Germán Larrea Mota-Velasco

About Germán Larrea Mota‑Velasco

Chairman of the Board of Southern Copper Corporation since December 1999; previously served as SCCO Chief Executive Officer (Dec 1999–Oct 2004). Age 71, director since 1999 (c. 26 years of board tenure). Core credentials: long‑tenured controlling‑shareholder representative with deep mining, rail and industrial holding company experience; presides over every SCCO Board meeting. Not independent given executive roles and control at Grupo México, SCCO’s 88.9% indirect owner .

Past Roles

External Roles

Board Governance

• Independence status: Not independent; SCCO is a “controlled company” (Grupo México 88.9% of shares) and relies on NYSE controlled‑company exemptions; special independent directors are nominated separately (Larrea is not among them) .
• Current SCCO committee assignments: Corporate Governance & Disclosure Committee (member); Compensation Committee (member); Executive Committee (member). Chairman of the Board (non‑CEO) .
• Committee chairs (context): Audit chaired by L.M. Palomino; Sustainability chaired by V. Ariztegui; Special Nominating has its own composition; no Lead Independent Director designated—independent directors choose a presiding director for executive sessions .
• Attendance: In 2024, each director attended ≥75% of Board and applicable committee meetings; Board held four regular meetings in 2023 with 100% attendance (context on cadence) .
• Executive sessions: Non‑management director executive session scheduled each regular Board meeting; independent directors attend and designate presiding director each time .

Fixed Compensation (Director)

2024 total director compensation for Larrea: $221,556 (Cash $52,000; Stock awards $169,556) .

Performance Compensation (Director equity; attendance‑contingent)

SCCO grants 400 shares quarterly to each eligible non‑employee director, contingent on attending every Board meeting for that quarter; no vesting. Beginning 2025 (subject to shareholder approval), an additional 200 shares annually if attends all Board meetings for the year .

Equity awards are time‑served/attendance‑based, not performance‑metric based; awards under Directors’ Stock Award Plan are immediate (no vesting) .

Other Directorships & Interlocks

Expertise & Qualifications

• Mining/industrial leadership; governance experience across mining, rail, construction, real estate, drilling; presides over SCCO Board meetings .
• Board structure separates Chair and CEO roles; Larrea as non‑executive Chair overseeing Board accountability .

Equity Ownership

Hedging/Pledging: SCCO policy strongly discourages hedging and requires pre‑clearance; no specific pledging disclosure for Larrea in the proxy .

Related‑Party Exposure (Conflict Risk)

Significant recurring transactions with Grupo México subsidiaries: shared services ($30.1m), freight ($48.49m), engineering/construction ($94.1m), power purchases from GMéxico affiliates ($172.6m from MGE; $12.4m from Parque Eólico de Fenicias; $4.9m from Eólica El Retiro). Transactions with entities controlled by the Larrea family include aviation services to Mextransport ($2.5m) and smaller entertainment services; some reimbursements/receipts noted. Audit Committee and a related‑party subcommittee review/oversee these transactions per policy and Certificate Article Nine (>$10m “Material Affiliate Transactions” require prior review by independent director committee) .

Director Compensation Mix (2024)

Say‑on‑Pay & Shareholder Feedback (context)

• 2024 Say‑on‑Pay approval: 99.40% of votes cast in favor; company maintained approach to executive pay .
• Compensation philosophy: no formulaic performance metrics; discretionary bonuses; no long‑term equity for executives since 2000; Clawback policy adopted in 2023 (required by rule) though incentive‑based measures are not used .

Governance Assessment

• Strengths

  • Clear disclosure of controlled‑company status and special independent director mechanism; independent Audit Committee with financial experts and robust related‑party oversight framework (subcommittee; Article Nine pre‑approval) .
  • Separation of Chair and CEO roles; regular executive sessions of independent directors .
  • High Board and committee attendance (≥75% for all directors in 2024) .

• Concerns and RED FLAGS

  • Controlled‑company structure with extensive related‑party transactions with Grupo México and Larrea‑family entities (aviation, entertainment), creating ongoing conflict‑of‑interest risk; scale of affiliate purchases (e.g., power, services) is material .
  • Compensation Committee not fully independent; Larrea (controlling shareholder executive) served as a member—heightens concerns over objective oversight of executive pay .
  • Family relationships on the Board (son‑in‑law director on Compensation Committee; nephew by marriage director) increase perceived entrenchment and interlocks .
  • Director equity is attendance‑based rather than performance‑metric based; broader executive pay lacks performance linkages (discretionary bonuses, no LTIs), though shareholder Say‑on‑Pay support is high .

• Implications for investor confidence

  • Board effectiveness is constrained by controlling‑shareholder influence and family interlocks; however, independent Audit oversight and formal RPT controls partially mitigate risk. Close monitoring of related‑party pricing/terms, committee independence, and execution of Article Nine approvals remains critical ahead of capital allocation and M&A decisions .

Overall: Larrea is a highly influential, non‑independent Chair tightly aligned with Grupo México. The governance framework acknowledges this through special independent directors and RPT controls, but the scale of affiliate dealings and Compensation Committee composition are key areas to watch for potential conflicts and minority‑shareholder risk .