SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
affected by the COVID-19 pandemic and to prioritize the health and well-being of our employees and shareholders, this year’s meeting will be conducted solely virtually via a live audio webcast. There is no physical location for the annual meeting.
compensation and vote on a shareholder proposal, if properly presented at the annual meeting. The meeting also provides you with an opportunity to review our activities and our plans and prospects.
| Sincerely, | | | | |
| | | |||
| Germán Larrea Mota-Velasco | | | Oscar González Rocha | |
| Chairman of the Board of Directors | | | President and Chief Executive Officer | |
| 1440 E. Missouri Avenue, Suite 160, Phoenix, AZ 85014 U.S.A. TEL: +(602) 264-1375 | | | Avenida Caminos del Inca No. 171, Chacarilla del Estanque, Santiago de Surco, C.P. 15038, Peru TEL: +(511) 512-0440, ext. 3442 | | | Edificio Parque Reforma, Campos Eliseos No. 400, 12th Floor, Col. Lomas de Chapultepec,
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annual meeting. You will be able to attend and participate in the annual meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting: meetnow.global/MX79W5S. The purposes of the annual meeting of stockholders of Southern Copper Corporation are the following: (1) To elect our nine directors, who will serve until the 2023 annual meeting; (2) To approve an amendment to the Company’s Directors’ Stock Award Plan to extend the term of the plan for five years; (3) To ratify the selection by the Audit Committee of the Board of Directors of Galaz,Yamazaki, Ruiz Urquiza S.C., a member firm of Deloitte Touche Tohmatsu Limited, as our independent accountants for calendar year 2022; (4) To provide stockholders the opportunity to cast a non-binding advisory vote on our executive compensation; (5) To vote on a shareholder proposal, as described in this proxy statement, if properly presented at the annual meeting; and (6) To transact such other business as may properly come before the meeting. Only stockholders |
Stockholders of record at the close of business on June 2, 2020 April 7, 2022, will be entitled to vote at the annual meeting and at any adjournment or postponement of the meeting. StockholdersA list of record who attendthese stockholders will be made available electronically at: meetnow.global/MX79W5S. REVIEW THE PROXY STATEMENT AND VOTE ELECTRONICALLY BY VISITING meetnow.global/MX79W5S. YOU MAY ALSO VOTE BY MAIL BY signing, dating, and returning the enclosed proxy card in the envelope provided. You may also vote by attending the annual meeting in person may withdraw their proxies and vote in person if they wish.
virtually.
meetnow.global/MX79W5S.
April 14, 2022
email containing your legal proxy from your broker or attach a PDF image of your legal proxy.
The affirmative vote of a majority of the votes cast in person or by proxy at the meeting by the holders of Common Stock entitled to vote thereon is required to ratify the selection of the independent accountants described in this proxy statement. Abstentions and broker non-votes are counted for quorum purposes. Abstentions are counted as a vote “Against” this proposal. Broker non-votes are not counted either as votes cast “For” or “Against” the proposal to ratify the selection of the independent accountants described in this proxy statement.Because brokers have discretionary authority to vote on the ratification of the appointment ofindependent accountants we do not expect any broker non-votes in connection with this proposal.If we receive a signed proxy with no voting instructions, such shares will be voted “For” the proposal to ratify the selection of the independent accountants.
The affirmative vote of a majority of the votes cast in person or by proxy at the meeting by the holders of shares of Common Stock entitled to vote thereon is required for the non-binding advisoryamendment and extension of the Directors’ Stock Award Plan described in this proxy statement. Abstentions are counted for quorum purposes. Abstentions and broker non-votes will have no effect on the outcome of this proposal, as they are not counted as votes cast. If we receive a signed proxy with no voting instructions, such shares will be voted “For” the approval of the Directors’ Stock Award Plan amendment and extension as described in this proxy statement.
Ten
Common Stock Director | | | Age | | | Position | |
Germán Larrea Mota-Velasco | | | | | Chairman of the Board and Director | | |
Oscar González Rocha | | | | | President, Chief Executive Officer, and Director | | |
Vicente Ariztegui Andreve | | | | | Director | ||
Enrique Castillo Sánchez Mejorada | | | | | Director | | |
Leonardo Contreras Lerdo de Tejada | | | 36 | | | Director | |
Xavier García de Quevedo Topete | | | | | Director | ||
Luis Miguel Palomino Bonilla | | | | | Director | | |
Gilberto Perezalonso Cifuentes | | | | | Director | | |
Carlos Ruiz Sacristán | | | | | Director | |
Mr. Larrea presides over every Board meeting andsince 1999 has been contributing to the Company his education, his leadership skills, industry knowledge, strategic vision, informed judgment and over 20 years of business experience, especially in the mining sector. As Chairman and Chief Executive Officer of Grupo Mexico, of Grupo Ferroviario Mexicano, S.A. de C.V. and of EIM, a holding company engaged in a variety of business, including mining, construction, railways, real estate, and drilling, he brings to the Company a valuable mix of business experience in different industries.
6
Alfredo Casar Pérez, Director. Mr. Casar Pérez has been a director of the Company since October 26, 2006. He has been a member of the board of directors of Grupo Mexico since 1997. He is also a member of the board of directors of Ferrocarril Mexicano, S.A. de C.V., an affiliated company of Grupo Mexico, since 1998 and its Chief Executive Officer since 1999. From 1992 to 1999, Mr. Casar Pérez served as General Director and member of the board of directors of Compañía Perforadora México, S.A. de C.V. and México Compañía Constructora, S.A. de C.V., two affiliated companies of Grupo Mexico. Mr. Casar Pérez served as Project Director of ISEFI, a subsidiary of Banco Internacional, in 1991 and as Executive Vice President of Grupo Costamex in 1985. Mr. Casar Pérez also worked for the Real Estate Firm, Agricultural Ministry, and the College of Mexico. Mr. Casar Pérez holds a degree in Economics from the Autonomous Technological Institute of Mexico, ITAM, and a degree in Industrial Engineering from Anáhuac University of Mexico City, Mexico. He also holds a Master’s degree in Economics from the University of Chicago in Chicago, Illinois.
Mr. Casar Pérez has been associated with Grupo Mexico or its affiliated companies in different executive positions for more than22 years. He contributes to the Company his background in engineering and economics, his extensive business experience, his high performance standards, leadership and mature confidence. As Chief Executive Officer of Ferrocarril Mexicano, S.A. de C.V., Mr. Casar Pérez contributes to the Company a unique experience and ability to address challenging issues and propose creative solutions.
Enrique Castillo Sánchez Mejorada, Independent Director. Mr. Castillo Sánchez Mejorada has been a director of the Company since July 26, 2010 and is our fifth independent director nominee. From May 2013 to December 2020, Mr. Castillo Sánchez Mejorada has beenwas Senior Partner of Ventura Capital Privado, S.A. de C.V. (Mexican financial company), and, since.
From April 2011 to May 2013, Mr. Castillo Sánchez Mejorada was asenior advisor at Grupo Financiero Banorte, S.A.B. de C.V.(“GFNorte”) a financial holding institution that controls a bank, a broker dealer and other financial institutions in Mexico. From October 2000 to March 2011, Mr. Castillo Sánchez Mejorada was the Chairman of the board of directors and Chief Executive Officer of Ixe Grupo Financiero, S.A.B. de C.V., a Mexican financial holding company that merged into GFNorte in April 2011. In addition, from March 2007 to March 2009, Mr. Castillo Sánchez Mejorada was the President of the Mexican Banking Association (Asociación de Bancos de México). Currently, Mr. Castillo Sánchez Mejorada is Chairman of the Board of Banco Nacional de Mexico, S.A. (Citibanamex), one of the largest banks in Mexico, and member of the board of of Grupo Financiero Citibanamex, where he serves as a member of the practices committee and audit committee. He serves as an independent director on the board of directors of (i) Grupo Herdez, S.A.B. de C.V., a Mexican holding company for the manufacture, sale and distribution of food products; (ii) Alfa, S.A.B. de C.V., a Mexico-based holding company that, through its subsidiaries, is engaged in the petrochemical, food processing, automotive and telecommunication sectors. Mr. Castillo Sánchez Mejorada also serves as a member of the audit committee; (iii) Médica Sur, S.A.B. de C.V., a Mexico-based company engaged in the hospital business; (iv) UNIFIN Financiera, S. A. B. de C. V., an independent leasing company; and (v)(iv) Laboratorios Sanfer, S.A. de C.V., one of the leading companies in the Mexican pharmaceutical market. He is also a Senior Advisor for General Atlantic in Mexico, a private equity firm based out of New York. From April 2012 to April 2016, Mr. Castillo Sánchez Mejorada served as a member of the board of directors of Organización Cultiba, S.A.B. de C.V. (formerly Grupo Embotelladoras Unidas, S.A.B. de C.V.), a Mexico-based holding company primarily engaged in the beverage industry. Mr. Castillo Sánchez Mejorada holds a Bachelor’s degree in Business Administration from the Anáhuac University, in Mexico City, Mexico.
Mr. García de Quevedo contributes to the Company his extensive business experience and leadership, his industry knowledge, his skills to motivate high-performing talent, and his general management skills. During his more than40 42 years of experience as an executive with Grupo Mexico and subsidiaries, he was responsible for developing the integration strategy of Grupo Mexico. He was directly responsible for the development of the copper smelter, refinery, precious metal and rod plants of Grupo Mexico. Mr. García de Quevedo also headed the process for the acquisition of railroad concessions for Grupo Mexico, the formation of Grupo Ferroviario Mexicano, S.A. de C.V. and its partnership with Union Pacific. Previously, he had a distinguished career as Vice President of sales and marketing for Grupo Condumex, S.A. de C.V., where among other achievements, he was responsible for the formation of a division for the sale, marketing and distribution of products in the United States and Latin America, and where he headed the Telecommunications division. Mr. García de Quevedo also contributes to the Company his diversified business experience gained from having served on the boards of different Mexican and United States companies and as Chairman of the Mining Chamber of Mexico.
Additionally, from April 1995 to July 2015, Mr. Mac Gregor Anciola served on the boards of Grupo Nacional Provincial, S.A.B. (Mexican insurance company), Grupo Palacio de Hierro, S.A.B. (Mexican department stores), Industrias Peñoles, S.A.B. (Mexican mining company), Crédito Afianzador, S.A. (Mexican financing company), Minera Tizapa, S.A. de C.V. (Mexican mining company), Minera Penmont, S.A. de C.V.(Mexican mining company), Profuturo G.N.P., S.A. de C.V., Afore, Profuturo GNP Pensiones, S.A. de C.V. (Mexican insurance and pension holding company) and Vice President of the MexDer (Mexican derivatives exchange). Mr. Mac Gregor Anciola holds the recognition of the Professional Merit Award from ITAM. Mr. Mac Gregor Anciola holds a degree in Business Administration from the Instituto Tecnológico Autónomo de México in Mexico City and he attended the Stanford University Executive program in Palo Alto, California.
Mr. Mac Gregor Anciola brings to the Company more than 30 years of experience in the financial sector. He also adds to the Board of Directors his leadership experience and expertise attained through his participation as a director of the Mexican Stock Exchange and as an independent director of various other companies.
Luis Miguel Palomino Bonilla, Special Independent Director. Dr. Palomino has been a director of the Company since March 19, 2004. Dr. Palomino is a member of the board of directors and Vice-chairman of the Central Bank of Peru (Banco Central de Reserva del Peru) since September 2016, a director of the Master’s in Finance Program at the University of the Pacific in Lima, Peru since July 2009, a member of the board of directors of Laboratorios Portugal (personal care products manufacturer) since September 2017, and a member of the board of directors of Summa Capital, S. A. (corporate consulting firm) since April 2014.2014 and a director of Mall Aventura, S.A., since March 2021. Dr. Palomino was a member of the board of directors and Vice-chairman of the Central Bank of Peru (Banco Central de Reserva del Peru) from September 2016 to October 2021. He was the Chairman of the board of directors of Aventura Plaza, S.A. (commercial real estate developer and operator) from January 2008 to June 2016, member of the board of directors and Manager of the Peruvian Economic Institute (economic think tank) from April 2009 to August 2016, Partner of Profit Consultoria e Inversiones (a financial consulting firm) from July 2007 to July 2016, and a member of the board of directors and chairman of the audit committee of the Bolsa de Valores de Lima (Lima Stock Exchange) from March 2013 to July 2016. Dr. Palomino was Principal and Senior Consultant of Proconsulta International (financial consulting) from September 2003 to June 2007. He was First Vice President and Chief Economist, Latin America, for Merrill Lynch, Pierce, Fenner & Smith, New York (investment banking) from 2000 to 2002. He was Chief Executive Officer, Senior Country and Equity Analyst of Merrill Lynch, Peru (investment banking) from 1995 to 2000. Dr. Palomino has held various positions with banks and financial institutions as an economist, financial advisor and analyst. He has a PhD in finance from the Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania and graduated from the Economics Program of the University of the Pacific in Lima, Peru.
Mr. Ruiz Sacristán is one of our special independent director nominees. Mr. Ruiz Sacristán contributes to the Company his extensive business studies, including aMaster’s Degree in Business Administration from
Southern Copper Corporation | ||||||||
Shares of Common Stock Beneficially Owned | Percent of Outstanding Common Stock | |||||||
Americas Mining Corporation, 1440 E. Missouri Avenue, Suite 160, Phoenix, AZ 85014(a) | 687,275,997 | 88.9 | % |
| | | Southern Copper Corporation | | |||||||||
| | | Shares of Common Stock Beneficially Owned | | | Percent of Outstanding Common Stock | | ||||||
Americas Mining Corporation, 1440 E. Missouri Avenue, Suite 160, Phoenix, AZ 85014(a) | | | | | 687,275,997 | | | | | | 88.9% | | |
| | | Southern Copper Corporation | | |||||||||
Director/Executive Officer | | | Shares of Common Stock Beneficially | | | Percent of Outstanding Common Stock | | ||||||
Germán Larrea Mota-Velasco | | | | 374,966 | | | | | | (b) | | ||
Oscar González Rocha | | | | | 134,539 | | | | | | (b) | | |
Vicente Ariztegui Andreve | | | | 4,300 | | | | | | (b | |||
| |||||||||||||
Enrique Castillo Sánchez Mejorada | | | | 3,200 | | | | | | (b) | | | |
Leonardo Contreras Lerdo de Tejada | | | | | 2,400 | | | | | | (b) | | |
Edgard Corrales | | | | | 0 | | | | | | | | |
Xavier García de Quevedo Topete | | | | 13,638 | | | | | | (b) | | ||
Raúl Jacob | | | | | 0 | | | | | | | | |
Jorge Lazalde | | | | | 0 | | | | | ||||
| | ||||||||||||
Luis Miguel Palomino Bonilla | | | | 4,614 | | | | | | (b) | | ||
Gilberto Perezalonso Cifuentes | | | | 26,541 | | | | | | (b) | | ||
Carlos Ruiz Sacristán | | | | 20,274 | | | | | | (b) | | ||
Lina Vingerhoets | | | | | 0 | | | | | | | | |
All nominees, directors and executive officers as a group (15 individuals) | | | | 584,472 | | | | | | | | |
Delegacion Delegación Miguel Hidalgo, Mexico City, C.P. 11000, 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 shares are listed on the Mexican Stock Exchange (GMEXICO).
Grupo Mexico | ||||||||
Director/Executive Officer | Shares of Common Stock Beneficially Owned | Percent of Outstanding Common Stock (a) | ||||||
Germán Larrea Mota-Velasco | 1,475,642,781 | 18.95 | % | |||||
Oscar González Rocha(b) | 3,952,096 | (a) | ||||||
Vicente Ariztegui Andreve | 0 | |||||||
Alfredo Casar Pérez | 3,126,271 | (a) | ||||||
Enrique Castillo Sánchez Mejorada | 0 | |||||||
Edgard Corrales | 36,000 | (a) | ||||||
Xavier García de Quevedo Topete | 1,729,651 | (a) | ||||||
Raúl Jacob | 146,424 | (a) | ||||||
Jorge Lazalde (b) | 334,887 | (a) | ||||||
Rafael Mac Gregor Anciola | 0 | |||||||
Luis Miguel Palomino Bonilla | 0 | |||||||
Gilberto Perezalonso Cifuentes | 0 | |||||||
Carlos Ruiz Sacristán | 64,100 | (a) | ||||||
Lina Vingerhoets | 0 | |||||||
All nominees, directors and executive officers as a group (16 individuals) | 1,485,062,341 |
| | | Grupo Mexico | | |||||||||
Director/Executive Officer | | | Shares of Common Stock Beneficially Owned | | | Percent of Outstanding Common Stock(a) | | ||||||
Germán Larrea Mota-Velasco | | | | | 1,487,717,390 | | | | | | 19.03% | | |
Oscar González Rocha | | | | | 3,932,096 | | | | | | (a) | | |
Vicente Ariztegui Andreve | | | | | 0 | | | | | | | | |
Enrique Castillo Sánchez Mejorada | | | | | 0 | | | | | | | | |
Leonardo Contreras Lerdo de Tejada | | | | | 440,000 | | | | | | (a) | | |
Edgard Corrales | | | | | 36,000 | | | | | | (a) | | |
Xavier García de Quevedo Topete | | | | | 2,532,169 | | | | | | (a) | | |
Raúl Jacob | | | | | 146,424 | | | | | | (a) | | |
Jorge Lazalde(b) | | | | | 300,397 | | | | | | (a) | | |
Luis Miguel Palomino Bonilla | | | | | 0 | | | | | | | | |
Gilberto Perezalonso Cifuentes | | | | | 0 | | | | | | | | |
Carlos Ruiz Sacristán | | | | | 70,262 | | | | | | (a) | | |
Lina Vingerhoets(c) | | | | | 5,821 | | | | | | (a) | | |
All nominees, directors and executive officers as a group (15 individuals) | | | | | 1,495,180,559 | | | | | | | | |
The
Mr. Palominochaired the Audit Committee in 2019.2021. Mr. Luis Miguel Palomino Bonilla was elected to the Board of Directors and the Audit Committee on March 19, 2004. Mr. Perezalonso has beenwas a member of the Audit Committee from June 2, 2002 until May 28, 2021. Mr. Perezalonso continues to serve on the Board of Directors, and ofbut he did not stand for reelection to the Audit Committee since June 2002.Committee. Mr. Enrique SanchezCastillo Sánchez Mejorada was elected to the Board of Directors on July 26, 2010. He has served on the Audit Committee since April 18, 2013.
Mr. Rafael MacGregor Anciola was elected to the Board of Directors in July 2017 and was scheduled to become the third independent member of the Audit Committee. Mr. MacGregor Anciola resigned as a member of the Board of Directors and of the Audit Committee on July 21, 2021. On July 22, 2021 the Board of Directors appointed Mr. Vicente Ariztegui Andreve to replace Mr. MacGregor Anciola on the Audit Committtee.
OnMac Gregor did not attend the one meeting he was entitled to attend prior to his resignation.
(1) reviewed and discussed the consolidated audited financial statements with management and the independent accountants; (2) discussed with the independent accountants, DTT, the matters required to be discussed under applicable standards of the Public Company Accounting Oversight Board and the SEC, as amended or supplemented from time to time; (3) received the written disclosures and the letters from DTT required by applicable requirements of the Public Company Accounting Oversight Board regarding DTT’s communications with us concerning independence, and has discussed with DTT its independence from us and our management; 12 (4) discussed with our internal and independent accountants, DTT, 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 our internal controls and the overall quality of our financial reporting; (5) recommended, based on the reviews and discussions referred to above, to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2021, for filing with the SEC; and (6) selected DTT as the Company’s independent accountants for year 2022. Such selection is submitted for ratification by you at this annual meeting.
13 PRINCIPAL ACCOUNTANT FEES AND SERVICES The following is a summary of fees we were or will be billed by DTT for professional services rendered forthe
Audit Fees Audit Fees consist of fees for professional services rendered by DTT for the audit of our financial statements and those of our subsidiaries in Mexico and Peru,as well as our subsidiary in Argentina, and of our branches in Peru and Chile, which are included in our Annual Report on Form 10-K, fees for the review of the financial statements included in our quarterly reports on Form 10-Q, and fees for services that are customarily rendered in connection with statutory and regulatory filings, including services in connection with the audit of the effectiveness of our internal control over financial reporting required by the Sarbanes-Oxley Act of 2002. For the fiscal years of Audit-Related Fees Audit-Related Fees consist of fees for assurance and related services provided by DTT, not described above under “Audit Fees,” in connection with the performance of the review and audit of the quarterly and annual financial statements of the Company, Tax Fees Tax Fees for the acquisitions and restructuring related to El Pilar project. All Other Fees In Audit Committee Pre-Approval Policies and Procedures Our management defines and communicates specific projects and categories of service for which the advance approval of the Audit Committee is requested. The Audit Committee reviews these requests and advises management if it approves the engagement of the independent accountants. On July 19, 2010, the Audit Committee decided that management could engage the services of the independent accountants for special projects in amounts up to $30,000, provided they would be approved at the next scheduled Audit Committee meeting. Management could only engage the services of the independent accountants for up to two special projects each calendar year, not exceeding $60,000. For services between $30,000 and $60,000, the services would have to be approved by the Chairman of the Audit Committee and would have to be reported to the full Audit Committee at the next scheduled Audit Committee meeting. For services in excess of $60,000, 14 COMPENSATION COMMITTEE REPORT Our Company was acquired in late 1999 by Grupo Mexico, our indirect majority stockholder, which owns88.9% of our stock as of December 31, The Compensation Committeemet two times in The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis with management of the Company. Based on said review and discussion, the Compensation Committee has recommended to our Board of Directors the inclusion of the Compensation Discussion and Analysis in the
COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis describes the compensation approach and the elements of compensation provided to our named executive officers for This Compensation Discussion and Analysis relates to and should be read together with our Summary Compensation Table, and other compensation tables, and the information on related party transactions in this proxy statement. Background and Role of Executive Officers in Determining Compensation: Our Chairman and certain of our other Named Executive Officers, including Mr. Oscar González Rocha, assist and advise the Compensation Committee with respect to the compensation of our executive officers generally. Messrs. Oscar González Rocha, our President and Chief Executive Officer, We are providing, in satisfaction of applicable rules of the SEC, information regarding compensation paid by us, or by one or more of our subsidiaries or affiliates, to our Named Executive Officers. Mr. Oscar González Rocha joined us in late 1999 after having an outstanding career at Grupo Mexico and has been receiving compensation from us since March 2000. Mr. Raúl Jacob held various positions with the Company since 1992, primarily focused in financial planning, corporate finance, and investor relations and project evaluation, before being appointed as our Comptroller on October 27, 2011 and our Vice President, Finance and Chief Financial Officer onApril 18, 2013 after resigning from the Comptroller office. 15 since April 2016. Previously she was Assistant Comptroller from April 2015 to April 2016. Ms. Vingerhoets has worked for the Company in various accounting, financial planning, finance, internal control and SEC reporting capacities since 1991. Mr. Germán Larrea Mota-Velasco, our Chairman, is an executive officer of Grupo Mexico and is compensated by Grupo Mexico. In Compensation Objectives: Our objectives in compensating our Named Executive Officers are to encourage the achievement of our business objectives and superior corporate performance by our Named Executive Officers. Our business objectives include increasing production and lowering costs in a safe environment, maintaining customer satisfaction, market leadership, and enhancing stockholder value. The principal objective of our compensation practices is to reward and retain executives with key core competency critical to our long-term management strategy. We reward results rather than on the basis of seniority, tenure or other entitlement. We believe that our executive compensation practices align compensation with our business values and strategy. What Is Our Compensation Designed to Reward? Our compensation is designed to reward our Named Executive Officers for their efforts and dedication to us and for their ability to attract, motivate, and energize a high-performance leadership team, encouraging innovation in our employees, conceptualizing key trends, evaluating strategic decisions, and continuously challenging our employees to sharpen their vision and excel in performing their duties. We also reward our Named Executive Officers for achieving the business plans that the Board of Directors has approved, for unique accomplishments and achievements, and for their leadership in managing our affairs in the locations in which we operate, mainly Peru and Mexico. Why We Choose to Compensate Our Executives? We choose to compensate our employees, including our Named Executive Officers, to grant them basic economic security at levels consistent with competitive local practices. We believe that the compensation we provide to our employees, including our Named Executive Officers, permits us to retain our highly skilled and qualified workforce. We are required to grant our employees certain elements of compensation mandated by Peruvian and Mexican law, as applicable. Peruvian and Mexican law require us to pay salaries to our employees commensurate with each employee’s job requirements and the experience and skills of every employee. The level of each salary is determined by us. We pay salaries and bonuses to reward and retain our excellent employees, including our Named Executive Officers. We also provide other Company sponsored benefits to remain competitive in the Peruvian and Mexican labor markets and to reward our employees, including our Named Executive Officers. The Peruvian five percent increase in monthly salary for each five years of service evolved as a benefit bargained by our labor unions and was later on extended to all salaried employees. The Peruvian vacation bonus and vacation travel benefits evolved from our practice of compensating expatriate employees who worked in Peru and was later extended to certain key salaried employees, including Named Executive Officers working in Peru. How Do We Determine Each Element of Compensation? The Company’s management team and Compensation Committee make the decisions to grant salary increases and bonuses for the Named Executive Officers of the Company after a thorough analysis of numerous factors, including among others, the responsibilities and performance of each Named Executive Officer measured in the areas of production, safety and environmental responsiveness (both individually and as compared to other officers of the Company). In addition, management and the Compensation Committee consider years of service, future challenges and objectives, the potential contributions of each officer to the future success of our Company, total executive compensation, and the Company’s overall financial performance. Peruvian and Mexican law requires us to pay salaries to our employees commensurate with each employee’s job requirements, experience and skills, and to share 8% of the annual pre-income 16 tax profits of our Peruvian Branch with our Peruvian employees and 10% of the annual pre-income tax profits of our Mexican operation with our Mexican employees. When we increase base salaries for our Named Executive Officers, we use a tabulation, which is revised every year to adjust for inflation in Mexico and Peru. The base salary increases take into account the individual’s position, as well as We promote our Named Executive Officers from within our organization and we hire new executives through recruiters. We also use Human Resources consultants, such as the Hay Group from time to time, which provide us with comparative salary data for the sought position extracted from their database relating to comparable companies in Mexico and Peru. The information provided from time to time by the Human Resources consultants is not customized for the Company. Although our Compensation Committee has the authority and necessary funding to engage compensation and other advisers, it has not engaged such advisers in the period 2018-2021. The salaries provided by the Human Resources consultants from their database are used by us as an indication of the market salaries prevailing in Peru and Mexico. In Peru, the consultants provide us with salaries, which they report were paid or offered to potential candidates by mining companies operating in Peru. The reports of the Human Resources consultants have included in the past salary information from Peruvian companies or Peruvian subsidiaries, such as the following: Xstrata Tintaya, S.A., Minera Yanacocha Peru, Hochschild Mining, plc, Compañía Minera Antamina, S.A., Minera Barrick Misquichilca, S.A., Minsur S.A., Gold Fields La Cima, S.A.A., and Sociedad Minera Cerro Verde, S.A.A. In Mexico, the consultants have provided us with salaries, which they reported were paid or offered to potential candidates by mining companies operating in Mexico. The reports of the Human Resources consultants have included in the past salary information from Mexican companies or Mexican subsidiaries, such as the following: Newmont Mining Corporation, Pan American Silver Corporation, Industrias Peñoles, S.A.B. de C.V., Grupo Bacis, S.A. de C.V., Mexicoro, S.A. de C.V., Minera BHP Billiton, S.A. de C.V., and Minera Phelps Dodge de Mexico S. de R.L. de C.V. The above listing is for illustration purposes only, as the list of companies used by Human Resources consultants may vary from year to year. Additionally, we have not made an independent verification of the salary information reported by the Human Resources consultants. We factor this comparative salary information into our decision making process by targeting our personnel compensation policies, including the compensation of the Named Executive Officers, generally toward the median and third quartile of market compensation. In 2021. The amount and formula applicable to the other benefits are mandated by Peruvian and Mexican law for all salaried employees. We also sponsor programs to recruit and retain qualified employees working in Peru and Mexico. Under Section 162(m) of the Internal Revenue Code of 1986, as amended, we may not deduct, with certain exceptions, compensation in excess of $1 million to the Principal Executive Officer, the Principal Financial Officer and our three other most highly compensated officers (other than the Principal Executive Officer or the Principal Financial Officer) as required to be reported in our proxy statement. We do not believe that Section 162(m) will have any immediate material impact on us because, among other things, our officers’ salaries do not enter into the calculation of US source taxable income. We will, however, continue 17 to monitor our executive compensation programs to ensure their effectiveness and efficiency in light of our needs, including Section 162(m). How Does Each Element and Our Decisions Regarding That Element Fit Into Our Overall Compensation Objectives and Affect Decisions Regarding Other Elements? We take into account each element of compensation to determine the overall compensation of our executives. It is our practice to grant relatively small salary increases commensurate with the cost of living increases in Peru and Mexico and tailor the amount of the incentive cash payments to balance the amounts of compensation mandated by Peruvian and Mexican law, principally the amounts received as profit participations. In years in which the profit participation is high, the bonus or incentive cash payment will be reduced. In years in which the profit participation is relatively modest, if our financial conditions permit, we tend to increase the amount paid in cash incentives. The payment of bonuses is discretionary and we do not necessarily pay bonuses every year. The payment of bonuses and the amount of any such bonuses depend, among other things, on our financial performance, our intensive capital investment plan, our projected future cash flow generation from operations, and our liquidity in general. We do not provide compensation tied to specific pre-determined individual or Company performance criteria or long-term incentive compensation. The discretionary cash bonus payments granted to our executives and non-executive employees are not based on pre-established performance targets or on targets that have been previously communicated to the executives or the employees. The granting of specific awards and the amount of each award are discretionary and substantially uncertain until we decide to award them. Without limiting this, from time to time, larger discretionary cash bonuses are granted to certain of our Named Executive Officers in recognition of said Named Executive Officers Disclosure on Result of the Non-Binding Advisory Vote on Executive Compensation (“Say-on-Pay”): Every year we provide our Common Stockholders with the opportunity to cast an advisory vote on executive compensation. At our annual meeting of stockholders held on Summary: Our compensation practices are designed to comply with the requirements of Peruvian and Mexican law and with our goals and objectives to retain our key executives and reward them appropriately for their positive results. We continue to monitor our compensation practices to remain competitive in the marketplace and to reward our executives for results that are consistent with the long-term interest of our Company and our stockholders. Peruvian Compensation Practices: Our Peruvian compensation practices take into account many factors, including individual performance and responsibilities, years of service, elements of compensation mandated by Peruvian law, future challenges and objectives, contributions to the future success of our Company, the executive’s total compensation, and our financial performance. We may also look at the compensation levels of comparable companies. Our Named Executive Officers in Peru, Messrs. Oscar González Rocha, Raúl Jacob, 18 working in Peru. Additionally, Grupo Mexico offers certain key employees, including our Named Executive Officers, eligibility under stock purchase plans. See the description of these plans under “Stock Purchase Plans of Grupo Mexico” below. The payment of bonuses to our Named Executive Officers is discretionary and we do not necessarily pay bonuses every year. The payment of bonuses and the amount of same depend on numerous factors including, among others, our financial performance, our intensive capital investment plan, our future cash flow generation from operations, and our liquidity in general. We do not provide compensation tied to specific pre-determined individual or Company performance criteria or long-term incentive compensation. The cash incentive payments granted to our Named Executive Officers are not based on pre-established performance targets or on targets that have been previously communicated to the executives. The granting of the award and the amount of each award are discretionary and substantially uncertain until we decide to award them. All our Peruvian employee compensation is denominated in Peruvian Soles. We convert the Peruvian Soles into U.S. dollars using the average exchange rate for the applicable period. Stock Options: We have not granted stock options or other equity incentive awards to any of our Named Executive Officers since 2000 in Peru. The Stock Incentive Plan, under which options and stock awards could have been granted, expired by its terms on January 1, 2006. Stock Purchase Plans of Grupo Mexico: Grupo Mexico offers certain eligible key employees, including our Named Executive Officers, a stock purchase plan (the “Employee Stock Purchase Plan”) through a trust that acquires shares of Grupo Mexico for future sales to our employees, and employees of our subsidiaries and certain affiliated companies. Sales are at the approximate fair market value at the date of grant. Every two years employees will be able to acquire title to 50% of the shares paid in the previous two years. The employees will pay for shares purchased through monthly payroll deductions over the eight year period of the plan. At the end of the eight year period, Grupo Mexico will grant the participant a bonus of one share for every ten shares purchased by the employee. If Grupo Mexico pays dividends on shares during the eight year period, the participant will be entitled to receive the dividend in cash for all shares that have been fully purchased and paid as of the date that the dividend is paid. If the participant has only partially paid for shares, the dividends payable with respect to the purchased shares will be used to reduce the remaining liability owed for such shares. No stock bonuses under the Employee Stock Purchase Plan were granted to our Named Executive Officers in 2021. Grupo Mexico also offers a stock purchase plan for certain members of its executive management and the executive management of its subsidiaries and certain affiliated companies (“Executive Stock Purchase Plan”). Under this plan, participants receive incentive cash bonuses that are used to purchase shares of Grupo Mexico and which are deposited in a trust. Mr. Oscar González Rocha received adiscretionary cash bonus of Pension Plan: The Company has two non-contributory defined benefit pension plans covering former salaried employees in the United States and certain former employees in Peru. Messrs. González Rocha, Jacob, Corrales and Ms. Vingerhoets are not covered by our non-contributory retirement plans. They are covered by the Peruvian private pension system (“AFP”), a mandatory pension system. As required by Peruvian law, we retain every month a percentage of their salary and deposit the amount into their individual AFP accounts. The percentage of the monthly salary retained and deposited varies each year and has ranged from 8% to 10% over the years. Employees received in 1995 a 13.53% salary increase to compensate them for the new deduction established by Peruvian law to participate in the mandatory pension system. Messrs. Jacob and Corrales and Ms. Vingerhoets received a payment of 19 2021 pursuant to the requirements of the AFP law. These payments are included in the compensation reported for Messrs. Jacob, Corrales and Ms. Vingerhoets. Severance Benefits: We do not have corporate plans providing severance benefits to our Named Executive Officers in Peru. Our Named Executive Officers only receive severance benefits provided by Peruvian law. If the employee is terminated by us and he or she has a fixed-term employment agreement, Peruvian law requires that we pay the employee’s salary for the remaining of the term of his or her employment agreement. Peruvian law also provides that if the employee has been dismissed without cause, he or she is entitled to an amount equal to one and one-half times his or her monthly salary for each year of service up to a maximum of eight years or the equivalent of twelve months of salary. Peruvian law also provides that at the termination of employment an employee will be able to withdraw the full amount of the compensation for the years of service, Expatriate Employees: Pursuant to Peruvian laws concerning expatriate employees, Mr. Oscar González Rocha entered into an employment agreement. The employment agreement is in effect for a term of one year and may be extended for additional periods. In accordance with the terms of the employment agreement, the Company has agreed to provide Mr. Oscar González Rocha (and any other expatriate employees) with benefits as required by Peruvian law. Under the employment agreement, Mr. Oscar González Rocha may resign at any time by providing us with 30 Discretionary Cash Compensation: (a) Base Salary: Messrs. González Rocha, Jacob, None of the Peruvian Named Executive Officers received salary increases in (b) Bonus: Mr. Oscar González Rochareceived a discretionary cash bonus of 20 Peruvian Mandated Cash Compensation: (a) Profit Sharing in the Profits of Our Peruvian Branch: Peruvian law requires that we, as well as all other mining companies in Peru, share 8% of the annual pre-income tax profits of our Branch with all our workers (salaried and non-salaried). This benefit is payable in cash to each employee in an amount not to exceed 18 times his or her monthly salary. The excess is paid to a Peruvian pro-employment fund and to the regional governments where we operate, that is to say, the regional governments of Lima, Arequipa, Moquegua, and Tacna in Peru. Messrs. González Rocha, Jacob, (b) Peruvian Legal Holiday and Other Bonuses: Peruvian law also requires payment each year of one month’s salary to each employee as a bonus for Peruvian Independence holidays and Christmas. Peruvian law requires the payment ofsix days’ salary to every employee, including Messrs. González Rocha, Jacob, Corrales and Ms. Vingerhoets, every year in which May 1 falls on a Sunday or five days’ salary if it falls on a weekday (“Labor Day Bonus”). Peruvian law also requires the payment of a bonus to each salaried and non-salaried employee, including Messrs. González Rocha, Jacob, Corrales and Ms. Vingerhoets for the celebration of In (c) Termination of Employment Compensation or CTS: Additionally, as compensation for years of service or CTS, Peruvian law requires a deposit of one twelfth of an employee’s annual salary, vacation, travel, Independence holidays, Christmas, dependents and service award bonus, each year, for each employee (whether Peruvian or expatriate) working in Peru, as applicable. This amount is deposited in a local bank of the employee’s choosing, in an individual account, which accrues interest paid by said bank. For all legal purposes, the chosen bank acts as trustee of the deposited amounts. The CTS funds can only be fully withdrawn when the employee terminates employment. In (d) Peruvian Mandated Company Housing: Peruvian mining law requires that we provide residences at our operations in Toquepala, Cuajone, and Ilo for all our salaried and non-salaried employees, including for Mr. (e) Peruvian Mandated Family Assistance: Peruvian law requires that we provide family assistance, which consists of 10% of the legal minimum salary, to all our salaried and non-salaried employees, including Messrs. González Rocha, 21 Cash Compensation under Company Sponsored Programs: (a) Vacation Compensation: We provide vacation bonuses for all our salaried employees and payment for vacation travel to all our key salaried employees. Mr. González Rocha’s vacation bonus and travel in (b) Five Percent Benefit or “Quinquenio”: We also provide voluntarily to all salaried employees and to non-salaried employees under agreement with our local labor unions, a benefit consisting of five percent of the monthly salary for each period of five years of service. We call this benefit, colloquially in Peru, the “quinquenio.” In (c) Other Company Sponsored Programs: We provide asmall family assistance subsidy mandated by Peruvian law to expatriate employees and certain executives. In Other Benefits: (a) Company Housing, We provide a corporate residence in Lima, which Mr. Oscar González Rocha uses when he conducts business activities at our Lima headquarters, (b) Company Provided Car and Driver: Messrs. González Rocha, Jacob, (c) Tax Gross-Up: We provide certain key employees a cash benefit as reimbursement for the payment of taxes on compensation received under the Stock Purchase Plans of Grupo Mexico. In (d)Affiliate Messrs. González Rocha, 22 Mexican Compensation Practices: Our Mexican compensation practices also take into account many factors, including individual performance and responsibilities, years of service, elements of compensation mandated by Mexican law, future challenges and objectives, contributions to the future success of our Company, the executive total compensation, and our financial performance. We may also look at the compensation levels of comparable companies, as described above. Our Named Executive The payment of bonuses to our Named Executive Officers is discretionary and we do not necessarily pay bonuses every year. The payment of bonuses and the amount of the same dependon numerous factors, including, among others, our financial performance, our intensive capital investment plan, our future cash flow generation from operations, and our liquidity in general. We do not provide compensation tied to specific pre-determined individual or Company performance criteria or long-term incentive compensation. The cash incentive payments granted to or Named Executive Officers are not based on pre-established performance targets or targets that have been previously communicated to the executives. The granting of the award and the amount of each award are discretionary and substantially uncertain until we decide to award them. All our Mexican employee compensation is denominated in Mexican Pesos. We convert the Mexican Pesos into U.S. dollars using the average exchange rate for the applicable period. Stock Options: We have not granted stock options or other equity incentive awards to any of our Named Executive Officers since 2000 in Mexico. The Stock Incentive Plan, under which options and stock awards could have been granted, expired by its terms on January 1, 2006. Stock Purchase Plans of Grupo Mexico: Grupo Mexico offers certain eligible key employees, including our Named Executive Officers, the Employee Stock Purchase Plan through a trust that acquires shares of Grupo Mexico for future sales to our employees, and employees of our subsidiaries and certain affiliated companies. Sales are at the approximate fair market value on the date of grant. 2021. Under the Executive Stock Purchase Plan, participants receive incentive cash bonuses which are used to purchase shares of Grupo Mexico and which are deposited in a trust. 2021. Pension Plan: Retirement benefits of our employees in Mexico are covered by the Mexican social security system mandated by Mexican law. In addition, certain of our Mexican subsidiaries participate in a defined contribution pension plan, which complements the retirement benefits granted under the Mexican social security system. 23 Under the Mexican pension plan, non-union employees of Minera México, S.A. de C.V., and participating subsidiaries who have completed ten continuous years of employment with the participating subsidiary, including Employees contribute 3% of their monthly base salary to the plan and the employer matches the employees’ contributions with an additional 3%. The funds are then invested in treasury or in marketable securities. The fiduciary of such investment funds is an institution authorized by the Mexican government. The plan is administered by a technical committeecomposed of at least three unpaid individuals (who may be employees of the participating companies), which are appointed by the Company. The plan may be amended or terminated at any time at the Company’s discretion, but such amendment or termination must preserve acquired rights of the employees. Regardless of the manner in which an employee’s employment is terminated, he/she is entitled to receive his/her employee contributions and any amounts earned during his/her term of employment. Any severance benefits received by the terminated employee will be deducted from any employer contribution to be received under the plan. In the event of the retirement of an employee, he/she is entitled to receive amounts accrued under the plan. Severance Benefits: We do not have corporate plans providing severance benefits to our Named Executive Officers in Mexico. Our Named Executive Officers only receive severance benefits provided by Mexican law or negotiated by us when we undertake workforce reductions at our operations. Our Named Executive Officers in Mexico do not have change of control or employment agreements. Discretionary Cash Compensation: (a) Base Salary:
Mr. Lazalde received (b) Bonus:
Mr. Lazalde did not receive a discretionary cash Mexican Mandated Cash Compensation: (a) Profit Sharing in the Profits of Our Mexican Operations: Mexican law requires us, as well as all other mining companies in Mexico, to share 10% of the annual pre-tax profits of our operations with all our workers (salaried and non-salaried). This benefit is payable in cash to each employee. Mr. (b) MexicanChristmas Bonus: Mexican law also requires payment each year of at least 15 days salary to each employee, with at least one completed year of service, as a bonus for Christmas. We give our employees in Mexico one month’s salary as Christmas bonus. Mr. Lazalde received 24 (c) Vacation Compensation: We provide vacation bonuses for all our salaried employees, with at least one completed year of service, including our Named Executive Officers in Mexico, as required by Mexican law. This vacation bonus consists of at least 25% of the salary earned during the vacation Cash Compensation under Company Sponsored Programs: (a) Mexican Pension Plan: We offer our employees of Minera Mexico, S.A. de C.V. and participating subsidiaries the possibility of joining a defined contribution pension plan. (b) Mexican Savings Plan: We offer our employees the possibility of saving up to 13% of their salaries and we match this amount with our own contributions (but never in excess of ten times the minimum monthly salary). These amounts are invested by us in marketable securities. Amounts can be withdrawn at any time with proper notice after ceasing participation in the plan. OtherCompany Provided Benefits: Mr. Lazalde receive minor contributions for medical insurance benefits and food vouchers. (b) Company Provided Car and Driver: Mr. Lazalde and other key salaried employees are provided with a Company car and a driver. (c) Corporate Secretary Fees: Mr. Lazalde received $32,000 in fees as our corporate Secretary in
EXECUTIVE COMPENSATION Set forth below is certain information concerning the compensation earned by, awarded to, paid by us, or by one or more of our subsidiaries or affiliates, to Messrs. González Rocha, Jacob, Corrales, Lazalde and to Ms. Vingerhoets for services rendered in all capacities to us for the fiscal years ended December 31,
Summary Compensation Table(a) Gross Annual Compensation
(i) Cash Compensation Mandated by Peruvian Law: • $431,599 in 2021 as profit sharing in the profits of our Peruvian Branch; • $98,216 in 2021 as Peruvian legal holiday, Labor Day and Miners’ bonuses; • $52,118 in 2021 as termination of employment or CTS; and • $287 in 2021 Family Assistance (ii) Cash Compensation Under Company Sponsored Programs: • $35,117 as a vacation bonus and travel in 2021; • $84,281 in 2021 as five percent benefit or Quinquenio; and • 2021 Compensation under other Company sponsored programs. 26 (iii) Other Benefits: • $36,000 for the use of our corporate Lima residence and $17,346 for payment of medical benefits and a business club membership in 2021; and • $79,687 in 2021 as a tax gross-up payment. (iv) Affiliate • $20,000 in 2021 as director’s fees for services in Coimolache. The Company has a 44.2% participation in Coimolache. All Other Compensation for Mr. Raúl Jacob consists mainly of: (i) Cash Compensation Mandated by Peruvian Law: • $164,260 in 2021 as profit sharing in the profits of our Peruvian Branch; • $35,592 in 2021 as Peruvian legal holiday, Labor Day and Miners’ bonuses; • $19,034 in 2021 as termination of employment or CTS; and • Family Assistance (ii) Cash Compensation Under Company Sponsored Programs: • $12,675 in 2021 as vacation bonus and travel; • $33,801 in 2021 as five percent benefit or Quinquenio; and • 2021 Compensation under other Company sponsored programs. (iii) Affiliate • $20,000 in 2021 as director’s fees for services in Coimolache. The Company has a 44.2% participation in Coimolache. All Other Compensation for Mr. (i) Cash Compensation Mandated by Peruvian Law: • $150,189 in 2021 as profit sharing in the profits of our Peruvian Branch; • $30,492 in 2021 as Peruvian legal holiday, Labor Day and Miners’ bonuses; • $17,480 in 2021 as termination of employment or CTS; and • 2021 Family Assistance (ii) Cash Compensation Under Company Sponsored Programs: • $11,592 in 2021 as vacation bonus and travel; • $40,564 in 2021 as five percent benefit or Quinquenio; and • 2021 Compensation under other Company sponsored programs. (iii) Affiliate Director’s Fees: • $20,000 in 2021 as director’s fees for services in Coimolache. The Company has a 44.2% participation in Coimolache. All Other Compensation for Mr. Jorge Lazalde consists mainly of: (i) Cash Compensation Mandated by Mexican Law: • Mexican Christmas bonus of $15,827 in 2021; 27 • Mexican vacation bonus of $15,827 in 2021; and • $5,675 Compensation in 2021 as profit participation. (ii) Cash Compensation Under Company Sponsored Programs: • 2021 contributions under our Mexican pension and health plans; • 2021 contributions under our Mexican savings plan; and • 2021 Compensation under other Company programs, consisting of food vouchers. (iii) Attendance Fees as Corporate Secretary: • $32,000 in fees as our corporate Secretary in 2021. All Other Compensation for (i) Cash Compensation Mandated by Peruvian Law: • $113,632 in 2021 as profit sharing in the profits of our Peruvian Branch; • $22,489 in 2021 as Peruvian legal holiday, Labor Day and Miners’ bonuses; • $11,589 in 2021 as termination of employment or CTS. (ii) Cash Compensation Under Company Sponsored Programs: Vacation bonus and travel compensation in 2021; $25,432 in 2021 as five percent benefit or Quinquenio; and • 2021 Compensation
Outstanding Equity Awards at Fiscal Year-End No options to purchase shares in the Company or other equity incentive awards have been granted since 2000. No options, equity awards or equity-based awards were outstanding at December 31, Option Exercises and Stock Vested at Fiscal Year-End No options were exercised since 2000. No stock award vested as of December 31, 2021. Retirement Plans See descriptions above under “Pension Plans.” Severance Benefits As described above in the Compensation Discussion and Analysis, we provide severance benefits as required by Peruvian and Mexican law, as applicable. 28 HEDGING POLICY On March 8, 2019, the SEC adopted final rules that require companies to disclose any practices or policies regarding the ability of employees and directors to engage in certain hedging transactions with respect to the Company’s securities. The SEC rules do not require companies to adopt new hedging policies or amend previously approved hedging policies. The Securities Law Compliance Policy of the Company, approved by the Board of Directors on April 23, 2009, provides the following hedging policy: Hedging
Certain forms of hedging or monetization transactions (such as zero-cost collars) are complex transactions that can present unique insider trading risks. Therefore, the Company strongly discourages board members, officers, employees, and agents covered by this Policy from engaging in such transactions. Any such person wishing to enter into such an arrangement must first pre-clear the proposed transaction with the General Counsel, Secretary or Assistant Secretary of SCC, and it is strongly recommended that such person consult with his or her broker/financial advisor and tax advisor. Any request for pre-clearance of a hedging or similar arrangement must be submitted to the General Counsel, Secretary or Assistant Secretary of SCC at least two weeks prior to the proposed execution of documents evidencing the proposed transaction and must set forth a justification for the proposed transaction. PAY RATIO DISCLOSURE As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has adopted a rule requiring us to disclose a ratio of total annual compensation of ourCEO to total annual compensation of our median employee. Based on the methodology described below, the compensation of our median employee in 30.8. We used our entire global employee population, other than the CEO, as of a determination date of December 31, Our pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. Because the SEC rules allow for different methodologies for determining the ratio, and because work force demographic can vary across companies, the estimated ratio should not be compared against other publicly-traded companies. There have been no changes that we reasonably believe would significantly affect the pay ratio disclosure set forth herein. COMPENSATION POLICIES AND PRACTICES AND RISK Our Peruvian and Mexican executive officers and non-executive employees receive cash-based compensation, which is currently paid. The cash-based compensation has two principal components: base salary and bonus, which are discretionary, and compensation mandated by Peruvian and Mexican law. We also sponsor programs to recruit and retain qualified employees working in Peru and Mexico. The payment of bonuses is discretionary and we do not necessarily pay bonuses every year. The payment of bonuses and the amount of the same depend, among other things, on our financial performance, our intensive capital investment plan, our future cash flow generation from operations, and our liquidity in general. We do not provide compensation tied to specific pre-determined individual or Company performance criteria or long-term incentive compensation. The cash incentive payments granted to our executives and non-executive employees are not based on pre-established performance targets or on targets that have been 29 previously communicated to the executives or the employees. The granting of specific awards and the amount of each award are discretionary and substantially uncertain until we decide to award them. The decisions to grant salary increases and bonuses for theNamed Executive Officers of the Company and for non-executive employees are made by our management team and our Compensation Committee after a thorough analysis of numerous factors, including among others, the responsibilities and performance of each Named Executive Officer or employee measured in the areas of production, expansions and project developments, safety and environmental responsiveness (both individually and as compared to other officers or employees of the Company). It is our practice to grant relatively small salary increases to our Named Executive Officers commensurate with the cost of living increases in Peru and Mexico and tailor the amount of the incentive cash payments to balance the amounts of compensation mandated by Peruvian and Mexican law, principally the amounts received by the Named Executive Officers as profit participations. Generally, in years in which the profit participation amounts paid to Named Executive Officers are high, the bonus or incentive cash payments will be lower than in years in which the profit participation amounts are relatively modest. In such years, where the profit participation amounts are modest, if our financial conditions permit, we tend to increase the amount paid in cash incentives. Without limiting this, from time to time larger discretionary cash bonuses are granted to our Named Executive Officers in recognition of a particular Named Executive Officer’s performance during the year and to reward him for his leadership, vision and focus. The Company’s compensation policies or practices do not vary significantly from the Company’s overall risk and reward structure, inasmuch as we do not offer performance-based bonuses or incentive awards which occur significantly before receipt of anticipated income or expiration of associated risk to the Company. We do not have business units that account for a significant portion of the Company’s risk profile or compensation policies and practices that vary for a particular business unit. We continuously monitor our compensation policies and practices to avoid risk-taking by executive and non-executive employees to increase their compensation. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Messrs. Germán Larrea Mota-Velasco, Oscar González Rocha, Xavier García de Quevedo Topete, and NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION The Dodd-Frank Act and Section 14A of the Securities Exchange Act of 1934, as amended, require that the Company’s stockholders be given the opportunity to cast a non-binding advisory vote regarding the approval of the compensation disclosed in this proxy statement of the Company’s Named Executive Officers in the Summary Compensation Table. The Compensation Discussion and Analysis begins at page The proposal for a non-binding advisory vote on executive compensation provides stockholders with the opportunity to endorse or not endorse the Company’s executive compensation program through the following resolution: “RESOLVED,that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” 30 Because this is an advisory vote, it will not be binding upon the Company, its Board of Directors, or its Compensation Committee. However, the Company, its Board of Directors, and its Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements to the extent they can determine the cause or causes of any significant negative voting results. The affirmative vote of a majority of the votes cast in person or by proxy or by any permissible means of remote communication, including electronic transmission or telephonic means at the meeting by the holders of shares of Common Stock entitled to vote thereon is required for the non-binding advisory vote on executive compensation described in this proxy statement. Abstentions and broker non-votes are counted for quorum purposes. Abstentions The Board of Directors recommends that stockholders vote FOR approval of this resolution. RELATED PARTY TRANSACTIONS In Grupo Mexico, our ultimate parent and our majority indirect stockholder, and its affiliates, provide various services to us directly or indirectly through subsidiaries. In In
December 2020. In 2012, the Company signed a power purchase agreement with MGE, whereby MGE will supply some of the Company’s Mexican operations with power through 2032. MGE has two natural gas-fired combined cycle power generating units, with a net total capacity of 516.2 megawatts, and has been supplying power to us since December 2013. Currently, MGE In 2014, Mexico Generadora de Energia Eolica S. de R.L. de C.V, an indirect subsidiary of Grupo Mexico, located in IMMSA and Mexcobre, both subsidiaries of the Company in 2021. Our Mexican operations purchased power from Eolica for $9.3 million in 2021. In 31 In 2021, the Company’s Mexican operations purchased LLC. In September 2019, Asarco LLC signed a promissory note to pay to the In 2021, 2020 and
The Larrea family controls a majority of the capital stock of Grupo Mexico, and has extensive interests in other businesses, includingtransportation, aviation, entertainment and real estate. In
In
The Company has a 44.2% participation in Compañia Minera Coimolache S.A. (“Coimolache”), which it accounts for on the equity method. Coimolache owns Tantahuatay, a gold mine located in the northern part of Peru. Messrs. Gonzalez Rocha, Jacob and Corrales are directors of Coimolache. In addition, the Company has a 30.0% participation in Apu Coropuna S.R.L. (“Apu Coropuna”), which it accounts for on the equity method. Apu Coropuna is a company, which undertakes exploration activities in the Pucay prospect, located in Arequipa, Peru. Mr. Edgard Corrales is a member of the Management Committee of Apu Coropuna. Asarco LLC, It is anticipated that in the future we will enter into similar transactions with such parties.
32 transactions. Related parties were those defined as such by the SEC. We are required to report all related party transactions in our filings with the SEC and as required by accounting requirements. Article Nine of During Additionally,during During (1) whether there is a valid business reason for us to enter into the related party transaction consistent with the best interests of the Company and our stockholders; (2) whether the transaction is negotiated on an arm’s length basis on terms comparable to those provided to unrelated third parties or on terms comparable to those provided to employees generally; (3) whether the Audit Committee determines that it has been duly apprised of all significant conflicts that may exist or may otherwise arise on account of the transaction, and it believes, nonetheless, that we are warranted in entering into the related party transaction and have developed an appropriate plan to manage the potential conflicts of interest; (4) whether the rates or charges involved in the transaction are determined by competitive bids, or the transaction involves the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; (5) whether the transaction involves services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services; and/or (6) whether the interest of the related party or that of a member of the immediate family of the related party arises solely from the ownership of our class of equity securities and all holders of that class of our equity securities received the same benefit on a pro rata basis. During During the second half of 2019, at the direction of the Audit Committee and with the input of the subcommittee of related party transactions, management undertook to revise our internal policies and procedures to establish channels of reporting and review and approval requirements for related party transactions. This revised policy was developed to complement our existing practices covering related party transactions, including the Audit Committee’s policy described above. While the revised policy addressed 33 the subject of related party transactions and the potential conflict of interest they present generally, a particular focus of the revised policy is to assist our employee base to identify potential transactions described by Article Nine of our Certificate as early as possible and establish a chain of internal reporting to help ensure that we do not engage in any Material Affiliate Transaction (as defined in Article Nine of our Certificate) unless that transaction has been the subject of prior review by a committee of three independent members of our board of directors. This revised policy was approved by our Board of Directors at its meeting of February 20, 2020. As an example of the revised policy’s enhanced control functions, related party transactions with consideration between $8,000,000 and $10,000,000 are to be pre-approved by our General Counsel and Chief Financial Officer. If the General Counsel and Chief Financial Officer have any questions about the consideration amount, they may refer a proposed related party transaction to the committee of three independent directors for consideration. “CONTROLLED COMPANY” EXCEPTIONTO NYSE RULES A company of which more than 50% of the voting power for the election of directors is held by a single entity, a “controlled company,” is not required to comply with the requirements of the NYSE corporate governance rules requiring a majority of independent directors and independent compensation and nominating/corporate governance committees. We are a controlled company as defined by the rules of the NYSE. Grupo Mexico owns indirectly CORPORATE GOVERNANCE Corporate Governance Guidelines, Committee Charters and Code of Ethics We have adopted Corporate Governance Guidelines for the Board of Directors and charters for the Audit, Special Nominating, Corporate Governance and Disclosure, and Compensation Committees. We also have in place a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, comptroller, all other officers, directors and our employees, including the persons performing accounting or financial functions. The Corporate Governance Guidelines, Code of Business Conduct and Ethics, and Committee charters, may be accessed free of charge by visiting our web site atwww.southerncoppercorp.com. We intend to report any amendments to, or waiver from, a provision of the Code of Business Conduct and Ethics that applies to the principal executive officer, principal financial officer, principal accounting officer, comptroller, director, Board Leadership Structure The Board of Directors believes that the Company is best served by separating the positions of Chairman and Chief Executive Officer. Mr. Germán Larrea Mota-Velasco is the Chairman of our Board of Directors and Mr. Oscar González Rocha, the President of the Company, is our Chief Executive Officer. This structure providestwo leaders for the Company and results in a more effective organization. We believe our current Board leadership structure is optimal for us because it demonstrates to our employees, suppliers, customers, and other stakeholders that the Company is under strong leadership with two persons setting the tone and having responsibility for managing our operations. 34 Risk Oversight Process Executivemanagement of the Company, with the assistance of internal audit and other management committees and key personnel reviews periodically the Company’s risk management process, including operational, legal, financial, governmental, environmental, corporate governance, credit, cybersecurity, and liquidity risk matters. Additionally, executive management reports to the Audit Committee significant risk findings and the Audit Committee then reports It is the competence of the Audit Committee to review and discuss withexecutive management the Company’s guidelines and policies with respect to the process by which the Company undertakes risk assessment and risk management, including discussion of the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. Additionally, the Board’s Corporate Governance and Disclosure Committee’s duties include overseeing and reviewing periodically with the Chief Executive Officer, the Chief Financial Officer, the proper officers, employees, and committees of the Company, the internal and external auditors, and the Audit Committee the effectiveness of the Company’s disclosure controls and procedures, internal controls, and risk assessments, and the quality and adequacy of the disclosures that the Company makes in the periodic reports it files with the SEC. We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing the Company and that our Board leadership structure supports this approach. Executive Session of Non-Management Directors In accordance with Section 303A.03 of the corporate governance rules of the NYSE, an executive session of non-management directors is scheduled on the occasion of each of our regularly scheduled Board of Directors meetings. Only independent directors attend the executive sessions of non-management directors. For such purpose, our Chairman invites the non-management directors to hold the executive session and all other members are asked to leave the boardroom. The non-management directors decide on each occasion if there are matters that warrant holding the executive session and the directors designate for each session, the director who will preside at each executive session. This policy is disclosed in Section 5.4 of our Corporate Governance Guidelines posted on the Company’s web site at www.southerncoppercorp.com. Corporate Governance and Disclosure Committee The primary functions of the Corporate Governance and Disclosure Committee are (a) to consider and make recommendations to the Company’s Board of Directors concerning the appropriate function and needs of the Board, (b) to develop and recommend to the Board of Directors corporate governance principles, (c) to oversee evaluation of the Board of Directors and management, and (d) to oversee and review compliance with the disclosure and reporting standards of the Company that require full, fair, accurate, timely, and understandable disclosure of material information regarding the Company in reports and documents that it files with the SEC, the NYSE and equivalent authorities in the countries in which the Company operates, as well as in other public communications that it regularly makes. The Chief Executive Officer, the Chief Financial Officer, the Comptroller, the Treasurer, and the persons performing accounting or financial functions are responsible to ensure compliance with these standards. Additionally, the Chief Executive Officer and the Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting. It is also the purpose of the Corporate Governance and Disclosure Committee to assist the Audit Committee in the performance of its responsibilities. Because we are a controlled company as defined by the NYSE we do not have a Corporate Governance and Disclosure Committee comprised entirely of independent directors. 2021. The Corporate Governance and Disclosure Committee has the authority to delegate any of its authority to subcommittees designated by the Corporate Governance and Disclosure Committee, to the extent permitted by law. The Corporate Governance and Disclosure Committee has the authority to delegate its authority to one or more members of the Committee with the requirement that such member or 35 members present any decisions made pursuant to such delegated authority to the full Corporate Governance and Disclosure Committee at its next meeting. The Committee has the sole authority to retain and terminate any counsel or other advisors, including sole authority to approve the fees and other retention terms. Special Independent Directors/Special Nominating Committee The Special Nominating Committee functions as a special committee to nominate special independent directors to the Board of Directors. The Company does not have any other nominating committee. Pursuant to our Certificate, a special independent director is any director who (i) satisfies the independence requirements of the NYSE Listed Company Manual (or any other exchange or association on which the Common Stock is listed) and (ii) is nominated by the Special Nominating Committee. The Special Nominating Committee has the right to nominate a number of special independent directors based on the percentage of our Common Stock owned by all holders of our Common Stock, other than Grupo Mexico and its affiliates. The Special Nominating Committee consists of three directors, Our Certificate provides that theminimum number of special independent directors on the Board of Directors at any given time shall be equal to (a) the total number of directors on the Board of Directors multiplied by (b) the percentage of Common Stock owned by all of the stockholders (other than Grupo Mexico and its affiliates), rounded up to the next whole number. Notwithstanding the foregoing, the total number of persons nominated as special independent directors cannot be less than two or greater than six. The Special Nominating Committee has nominated Messrs. Luis Miguel Palomino Bonilla, Gilberto Perezalonso Cifuentes, and Carlos Ruiz Sacristán as special independent directors. Messrs. Vicente Ariztegui Andreve and Enrique Castillo Sánchez Mejorada The Special Nominating Committeemet The Special Nominating Committee’s Charter sets forth that it shall have the authority to: • consider and recruit candidates to fill the positions on the Board of Directors allocated to special independent directors taking into account the Board’s current composition and core competencies and the needs of the Board of Directors as a whole; 36 • apply criteria for Board membership that require special independent directors to satisfy the independence requirements, possess financial and business competency, high ethical standards and integrity, intelligence and judgment, sufficient time to devote to our matters, and a history of achievement; • review and consider candidates from all sources; • conduct appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates; • recommend the special independent director nominees for approval by the Board of Directors and you; • fill any vacancy created by the removal, resignation or retirement from the Board of Directors of any special independent director; and • evaluate annually the Committee’s own performance and the adequacy of the charter, and report on the same to the Board of Directors The Committee has the authority to delegate any of its authority to subcommittees designated by the Committee, to the extent permitted by law. However, the Committee has the sole authority to retain and terminate any advisor, including counsel and any search firm used to identify special independent director candidates, and to approve the fees and other retention terms of said advisors. 37 COMPENSATION OF DIRECTORS
The dollar value reported is based on the closing stock price of a share of SCC’s common stock on the NYSE on the $64.45. (b) The dollar value reported is based on the closing stock price of a share of SCC’s common stock on the NYSE on the November 4, 2021 grant date, which was $58.93. Each non-employee director receives compensation in the amount of $20,000 per year and We have a Directors’ Stock Award Planwhich entitles directors who are not compensated as our employees to an award of 1,600 shares of Common Stock upon election to the Board of Directors and 1,600 additional shares of Common Stock The information set forth below reflects the shares of our Common Stock granted under the Directors’ Stock Award Plan outstanding and held by each of the directors as of Southern Copper Corporation
38 ATTENDANCE OF DIRECTORS The Board of Directors met four times at its regularly scheduled meetings in meetings. During . We do not have a policy requiring attendance by directors at the annual meeting of stockholders. Mr. Oscar González Rocha, our Chief Executive Officer, chaired the COMMUNICATIONS WITH DIRECTORS You or other interested persons wishing to write to our Board of Directors or a specified director or committee of the Board, including our non-management directors or independent directors, should send correspondence to our Secretary or Assistant Secretary at Southern Copper Corporation, 1440 E. Missouri Avenue, Suite 160, Phoenix, AZ 85014, or at Southern Copper Corporation, Av.Caminos del Inca 171, Chacarilla del Estanque, Santiago de Surco, C.P. 15038, Peru, or at Southern Copper Corporation, Edificio Parque Reforma, Campos Eliseos No. 400, 12th Floor, Col. Lomas de Chapultepec, Delegacion Miguel Hidalgo, Mexico City, C.P. 11000, Mexico. All communications so received from you or other interested parties will be forwarded to the Board of Directors, or to a specific Board member or committee if so designated by such person. Anyone who wishes to communicate with a specific Board member or committee should send instructions asking that the material be forwarded to the director or to the appropriate committee chairman. When reporting a concern, please supply sufficient information so that the matter may be addressed properly. This process will assist the Board of Directors in reviewing and responding to communications in an appropriate manner. The Board of Directors has instructed our Corporate Secretary or Assistant Secretary to review such correspondence and, at his discretion, to not forward items he deems to be commercial or frivolous in nature, or otherwise inappropriate for the Board’s consideration. DELINQUENT SECTION 16 (a) REPORTS Based on our records and other information, we believe that all filing requirements of the SEC applicable to our executive officers, directors, and owners of more than ten percent of our Common Stock were complied with in
APPROVAL OF MANAGEMENT PROPOSALS BY STOCKHOLDERS The Board of Directors recommends that you vote FOR the following proposals: PROPOSAL TO ELECT NINE DIRECTORS The Board of Directors recommends that you vote in favor of the election of Messrs. Vicente Ariztegui Andreve, A plurality of the votes cast by you is required for the election of the 39 nominees at the annual meeting on PROPOSAL TO AMEND AND EXTEND THE TERM OF THE DIRECTORS’ STOCK AWARD PLAN FOR FIVE YEARS The Company has a stockholder approved plan, the Directors’ Stock Award Plan (“Plan”), attached hereto as Exhibit A, which provides that directors who are not compensated as employees of the Company will be automatically awarded 1,200 shares of common stock upon election and 1,200 additional shares following each annual meeting of stockholders thereafter. Under the Plan, 600,000 shares have been reserved for awards. At December 31, 2021, 405,200 shares had been awarded under the Plan, leaving 194,800 shares available for use after such date. The Plan expired by its terms on January 31, 2016. On January 28, 2016, the Board of Directors approved, subject to stockholder approval, a one-year extension of the Plan. On January 26, 2017 the Board approved a further extension of the Plan for one year. The Plan extensions were approved at the Annual Meetings of Stockholders of 2016 and 2017, respectively. On January 25, 2018, the Board approved a further extension of the Plan for five years and an amendment to the Plan to increase the number of shares to be granted to the non-employee directors from 1,200 to 1,600. At the 2018 Annual Meeting of Stockholders the amendments to increase the award amount from 1,200 to 1,600 and the five-year extension of the Plan until January 28, 2023 were approved. On April 22, 2021, the Board amended the Directors’ compensation so that commencing with the second quarter 2021, Eligible Directors are entitled to receive 400 Shares quarterly, conditioned upon the attendance of each director to each quarterly Board meeting. On January 27, 2022, the Board of Directors approved, subject to stockholder approval, a further five-year extension of the Plan. The stockholders are requested to approve a five-year extension of the Plan until January 27, 2028. The following is a description of the amended Plan, a copy of which is attached as Exhibit A to this proxy statement. It is anticipated that the five-year extension of the Plan will permit the Company to review and address the compensation of Directors to relate it more closely to the interests of the shareholders of the Company. Purpose The purposes of the Plan are (a) to attract and retain highly qualified individuals to serve as members of the Board of the Company, (b) to increase the stock ownership in the Company of members of the Board who are not compensated as employees and (c) to relate the compensation of members of the Board who are not compensated as employees more closely to the Company’s performance and its shareholders’ interest by granting such directors shares of common stock, par value $0.01 per share, of the Company (the “Shares”). Administration The Plan is administered by the Board. Subject to the provisions of the Plan, the Board is authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan and to make all other determinations necessary or advisable for the administration of the Plan; provided, however, that the Board does not have discretion with respect to the selection of directors to receive awards of Shares or the number of Shares to be awarded. The determinations of the Board in the administration of the Plan, as described herein, are to be final and conclusive. The Secretary of the Company is authorized to implement the Plan in accordance with its terms and to take such actions of a ministerial nature as necessary to effectuate the intent and purposes thereof. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware. Eligibility The class of individuals eligible to receive awards of Shares under the Plan shall be directors of the Company who are not compensated as employees of the Company (“Eligible Directors”), of which there currently are nine. Any recipient of an award granted under the Plan is referred to as a “Participant.” Employees are not eligible to receive awards under the Plan. 40 Once elected at the 2022 annual meeting of stockholders, Germán Larrea Mota-Velasco, Vicente Ariztegui Andreve, Enrique Castillo Sánchez Mejorada, Leonardo Contreras Lerdo de Tejada, Xavier García de Quevedo Topete, Luis Miguel Palomino Bonilla, Gilberto Perezalonso Cifuentes and Carlos Ruiz Sacristán will be Eligible Directors. Shares Subject to the Plan Subject to adjustment as provided in Section 6, an aggregate of 194,800 Shares will be available for awards under the Plan. The Shares may be made available from authorized but unissued Shares or treasury shares. If any stock awards under the Plan shall be foregone or returned to the Company for any reason, the Shares subject to such award shall again be available for awards. Grant, Stock Awards (a) Upon first election to the Board after September 1, 1995, each newly elected Eligible Director will be granted 1,600 Shares. (b) Eligible Directors will be entitled to receive a total of 1,600 Shares annually, paid 400 shares per quarter, contingent upon the attendance by each Director to each quarterly Board meeting. (c) An Eligible Director may forego any grant of Shares by giving irrevocable written notice to such effect to the Secretary of the Company six months in advance of such grant. Adjustment of and Changes in Shares In the event of a stock split, stock dividend, extraordinary dividend, subdivision or combination of the Shares or other change in corporate structure affecting the Shares, the number of Shares authorized by the Plan and the number of Shares to be granted under Section 5 shall be appropriately and equitably adjusted. Withholding of Taxes and Other Laws The Company shall be authorized to withhold from any payment due under this Plan the amount of withholding taxes, if any, due in respect of an award hereunder, unless other provisions satisfactory to the Company shall have been made for the payment of such taxes. The Board may refuse to issue or transfer any Shares if, acting in its sole discretion, it determines that the issuance or transfer of such Shares might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Securities Exchange Act of 1934, as amended. Without limiting the generality of the foregoing, no award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Board in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws. Effective Date and Duration of Plan The Plan became effective on January 1, 1996 on the effective date of the exchange of the Company’s shares for certain labor shares of the Peruvian Branch of Southern Peru Limited (the “Exchange Offer”), subject to the completion of such Exchange Offer. The Plan terminated by its terms on January 31, 2016. On January 28, 2016, the Board approved, subject to stockholder approval, a one-year extension of the Plan, until January 30, 2017. On January 26, 2017 the Board approved, subject to stockholder approval, a one-year extension of the Plan until January 29, 2018. On January 25, 2018, the Board approved a further five-year extension of the Plan until January 28, 2023. On January 27, 2022, the Board of Directors approved, subject to stockholder approval, a further five-year extension of the Plan until January 27, 2028. The Board recommends that the stockholders approve a five-year extension of the Plan until January 27, 2028. Federal Income Tax Consequences Directors will realize income with respect to an award under the Plan at the time of grant based on the grant-date value of the shares. 41 Accounting Treatment The Company accounts for stock-based awards issued to directors as compensation for their attendance at directors meetings. Compensation cost is determined based on the fair value of the awards that the Company is obligated to issue. Amended Plan Benefits for Eligible Directors The following table summarizes the benefits that would be provided under the amended Plan in 2022 to the groups of individuals set forth below. It is anticipated that, if the amended Plan is approved by stockholders, that each Eligible Director will be entitled to receive 1,600 Shares annually, paid 400 shares per quarter and contingent upon the attendance by each Director to each quarterly Board meeting. Directors’ Stock Award Plan
(a) The dollar values in this column are based on the closing price of the Shares on April 7, 2022. The affirmative vote of a majority of the votes cast in person or by proxy at the meeting by the holders of shares of Common Stock entitled to vote thereon is required for the amendment and extension of the Directors’ Stock Award Plan described in this proxy statement. Abstentions are counted for quorum purposes. Abstentions and broker non-votes will have no effect on the outcome of this proposal, as they are not counted as votes cast. If we receive a signed proxy with no voting instructions, such shares will be voted ‘‘For’’ the approval of the Directors’ Stock Award Plan amendment and extension as described in this proxy statement. 42 PROPOSAL TO RATIFY THE SELECTION OF INDEPENDENT ACCOUNTANTS Galaz, Yamazaki, Ruiz Urquiza S.C. is a member firm of Deloitte Touche Tohmatsu Limited, a The Board of Directors recommends that you ratify the selection by the Audit Committee of the Board of Directors of Galaz, Yamazaki, Ruiz Urquiza S.C., a member firm of Deloitte Touche Tohmatsu Limited, as our independent accountants for the calendar year The affirmative vote of a majority of the votes cast in person or by proxy or by any permissible means of remote communication, including electronic transmission or telephonic means at the meeting by the holders of shares of Common Stock entitled to vote thereon is required to ratify the selection of the independent accountants described in this proxy statement. Abstentions and broker non-votes are counted for quorum purposes. Abstentions are NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION The Board of Directors recommends that you vote in favor of the resolution to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as disclosed in this proxy statement pursuant to Item 402 of Securities and Exchange Commission Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. The affirmative vote of a majority of the votes cast in person or by proxy or by any permissible means of remote communication, including electronic transmission or telephonic means at the meeting by the holders of shares of Common Stock entitled to vote thereon is required for the non-binding advisory vote on executive compensation described in this proxy statement. Abstentions and broker non-votes are counted for quorum purposes. Abstentions SHAREHOLDER PROPOSAL TO APPOINT INDEPENDENT CHAIR The United Steelworkers, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (“USW”), which represents that it owns 105 shares of the Common Stock of the Company, has notified the Company that the following proposal is to be presented at the annual meeting. The Stockholder’s Resolution RESOLVED: Shareholders of Southern Copper Corporation (the “Company”) urge the Board of Directors (the “Board”) to take the steps necessary to adopt a policy to require that the Chair of the Board (the “Chair”), whenever possible, be an independent member of the Board. This independence policy shall apply prospectively so as not to violate any contractual obligations. The policy should also specify the 43 process for selecting a new independent Chair if the current Chair ceases to be independent between annual meetings of shareholders. Compliance with the policy may be excused if no independent director is available and willing to be Chair. Supporting Statement In our view, the Chair should be an independent director, who has not previously served as an executive of the Company, in order to provide robust oversight and accountability of management and to facilitate effective deliberation of corporate strategy. The appointment of an independent board chair has become a more common practice in recent years. In 2019, 34 percent of S&P 500 boards were chaired by an independent director, compared to 16 percent in 2009.1 The Company’s Chair German Larrea Mota-Velasco is a non-independent member of the Board. Grupo Mexico S.A.B. de C.V. (“Grupo Mexico”) beneficially owns more than 50 percent of the Company’s voting stock. German Larrea Mota-Velasco serves as President and CEO of Grupo Mexico. German Larrea Mota-Velasco also serves as non-independent member of the Board’s Compensation and Corporate Governance committees. He previously served as the Company’s CEO until 2004. In our opinion, an independent Chair will increase investor confidence in our Company and support enhanced oversight of the Company’s executive officers. The Board is responsible for monitoring the executive officers’ performance and providing objective guidance to the executives. Having a non-independent Chair has the potential to weaken the Board’s independent oversight. We also believe that an independent Chair will enhance the independence and objectivity of the Board in reviewing the Company’s various related party transactions with Grupo Mexico. According to Institutional Shareholder Services, “boards with independent leadership (either via an independent Chair or a Lead Director) are more likely to be more diverse, have more balance tenure, are more responsive to shareholders, while their CEO pay levels are less likely to be excessive relative to peers.”2 According to Glass Lewis, “shareholders are better served when the board is led by an independent chairman who we believe is better able to oversee the executives of the Company and set a pro-shareholder agenda without management conflicts that exist when the CEO or other executive also serves as a chairman.”3 For these reasons, we urge shareholders to vote FOR this resolution. The Board of Directors recommends that you vote AGAINST this proposal. The affirmative vote of a majority of the votes cast in person or by proxy or by any permissible means of remote communication, including electronic transmission or telephonic means at the meeting by the holders of shares of Common Stock entitled to vote thereon is required for the approval of the shareholder proposal described in this proxy statement. Abstentions and broker non-votes are counted for quorum purposes. Abstentions and broker non-votes are not counted as a vote “For “ or “Against” this proposal. If we receive a signed proxy with no voting instructions, such shares will be voted “Against” the approval of the proposal. 1 2019 U.S. Spencer Stuart Board Index, Spencer Stuart, 2019, available at https://www.spencerstuart.com/-/media/2019/ssbi-2019/us board index 2019.pdf 2 Independent Board Leadership Matters: Evidence from Governance Practices, Institutional Shareholder Services, November 9, 2018, available at https://www.issgovernance.com/library/independent-board-leadership-matters/ 3 In-Depth: Independent Board Chairman, Glass Lewis, March 2016, available at https://www.glasslewis.com/wp-content/uploads/2016/03/2016-In-Depth-Report-INDEPENDENT-BOARD-CHAIRMAN.pdf 44 PROPOSALS AND NOMINATIONS OF STOCKHOLDERS Under SEC rules, proposals of stockholders intended to be presented at our In addition, Section 2.03 of our by-laws, which deals with Notice of Stockholder Business and Nominations, provides that Common Stockholders seeking to nominate a director or propose business to be considered at an annual meeting of stockholders must give written notice to our Secretary or Assistant Secretary regarding the proposed nominee and/or proposed business to be considered no less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. Accordingly, your nominations or proposals intended to be presented at our OTHER INFORMATION We are 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 ratified 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 us. Computershare has been employed to render some services for a net fee of $1,200, plus reasonable out-of-pocket expenses, to be paid by us. A number of our regular employees, without additional compensation, may solicit proxies personally or by mail or telephone.
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Exhibit A DIRECTORS’ STOCK AWARD PLAN (To be Approved by the Stockholders at the 2022 Annual Meeting of Stockholders) 1. Purpose The purposes of the Directors’ Stock Award Plan are (a) to attract and retain highly qualified individuals to serve as members of the Board of Directors (the “Board”) of Southern Copper Corporation (the “Company”), (b) to increase the stock ownership in the Company of members of the Board who are not compensated as employees and (c) to relate the compensation of members of the Board who are not compensated as employees more closely to the Company’s performance and its shareholders’ interest by granting such directors shares of common stock, par value $0.01 per share, of the Company (the “Shares”). 2. Administration The Plan shall be administered by the Board. Subject to the provisions of the Plan, the Board shall be authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan and to make all other determinations necessary or advisable for the administration of the Plan; provided, however, that the Board shall have no discretion with respect to the selection of directors to receive awards of Shares or the number of Shares to be awarded. The determinations of the Board in the administration of the Plan, as described herein, shall be final and conclusive. The Secretary of the Company shall be authorized to implement the Plan in accordance with its terms and to take such actions of a ministerial nature as shall be necessary to effectuate the intent and purposes thereof. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware. 3. Eligibility The class of individuals eligible to receive awards of Shares under the Plan shall be directors of the Company who are not compensated as employees of the Company (“Eligible Directors”). Any recipient of an award granted hereunder shall hereinafter be referred to as a “Participant”. 4. Shares Subject to the Plan Subject to adjustment as provided in Section 6, an aggregate of 194,800 Shares shall be available for awards under the Plan. The Shares may be made available from authorized but unissued shares or treasury shares. If any stock awards under the Plan shall be foregone or returned to the Company for any reason, the Shares subject to such award shall again be available for awards. 5. Grant, Stock Awards (a) Upon first election to the Board after September 1, 1995, each newly elected Eligible Director will be granted 1,600 Shares. (b) Eligible Directors will be entitled to receive a total of 1,600 Shares annually, paid 400 shares per quarter, contingent upon the attendance by each Director to each quarterly Board meeting. (c) An Eligible Director may forego any grant of Shares by giving irrevocable written notice to such effect to the Secretary of the Company six months in advance of such grant. 6. Adjustment of and Changes in Shares In the event of a stock split, stock dividend, extraordinary dividend, subdivision or combination of the Shares or other change in corporate structure affecting the Shares, the number of Shares authorized by the Plan and the number of Shares to be granted under Section 5 shall be appropriately and equitably adjusted. 46 7. Withholding of Taxes and Other Laws The Company shall be authorized to withhold from any payment due under this Plan the amount of withholding taxes, if any, due in respect of an award hereunder, unless other provisions satisfactory to the Company shall have been made for the payment of such taxes. The Board may refuse to issue or transfer any Shares if, acting in its sole discretion, it determines that the issuance or transfer of such Shares might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Securities Exchange Act of 1934, as amended. Without limiting the generality of the foregoing, no award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Board in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws. 8. Effective Date and Duration of Plan The Plan became effective on January 1, 1996 on the effective date of the exchange of the Company’s Shares for certain labor shares of the Peruvian Branch of Southern Peru Limited (the “Exchange Offer”), subject to the completion of such Exchange Offer. The Plan was extended subject to stockholder approval until January 31, 2016. The Plan was then extended subject to stockholder approval until January 30, 2017. The Plan was further amended to terminate on January 29, 2018. The Plan was further amended to terminate on January 28, 2023. The Plan was further amended to terminate on January 27, 2028, unless the Plan is extended or terminated at an earlier date by Shareholders or is terminated by exhaustion of the Shares available for issuance hereunder. 47 MMMMMMMMMMMM MMMMMMMMMMMMMM C123456789 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Your vote matters – here’s how to vote! You may vote online instead of mailing this card. Online Go to www.envisionreport.com/SCCO or scan the QR code — login details are located in the shaded bar below. Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/SCCO Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card 1234 5678 9012 345 q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. PLEASE COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. q A Proposals — The Board of Directors of Southern Copper Corporation recommends a vote “For” proposals 1, 2, 3 and 4. 1. Election of Directors For Withhold For Withhold For Withhold + 04 - Leonardo Contreras Lerdo de Tejada 07 - Luis Miguel Palomino Bonilla 05 - Enrique Castillo Sanchez Mejorada 08 - Gilberto Perezalonso Cifuentes 06 - Xavier Garcia de Quevedo Topete 09 - Carlos Ruiz Sacristan 2. To approve an amendment to the Company’s Directors’ Stock Award Plan to extend the term of the plan for five years. For Against Abstain 3. Ratify the Audit Committee’s selection of Galaz,Yamazaki, Ruiz Urquiza S.C., a member firm of Deloitte Touche Tohmatsu Limited, as our independent accountants for 2022. For Against Abstain 4. Approve by, non-binding vote, executive compensation. 6. In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the meeting. The Board of Directors recommends a vote AGAINST Proposal 5. For Against Abstain 5. To vote on a shareholder proposal, if properly presented at the annual meeting. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, custodian, guardian or corporate officer, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. MMMMMM C 1234567890 J N T 1 U P X 5 2 7 8 5 3 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 03L54D The 2022 Annual Meeting of Stockholders of Southern Copper Corporation will be held on May 27, 2022 at 9:00 A.M. Mexico City time, virtually via the internet at meetnow.global/MX79W5S. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. PLEASE COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. q Proxy — SOUTHERN COPPER CORPORATION Proxy Solicited by Board of Directors for Annual Meeting of Stockholders to be Held May 27, 2022. The undersigned hereby appoints OSCAR GONZALEZ ROCHA and JORGE LAZALDE, 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 Copper Corporation, to be held virtually on May 27, 2022, at 9:00 A.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 are entitled to elect nine 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. Important Notice regarding Internet Availability of Proxy Materials and Annual Report. The proxy statement, proxy card and annual report on Form 10-K are available at www.envisionreports.com/SCCO. If you wish to attend the virtual meeting and vote your shares visit meetnow.global/MX79W5S. 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 all nominees for election as directors, FOR proposals No. 2, 3 and 4 and AGAINST proposal 5. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. (Continued and to be marked, dated and signed, on the other side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. + |