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Exhibit 10.1

 

OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

2015 PERFORMANCE AWARD AGREEMENT

 

This Performance Award Agreement is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and you, as an employee of the Corporation, effective as of the date of grant (the “Grant Date”) set forth in the attached Performance Award Certificate.

 

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), wishes to grant to you the opportunity and right to receive a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to the terms and conditions contained in this Agreement and in the attached Performance Award Certificate, which is made a part of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and you hereby agree as follows:

 

1.  Performance Award . The Corporation hereby grants to you, effective as of the Grant Date, a Performance Award representing the right to receive a specified number of Common Shares, as set forth in the attached Performance Award Certificate and subject to the terms and conditions set forth in this Agreement, the Performance Award Certificate and the Plan. The Performance Award, to the extent it becomes payable, shall be paid in Common Shares of the Corporation (the “Shares”).

 

2.  Performance Period and Performance Goals . The performance period for purposes of determining whether the Performance Award will be paid shall be January 1, 2015 through December 31, 2017 (the “Performance Period”). The performance goals for purposes of determining whether, and the extent to which, the Performance Award will be paid are set forth in Exhibit 1 to this Agreement, which Exhibit is made a part of this Agreement.

 

3.  Payment . Subject to the provisions of Sections 4 and 5 of this Agreement, the Performance Award shall be paid within 59 days after the January 15 following the end of the Performance Period after the Compensation Committee of the Corporation’s Board of Directors (the “Committee”) determines, in its discretion, whether and to what extent the performance goals have been achieved in accordance with the terms set forth in Exhibit 1 to this Agreement.

 

4.  Forfeiture; Early Vesting . Notwithstanding the provisions of Section 3 of this Agreement, in the event your employment is terminated during the Performance Period, the Performance Award and your right to receive any Shares shall be immediately and irrevocably forfeited, unless such termination is by reason of your:

 

  (a)           disability (as determined under any long-term disability program then maintained by the Corporation or any of its Affiliates that is applicable to you);

 

  (b)           death;

 

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  (c)            retirement (voluntary resignation at or after the earlier of (i) age 62 or (ii) your qualifying for normal or early retirement under any retirement plan of the Corporation that is applicable to you); or

 

  (d)           resignation for good reason or involuntary termination without cause that qualifies you for severance benefits under an employment agreement or severance plan applicable to you.

 

In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clauses (a) or (b) above, then you or your estate shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would be achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made as soon as administratively feasible following your separation from service (subject to any required delay under Section 9(a)). If a payment is made pursuant to this paragraph, no payment shall be made pursuant to Section 3 of this Agreement.

 

In the event you retire during the Performance Period under clause (c) above, then your rights under the Performance Award shall remain outstanding as if you had remained employed for the duration of the Performance Period. You shall be entitled to receive payment of the Performance Award, if any, that becomes payable under Section 3 of this Agreement following the end of the Performance Period, prorated as follows. If you retire on or before June 30 of the calendar year that includes the Grant Date, the Performance Award shall be prorated by multiplying the Performance Award by a fraction, the numerator of which shall be the number of full calendar months during the Performance Period you were so employed, and the denominator of which shall be twelve (12). If you retire after June 30 of the calendar year that includes the Grant Date, any Performance Award that becomes payable under Section 3 shall not be prorated.

 

In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clause (d) above, then your rights under the Performance Award shall remain outstanding as if you had remained employed for the duration of the Performance Period. You shall be entitled to receive payment of the Performance Award, if any, that becomes payable under Section 3 of this Agreement following the end of the Performance Period, prorated as follows. The Performance Award shall be prorated by multiplying the Performance Award by a fraction, the numerator of which shall be the number of full calendar months during the Performance Period you were so employed, and the denominator of which shall be thirty-six (36).

 

5.  Change in Control . Notwithstanding the provisions of Section 3 of this Agreement, in the event of a Change in Control (as defined in the Plan) during the Performance Period that occurs prior to your termination of employment, you shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would have been achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made promptly following the date of the Change in Control. If a payment is made pursuant to this Section 5, no payment shall be made pursuant to Section 3 of this Agreement. Notwithstanding the foregoing, if any payment due under Section 5 is deferred compensation subject to Section 409A of the Code, and if the Change in Control is not a “change in control event” that serves as a permissible payment event under Treasury Regulation § 1.409A-3(i)(5) or such other regulation or guidance issued under Section 409A of the Code, then the Performance Award shall vest upon the Change in Control as provided above but payment under this Section 5 shall be delayed until the earlier of (i) January 15 following the end of the Performance Period or (ii) the Executive’s separation from service (subject to any additional required delay under Section 9(a)).

 

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6.  Restriction on Transfer . The Performance Award, and the right to receive Shares, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer the Performance Award, and the right to receive 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 Performance Award or the Shares. No transfer by will or the applicable laws of descent and distribution of the Performance Award 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.

 

7.  Issuance of Shares . After the Performance Award becomes payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in your name or in the name of your legal representatives, beneficiaries or heirs, as the case may be, representing the Shares (less any shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to you or your legal representatives, beneficiaries or heirs, as the case may be.

 

8.  Income Tax Matters .

 

  (a)           You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Performance Award, the receipt of Shares upon any payment of the Performance Award, the subsequent disposition of the Shares and any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

 

  (b)           In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Corporation Common Shares having a Fair Market Value equal to the amount of such taxes. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

 

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9.  Miscellaneous .

 

(a)           Notwithstanding the foregoing, to the extent that any payment due hereunder is (i) deferred compensation subject to Section 409A of the Code (“Section 409A”), and (ii) is payable to a specified employee (as that term is defined in Section 409A), and (iii) is payable on account of the specified employee’s separation from service (as that term is defined in Section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

 

 (i)           For this purpose, specified employees shall be identified by the Corporation on a basis consistent with regulations issued under Section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Corporation that are subject to Section 409A.

 

 (ii)          For this purpose “termination of employment” shall be defined as “separation from service” as that term is defined under Section 409A.

 

 (iii)         To the extent that Section 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of Section 409A. Neither the Corporation nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

 

(b)           Nothing contained in this Agreement or the Plan shall confer on you any right to continue in the employ of the Corporation or any Affiliate or affect in any way the right of the Corporation or any Affiliate to terminate your employment at any time.

 

(c)           You shall not have any rights of a holder of Common Shares unless and until Shares are actually issued to you after the end of the Performance Period as provided in this Agreement.

 

(d)           The Corporation shall not be required to 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.

 

(e)           This Agreement is subject to the terms of the Plan, including, without limitation, the provision for adjustments in Section 4(c) of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to you upon request.

 

(f)           This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

 

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(g)           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.

 

(h)           THIS PERFORMANCE AWARD AGREEMENT IS ATTACHED TO AND MADE A PART OF A PERFORMANCE AWARD CERTIFICATE AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH PERFORMANCE AWARD CERTIFICATE IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND YOU.

 

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OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

 

PERFORMANCE AWARD CERTIFICATE

 

This certifies the Performance Award, as specified below, has been granted under the Otter Tail Corporation 2014 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 2015 Performance Award Agreement of which this Certificate is a part.

 

[Name and address of recipient]

 

[Social Security Number of recipient]

 

You have been granted the following Award:

 

 

By the Corporation’s and your signature below, it is agreed that this Performance Award is governed by the terms and conditions of the Performance Award Agreement, a copy of which is attached and made a part of this document, and the Plan.

 

 

 

●	Amounts payable for performance will be treated linearly from threshold to target and from target to maximum.

●

Total Shareholders Return (TSR) (for both Otter Tail and peer group determination) = stock price appreciation (measured as of the average closing price for the 20 trading days immediately following January 1, 2015 and as of the average closing price for the 20 trading days immediately preceding January 1, 2018), plus value of dividends.

●	Peer group = Edison Electric Institute Index.

●	Award capped at Target if there is negative TSR.

			Threshold	Target	Maximum
Performance Goal	Adjusted 3-Year ROE	<8.5%	8.5%	10%	11%
Payment Levels	% of target shares	0%	16.7%	33.3%	50%

●	Amounts payable for performance will be treated linearly from threshold to target and from target to maximum.

●	Adjusted 3-Year Return on Equity (ROE) is equal to the average of Adjusted Return on Equity for each of the three years in the Performance Period.

●	Adjusted Return on Equity is equal to the Corporation’s Adjusted Earnings divided by the 13-month average of Total Outstanding Common Equity using the 13 months ending at the end of the fiscal year.

●

Adjusted Earnings is equal to the earnings available for Common Shares as reported in the Corporation’s annual year-end financial report, as adjusted to reflect (1) unusual, extraordinary or nonrecurring events; (2) changes in applicable accounting rules or principles or in the Company’s methods of accounting; (3) changes in applicable tax laws or regulations; (4) asset write-downs; (5) litigation or claim judgments or settlements; (6) changes in tax law affecting reported results; (7) severance, contract termination and other costs related to exiting business activities; (8) acquisitions; (9) gains or losses from the disposition of businesses or assets; (10) gains or losses from the early extinguishment of debt; and (11) other publicly identified one-time items (collectively, the “Adjustment Items”).

 

 

●	Total Outstanding Common Equity is equal to the month end common equity balance.

●	The Committee may exercise discretion to not make adjustment for one or more Adjustment Items when determining Adjusted Earnings but only if the exercise of discretion reduces amounts payable under the Performance Award.

The number of Common Shares payable is determined by taking the sum of the percentages earned in each of the tables.

 

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Exhibit 10.2

 

OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

2015 PERFORMANCE AWARD AGREEMENT

 

This Performance Award Agreement is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and you, as an employee of the Corporation, effective as of the date of grant (the “Grant Date”) set forth in the attached Performance Award Certificate.

 

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), wishes to grant to you the opportunity and right to receive a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to the terms and conditions contained in this Agreement and in the attached Performance Award Certificate, which is made a part of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and you hereby agree as follows:

 

1.  Performance Award . The Corporation hereby grants to you, effective as of the Grant Date, a Performance Award representing the right to receive a specified number of Common Shares, as set forth in the attached Performance Award Certificate and subject to the terms and conditions set forth in this Agreement, the Performance Award Certificate and the Plan. The Performance Award, to the extent it becomes payable, shall be paid in Common Shares of the Corporation (the “Shares”).

 

2.  Performance Period and Performance Goals . The performance period for purposes of determining whether the Performance Award will be paid shall be January 1, 2015 through December 31, 2017 (the “Performance Period”). The performance goals for purposes of determining whether, and the extent to which, the Performance Award will be paid are set forth in Exhibit 1 to this Agreement, which Exhibit is made a part of this Agreement.

 

3.  Payment . Subject to the provisions of Sections 4 and 5 of this Agreement, the Performance Award shall be paid within 59 days after the January 15 following the end of the Performance Period after the Compensation Committee of the Corporation’s Board of Directors (the “Committee”) determines, in its discretion, whether and to what extent the performance goals have been achieved in accordance with the terms set forth in Exhibit 1 to this Agreement.

 

4.  Forfeiture; Early Vesting . Notwithstanding the provisions of Section 3 of this Agreement, in the event your employment is terminated during the Performance Period, the Performance Award and your right to receive any Shares shall be immediately and irrevocably forfeited, unless such termination is by reason of your:

 

(a)           disability (as determined under any long-term disability program then maintained by the Corporation or any of its Affiliates that is applicable to you);

 

(b)           death;

 

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(c)           retirement (normal or early retirement under any retirement plan of the Corporation or any of its Affiliates that is applicable to you), provided you are at least 62 years old at the time of such retirement;

 

(d)           resignation for “Good Reason” (as defined in your Executive Employment Agreement, dated on or before the Grant Date, between the Corporation and you); or

 

(e)           termination “Without Cause” (as defined in your Executive Employment Agreement, dated on or before the Grant Date, between the Corporation and you)).

 

In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clauses (a) through (c) above, then you or your estate shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would be achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made as soon as administratively feasible following your separation from service (subject to any required delay under Section 9(a)). In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clause (d) or (e) above or retirement before age 62, then you shall be entitled to receive a pro rata payment of the Performance Award based on the performance of the Company against the performance goal as of the date of such termination, as set forth in Exhibit 1 to this Agreement (subject to any required delay under Section 9(a)). If a payment is made pursuant to this Section 4, no payment shall be made pursuant to Section 3 of this Agreement.

 

5.  Change in Control . Notwithstanding the provisions of Section 3 of this Agreement, in the event of a Change in Control (as defined in the Plan) during the Performance Period that occurs prior to your termination of employment, you shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would have been achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made promptly following the date of the Change in Control. If a payment is made pursuant to this Section 5, no payment shall be made pursuant to Section 3 of this Agreement. Notwithstanding the foregoing, if any payment due under Section 5 is deferred compensation subject to Section 409A of the Code, and if the Change in Control is not a “change in control event” that serves as a permissible payment event under Treasury Regulation § 1.409A-3(i)(5) or such other regulation or guidance issued under Section 409A of the Code, then the Performance Award shall vest upon the Change in Control as provided above but payment under this Section 5 shall be delayed until the earlier of (i) January 15 following the end of the Performance Period or (ii) the Executive’s separation from service (subject to any additional required delay under Section 9(a)).

 

6.  Restriction on Transfer . The Performance Award, and the right to receive Shares, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer the Performance Award, and the right to receive 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 Performance Award or the Shares. No transfer by will or the applicable laws of descent and distribution of the Performance Award 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.

 

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7.  Issuance of Shares . After the Performance Award becomes payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in your name or in the name of your legal representatives, beneficiaries or heirs, as the case may be, representing the Shares (less any shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to you or your legal representatives, beneficiaries or heirs, as the case may be.

 

8.  Income Tax Matters .

 

(a)           You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Performance Award, the receipt of Shares upon any payment of the Performance Award, the subsequent disposition of the Shares and any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

 

(b)           In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Corporation Common Shares having a Fair Market Value equal to the amount of such taxes. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

 

9.  Miscellaneous .

 

(a)           Notwithstanding the foregoing, to the extent that any payment due hereunder is (i) deferred compensation subject to Section 409A of the Code (“Section 409A”), and (ii) is payable to a specified employee (as that term is defined in Section 409A), and (iii) is payable on account of the specified employee’s separation from service (as that term is defined in Section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

 

 (i)            For this purpose, specified employees shall be identified by the Corporation on a basis consistent with regulations issued under Section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Corporation that are subject to Section 409A.

 

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 (ii)           For this purpose “termination of employment” shall be defined as “separation from service” as that term is defined under Section 409A.

 

 (iii)          To the extent that Section 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of Section 409A. Neither the Corporation nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

 

(b)           Nothing contained in this Agreement or the Plan shall confer on you any right to continue in the employ of the Corporation or any Affiliate or affect in any way the right of the Corporation or any Affiliate to terminate your employment at any time.

 

(c)           You shall not have any rights of a holder of Common Shares unless and until Shares are actually issued to you after the end of the Performance Period as provided in this Agreement.

 

(d)           The Corporation shall not be required to 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.

 

(e)           This Agreement is subject to the terms of the Plan, including, without limitation, the provision for adjustments in Section 4(c) of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to you upon request.

 

(f)           This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

 

(g)           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.

 

(h)           THIS PERFORMANCE AWARD AGREEMENT IS ATTACHED TO AND MADE A PART OF A PERFORMANCE AWARD CERTIFICATE AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH PERFORMANCE AWARD CERTIFICATE IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND YOU.

 

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OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

 

PERFORMANCE AWARD CERTIFICATE

 

This certifies the Performance Award, as specified below, has been granted under the Otter Tail Corporation 2014 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 2015 Performance Award Agreement of which this Certificate is a part.

 

[Name and address of recipient]

 

[Social Security Number of recipient]

 

You have been granted the following Award:

 

 

By the Corporation’s and your signature below, it is agreed that this Performance Award is governed by the terms and conditions of the Performance Award Agreement, a copy of which is attached and made a part of this document, and the Plan.

 

 

●	Amounts payable for performance will be treated linearly from threshold to target and from target to maximum.

●

Total Shareholders Return (TSR) (for both Otter Tail and peer group determination) = stock price appreciation (measured as of the average closing price for the 20 trading days immediately following January 1, 2015 and as of the average closing price for the 20 trading days immediately preceding January 1, 2018), plus value of dividends.

●	Peer group = Edison Electric Institute Index.

●	Award capped at Target if there is negative TSR.

			Threshold	Target	Maximum
Performance Goal	Adjusted 3-Year ROE	<8.5%	8.5%	10%	11%
Payment Levels	% of target shares	0%	16.7%	33.3%	50%

●	Amounts payable for performance will be treated linearly from threshold to target and from target to maximum.

●	Adjusted 3-Year Return on Equity (ROE) is equal to the average of Adjusted Return on Equity for each of the three years in the Performance Period.

●	Adjusted Return on Equity is equal to the Corporation’s Adjusted Earnings divided by the 13-month average of Total Outstanding Common Equity using the 13 months ending at the end of the fiscal year.

●

Adjusted Earnings is equal to the earnings available for Common Shares as reported in the Corporation’s annual year-end financial report, as adjusted to reflect (1) unusual, extraordinary or nonrecurring events; (2) changes in applicable accounting rules or principles or in the Company’s methods of accounting; (3) changes in applicable tax laws or regulations; (4) asset write-downs; (5) litigation or claim judgments or settlements; (6) changes in tax law affecting reported results; (7) severance, contract termination and other costs related to exiting business activities; (8) acquisitions; (9) gains or losses from the disposition of businesses or assets; (10) gains or losses from the early extinguishment of debt; and (11) other publicly identified one-time items (collectively, the “Adjustment Items”).

 

 

●	Total Outstanding Common Equity is equal to the month end common equity balance.

●	The Committee may exercise discretion to not make adjustment for one or more Adjustment Items when determining Adjusted Earnings but only if the exercise of discretion reduces amounts payable under the Performance Award.

The number of Common Shares payable is determined by taking the sum of the percentages earned in each of the tables.

 

Exhibit 10.3

 

OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

2015 RESTRICTED STOCK UNIT AWARD AGREEMENT

FOR EXECUTIVE OFFICERS

 

This Restricted Stock Unit Award Agreement for Executive Officers is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and the person named in the attached Restricted Stock Unit Award Certificate who is an Executive Officer of the Corporation effective as of the date of grant (the “Grant Date”) set forth in the attached Restricted Stock Unit Award Certificate.

 

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), wishes to grant the Executive Officer the opportunity and right to receive a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to the terms and conditions contained in this Agreement and in the attached Restricted Stock Unit Award Certificate, 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 Executive Officer hereby agree as follows:

 

1.  Award of Restricted Stock Units . The Corporation hereby grants to the Executive Officer, effective as of the Grant Date, an award of Restricted Stock Units representing the right to receive that number of Common Shares set forth in the attached Restricted Stock Unit Award Certificate (the “Shares”), on the terms and conditions set forth in this Agreement, the Restricted Stock Unit Award Certificate and the Plan.

 

2.  Rights of the Executive Officer with Respect to the Units . The Executive Officer shall not have any rights of a holder of Shares unless and until Shares are actually issued to the Executive Officer after vesting as provided in this Agreement. However, if any cash dividends or other cash distributions are distributed to shareholders of the Corporation, the Executive Officer shall have the right to receive a Dividend Equivalent (as defined under Section 6(d) of the Plan) in cash equal to the amount of the dividend or distribution that would have been paid on the number of Shares equal to the number of Restricted Stock Units then outstanding under this Agreement (whether vested or unvested) as of the close of business on the applicable record date. Payment of the Dividend Equivalent shall be made at or near the same time the corresponding dividend is distributed to shareholders of the Corporation generally, but in all events shall be paid within the same calendar year that includes the declaration date. Any Dividend Equivalent paid on unvested Restricted Stock Units under this Section 2 shall be subject to the Corporation’s right to demand repayment under Section 5 below.

 

3.  Vesting and Payment . Subject to the terms and conditions of this Agreement, the Restricted Stock Units shall vest, and the corresponding Shares shall be issued, in installments on the dates and in the amounts set forth in the attached Restricted Stock Unit Award Certificate if the Executive Officer remains continuously employed by 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 Executive Officer’s employment, the Executive Officer shall become immediately and unconditionally vested in all of the Restricted Stock Units then outstanding under this Agreement, and the corresponding Shares shall be issued promptly following the Change in Control. Notwithstanding the foregoing, if any payment due under this Section 4 is deferred compensation subject to Section 409A of the Code, and if the Change in Control is not a “change in control event” that serves as a permissible payment event under Treasury Regulation § 1.409A-3(i)(5) or such other regulation or guidance issued under Section 409A of the Code, then the Restricted Stock Units shall vest upon the Change in Control as provided above but payment under this Section 4 shall be delayed until the earlier of (i) the applicable vesting dates (corresponding to each installment) set forth in in the vesting schedule in the attached Restricted Stock Unit Award Certificate or (ii) the Executive’s separation from service (subject to any additional required delay under Section 9(a)).

 

5.  Additional Vesting Rules; Forfeiture .

 

(a)           If the Executive Officer ceases to be employed by the Corporation by reason of disability (as determined under any long-term disability program then maintained by the Corporation that is applicable to the Executive Officer) or death prior to the vesting of the Restricted Stock Units pursuant to Section 3 or 4 hereof, the Executive Officer or the Executive Officer’s legal representatives, beneficiaries or heirs, as the case may be, shall become immediately vested, as of the date of such termination for disability or death, in all of the unvested Restricted Stock Units then outstanding under this Agreement, and the corresponding Shares shall be issued upon such termination of employment (subject to any required delay under Section 9(a)). No transfer by will or the applicable laws of descent and distribution of any Shares which vest by reason of the Executive Officer’s death shall be effective to bind the Corporation unless the Compensation Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Compensation Committee may deem necessary to establish the validity of the transfer.

 

(b)           If the Executive Officer ceases to be employed by the Corporation by reason of retirement (voluntary resignation 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 Executive Officer) prior to the vesting of the Restricted Stock Units pursuant to Section 3 or 4 hereof, the Executive Officer shall become immediately vested, as of the date of such retirement, in all of the unvested Restricted Stock Units then outstanding under this Agreement (subject to proration as provided below), and the corresponding Shares shall be issued upon such termination of employment (subject to any required delay under Section 9(a)). If the Executive Officer retires on or before June 30 of the calendar year that includes the Grant Date, the number of remaining unvested Restricted Stock Units that becomes vested shall be prorated by multiplying the remaining unvested Restricted Stock Units then outstanding under this Agreement by a fraction, the numerator of which shall be the number of full months during the vesting schedule the Executive was employed, and the denominator of which shall be twelve (12). If the Executive Officer retires after June 30 of the calendar year that includes the Grant Date, all of the unvested Restricted Stock Units then outstanding under this Agreement shall become immediately vested without proration.

 

2

 

(c)           If the Executive Officer’s employment relationship with the Corporation ceases for reasons other than disability, death or retirement prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, the Executive Officer’s rights to all of the unvested Restricted Stock Units then outstanding under this Agreement shall be immediately and irrevocably forfeited, including the right to Dividend Equivalents. In addition, upon such event, the Corporation shall have the right to demand immediate repayment of any Dividend Equivalents paid on unvested Restricted Stock Units.

 

6.  Restriction on Transfer . The Restricted Stock Units, the right to Dividend Equivalents or the right to receive Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer the Restricted Stock Units, the right to Dividend Equivalents and the right to receive 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 Restricted Stock Units, Dividend Equivalents or the Shares. No transfer by will or the applicable laws of descent and distribution of the Restricted Stock Units, the Dividend Equivalents or the Shares 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.

 

7.  Issuance of Shares . After the Shares become payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in the Executive Officer’s name or in the name of the Executive Officer’s legal representative, beneficiaries or heirs, as the case may be, representing the Shares (less any Shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to the Executive Officer or the legal representatives, beneficiaries or heirs, as the case may be. Upon issuance of the Shares, the corresponding Restricted Stock Units (and Dividend Equivalent rights) shall be cancelled.

 

8.  Income Tax Matters .

 

(a)           The Executive Officer acknowledges that the Executive Officer will consult with the Executive Officer’s personal tax advisor regarding the income tax consequences of the grant of the Restricted Stock Units, the payment of Dividend Equivalents on the Restricted Stock Units and the issuance of Shares upon the vesting of the Restricted Stock Units or any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of the Executive Officer, are withheld or collected from the Executive Officer.

 

3

 

(b)           In accordance with the terms of the Plan, and such rules as may be adopted by the Compensation Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of the employer’s minimum statutory withholding requirements, or (iii) delivering to the Corporation Common Shares having a Fair Market Value equal to the amount of such taxes. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

 

9.  Miscellaneous .

 

(a)           Notwithstanding the foregoing, to the extent that any payment due hereunder is (i) deferred compensation subject to Section 409A of the Code (“Section 409A”), and (ii) is payable to a specified employee (as that term is defined in Section 409A), and (iii) is payable on account of the specified employee’s separation from service (as that term is defined in Section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

 

 (i)            For this purpose, specified employees shall be identified by the Corporation on a basis consistent with regulations issued under Section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Corporation that are subject to Section 409A.

 

 (ii)           For this purpose “termination of employment” shall be defined as “separation from service” as that term is defined under Section 409A.

 

 (iii)          The right to payment of Dividend Equivalents is, for purposes of Section 409A, intended to be a separate right to payment (apart from the right to receive Shares) that is payable currently as and when cash dividends or other cash distributions are distributed, as permitted under § 1.409A-3(e) where dividends or distributions are anticipated to be paid at least annually.

 

 (iv)           To the extent that Section 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of section 409A. Neither the Corporation nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

 

4

 

(b)           Nothing contained in this Agreement or the Plan shall confer on the Executive Officer any right to continue in the employ of the Corporation or affect in any way the right of the Corporation to terminate the employment of the Executive Officer at any time.

 

(c)           The Corporation shall not be required to 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.

 

(d)           This Agreement is subject to the terms of the Plan, including, without limitation, the provision for adjustments in Section 4(c) of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to the Executive Officer upon request.

 

(e)           This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

 

(f)           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.

 

(g)           THIS RESTRICTED STOCK UNIT AWARD AGREEMENT FOR EXECUTIVE OFFICERS IS ATTACHED TO AND MADE A PART OF A RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND THE EXECUTIVE OFFICER.

 

* * * * * * * *

 

5

OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS

 

This certifies the award of restricted stock units as specified below which has been granted under the Otter Tail Corporation 2014 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 2015 Restricted Stock Unit Award Agreement for Executive Officers of which this Certificate is a part.

 

[Name and address of recipient]

 

[Social Security Number of recipient]

 

You have been granted the following Award:

 

By the Corporation’s and your signature below, it is agreed that this award of restricted stock units is governed by the terms and conditions of the 2015 Restricted Stock Unit Award Agreement for Executive Officers, a copy of which is attached and made a part of this document, and the Corporation’s 2014 Stock Incentive Plan.

 

 

 

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Exhibit 10.4

 

OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

2015 RESTRICTED STOCK UNIT AWARD AGREEMENT

FOR EXECUTIVE OFFICERS

 

This Restricted Stock Unit Award Agreement for Executive Officers is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and the person named in the attached Restricted Stock Unit Award Certificate who is an Executive Officer of the Corporation effective as of the date of grant (the “Grant Date”) set forth in the attached Restricted Stock Unit Award Certificate.

 

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), wishes to grant the Executive Officer the opportunity and right to receive a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to the terms and conditions contained in this Agreement and in the attached Restricted Stock Unit Award Certificate, 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 Executive Officer hereby agree as follows:

 

1.  Award of Restricted Stock Units . The Corporation hereby grants to the Executive Officer, effective as of the Grant Date, an award of Restricted Stock Units representing the right to receive that number of Common Shares set forth in the attached Restricted Stock Unit Award Certificate (the “Shares”), on the terms and conditions set forth in this Agreement, the Restricted Stock Unit Award Certificate and the Plan.

 

2.  Rights of the Executive Officer with Respect to the Units . The Executive Officer shall not have any rights of a holder of Shares unless and until Shares are actually issued to the Executive Officer after vesting as provided in this Agreement. However, if any cash dividends or other cash distributions are distributed to shareholders of the Corporation, the Executive Officer shall have the right to receive a Dividend Equivalent (as defined under Section 6(d) of the Plan) in cash equal to the amount of the dividend or distribution that would have been paid on the number of Shares equal to the number of Restricted Stock Units then outstanding under this Agreement (whether vested or unvested) as of the close of business on the applicable record date. Payment of the Dividend Equivalent shall be made at or near the same time the corresponding dividend is distributed to shareholders of the Corporation generally, but in all events shall be paid within the same calendar year that includes the declaration date. Any Dividend Equivalent paid on unvested Restricted Stock Units under this Section 2 shall be subject to the Corporation’s right to demand repayment under Section 5 below.

 

3.  Vesting and Payment . Subject to the terms and conditions of this Agreement, the Restricted Stock Units shall vest, and the corresponding Shares shall be issued, in installments on the dates and in the amounts set forth in the attached Restricted Stock Unit Award Certificate if the Executive Officer remains continuously employed by 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 Executive Officer’s employment, the Executive Officer shall become immediately and unconditionally vested in all of the Restricted Stock Units then outstanding under this Agreement, and the corresponding Shares shall be issued promptly following the Change in Control. Notwithstanding the foregoing, if any payment due under this Section 4 is deferred compensation subject to Section 409A of the Code, and if the Change in Control is not a “change in control event” that serves as a permissible payment event under Treasury Regulation § 1.409A-3(i)(5) or such other regulation or guidance issued under Section 409A of the Code, then the Restricted Stock Units shall vest upon the Change in Control as provided above but payment under this Section 4 shall be delayed until the earlier of (i) the applicable vesting dates (corresponding to each installment) set forth in in the vesting schedule in the attached Restricted Stock Unit Award Certificate or (ii) the Executive’s separation from service (subject to any additional required delay under Section 9(a)).

 

5.  Additional Vesting Rules; Forfeiture .

 

(a)           If the Executive Officer ceases to be employed by the Corporation by reason of disability (as determined under any long-term disability program then maintained by the Corporation that is applicable to the Executive Officer); death; or retirement (normal or early retirement under any retirement plan of the Corporation that is applicable to the Executive Officer) prior to the vesting of the Restricted Stock Units pursuant to Section 3 or 4 hereof, the Executive Officer or the Executive Officer’s legal representatives, beneficiaries or heirs, as the case may be, shall become immediately vested, as of the date of termination for disability, death or retirement, in all of the unvested Restricted Stock Units then outstanding under this Agreement, and the corresponding Shares shall be issued upon such termination of employment (subject to any required delay under Section 9(a)). No transfer by will or the applicable laws of descent and distribution of any Shares which vest by reason of the Executive Officer’s death shall be effective to bind the Corporation unless the Compensation Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Compensation Committee may deem necessary to establish the validity of the transfer.

 

(b)           If the Executive Officer’s employment relationship with the Corporation ceases for reasons other than disability, death or retirement prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, the Executive Officer’s rights to all of the unvested Restricted Stock Units then outstanding under this Agreement shall be immediately and irrevocably forfeited, including the right to Dividend Equivalents. In addition, upon such event, the Corporation shall have the right to demand immediate repayment of any Dividend Equivalents paid on unvested Restricted Stock Units.

 

2

 

6.  Restriction on Transfer . The Restricted Stock Units, the right to Dividend Equivalents or the right to receive Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer the Restricted Stock Units, the right to Dividend Equivalents and the right to receive 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 Restricted Stock Units, Dividend Equivalents or the Shares. No transfer by will or the applicable laws of descent and distribution of the Restricted Stock Units, the Dividend Equivalents or the Shares 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.

 

7.  Issuance of Shares . After the Shares become payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in the Executive Officer’s name or in the name of the Executive Officer’s legal representative, beneficiaries or heirs, as the case may be, representing the Shares (less any Shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to the Executive Officer or the legal representatives, beneficiaries or heirs, as the case may be. Upon issuance of the Shares, the corresponding Restricted Stock Units (and Dividend Equivalent rights) shall be cancelled.

 

8.  Income Tax Matters .

 

(a)           The Executive Officer acknowledges that the Executive Officer will consult with the Executive Officer’s personal tax advisor regarding the income tax consequences of the grant of the Restricted Stock Units, the payment of Dividend Equivalents on the Restricted Stock Units and the issuance of Shares upon the vesting of the Restricted Stock Units or any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of the Executive Officer, are withheld or collected from the Executive Officer.

 

(b)           In accordance with the terms of the Plan, and such rules as may be adopted by the Compensation Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of the employer’s minimum statutory withholding requirements, or (iii) delivering to the Corporation Common Shares having a Fair Market Value equal to the amount of such taxes. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

 

3

 

9.  Miscellaneous .

 

(a)           Notwithstanding the foregoing, to the extent that any payment due hereunder is (i) deferred compensation subject to Section 409A of the Code (“Section 409A”), and (ii) is payable to a specified employee (as that term is defined in Section 409A), and (iii) is payable on account of the specified employee’s separation from service (as that term is defined in Section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7th) month following the separation from service.

 

 (i)           For this purpose, specified employees shall be identified by the Corporation on a basis consistent with regulations issued under Section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Corporation that are subject to Section 409A.

 

 (ii)          For this purpose “termination of employment” shall be defined as “separation from service” as that term is defined under Section 409A.

 

 (iii)         The right to payment of Dividend Equivalents is, for purposes of Section 409A, intended to be a separate right to payment (apart from the right to receive Shares) that is payable currently as and when cash dividends or other cash distributions are distributed, as permitted under § 1.409A-3(e) where dividends or distributions are anticipated to be paid at least annually.

 

 (iv)        To the extent that Section 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of section 409A. Neither the Corporation nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

 

(b)           Nothing contained in this Agreement or the Plan shall confer on the Executive Officer any right to continue in the employ of the Corporation or affect in any way the right of the Corporation to terminate the employment of the Executive Officer at any time.

 

(c)           The Corporation shall not be required to 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.

 

(d)           This Agreement is subject to the terms of the Plan, including, without limitation, the provision for adjustments in Section 4(c) of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to the Executive Officer upon request.

 

4

 

(e)           This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

 

(f)           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.

 

(g)           THIS RESTRICTED STOCK UNIT AWARD AGREEMENT FOR EXECUTIVE OFFICERS IS ATTACHED TO AND MADE A PART OF A RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND THE EXECUTIVE OFFICER.

 

* * * * * * * *

 

5

 

OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AWARD CERTIFICATE FOR EXECUTIVE OFFICERS

 

This certifies the award of restricted stock units as specified below which has been granted under the Otter Tail Corporation 2014 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 2015 Restricted Stock Unit Award Agreement for Executive Officers of which this Certificate is a part.

 

[Name and address of recipient]

 

[Social Security Number of recipient]

 

You have been granted the following Award:

 

By the Corporation’s and your signature below, it is agreed that this award of restricted stock units is governed by the terms and conditions of the 2015 Restricted Stock Unit Award Agreement for Executive Officers, a copy of which is attached and made a part of this document, and the Corporation’s 2014 Stock Incentive Plan.

 

 

 

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Exhibit 10.5

 

OTTER TAIL CORPORATION

EXECUTIVE RESTORATION PLUS PLAN

As Amended and Restated on February 6, 2015

TABLE OF CONTENTS

ii

 

SECTION 1

Purpose and Administration

 

1.1.	Name of Plan . Otter Tail Corporation, a Minnesota corporation (“Company”), has previously adopted the Executive Restoration Plus Plan (“Plan”), and the Company hereby adopts this restated Plan, as set forth herein.

 

1.2.	Effective Date . The original effective date of this Plan was July 1, 2012. The effective date of this restatement is February 6, 2015.

 

1.3.

Purpose . The Company has established the Plan primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees of the Employer. The Plan is intended: (1) to comply with Code section 409A and official guidance issued thereunder for all amounts earned under the Plan, and (2) to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

 

Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

 

The Company intends that the Plan (and any trust under the Plan as described in Section 6.1) shall be treated as unfunded for tax purposes and for purposes of Title I of ERISA. The Plan is not intended to qualify under Code section 401(a). The Company’s obligations hereunder, if any, to a Participant (or to a Participant’s beneficiary) shall be unsecured and shall be a mere promise by the Company to make payments hereunder in the future. A Participant (and any Participant’s beneficiary) shall be treated as a general unsecured creditor of the Company.

 

1.4.

Administration . The Plan shall be administered by the Committee, which shall act as the Plan Administrator. The Plan Administrator shall have the powers, rights and duties set forth in the Plan and shall have the power, in the Plan Administrator’s sole and absolute discretion, to determine all questions arising under the Plan, including the determination of the rights of all persons with respect to the Plan and to interpret the provisions of the Plan and remedy any ambiguities, inconsistencies, or omissions. Any decisions of the Plan Administrator shall be final and binding on all persons with respect to the Plan and the benefits provided under the Plan. The Committee may, subject to limitations under applicable law or securities exchange rules, delegate such powers and duties as are deemed desirable to the Chief Executive Officer or one or more other individuals, in which case every reference made to the Committee will be deemed to mean or include such individuals as to matters within their jurisdiction. If any individual to whom authority has been delegated hereunder shall also be a Participant in the Plan, the individual shall have no authority with respect to any matter specially affecting his or her individual interest in the Plan.

 

 

Each person or entity to whom a duty or responsibility has been delegated shall be responsible for the exercise of such duty or responsibility and shall not be responsible for any act or failure to act of any other person or entity.

 

If a Participant is serving as the Plan Administrator (either individually or as a member of a committee), the Participant may not decide or determine any matter or question concerning such Participant’s benefits under the Plan that the Participant would not have the right to decide or determine if the Participant were not serving as the Plan Administrator.

 

SECTION 2

Definitions

 

For purposes of the Plan, the following words and phrases shall have the meanings set forth below, unless their context clearly requires a different meaning:

 

2.1.

Account . “Account” means the bookkeeping account maintained under the Plan in the Participant’s name to reflect amounts deferred by the Participant under the Plan pursuant to Section 3 (as adjusted under Section 4) and any Employer Contributions made on behalf of the Participant pursuant to Section 3 (as adjusted under Section 4). The Account shall be hypothetical in nature and shall be maintained for bookkeeping purposes only. Neither the Plan nor the Account shall hold any actual funds or assets. The Account shall consist of a Participant’s entire account balance, including his Elective Deferred Subaccount and Employer Contributions Subaccount.

 

2.2.	Bonus . “Bonus” means an amount payable to an eligible Employee under an annual bonus or incentive compensation plan of the Company.

 

2.3.	Change in Control . “Change in Control” means, for purposes of determining a Participant’s vested interest in his Employer Contributions Subaccount, a Change in Control as defined in the Otter Tail Corporation 2014 Stock Incentive Plan.

 

2.4.	Code . “Code” means the Internal Revenue Code of 1986, as amended from time to time. Any reference to a section of the Code includes any comparable section or sections of any future legislation that amends, supplements or supersedes that section.

 

2.5.	Committee . “Committee” means the Compensation Committee of the Board of Directors of the Company and any successor thereto .

 

2.6.	Company . “Company” means Otter Tail Corporation, a Minnesota corporation.

 

2.7.	Compensation . “Compensation” means the total remuneration paid to the Participant by the Employer for services as an employee reportable on Treasury Form W-2 (or any comparable successor form) for the applicable period; subject, however, to the following:

 

(a)

Included Items . In determining a Participant’s Compensation there shall be included (i) elective contributions made by the Employer on behalf of the Participant that are not includible in gross income under Code sections 125, 132(f), 402(e)(3), 402(h), 403(b), 414(h)(2) and 457 including elective contributions authorized by the Participant under a retirement savings election under the Otter Tail Corporation Retirement Savings Plan, a cafeteria plan or any other qualified cash or deferred arrangement under Code section 401(k) and (ii) all elective deferrals under this or any other nonqualified plan of the Company.

 

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(b)

Excluded Items . In determining a Participant’s Compensation there shall be excluded: (i) all expense reimbursements (including moving expenses and tuition reimbursements), and other similar payments, and (ii) all noncash remuneration, and (iii) welfare benefits (both cash and noncash) including third party sick pay (including short and long term disability insurance benefits), and (iv) income imputed from insurance coverages and premiums or employee discounts and other similar accounts, and (v) the value of stock options and stock appreciation rights (whether or not exercised) and other similar amounts, and (vi) all foreign service allowances, station allowances, foreign tax equalization payments and other similar payments, and (vii) taxable and nontaxable fringe benefits, prizes, gifts (both cash and noncash included) or awards provided by Employer (including any gross up) (viii) final payments on account of termination of employment (i.e., severance payments) and settlement for accrued but unused PTO plans, and (ix) the value of long term incentives under the Company’s 1999 Stock Incentive Plan or any successor Plan, and (x) Achievement Awards and other similar incentive payments, and (xi) similar emoluments consistent with the foregoing.

 

2.8.	Deferral Election . “Deferral Election” means a written irrevocable election filed by the Participant with the Employer, as provided in Section 3.2, specifying the amount of Compensation to be deferred by the Participant for a Plan Year.

 

2.9.

Disabled . “Disabled” or “Disability” means, with respect to a Participant, that the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (b) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (c) has been determined to be totally disabled by the Social Security Administration. Disability under subsections (a) and (b) shall be determined by a physician selected by the Company. A Participant shall cooperate with the Company, including making the Participant reasonably available for examination by physicians at the Company’s request and at the Company’s expense to determine whether or not the Participant is Disabled.

 

2.10.

Elective Deferred Subaccount . “Elective Deferred Subaccount” means the bookkeeping account maintained to reflect the portion of a Participant’s Salary and Bonus deferred under the Plan pursuant to Section 3 (as adjusted under Section 4). The Elective Deferred Subaccount shall be hypothetical in nature and shall be maintained for bookkeeping purposes only. Neither the Plan nor the Elective Deferred Subaccount shall hold any actual funds or assets.

 

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2.11.

Employee . “Employee” means an employee of the Employer who meets the eligibility criteria set forth in Section 3.1 of the Plan and who is a member of a select group of management or highly compensated employees as defined under ERISA or the regulations thereunder.

 

2.12.

Employer . “Employer” means the Company.

 

2.13.

Employer Contributions . “Employer Contributions” means any Employer Contributions credited to a Participant’s Employer Contributions Subaccount pursuant to Section 3.5.

 

2.14.

Employer Contributions Subaccount . “Employer Contributions Subaccount” means the bookkeeping account or accounts maintained to reflect Employer Contributions made on behalf of the Participant under the Plan pursuant to Section 3.5 (as adjusted under Section 4). The Employer Contributions Subaccount shall be hypothetical in nature and shall be maintained for bookkeeping purposes only. Neither the Plan nor the Employer Contributions Subaccount shall hold any actual funds or assets.

 

2.15.

ERISA . “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time. Any reference to a section of ERISA includes any comparable section or sections of any future legislation that amends, supplements or supersedes that section.

 

2.16.

Investment Options . The Plan Administrator will designate the hypothetical “Investment Options”, if any, available for participant selection from time to time.

 

2.17.

Otter Tail Corporation Retirement Savings Plan . The “Otter Tail Corporation Retirement Savings Plan” means the Company’s retirement plan qualified under sections 401(a) and 401(k) of the Code as amended from time to time.

 

2.18.

Participant . “Participant” means an Employee who meets the eligibility criteria set forth in Section 3.1 and who has made a Deferral Election in accordance with the terms of the Plan or otherwise had amounts credited to his Account.

 

2.19.

Plan . “Plan” means the nonqualified deferred compensation plan named in Section 1.1.

 

2.20.

Plan Administrator . The “Plan Administrator” means the Committee or its delegate appointed as described in Section 1.4.

 

2.21.

Plan Year . “Plan Year” means the calendar year.

 

2.22.

Retirement . “Retirement” or “Retire” means a Separation from Service at or after attaining age 62.

 

2.23.

Salary . “Salary” means the regular base salary paid to an eligible Employee by the Company. Such pay shall be determined before any elections to defer or otherwise reduce compensation under this or any other nonqualified deferred compensation plan, and also before any salary reductions used for contributions or to purchase benefits under any other Company sponsored plans such as the Otter Tail Corporation Retirement Savings Plan.

 

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2.24.

Separation from Service . “Separation from Service” or “Separates from Service” means a “separation from service” within the meaning of Code section 409A.

 

2.25.

Unforeseeable Emergency . “Unforeseeable Emergency” means a severe financial hardship of the Participant as described in Code section 409A resulting from:

 

(a)

A sudden and unexpected illness or accident of the Participant, the Participant’s beneficiary, the Participant’s spouse, or the Participant’s dependent (as defined in Code section 152(a));

 

(b)

Loss of Participant’s property due to casualty; or

 

(c)

Such other similar extraordinary and unforeseeable circumstances resulting from events beyond the control of the Participant.

 

Whether a Participant has an Unforeseeable Emergency shall be determined in the sole discretion of the Plan Administrator.

 

2.26.

Valuation Date . “Valuation Date” means each business day the financial markets are open, unless the underlying investment requires a less frequent valuation.

 

2.27.

Other Definitions . In addition to the terms defined in this Section 2, other terms are defined when first used in Sections of this Plan.

 

SECTION 3

Eligibility, Participation, Deferral Elections, and Employer Contributions

 

3.1.

Eligibility and Participation . Any executive officer or employee of Otter Tail Corporation who is named by the Committee is eligible to participate in the Plan. An Employee shall become a Participant as of a date specified by the Committee and shall remain a Participant until the entire balance of the Participant’s vested Account has been distributed.

 

(a)

Each Participant shall complete and deliver a properly executed Retirement Distribution Election Form to the Plan Administrator no later than thirty (30) days after he first becomes eligible to participate in the Plan.

 

(b)

The Participant shall in the Retirement Distribution Election Form designate the form of the distribution of the Participant’s vested Account upon Retirement in (i) a single sum, (ii) annual installments over a period of five (5), ten (10), fifteen (15) or twenty (20) years, or (iii) a partial single sum (designated as a whole percentage) and the remainder in annual installments as permitted in (ii) above. In the event that the Participant fails to timely deliver a properly executed Retirement Distribution Election Form, the Participant shall be deemed to have elected a single lump sum.

 

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3.2.	Rules for Annual Deferral Elections . Each Plan Year, any Employee identified in Section 3.1 may make a separate Deferral Election to defer receipt of Salary and Bonus in accordance with the rules set forth below:

 

(a)

All Deferral Elections must be made in writing on the form prescribed by the Plan Administrator. Each Deferral Election will be effective only when filed with the Plan Administrator no later than the date specified by the Plan Administrator. In no event may a Deferral Election be made later than the last day of the Plan Year preceding the Plan Year in which the Compensation being deferred is earned. Additionally, no election under this Plan will be allowed if the Employee has a deferral election in place under another account balance nonqualified deferred compensation plan sponsored by the Company that would be aggregated with this Plan under Code section 409A.

 

(b)

With respect to Plan Years following the Participant’s initial Plan Year of participation in the Plan, failure to complete timely another Deferral Election shall constitute a waiver of the Participant’s right to elect a different amount of Compensation to be deferred for each such Plan Year and shall be considered an affirmation and ratification to continue the Participant’s existing Deferral Election (i.e., an “evergreen election”). However, a Participant may, prior to the beginning of any Plan Year, elect to increase or decrease the amount of Compensation to be deferred for the next following Plan Year by filing another Deferral Election with the Plan Administrator in accordance with paragraph (a) above.

 

(c)

In connection with each In-Service Distribution Election Form, a Participant may irrevocably elect one or more scheduled in-service distribution date(s) on which to receive a distribution of all or a portion of the amounts credited to the Participant’s Account to which such Form relates. Distribution upon a scheduled in-service distribution date shall be made pursuant to Section 5.1.

 

(d)

The Plan Administrator may establish a special enrollment period during a Plan Year ending no later than thirty (30) days after an Employee first becomes eligible to participate in the Plan, to allow deferral by such Employee of Base Salary (but not Bonus) that relates to (or is earned with respect to) services performed after the time the deferral election is made (as long as such Employee is not already a participant in another plan or arrangement which is aggregated with this Plan for purposes of Code §409A and that permits elective deferrals).

 

3.3.	Amounts Deferred . A Participant may elect to:

 

Defer up to 50% of Salary, in 1% increments.

 

Defer up to 100% of Bonus, in 1% increments.

 

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