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STOCKHOLDERS' EQUITY:
 12 Months Ended
Dec. 31, 2014
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 2014 and 2013 was as follows (in millions):

 

 

 

2014

 

2013

 

Southern Copper common shares

 

 

 

 

 

Balance as of January 1,

 

$
1,011.0

 

$
729.8

 

Purchase of shares

 
682.8

 
281.4

 

Used for corporate purposes

 
(0.3

)
(0.2

)

Balance as of December 31,

 
1,693.5

 
1,011.0

 

 

 

 

 

 

 

Parent Company (Grupo Mexico) common shares

 

 

 

 

 

Balance as of January 1,

 
205.6

 
189.0

 

Other activity, including dividend, interest and currency translation effect

 
1.6

 
16.6

 

Balance as of December 31,

 
207.2

 
205.6

 

 

 

 

 

 

 

Treasury stock balance as of December 31,

 

$
1,900.7

 

$
1,216.6

 

 

SCC shares of common stock in treasury:

 

At December 31, 2014 and 2013, treasury stock holds 71,977,964 shares and 49,278,536  shares of SCC’s common stock with a cost of $1,693.5 million and $1,011.0 million, respectively.  The shares of SCC’s common stock held in treasury are used for Director’s stock award plans and available for general corporate purposes.

 

SCC share repurchase program:

 

In 2008, the Company’s Board of Directors (“BOD”) authorized a $500 million share repurchase program that has since been increased by the BOD and is currently authorized to $3 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.

 

 

 

 

 

 

 

 

 

 

 

Maximum Number

 

 

 

 

 

 

 

 

 

 

 

Total Number of

 

of Shares that May

 

 

 

 

 

 

 

Total Number of

 

Average Price

 

Shares Purchased as

 

Yet Be Purchased

 

Total Cost

 

Period

 

Shares

 

Paid per

 

Part of Publicly

 

Under the Plan

 

($ in

 

From

 

To

 

Purchased

 

Share

 

Announced Plan

 

@ $28.20 (1)

 

millions)

 

2008

 

2011

 
42,472,150 

 

$
17.20 

 
42,472,150 

 

 

 

$
730.8 

 

2012:

 

 

 
4,442,336 

 
33.17 

 
46,914,486 

 

 

 
147.3 

 

2013:

 

 

 
10,245,000 

 
27.47 

 
57,159,486 

 

 

 
281.4 

 

2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

01/01/14

 

01/31/14

 
1,768,000 

 
28.06 

 
58,927,486 

 

 

 
49.6 

 

03/01/14

 

03/21/14

 
106,079 

 
27.04 

 
59,033,565 

 

 

 
2.9 

 

Total first quarter

 

 

 
1,874,079 

 
28.00 

 

 

 

 

 
52.5 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

06/01/14

 

06/30/14

 
450,532 

 
28.92 

 
59,484,097 

 

 

 
13.0 

 

Total second quarter

 

 

 
450,532 

 
28.92 

 

 

 

 

 
13.0 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

07/01/14

 

07/31/14

 
724,516 

 
33.04 

 
60,208,613 

 

 

 
23.9 

 

08/01/14

 

08/31/14

 
4,926,534 

 
32.09 

 
65,135,147 

 

 

 
158.1 

 

09/01/14

 

09/30/14

 
4,498,263 

 
31.44 

 
69,633,410 

 

 

 
141.4 

 

Total third quarter

 

 

 
10,149,313 

 
31.87 

 

 

 

 

 
323.4 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/01/14

 

10/31/14

 
5,821,213 

 
28.86 

 
75,454,623 

 

 

 
168.0 

 

11/01/14

 

11/30/14

 
1,286,767 

 
29.50 

 
76,741,390 

 

 

 
38.0 

 

12/01/14

 

12/31/14

 
3,129,524 

 
28.08 

 
79,870,914 

 

 

 
87.9 

 

Total fourth quarter

 

 

 
10,237,504 

 
28.70 

 

 

 

 

 
293.9 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total purchased

 

 

 
79,870,914 

 

$
23.07 

 

 

 
5,593,347 

(2)

$
1,842.3 

 

 

 

(1) NYSE closing price of SCC common shares at December 31, 2014.

(2) Maximum number of shares will increase by approximately 35.5 million shares, with the Board authorized increase of $1 billion approved on January 29, 2015.

 

As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s direct and indirect ownership was 84.6% as of December 31, 2014 and 82.3% at December 31, 2013.

 

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, 2014 and 2013 was as follows:

 

 

 

2014

 

2013

 

Total SCC shares reserved for the plan

 
600,000

 
600,000

 

 

 

 

 

 

 

Total shares granted at January 1,

 
(297,600

)
(285,600

)

Granted in the period

 
(12,000

)
(12,000

)

Total shares granted at December 31,

 
(309,600

)
(297,600

)

 

 

 

 

 

 

Remaining shares reserved

 
290,400

 
302,400

 

 

Parent Company common shares:

 

At December 31, 2014 and 2013, there were in treasury 89,950,310 and 75,262,919 of Grupo Mexico’s common shares, respectively.

 

Employee Stock Purchase Plan:

 

2007 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 one share for every ten 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.

 

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, 2014, 2013 and 2012 and the remaining balance of the unrecognized compensation expense under the Employee Stock Purchase Plan, were as follows:

 

 

 

2014

 

2013

 

2012

 

Stock based compensation expense

 

$
2.1 

 

$
2.1 

 

$
2.1 

 

Unrecognized compensation expense

 

—

 

$
2.1 

 

$
4.2 

 

 

The following table presents the stock award activity of the Employee Stock Purchase Plan for the years ended December 31, 2014 and 2013:

 

 

 

Shares

 

Unit Weighted Average
Grant Date Fair Value

 

Outstanding shares at January 1, 2014

 
4,449,599

 

$
1.16

 

Granted

 

—

 

—

 

Exercised

 
(150,987

)
1.16

 

Forfeited

 

—

 
1.16

 

Outstanding shares at December 31, 2014

 
4,298,612

 
1.16

 

 

 

 

 

 

 

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

 

 

2010 Plan: 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, 2014, 2013 and 2012 and the remaining balance of the unrecognized compensation expense under the New Employee Stock Purchase Plan, were as follows:

 

 

 

2014

 

2013

 

2012

 

Stock based compensation expense

 

$
0.6 

 

$
0.6 

 

$
0.6 

 

Unrecognized compensation expense

 

$
2.0 

 

$
2.6 

 

$
3.2 

 

 

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

 

The following table presents the stock award activity of the New Employee Stock Purchase Plan for the years ended December 31, 2014 and 2013:

 

 

 

Shares

 

Unit Weighted Average
Grant Date Fair Value

 

Outstanding shares at January 1, 2014

 
3,012,464

 

$
2.05

 

Granted

 

—

 

—

 

Exercised

 
(724,573

)
2.05

 

Forfeited

 

—

 

—

 

Outstanding shares at December 31, 2014

 
2,287,891

 
2.05

 

 

 

 

 

 

 

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

 

 

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.