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:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/X/ 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:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO]
June 25, 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,
[LOGO] [LOGO]
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]
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.
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 25, 2001
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY.
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 25, 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.
1
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, Robert A. Pritzker, Jaime Serra Puche,
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.
2
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.
DIRECTOR
FOR COMMON STOCK DIRECTOR AGE SINCE
- ------------------------- --- --------
Amb. Everett E. Briggs.................... Consultant, Latin American political and 67 1996
business issues; 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 70 1996
Corporation and Empire 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.
3
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...................... 63 President and Director
Manuel Calderon Cardenas.................. 69 Director
Hector Calva Ruiz......................... 64 Vice President and Director
Jaime Claro............................... 65 Director
Hector Garcia de Quevedo Topete........... 50 Director
Xavier Garcia de Quevedo Topete........... 54 Director
Manuel J. Iraola.......................... 53 Director
Genaro Larrea Mota-Velasco................ 41 Vice President and Director
Robert A. Pritzker........................ 74 Director
Jaime Serra Puche......................... 50 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
4
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.
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.
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.
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.
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.
5
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) ....... -- -- 43,348,949 65.8% 54.2% 63.1%
1150 N. 7th Avenue
Tucson, AZ 85705-0747
Cerro Trading Company, Inc.(c) .............. -- -- 11,378,088 17.3 14.2 16.6
225 West Washington Street
Suite 1900
Chicago, IL 60606
Phelps Dodge Overseas Capital -- -- 11,173,796 16.9 14.0 16.3
Corporation(d) ............................
2600 North Central Avenue
Phoenix, AZ 85004
The Pritzker Family Philanthropic Fund ...... 2,850,000 20.2% -- -- 3.6 0.8
200 West Madison Street
Chicago, IL 60606
- --------------------------
(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.
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
6
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 de 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)
Robert A. Pritzker(e)....................................... 1,000 (c)
Jaime Serra Puche........................................... 0 (c)
Daniel Tellechea Salido..................................... 400 (c)
J. Steven Whisler(b)........................................ 1,200 (c)
All nominees, directors and officers as a group (17
individuals).............................................. 9,451
- ------------------------
(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.
7
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.
8
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 Genaro Larrea Mota-Velasco
Manuel Calderon Cardenas German Larrea Mota-Velasco
Hector Calva Ruiz John F. McGillicuddy
Jaime Claro Robert A. Pritzker
Hector Garcia de Quevedo Topete Jaime Serra Puche
Xavier Garcia de Quevedo Topete Daniel Tellechea Salido
Oscar Gonzalez Rocha J. Steven Whisler
Manuel J. Iraola
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.
9
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
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);
10
(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.
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.
11
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 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.
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.
12
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**
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
1995 1996 1997 1998 1999 2000
SPCC 100.00 102.48 100.96 74.48 123.32 105.53
S&P 500 100.00 122.96 164.00 210.85 255.20 232.01
S&P METALS 100.00 103.29 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 500 INDEX AND S&P METALS GROUP INDEX
13
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 $108.2 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
14
Stockholders should be sent in writing 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
15
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:
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, S.A. de C.V., 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
16
Certificate which they believe were intended to help maintain stability in the
corporate governance of SPCC.
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. and have
served as the Company's independent accountants since 2000.
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.
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 its principal
executive office (1150 N. 7TH Avenue, Tucson, AZ 85705-0747) by February 25,
2002 in order to be considered for inclusion in the Company's proxy statement
and form of proxy.
17
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 25, 2001
18
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.
6. Review the annual plan and scope of work of the internal and
independent auditors.
A-1
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.
A-2
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
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. / /