DRAFT
BLACK HILLS CORPORATION
625 NINTH STREET
RAPID CITY, SOUTH DAKOTANinth Street
Rapid City, South Dakota 57701
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 199423, 1995
To the Shareholders of
Black Hills Corporation
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
holders of Common Stock of BLACK HILLS CORPORATION (herein called
the Company) will be held at the Holiday Inn Rushmore Plaza
Hotel, 505 North Fifth Street, Rapid City, South Dakota, on
Tuesday, May 24, 1994,23, 1995, commencing at 9:30 A.M., for the following
purposes:
1. To elect three Class IIIII Directors to serve
until the Annual Meeting of Shareholders in
1997;1998;
2. To consider a proposal to increase the Company's
authorized indebtedness from $200,000,000 to
$500,000,000;
3. Toand act on a proposal to amend Article Fourth of the
Company's Restated Articles of Incorporation as amended
to provide that the control share provisions of the South
Dakota Takeover Act do not applyupon an amendment to the
Company.
4.Employee Stock Purchase Plan to allow the
issuance of an additional 200,000 shares
pursuant to the Plan;
3. To ratify the appointment of Arthur Andersen
& Co.LLP to serve as independent auditors of the
Company for the year 1994;
5.1995;
4. To transact such other business as may
properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on
March 11, 1994,April 7, 1995, are entitled to notice of and to vote at the
meeting or any adjournment thereof.
All shareholders are cordially invited to attend the
meeting. Please complete, date, sign, and return the
accompanying form of proxy. A return envelope is enclosed which
requires no postage if mailed in the United States. We
appreciate your giving this matter your prompt attention.
By Order of the Board of Directors
ROXANN R. BASHAM
Corporate Secretary
Dated: March 25, 1994
April 14, 1995
BLACK HILLS CORPORATION
625 NINTH STREET
RAPID CITY, SOUTH DAKOTANinth Street
Rapid City, South Dakota 57701
PROXY STATEMENT
A proxy in the accompanying form is solicited by the Board
of Directors of Black Hills Corporation, a South Dakota
corporation (the Company), to be voted at the Annual Meeting of
Shareholders of the Company to be held Tuesday, May 24, 1994,23, 1995, and
at any adjournment thereof.
The enclosed form of proxy, when executed and returned,
will be voted as set forth therein. Any shareholder signing a
proxy has the power to revoke the same in writing, addressed to
the Secretary of the Company, or in person at the meeting at any
time before the proxy is exercised.
All shares represented by valid, unrevoked proxies will be
voted at the Annual Meeting. Shares voted as abstentions on any
matter (or as "withhold authority" as to Directors) will be
counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum at the meeting
and as unvoted, although present and entitled to vote, for
purposes of determining the approval of each matter as to which
the shareholder has abstained. If a broker submits a proxy which
indicates that the broker does not have discretionary authority
as to certain shares to vote on one or more matters, those shares
will be counted as shares that are present and entitled to vote
for purposes of determining the presence of a quorum at the
meeting, but will not be considered as present and entitled to
vote with respect to such matters.
The Company will bear all costs of the solicitation. In
addition to solicitation by mail, officers and employees of the
Company may solicit proxies by telephone, telegraph, or in
person. Chemical Bank has been retained by the Company to assist
in the solicitation of proxies at an anticipated cost of $4,500.$3,000.
Also, the Company will, upon request, reimburse brokers or other
persons holding stock in their names or in the names of their
nominees for reasonable expenses in forwarding proxies and proxy
material to the beneficial owners of stock.
This Proxy Statement and the accompanying form of proxy
are to be first mailed on March 25, 1994.April 14, 1995. The Company's Annual
Report for the year 19931994 has been mailed to shareholders.
VOTING RIGHTS AND PRINCIPAL HOLDERS
Only shareholders of record at the close of business on
March 11, 1994,April 7, 1995, will be entitled to vote at the meeting. The
outstanding voting stock of the Company as of such record date
consisted of __________14,399,436 shares of Common Stock.
Each outstanding share of Common Stock is entitled to one
vote. Cumulative voting is permitted in the election of
directors. Each share is entitled to three votes, one each for
the election of three directors, and the three votes may be cast
for a single person or may be distributed among two or three
persons.
The Company is not aware of any person or group who is the
beneficial owner of more than five percent of the Company's
Common Stock.
ITEM I
ELECTION OF DIRECTORS
In accordance with the Bylaws and Article Fifth of the
Restated Articles of Incorporation, the Company's directors are
elected to three classes of staggered terms consisting of three
years each. At this Annual Meeting of Shareholders, three
directors will be elected to Class IIIII of the Board of Directors
to hold office for a term of three years until the Annual Meeting
of Shareholders in 19971998 and until their respective successors
shall be duly elected and qualified.
EachThe terms of Michael B. Enzi, Everett E. Hoyt, and Charles
T. Undlin expire at the time of the nominees1995 Annual Meeting. Mr.
Undlin has elected not to stand for director is presently a member of there-election.
The Board of Directors has nominated Kirk E. Dean for
election as Director to succeed Mr. Undlin and nominated the
re-election of Michael B. Enzi and Everett E. Hoyt to each serve
a three-year term ending at the time of the Company and its subsidiaries, including Wyodak Resources
Development Corp., the Company's coal mining subsidiary, and Western
Production Company, the Company's oil and gas producing company.Annual Meeting in
1998.
The proxy attorneys will vote your stock for the election
of the three nominees for director listed below, unless otherwise
instructed, but will, at their
discretion, cumulate votes for any one or more of the nominees.instructed. If, at the time of the meeting, any of such nominees
shall be unable to serve in the capacity for which they are
nominated or for good cause will not serve, an event which the
Board of Directors does not anticipate, it is the intention of
the persons designated as Proxy Attorneys to vote, at their
discretion, for nominees to replace those who are unable to
serve. The affirmative vote of a majority of the common shares
present and entitled to vote with respect to the election of
directors is required for the election of the nominees to the
Board of Directors.
The following information, including principal occupation
or employment for the past five or more years, is furnished with
respect to each of the following persons who are nominated as
Class IIIII directors, each to serve for a term of three years to
expire in 1997.
1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION
OF THE FOLLOWING NOMINEES:
NOMINEES FOR ELECTION UNTILNominees for Election Until
1998 Annual Meeting - Class III
Name, Age, Principal Occupation for Director
Last Five Years and Other Directorships Since
Kirk E. Dean, 47 --
President, Rapid City Market,
Norwest Bank South Dakota, N.A.
Rapid City, South Dakota
Michael B. Enzi, 51 1992
Accounting Manager, Dunbar Well Service,
Inc. (an oil well servicing company),
Gillette, Wyoming; Wyoming State Senator,
Campbell County, Wyoming; President of NZ
Shoes, Inc. (retail shoe store), Gillette,
Wyoming
Everett E. Hoyt, 55 1991
President and Chief Operating Officer of
Black Hills Power and Light Company since
October 1, 1989
Directors Whose Terms Expire at
1996 Annual Meeting - Class I
Name, Age, Principal Occupation for Director
Last Five Years and Other Directorships Since
Glenn C. Barber, 61 1984
President and General Manager, Glenn
C. Barber & Associates Inc. (a general
construction company)
Bruce B. Brundage, 59 1986
President and Director, Brundage &
Company (a firm specializing in corporate
financing), Englewood, Colorado; Director,
Vicorp Restaurants, Inc., Denver, Colorado
Kay S. Jorgensen, 44 1992
Concessionaire, Black Hills Passion Play,
Spearfish, South Dakota; South Dakota
Legislative Representative, Lawrence County,
South Dakota
Directors Whose Terms Expire at
1997 ANNUAL MEETINGAnnual Meeting - CLASSClass II
NAME, AGE, PRINCIPAL OCCUPATION FOR DIRECTOR
LAST FIVE YEARS AND OTHER DIRECTORSHIPS SINCE
DANIELName, Age, Principal Occupation for Director
Last Five Years and Other Directorships Since
Daniel P. LANDGUTH, 47Landguth, 48 1989
Chairman, President, and Chief Executive
Officer of the Company since January 1,
1991; President and Chief Operating
Officer of Black Hills Corporation from
October 1989; Senior Vice President and
Chief Operating Officer of the Utility
from May 1985 to October 1989
DALEDale E. CLEMENT, 60Clement, 61 1979
Senior Vice President-Finance of the Company
and subsidiaries since September 1, 1989;
Dean of the School of Business and Professor
of Finance, University of South Dakota,
Vermillion, South Dakota, prior to
September 1989
JOHNJohn R. HOWARD, 53Howard, 54 1977
President, Industrial Products, Inc. (an
industrial parts distributor) since
March 2, 1992; General Manager of Black
Hills Packing Co. (a meat processing
concern), Rapid City, South Dakota, from
December 1978 to June 1, 1991; Director,
Norwest Bank-South Dakota, N.A.
DIRECTORS WHOSE TERMS EXPIRE AT
1995 ANNUAL MEETING - CLASS III
NAME, AGE, PRINCIPAL OCCUPATION FOR DIRECTOR
LAST FIVE YEARS AND OTHER DIRECTORSHIPS SINCE
MICHAEL B. ENZI, 50 1992
Accounting Manager, Dunbar Well Service,
Inc. (an oil well servicing company),
Gillette, Wyoming; Wyoming State Senator,
Campbell County, Wyoming; PresidentSecurity Ownership of NZ
Shoes, Inc. (retail shoe store), Gillette,
Wyoming
EVERETT E. HOYT, 54 1991
President and Chief Operating Officer of
Black Hills Power and Light Company from
October 1, 1989; Director since January 1,
1991; Senior Vice President - Legal
and Corporate Secretary of Northwestern
Public Service Company, Huron, South
Dakota, prior to October 1989;
Director-Northwestern Public
Service Company from May 1988 through
September 1989
CHARLES T. UNDLIN, 66 1970
Vice Chairman, Rushmore State Bank,
Rapid City, South Dakota
DIRECTORS WHOSE TERMS EXPIRE AT
1996 ANNUAL MEETING - CLASS I
NAME, AGE, PRINCIPAL OCCUPATION FOR DIRECTOR
LAST FIVE YEARS AND OTHER DIRECTORSHIPS SINCE
GLENN C. BARBER, 60 1984
President and General Manager, Glenn
C. Barber & Associates Inc. (a general
construction company)
BRUCE B. BRUNDAGE, 58 1986
President and Director, Brundage &
Company (a firm specializing in corporate
financing), Englewood, Colorado; Director,
Vicorp Restaurants, Inc., Denver, Colorado
KAY S. JORGENSEN, 43 1992
Concessionaire, Black Hills Passion Play,
Spearfish, South Dakota; South Dakota
Legislative Representative, Lawrence County,
South Dakota
__________________________
SECURITY OWNERSHIP OF MANAGEMENTManagement
The following table sets forth information, as of December
31, 1993,1994, with respect to beneficial ownership of Common Stock of
the Company for each Director, each executive officer named in
the Summary Compensation table herein, and all Directors and
executive officers of the Company as a group.
NUMBER OF SHARES AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIPNumber of Shares and Nature
Name of Beneficial Owner Of Beneficial Ownership
Glenn C. Barber 2,6873,011
Bruce B. Brundage 3,615
Dale E. Clement 9,59710,197
Kirk E. Dean 186
Michael B. Enzi 9981,354
John R. Howard 10,42011,102
Everett E. Hoyt 4,0484,705
Kay S. Jorgensen 343513
Daniel P. Landguth 7,9888,679
Charles T. Undlin 8,356
All Directors and executive
officers as a group 58,24656,872
Represents outstanding Common Stock beneficially owned
both directly and indirectly as of December 31, 1993.1994. The Common
Stock interest of each named person and all Directors and
executive officers as a group represents less than one percent of
the aggregate amount of Common Stock issued and outstanding.
Except as indicated by footnote below, the beneficial owner
possesses sole voting and investment powers with respect to the
shares shown.
Includes 3,600 shares owned by Brundage & Co. Pension
Plan and Trust which Mr. Brundage is the Trustee and has sole
voting and investment power.
Includes 100 shares owned jointly with Mr. Enzi's son
as to which he shares voting and investment power and 100106 shares
for which Mr. Enzi is custodian of his minor daughter.
Includes Common Stock held by the Trustee of the
Company's Retirement Savings Plan (401K) of which the Trustee has
sole voting and investment power as follows: Mr. Hoyt 3,7113,949
shares, Mr. Landguth 2,5932,875 shares, and all Directors and
executive officers as a group 10,8809,218 shares.
THE BOARD AND COMMITTEESThe Board and Committees
The Executive Committee is comprised of Glenn C. Barber,
Bruce B. Brundage, John R. Howard, Daniel P. Landguth, and
Charles T. Undlin, with Mr. Landguth serving as Chairman. The
Committee exercises the authority of the Board of Directors in
the interval between meetings of the Board, recommends to the
Board of Directors persons to be elected as officers, and
recommends persons to be appointed to Board Committees. The
Executive Committee held twothree meetings during 1993.1994.
The Compensation Committee is comprised of Glenn C.
Barber, Bruce B. Brundage, Michael B. Enzi, John R. Howard,
Kay S. Jorgensen, and Charles T. Undlin, with Mr. Barber serving
as Chairman. The Committee performs functions required by the
Board of Directors in the administration of all federal and state
statutes relating to employment and compensation, recommends to
the Board of Directors compensation for officers, and considers
and approves the Company's compensation program including
benefits and stock ownership plans. The Compensation Committee
held threetwo meetings in 1993.1994.
The Audit Committee is comprised of Bruce B. Brundage,
Michael B. Enzi, John R. Howard, and Kay S. Jorgensen, with
Mr. Howard serving as Chairman. The Committee annually
recommends to the Board of Directors an independent accounting
firm to be appointed by the Board for ratification by the
shareholders, reviews the scope and results of the annual audit
including reports and recommendations of the firm, reviews the
Company's internal audit function, and periodically confers with
the internal audit group, management of the Company, and its
independent accountants. The Audit Committee held threetwo meetings
in 1993.1994.
The Nominating Committee is comprised of Glenn C. Barber,
John R. Howard, Daniel P. Landguth, and Charles T. Undlin, with
Mr. Howard serving as Chairman. The Committee recommends to the
Board of Directors persons to be nominated as directors or to be
elected to fill vacancies on the Board. The Bylaws require that
an outside director serve as Chairman of the Committee. The
Nominating Committee held one meeting in 1993.1994.
Pursuant to the Company's Bylaws, nominations from
shareholders for Board membership will be considered by the
Nominating Committee. Shareholders who wish to submit names for
future consideration for Board membership should do so in writing
prior to November 26, 1994,25, 1995, addressed to Nominating Committee,
c/o Corporate Secretary, Black Hills Corporation, P.O. Box 1400,
Rapid City, South Dakota 57709.
Members of the Committees referred to herein are
designated by the Board of Directors upon recommendation of the
Executive Committee each year at a meeting held following the
Annual Meeting of Shareholders.
The Board of Directors held twelveten meetings during 1993. During 1993
Bruce B. Brundage only1994.
Each director attended 70no less than 80 percent of the aggregate
of the total number of Board meetings and Committee meetings on
which he served due to his
recuperation from an accident.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONthe director served.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is solely comprised of the
following outside directors, Glenn C. Barber, Bruce B. Brundage,
Michael B. Enzi, John R. Howard, Kay S. Jorgensen, and
Charles T. Undlin.
Mr. Howard is also a director of Norwest Bank - South
Dakota, N.A. Mr. Dean is President of the Rapid City Market -
Norwest Bank South Dakota, N.A., of which the Company has a $15
million line of credit. During 1993,1994, Norwest Bank - South
Dakota, N.A. participated in short-term loans to the Company of
up to $10$14.7 million at an interest rate of 1/8 percent less than
the prime rate.
DIRECTORS' FEESDirectors' Fees
Directors who are not officers of the Company receive an
annual fee of $12,000 plus a fee of $600 for each board meeting
and committee meeting attended providing such committee meetings
are substantive in nature and content.
DIRECTORS' RETIREMENT PLANDirectors' Retirement Plan
The Company has a Retirement Plan for those directors who
are not otherwise employed by the Company (outside directors).
The monthly benefit is $1,000 payable for a period of time equal to the number of months
the outside director served or for 120 months, whichever is less.
The monthly benefits commence at the earliest of (1) the first
full complete month the outside director is 60 years of age or
more and is no longer a director of the Company or (2) the first
full month after the death of the outside director or former
outside director. The Board of Directors may withdraw retirement
benefits for any outside director dismissed for cause. The
monthly benefit is paid to the participating director, or if
deceased, the director's designated beneficiary, and if none, his
or her estate.
EXECUTIVE COMPENSATION
Executive Compensation
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors is
responsible for developing and making recommendations to the
Board on executive compensation. The components of the Company's
executive compensation program consists of a base salary, and an
incentive gainsharing bonus.bonus and results compensation. The mix of
base salary, and
incentive bonus, and results compensation reflects
the Company's goals of attracting and retaining highly qualified
and motivated managers, recognizing and rewarding outstanding
performance, and fostering a cohesive management team.team, and having a
portion of compensation contingent upon the performance of the
Company.
The Committee makes annual recommendations to the Board
concerning the base salary, and incentive gainsharing bonus, and
results compensation for the Chief Executive Officer and each of
the other executive officers of the Company. Recognizing a
market based compensation structure, the Committee strives to
ensure that competitive salary ranges and base salaries are being
maintained. In the later part of 1992, the Compensation
Committee had hired Hewitt Associates, an internationally recognized
compensation consultant firm, to review the executive and
director compensation being paid at the Company. Data collected
for that 1992 review was again utilized. Hewitt Associates
confirmed that their data, ifutilized in 1994, aged for the
few months that had passed, would
be adequate as a basis for 1993.passage of time.
Utilizing the data from the Hewitt Associates study and
comparing it to data from the Edison Electric Institute, the
trade association of investor-
ownedinvestor-owned electric utilities, the
Committee recommended to the Board the base salary for the Chief
Executive Officer as well as for the other executive officers.
The salaries were not only based upon comparable market salary
information but also on the accomplishments of key corporate and individual
performance objectives.
The Company's position is to establish a market salary
level for each salary range that is at or near the median (50th
percentile) of the range of salaries of comparable companies
surveyed. A performance matrix system is used in determining the
percentage of salary increase taking into account the performance
rating for the individual officer and the relationship of the
officers current salary to market. An outstanding performance
rating is given when there is extraordinary and exceptional
accomplishment, results are far in excess of requirements, and
demanding objectives are attained. A superior performance rating
indicates results are well above the expected level and the
individual was successful in accomplishing challenging
objectives. Competent performance ratings are given when all
position requirements are met, the individual consistently
performs the job in a satisfactory manner, and realistic
objectives are obtained. All executiveBase salary increases in 1994 for the
Company's officers received either a superior or outstanding performance rating.
Theranged from 2 percent to 5 percent.
In April 1994, the Compensation Committee granted the
Chief Executive Officer a superior rating based on the Company's performance and obtaining successful
regulatory approval and all permits to constructefforts made
in commencing construction on the new power plant.
Overall corporate results were very positiveplant, a successful
common equity sale, the increase in 1992, corporate earnings
increased 4 percent,dividends, and dividends increased by 6 percent over 1991.maintenance of
earnings. The Compensation Committee approved a 65 percent base
salary increase and a one-
time $4,900 performance bonusin the amount of $9,176 for the Chief Executive
Officer. The increase to the base salary brings the Chief
Executive Officer's base salary to 95.898 percent of market as
determined by wage surveys. Consolidated earnings per share in
1993 was $1.66 compared to $1.73 in 1992. However, 1992 earnings
included a $0.07 per share non-recurring after-tax non-cash gain.
Without this gain in 1992, earnings per share would have been flat
with 1 percent more average shares outstanding. Dividends
increased 3.2 percent over 1992.
The Company currently maintains a variety of employee
benefit plans and programs in which its executive officers may
participate, including the gainsharing program, the results
compensation program, the retirement savings (401k) plan, the
pension plan, and the pension equalization plan. With the
exception of the Pension Equalization Plan (PEP), these benefit
plans and programs are generally available to all employees
within the Company.
The Executive Gainsharing Program is one of three sections
of a Company wide program. The goals of the Executive
Gainsharing Program support the interests of the ratepayercustomer and
stockholder by increasing net income.shareholder. This is accomplished through increased cost
containment and operating efficiencies which in the end result
reduce costs and increase earnings. The program for 19921994 which
paid a 2 to 3 percent gainshare award in 1993 specifically1995 consisted of a
net incomesafety goal, a reduction in budgeted operating expenses, and a
goal related to the new power plant.
The Results Compensation Program began in 1994 and was
designed to recognize and reward the contribution that group
performance makes to corporate success. All regular full-time
and regular part-time non-union employees are eligible to
participate in the program. The local union IBEW, 1250, elected
not to participate in the Results Compensation Program. The
program has two key financial goals, a business unit goal and a
corporate goal. The Company's actual netbusiness unit goal is based upon the
percentage of operating income for the respective business unit
which exceeds budgeted amounts. The corporate goal is based upon
the percentage of consolidated earnings per share which exceeds
budgeted amounts. Each goal is weighted 50 percent and must
exceed 5 percent of budgeted amounts before a bonus is paid. The
maximum bonus which can be paid is 8 percent. The executive
officers earned a 2.25 percent results compensation bonus in 1993 exceeded budgeted
net income by more than 1091994
which was paid in 1995. Company wide bonuses ranged from 2
percent resulting in a maximum 3 percent
gainshare award.to 6.20 percent.
It is the objective of the Company to pay its executives a
fair salary, based on the comparable pay of similar types of
companies in relation to achieving corporate, business unit, and
individual performance objectives. The Company does not offer
any restricted stock awards, stock options, or other long-term
incentive compensation plans. Furthermore, officers are not
permitted to serve on the Board of Directors of any other
corporation operating for profit. The intent of the latter is
that if the executives are paid fairly, the Company and its
shareholders should demand their full attention and, therefore,
their efforts are totally directed toward the Company and not
interrupted by the obligations of serving as a director for other
for profit corporations.
COMPENSATION COMMITTEE
Glenn C. Barber, Chairman Bruce B. Brundage Michael B. Enzi
John R. Howard Kay S. Jorgensen Charles T. Undlin
____________________
The following table is furnished for the fiscal year ended
December 31, 1993,1994, with respect to the Chief Executive Officer of
the Company and the executive officers whose salary and bonus
compensation for 19931994 exceeded $100,000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME AND PRINCIPAL
POSITION YEAR SALARY BONUSName and Principal Annual Compensation
Position Year Salary Bonus OTHER
ANNUAL
COMPENSATION
Daniel P. Landguth 1994 $188,110 $10,180
Chairman, President, and 1993 $178,466 $10,761 -178,466 10,761
Chief Executive Officer of 1992 173,134 18,250
the Company and subsidiaries
Everett E. Hoyt 1994 $128,365 $ 6,945
President and Chief Executive 1992 173,134 4,400 $13,850Operating 1993 123,566 3,906
Officer of theBlack Hills Power 1992 121,008 5,791
and Light Company 1991 169,866 - -
and subsidiaries
Dale E. Clement 1994 $127,363 $ 5,582
Senior Vice President-President - 1993 $124,266 $124,266 3,966 -
Finance of the Company and 1992 122,430 3,163 $ 2,449
and subsidiaries 1991 116,865 - -
Everett E. Hoyt
President and Chief 1993 $123,566 $ 3,906 -
Operating Officer of 1992 121,008 3,245 $ 2,546
Black Hills Power 1991 121,008 - 3,630
and Light Company5,612
Subsidiaries
Bonus isamounts for 1994 include amounts earned under the
amount received underResults Compensation Program and the Incentive Gainshare Program,
a cash bonus programprograms for all Company employees based on the attainment
of predetermined profitability measures. Bonus amounts for 1993
include amounts earned under the Incentive Gainshare Program.
Mr. Landguth's bonus in 1993 also includes both his Gainshare bonus and a one-time performance
bonus of $4,900. Other Annual Compensation isBonus amounts for 1992 include amounts earned
under the amount ofIncentive Gainshare Program and lump sum payments that
were received in lieu of base salary increases in 1992. Mr. Hoyt also received a
lump sum payment in 1991 in lieu of an increase in his base salary.
RETIREMENT PLANSincreases.
Retirement Plans
The Company has a defined benefit retirement plan
(Retirement Plan) for its employees. The Retirement Plan
provides benefits at retirement based on length of employment
service and average monthly pay in the five consecutive calendar
years of highest earnings out of the last ten years. Employees
do not contribute to the Retirement Plan. The amount of annual
contribution by the employers to the Retirement Plan is based on
an actuarial determination. Accrued benefits become 100 percent
vested after an employee completes five years of service.
The Company also has a Pension Equalization Plan (the
PEP), a nonqualified supplemental plan, which is designed to
provide the higher paid executive employee a retirement benefit
which, when added to social security benefits and the pension to
be received from the Retirement Plan, will approximate retirement
benefits being paid by other employers to its employees with like
executive positions. The employee's pension from the qualified
pension plan is limited under the current law to not exceed
$118,800$120,000 annually and the compensation taken into account in
determining contributions and benefits cannot exceed $150,000.
The amounts of deferred compensation paid under nonqualified
plans such as the PEP are not subject to the limits. A
participant under the PEP does not qualify for benefits until the
benefits become vested under a vesting schedule - 20 percent
after three years of employment under the plan increasing up to
100 percent vesting after eight years of employment under the
plan. No credit for past service is granted under the PEP. The
annual benefit is 25 percent of the employee's average earnings
(if salary was less than two times the Social Security Wage Base)
or 30 percent (if salary was more than two times the Social
Security Wage Base) times the vesting percentage. Average
earnings are normally an employees average earnings for the
five highest consecutive full years of employment during the ten
full years of employment immediately preceding the year of
calculation. The annual PEP benefit is paid on a monthly basis
for 15 years to each participating employee and if deceased to
the employee's designated beneficiary or estate, commencing at
the earliest of death or when the employee is both retired and 62
years of age or more.
In the event that at the time of a Participant's
retirement from the Company the Participant's salary level
exceeds the qualified pension plan annual compensation limitation
of $150,000, then the Participant shall receive an additional
benefit which is measured by the difference between the monthly
benefit which would have been provided to the Participant under
the Company's defined benefit retirement plan as if there were no
annual compensation limitation and the monthly benefit to be
provided to the Participant under the Retirement Plan.
Participants in the PEP are designated by the Board of
Directors upon recommendation of the Chief Executive Officer.
Selection is based on key employees as determined by management
and consideration of performance rather than salary based only.
The minimum salary component applied in the selection process is
the maximum annual Social Security taxable wage base which is
presently at $60,600. Four officers of the Company were initially
excluded because the period of time up to the date of their likely retirement
would not result in vested benefits as intended by the PEP. The Company
extended to those four individuals certain benefits paid at retirement which
would approximate 50 percent of the present value of the PEP. Since then,
arrangements have been made with three of those persons who retired.
RETIREMENT BENEFITS$61,200.
Retirement Benefits
The following table illustrates estimated annual benefits as of January
1, 1994,
payable under the Retirement Plan and the PEP to employees who
retire at the normal retirement date.
Years of Service
Annual 15 20 25 30 35
Pay Years Years Years Years Years
$ 60,000 $ 27,94527,941 $ 32,26032,255 $ 36,57536,569 $ 40,89040,883 $ 45,20545,196
75,000 35,295 40,810 46,325 51,840 57,35535,291 40,805 46,319 51,833 57,346
90,000 42,645 49,360 56,075 62,790 69,50542,641 49,355 56,069 62,783 69,496
110,000 52,445 60,760 69,075 77,390 85,70552,441 60,755 69,069 77,383 85,696
125,000 66,045 75,560 85,075 94,550 104,10566,041 75,555 85,069 94,583 104,096
150,000 79,545 91,060 102,575 114,090 125,60579,541 91,055 102,569 114,083 125,596
175,000 87,045 98,560 110,075 121,590 133,10593,041 106,555 120,069 133,583 147,096
200,000 94,545 106,060 117,575 129,090 140,605106,541 122,055 137,569 153,083 168,596
225,000 102,045 113,560 125,075 136,590 148,105120,041 137,555 155,069 172,583 190,096
Estimated annual benefits payable to officers named below
at age 65 from all sources are as follows: Daniel P. Landguth,
35 yrs. - $134,991;$159,597; Dale E. Clement, 33 yrs. - $88,235$82,533;
Everett E. Hoyt, 31 yrs. - $81,393$78,156.
The benefits in the foregoing table were calculated as a
straight life annuity. Amounts shown are exclusive of Social
Security benefits and include benefits from both the Retirement
Plan and from the PEP assuming a 100 percent vested interest in
the PEP.
_________________________
Such amounts are adjusted for benefits applicable to
service for prior employment.
EMPLOYEES' STOCK PURCHASE PLANEmployees' Stock Purchase Plan
Employees of the Company and its subsidiaries are eligible
to participate in the Employees' Stock Purchase Plan, as approved
by the shareholders at the 1987 Annual Meeting under which
offerings of the Company's Common Stock, at the discretion of the
Board, are made to employees at a price equal to 90 percent of
the closing sale price on the New York Stock Exchange on the date
of the offering. An offering was extended to employees in 19931994
and officers subscribed to 3502,200 shares at a price of $24.08$17.10 per
share. Shares are held in nominee name until subscriptions are
paid for in full.
RETIREMENT SAVINGS PLANRetirement Savings Plan
The Company has a Retirement Savings Plan under Section
401(k) of the Internal Revenue Code of 1954, as amended, which
permits employees of the Company and its subsidiaries, including
officers, to elect to invest up to 15 percent of their eligible
earnings on a pre-tax basis into an investment fund subject to
limitations imposed by the Internal Revenue Code. The Company
makes no contributions to the Plan.
Distribution from the fund will be made to employees at
termination of employment, retirement, death, or in case of
hardship. No amounts were paid or distributed pursuant to the
Retirement Savings Plan to the individuals named herein nor to
the officers as a group.
The Trustee for the Retirement Savings Plan (401(k) Plan)
has voting power with respect to shares held in the name of the
Trustee of the Plan.
STOCK PERFORMANCE GRAPHStock Performance Graph
The graph below compares the cumulative shareholder return
on the Company's Common Shares for the last five fiscal years
with the cumulative total return of the S&P 500 Index, the Edison
Electric Institute Electric Index, (EEI Electric Index) and the
Duff & Phelps Quality II Electrics and the S&P 500 Index over the same period
(assuming the investment of $100 on January 1,December 31, 1989, and the
reinvestment of all dividends). The Company has changed its
broad marketindustry index this year from the Edison Electric Institute Investor-Owned Electric
Utility IndexDuff & Phelps Quality II Electrics to the
S&P 500EEI Electric Index because the Securities and Exchange Commission
notifiedhas approved the Company that they do not accept the EdisonEEI Electric
Institute Investor-Owned Electric Utility Index as a published broad market
index. 1989The
Company believes the EEI Electric Index is more widely recognized
by investors. Both indexes have been shown for comparison
purposes.
(INSERT CAMERA READY GRAPH)
1990 1991 1992 1993 1994
Black Hills Corporation 120 135 194 202 176$112 $161 $167 $146 $146
S&P 500 $ 97 $126 $136 $150 $152
EEI ELectric $101 $131 $141 $156 $138
Duff & Phelps Quality
II Electric Companies 127 131 173 186 204
S&P 500 Index 132 128 166 179 197Electrics $104 $136 $143 $159 $142
ITEM II
AUTHORIZATIONPROPOSAL TO AMEND THE 1987 EMPLOYEE STOCK
PURCHASE PLAN TO ALLOW THE ISSUANCE
OF INCREASE IN INDEBTEDNESS
UnderAN ADDITIONAL 200,000 SHARES OF COMMON STOCK,
PAR VALUE $1.00,
PURSUANT TO THE PLAN
The 1987 Employee Stock Purchase Plan (the Plan), providing
for the provisionssale of Article XVII, Section 8shares of the ConstitutionCompany's Common Stock, Par Value
$1.00 (Shares) to employees, was adopted by the Board of
Directors on January 29, 1987, and approved by the shareholders
on May 20, 1987. The Board of Directors is of the Stateopinion that
the Plan has proved to be of South Dakota,substantial value in stimulating the
maximum amountefforts of indebtedness whichemployees and increasing their ownership in the
Company. The number of Shares remaining for issuance under the
Plan is insufficient to provide adequately for the future
participation by eligible employees who wish to purchase Shares.
Accordingly, on February 14, 1995, the Board of Directors
adopted an amendment to the Plan to increase the number of Shares
available for issuance under the Plan by an additional 200,000
Shares. The Plan is briefly described below.
Each full-time employee of the Company and its subsidiaries,
including officers, but excluding directors not otherwise
employed by the Company, is eligible to participate in the Plan.
A full-time employee is one who has been in the employ of the
Company or subsidiary for at least six months prior to the
Offering Date and who is in the active service of the Company or
subsidiary. Any employee whose customary employment is 20 hours
or less per week or whose customary employment is for not more
than five months per calendar year is not eligible to
participate. As of December 31, 1994 there were approximately
342 employees of the Company and 96 employees of the subsidiaries
who would have been eligible to participate in the Plan on that
date.
The Board of Directors of the Company determines the time
(Offering Date) at which Shares may be offered. The maximum
number of Shares which could originally be issued by the Company
under the Plan was 100,000 Shares subject to adjustment in the
event of stock dividends, stock splits or reverse stock splits.
This amount was increased to 137,459 Shares on March 2, 1992, to
reflect the adjustment for the three-for-two split. The amount
would be increased to 337,459 Shares if this proposal is
approved.
The Plan provides that an eligible employee may subscribe
for not less than 20 nor more than 400 Shares in connection with
each offering thereunder at a price equal to 90 percent of the
fair market value of such Shares on the date an offering is made
but not less than book value. The fair market value is deemed to
be the closing sale price of the Shares on the Offering Date as
reported on the New York Stock Exchange - Composite Transactions.
A subscription, subject to cancellation by the employee,
must be completed through payroll deductions within 12 months
from the Subscription Date. All dividends declared and paid on
Shares subscribed for will be applied toward the purchase of
additional Shares through the Dividend Reinvestment and Stock
Purchase Plan at the Offering Price. The Company pays all
administrative costs of the Plan.
The Plan is administered by the Board of Directors which has
power and authority to promulgate such rules and regulations as
it deems appropriate therefor, to interpret its provisions and to
take all action in connection therewith as it deems necessary.
Other aspects of administration are handled by the Employees'
Stock Purchase Plan Committee, the membership of which will be
designated from time to time by the President of the Company. No
person is specifically compensated from assets of the Plan for
the performance of any such administrative duties.
The Board of Directors may amend, modify, suspend or
terminate the Plan at any time without notice, provided however,
that no such amendment, modification or termination shall
adversely affect any existing subscription or offering, and
provided further, that no such amendment shall increase the
number of shares authorized to issue may not be increased withoutoffered under the consentPlan, or
change the definition of eligible participants under the Plan.
Amounts received by the Company from the sale of the shareholders. PursuantShares
will be used for its general corporate purposes.
Since inception of the Plan through March 1, 1995, 80,528
Shares have been purchased, 24,233 Shares have been subscribed
to, this provision,and 32,698 Shares remain for future offerings.
It is the shareholders in 1992, on
the recommendationjudgement of the Board of Directors approved and authorized an
increasethat the Plan
promotes employee interest in the maximum amountCompany to the benefit of the
Company and its shareholders and the Amendment to the Plan should
be approved. Adoption of the following resolution is therefore
recommended:
RESOLVED, That the shareholders of the Company do
hereby approve the Amendment to the Employee Stock Purchase
Plan, as adopted by the Board of Directors at their meeting
held on February 14, 1995, increasing the number of shares
of the Company's authorized indebtednessand unissued shares of Common
Stock, par value $1.00, to $200,000,000. As of February 28, 1994, the Company's outstanding
indebtedness was as follows:
First Mortgage Bonds . . . . . . . . . . . $ 62,794,000
Other Long Term Debt . . . . . . . . . . . . 24,500,000
Notes Payable. . . . . . . . . . . . . . . 14,468,000
$101,762,000
The Company's construction expenditures for the next three years are
estimated as follows:
1994 1995 1996
(in thousands)
Neil Simpson Unit #2
(new power plant) $65,113 $45,035 $ -
Other Production Plant 2,283 859 897
Transmission Plant 4,228 1,617 8,478
Distribution Plant 6,511 6,503 6,876
General Plant 1,448 814 2,354
$79,583 $54,828 $18,605
These and future construction requirements of the Company will requirean additional debt financing. The Company has not entered into agreements with
respect to the issuance of any additional debt securities. It is expected,
however, that the Company will issue and sell additional debt securities from
time to time. The timing and amount of such issuance will depend on market
conditions and other factors existing at the time. Under the terms of the
proposed resolution, the Board of Directors, subject to the approval of
regulatory authorities, can, at the opportune time without further
authorization of the shareholders, determine and fix the amount and terms of
the debt securities200,000 shares to
be issued including interest rates, maturity dates,
call provisions, sinking fund requirements, and similar matters.
Accordingly,available for issuance under the following resolution will be presented at the meeting:
RESOLVED, That the consent of the shareholders be, and it is
hereby given to an increase in the Company's authorized
indebtedness to not exceed $500,000,000 at any one time
outstanding; that for the purpose of effecting such increase,
bonds, debentures, notes, and other instruments evidencing
indebtedness of the Company may be issued from time to time in such
form and of such character as seems desirable to the Board of
Directors; and that for the purpose of consenting to an increase of
authorized indebtedness of the Company, it is the intention of this
resolution that bonds, debentures, notes, and other instruments
evidencing indebtedness are authorized to be issued whenever the
maximum indebtedness by this resolution is not thereby exceeded;
said bonds, debentures, notes and other evidences of indebtedness
to be issued when and as the Board of Directors shall deem
advantageous for the Company's interest and upon such terms and
conditions as shall be approved by the Board.
VOTE REQUIREDPlan.
Vote Required
An affirmative vote of the holders of the majority of all
issued and outstanding shares of common stock is required to adopt the foregoing
resolution.
While the current debt limitation is believed to be sufficient to
complete the above construction expenditures, the Board of Directors is of
the opinion that the debt limitation should be set high enough so as to give
the Board the flexibility to determine from time to time on short notice the
borrowing requirements and terms of those borrowings and to be able to close
those borrowings without the necessity of calling frequent shareholder
meetings.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ADOPTION OF THE RESOLUTION
ITEM III
AMENDMENT TO ARTICLE FOURTH OF THE RESTATED ARTICLES
OF INCORPORATION TO PROVIDE THAT THE
CONTROL SHARE ACQUISITION PROVISIONS OF THE SOUTH DAKOTA
TAKEOVER ACT DO NOT APPLY TO THE COMPANY
The Board of Directors unanimously adopted a resolution to submit to the
shareholders for their consideration an amendment, as described herein, to
Article Fourth of the Restated Articles of Incorporation, as amended, that if
adopted will add paragraph 8 to Article Fourth providing that the Control
Share Acquisition (hereinafter defined) provisions of the South Dakota
Domestic Public Corporation Takeover Act ("Takeover Act") do not apply to the
Company.
The Takeover Act, found at Chapter 47-33 of the South Dakota Codified
Laws ("SDCL"), was adopted by the South Dakota Legislature in 1990 and became
effective July 1, 1990. The Control Share Acquisition provisions along with
other provisions of the Takeover Act became applicable to domestic public
corporations, including the Company, on the effective date of the Takeover
Act. However, the Takeover Act provides that a corporation through its
articles of incorporation may elect not to have the Control Share Acquisition
provisions apply to that corporation.
The Control Share Acquisition provisions and other provisions of the
Takeover Act are summarized in the Proxy Statement. However, the summary
does not include each and every provision of the act. A full understanding
of the Takeover Act would require a thorough reading of the act at
SDCL 47-33.
If the proposed amendment to Article Fourth is adopted by the
shareholders, the Control Share Acquisition provisions of the Takeover Act
shall not apply to any Control Share Acquisition occurring after such
adoption.
Control Share Acquisition Provisions Explained
Definition. A "Control Share Acquisition" as defined by the Takeover
Act at SDCL Section 47-33-3(l) is generally, subject to certain exceptions,
an acquisition, directly or indirectly, by an acquiring person of beneficial
ownership of shares of a domestic public corporation that when added to all
other shares beneficially owned by the acquiring person would allow that
person to exercise certain ranges of voting power. Acquisition of shares as
a result of a merger first approved by the Board of Directors followed by
approval of the shareholders is not a Control Share Acquisition.
Shareholder Election Required to Give Voting Rights. The Control Share
Acquisition provisions of the Takeover Act provides generally that a Control
Share Acquisition that exceeds certain thresholds of voting power (described
below) shall have the same voting rights as other shares of the same class or
series only if approved by the affirmative vote of the majority of all
outstanding shares entitled to vote, including all shares held by the
acquiring person, and by the affirmative vote of the holders of the majority
of the voting power of all outstanding shares entitled to vote, excluding all
interested shares. The thresholds which would require shareholder approval
before voting powers are obtained with respect to shares acquired in excess
of such thresholds are 20 percent, 33 2/3 percent and 50 percent,
respectively. Each time an acquiring person reaches a threshold, an election
must be held as described above before the acquiring person will have any
voting rights with respect to shares in excess of such threshold.
The Control Share Acquisition provisions of the Takeover Act further
provides that any person who proposes to make or has made a Control Share
Acquisition may at that person's election cause an informational statement to
be furnished the Company and, if an undertaking is furnished to pay the costs
of the meeting, may request a special meeting of the shareholders to be
called for the sole purpose of considering the voting rights to be accorded
the shares acquired or to be acquired pursuant to the Control Share
Acquisition. If such informational statement, request and undertaking are
furnished, the Takeover Act provides that a special meeting of shareholders
be called for such purpose be held no later than 50 days after receipt of the
informational statement. If the informational statement is furnished but a
special meeting of shareholders is not requested, consideration of the voting
rights to be accorded shares pursuant to the Control Share Acquisition is to
be submitted to the shareholders at the next special or annual meeting of
shareholders.
Redemption of Shares. The Control Share Acquisition provision of the
Takeover Act further provides that the Company may redeem at the market value
as of the time of redemption those shares that were acquired in a Control
Share Acquisition if (i) an informational statement was not furnished the
Company within the tenth day after the Control Share Acquisition or (ii) an
informational statement was furnished but the shareholders voted not to
accord voting rights.
Purpose of Takeover Act
The Takeover Act provides that the purpose of the Control Share
Acquisition provisions and other anti-takeover provisions of the Takeover Act
generally, among other things, is to provide the stable, long-term growth of
South Dakota's domestic public corporations, to prevent the impairment of
local employment conditions and disruption of local commercial activity and
stable relationship of corporations and to protect shareholders from forced
mergers and other coercive devices adopting short-term business strategies
that deprive shareholders of value.
Reasons for Board's Recommendation
The Board of Directors does not have any knowledge of any effort to
accumulate the Company's common stock or to obtain control of the Company.
Notwithstanding lack of those efforts at this time, the Board believes that
for the reasons in the following paragraph, it should be prepared for such
possibility. Once a Control Share Acquisition is proposed, it would be too
late to amend the Articles of Incorporation.
The reasons why the Board of Directors is recommending to the
shareholders to elect to not have the Control Share Acquisition provisions
apply to the Company is that the provisions could allow a person to force the
Board of Directors to call a shareholder meeting to consider voting rights of
the acquiring person within only 50 days from the time the Board first
discovers that the person is interested in acquiring the Company. In the
opinion of the Board of Directors, this period of time does not give the
Board an ample opportunity to study the proposal and to act in the best long-
term interests of the shareholders. The Board further believes that the
issue of granting or not granting voting rights for shares that may not even
have been acquired at the time of the shareholder meeting would be confusing
to shareholders, and the results of such vote would, in the opinion of the
Board of Directors, be of little guidance in determining what action the
Board should take to protect shareholders' interests. The Board believes
this to be especially true because the Company is an electric public utility,
and under current law any acquisition by a person of 10 percent or more of
its shares must be first approved by the South Dakota Public Utilities
Commission, and any acquisition over 50 percent by the Wyoming Public Service
Commission. The Federal Energy Regulatory Commission would also be required
to approve any merger, and the Securities and Exchange Commission may become
involved if a holding company is created under the Public Utilities Holding
Company Act. The Board of Directors believes that any future acquisition of
the Company whether supported or opposed by the Board will largely depend
upon the decisions of some or all of these regulatory commissions which will
apply public interests standards to any such proposed mergers. In view of
these regulatory requirements, the Board of Directors believes that forced
shareholder meetings to consider voting rights to be given to a proposed
acquiring person before regulatory proceedings are held would be premature
and would interfere with strategies to be undertaken by the Board of
Directors to protect the interests of shareholders.
The Board of Directors has no intention at this time to propose any
additional anti-takeover measures or modify or remove any of those other
defenses disclosed under "Other Takeover Defenses Not Affected by Proposal"
following.
Overall Effect of the Proposal--Advantages and Disadvantages
The Control Share Acquisition provisions are designed to discourage any
change of control of the Company that the Board of Directors does not
approve. Since the acquiring person must get permission from the other
shareholders to be able to vote the shares at the 20, 33 1/3 and 50 percent
thresholds, and if approval is not given, the Company would have the right to
redeem those shares, an acquiring person would obviously be discouraged from
investing in the shares. Conceivably an acquiring person could own over 50
percent of the shares but be denied any right to vote those shares.
Therefore, the effect of the proposal to amend the articles to not have the
Control Share Acquisition provisions apply is to make it easier for
shareholders to obtain control and remove management.
On the other hand, the Control Share Acquisition provisions do allow an
acquiring person an opportunity to force a reluctant Board of Directors to
call a shareholder meeting. While the shareholder vote would be whether to
grant voting rights to the stock of the acquiring person, the vote could be
perceived as a referendum of the shareholders on the acquiring person's
proposal to acquire the Company. Granting voting rights would be a clear
signal to the acquiring person to acquire additional stock. To that extent,
the Control Share Acquisition provisions would encourage shareholder
participation in a takeover proposal, and the proposed amendment discourages
shareholder participation.
However, the Board of Directors believes that for all the reasons stated
above under "Reasons for Board's Recommendations" and especially in view of
the regulatory approvals required for any change in control, forced
shareholder meetings to vote on granting voting rights would be premature and
confusing to the regulatory process and undermine the Board's strategy in
protecting the shareholder interest in that regulatory process.
Other Takeover Defenses Not Affected by Proposal
The Takeover Act and the Company's Restated Articles of Incorporation
contain other provisions hereafter described that would not be affected by
the adoption of the proposed Amendment but would discourage or make more
difficult a change in control of the Company without approval of the Board of
Directors. The Board of Directors believes that these remaining provisions
are adequate without the Control Share Acquisition provisions to protect the
Company's shareholders against coercive, unfair or inadequate tender offers
and other abusive takeover tactics and to encourage any person contemplating
a business combination with the Company to negotiate with its Board of
Directors for the fair and equitable treatment of all of the Company's
shareholders.
Election of Directors. In electing directors, shareholders may
cumulate their votes as provided by Article XVII, Section 5 of the South
Dakota Constitution and SDCL Section 47-5-6. Article Fifth of the Company's
Restated Articles of Incorporation provides that the Board of Directors is
divided into three classes as nearly equal in number as possible with
staggered terms of office so that only approximately one-third of the
directors are elected at each annual meeting of shareholders. The existence
of a classified Board along with cumulative voting rights may make it more
difficult for a group owning a significant amount of the Company's voting
securities to effect a change in the majority of the Board than would be the
case if a classified Board and cumulative voting did not exist. Article
Fifth cannot be amended or repealed without the affirmative vote of the
holders of at least 80 percent of the Common Stock of the Company and 66 2/3
percent of the Cumulative Preferred Stock of the Company.
Fair Price Article. Article Sixth of the Company's Restated Articles
of Incorporation provides that the affirmative vote of the holders of not
less than 80 percent of the outstanding shares of voting stock of the Company
is required for the approval of any Business Transaction (a merger or similar
transaction) with any Related Person (a beneficial owner of 10 percent or
more of the outstanding voting stock of the Company) or any Business
Transaction in which a Related Person has an interest; provided, that the 80
percent voting requirement is not applicable if the Continuing Directors
(Directors who are unaffiliated with, and are not nominees of, the Related
Person involved in the Business Transaction) of the Company by at least a
majority vote thereof have (i) expressly approved in advance the acquisition
of the outstanding shares of voting stock that caused such Related Person to
become a Related Person, or (ii) expressly approved such Business
Transaction. Article Sixth of the Company's Restated Articles of
Incorporation also provides that the 80 percent voting requirement is not
required for a Business Transaction involving a Related Person if the
following conditions are satisfied: (a) the cash or fair market value or
other consideration to be received per share by holders of voting stock of
the Company in the Business Transaction is not less than the highest purchase
price paid by the Related Person involved in the Business Transaction in
acquiring any of its holdings of the Company's voting stock; (b) the ratio of
the amount of cash and other consideration to be received per share by
holders of Common Stock in such Business Transaction to the market price of
the Common Stock immediately prior to the announcement of such Business
Transaction is at least as great as the ratio of the highest per share price
paid by the Related Person for any shares of Common Stock acquired by it to
the market price of the Common Stock immediately prior to the initial
acquisition by such Related Person of any Common Stock; and (c) the
consideration to be received by holders of each class of capital stock of the
Company in such Business Transaction is the same form and of the same kind as
the consideration paid by the Related Person in acquiring the shares of that
class of capital stock already owned by it. Article Sixth cannot be amended
or repealed without the affirmative vote of the holders of at least 80
percent of the Common Stock of the Company.
Takeover Act--Business Combination Provisions. The Takeover Act
provides that certain domestic public corporations (including the Company)
shall not engage at any time in any business combination (a merger, transfer
of ten percent of the Company's assets, issuance or transfer of stock equal
to 5 percent of the aggregate market value of all outstanding shares of the
Company, the adoption of a plan of liquidation or dissolution or other
similar transaction) with any interested shareholder (the beneficial owner or
an affiliate of a beneficial owner of ten percent or more of the Company's
voting shares) unless (i) the Board of Directors of the Company, prior to the
interested shareholder becoming an interested shareholder, approves either
the business combination or the acquisition of shares by the interested
shareholder which causes it to become an interested shareholder, (ii) subject
to the fair price requirements discussed below, the business combination is
approved by the affirmative vote of the holders of a majority of the
outstanding voting shares, not including any voting shares beneficially owned
by the interested shareholder, at a meeting called for such purpose at such
time as the interested shareholder beneficially owns 80 percent of the voting
shares of the Company and not earlier than 3 months after the interested
shareholder became the beneficial owner of 80 percent of the voting shares of
the Company, (iii) the business combination is approved by the affirmative
vote of the holders of all of the outstanding voting shares of the Company,
(iv) the business combination is approved by the affirmative vote of the
holders of a majority of the outstanding voting shares of the Company, not
including any voting shares beneficially owned by the interested shareholder,
at a meeting called for such purpose no earlier than four years after the
interested shareholder became an interested shareholder, or (v) subject to
the fair price requirements discussed below, the business combination is
approved by a majority of the outstanding voting shares at a shareholders'
meeting called for such purpose no earlier than 4 years after the interested
shareholder became an interested shareholder.
Takeover Act--Fair Price Provisions. The Takeover Act provides for a
fair price provision for business combinations approved pursuant to (ii) or
(v) of the preceding paragraph. Business combinations approved by
shareholders of the Company pursuant to the requirements of (ii) or (v) of
the preceding paragraph must meet certain conditions which require, among
other things, that the value of the consideration received per share by
holders of outstanding shares of Common Stock in the business combination
must be at least equal to the higher of (i) the price per share paid for any
shares of Common Stock acquired by the interested shareholder within the
three-year period immediately prior to (a) the announcement of the business
combination or (b) the transaction in which the interested shareholder became
an interested shareholder, whichever is higher, or (ii) the market value per
share of Common stock on the announcement date with respect to the business
combination or the date on which the interested shareholder became an
interested shareholder, whichever is higher.
Takeover Act--Board May Protect Other Constituencies and Consider Long-
Term Interests. The Takeover Act further allows the Board of Directors of
the Company in determining whether to approve a merger or other change of
control to take into account both the long-term as well as short-term
interests of the Company and its shareholders, the effect on the Company's
employees, customers, creditors and suppliers, the effect upon the community
in which the Company operates and the effect on the economy of the state and
nation.
Proposed Resolution
To cause the Control Share Acquisition provisions of the Takeover Act
not to apply to any Control Share Acquisition occurring after the adoption of
the Resolution, the following Resolution will be submitted to the
shareholders:
BE IT RESOLVED by the shareholders of Black Hills Corporation
that Article Fourth of the Company's Restated Articles of
Incorporation be amended by adding thereto the following paragraph
8:
8. The provisions of South Dakota Codified Laws Sections 47-33-8
through 47-33-16, inclusive, do not apply to control share
acquisitions (as defined by South Dakota Codified Laws Section
47-33-3(1)) of shares of the Company.
Vote Required
The affirmative vote of the holders of the majority of all issued and
outstanding shares of common stock is required to
adopt the foregoing resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ADOPTION OF THE RESOLUTION
RESOLUTION.
ITEM IVIII
APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Arthur Andersen & Co.,LLP, independent public
accountants, conducted the audit of the Company and its
subsidiaries for 1993.1994. Representatives of Arthur Andersen & Co.LLP
will be present at the Annual Meeting and will have the
opportunity to make a statement, if they desire to do so, and to
respond to appropriate questions.
Audit services performed by Arthur Andersen & Co.LLP during 19931994
included examinations of the financial statements of the Company
and its subsidiaries and limited reviews of interim financial
information.
The Board of Directors, on recommendation of the Audit
Committee and subject to ratification by shareholders, has
appointed Arthur Andersen & Co.LLP to perform an examination of the
consolidated financial statements of the Company and its
subsidiaries for the year 19941995 and to render their opinion
thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN & CO.LLP TO SERVE AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR 19941995
SHAREHOLDER PROPOSALS FOR 19951996 ANNUAL MEETING
StockholderShareholder proposals intended to be presented at the 19951996
Annual Meeting of Shareholders must be received by the Secretary
of the Company in writing at its home offices at 625 Ninth
Street, P.O. Box 1400, Rapid City, South Dakota 57709, prior to
November 26, 1994.25, 1995. Any proposal submitted must be in compliance
with Rule 14a-8 of Regulation 14A of the Securities and Exchange
Commission.
ITEM V
TRANSACTION OF OTHER BUSINESS
The Board of Directors does not intend to present any
business for action by the shareholders at the meeting except the
matters referred to in this Proxy Statement. If any other
matters should be properly presented at the meeting, it is the
intention of the persons named in the accompanying form of proxy
to vote thereon in accordance with the recommendations of the
Board of Directors.
If a stockholdershareholder participates in the Company's Dividend
Reinvestment and Stock Purchase Plan, the proxy to vote shares of
record will serve as instructions to vote shares held in custody
for the stockholder.shareholder. Accordingly, as Transfer Agent for shares
of the Company's Common Stock, Chemical Bank will cause shares
held in the name of its nominee for the account of a stockholdershareholder
participating in the Plan to be voted in the same way as that
stockholdershareholder votes shares registered in their name. If
shareholders do not vote the shares registered in their name,
shares held for their account in the Plan will not be voted.
Please complete and sign the accompanying form of proxy
whether or not you expect to be present at the meeting and
promptly return it in the enclosed postage paid envelope.
By Order of the Board of Directors
ROXANN R. BASHAM
Corporate Secretary
Dated: March 25, 1994April 14, 1995
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The information required by Item 13, Financial and Other
Information, of Regulation 14-A is provided in the Company's
Annual Report on Form 10-K for the year ended December 31, 1993,1994,
which is incorporated by reference into this Proxy Statement.
The Company hereby undertakes to provide to each shareholder
whose proxy is solicited for the 19941995 Annual Meeting, upon
written or oral request and without charge, a copy of the
Company's 19931994 Annual Report on Form 10-K (without exhibits) to
the Securities and Exchange Commission. Requests should be
directed to Roxann R. Basham, Corporate Secretary and Treasurer,
Black Hills Corporation, P.O. Box 1400, Rapid City, SD 57709, or
telephone (605)-348-1700.
PLEASE COMPLETE, SIGN AND RETURN PROMPTLY
THE ENCLOSED PROXY SO THAT YOUR STOCK MAY
BE REPRESENTED AND VOTED AT THE ANNUAL MEETING.
DRAFT PROXY CARD
Front of Proxy Card
BLACK HILLS CORPORATION
625 NINTH STREET
RAPID CITY, SOUTH DAKOTA 57701
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS OF THE COMPANY
TO BE HELD MAY 24, 199423, 1995 AT 9:30 A.M.
The undersigned hereby appoints Daniel P. Landguth, Dale E. Clement,
and David E. Morrill, and any one or more of them, proxy attorneys, with full
substitution and revocation in each, for and on behalf of the undersigned,
and with all powers the undersigned would possessposess if personally present, to
vote at the above Annual Meeting and any adjournment thereof all shares of
Common Stock of Black Hills Corporation that the undersigned would be
entitled to vote at such meeting.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON
ANY ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATION, PLEASE SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
COMMENTS/COMMENT/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
Back of Proxy Card X Please mark your votes this way
__________ ____________________________----------- ----------------------------
COMMON DIVIDEND REINVESTMENT SHARES
The Board of Directors recommends a vote FOR Items 1,2,31,2, and 4.3.
WITHHELD
FOR FOR ALL
Item 1-ELECTION OF CLASS IIIII DIRECTORS
Nominees:
Daniel P. Landguth
DaleKirk E. Clement
John R. HowardDean
Michael B. Enzi
Everett E. Hoyt
WITHHELD FOR: (Write that nominee's name
in the space provided below).
(To cumulate votes so indicate)
FOR AGAINST ABSTAIN
Item 2-INCREASE2-TO CONSIDER AND ACT UPON AN AMENDMENT
TO THE COMPANY'S AUTHORIZED
INDEBTEDNESSEMPLOYEE STOCK PURCHASE PLAN TO ALLOW
THE ISSUANCE OF AN ADDITIONAL 200,000 SHARES
PURSUANT TO THE PLAN.
Item 3-AMEND ARTICLE FOURTH OF THE
COMPANY'S RESTATED ARTICLES OF INCORPORATION
Item 4-RATIFY3-RATIFY THE APPOINTMENT OF ARTHUR
ANDERSEN & CO.LLP TO SERVE AS THE COMPANY'S
INDEPENDENT AUDITORS IN 19941995.
Item 5-PROXY4-PROXY ATTORNEYS ARE AUTHORIZED AT
THEIR DISCRETION TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETINGMEETING.
I PLAN TO ATTEND MEETING
If you check this box to the right
an admission card will be sent to you.
COMMENTS/ADDRESS CHANGE
Please mark this box if you have
written comments/address change on
the reverse side
Black Hills Corporation, as Administrator under the Company's Dividend
Reinvestment and Stock Purchase Plan, is instructed to execute a proxy
with identical instructions, for any shares held for my benefit.
Signature(s) Date ____________________-----------------
Please mark, date and sign as your account name appears and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should indicate same when signing. If the signer is a corporation
or partnership, please sign the full corporate or partnership name by
authorized officer or person. If shares are held jointly, each stockholder
should sign.
EXHIBIT INDEX
EX-13.A 1993 FORM 10-K (DRAFT FORM ONLY)
EX-13.B 1993 FINANCIAL SECTION OF ANNUAL REPORT (DRAFT FORM ONLY)