STOCKHOLDERS' EQUITY:

12 Months Ended

Dec. 31, 2022

STOCKHOLDERS' EQUITY:

STOCKHOLDERS' EQUITY:

NOTE 14—STOCKHOLDERS’ EQUITY

Treasury Stock:

Activity in treasury stock in the years 2022 and 2021 was as follows (in millions):

	2022		2021
Southern Copper common shares
Balance as of January 1,	$	2,767.2	$	2,767.5
Used for corporate purposes		(0.3)		(0.3)
Balance as of December 31,		2,766.9		2,767.2
Parent Company (Grupo Mexico) common shares
Balance as of January 1,		306.8		296.0
Other activity, including dividend, interest and foreign currency transaction effect		33.9		10.8
Balance as of December 31,		340.7		306.8
Treasury stock balance as of December 31,	$	3,107.6	$	3,074.0

Common Stock:

In September 2022, Grupo Mexico, through its wholly owned subsidiary AMC, purchased 350,000 shares of SCC’s Common Stock. With this purchase and the Company’s repurchase of shares of its Common Stock, the indirect ownership of Grupo Mexico increased to 88.92% at December 31, 2022.

SCC shares of common stock in treasury:

At December 31, 2022 and 2021, treasury stock holds 111,497,617 shares and 111,509,217 shares of SCC’s common stock with a cost of $2,766.9 million and $2,767.2 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 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 has purchased 119.5 million shares of common stock at a cost of $2.9 billion. 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.

There has been no activity in the SCC share repurchase program since the third quarter of 2016. The NYSE closing price of SCC common shares at December 31, 2022 was $60.39 and the maximum number of shares that the Company could purchase at that price was 1.4 million.

Grupo Mexico’s direct and indirect ownership remains at 88.9% as of December 31, 2022.

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 received 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. On April 26, 2018, the Company’s stockholders approved a five-year extension of the Plan until January 28, 2023 and an increase of the shares award from 1,200 to 1,600. The fair value of the award is measured each year at the date of the grant. Commencing with the 2021 grant, the 1,600 shares shall be granted quarterly and conditioned upon the attendance of each director to each Board meeting. On May 27, 2022, the Company’s stockholders approved a five-year extension of the Plan until January 27, 2028. The award is not subject to vesting requirements. The stock-based compensation expense under this plan equaled $0.3 million for both years 2022 and 2021.

The activity of this plan for the years ended December 31, 2022 and 2021 was as follows:

	2022	2021
Total SCC shares reserved for the plan	600,000	600,000
Total shares granted at January 1,	(405,200)	(391,600)
Granted in the period	(11,600)	(13,600)
Total shares granted at December 31,	(416,800)	(405,200)
Remaining shares reserved	183,200	194,800

Parent Company common shares:

At December 31, 2022 and 2021, there were in treasury 74,367,673 and 79,800,655 of Grupo Mexico’s common shares, respectively.

Employee Stock Purchase Plan:

2015 Plan: In January 2015, the Company offered to eligible employees a new stock purchase plan through a trust that acquires series B shares of Grupo Mexico stock for sale to its employees, and employees of subsidiaries, and certain affiliated companies. The purchase price was established at 38.44 Mexican pesos (approximately $2.63) for the initial subscription, which expires in January 2023. 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. Any future subscription will be at the average market price at the date of acquisition or the grant date.

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 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, 2022, 2021 and 2020 and the unrecognized compensation expense under this plan were as follows (in millions):

	2022		2021		2020
Stock based compensation expense	$	0.6	$	0.6	$	0.6
Unrecognized compensation expense	$	0.2	$	0.8	$	1.4

The following table presents the stock award activity of this plan for the years ended December 31, 2022 and 2021:

		Unit Weighted Average
	Shares	Grant Date Fair Value
Outstanding shares at January 1, 2022	867,234	$	2.63
Granted	—		—
Exercised	(21,339)	$	2.63
Forfeited	—		—
Outstanding shares at December 31, 2022	845,895	$	2.63
Outstanding shares at January 1, 2021	1,264,410	$	2.63
Granted	—		—
Exercised	(397,176)	$	2.63
Forfeited	—		—
Outstanding shares at December 31, 2021	867,234	$	2.63

2018 Plan: In November 2018, 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, and employees of subsidiaries, and certain affiliated companies. The purchase price was established at 37.89 Mexican pesos (approximately $1.86) for the initial subscription, which expires in October 2026. 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. Any future subscription will be at the average market price at the date of acquisition or the grant date.

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 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, 2022, 2021 and 2020 and the unrecognized compensation expense under this plan were as follows (in millions):

	2022		2021		2020
Stock based compensation expense	$	0.7	$	0.7	$	0.7
Unrecognized compensation expense	$	2.4	$	3.1	$	3.8

The following table presents the stock award activity of this plan for the years ended December 31, 2022 and 2021:

		Unit Weighted Average
	Shares	Grant Date Fair Value
Outstanding shares at January 1, 2022	3,173,924	$	1.86
Granted	—		—
Exercised	(419,418)	$	1.86
Forfeited	—		—
Outstanding shares at December 31, 2022	2,754,506	$	1.86
Outstanding shares at January 1, 2021	3,918,458	$	1.86
Granted	—		—
Exercised	(744,534)	$	1.86
Forfeited	—		—
Outstanding shares at December 31, 2021	3,173,924	$	1.86

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.

Non-controlling interest:

For all the years presented, in the consolidated statement of earnings the income attributable to non-controlling interest is based on the earnings of the Company's Peruvian Branch.

The non-controlling interest of the Company’s Peruvian Branch is for investment shares. These shares were generated by legislation in place in Peru from the 1970s through 1991; such legislation provided for the participation of mining workers in the profits of the enterprises for which they worked. This participation was divided between equity and cash. The investment shares included in the non-controlling interest on the consolidated balance sheets reflect outstanding equity distributions made to the Peruvian Branch’s employees.

In prior years, the Company acquired some Peruvian investment shares in exchange for newly issued common shares of the Company and through purchases at market value. These acquisitions were accounted for as purchases of non-

controlling interests. The excess paid over the carrying value was assigned to intangible assets and is being amortized based on production. As a result of these acquisitions, the remaining investment shareholders hold a 0.71% interest in the Peruvian Branch and are entitled to a pro rata participation in the cash distributions made by the Peruvian Branch. The shares are recorded as a non-controlling interest in the Company's financial statements.