SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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|_| Preliminary Proxy Statement
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14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240 14a-11(c) or ss.240. 14a-12
Southern Peru Copper Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other Than the Registrant)
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|X| No fee required.
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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
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[LOGO] SOUTHERN PERU COPPER CORPORATION
March 24, 2000
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 Tuesday, May 9,
2000, at 2:00 P.M., Mexico City time. We hope you can be with us.
At the meeting, you will be asked to elect two directors and to approve
the selection of independent accountants.
The meeting also provides an opportunity to give you a current report on
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
180 Maiden Lane, New York, N.Y. 10038 (212) 510-2000
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] SOUTHERN PERU COPPER CORPORATION
180 Maiden Lane Avenida Caminos del Inca No. 171
New York, N.Y. 10038 Chacarilla del Estanque, Santiago de Surco,
Lima 33, Peru
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
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 Tuesday, May 9, 2000, at
2:00 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
2001 annual meeting.
(2) 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 2000.
(3) 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 2001
annual meeting. The holders of Class A Common Stock will vote together with the
holders of Common Stock, as a single class, upon the proposal to approve the
selection of independent accountants for the calendar year 2000.
Stockholders of record at the close of business on March 10, 2000 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,
Robert Ferri
Secretary
New York, N.Y., March 24, 2000
----------------------------------------------
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, 180 Maiden Lane, New York,
N.Y. 10038 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 May 9, 2000 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 March 30, 2000, to holders
of Common Stock of record on March 10, 2000. 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 election of directors and approval of
accountants proposals. 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 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 March 10, 2000, the record date for the annual meeting, the
Company had outstanding 14,095,792 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 March 10,
2000 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 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
Pursuant to a resolution of the Board of Directors adopted on February 25,
2000 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, Alberto de la Parra Zavala, Hector Garcia de
Quevedo Topete, Xavier Garcia de Quevedo Topete, Oscar Gonzalez Rocha, Manuel J.
Iraola, Genaro Larrea Mota-Velasco, German Larrea Mota-Velasco, Robert A.
Pritzker, Daniel Tellechea Salido and J. Steven Whisler. Charles B. Smith and
Douglas C. Yearley will not stand for re-election.
All of the nominees, except for Messrs. Hector Garcia de Quevedo Topete
and Manuel J. Iraola, 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 65 1996
and 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 69 1996
Corporation, Empire Blue Cross and
Blue Shield and Young & Rubicam
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 46 Chairman of the Board, Chief
Executive Officer and Director
Oscar Gonzalez Rocha 61 President and Director
Manuel Calderon Cardenas 67 Director
Hector Calva Ruiz 62 Vice President and Director
Jaime Claro 64 Director
Alberto de la Parra Zavala 33 Director
Hector Garcia de Quevedo Topete 49 Nominee
Xavier Garcia de Quevedo Topete 53 Director
Manuel J. Iraola 52 Nominee
Genaro Larrea Mota-Velasco 39 Vice President and Director
Robert A. Pritzker 73 Director
Daniel Tellechea Salido 54 Vice President and Director
J. Steven Whisler 45 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 1989 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 Development 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.
Alberto de la Parra Zavala, Director. Mr. de la Parra has been a Director
of the Company since November 1999. He has been a Partner with the law firm of
Santamarina y Steta, S. C. since 1997, previously an Associate before 1995 and
is a Legal Advisor to Grupo Mexico, S.A. de C.V. He is Assistant Secretary of
Grupo Ferroviario Mexicano, S.A. de C.V. and Ferrocarril Mexicano, S.A. de. C.V.
He has been a director of ASARCO Incorporated since November 1999.
Hector Garcia de Quevedo Topete, Nominee. Mr. Garcia de Quevedo has 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, Nominee. Mr. Iraola has been 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-six years. He holds
executive positions in its more than sixty autonomous member companies. He is
also a director of Acxiom Corporation and 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 President and Chief Executive Officer of
Phelps Dodge Corporation since January 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, 1999, 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)
180 Maiden Lane
New York, NY 10038 ............ -- -- 43,348,949 65.8% 54.2% 63.1%
Cerro Trading Company, Inc. (c)
225 West Washington Street
Suite 1900
Chicago, IL 60606 ............. -- -- 11,378,088 17.3 14.2 16.6
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, a wholly-owned 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.
(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 addition, the rights
7
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, 1999.
SOUTHERN PERU COPPER CORPORATION
------------------------------------------------------------------------
Shares of the Additional
Company's Shares
Common Stock Deemed Percent of
Beneficially Beneficially Outstanding
Owned (a) Owned (b) Totals Common Stock
-------------------- --------------- --------------- ----------------
Everett E. Briggs (c) 1,409 -- 1,409 (d)
Manuel Calderon Cardenas -- -- -- --
Hector Calva Ruiz -- -- -- --
Jaime Claro (c) 800 -- 800 (d)
Alberto de la Parra -- -- -- --
Hector Garcia Quevedo Topete -- -- -- --
Xavier Garcia de Quevedo Topete -- -- -- --
Oscar Gonzalez Rocha -- -- -- --
Manuel J. Iraola -- -- -- --
Genaro Larrea Mota-Velasco -- -- -- --
German Larrea Mota-Velasco (e) -- -- -- --
John F. McGillicuddy 1,000 -- 1,000 (d)
Charles G. Preble 23,196 42,000 65,196 (d)
Robert A. Pritzker (f) 800 -- 800 (d)
Eduardo Santistevan (g) 1,050 8,300 9,350 (d)
Charles B. Smith (g)(h) 8,588 31,300 39,888 (d)
Daniel Tellechea Salido -- -- -- --
David J. Thomas (g) 1,016 -- 1,016 (d)
J. Steven Whisler (c) 1,000 -- 1,000 (d)
Douglas C. Yearley (c) 1,000 -- 1,000 (d)
All nominees, directors and
officers as a group (23
individuals) 39,859 81,600 121,459 0.86%
- -------------
(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) Consists of shares of Common Stock of the Company deemed beneficially
owned under regulations of the Securities and Exchange Commission because
such shares may be acquired within 60 days after December 31, 1999,
through the exercise of options granted under the Company's Stock
Incentive Plan.
(c) See also the information below on Common Stock Equivalents.
(d) Less than .5%
(e) Mr. Larrea disclaims beneficial ownership over the shares of the Company
owned by Asarco, which in turn is controlled by Grupo Mexico.
(f) 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.
(g) With the management restructure in late 1999, Restricted Common Stock
awarded under the Company's Stock Incentive Plan was forfeited by the
Company's executive officers as follows: 11,480 by Mr. Smith 2,000 by Mr.
Thomas; and 1,400 by Mr. Santistevan.
(h) Includes 1,460 shares of the Company's Common stock held in the name of
Mr. Smith's wife.
8
Common Stock Equivalents
The following table sets forth the per share number of Common Stock
Equivalents credited as of December 31, 1999, 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
Common Stock
Director Equivalents
-------- -----------
Everett E. Briggs ..................... 6,492
Jaime Claro ........................... 5,608
J. Steven Whisler ..................... 3,074
Douglas C. Yearley .................... 3,100
------
Total ........................ 18,274
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 3.1538% of the outstanding shares of Grupo Mexico):
Beneficial
Director/Officer Ownership
---------------- ---------
German Larrea Mota-Velasco ............ 17,050,229*
Genaro Larrea Mota-Velasco ............ 2,652,681
Oscar Gonzalez Rocha .................. 121,874
Daniel Tellechea Salido ............... 40,955
Genaro Guerrero Diaz Mercado .......... 3,236
----------
Total ................... 19,868,975
- -------------
* 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.
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 1999.
Since December 17, 1999, this Committee is composed of the entire Board of
Directors. From January 1999 to December 17, 1999, the members of the
Compensation Committee were Messrs. Kevin R. Morano, Richard de J. Osborne,
Robert A. Pritzker and Douglas C. Yearley. The Committee met three times in
1999.
9
During 1999, the Compensation Committee considered and made
recommendations to the Board of Directors with respect to the base salaries of
the Company's executive officers, other than those executive officers who are
also officers of, and compensated by, Asarco.
The 1999 target levels for the base salaries of the executive officers
were determined with the assistance of an independent compensation consulting
organization which established target compensation levels for each position
based on competitive data and the responsibilities and value of each executive
position. The Compensation Committee considered compensation information from
other companies in the mining and metals industry and comparably sized and both
larger and smaller companies in other industries. The Compensation Committee
then considered individual and corporate performance in establishing salary
levels within a competitive range.
The Compensation Committee set base salaries at levels intended to be
competitive with the Company's industry peers. The Committee also considered the
Company's performance relative to its industry peers. In this regard, the
Company's success in meeting transactional, operational and financial objectives
was taken into consideration. In 1999, for executive officers other than Mr.
Smith, base salaries were increased by an average of approximately 3.5%. In
1999, Mr. Smith was awarded a promotional salary adjustment of 15.8%, and a
salary increase of 5.5% in recognition of his performance, which exceeded
expectations. In late 1999, there was a reorganization in the SPCC management
structure with the replacement of, among others, Mr. Charles B. Smith by Mr.
Oscar Gonzalez Rocha as President. All the Grupo Mexico officers, including Mr.
Gonzalez Rocha, serving as executive officers of SPCC received no compensation
from the Company for 1999 for services other than as directors. Mr. Gonzalez
Rocha is expected to participate in the Company's compensation program beginning
March 2000.
The Compensation Committee did not award cash incentive compensation to be
paid to each of the Company's executive officers with respect to 1999
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.
10
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).
Amb. Everett E. Briggs German Larrea Mota-Velasco
Manuel Calderon Cardenas John F. McGillicuddy
Hector Calva Ruiz Robert A. Pritzker
Jaime Claro Charles B. Smith
Alberto de la Parra Zavala Daniel Tellechea Salido
Xavier Garcia de Quevedo Topete J. Steven Whisler
Oscar Gonzalez Rocha Douglas C. Yearley
Genaro Larrea Mota-Velasco
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
met twice in 1999.
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.
Long-term incentive compensation awarded in 1999 consisted of awards of
restricted stock and/or stock options and was 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 in 1999 were to selected officers and employees, and were
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
considered his performance and responsibility in directing the Company's
performance.
Everett E. Briggs
John F. McGillicuddy
11
Executive Compensation
Set forth below is certain information concerning the compensation for
services in all capacities to the Company for fiscal years 1999, 1998 and 1997
of the Company's Chief Executive Officers and certain other highly compensated
executive officers of the Company. 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 either Mr. Larrea or Mr.
Gonzalez from the Company in 1999 for services other than as directors. In
addition, no compensation for services rendered to the Company and its
subsidiaries was received by any executive officer of the Company holding office
on December 31, 1999.
Summary Compensation Table
Long Term
Compensation
------------ ------------
Annual Compensation Securities
----------------------------------------------- Restricted Underlying
Name and Other Annual Stock Options All Other
Principal Position Year Salary Bonus Compensation (a) Awards (b) (shares) Compensation (c)
------------------ ---- ---------- ----- ---------------- ---------- -------- ----------------
Charles B. Smith (d) 1999 $353,350 --- $234,303 $86,478 27,100 $597,094
President and Chief 1998 311,050 $85,300 139,339 31,953 14,500 75,333
Executive Officer 1997 298,700 122,700 100,078 37,375 13,000 110,991
Charles G. Preble (e) 1999 134,333 --- 111,693 --- --- 20,951
President and Chief 1998 392,637 147,100 117,956 86,913 25,000 97,111
Executive Officer 1997 362,940 232,200 115,854 97,500 23,000 138,276
David J. Thomas (f) 1999 183,500 --- 133,805 10,538 6,800 288,695
Vice President 1998 179,667 41,800 87,071 12,781 5,500 24,073
1997 34,514 --- 13,766 --- --- 4,319
Eduardo Santistevan 1999 180,629 --- 94,430 5,269 6,000 386,908
Vice President 1998 191,950 38,200 117,301 5,752 4,500 50,126
1997 184,967 47,200 102,881 7,313 4,500 75,587
- ---------------
(a) Other Annual Compensation consists mainly of Company-sponsored programs
that relate to the geographic distance of the Company's operations from
countries from which employees are recruited, and address the Company's
need to recruit and retain certain qualified employees in those employment
positions in Peru in which their services are needed by the Company. The
Company also sponsors programs to recruit and retain qualified Peruvian
employees. During 1999, the expatriates' programs included: a foreign
service premium, a program reimbursing travel costs for the employee and
his family to travel back to their home country, an educational assistance
program, a vacation payment program, and a program awarding a housing
allowance to employees residing in Lima. Compensation amounts exceeding
25% of a named officer's total Other Annual Compensation in 1999 were as
follows: Charles G. Preble, a $31,595 foreign service premium and a
$80,098 vacation payment; Charles B. Smith, a $87,537 foreign service
premium and a $111,121 vacation payment; David J. Thomas, a $73,873
foreign service premium and a $42,000 educational assistance; and Eduardo
Santistevan, a $41,556 foreign service premium and a $35,000 housing
allowance. Mr. Santistevan is the brother-in-law of Mr. Preble.
(b) Dollar values of restricted stock awards are shown as of the date of
grant. Restricted Common Stock awarded under the Company's Stock Incentive
Plan was forfeited by the Company's executive officers following the
management restructure in late 1999.
(c) Amounts shown for 1999 for all named officers include matching
contributions by the Company under the Company's Savings Plan and its
Compensation Deferral Plan. The Savings Plan is a 401(k) plan available
generally to United States and expatriate salaried employees. The
Compensation Deferral Plan is a non-qualified deferred compensation plan
that allows eligible employees to defer that portion of their salary that
could have been deferred under the Savings Plan but for limitations
imposed by the Internal Revenue Code, and to defer all or part of their
eligible incentive compensation, as provided in the Plan. Salary deferrals
are eligible for a Company matching contribution under the Plan.
Compensation deferred and amounts contributed by the Company may be
withdrawn subject to certain restrictions and penalties. Deferrals of
incentive compensation are not eligible for a Company matching
contribution. Additional components of All Other Compensation are as
follows. Peruvian law mandates each of these programs.
12
Private Pension System (AFP). Pursuant to the requirements of the
Peruvian private pension fund system (AFP), funds were paid to Messrs.
Preble, Smith, and Santistevan in amounts of $16,921, $34,035 and $21,251,
respectively, in 1999.
Severance Benefit. 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 return 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, severance benefits were deposited on behalf of Messrs.
Smith, Thomas and Santistevan in amounts of $39,086, $21,587 and $24,647,
respectively, in 1999. Mr. Preble retired in April 1999, and the
employment of Messrs. Smith, Santistevan and Thomas was terminated
following the management restructure in late 1999.
Severance Payments for Termination of Employment Agreement. Pursuant
to Peruvian laws concerning expatriate employees, Messrs. Smith,
Santistevan and Thomas received severance benefits upon termination of the
employment agreements in December 1999 as follows: Mr. Smith, $514,515;
Mr. Santistevan, $336,210; and Mr. Thomas $262,053.
(d) Mr. Smith held this position with the Company until December 1999.
(e) Mr. Preble retired from the Company on April 29, 1999.
(f) Mr. Thomas commenced service with the Company in July 1997, after having
previously been employed by the Company from 1977 to 1987.
Option Grants, Exercises, and Fiscal Year-End Values
Set forth below is further information on grants of stock options under
the Company's Stock Incentive Plan for the period January 1, 1999 to December
31, 1999.
Option Grants in Last Fiscal Year
Grant
Individual Grants (1) Value
---------------------------------------------------------------- --------------
% of Total
Number of Options
Shares Granted to
Underlying Employees Exercise Grant Date
Options in or Base Expiration Present
Name Granted(2) Fiscal Year Price $/Sh Date Value(3)
---- ------------- --------------- ------------ ----------- --------------
19,100 $8.78 2/1/09 $50,099
Charles B. Smith 8,000 35.5% 14.375 4/28/09 39,344
David J. Thomas 6,800 8.9% 8.78 2/1/09 17,836
Eduardo Santistevan 6,000 7.9% 8.78 2/1/09 15,738
- -----------
(1) Following the management restructure of the Company in December 1999, Mr.
German Larrea Mota-Velasco became Chairman of the Board and Mr. Oscar
Gonzalez Rocha became President of the Company. No options were granted to
either Mr. Larrea or Mr. Gonzalez by the Company in 1999. Mr. Charles G.
Preble retired on April 29, 1999 and was granted no options in 1999.
(2) The options were awarded under the Company's Stock Incentive Plan. The
option price per share equals the fair market value of the Company's
Common Stock on the date of grant. The options provide for limited rights
exercisable upon the occurrence of specified events that may materially
affect the value of the Company's Common Stock and are designated as such
by the Committee that administers the Plan, including a tender or exchange
offer for shares of the Company's Common Stock, the replacement of a
majority of the Board as a result of a proxy contest, a merger or
reorganization of the Company, or a liquidation or dissolution of the
Company. If an exercise event occurs, the holder is entitled to receive
the cash value of the options at the highest market value that the shares
traded over a period of sixty days preceding the event or, in the event of
the consummation of a tender offer, the tender offer price, in each case,
less the exercise price.
(3) Based on the Black-Scholes option pricing model, a widely recognized
method of valuing options. The following assumptions were used in
determining the value of the options using the model: historical
volatility of 39.6% based on the volatility of the Common Stock as traded
on the New York Stock Exchange from the start of trading on January 5,
1996 to April 29, 1999; an annual dividend rate of $0.32
13
per share based upon the ten year average dividend rate paid per share; a
risk free rate of return of 4.7% based on the yield of the five year U.S.
treasury notes as of the grant date; and exercise of the option five years
after the grant date. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model. The model is used for valuing market traded options
and is not directly applicable to valuing stock options granted under the
Company's Stock Incentive Plan which cannot be sold.
All outstanding options were exercisable at December 31, 1999, and as of
that date, unexercised options were held as follows: Mr. Preble, 42,000; Mr.
Smith, 31,300; and Mr. Santistevan 8,300.
Option Exercises and Fiscal Year-End Values
Set forth below is information concerning stock option exercises by named
executive officers during 1999, including the aggregate value of gains on the
date of exercise, the number of shares covered by exercisable options and the
value of "in-the-money" options as of December 31, 1999. All outstanding options
were exercisable at December 31, 1999.
Aggregated Option Exercises in 1999 and
December 31, 1999 Option Values
Number of
Securities Underlying Value of
Unexercised Unexercised
Options at Year End In-the Money
Shares Acquired Value Exercisable/ Options at
Name on Exercise Realized Unexercisable (1) Year End (2)
---- -------------------- ------------- ------------------------- ------------------
Charles G. Preble . . . . . . . 25,000 $319,533 42,000 ---
Charles B. Smith . . . . . . . 33,600 130,805 31,300 $6,250
David J. Thomas . . . . . . . . 12,300 66,146 --- ---
Eduardo Santistevan . . . . . . 10,500 59,109 8,300 ---
- ----------
(1) The above officers held no unexercisable options at December 31, 1999.
(2) Based on the New York Stock Exchange--Composite Transactions price for the
Company's Common Stock of $15.1563 on December 31, 1999.
14
Retirement Plans
The following table shows the estimated amount of annual retirement income
payable to employees for life, commencing at normal retirement at age 65 in 1999
under the Company's qualified noncontributory defined benefit Retirement
Benefits Plan (the "Retirement Plan"), covering substantially all salaried
employees in the United States and all expatriate employees in Peru, together
with certain employees of subsidiaries, and a supplemental retirement plan (the
"Supplemental Plan"). Benefits are calculated using an average of the highest
consecutive 60 months of the last 120 months of compensation received, minus a
Social Security offset. The Company's funding policy is to contribute amounts to
the Retirement Plan sufficient to meet the minimum funding requirements set
forth in the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), plus such additional amounts as may be determined to be appropriate
from time to time. The Supplemental Plan is a non-qualified supplemental
retirement plan under which any benefits not payable from Retirement Plan assets
by reason of the limitations imposed by the Internal Revenue Code are paid from
the Company's general corporate funds. The figures below reflect a straight life
annuity benefit assuming normal retirement at age 65 and are subject to Social
Security offsets assuming Social Security benefit levels as in effect on January
1, 2000.
Pension Plan Table
Years of Service
------------------------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 40 45
- ------------------- ------------- ------------- ------------- ------------- ------------- -------------- --------------
125,000 . . . . . 24,966 33,288 41,610 49,932 58,254 66,576 74,898
150,000 . . . . . 30,591 40,788 50,985 61,182 71,379 81,576 91,773
175,000 . . . . . 36,216 48,288 60,360 72,432 84,504 96,576 108,648
200,000 . . . . . 41,841 55,788 69,735 83,682 97,629 111,576 125,523
225,000 . . . . . 47,466 63,288 79,110 94,932 110,754 126,576 142,398
250,000 . . . . . 53,091 70,788 88,485 106,182 123,879 141,576 159,273
275,000 . . . . . 58,716 78,288 97,860 117,432 137,004 156,576 176,148
300,000 . . . . . 64,341 85,788 107,235 128,682 150,129 171,576 193,023
325,000 . . . . . 69,966 93,288 116,610 139,932 163,254 186,576 209,898
350,000 . . . . . 75,591 100,788 125,985 151,182 176,379 201,576 226,773
375,000 . . . . . 81,216 108,288 135,360 162,432 189,504 216,576 243,648
400,000 . . . . . 86,841 115,788 144,735 173,682 202,629 231,576 260,523
425,000 . . . . . 92,466 123,288 154,110 184,932 215,754 246,576 277,398
450,000 . . . . . 98,091 130,788 163,485 196,182 228,879 261,576 294,273
475,000 . . . . . 103,716 138,288 172,860 207,432 242,004 276,576 311,148
500,000 . . . . . 109,341 145,788 182,235 218,682 255,129 291,576 328,023
525,000 . . . . . 114,966 153,288 191,610 229,932 268,254 306,576 344,898
550,000 . . . . . 120,591 160,788 200,985 241,182 281,379 321,576 361,773
575,000 . . . . . 126,216 168,288 210,360 252,432 294,504 336,576 378,648
600,000 . . . . . 131,841 175,788 219,735 263,682 307,629 351,576 395,523
625,000 . . . . . 137,466 183,288 229,110 274,932 320,754 366,576 412,398
650,000 . . . . . 143,091 190,788 238,485 286,182 333,879 381,576 429,273
675,000 . . . . . 148,716 198,288 247,860 297,432 347,004 396,576 446,148
700,000 . . . . . 154,341 205,788 257,235 308,682 360,129 411,576 463,023
725,000 . . . . . 159,966 213,288 266,610 319,932 373,254 426,576 479,898
750,000 . . . . . 165,591 220,788 275,985 331,182 386,379 441,576 496,773
775,000 . . . . . 171,216 228,288 285,360 342,432 399,504 456,576 513,648
800,000 . . . . . 176,841 235,788 294,735 353,682 412,629 471,576 530,523
As of December 31, 1999, the following officers had completed the number
of years of service indicated: Charles B. Smith, 7 years; Eduardo Santistevan,
16 years and David J. Thomas, 12 years. The amounts of
15
covered compensation of such persons for calendar year 1999 were: Charles B.
Smith, $438,650; David J. Thomas, $225,300; Eduardo Santistevan, $218,829, and
consisted of basic salary and bonuses in the year received. Mr. Charles G.
Preble retired as President and Chief Executive Officer on April 29, 1999. Mr.
Santistevan's benefits are offset by 13 years of accrued vested benefits of
$31,724 (reflecting a straight life annuity benefit assuming normal retirement
at age 65) payable to him under the Company's nonqualified noncontributory
defined benefit Retirement Plan and Trust for Selected Employees (the "Offshore
Pension Plan"). Under the Offshore Pension Plan, selected non-U.S.-citizen
expatriate salaried employees in Peru accrued benefits calculated as 1.5% of the
employee's final salary rate multiplied by the number of years of the employee's
credited service. The benefits are not subject to any offset for Peruvian
governmental benefits. Effective January 1, 1997, covered employees under the
Offshore Pension Plan ceased to accrue benefits under the Offshore Pension Plan
and began to participate in and accrue benefits under the Retirement Plan.
Severance Benefit
As described in Note (c) to the Summary Compensation Table above, the
Company provides severance benefits as required by Peruvian law.
Employment Agreements
Pursuant to Peruvian laws concerning expatriate employees, Messrs. Smith,
Santistevan and Thomas had entered into employment agreements. These contracts
generally are for terms of three years and may be extended for additional
periods. Pursuant to Peruvian law, those expatriate employees whose spouses
and/or children are Peruvian citizens have agreements for unlimited terms. Of
the three such named executive officers, Mr. Santistevan has an agreement with
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. Following the reorganization of the management structure of the
Company, the employment agreements for Messrs. Smith, Santistevan and Thomas
were terminated.
16
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 four-year period ending December 31, 1999. 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 January 5, 1996 and ending December 31, 1999,
compared to the total return of the S&P 500 and the S&P Metals Miscellaneous
Group for the four-year period commencing December 31, 1995 and ending December
31, 1999. In 1996, SPCC's stock declined 0.9% compared to positive returns of
23.0% for the S&P 500 and 2.0% for the S&P Metals Miscellaneous Group. In 1997,
SPCC's stock declined 1.7% compared to positive returns of 33.3% for the S&P 500
and a negative return of 32.6% for the S&P Metals Miscellaneous Group. In 1998,
SPCC's stock provided a negative return of 26.4% compared to a positive return
of 28.5% for the S&P 500 and a negative return of 27.9% for the S&P Metals
Miscellaneous Group. In 1999, SPCC's stock provided a positive return of 65.4%
compared to a positive return of 21.0% and a positive return of 89.4% for the
S&P 500 and S&P Metals Miscellaneous Group, respectively.
[GRAPHIC OMITTED]
[The following table was depicted as a line graph in the printed material.]
COMPARISON OF FOUR YEAR CUMULATIVE TOTAL RETURN*
SPCC, S&P 500 INDEX & S&P METALS MISC. GROUP INDEX**
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
SPCC 100 99.06 97.42 71.68 118.53
S&P 500 100 122.96 163.93 210.68 254.96
S&P METALS GROUP 100 102.03 68.73 49.53 93.79
* 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
Certain Transactions
Asarco provides various support services to the Company. In 1999, these
activities were principally related to accounting, legal, tax, treasury, price
risk assessment and hedging and administrative support services. Asarco is
reimbursed for these support services. The total amount paid by the Company to
Asarco for such services in 1999 was $800,000.
During 1999, the Company contracted an aggregate of approximately $8.3
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,
17
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 1999. 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 to the
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 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 2001 annual meeting of stockholders
must be received by January 29, 2001.
The Board of Directors met five times in 1999, 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 60% of the aggregate number of meetings of the Board and of
the committees on which they served, with the exception of Mr. Pritzker, who
attended 20% of such meetings. There was one meeting of the Executive Committee
during 1999, with 100% attendance by all members.
Compensation of Directors
During 1999 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
18
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.
Compensation Committee Interlocks and Insider Participation
During 1999, Jaime Claro attended meetings of the Compensation Committee
as an alternate in the absence of Robert A. Pritzker. Mr. Claro received no
compensation from the Company during 1999 for services other than as a director.
See "Certain Transactions" above for information regarding related transactions
concerning this director.
Section 16(a) Beneficial Ownership Reporting Compliance
Based on Company records and other information, the Company believes that
all filing requirements of the Securities and Exchange Commission applicable to
its executive officers and Directors were complied with for 1999, except for Mr.
Eduardo Santistevan, a former Vice President, who filed a late report covering
one transaction when no longer in the Company's employment.
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 2000, 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. replaces 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. A representative from
PricewaterhouseCoopers L.L.P., the Company's former independent accountants,
will not be present at the stockholders' meeting. 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. Three meetings were held in 1999. 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.
19
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 2001
annual meeting of stockholders must be received by the Company at either of its
principal executive offices (180 Maiden Lane, New York, N.Y. 10038 or Avenida
Caminos del Inca No. 171, Chacarilla del Estanque, Santiago de Surco, Lima 33,
Peru) by December 1, 2000 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
Robert Ferri, Secretary
New York, N.Y. March 24, 2000
20
SOUTHERN PERU COPPER CORPORATION
180 Maiden Lane, New York, NY 10038 (212) 510-2000
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
April 14, 2000
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 May 9, 2000.
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,
Robert Ferri
Secretary
PLEASE ACT PROMPTLY
SOUTHERN PERU COPPER CORPORATION
PROXY
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
The undersigned hereby appoints OSCAR GONZALEZ ROCHA, DANIEL TELLECHEA
SALIDO and ROBERT FERRI, 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 in the offices of Grupo Mexico, S.A. de C.V., Baja
California 200, Fifth Floor, Colonia Roma Sur, Mexico City, Mexico, on Tuesday,
May 9, 2000, at 2:00 P.M., 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 PROPOSAL NO. 2.
(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 AND 2.
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. Selection of Arthur Andersen L.L.P. as
independent accountants for 2000.
ADDRESS CHANGE/COMMENTS
3. In their discretion, the proxies are
authorized to vote upon such other If you have noted either an Address Change or
matters as may properly come before the made Comments on the reverse side of this
meeting. 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:___________________________________, 2000
________________________________________________
Signature
________________________________________________
Signature
PLEASE SIGN, DATE AND RETURN THIS PROXY IN VOTES MUST BE INDICATED
THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. |X|