Stockholders and their affiliates own less than 35% of the Class A Common Stock
and Common Stock in the aggregate.
There are certain provisions in the Certificate that trigger the
conversion of Class A Common Stock when there is a change at the parent company
level in the control of the Class A Common Stock held by certain Founding
Stockholders, whether or not there is a change in the corporate entity that
holds such stock. Under the Certificate Cerro and Phelps Dodge remain Founding
Stockholders only as long as they are affiliated with their respective parent
entities, Marmon Corporation and Marmon Holdings, Inc. (in the case of Cerro)
and Phelps Dodge Corporation (in the case of Phelps Dodge). No such provision
was made for Asarco which was an independent public company at the time these
provisions were adopted. Since then Asarco has become an indirect wholly owned
subsidiary of Grupo Mexico which has voting control of the Class A Common Stock
held by Asarco, but Asarco remains the designated Founding Stockholder.
Therefore, under the existing Certificate some transactions that would change
voting control of the Class A Common Stock held by Asarco (such as a sale of
Asarco with its SPCC stock) would not trigger the conversion of Class A Common
Stock into Common Stock, while some transactions that would not change the
voting control of the Class A Common Stock held by Asarco (such as a sale of
Asarco without its SPCC stock) would trigger conversion. If the Certificate were
amended to substitute Grupo Mexico for Asarco as a Founding Stockholder, the
Class A Common Stock presently held by Asarco would be converted into Common
Stock if this Class A Common Stock ceased to be owned by Grupo Mexico and its
affiliates. The Board of Directors believes that this change would be consistent
with the purposes of the existing provisions of the Certificate which they
believe were intended to help maintain stability in the corporate governance of
SPCC.
19
The proposed amendment to the Certificate would not affect the right of
the holders of Common Stock to elect two of SPCC's 15 directors while there is
Class A Common Stock outstanding or their right to elect the entire Board if
there is no Class A Common Stock outstanding.
If the proposed amendment to the Certificate is adopted, the Founding
Stockholders have agreed to adopt a conforming amendment to the Certificate
under which Grupo Mexico would be substituted for Asarco as Founding Stockholder
in that Agreement as well. Asarco has advised the Company that it is
contemplating a transaction in which Asarco's wholly owned subsidiary, Southern
Peru Holdings Corporation, would sell all its SPCC stock to Asarco's immediate
parent corporation, Americas Mining Corporation ("AMC"), a wholly-owned
subsidiary of Grupo Mexico. Asarco would use the proceeds to repay debt and for
other corporate purposes. Asarco would continue to be a wholly owned subsidiary
of AMC and Grupo Mexico after that sale, and Grupo Mexico and AMC have no plans
to engage in any transaction that would cause Asarco to cease to be affiliated
with AMC and Grupo Mexico.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL.
PROPOSAL TO APPROVE THE SELECTION OF ACCOUNTANTS
The Board of Directors has selected Arthur Andersen L.L.P. to serve as
independent accountants for the Company for the calendar year 2001, subject to
approval of the stockholders. The Board of Directors recommends that the
stockholders approve the selection of Arthur Andersen L.L.P. at the annual
meeting. Arthur Andersen L.L.P. replaced PricewaterhouseCoopers L.L.P.
PricewaterhouseCoopers L.L.P. and its predecessors had served as the Company's
accountants continuously since 1962. Arthur Andersen L.L.P. has had more than 25
years of experience with Grupo Mexico, providing outstanding professional
services. Arthur Andersen L.L.P. is a world-class global auditing and consulting
firm with excellent mining industry credentials in the primary mineral producing
countries of the world. Arthur Andersen L.L.P. has advised the Company that
neither the firm nor any of its members have any direct or material indirect
financial interest in the Company or its subsidiaries. There were no
disagreements with PricewaterhouseCoopers L.L.P. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
The Audit Committee consists of Amb. Everett E. Briggs and Mr. John F.
McGillicuddy and, since June 12, 2001, Jaime Serra Puche. Two meetings were held
in 2001. The functions of the Committee include recommending the engagement of
independent accountants, reviewing the fees, scope and timing of their other
services, and reviewing the audit plan and results of the audit. The Committee
also reviews the Company's policies and procedures on internal auditing,
accounting and financial controls. The implementation and maintenance of
internal controls are understood to be primarily the responsibility of
management.
A representative of Arthur Andersen L.L.P. will be present at the
stockholders' meeting. The representative will have an opportunity to make a
statement and will be available to respond to appropriate questions.
20
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the Company's
2002 annual meeting of stockholders must be received by the Company at either of
its principal executive offices (1150 N. 7TH Avenue, Tucson, AZ 85705-0747 by
, 2001 in order to be considered for inclusion in the Company's
proxy statement and form of proxy.
OTHER INFORMATION
The Company is not aware of any other matters to be considered at the
meeting. If any other matters properly come before the meeting, the persons
named in the enclosed form of proxy are authorized to and will vote said proxy
in accordance with their judgment on such matters.
The cost of soliciting proxies in the accompanying form will be borne
by the Company. Georgeson Shareholder Communications Inc. has been employed to
solicit proxies by mail, telephone or personal solicitation for fees to be paid
by the Company of $12,000, plus reasonable out-of-pocket expenses. A number of
regular employees of the Company, without additional compensation, may solicit
proxies personally or by mail or telephone.
SOUTHERN PERU COPPER CORPORATION
Hans A. Flury, Assistant Secretary
Tucson, AZ, June___, 2001
21
Annex I
Southern Peru Copper Corporation
Audit Committee Charter
-----------------------
The Audit Committee (the "Audit Committee") of the Board of Directors
shall be appointed by the Board of Directors (the "Board") of Southern Peru
Copper Corporation (the "Company"). The Audit Committee shall comply with the
rules of the Securities and Exchange Commission governing audit committees and
the New York Stock Exchange rules applicable to companies whose securities are
listed for trading on that exchange (the "NYSE Audit Rules"). The Audit
Committee will assist the Board in ensuring the integrity of the Company's
financial statements, the Company's system of internal controls and the
independence and performance of the Company's auditors.
The Audit Committee shall, as and when required by the NYSE Audit
Rules, be comprised of at least three (3) members chosen from the Board. Each
member of the Audit Committee shall meet the independence and financial literacy
requirements of the NYSE Audit Rules and at least one member of the Audit
Committee shall satisfy the "financial expertise" requirements thereof.
The Audit Committee shall have direct access to, and complete and open
communication with, the Company's senior management and internal and independent
auditors and shall have the authority to retain outside third parties, as it
determines appropriate, to assist it in fulfilling its responsibilities.
The Audit Committee shall:
1. Review and discuss with management and the Company's independent auditors,
the Company's audited financial statements, as well as related significant
reporting issues, judgements, estimates made in preparing such financial
statements and other matters required by professional auditing standards and
regulations. Review and discuss, with management and the independent auditors,
as appropriate, any significant accounting issues involving the Company's
quarterly financial statements. After review, recommend to the Board the
acceptance and inclusion of the annual audited consolidated financial statements
in the Company's Annual Report on Form 10-K.
2. Review and discuss the matters set forth in Statement of Auditing Standards
No. 61, as well as matters as required by professional auditing standards and
regulations, with the independent auditors.
3. Review with the Company's Chief Legal Officer, or appropriate
representatives, legal, disclosure and other matters that may have a material
impact on the Company's financial statements.
4. Select, evaluate and, where appropriate, recommend certain actions with
respect to the independent auditors, including selection of a replacement
auditing firm. Additionally, the Audit Committee shall recommend to the Board
the nomination of the independent auditors to be proposed for stockholder
approval at the Company's annual stockholders meeting.
5. Evaluate and satisfy itself as to the independence of the independent
auditors by, among other things, ensuring that the independent auditors
periodically submit to the Audit Committee a formal written statement
delineating all relationships between such auditors and the Company and actively
engaging in a dialogue with the independent auditors with respect to any
disclosed relationships or services that may impact their objectivity and
independence and, if appropriate, recommending that the Board take appropriate
action to ensure their independence.
22
6. Review the annual plan and scope of work of the internal and independent
auditors.
7. Review, as appropriate, the results of any and all independent audits
performed on the Company's consolidated financial statements, and the results of
any and all internal audits, and discuss related significant internal control
matters.
8. Discuss, as appropriate, the adequacy of the Company's internal controls with
the internal and independent auditors and with senior management.
9. Review the appointment of the Company's senior internal auditing executive.
10. Hold regular meetings and make summary reports to the Board and, at least
once per year, meet with the independent and internal auditors without the
Company's management being present.
11. Provide the report of the Audit Committee required to be included in the
Company's annual proxy statement.
12. Annually review and assess the adequacy of this charter and, if appropriate,
recommend changes to the Board.
It is the responsibility of the Company's management to prepare
financial statements in accordance with generally accepted accounting principles
and of the Company's independent auditors to audit those financial statements.
The Audit Committee's responsibility is one of review. The Audit Committee does
not provide any expert or other special assurance as to such financial
statements concerning compliance with laws, regulations, or generally accepted
accounting principles. Nothing contained herein shall have the effect of
altering the responsibilities or duties toward the Company of the Company's
independent auditors, which shall remain ultimately accountable to the Board and
the Audit Committee in accordance with applicable accounting standards,
statutory or otherwise.
Approved by the Board of Directors on May 9, 2000.
23
SOUTHERN PERU COPPER CORPORATION
1150 N. 7TH Avenue, Tucson, AZ 85705-0747
Avenida Caminos del Inca No. 171, Chacarilla del Estanque,
Santiago de Surco, Lima 33, Peru
(511) 372-1414, ext. 3312 (Spanish), ext. 3325 (English)
BECAUSE OF DELAYS IN MAIL
PLEASE SIGN AND RETURN THE
ENCLOSED PROXY EVEN IF YOU
RETURNED THE ORIGINAL
July __, 2001
TO THE COMMON STOCKHOLDERS OF
Southern Peru Copper Corporation
A REMINDER
We have previously sent to you proxy soliciting material relating to
the annual meeting of stockholders to be held on July 25, 2001.
According to our latest records, we have not as yet received your
Proxy. The time before the meeting is short and many of our shares are held in
small amounts. Your signed Proxy will be helpful, whether your holding is large
or small, and will aid us in avoiding further expense and delay.
A Proxy and return envelope are enclosed for your use. You may also
return your Proxy to the Company's Lima office.
Thank you for your cooperation.
Very truly yours,
Hans A. Flury, Assistant Secretary
PLEASE ACT PROMPTLY
24
SOUTHERN PERU COPPER CORPORATION
PROXY
Proxy Solicited by Board of Directors for Annual Meeting of
Stockholders to be held July 25, 2001
The undersigned hereby appoints OSCAR GONZALEZ ROCHA, DANIEL TELLECHEA
SALIDO and DOUGLAS E. McALLISTER, and each of them, with power of substitution,
the proxies of the undersigned to vote all the shares the undersigned may be
entitled to vote at the annual meeting of stockholders of Southern Peru Copper
Corporation, to be held at the offices of Grupo Mexico, S.A. de C.V., Baja
California 200, Fifth Floor, Col. Roma Sur, Mexico City, Mexico, onWednesday,
July 25, 2001, at 1:00 PM, Mexico City time, and at any adjournment thereof upon
all matters specified in the notice of said meeting as set forth on the reverse
hereof, and upon such other business as may lawfully come before the meeting.
Holders of Common Stock, voting as a separate class, are entitled to
elect two directors at the meeting. Please refer to the Proxy Statement for
details.
PLEASE VOTE ON ALL PROPOSALS, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF A SIGNED PROXY IS RETURNED TO THE COMPANY WITH NO VOTING
INSTRUCTIONS GIVEN, SUCH SHARES WILL BE VOTED FOR BOTH NOMINEES FOR ELECTION AS
DIRECTORS AND FOR PROPOSALS NO. 2 AND NO. 3.
(Continued on the other side.)
SOUTHERN PERU COPPER CORPORATION
P.O. Box 11179
New York, N.Y. 10203-0179
DIRECTORS OF SPCC RECOMMEND A VOTE "FOR" PROPOSALS 1, 2 AND 3.
1. Election of Directors FOR both nominees / / WITHHOLD AUTHORITY to vote / / *EXCEPTION / /
listed below for both nominees listed below
Common Stock Director Nominees: Everett E. Briggs and John F. McGillicuddy
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER INDIVIDUAL NOMINEE, MARK
THE "EXCEPTION" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exception:_____________________________________________________________________
FOR AGAINST ABSTAIN
2. Amendment to Section 4.9(a) of the Company's
Restated Certificate of Incorporation / / / / / /
FOR AGAINST ABSTAIN
3. Selection of Arthur Andersen L.L.P. as / / / / / /
independent accountants for 2001.
ADDRESS CHANGE/COMMENTS
4. In their discretion, the proxies are / /
authorized to vote upon such other matters If you have noted either an Address Change or made
as may properly come before the meeting. Comments on the reverse side of this card, mark here. / /
Please sign exactly as name or names appear on this
proxy. If stock is held jointly, each holder should
sign. If signing as attorney, trustee, executor,
administrator, custodian, guardian or corporate
officer, please give full title.
Dated:______________________________________, 2001
__________________________________________________
Signature
__________________________________________________
Signature
VOTES MUST BE INDICATED
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. / /