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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 16, 2023
OTTER TAIL CORPORATION
(Exact name of registrant as specified in its charter)
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Minnesota (State or other jurisdiction of incorporation or organization) | 0-53713 (Commission File Number) | 27-0383995 (I.R.S. Employer Identification No.) |
215 South Cascade Street, P.O. Box 496, Fergus Falls, MN 56538-0496
(Address of principal executive offices, including zip code)
(866) 410-8780
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Shares, par value $5.00 per share | OTTR | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.07 Submission of Matters to a Vote of Security Holders
Otter Tail Corporation (the “Company”) held its Annual Shareholder Meeting on April 17, 2023 in a virtual format. A total of 41,684,526 shares of the Company’s common stock were entitled to vote as of the close of business on February 17, 2023, the record date for the Annual Meeting, of which 33,946,042 were voted in person or by proxy at the Annual Meeting, with virtual attendance constituting in person attendance at the Annual Meeting.
The following is a summary of the voting results for each matter presented to the shareholders:
Election of Directors:
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| Director’s Name | Votes For | Votes Withheld | Broker Non-Votes |
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| John D. Erickson | 26,722,234 | 521,197 | | 6,702,611 |
| Nathan I. Partain | 26,758,332 | 485,099 | 6,702,611 |
| Jeanne H. Crain | 26,925,494 | 317,937 | 6,702,611 |
All three directors were elected, or re-elected, to serve three-year terms expiring at the time of the 2026 Annual Shareholder Meeting and until their successors are duly elected and qualified.
Approval, In a Non-Binding Advisory Vote, of Compensation Provided to the Named Executive Officers as Described in the Proxy Statement:
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| Votes For | Votes Against | Votes Abstained | Broker Non-Votes |
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| 26,134,940 | 696,211 | 412,280 | 6,702,611 |
Determination, In a Non-Binding Advisory Vote, of Whether Future Shareholder Votes on the Compensation of the Named Executive Officers Should Occur Every One, Two or Three Years:
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| Votes For One Year | Votes For Two Years | Votes For Three Years | Votes Abstained | Broker Non-Votes |
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| 25,511,046 | 358,621 | 1,216,875 | 156,889 | 6,702,611 |
Adoption of the Otter Tail Corporation 2023 Stock Incentive Plan:
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| Votes For | Votes Against | Votes Abstained | Broker Non-Votes |
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| 26,075,218 | 895,106 | 273,107 | 6,702,611 |
Ratification of the Appointment of Deloitte & Touche LLP as Otter Tail Corporation’s Independent Registered Public Accounting Firm for the Year 2023:
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| Votes For | Votes Against | Votes Abstained | Broker Non-Votes |
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| 33,237,781 | | 543,757 | | 164,504 | | — | |
Item 5.02(e) Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Approval of 2023 Stock Incentive Plan
On April 17, 2023, shareholders approved the Company’s 2023 Stock Incentive Plan, which is an omnibus equity incentive plan that allows us to grant stock-based awards to employees, officers, non-employee directors and other eligible participants. The material terms of the 2023 Stock Incentive Plan are disclosed in the Company’s Definitive Proxy Statement for its Annual Shareholder Meeting filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2023, and are incorporated herein by reference. This description is subject to the complete text of the 2023 Stock Incentive Plan, which is Exhibit 4.1 to the registration statement on Form S-8 filed on April 17, 2023 and incorporated herein by reference. The form of Restricted Stock Award Agreement for Directors, which was approved by the Compensation and Human Capital Management Committee of the Board of Directors for use under the 2023 Stock Incentive Plan, is filed as Exhibit 10.2 to this report and incorporated herein by reference.
Approval of Executive Annual Incentive Plan
On April 16, 2023, the Company’s Board of Directors approved the Executive Annual Incentive Plan for 2023, which will provide cash incentives to our executives based on competitive market practice, internal equity needs and the Company’s philosophy of pay for performance. Target annual incentives for named executive officers range from 50% to 100% of the officer’s base pay.
Earning the annual incentive payout is dependent on achieving one or more performance goals and such other performance criteria identified for each officer by the Compensation and Human Capital Management Committee, including financial performance metrics (60-80% of an officer’s target annual incentive), individual performance and strategic goals (10-30% of an officer’s target annual incentive), workplace safety (10% of an officer’s target annual incentive), a new metric for diversity, equity and inclusion (“DEI”) performance (up to 5% of an officer’s target annual incentive) and a new metric for environmental performance (up to 5% of an officer’s target annual incentive). The annual incentive payout can range from 0% to 200% of target.
This description is subject to the Executive Annual Incentive Plan, which is filed as Exhibit 10.3 to this report and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
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(d) | Exhibits |
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| 10.1 | |
| 10.2 | |
| 10.3 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| OTTER TAIL CORPORATION |
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| Date: April 19, 2023 | By: | /s/ Kevin G. Moug |
| | Kevin G. Moug |
| | Chief Financial Officer |
OTTER TAIL CORPORATION
2023 STOCK INCENTIVE PLAN
2023 RESTRICTED STOCK AWARD AGREEMENT
FOR DIRECTORS
This Restricted Stock Award Agreement is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and the person named in the attached Restricted Stock Award Certificate for Directors who is a Non-employee Director (“Director”) of the Corporation effective as of the date of grant (the “Grant Date”) set forth in the attached Restricted Stock Award Certificate for Directors.
WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2023 Stock Incentive Plan (the “Plan”), wishes to award to the Director a number of the Corporation’s common shares, par value $5.00 per share (the “Shares”), subject to certain restrictions and on the terms and conditions contained in this Agreement and in the attached Restricted Stock Award Certificate for Directors, which is made a part hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and the Director hereby agree as follows:
1.Award of Restricted Stock. The Corporation hereby grants to the Director, effective as of the Grant Date, an award of restricted stock for that number of Shares set forth in the attached Restricted Stock Award Certificate for Directors (the “Shares”), on the terms and conditions set forth in this Agreement, the Restricted Stock Award Certificate for Directors and the Plan.
2.Rights of the Director with Respect to the Shares. With respect to the Shares, the Director shall be entitled at all times on and after the date of issuance of the Shares to exercise the rights of a shareholder of Shares of the Corporation, including the right to vote the Shares and the right to receive dividends thereon as provided in Section 8 hereof, unless and until the Shares are forfeited pursuant to Section 5(b) hereof. The rights of the Director with respect to the Shares shall remain forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the Shares lapse, in accordance with Section 3, 4 or 5(a) hereof.
3.Vesting. Subject to the terms and conditions of this Agreement, the Shares shall vest, and the restrictions with respect to the Shares shall lapse, in installments on the dates and in the amounts set forth in the attached Restricted Stock Award Certificate for Directors if the Director remains continuously a Director of the Corporation until the respective vesting dates.
4.Change in Control. Notwithstanding the vesting provision contained in Section 3 above, but subject to the other terms and conditions set forth herein, upon the occurrence of a Change in Control (as defined in the Plan) prior to any termination of the Director’s service on the Board, the Director shall become immediately and unconditionally vested in all of the Shares, and the restrictions with respect to all of the Shares shall lapse.
5.Early Vesting; Forfeiture.
a)If the Director’s service on the Corporation’s Board ceases for any of the following reasons:
(i)Disability;
(ii)Death;
(iii)Retirement from the Board at the first Annual Shareholder meeting following the Director’s 72nd birthday; or
(iv)Resignation from the Board at the end of a term prior to a Director’s 72nd birthday, with appropriate prior notice, and subject to the approval of the Compensation and Human Capital Management Committee (formerly known as the “Compensation Committee” and hereinafter, the “Compensation Committee”) in its sole discretion,
and such service ends prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, then the Director (or the Director’s legal representatives, beneficiaries or heirs, as the case may be,) shall become immediately vested, as of the date of such disability, death, retirement or action by the Compensation Committee following the resignation of the Director, in all of the unvested Shares, and the restrictions with respect to all of such Shares shall lapse.
No transfer by will or the applicable laws of descent and distribution of any Shares which vest by reason of the Director’s death shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.
b)If the Director’s service on the Corporation’s Board ceases for reasons other than disability, death, retirement or resignation as set forth in Section 1(a)(iv) above prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, the Director’s rights to all of the unvested Shares shall be immediately and irrevocably forfeited, including the right to vote such Shares and the right to receive cash dividends.
6.Restriction on Transfer. Until the Shares vest pursuant to Section 3, 4 or 5(a) hereof, none of the Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares.
7.Issuance.
a)The Corporation shall cause to be issued uncertificated book-entry shares, registered in the Director’s name, representing the Shares. These Shares shall be recorded by the Corporation or its transfer agents or registrars, and shall be delivered to the Director through electronic delivery to a brokerage account. These Shares shall be held as restricted Shares until the vesting dates and be held subject to an appropriate stop-transfer order in accordance with the restrictions against transfer as contained in the Plan and this Agreement.
b)The Corporation may, in its sole discretion, decide to deliver any documents related to the Shares by electronic means or request the Director’s consent to participate in the Plan by electronic means. The Director hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Corporation or another third party designated by the Corporation.
8.Distributions and Adjustments.
a)If any Shares vest in the Director subsequent to any change in the number or character of the Shares of the Corporation (through recapitalization, stock split, stock dividend,
reorganization, merger, consolidation or otherwise), the Director shall then receive upon such vesting the number and type of securities or other consideration which the Director would have received if such Shares had vested prior to the event changing the number or character of the outstanding Shares.
b)Any additional Shares of the Corporation, any other securities of the Corporation and any other property (except for cash dividends or other cash distributions) distributed with respect to the Shares prior to the date or dates the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares to which they relate and shall be promptly deposited with the Secretary of the Corporation or a custodian designated by the Secretary.
c)Any cash dividends or other cash distributions payable with respect to the Shares shall be distributed to the Director at the same time cash dividends or other cash distributions are distributed to shareholders of the Corporation generally.
9.Income Tax Matters. The Director acknowledges that the Director will consult with the Director’s personal tax advisor regarding the income tax consequences of the grant of the Shares, or any other matters related to this Agreement. Income taxes will not be withheld in connection with the vesting of shares under this Agreement.
10.Miscellaneous.
a)The Corporation shall not be required to release or deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.
b)If any of the Shares covered by this Agreement are not registered under the Securities Act of 1933 at the time of their issuance hereunder, the Director represents and agrees that all such Shares under this grant will be acquired for investment and not for resale.
c)This grant of Shares is granted pursuant to the Plan and is subject to all the terms and conditions contained therein. A copy of the Plan is available to the Director upon request.
d)This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.
e)Headings in this Agreement are for convenience of reference only and shall not be deemed in any way to be material or relevant to the construction or interpretation of this Agreement or any provision hereof.
f)THIS RESTRICTED STOCK AWARD AGREEMENT FOR DIRECTORS IS ATTACHED TO AND MADE A PART OF A RESTRICTED STOCK AWARD CERTIFICATE FOR DIRECTORS AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH RESTRICTED STOCK AWARD CERTIFICATE FOR DIRECTORS IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND THE DIRECTOR.
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OTTER TAIL CORPORATION
2023 STOCK INCENTIVE PLAN
2023 RESTRICTED STOCK AWARD CERTIFICATE
FOR DIRECTORS
This certifies the award of restricted stock as specified below which has been granted under the Otter Tail Corporation 2023 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein and made a part hereof. In addition, the award shown in this Certificate is nontransferable and is subject to the terms and conditions set forth in the attached 2023 Restricted Stock Award Agreement for Directors of which this Certificate is a part.
[Name and address of recipient]
You have been granted the following Award:
Grant Type: Restricted Stock
Number of Shares: _____________
Grant Date: April 17, 2023
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| Vesting Schedule: |
Date | | Number of Restricted Stock Vested |
| April 8, 2024 | | _________________ |
| April 8, 2025 | | _________________ |
| April 8, 2026 | | _________________ |
| | |
By the Corporation’s and your signature below, it is agreed that this award of restricted stock is governed by the terms and conditions of the 2023 Restricted Stock Award Agreement for Directors, a copy of which is attached and made a part of this document, and the Corporation’s 2023 Stock Incentive Plan, a copy of which is enclosed.
OTTER TAIL CORPORATION
By: ______________________________________
Charles S. MacFarlane
Its: President and CEO
______________________________________
Exhibit 10.3
Otter Tail Corporation
Executive Annual Incentive Plan
April 16, 2023
BACKGROUND
The Compensation and Human Capital Management Committee (hereinafter the “Compensation Committee”) of Otter Tail Corporation (the “Corporation”) has established the Executive Annual Incentive Plan (the “Plan”) to reward top Corporate executives (“Participants”) who are directly involved in ensuring that the Corporation reaches its performance objectives. The key objectives of the Plan are to focus the Participants’ attention on the Corporation’s operating results to ensure that the Corporation will achieve its desired results currently and in the future.
ELIGIBILITY
Participants include the executive officers of the Corporation as named by the President and Chief Executive Officer and approved by the Compensation Committee of the Board of Directors. Participants who terminate employment for reasons other than death, disability, retirement or transfer to a Corporation subsidiary before the end of a Plan Year will not receive payments under this Plan for the Plan Year, unless otherwise provided in the terms of any employment agreement between the Corporation and the Participant.
In the event a Participant dies, terminates employment due to disability (as determined under any long term disability program then maintained by the Corporation or any of its affiliates that is applicable to the Participant, retires (voluntarily resigns at or after the earlier of (i) age 62 or (ii) qualifying for normal or early retirement under any retirement plan of the Corporation that is applicable to the Participant) or transfers to a subsidiary during a Plan Year, then the Participant shall be entitled to receive a payout for the Plan Year in which the termination or transfer occurs based on performance through the end of the Plan Year, prorated based on the number of days in the Plan Year up to and including the date of termination or transfer. Prorated annual incentive payments will be paid to the estates of Participants who die during a Plan Year for which a Plan payment is made, following the end of the Plan year at such time payment is made to other Plan Participants.
DEFINITIONS
Base Pay is the annualized base amount paid to Participants as of December 31 of the current Plan Year or, in the case of termination or transfer during the Plan Year, the date of termination or transfer. Base Pay includes amounts deferred under Section 401(k) of the Internal Revenue Code, salary reduction amounts under Section 125 of the Internal Revenue Code, and amounts deferred under any deferred compensation program sponsored by the Corporation. Base Pay does not include incentive payments, moving expenses, expense reimbursements, imputed income or any similar amounts.
Plan Year is the calendar year.
Target Annual Incentive is the percentage of Base Pay payable if performance is achieved at the stated target level. The Target Annual Incentive levels will be set for each Participant and approved by the Compensation Committee
CASH ANNUAL INCENTIVE
The Participant’s Target Annual Incentive will be based on competitive market practice, internal equity needs and the Corporation’s philosophy of pay for performance.
Earning the Target Annual Incentive payout is dependent upon achieving one or more performance goals and such other performance criteria identified for each Participant by the Compensation Committee.
Financial metrics, which account for 60-80% of a Participant’s Target Annual Incentive, are approved by the Board of Directors and have threshold, target and maximum performance levels. For financial metrics, 50% of the Target Annual Incentive payable is paid if minimum performance level is achieved; 100% of the Target Annual Incentive payable is paid if the target performance level is achieved; and 200% of the Target Annual Incentive payable is paid if the maximum performance level is achieved. For performance between the minimum performance level and the target performance level, the payment amount shall increase at an even rate; similarly, for performance between the target performance level and the maximum performance level, the payment amount shall increase at an even rate.
Individual performance and strategic goals, which account for 10-30% of a Participant’s Target Annual Incentive, are established at the beginning of the year.
Workplace safety accounts for 10% of a Participant’s Target Annual Incentive. The annual cash incentive for safety measures is paid out at 0% or 100%.
A DEI performance measure is evaluated after the annual cash incentive payout is calculated according to the above measures and can add up to 5% of Target Annual Incentive to the payout. For the DEI goal, 0% is paid if target is achieved with up to 5% of bonus target paid at maximum performance.
An environmental performance measure is evaluated after the annual incentive payout is calculated according to the above measures (besides DEI) and can add up to 5% of Target Annual Incentive to the payout. For the environmental goal, 0% is paid if target is achieved with up to 5% of bonus target paid at maximum performance.
Where more than one performance goal is identified for a Participant, weighting of the goals will be specified and approved by the Compensation Committee.
ADMINISTRATION
The Plan is not funded, and all annual incentive payments will be paid out of the Corporation’s general assets.
Annual incentive payments will be paid in cash, through the appropriate payroll system, as soon as administratively possible after annual performance results are approved by the Compensation Committee, but not later than March 15th. The Corporation will deduct from any Plan payment and transmit to the proper taxing authority, such amount as it may be required to withhold under any applicable federal, state or other law.
Payment under this Plan is also governed by the Executive Compensation Policy which includes a Recoupment Policy, which includes, among other provisions, that amounts paid under this Plan
are subject to recoupment if there is an accounting restatement due to the material noncompliance under any financial reporting requirements which results in performance-based compensation that would have been a lower amount if it had been calculated based on such restated results.
The Compensation Committee retains sole discretion, authority and responsibility to decide all factual and legal questions under the Plan.
MISCELLANEOUS
The terms of this document shall not constitute a term of employment for any Participant, and the Corporation shall not be obligated to continue the Plan. The terms of this document shall not give any Participant the right to be retained in employment with the Corporation.
Payments under this Plan are not considered part of base pay and, except for contributions to the Corporation’s Retirement Savings Plan, will not be considered in any Corporation or subsidiary ‑tax qualified Participant benefit plan. Payments under this Plan will be considered part of Recognized Compensation under the Otter Tail Corporation Retirement Savings Plan, or its successor, and will, therefore, be included in determining the Participant’s Retirement Savings Plan contributions.
AMENDMENT AND TERMINATION
The Plan’s performance goals and payment structure will be reviewed annually and adjusted to reflect current market conditions and Corporation’s needs. The Corporation, by action of the Compensation Committee of the Board of Directors, reserves the right to amend or terminate this Plan at any time.
FOR THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
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| /s/ James B. Stake | | April 16, 2023 | |
| James B. Stake, Compensation and Human Capital Management Committee Chair | | Date | |
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| OTTER TAIL CORPORATION | | | |
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| /s/ Charles S. MacFarlane | | April 16, 2023 | |
| Charles S. MacFarlane | | Date | |
| Its: Chief Executive Officer and President | | | |