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STOCKHOLDERS' EQUITY:
 12 Months Ended
Dec. 31, 2013
STOCKHOLDERS' EQUITY:  
STOCKHOLDERS' EQUITY:

NOTE 14-STOCKHOLDERS’ EQUITY

 

Delaware Court Decision Related to SCC Shareholder Derivative Lawsuit:

 

On October 9, 2012 the Company received from AMC, its majority shareholder, $2,108.2 million in satisfaction of the judgment issued pursuant to the decision of the Court of Chancery of Delaware, which concluded that the Company paid an excessive price to AMC in the 2005 merger between the Company and Minera Mexico, S.A. de C.V. From the aforementioned sum received from AMC, the Company paid $316.2 million of legal fees and expenses to the plaintiff’s attorneys to satisfy the court ordered award of attorneys’ fees and expenses. The effect of this award was recorded in the Company’s 2012 results. The $2,108.2 million awarded to the Company was included in the capital accounts (additional paid-in capital) on the balance sheet. Additionally, the Company recorded an operating expense of $316.2 million in its 2012 results for the legal fees related to this award.

 

Treasury Stock:

 

Activity in treasury stock in the years 2013 and 2012 was as follows (in millions):

 

 

 

2013

 

2012

 

Southern Copper common shares

 

 

 

 

 

Balance as of January 1,

 

$

729.8

 

$

734.1

 

Purchase of shares

 

281.4

 

147.3

 

Stock dividend distribution

 

—

 

(151.4

)

Used for corporate purposes

 

(0.2

)

(0.2

)

Balance as of December 31,

 

1,011.0

 

729.8

 

 

 

 

 

 

 

Parent Company (Grupo Mexico) common shares

 

 

 

 

 

Balance as of January 1,

 

189.0

 

163.7

 

Other activity, including dividend, interest and currency translation effect

 

16.6

 

25.3

 

Balance as of December 31,

 

205.6

 

189.0

 

 

 

 

 

 

 

Treasury stock balance as of December 31,

 

$

1,216.6

 

$

918.8

 

 

SCC shares of common stock in treasury:

 

At December 31, 2013 and 2012, treasury stock holds 49,278,536 shares and 39,045,536  shares of SCC’s common stock with a cost of $1,011.0 million and $729.8 million, respectively.  The shares of SCC’s common stock held in treasury are used for general corporate purposes.

 

SCC share repurchase program:

 

In 2008, the Company’s Board of Directors authorized a $500 million share repurchase program. On July 28, 2011, the Company’s Board of Directors authorized an increase of the share repurchase program to $1 billion and on October 17, 2013, the Company’s Board of Directors authorized an additional increase to $2 billion. Pursuant to this program, the Company purchased common stock as shown in the table below.  These shares are available for general corporate purposes.  The Company may purchase additional shares of its common stock from time to time, based on market conditions and other factors.  This repurchase program has no expiration date and may be modified or discontinued at any time.

 

Period

 

Total Number
of Shares

 

Average
Price

Paid per

 

Total Number of
Shares Purchased
as Part of Publicly

 

Maximum
Number of
Shares that May
Yet Be
Purchased
Under the Plan

 

Total Cost
($ in

 

From

 

To

 

Purchased

 

Share

 

Announced Plan

 

@ $28.71 (*)

 

millions)

 

2008:

 

 

 

28,510,150

 

$

13.49

 

28,510,150

 

 

 

$

384.7

 

2009:

 

 

 

4,912,000

 

14.64

 

33,422,150

 

 

 

71.9

 

2010:

 

 

 

15,600

 

29.69

 

33,437,750

 

 

 

0.5

 

2011:

 

 

 

9,034,400

 

30.29

 

42,472,150

 

 

 

273.7

 

2012:

 

 

 

4,442,336

 

33.17

 

46,914,486

 

 

 

147.3

 

2013:

 

 

 

 

 

 

 

 

 

 

 

 

 

04/01/13

 

04/30/13

 

1,500

 

32.96

 

46,915,986

 

 

 

0.1

 

05/01/13

 

05/31/13

 

807,100

 

32.33

 

47,723,086

 

 

 

26.1

 

06/01/13

 

06/30/13

 

1,350,000

 

29.05

 

49,073,086

 

 

 

39.2

 

Total second quarter

 

2,158,600

 

30.28

 

 

 

 

 

65.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

07/01/13

 

07/31/13

 

1,300,000

 

27.60

 

50,373,086

 

 

 

35.9

 

08/01/13

 

08/31/13

 

641,400

 

26.68

 

51,014,486

 

 

 

17.1

 

09/01/13

 

09/30/13

 

204,012

 

27.65

 

51,218,498

 

 

 

5.6

 

Total third quarter

 

2,145,412

 

27.33

 

 

 

 

 

58.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/01/13

 

10/31/13

 

1,552,100

 

27.68

 

52,770,598

 

 

 

42.9

 

11/01/13

 

11/30/13

 

2,446,490

 

26.49

 

55,217,088

 

 

 

64.8

 

12/01/13

 

12/31/13

 

1,942,398

 

25.58

 

57,159,486

 

 

 

49.7

 

Total fourth quarter 2013

 

5,940,988

 

26.50

 

 

 

 

 

157.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Total purchased

 

57,159,486

 

$

20.29

 

 

 

29,275,745

 

$

1,159.5

 

 

(*) NYSE closing price of SCC common shares at December 31, 2013

 

As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s direct and indirect ownership was 82.3% as of December 31, 2013 and 81.3% at December 31, 2012.

 

Directors’ Stock Award Plan:

 

The Company established a stock award compensation plan for certain directors who are not compensated as employees of the Company.  Under this plan, participants will receive 1,200 shares of common stock upon election and 1,200 additional shares following each annual meeting of stockholders thereafter. 600,000 shares of Southern Copper common stock have been reserved for this plan.  The fair value of the award is measured each year at the date of the grant.

 

The activity of this plan for the years ended December 31, 2013 and 2012 was as follows:

 

 

 

2013

 

2012

 

Total SCC shares reserved for the plan

 

600,000

 

600,000

 

 

 

 

 

 

 

Total shares granted at January 1,

 

(285,600

)

(271,200

)

Granted in the period

 

(12,000

)

(14,400

)

Total shares granted at December 31,

 

(297,600

)

(285,600

)

 

 

 

 

 

 

Remaining shares reserved

 

302,400

 

314,400

 

 

Parent Company common shares:

 

At December 31, 2013 and 2012, there were in treasury 75,262,919 and 80,674,702 of Grupo Mexico’s common shares, respectively.

 

Employee Stock Purchase Plan:

 

In January 2007, the Company offered to eligible employees a stock purchase plan (the “Employee Stock Purchase Plan”) through a trust that acquires shares of Grupo Mexico stock for sale to its employees, employees of subsidiaries, and certain affiliated companies.  The purchase price is established at the approximate fair market value on the grant date.  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, the Company will grant the participant a bonus of 1 share for every 10 shares purchased by the employee.

 

If Grupo Mexico pays dividends on shares during the eight year period, the participants 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 entitled dividends will be used to reduce the remaining liability owed for purchased shares.

 

In the case of voluntary or involuntary resignation/termination of the employee, the Company will pay to the employee the fair market sales price at the date of resignation/termination of the fully paid shares, net of costs and taxes.  When the fair market sales value of the shares is higher than the purchase price, the Company will apply a deduction over the amount to be paid to the employee based on a decreasing schedule specified in the plan for each case.

 

In case of retirement or death of the employee, the Company will render the buyer or his legal beneficiary, the fair market sales value as of the date of retirement or death of the shares effectively paid, net of costs and taxes.

 

The stock based compensation expense for the years ended December 31, 2013, 2012 and 2011 and the remaining balance of the unrecognized compensation expense under the Employee Stock Purchase Plan, were as follows:

 

 

 

2013

 

2012

 

2011

 

Stock based compensation expense

 

$

2.1

 

$

2.1

 

$

2.1

 

Unrecognized compensation expense

 

$

2.1

 

$

4.2

 

$

6.3

 

 

The unrecognized compensation expense under this plan is expected to be recognized over the remaining one year period.

 

The following table presents the stock award activity of the Employee Stock Purchase Plan for the years ended December 31, 2013 and 2012:

 

 

 

Shares

 

Unit Weighted Average
Grant Date Fair Value

 

Outstanding shares at January 1, 2013

 

6,955,572

 

$

1.16

 

Granted

 

—

 

—

 

Exercised

 

(2,474,814

)

1.16

 

Forfeited

 

(31,159

)

1.16

 

Outstanding shares at December 31, 2013

 

4,449,599

 

1.16

 

 

 

 

 

 

 

Outstanding shares at January 1, 2012

 

7,270,341

 

1.16

 

Granted

 

—

 

—

 

Exercised

 

(220,430

)

1.16

 

Forfeited

 

(94,339

)

1.16

 

Outstanding shares at December 31, 2012

 

6,955,572

 

$

1.16

 

 

During 2010, the Company offered to eligible employees a new stock purchase plan (the “New Employee Stock Purchase Plan”) through a trust that acquires series B shares of Grupo Mexico stock for sale to its employees, employees of subsidiaries, and certain affiliated companies.  The purchase price was established at 26.51 Mexican pesos (approximately $2.05) for the initial subscription.  The terms of the New Employee Stock Purchase Plan are similar to the terms of the Employee Stock Purchase Plan.

 

The stock based compensation expense for the years ended December 31, 2013, 2012 and 2011 and the remaining balance of the unrecognized compensation expense under the New Employee Stock Purchase Plan, were as follows:

 

 

 

2013

 

2012

 

2011

 

Stock based compensation expense

 

$

0.6

 

$

0.6

 

$

0.6

 

Unrecognized compensation expense

 

$

2.6

 

$

3.2

 

$

3.8

 

 

The unrecognized compensation expense under this plan is expected to be recognized over the remaining five year period.

 

The following table presents the stock award activity of the New Employee Stock Purchase Plan for the years ended December 31, 2013 and 2012:

 

 

 

Shares

 

Unit Weighted Average
Grant Date Fair Value

 

Outstanding shares at January 1, 2013

 

2,944,742

 

$

2.05

 

Granted

 

226,613

 

2.05

 

Exercised

 

(38,098

)

2.05

 

Forfeited

 

(120,793

)

2.05

 

Outstanding shares at December 31, 2013

 

3,012,464

 

2.05

 

 

 

 

 

 

 

Outstanding shares at January 1, 2012

 

3,807,146

 

2.05

 

Granted

 

—

 

—

 

Exercised

 

(772,850

)

2.05

 

Forfeited

 

(89,554

)

2.05

 

Outstanding shares at December 31, 2012

 

2,944,742

 

$

2.05

 

 

Executive Stock Purchase Plan:

 

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.  Under this plan, participants will receive incentive cash bonuses which are used to purchase shares of Grupo Mexico which are deposited in a trust.