Heron Lake BioEnergy DEF 14A Definitive proxy



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )

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Heron Lake BioEnergy, LLC
(Name of Registrant as Specified In Its Charter)

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Heron Lake BioEnergy, LLC

91246 390th Avenue

Heron Lake, Minnesota 56137

(507) 793-0077

NOTICE OF 2016 ANNUAL MEETING OF MEMBERS

To Be Held Wednesday, March 23, 2016

TO THE MEMBERS OF HERON LAKE BIOENERGY, LLC:

The 2016 annual meeting of members (the "2016 annual meeting") of Heron Lake BioEnergy, LLC (the "Company") will be held on Wednesday, March 23, 2016, at the Heron Lake Community Center, 312 10th Street, Heron Lake, Minnesota 56137. Registration for the meeting will begin at 12:00 p.m. The 2016 annual meeting will commence at 1:00 p.m.

The purposes of the meeting are to:


•	Proposal 1: Elect one governor to serve on the Company's board of governors for a term of three years until the 2019 annual meeting of members or until a successor has been elected and qualified; and


•	Transact such other business as may properly come before the 2016 annual meeting or any adjournments thereof.

The foregoing items of business are more fully described in the proxy statement accompanying this notice.

All members are cordially invited to attend the 2016 annual meeting in person. However, only members listed on the Company's records at the close of business on February 25, 2016 are entitled to vote at the 2016 annual meeting and any adjournments thereof.

Your proxy is important to ensure a quorum at the meeting. Even if you own only a few units, and whether or not you expect to be present, the board of governors requests that you promptly sign, date and return the enclosed proxy card by fax to (320) 235-5962 or by mail to Christianson & Associates, PLLP, Attention: Christina Boike, at 302 SW 5th Street, Willmar, MN 56201, using the enclosed envelope. Voting by proxy will not affect your right to subsequently change your vote or to attend the regular meeting.

For your proxy card to be counted in advance of the meeting, it must be received by the inspector of elections, Christianson & Associates, PLLP, 302 SW 5th Street, Willmar, MN 56201, no later than 5:00 p.m. on Tuesday, March 22, 2016.

By Order of the Board of Governors,

/s/ Paul Enstad

PAUL ENSTAD

Chairman of the Board of Governors

Heron Lake, Minnesota

February 25, 2016

Heron Lake BioEnergy, LLC

91246 390th Avenue

Heron Lake, Minnesota 56137

(507) 793-0077

PROXY STATEMENT

2016 Annual Meeting of Members

Wednesday, March 23, 2016

The proxy included on the enclosed proxy card is solicited by the board of governors of Heron Lake BioEnergy, LLC (“we”, “us”, the “Company”, or “Heron Lake BioEnergy”) for use at the 2016 annual meeting of members to be held on Wednesday, March 23, 2016 (the "2016 annual meeting"), and any adjournment thereof. The 2016 annual meeting will be held at the Heron Lake Community Center, 312 10th Street, Heron Lake, Minnesota 56137. Registration for the meeting will begin at 12:00 p.m. The 2016 annual meeting will commence at 1:00 p.m.

This solicitation is being made by mail, however, the Company may also use its officers, governors, and employees (without providing them with additional compensation) to solicit proxies from members in person or by telephone, facsimile or letter. Distribution of this proxy statement and a proxy card is scheduled to begin on or about February 25, 2016.

We have organized this proxy statement into three sections in order to set forth our information in a straightforward and understandable way. You should read all three sections.


•	Questions and Answers: this section provides answers to frequently asked questions regarding the purpose of the 2016 annual meeting and meeting procedures.


•	Proxy Proposals: this section provides information and detailed explanation of the proposals to be voted on at the 2016 annual meeting. There is one proposal being presented for your consideration at the 2016 annual meeting:


◦	Elect one governor to serve on the Company's board of governors for a term of three years until the 2019 annual meeting of members or until a successor has been elected and qualified.


•	Required Information: this section provides information that is required by law to be included in the Company's Proxy Statement, which has not been included in Sections I and II.

SECTION I - FREQUENTLY ASKED QUESTIONS ABOUT THE 2016 ANNUAL MEETING AND VOTING


Q.	What is a proxy?


A.	It is your legal designation of another person to vote the units you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated two of our officers as proxies for the 2016 annual meeting. These officers are Paul Enstad and Rodney Wilkison.


Q.	What is a proxy statement?


A.	It is a document that Securities and Exchange Commission ("SEC") regulations require us to give you when we ask you to vote by mail or by fax by signing and returning a proxy card designating Paul Enstad and Rodney Wilkison as proxies to vote on your behalf.


Q.	Why did I receive this proxy statement?


A:	The board of governors is soliciting your proxy to vote at the 2016 annual meeting because you were a member of the Company at the close of business on the record date.

In order to be considered a member, you must hold a minimum of 2,500 units. If you own fewer than 2,500 units, you are considered a non-member unit holder and have no rights except financial rights with respect to the units you own. We currently have 66 non-member unit holders who own an aggregate of 36,488 Class A units.


Q.	Who can attend the annual meeting?


A:	All members as of the close of business on the record date may attend the 2016 annual meeting.


Q.	What is the record date for the 2016 annual meeting and what does it mean?


A:	February 25, 2016. The record date is established by the board of governors as required by the Minnesota Limited Liability Company Act set forth in Chapter 322B of the Minnesota Statutes. Owners of record of units at the close of business on the record date are entitled to receive notice of the meeting and vote at the meeting and any adjournments or postponements of the 2016 annual meeting.


Q.	How do I vote?


A.	Membership units can be voted only if the holder of record is present at the 2016 annual meeting either in person or by proxy. You may vote using either of the following methods:

•

Proxy card. The enclosed proxy card is a means by which a member may authorize the voting of his, her, or its membership units at the 2016 annual meeting. The membership units represented by each properly executed proxy card will be voted at the 2016 annual meeting in accordance with the member's directions. The Company urges you to specify your choices by marking the appropriate boxes on your enclosed proxy card. After you have marked your choices, please sign and date the enclosed proxy card and return it


◦	By mail to Christianson & Associates, PLLP, Attention: Christina Boike, at 302 SW 5th Street, Willmar, MN 56201.


◦	By fax to Christianson & Associates, PLLP, Attention: Christina Boike, at (320) 235-5962.

If you sign and return the proxy card without specifying any choices, your membership units will be voted FOR all incumbent governor nominees with respect to Proposal 1.


•	In person at the 2016 annual meeting. All members may vote in person at the 2016 annual meeting.


Q.	How many membership units are outstanding on the record date?

On February 25, 2016, there were 77,932,107 units of the Company issued and outstanding, consisting of 62,932,107 Class A units and 15,000,000 Class B units. There are no other classes of units outstanding. Under the Company’s member control agreement, the Class A units and the Class B units are identical with respect to voting rights and privileges. Therefore, when we refer to "units", unless the context otherwise requires, we are referring to the Class A units and Class B units collectively.

Under our member control agreement, only members may vote at the 2016 annual meeting. We currently have 66 non-member unit holders who own an aggregate of 36,488 Class A units. Therefore, the total number of units outstanding and entitled to vote at the 2016 annual meeting is 77,895,619 units.


Q.	What am I voting on?

Members will vote on one proposal at the 2016 annual meeting, the election of one governor. Mr. Robert J. Ferguson, the incumbent governor, has been nominated by the nomination and governance committee for re-election at the 2016 annual meeting. Detailed information on Mr. Ferguson is provided below at "SECTION II - PROPOSALS TO BE VOTED ON, ELECTION OF GOVERNORS." The board of governors believes the nominee is well qualified to serve as a governor of the Company recommends a vote FOR the incumbent nominee.

Any member who is entitled to appoint a governor pursuant to Section 5.3(a)(iv) of the member control agreement (an "appointing member"), and such appointing members’ affiliates, are not entitled to vote for the election of any governors. As of the record date, Project Viking, L.L.C. ("Project Viking"), a wholly owned subsidiary of Granite Falls Energy, LLC ("Granite Falls Energy"), is the only member entitled to appoint governors under our member control agreement. Accordingly, Granite Falls Energy (and Project Viking) is not entitled to vote for the election of governors.

As of the mailing date of this proxy statement, the board of governors is not aware of any matters, other than those set forth above, which may be presented for action at the 2016 annual meeting. If other matters are properly presented, including voting to adjourn or postpone the annual meeting to solicit additional proxies with respect to any proposal or for any other reason, the persons named as proxies will vote in accordance with their judgment with respect to such matters.


Q.	How many votes do I have?


A:	On any matter which may properly come before the 2016 annual meeting, members are entitled to one vote for each unit owned of record by such member as of the close of business on the record date.

However, as stated above, units owned by an appointing member, and such appointing member's affiliates, are not entitled to be voted in the election of any governors. Therefore, the 39,420,949 units controlled by Granite Falls Energy as of February 25, 2016 are excluded from voting in the election of governors.


Q.	What is the voting requirement for the election of governors?

For the election of one governor, the sole nominee will be elected as governor if the nominee receives an affirmative vote of the members holding at least a majority of the units present, in person or by proxy, at the 2016 annual meeting (excluding units controlled by Granite Falls Energy and its affiliates). Members are not entitled to cumulate their voting power for the election of governors. You may vote "FOR", "WITHHOLD/AGAINST" or "ABSTAIN" with respect to the nominee.


Q.	What is the effect of an abstention?


A:	If you "ABSTAIN" authority to vote for the nominee, it has the same effect as a vote of "WITHHOLD/AGAINST" that nominee. However, abstentions will be counted when determining whether a quorum is present.


Q.	What can I do if I change my mind after I submit my proxy?


A:	You may revoke your proxy at any time before it is voted. If you would like to revoke your proxy, you may do so by:


•	Voting in person at the 2016 annual meeting; or


•	Giving written notice of revocation that is received by Christianson & Associates, PLLP by 5:00 p.m. on Tuesday, March 22, 2016.

Simply attending the 2016 annual meeting will not revoke your proxy; you must revoke your proxy one of the ways described above. If you would like to change your vote, you may do so by revoking your proxy and then voting in person or by proxy as described in the immediately preceding question.


Q.	What happens if I mark too few or too many boxes on the proxy card?

If you do not mark any choices on the proxy card, then the proxy will vote your units FOR the nominee named in Proposal 1. If you mark contradicting choices on the proxy card, such as both "FOR" and "WITHHOLD/AGAINST" for the nominee, your votes will not be counted with respect to the nominee. However, each fully executed proxy card will be counted for purposes of determining whether a quorum is present at the 2016 annual meeting.

If any other matters are properly presented to the 2016 annual meeting for action, including voting to adjourn or postpone the annual meeting to solicit additional proxies with respect to any proposal or for any other reason the Proxy will vote the proxies (which confer discretionary authority to vote on such matters) in accordance with his best judgment.


Q.	What constitutes a quorum?


A:	At the 2016 annual meeting, a majority in interest of members, represented in person or by proxy, constitutes a quorum necessary for the transaction of business. “Majority in interest” means members holding more than 50% of the units then held by all members.

Because there is an aggregate total of 77,895,619 units held by members (which excludes units held by non-member unit holders), quorum for the 2016 annual meeting requires that 38,947,810 units be represented at the meeting in person or by proxy. If you submit a properly executed proxy, then you will be considered part of the quorum even if you are not physically present at the meeting.


Q.	Do I have dissenters' rights to any matter acted upon during the 2016 annual meeting?


A:	No. the election of governors is not a circumstance in which the Minnesota Limited Liability Company Act or the Company's member control agreement provides members with dissenters' rights.

Pursuant to the Minnesota Limited Liability Company Act, dissenters' rights are available to members under the following circumstances: (i) an amendment to the articles of organization which materially and adversely affects the rights or preferences of the membership interests of the dissenting member; (ii) a sale, lease, transfer, or other disposition of property and assets requiring member approval; (iii) a plan of merger; (iv) a plan of exchange; (v) a plan of conversion; or (vi) any other action taken to which the articles of organization, member control agreement, bylaws, or a resolution approved by the board of governors directs that dissenting members may obtain payment for their membership units. In addition, the Company's member control agreement does not provide for any dissenters' rights for our members.


Q.	Who will count the vote?


A:	The Company has hired the accounting firm of Christianson & Associates, PLLP to count the ballots.


Q.	How do I nominate a candidate for election as a governor or make a proposal for next year's annual meeting?


A:	This question is answered in the section of this Proxy Statement entitled "MEMBER PROPOSALS FOR 2017 ANNUAL MEETING."


Q.	Who is paying for this proxy solicitation?

The entire cost of this proxy solicitation will be borne by the Company. The cost will include the cost of supplying necessary additional copies of the solicitation material for beneficial owners of units held of record by brokers, dealers, banks and voting trustees and their nominees and, upon request, the reasonable expenses of such record holders for completing the mailing of such material and report to such beneficial owners.


Q.	How can I find out results of the voting at the 2016 annual meeting?

Preliminary voting results will be announced at the 2016 annual meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the 2016 annual meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties, including, but not limited to those described in this proxy statement and our other Securities and Exchange Commission filings.

Our actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in this proxy statement. We are not under any duty to update the forward-looking statements contained in this proxy statement. We cannot guarantee future results, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this proxy statement. You should read this proxy statement and the documents that we reference in this proxy statement, completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.

SECTION II - PROPOSAL TO BE VOTED UPON

ELECTION OF TWO GOVERNORS

Currently, four elected governors and five appointed governors comprise our nine member board of governors. In addition, there are three alternate governors - one alternate to the elected governors and two alternates to the appointed governors. The alternate to the elected governors is appointed collectively by the elected governors. The alternate governors to the appointed governors are appointed by the appointing member. Detailed information regarding non-nominee elected, appointed and alternate governors is provided below under “SECTION III - REQUIRED INFORMATION, GOVERNORS AND OFFICERS.”

Governors that are elected by members (other than the alternate to the elected governors) are currently divided into three classes, with the terms of the governors staggered so that one-third of the governors (or as nearly as possible) are elected by the members at each annual meeting. As the term of each class of governors expires, the successors to that class are elected to serve a term of three-years or until their successors are duly elected and qualified, or their earlier death, resignation or removal.

The Company's current elected governors and their respective terms are as follows:



Term Expires 2016	Robert J. Ferguson
Term Expires 2017	Michael S. Kunerth
Term Expires 2018	David Woestehoff
Term Expires 2018	Doug Schmitz

Upon the recommendation of the nomination and governance committee, the board of governors has nominated Robert J. Ferguson for election. Robert J. Ferguson is an incumbent governor and has indicated his willingness to serve as a governor if elected. The board of governors has determined that the nominee is qualified to serve as a governor and recommends a vote for re-election at the 2016 annual meeting of the incumbent governor nominee Robert J. Ferguson.

Under the member control agreement, appointing members, and such appointing member's affiliates, are not entitled to vote for the election of governors. As of the record date, Granite Falls Energy, as a result of its 100% ownership of Project Viking, is the Company's sole appointing member and has appointed five governors to the board of governors pursuant to this right. Accordingly, Granite Falls Energy (and Project Viking) is not entitled to vote for Proposal 1. Detailed information regarding the governors appointed by Granite Falls Energy is provided below under "SECTION III - REQUIRED INFORMATION, GOVERNORS AND OFFICERS."

Except for the appointment right described above, we know of no arrangements or understandings between a governor or nominee and any other person pursuant to which he has been selected as a governor or nominee. There is no family relationship between any of the nominees, our governors or our executive officers.

It is intended that proxies will be voted for the named nominee. The board of governors believes that the nominee named below will be able to serve, but if any nominee should be unable to serve as a governor, the persons named in the proxies have advised us that they will vote for the election of such substitute nominee that the board of governors may propose.

Information Regarding Nominee

Set forth below is biographical and other information with respect to the nominee for election at the 2016 annual meeting:

Robert J. Ferguson - Age 67, Elected Governor. Since 1972, Mr. Ferguson has farmed near Heron Lake, Minnesota. Mr. Ferguson was formerly a Jackson County Commissioner and served on the Jackson County Planning and Zoning board and the Prairieland Economic Development board. In addition, he is a member of the Jackson County Corn and Soybean Associations. Mr. Ferguson attended Worthington Community College to pursue his associate of arts degree in business administration but just after graduation was drafted by the U.S. Army to serve in the Vietnam War. Mr. Ferguson was an original member of our founding board of governors and formerly served as our president and chief executive officer from 2007 to 2013. Mr. Ferguson also serves one of the Company's appointed directors to the board of directors of Agrinatural Gas, LLC, a majority owned subsidiary of the Company. Mr. Ferguson was selected as a nominee based on his prior experience with the Company which provides a significant depth of understanding of the Company’s operations.

Vote Required for the Election of Governors

Under our member control agreement, the sole nominee for governor will be elected if the nominee receives an affirmative vote of the members holding at least a majority of the units present, in person or by proxy, at the 2016 annual meeting. Members are not entitled to cumulate their voting power for the election of governors. Additionally, any member who is entitled to appoint one or more governors pursuant to Section 5.3(a)(iv) of the member control agreement, and such appointing member's affiliates, are not entitled to vote for the election of governors. Granite Falls Energy, as a result of its 100% ownership of Project Viking, is the only appointing member of the Company. Accordingly, the 39,420,949 units held by Granite Falls Energy (and Project Viking) as of February 25, 2016 are excluded in determining the outcome of the vote for the election of governors.

You may only mark one voting choice with respect to the nominee, either "FOR", "WITHHOLD/AGAINST" or "ABSTAIN". If you mark "ABSTAIN", it has the same effect as a vote of "WITHHOLD/AGAINST" that nominee. If you just sign and submit your proxy without voting instructions, your units will be voted “FOR” for the nominee for governor. If you mark contradicting choices on your proxy card such as both "FOR" and "ABSTAIN" with respect to the nominee, your votes will not be counted with respect to the nominee.

THE BOARD BELIEVES THE NOMINEE IS WELL QUALIFIED TO SERVE AS A GOVERNOR OF THE COMPANY. THE BOARD RECOMMENDS A VOTE FOR THE INCUMBENT GOVERNOR ROBERT J. FERGUSON.

SECTION III - REQUIRED INFORMATION

GOVERNORS AND OFFICERS

Our board of governors consists of nine governors, including five appointed governors and four elected governors.

Under Section 5.3(a)(iv) of the member control agreement, any member who, together with such member’s affiliates, holds 9% or more of the units outstanding is entitled to appoint one governor to the board for every 9% of units held, up to the right to appoint a maximum of four governors by any member who, together with such member’s affiliates, holds 36% or more of the units outstanding but less than a majority of the units outstanding. No member who, together with such member’s affiliates, holds 45% or more of the units outstanding but less than a majority of the units outstanding is entitled to appoint a majority of the governors to the board, notwithstanding the fact that such member together with such member’s affiliates owns 45% or more but less than a majority of the units outstanding. Any member who, together with such member’s affiliates, holds a majority of the units outstanding is entitled to appoint a majority of the governors (five governors) to the board of governors. An appointed governor serves indefinitely at the pleasure of the member appointing him or her (so long as such member and its affiliates continue to hold a sufficient number of units to maintain the applicable appointment right) until a successor is appointed, or until the earlier death, resignation or removal of the appointed governor.

Project Viking, a wholly owned subsidiary of Granite Falls Energy, is the only member entitled to appoint governors under Section 5.3(a)(iv) of our member control agreement. Granite Falls Energy, through Project Viking, controls 39,420,949 units, or approximately 50.6% of our issued and outstanding units. Accordingly, Granite Falls Energy has the right to appoint a majority of the Company’s board of governors and has appointed the following five governors: Paul Enstad, Rod Wilkison, Dean Buesing, Marten Goulet, and Leslie Bergquist.

In addition to our appointed and elected governors, our board of governors includes three alternate governors. Two of these alternates serve as available replacements to the appointed governors and are designated by Granite Falls Energy. One of the alternate governors serves as an available replacement to the elected governors and is designated by the elected governors of the board of governors. The alternate governors are entitled to attend and participate in all meeting of the board, but are only entitled to vote at a board meeting at which an appointed governor or elected governor for which the alternate is serving is absent. The alternates to the appointed governors designated by Granite Falls Energy are Kenton Johnson and Martin Seifert. The alternate to the elected governors selected by the elected governors is Milton McKeown.

Biographical Information for Non-nominee Elected and Appointed Governors

Set forth below is biographical and other information with respect to each of the appointed and elected governors serving continuing terms. This information was reviewed and updated by the governors in February 2016.

Paul Enstad - Age 56, Appointed Governor, President of the Board of Governors. Mr. Enstad was appointed as a governor by Granite Falls Energy, LLC effective July 31, 2013. Mr. Enstad has been farming corn and soybeans near Granite Falls, Minnesota since 1978. He served on the board of directors of Farmers Cooperative Elevator Company, a member of the Company, from 1996 to 2011. Mr. Enstad also serves as chairman and as a governor of Granite Falls Energy, LLC, an SEC-reporting company and the majority owner of the Company. Mr. Enstad also serves one of the Company's appointed directors to the board of directors of Agrinatural Gas, LLC, a majority owned subsidiary of the Company, representing the Company's investment interest in Agrinatural. The board believes Mr. Enstad's business experience, experience in board and leadership roles, and his knowledge of the ethanol industry, provides the board with valuable perspective.

Rod Wilkison - Age 61, Appointed Governor, Vice President of the Board of Governors. Mr. Wilkison was appointed as a governor by Granite Falls Energy, LLC effective July 31, 2013. Since 1985, Mr. Wilkison has been the owner and chief executive officer of Wilkison Consulting Service, which provides financial consulting, tax preparation, and monthly accounting services for farmers and small businesses. Prior to starting his consulting business, Mr. Wilkison worked for two different banks for over eleven years. Mr. Wilkison graduated from Pipestone Area Vocational Technical Institute with a degree in agricultural banking and is certified by the Minnesota Department of Agriculture as a Farm Business Management Instructor. Mr. Wilkison also serves as vice-chairman and as a governor of Granite Falls Energy, LLC, an SEC-reporting company and the majority owner of the Company. Mr. Wilkison is a member of and serves as the chairman of the audit committees for the Company and Granite Falls Energy, LLC. The board believes Mr. Wilkison provides the board with critical financial and accounting acumen and because he qualifies as an audit committee financial expert.

Michael S. Kunerth - Age 48, Elected Governor, Secretary of the Board of Governors. Mr. Kunerth has operated a corn and soybean farm in Brewster, Minnesota since 1990. Since 1992, Mr. Kunerth has also operated a retail seed and service business specializing in seed and precision agricultural equipment. From 1994 to 2008, Mr. Kunerth also served as the Clerk of Graham Lakes Township. He holds a B.S. degree in business management from St. John's University, Collegeville, Minnesota. Mr. Kunerth was an original member of our founding board of governors and formerly served as treasurer. Mr. Kunerth is a member of the audit committee for the Company and past chair of the audit committee. He was also serves on the Company's compensation committee and nomination and governance committee. Mr. Kunerth is an important resource to the board due to his agriculture and business experience and first-hand knowledge of the Company's history and business.

David Woestehoff - Age 46, Elected Governor. Mr. Woestehoff operates grain farming operations in Belle Plaine, Minnesota and Arlington, South Dakota. Mr. Woestehoff is also the founder and 50% owner of Brewery Hill Grain Company, which operates an independent grain elevator in Le Sueur, Minnesota. In 2009, Mr. Woestehoff became president, chief executive officer and majority shareholder of Minnesota Valley Grain Company, LLC, which operates commercial grain elevators in LeCenter, LeSueur and Montgomery, Minnesota. Mr. Woestehoff also serves as the treasurer for Emanuel Lutheran Church in Hamburg, Minnesota and on the board of directors for the Lutheran High School Mayer Foundation. Mr. Woestehoff graduated from the University of Wisconsin in 1990 with a B.S. degree in agricultural business and minors in economics and animal science. Mr. Woestehoff was an original member of our founding board of governors and formerly served as our board president. Mr. Woestehoff also serves one of the Company's appointed directors to the board of directors of Agrinatural Gas, LLC, a majority owned subsidiary of the Company. Mr. Woestehoff is a valuable resource to the board given his prior experience with the Company and his experience in commodities and agribusiness knowledge.

Doug Schmitz - Age 53, Elected Governor. Mr. Schmitz attended Willmar Community College in Willmar, Minnesota, and majored in ag business. Mr. Schmitz is a third generation farmer who has been farming with his brother since 1988. In addition to agriculture, Mr. Schmitz owns and operates Schmitz Grain, Inc., which was purchased from his father in 1991. Schmitz Grain has three locations in southwestern Minnesota and provides services to area farmers in grain merchandising, custom drying, feed sales, seed sales and fertilizer and chemical application. He also currently serves on the board of two privately-held companies: Agri-Tech Systems, Inc. located in Las Vegas, Nevada, and United Ag Resources of Slayton, Minnesota. Mr. Schmitz's experience in commodities and agribusiness knowledge, as well as his history with the Company, provides valuable insight to the Board.

Milton J. McKeown - Age 70, Alternate Elected Governor. Mr. McKeown was appointed as an alternate governor by the board of governors effective July 31, 2013. From 1991 until his retirement in October 2006, Mr. McKeown managed the Heron Lake Insurance Agency. While he is currently retired, Mr. McKeown is active in community affairs. Mr. McKeown graduated from Dakota State University with a B.S. degree in Industrial Arts. Mr. McKeown was an original member of our founding board of governors, serving as an at-large governor until July 2013, when he was appointed as an alternate at-large governor. Mr. McKeown is an important resource to the Board due to his prior involvement with the Company and his business experience.

Dean Buesing - Age 63, Appointed Governor. Mr. Buesing was appointed as a governor by Project Viking effective July 31, 2013. Mr. Buesing has decades of experience in the agricultural industry, farming near Granite Falls since 1973, and serving as the president of Buesing Farms, Inc. since 1980, as the president of Buesing-Buesing, LLC since 2006 and as a partner in Buesing Ag Partnership since 2007. He also served as a director and planning committee member of Minnesota Corn Processors, LLC, an ethanol production facility located near Marshall, Minnesota, from 1998 until its acquisition by Archer Daniels Midland in 2002. From 2007 to 2011, Mr. Buesing was a director and secretary of SW Energy, LLC, a development stage ethanol production facility located near McCook, Nebraska. From 1992 to 2000, he was a director and treasurer of Yellow Medicine Soybean Growers. Mr. Buesing also serves as a governor and secretary of Granite Falls Energy, an SEC-reporting company and the majority owner of the Company. Mr. Buesing's board experience with other ethanol companies and grain industry experience traits make him an essential member of the Board.

Marten Goulet - 36, Appointed Governor. Mr. Goulet was appointed as a governor by Granite Falls Energy, LLC effective July 31, 2013. Since June 2012, Mr. Goulet has been the chief financial officer of Wagner Construction, an underground utility and site development contractor based in International Falls, Minnesota with operations in Minnesota, North Dakota, Michigan, Arizona, and Canada. Prior to joining Wagner Construction, Mr. Goulet spent eight years with Wells Fargo in the Twin Cities managing banking relationships and providing financial services to companies in the construction, manufacturing, wholesaling, and service-related industries with annual revenues of $20 million to $1 billion. Mr. Goulet received his bachelors of arts in finance from Bemidji State University and his M.B.A. in accounting from the University of St. Thomas in St. Paul, Minnesota. Mr. Goulet also serves as a governor of Granite Falls Energy, LLC, an SEC-reporting company and the majority owner of the Company. Mr. Goulet is an alternate member of the audit committee for the Company and a member of the audit committee for Granite Falls Energy, LLC. The Board believes Mr. Goulet provides valuable insight to the Board because his business experiences, his education and financial acumen.

Leslie Bergquist - Age 56, Appointed Governor. Mr. Bergquist was appointed as a governor by Project Viking effective March 21, 2014. Mr. Bergquist served as Project Viking's alternate appointed governor from July 31, 2013 until his appointment as an appointed governor. Since January 2012, Mr. Bergquist has owned and served as president of Bergquist Consulting Corporation, which provides commercial and agricultural loan reviews and appraisal reviews. Mr. Bergquist also serves as a farm manager for Fagen Farms, LLP, which is an affiliate of Fagen, Inc., as a bus driver for Bennett & Bennett Transportation. Mr. Bergquist previously served as a senior credit analyst for Forstrom Bancorporation, Inc. from May 2007 through December 2011, and held the positions of president, vice president, and director during his tenure with Yellow Medicine County Bank, which spanned from August 2002 through May 2007. He received his Bachelor's degree in Agronomy from the University of Minnesota. Mr. Bergquist also serves as a governor of Granite Falls Energy, an SEC-reporting company and the majority owner of the Company. Mr. Bergquist is a member of the audit committees of the Company and Granite Falls Energy, LLC. Mr. Bergquist also serves one of the Company's appointed directors to the board of directors of Agrinatural Gas, LLC, a majority owned subsidiary of the Company, representing the Company's investment interest in Agrinatural. Mr. Bergquist's business, agriculture and banking experience provide the board with unique insight.

Kenton Johnson - Age 27, Alternate Appointed Governor. In March 2014, Granite Falls Energy, LLC appointed Mr. Johnson to fill its alternate appointed seat on the board of governors. Previously, Mr. Johnson was appointed to our Board of Governors by Project Viking, LLC from August 30, 2011 until July 31, 2013. Additionally, Mr. Johnson previously served as the Company's board secretary. Since 2007, Mr. Johnson has raised corn and soybeans in his farming operation located south of Granite Falls, Minnesota. In August of 2009, Mr. Johnson became chief executive officer and shareholder of Prairie View Farms, Inc., a family owned and operated farming business. Since January of 2013, Mr. Johnson has served as a director on the boards of Platinum Ethanol, LLC, a 125 million gallon per year ethanol plant located in Arthur, Iowa, and of Platinum Grain, LLC, a commercial grain elevator in Anthon, Iowa. Since October 2013, he has served on the board of Bushmills Ethanol, Inc., a 60 million gallon per year ethanol facility located in Atwater, Minnesota, as an appointee of our general contractor Fagen, Inc. Since June 2015, Mr. Johnson has served as a director for Ringneck Energy, LLC, a start-up ethanol company with plans to develop, construct and operate and 70 million gallon per year ethanol facility in Onida, South Dakota. Mr. Johnson serves as a governor of Granite Falls Energy, an SEC-reporting company and the majority owner of the Company. Mr. Johnson received his B.S. in agriculture business management from Southwest Minnesota State University. Mr. Johnson's prior service on our board, agriculture experience and leadership traits make him an essential member of the Board.

Martin Seifert - Age 43, Alternate Appointed Governor. Mr. Seifert was appointed as one of Granite Falls Energy, LLC's alternate appointed governors in March 2014. Since December 2014, Mr. Seifert has been employed as a lobbyist with the firm of Flaherty and Hood, P.A. in St. Paul, Minnesota. Previously, he was the executive director of the Avera Marshall Foundation from 2010 to 2013, which provides financial support for the Marshall Regional Medical Center hospital and long term care facility. Mr. Seifert has also been a realtor with Real Estate Retrievers from 2010 to 2014. Mr. Seifert was a member of the Minnesota House of Representatives from 1996 to 2011. He also served as minority leader in the Minnesota House of Representatives from 2006 to 2009. He also serves as an alternate governor of Granite Falls Energy, an SEC-reporting company and the majority owner of the Company. Mr. Seifert graduated from Southwest Minnesota State University in 1995. Mr. Seifert's business and government experience provides valuable leadership skills and perspective to the Board.

Biographical Information for Executive Officers

Steve Christensen - Age 58, Chief Executive Officer. Mr. Christensen was named chief executive officer of the Company effective as of July 31, 2013, pursuant to the Company’s management services agreement with Granite Falls Energy, LLC. Mr. Christensen continues to serve as chief executive officer and general manager of Granite Falls Energy, LLC, positions he has held since April 2012. From 2005 through December 2011, Mr. Christensen was chief executive officer and general manager of Western Wisconsin Energy, LLC, which owned and operated an ethanol plant in Boyceville, Wisconsin. Mr. Christensen has also operated a southwest Iowa family farm since 1987. Mr. Christensen holds a bachelors of science degree in animal science from Iowa State University and has completed some post graduate work in business. It is anticipated that Mr. Christensen will hold the office of Chief Executive Officer until the earlier of his resignation, death, disqualification or removal by the Board or the termination of the Company's management services agreement with Granite Falls Energy, LLC.

Stacie Schuler - Age 43, Chief Financial Officer. Ms. Schuler was named chief financial officer of the Company effective as of July 31, 2013, pursuant to the Company’s management services agreement with Granite Falls Energy, LLC. Ms. Schuler continues to serve as chief financial officer and controller of Granite Falls Energy, LLC, positions she has held since July 2005. Prior to joining the Company, Ms. Schuler worked as a financial manager for Cargill, Incorporated from 1997 to 2005. Ms. Schuler received her accounting degree through Southwestern Technical College in Granite Falls, Minnesota and Southwest State University in Marshall, Minnesota. Ms. Schuler received her accounting degree through Southwestern Technical College in Granite Falls, Minnesota and Southwest State University in Marshall, Minnesota. It is anticipated that Ms. Schuler will hold the office of Chief Financial Officer until the earlier of her resignation, death, disqualification or removal by the Board or the termination of the Company's management services agreement with Granite Falls Energy, LLC.

Biographical Information on Significant Employees

We currently have one employee whom we expect to make a significant contribution to the Company's business, in addition to the executive officers identified above. This employee is Erik Baukol.

Eric Baukol - Age 33, Risk Manager. Mr. Baukol was named risk manager of the Company effective as of July 31, 2013, pursuant to the Company’s management services agreement with Granite Falls Energy, LLC. Prior to joining the Company, Mr. Baukol was employed as a market analyst for Country Hedging, Inc. (now CHS Hedging), a farm marketer for Cargill, and as a location manager for Canby Farmers Grain. Mr. Baukol holds a B.S. degree in agricultural education from the University of Wisconsin-River Falls and a master’s degree in business administration from Southwest Minnesota State University. It is anticipated that Mr. Baukol will hold the office of Risk Manager until the earlier of his resignation, death, disqualification or removal by the Board or the termination of the Company's management services agreement with Granite Falls Energy, LLC.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission ("SEC"). Except as indicated by footnote, a person named in the tables below has sole voting and sole investment power for all units beneficially owned by that person. The beneficial ownership percentages are based on 77,932,107 units issued and outstanding as of February 25, 2016, which includes 36,488 Class A units held by non-members.

As of February 25, 2016, the following beneficial owners owned or held 5% or more of our outstanding membership units:



Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership⁽¹⁾		Percent of Class
Class A Units	Granite Falls Energy, LLC ⁽²⁾ 15045 Highway 23 S.E. Granite Falls, MN 56241-0216	24,420,949	Class A Units	38.81	%
Class B Units	Granite Falls Energy, LLC ⁽²⁾ 15045 Highway 23 S.E. Granite Falls, MN 56241-0216	15,000,000	Class B Units	100.00	%
All Classes	Granite Falls Energy, LLC ⁽²⁾ 15045 Highway 23 S.E. Granite Falls, MN 56241-0216	39,420,949	Units	50.58	%

_______________________


(1)	Based on Amendment No. 4 to Schedule 13D filed on August 2, 2013 by Project Viking, LLC and Granite Falls Energy, LLC. Effective July 31, 2013, Granite Falls Energy purchased from Roland J. (Ron) Fagen and Diane K. Fagen 100% of the membership interests of Project Viking.

(2)

Each of Paul Enstad, Rodney Wilkison, Dean Buesing, Marten Goulet, Leslie Bergquist, Kenton Johnson and Martin Seifert, were appointed to our board by Granite Falls Energy, and each serves a governor on the board of governors of Granite Falls Energy. However, each of Messrs. Enstad, Wilkison, Buesing, Goulet, Bergquist, Johnson and Seifert disclaim beneficial ownership of the securities indicated, and the reporting herein of such securities shall not be construed as an admission that any of the foregoing is the beneficial owner thereof for purposes of Section 16 or for any other purpose.

SECURITY OWNERSHIP OF MANAGEMENT AND NOMINEES

As of February 25, 2016, members of our board of governors, nominees to our board of governors and executive officers own units as set forth in the following table. The beneficial ownership percentages are based on 77,932,107 units issued and outstanding as of February 25, 2016, which includes 36,488 Class A units held by non-members.

Unless otherwise indicated and subject to community property laws where applicable, each unit holder named in the table below has sole voting and investment power with respect to the units shown opposite such unit holder’s name.



Title of Class	Name and Address of Beneficial Owner⁽¹⁾	Amount and Nature of Beneficial Ownership		Percent of Class	Percent of All Classes
Class A Units	David J. Woestehoff ⁽²⁾	3,239,846	Class A Units	5.15%	4.16%
Class A Units	Doug Schmitz ⁽³⁾	2,039,675	Class A Units	3.24%	2.62%
Class A Units	Robert J. Ferguson ⁽⁴⁾	296,250	Class A Units	*	*
Class A Units	Michael S. Kunerth ⁽⁵⁾	966,000	Class A Units	1.53%	1.24%
Class A Units	Milton J. McKeown ⁽⁶⁾	122,000	Class A Units	*	*
Class A Units	Leslie Bergquist	—	—	*	*
Class A Units	Dean Buesing	—	—	*	*
Class A Units	Steve Christensen	—	—	*	*
Class A Units	Paul Enstad	—	—	*	*
Class A Units	Martin Goulet	—	—	*	*
Class A Units	Kenton Johnson	—	—	*	*
Class A Units	Stacie Schuler	—	—	*	*
Class A Units	Martin Seifert	—	—	*	*
Class A Units	Rod Wilkison	—	—	*	*
TOTAL:		6,663,771	Class A Units	10.59%	8.55%

_______________________


(*)	Indicates that the membership units owned represent less than 1% of the outstanding units.


(1)	The address of each beneficial owner is deemed to be the address of the Company.


(2)	All units are owned jointly by Mr. Woestehoff and his spouse.


(3)	Includes 860,000 units owned by Doug Schmitz, 38,092 units owned by Mr. Schmitz and his spouse, 44,432 units owned by Mr. Schmitz’s spouse, and 1,097,151 units owned by Schmitz Grain Inc., which is controlled by Doug Schmitz.


(4)	All units are owned jointly by Mr. Ferguson and his spouse.


(5)	Includes 483,000 units owned by the Michael Kunerth Trust under agreement dated July 18, 2006, and 483,000 units owned by the Dawn Kunerth Trust under agreement dated July 18, 2006. Mr. Kunerth and his spouse are trustees of each of these trusts.


(6)	All units are owned jointly by Mr. McKeown and his spouse.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act requires our governors, officers and persons who own more than 10% of our units to file reports of ownership and changes in ownership in our units with the Securities and Exchange Commission, and to furnish us with copies of the reports. Based on our review of such reports, we believe that our governors, officers and owners of 10% or more of our units timely filed all required Section 16(a) reports during our fiscal year ended October 31, 2015.

BOARD OF GOVERNORS' MEETINGS AND INDEPENDENCE

The board of governors generally meets once per month. The board of governors held twelve (12) regularly scheduled meetings during the fiscal year ended October 31, 2015. All governors attended at least 75% of the aggregate of all meetings of the board of governors and all committees of the board on which he or she served during the fiscal year ended October 31, 2015.

The board of governors does not have a formalized process for unit holders to send communications to the board. The board of governors feels this is reasonable given the accessibility of our governors. Members desiring to communicate with the board are free to do so by contacting a governor via our website, fax, phone or in writing. The names of our governors are listed on the Company's website at www.heronlakebioenergy.com.

The board does not have a policy with regard to governors' attendance at annual meetings. Last year, all governors and alternate governors serving at the time of the last annual meeting in 2015 attended that annual meeting except for alternate governor Milton McKeown. Due to this high attendance record, it is the view of the board that such a policy is unnecessary.

Board Leadership Structure

The Company is managed by a chief executive officer that separate from the chairman of the Board. Our chief executive officer is employed by Granite Falls Energy and is provided on a part-time basis to the Company pursuant to our management services agreement with Granite Falls Energy.

Separation of the two offices is not mandated by the Company’s corporate governance guidelines or Operating and Member Control Agreement. The Board has determined that its leadership structure is effective to create checks and balances between the executive officers of the Company and the Board.

Committees of Our Board of Governors

During fiscal 2015, our board of governors had four standing committees: the audit committee, compensation committee, nomination and governance committee and risk management committee.

Audit Committee. The audit committee’s function is one of oversight and, in that regard, the audit committee meets with our management and independent registered public accounting firm to review and discuss our financial reporting and our controls respecting accounting. The audit committee consists of Messrs. Rodney Wilkison (Chairman), Leslie Bergquist, and Michael Kunerth. Marten Goulet also serves as an alternate member of the audit committee

Compensation Committee. The board of governors' three member non-employee executive committee serves as our compensation committee. The executive board is responsible for discharging the board’s responsibilities relating to compensation of our Company’s executive officers. The executive board has the authority to approve and make recommendations to the board with respect to the compensation of the chief executive officer of the Company and evaluates the chief executive officer’s performance in light of his goals and objectives, as determined by the executive board. The executive board consults with the chief executive officer with respect to compensation for the Company’s other executives and the chief executive officer may be present at meetings for deliberations on non-CEO executive officer compensation, but he may not vote. The executive board consists of Messrs. Paul Enstad (Chairman), Rodney Wilkison, and Michael Kunerth.

Nominating Committee. The nominating committee is responsible for identifying individuals qualified to become board members and recommending to the board of governors the governor nominees to be considered for election by members and for election by the board of governors to fill any vacancy or newly created governorship. The nominating committee consists of Messrs. Michael Kunerth, David Woestehoeff, Doug Schmitz and Lee Uldbjerg (Chairman).

Risk Management Committee. The risk management committee’s function is to assist the board of governors in assessing and managing the risks associated with managing our processing margin and the purchase and sale of commodities required in connection with or produced as a result of our production of ethanol. The risk management committee consists of Steve Christensen, our chief executive officer, and Eric Baukol, our risk manager.

Board's Role In Risk Oversight

The Board is actively involved in overseeing all material risks that face the Company, including risks related to changes in commodity prices. The Board administers its oversight functions by reviewing the operations of the Company, by overseeing the executive officers' management of the Company, and through its risk management committee. In some cases, risk oversight is addressed as part of the full board’s engagement with the CEO and management. In other cases, a board committee is responsible for oversight of specific risk topics. The audit committee oversees risks related to internal control over financial reporting, the risk management committee oversees risks related to commodity prices and instruments, and the compensation committee reviews the Company’s compensation policies, programs and procedures and oversees risks and relevant risk controls related to the Company’s compensation policies, programs and procedures, including the incentives they create.

Governor Independence

Our securities are not listed on a national securities exchange or in an inter-dealer quotation system that requires that a majority of the board of governors be independent. However, the board of governors undertook a review of governor independence in February 2016 as to all of the governors then serving. The board considers all relevant facts and circumstances. In assessing the materiality of a governor's relationship to the Company, the board considers the issues from the governor's standpoint and from the perspective of the persons or organizations with which the governor has an affiliation and is guided by the standards set forth by the SEC and NASDAQ. An independent governor must not have any material relationship with the Company, directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company, or any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a governor.

As a result of its review, the board of governors affirmatively determined that David Woestehoff, Michael S. Kunerth, and Milton J. McKeown are independent according to the “independence” definition of the NASDAQ Listing Rules. Paul Enstad, Rodney Wilkison, Marten Goulet, Leslie Bergquist, Kenton Johnson, and Martin Seifert are appointed to our board of governors by Granite Falls Energy, LLC. Granite Falls Energy, LLC has voting and disposition control over approximately 50.6% of the Company’s units, but, per SEC Rule 10A-3(e)(1)(ii)(B), ownership of 10% of an issuer’s securities does not create a presumption of affiliation and thus lack of independence and, based upon all other factors, the board made the determination that each of Messrs. Enstad, Wilkison, Goulet, Bergquist, Johnson and Siefert was independent.

Robert J. Ferguson is not “independent” under the NASDAQ Listing Rules because he served as our chief executive officer from 2007 to 2013 and sold a significant amount of grain to us in fiscal year 2015. Doug Schmitz is also not independent because he sold a significant amount of grain to us in fiscal year 2015 through an affiliated entity.

Code of Ethics

The board has adopted a code of ethics that sets forth standards regarding matters such as honest and ethical conduct, compliance with the law, and full, fair, accurate, and timely disclosure in reports and documents that we file with the SEC and in other public communications. The code of ethics applies to all of our employees, officers, and governors, including our chief executive officer, chief financial officer, and risk manager. The code of ethics is available free of charge on written request to Heron Lake BioEnergy, LLC, 91246 390th Avenue, Heron Lake, Minnesota 56137.

NOMINATION AND GOVERNANCE COMMITTEE

The nomination and governance committee operates under a charter adopted by the board of governors. Our nomination and governance committee charter is available on our website at www.heronlakebioenergy.com.

Messrs. Kunerth, Woestehoeff, Schmitz and Uldbjerg currently serve as the Company's nominating committee. The chairperson of the nominating committee is Mr. Uldbjerg, who is the principal of Uldbjerg Consulting LLC and not a member of our board of governors.

The nominating committee has the authority to engage consultants, and during fiscal year 2015 engaged Uldbjerg Consulting LLC to help identify and evaluate potential governor nominees. As part of the engagement, Uldbjerg Consulting LLC agreed to provide the services of Mr. Uldbjerg as the nomination and governance committee chair and that he would attend all meetings of the Company's nomination and governance committee and attend board of governor meetings as requested by our board. In exchange for these services, we agreed to pay Uldbjerg Consulting LLC $250 per each nominating meeting attended by Mr. Uldbjerg plus travel expenses and mileage at IRS approved rates. For fiscal year 2015, we paid Uldbjerg Consulting LLC a total of approximately $970 for his services on our nominating committee. The nomination and governance committee held three meetings in order to nominate candidates for the 2016 annual meeting and all members of the nomination and governance committee attended at least 75% of these meetings.

The nomination and governance committee’s responsibilities include: (1) identifying and nominating individuals qualified to serve as governors and on committees of the board; (2) advising the governors with respect to the board’s composition, procedures and committees; (3) developing and recommending to the board a set of corporate governance principles; and (4) overseeing the evaluation of the board and the board committees.

The charter of the nomination and governance committee requires that this committee consist of at least two members of the board of governors. A majority of members of the nomination and governance committee must satisfy the independence requirements of the NASDAQ Listing Rules, as adopted in the Company’s Governance Guidelines. The membership of our nomination and governance committee meets the requirements of its charter.

The nomination and governance committee will consider candidates for board membership suggested by members of that committee, other governors, as well as management and members.

Criteria for Nomination to the Board

The nomination and governance committee is responsible for identifying, evaluating and approving qualified candidates for nomination as governors. The committee has not adopted minimum qualifications that nominees must meet in order for the committee to recommend them to the board of governors, as the committee believes that each nominee should be evaluated based on his or her merits as an individual, taking into account our needs and the needs of the board of governors. The nomination and governance committee evaluates each prospective nominee against the standards and qualifications set out in our Governance Guidelines, including:


•	Background, including demonstrated high personal and professional ethics and integrity; and the ability to exercise good business judgment and enhance the board’s ability to manage and direct the affairs and business of the Company;


•	Commitment, including the willingness to devote adequate time to the work of the board and its committees, and the ability to represent the interests of all members and not a particular interest group;


•	Board skills needs, in the context of the existing makeup of the board, and the candidate’ s qualification as independent and qualification to serve on board committees;


•	Diversity, in terms of knowledge, experience, skills, expertise, and other demographics which contribute to the board’s diversity; and


•	Business experience, which should reflect a broad experience at the policy-making level in business, government and/or education.

The nomination and governance committee also considers such other relevant factors, as it deems appropriate. The committee will consider persons recommended by the members in the same manner as other nominees.

Process for Identifying and Evaluating Nominees

The process for identifying and evaluating nominees to the board of governors is initiated by identifying a slate of candidates who meet the criteria for selection as a nominee and have the specific qualities or skills being sought based on input from members of the board and, if the nomination and governance committee deems appropriate, a third-party search firm. The nomination and governance committee evaluates these candidates by reviewing the candidates’ biographical information and qualifications and checking the candidates’ references. We have not engaged a third-party search firm to assist us in identifying potential governor candidates, but the nomination and governance committee may choose to do so in the future.

Member Proposals for Nominees

The nomination and governance committee will consider written proposals from members for nominees for governor. Any such nominations should be submitted in writing to the nomination and governance committee in care of the board secretary and should accompanied by a completed nominee questionnaire which includes the nominating member's name and contact information, a brief description of the candidate's business experience, civic involvement, education and such other information as the member submitting the recommendation believes is relevant to the evaluation of the candidate. All member recommendations for the election of governors at the 2017 annual meeting must be received by the Company no later than November 4, 2015.

AUDIT COMMITTEE

Currently, the audit committee consists of three governors: Michael S. Kunerth, Rod Wilkison (chair) and Leslie Bergquist. Additionally, Marten Goulet was appointed as an alternate member to the committee.

The audit committee assists the board in fulfilling its oversight responsibility for: (1) the integrity of our financial statements and financial reporting process and our systems of internal accounting and financial controls; (2) the performance of our internal audit function; (3) the annual independent integrated audit of our consolidated financial statements and internal control over financial reporting; and (4) our compliance with legal and regulatory requirements, including our disclosure controls and procedures. The duties and responsibilities of the audit committee include the engagement of our independent registered public accounting firm and the evaluation of our accounting firm’s qualifications, independence and performance.

The charter of the audit committee requires that the audit committee be comprised of three or more governors, a majority of whom must be “independent” under the NASDAQ Listing Rules, as adopted in the Company’s Governance Guidelines. A majority of the members must also be non-executive governors, free from any relationship that would interfere with the exercise of independent judgment and “independent” as defined by the applicable rules and regulations of the Securities and Exchange Commission. Moreover, all members of the committee must have a basic understanding of finance and accounting and be able to read and understand fundamental financial statements, and at least one member of the committee must have accounting or related financial management expertise. The board of governors determined that the membership of the audit committee meets the requirements of its charter. During fiscal year 2015, the audit committee met four times.

In February 2016, the board of governors reviewed the qualifications of each member of the audit committee for the purpose of determining whether any governor serving on the audit committee would qualify as an “audit committee financial expert” as that term is defined under the rules of the Securities and Exchange Commission. Based upon that review, the board of governors determined that Mr. Wilkison qualifies as an audit committee financial expert. Mr. Wilkison's experience as the owner and chief executive officer of Wilkison Consulting Service, which provides financial consulting, tax preparation, and monthly accounting services for farmers and small businesses, qualifies him to be the Audit Committee's financial expert.

Independent Registered Public Accounting Firm

The audit committee selected Boulay PLLP, as independent registered public accountants for the fiscal year November 1, 2015 to October 31, 2016. A representative of Boulay PLLP, is expected to be present at the 2016 annual meeting of members and will have an opportunity to make a statement if so desired. The representative is also expected to be available for questions from the members.

Audit Fees

The following is an explanation of the fees billed to us by Boulay PLLP for professional services rendered for the fiscal years ended October 31, 2015 and October 31, 2014, which totaled approximately $171,000 and $186,000, respectively.

Audit Fees. The aggregate fees billed to us for professional services related to the audit of our annual financial statements, review of financial statements included in our reports with the Securities and Exchange Commission, or other services normally provided by Boulay PLLP in connection with statutory and regulatory filings or engagements for the fiscal years ended October 31, 2015 and October 31, 2014 totaled approximately $124,000 and $130,000, respectively.

Tax Fees. The aggregate fees billed to us by Boulay PLLP for professional services related to tax compliance (year-end tax preparation of the partnership return and associated K-1's) for the fiscal year ended October 31, 2015 and October 31, 2014 totaled approximately $21,000 and $25,000, respectively.

All Other Fees. The aggregate fees billed to us by Boulay PLLP for professional services related to all other fees for the fiscal years ended October 31, 2015 and October 31, 2014 totaled approximately $26,000 and $31,000, respectively. The other fees were billed for services rendered for the Renewable Identification Number (RINs) agreed-upon procedures as well as other financial, tax, and operational related consulting.

Audit Committee Report

This is a report of the audit committee of the board of governors of Heron Lake BioEnergy, LLC for the year ended October 31, 2014. This report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 and shall not otherwise be deemed to be filed under either such Act.

In accordance with its charter, the audit committee reviewed and discussed the audited financial statements with management and Boulay PLLP, our independent accountants. The discussions with Boulay PLLP also included the matters required under Public Company Accounting Oversight Board ("PCAOB") Auditing Standard No. 16, Communications with Audit Committee (AS16).

Boulay PLLP provided to the audit committee the written disclosures and the letter regarding its independence as required by the PCAOB and Independence Rule 3526, Communication with Audit Committees Concerning Independence. This information was discussed with Boulay PLLP.

Based on the discussions with management and Boulay PLLP, the audit committee’s review of the representations of management and the report of Boulay PLLP, the audit committee recommended to our board of governors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended October 31, 2015, to be filed with the Securities and Exchange Commission.

Submitted By the Audit Committee of the Board of Governors:



	Rodney Wilkison	Michael S. Kunerth
	Leslie Bergquist	Martin Goulet

Audit Committee Pre-Approval Policies

We have adopted pre-approval policies and procedures for the audit committee that require the audit committee to pre-approve all audit and all permitted non-audit engagements and services (including the fees and terms thereof) by the independent auditors, except that the audit committee may delegate the authority to pre-approve any engagement or service less than $10,000 to one of its members, but requires that the member report such pre-approval at the next full audit committee meeting. The audit committee may not delegate its pre-approval authority for any services rendered by our independent auditors relating to internal controls. These pre-approval policies and procedures prohibit delegation of the audit committee’s responsibilities to our management. Under the policies and procedures, the audit committee may pre-approve specifically described categories of services which are expected to be conducted over the subsequent twelve months on its own volition, or upon application by management or the independent auditor.

All of the services described above for fiscal year 2015 were pre-approved by the audit committee or a member of the committee before Boulay PLLP was engaged to render the services.

COMPENSATION COMMITTEE

The compensation committee operates under a charter adopted by the board of governors. Our compensation committee charter is available on our website at www.heronlakebioenergy.com. The board of governors has acted as a compensation committee for the Company and no separate committee was established.

Our board of governors performs the same tasks usually performed by a compensation committee overseeing our compensation and employee benefit plans and practices, including any executive compensation plans, governor compensation plans and incentive compensation and equity-based plans. The charter of the compensation committee requires majority of members of the compensation committee must satisfy the independence requirements of: (1) the NASDAQ Listing Rules, as adopted in the Company’s Governance Guidelines; (2) Section 16b-3 of the Exchange Act, if Section 16 is applicable to the Company; and (3) Section 162(m) of the Internal Revenue Code of 1986, all as amended from time to time. A majority of the members of our board meet these requirements. During fiscal year 2015, the board met one times to review our compensation and employee benefit plans and practice.

For additional information on the responsibilities and activities of the executive board, including the process for determining executive compensation, see the section of this proxy statement entitled "COMPENSATION OF GOVERNORS AND EXECUTIVE OFFICERS - Compensation Discussion and Analysis."

MEMBER PROPOSALS FOR 2017 ANNUAL MEETING

The proxy rules of the Securities and Exchange Commission permit equity owners of a company, after timely notice to the Company, to present proposals for action in the Company’s proxy statement where such proposals are consistent with applicable law, pertain to matters appropriate for action by equity owners and are not properly omitted by Company action in accordance with the proxy rules.

The 2017 annual meeting of members is expected to be held during the last half of March 2017, and proxy materials in connection with that meeting are expected to be mailed on or about the last business day of February 2017.

Under the rules of the SEC, including Rule 14a-8 of the Securities Exchange Act of 1934, any member proposal to be considered by us for inclusion in the proxy material for the 2017 annual meeting must be received by the secretary of the Company, 191246 390th Avenue, Heron Lake, Minnesota 56137, no later than one-hundred and twenty (120) days prior to when we mailed the proxy materials for the 2017 annual meeting. Accordingly, we determined that members must submit proposals related to the 2017 annual meeting of members to the Company by November 1, 2016. The submission of a proposal does not guarantee its inclusion in the proxy statement or presentation at the annual meeting unless certain securities laws requirements are met. Proposals submitted later than November 1, 2016 will be considered untimely and will not be included in our proxy statement for the 2017 annual meeting. We suggest that any proposal be submitted by certified mail - return receipt requested.

Pursuant to our nominating committee charter, members of the Company may submit recommendations for governor candidates to the chairman of the nominating committee. All such nominations must be submitted in writing to the nomination and governance committee at Heron Lake BioEnergy, LLC, 1191246 390th Avenue, Heron Lake, Minnesota 56137. Such submissions should include the nominating member's name and contact information, a brief description of the candidate's business experience, civic involvement, education and such other information as the member submitting the recommendation believes is relevant to the evaluation of the candidate.

For candidates to be considered for election at the 2017 annual meeting, the recommendation must be received by the Company by November 1, 2016. Candidates properly submitted by members of the Company or members of the nomination and governance committee will be considered in the same manner as those submitted by third-party search firms, if any, to the nomination and governance committee.

Additionally, the Company will also be soliciting governor candidates by notifying members of a “Call for Board of Governors Nominations” in the fall of 2016.

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Transactions in Fiscal Year 2015

Except as disclosed below or "SECTION III - REQUIRED INFORMATION, EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION", we have not entered into any transaction since the beginning of fiscal year 2015 and there are no currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest.

Corn Transactions

In the ordinary course of business, we regularly enter into transactions to buy grain. From time to time, we may buy grain from related persons on the same basis as we buy grain from unrelated parties. For the fiscal year ended October 31, 2015, we purchased approximately $336,000 in grain from Robert J. Ferguson and approximately $10.7 million in grain from Schmitz Grain, Inc. Schmitz Grain, Inc. is controlled by Doug Schmitz, a governor.

Management Services Agreement with Granite Falls Energy

On July 31, 2013, we entered into a management services agreement with Granite Falls Energy for the purpose of sharing certain management employees. Under the management services agreement, Granite Falls Energy supplies its personnel to act as part-time officers and managers of the Company for the positions of chief executive officer, chief financial officer, and risk manager. In return, we pay Granite Falls Energy $35,000 per month for the first year of the management services agreement. During years two and three of the management services agreement, the Company agreed to pay Granite Falls Energy 50% of the total salary, bonuses and other expenses and costs (including all benefits and tax contributions) incurred by Granite Falls Energy for the three management positions, paid on an estimated monthly basis with a “true-up” following the close of Granite Falls Energy’s fiscal year. Granite Falls Energy is responsible for and agreed to directly pay salary, wages, and/or benefits to the persons providing management services under the management services agreement.

The initial term of the management services agreement is three years. At the expiration of the initial term, the management services agreement will automatically renew for successive one-year terms unless and until the Company or Granite Falls Energy gives the other party 90-days written notice of termination prior to expiration of the initial term or the start of a renewal term. The management services agreement may also be terminated by either party for cause under certain circumstances.

The total costs that the Company incurred under the management services agreement for fiscal year 2015 was approximately $414,000.

Review and Approval of the Transactions with Project Viking and Granite Falls Energy

The transactions and agreements with Granite Falls Energy described above, were reviewed and approved by a Special Committee of the board of governors. The Special Committee was comprised of Robert J. Ferguson, Doug Schmitz, David J. Woestehoff, Michael S. Kunerth and Milton J. McKeown. The governors serving on the Special Committee had no personal interest in the transactions contemplated by the management services agreement or related transactions. The governors serving on the Special Committee also were not affiliated with Granite Falls Energy or Project Viking or any of their respective affiliates.

Process for Review, Approval or Ratification of Transactions with Related Persons

The charter of our audit committee provides that the audit committee is responsible for reviewing and approving the terms and conditions of all of transactions we enter into in which an officer, governor or any member holding greater than 5% or any affiliate of these persons has a direct or indirect material interest. Our Code of Business Conduct and Ethics, which is applicable to all of our employees and governors, also prohibits our employees, including our executive officers, and our governors from engaging in conflict of interest transactions. Requests for waivers by our executive officers and governors from the provisions of, or requests for consents by our executive officers and governors under, our Code of Business Conduct and Ethics must be made to the audit committee.

In addition, in December 2007, we adopted a formal related person transaction approval policy, which sets forth our policies and procedures for the review, approval or ratification of any transaction required to be reported in our filings with the Securities and Exchange Commission. Our policy applies to any financial transaction, arrangement or relationship or any series of similar transactions, arrangements or relationships in which our company is a participant and in which a related person has a direct or indirect interest. Through the policy, the audit committee has also identified and pre-approved certain transactions with related persons, including:


•	employment and compensation of our executive officers or governor compensation, if required to be reported in under the disclosure requirements of the Securities and Exchange Commission,


•	payment of ordinary expenses and business reimbursements;


•	transactions with another company in which the related party’s only relationship is as a non-executive officer, employee, governor/director or beneficial owner of less than 10% of the other company’s voting equity and in which the dollar amount does not exceed the greater of $100,000 or 2% of the other company’s total revenues;

•

any transaction with another company controlled by a related party or with a related party for the purchase by us of corn where (A) the amount of corn sold in the transaction does not exceed 200,000 bushels; (B) the contract for delivery of the corn specifies a delivery date of not more than sixty (60) days from the date of the contract; (C) the price per bushel is fixed at the time of the contract; and (D) where the amount paid per bushel or other material terms of the transaction are based on consideration or criteria generally applicable to other sellers of corn of a like quality and quantity, given the conditions of the grain markets at the time of sale;


•	charitable contributions in which the dollar amount does not exceed $100,000 or 2% of the charitable organization’s receipts if the related party’s only relationship is as a non-executive officer, employee or a governor/director;


•	payments made under our Articles of Organization, member control agreement, insurance policies or other agreements relating to indemnification;


•	transactions in which our members receive proportional benefits; and


•	transactions that involve competitive bid, banking transactions and transactions where the terms of which are regulated by law or governmental authority.

The audit committee must approve any related person transaction subject to this policy before commencement of the related party transaction. If pre-approval is not feasible, the audit committee may ratify, amend or terminate the related person transaction. The audit committee will analyze the following factors, in addition to any other factors the Committee deems appropriate, in determining whether to approve a related party transaction:


•	whether the terms are fair to us;


•	whether the terms of the related party transaction are no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances;


•	whether the related party transaction is material to us;


•	the role the related party has played in arranging the transaction;


•	the structure of the related party transaction;


•	the interests of all related parties in the transaction;


•	the extent of the related party’s interest in the transaction; and


•	whether the transaction would require a waiver of our Code of Business Conduct and Ethics.

The audit committee may, in its sole discretion, approve or deny any related person transaction. Approval of a related person transaction may be conditioned upon our company and the related person taking such precautionary actions, as the audit committees deems appropriate.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

Throughout this proxy statement, the individuals who serve as our chief executive officer and chief financial officer are referred to as the “executive officers”. Pursuant to our management services agreement with Granite Falls Energy, these executive officers are employed by Granite Falls Energy and provide part-time management services to our Company. Subject to the terms of the management services agreement discussed below, Granite Falls Energy sets the compensation paid to the executive officers that are employees of Granite Falls Energy.

The compensation committee has responsibility for establishing, implementing and regularly monitoring adherence to the Company's compensation philosophy and objectives. The compensation committee ensures that the total compensation paid to management and employees is fair, reasonable and competitive. The compensation committee considers compensation paid to the Company's employees, subject to the terms of the management services agreement described below.

The compensation committee:


•	establishes and administers a compensation policy for management;


•	reviews and approves the compensation policy for all or our employees other than management;


•	reviews and monitors our financial performance as it affects our compensation policies or the administration of those policies;


•	reviews and monitors our succession plans;


•	approves awards to employees pursuant to our incentive compensation plans; and


•	approves modifications in the employee benefit plans with respect to the benefits salaried employees receive under such plans.

All of the compensation committee's actions are reported to the board and, where appropriate, submitted to the board for ratification. From time to time, the compensation committee may delegate to the chief executive officer the authority to implement certain decisions of the committee, to set compensation for other employees or to fulfill administrative duties.

Our Compensation Philosophy and Objectives

The compensation committee’s philosophy is to provide a competitive level of compensation that is consistent with the Company’s budget, financial performance, and local labor market conditions. In determining compensation for executive officers and management employees, the compensation committee sometimes solicits input from our human resources personnel, primarily relating to benefit programs and local labor market conditions. Based upon this philosophy, the compensation committee has determined that the compensation of management employees should consist of base salary and benefits to which our other employees are eligible.

Management Services Agreement

On July 31, 2013, we entered into a management services agreement with Granite Falls Energy for the purpose of sharing certain management employees. Since July 31, 2013, our chief executive officer, chief financial officer, and risk manager have been employed by Granite Falls Energy. Pursuant to the management services agreement, we pay Granite Falls Energy $35,000 per month for the first year of the management services agreement. During years two and three of the management services agreement, the Company will pay Granite Falls Energy 50% of the total salary, bonuses and other expenses and costs (including all benefits and tax contributions) incurred by Granite Falls Energy for the three management positions, paid on an estimated monthly basis with a “true-up” following the close of Granite Falls Energy’s fiscal year. All other employees are employed by the Company.

Compensation Committee Procedures

The executive board, acting as the compensation committee, is responsible for determining the nature and amount of compensation for the Company's management employees. The compensation committee receives input from the chief executive officer on the personal performance achievements of the management employees who report to him. This individual performance assessment determines a portion of the annual compensation for each manager. In addition, the chief executive officer provides input on salary increases, incentive compensation opportunities, and long-term incentive grants for the management employees who report to him, which the committee considers when making executive compensation decisions.

In addition, the executive board expects to review the executive officers' performance pursuant to the management services agreement with Granite Falls Energy annually. A part of this review includes decisions and approvals regarding compensation reimbursement by the Company to Granite Falls Energy.

Compensation Components

The compensation committee followed the guiding principles outlined above in the development and administration of compensation programs for our named executive officers. During fiscal year 2015, the components of our management compensation programs consisted of base salary and a discretionary cash bonus. Additionally, management (other than our executive officers) was also eligible to participate in the same benefit programs as were available to our other employees.

Base Salaries

Base salaries for management and other employees employed by the Company are established based on the scope of their roles, responsibilities, experience levels and performance, and taking into account competitive market compensation paid by comparable companies for similar positions. Base salaries are reviewed approximately annually, and may be adjusted from time to time to realign salaries with market levels after taking into account individual performance and experience. The base salaries of the executive officers are set by Granite Falls Energy. The Company's obligation to reimburse Granite Falls Energy for the base salaries paid to these shared employees is established by the management services agreement.

Bonus

In addition to the base salaries, management and other employees employed by the Company may receive bonuses. The bonuses, if any, of the executive officers are set by Granite Falls Energy. The Company's obligation to reimburse Granite Falls Energy for bonuses paid to these shared employees is established by the management services agreement.

Benefits and Perquisites

We do not provide any material executive perquisites. We have no supplemental retirement plans or pension plans.

Accounting and Tax Treatment of Awards

None of our executive officers, governors, or employees receives compensation in excess of $1,000,000 and therefore the entire amount of their compensation is deductible by the Company as a business expense. Certain large executive compensation awards are not tax deductible by companies making such awards. None of our compensation arrangements are likely to reach this cap in the foreseeable future.

Report of the Compensation Committee

The following report of the compensation committee shall not be deemed to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the 1934 Securities Exchange Act, as amended, except to the extent that we specifically incorporate it by reference in such filing.

The board of governors has reviewed and discussed the section of this proxy statement entitled Compensation Discussion and Analysis (the “CD&A”) for the year ended October 31, 2015 with management. In reliance on this review and discussion, the board of governors recommended that the CD&A be included in this proxy statement for the 2016 annual meeting of members for filing with the Securities and Exchange Commission.



Paul Enstad	Rod Wilkison	Michael Kunerth

Compensation Committee Interlocks and Insider Participation

Except for Robert J. Ferguson, who is our former president and chief executive officer, none of the members of the compensation committee is or has been an employee of the Company. There are no interlocking relationships between our Company and other entities that might affect the determination of the compensation of our executive officer.

Summary Compensation Table

The following table sets forth all compensation paid or payable by the Company during the last three fiscal years to our named executive officers. Although Mr. Steve Christensen and Ms. Stacie Schuler are the Company’s named executive officers, they are directly employed and compensated by Granite Falls Energy and their services are provided to us on a part-time basis pursuant to the management services agreement between the Company and Granite Falls Energy. The management services agreement is discussed in more detail above in the section titled "Certain Relationships and Related Person Transactions" above. Therefore, for fiscal years 2015, 2014 and 2013, the table below reflects the total compensation received by the Mr. Christensen and Ms. Schuler in their capacity as employees of Granite Falls Energy that has been attributed to the Company as a result of the services provided by Mr. Christensen and Ms. Schuler to Company under the management services agreement. We do not pay any cash or non-cash salary, bonus, or other compensation to Mr. Christensen and Ms. Schuler for their services to us.

As of February 25, 2016, none of our named executive officers had any options, warrants, or other similar rights to purchase securities of the Company.



Name and Principal Position	Fiscal Year	Salary ($)		All Other Compensation		Bonus		Total ($)
Steve Christensen, CEO^{(1), (2), (3)}	2015	$	94,904	$	11,356	$	17,040	$	123,299
	2014	$	95,390	$	9,601	$	60,968	$	165,959
	2013	$	19,467	$	2,271	$	2,500	$	24,238
Stacie Schuler, CFO^{(1), (2), (3)}	2015	$	64,904	$	4,712	$	11,235	$	80,851
	2014	$	57,519	$	2,481	$	10,519	$	70,519
	2013	$	11,994	$	694	$	2,364	$	15,051


⁽¹⁾	The Company paid Granite Falls Energy, in the aggregate, approximately $105,000, $392,000 and $414,000 during each of fiscal years 2015, 2014 and 2013, respectively, for services provided pursuant the management services agreement, which included Mr. Christensen’s and Ms. Schuler’s services, and the services of one other shared manager.


⁽²⁾	For fiscal year 2013, the total compensation reported in the table above reflects one-half of the total salary, bonuses and other compensation paid to Mr. Christensen and Ms. Schuler by Granite Falls Energy for fiscal year 2013 and prorated for the three months of services provided by Mr. Christensen and Ms. Schuler to the Company in fiscal year 2013 pursuant to the management services agreement.


⁽²⁾	For fiscal years 2015 and 2014, the total compensation reported in the table above reflects one-half of the total salary, bonuses and other compensation paid to Mr. Christensen and Ms. Schuler by Granite Falls Energy for fiscal years 2015 and 2014.

GOVERNOR COMPENSATION

On September 26, 2013, the board approved a board of governors' compensation policy that, effective November 1, 2013, provides for payment to governors of a monthly stipend plus a fee based on attendance at board and committee meetings. Governors were also reimbursed for reasonable expenses included in carrying out their duties as governors, including mileage reimbursement for travel to meetings.

The following table shows for fiscal year 2015 the total compensation paid by us to each of our governors:



Name	Fiscal Year	Fees Earned or Paid in Cash(1) ($)		Additional Compensation(2) ($)		Total Compensation ($)
Paul Enstad	2015	$	21,125	$	193	$	21,318
Michael S. Kunerth	2015	$	23,125	$	604	$	23,729
Rodney Wilkison	2015	$	18,125	$	325	$	18,450
Dean Buesing	2015	$	15,125	$	73	$	15,198
Marten Goulet	2015	$	18,000	$	6,646	$	24,646
Robert Ferguson	2015	$	14,625	$	530	$	15,155
David J. Woestehoff	2015	$	15,500	$	1,775	$	17,275
Doug Schmitz	2015	$	12,750	$	408	$	13,158
Milton J. McKeown	2015	$	14,000	$	446	$	14,446
Leslie Bergquist	2015	$	18,625	$	779	$	19,404
Kenton Johnson	2015	$	15,000	$	95	$	15,095
Martin Seifert	2015	$	15,000	$	260	$	15,260

____________________________________________________

(1)

Includes a monthly stipend plus a fee based on attendance at board and committee meetings. We pay our governors as follows: $1,000 per each monthly board meeting attended in-person and $250 for monthly board meeting participation whether in-person or by conference call. We also pay $250 for additional meetings of greater than one-half day in length; $125 for attending meetings less than one half day in length; and $125 for attendance at meetings by conference call. We pay $500 per month to the president and secretary of the board and $1,000 quarterly to the audit committee.


(2)	Includes reimbursement for mileage and other reasonable expenses incurred in connection with services rendered to the Company and the board of governors.

ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS

The Company's annual report to the Securities and Exchange Commission on Form 10-K, including the financial statements and the notes thereto, for the fiscal year ended October 31, 2015 accompanies this Notice of Annual Meeting and Proxy Statement.

The Company will provide each member solicited a copy of Exhibits to the 10-K upon written request and payment of specified fees. The written request for such Exhibits should be directed to Stacie Schuler, chief financial officer of Heron Lake BioEnergy, LLC, 91246 390th Avenue, Heron Lake, Minnesota 56137 or by calling us at (507) 793-0077. Such request must set forth a good faith representation that the requesting party was a holder of record or a beneficial owner of membership units in the Company on February 25, 2016.

The 2015 annual report on Form 10-K complete with exhibits is also available at no cost through the EDGAR database available from the SEC's internet site (www.sec.gov). Information about us is also available at our website at www.heronlakebioenergy.com, under “SEC Filings,” which includes links to reports we have filed with the Securities and Exchange Commission.



Heron Lake BioEnergy, LLC		MEMBER NAME
2016 Annual Meeting - Wednesday, March 23, 2016		NUMBER OF UNITS
For Members as of February 25, 2016		TELEPHONE NUMBER
Proxy Solicited on Behalf of the Board of Governors
		Vote by Mail or Facsimile:
		1) Read the Proxy Statement
		2) Check the appropriate boxes on the proxy card
		3) Sign and date the proxy card
PROPOSAL ONE: ELECTION OF ONE GOVERNORVote by marking one (1) choice.		4) Return the proxy card in the envelope provided or via fax to (320) 235-5962 or mail to Christianson & Associates, PLLP, Attention: Christina Boike at 302 SW 5th St, Wilmar, MN 56201. It must be received by Christianson & Associates no later than 5:00 p.m. on Tuesday, March 22, 2016.



	For	Withhold / Abstain
Robert J. Ferguson	o	o	PLEASE INDICATE YOUR SELECTION BY FIRMLY PLACING AN "X" IN THE APPROPRIATE BOX WITH BLUE OR BLACK INK

By signing this proxy card, you appoint Paul Enstad and Rodney Wilkison, jointly and severally, each with full power of substitution, as proxies to represent you at the 2016 annual meeting of the members to be held on Wednesday, March 23, 2016, at the Heron Lake Community Center, 312 10th Street, Heron Lake, Minnesota 56137, and at any adjournment thereof, on any matters coming before the meeting. Registration for the meeting will begin at 12:00 p.m. The 2016 annual meeting will commence at 1:00 p.m. This proxy, when properly executed, will be voted in the manner directed herein and authorizes the proxies to take action in their discretion upon other matters that may properly come before the 2016 annual meeting. The proxies cannot vote your units unless you sign and return this card. For your proxy card to be valid, it must be received by Christianson & Associates, PLLP by 5:00 p.m. on Tuesday, March 22, 2016, or by submitting the proxy card in person when registering at the 2016 annual meeting. If you do not mark any boxes, your units will be voted FOR for the nominee with respect to Proposal 1. If you mark only one boxy on the proxy card, either FOR or WITHHOLD / ABSTAIN for the nominee, then the proxy will vote your units in the manner marked. If you mark contradicting choices on the proxy card, voting both FOR and WITHHOLD / ABSTAIN for the nominee, your votes will not be counted with respect to the nominee as you marked contradicting choices. However, each fully executed proxy card will be counted for purposes of determining whether a quorum is present at the 2016 annual meeting. You may revoke your proxy by: (1) voting in person at the 2016 annual meeting; or (2) giving written notice of revocation, which is received by Christianson & Associates, PLLP by 5:00 p.m. on Tuesday, March 22, 2016.



Signature:			Signature:
Date:			Date:
Please date and sign exactly as name(s) appear(s) on your membership unit certificate(s). If membership units are held jointly, each owner should sign this proxy. If acting as an executor, administrator, trustee, custodian, guardian, etc., you should so indicate in signing. If the member is a corporation or other business entity, the proxy should indicate the full legal name of the corporation or entity, and be signed by a duly authorized officer (indicating his or her position).

Heron Lake BioEnergy (HLBYL) DEF 14ADefinitive proxy