SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Black Hills Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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BLACK HILLS CORPORATION
625 Ninth Street
Rapid City, South Dakota 57701
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 30, 2001
March 29, 2001
Dear Shareholder:
You are invited to attend our annual meeting of shareholders to be held
on Wednesday, May 30, 2001 at 9:30 a.m. local time, at the Journey Museum, 222
New York Street, Rapid City, South Dakota. The purpose of our annual meeting is
to consider and take action on the following:
1. Election of three Class I Directors to serve until the annual
meeting of shareholders in 2004: Adil M. Ameer, Everett E. Hoyt
and Thomas J. Zeller.
2. Authorization of an increase in our authorized indebtedness from
$500 million to $2 billion.
3. Authorization of the Black Hills Corporation Omnibus Incentive
Compensation Plan.
4. Ratification of Arthur Andersen LLP to serve as our independent
auditors for the year 2001.
5. Any other business that properly comes before the annual meeting.
The accompanying proxy statement discusses the important matters to be
considered at this year's meeting. Our shareholders of record as of March 16,
2001 can vote at the annual meeting.
Your vote is very important. Please sign, date and return the enclosed
proxy card in the envelope provided. If you own shares of common stock other
than the shares shown on the enclosed proxy, you will receive a proxy in a
separate envelope for each such holding. Please execute and return each proxy
received. To make sure that your vote is counted, you should allow enough time
for the postal service to deliver your proxy before the meeting.
Sincerely,
STEVEN J. HELMERS
General Counsel
and Corporate Secretary
BLACK HILLS CORPORATION
625 Ninth Street
Rapid City, South Dakota 57701
PROXY STATEMENT
A proxy in the accompanying form is solicited by the Board of Directors
of Black Hills Corporation, a South Dakota corporation, to be voted at the
annual meeting of our shareholders to be held Wednesday, May 30, 2001, and at
any adjournment of the annual meeting.
The enclosed form of proxy, when executed and returned, will be voted
as set forth therein. Any shareholder signing a proxy has the power to revoke
the proxy in writing, addressed to our secretary, or in person at the meeting at
any time before the proxy is exercised.
All shares represented by valid, unrevoked proxies will be voted at our
annual meeting. Shares voted as abstentions on any matter, or as "withhold
authority" as to votes for members of our Board of Directors, will be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum at the meeting. For the election of directors, votes
"withheld" will be considered votes against the directors. For all other
proposals, abstentions and broker non-votes will not be counted as votes cast.
If a broker submits a proxy which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
those shares will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum at the meeting, but will not be
considered as present and entitled to vote with respect to such matters.
We will bear all costs of the solicitation. In addition to solicitation
by mail, our officers and employees may solicit proxies by telephone, fax, or in
person. Georgeson Shareholder Communications, Inc. has been retained to assist
in the solicitation of proxies at an anticipated cost of $5,000 plus
out-of-pocket expenses. Also, we will, upon request, reimburse brokers or other
persons holding stock in their names or in the names of their nominees for
reasonable expenses in forwarding proxies and proxy materials to the beneficial
owners of stock.
This proxy statement and the accompanying form of proxy are to be first
mailed on or about March 27, 2001. Our annual report to shareholders is being
mailed to shareholders with this proxy statement.
VOTING RIGHTS
Only our shareholders of record at the close of business on March 16,
2001, will be entitled to vote at the meeting. Our outstanding voting stock as
of such record date consisted of 22,977,508 shares of our common stock.
Each outstanding share of our common stock is entitled to one vote.
Cumulative voting is permitted in the election of our Board of Directors. Each
share is entitled to three votes, one each for the election of three directors,
and the three votes may be cast for a single person or may be distributed among
two or three persons.
TABLE OF CONTENTS
COMMONLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING PROCESS.........1
ITEM I: ELECTION OF DIRECTORS.................................................4
Security Ownership of Management and Principal Shareholders..........6
The Board and Committees.............................................8
Compensation Committee Interlocks and Insider Participation..........9
Directors' Fees......................................................9
Executive Compensation..............................................10
Retirement Plans....................................................13
Retirement Benefits.................................................14
Nonqualified Deferred Compensation Plan.............................15
Retirement Savings Plan.............................................15
Severance Agreements................................................15
Audit Committee Report..............................................16
Principal Accounting Firm Fees......................................17
Stock Performance Graph.............................................18
ITEM II: AUTHORIZATION OF INCREASE IN INDEBTEDNESS...........................18
ITEM III: PROPOSAL TO APPROVE THE BLACK HILLS CORPORATION OMNIBUS INCENTIVE
COMPENSATION PLAN..................................................19
Background..........................................................19
Purpose.............................................................19
Duration............................................................20
Shares Available....................................................20
Administration......................................................20
Eligibility.........................................................20
Grants under the Plan...............................................20
Termination of Employment or Board Service..........................22
Transferability.....................................................22
Taxes...............................................................22
Change in Control...................................................22
Award Information...................................................22
Federal Income Tax Consequences.....................................22
ITEM IV: APPOINTMENT OF INDEPENDENT AUDITORS.................................24
ITEM V: TRANSACTION OF OTHER BUSINESS........................................25
COMMONLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING PROCESS
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Q: Who is soliciting my proxy?
A: The Board of Directors of Black Hills Corporation.
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Q: Where and when is the annual meeting?
A: 9:30 a.m., Mountain Daylight Time, May 30, 2001 at the Journey Museum,
222 New York Street, Rapid City, South Dakota.
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Q: What am I voting on?
A: Election of three Class I Directors: Adil M. Ameer, Everett E. Hoyt and
Thomas J. Zeller.
Authorization of an increase in our authorized indebtedness from $500
million to $2 billion.
Authorization of the Black Hills Corporation Omnibus Incentive Compensation
Plan.
Ratification of Arthur Andersen LLP as our independent auditors for 2001.
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Q: Who can vote?
A: Holders of our common stock as of the close of business on the record date,
March 16, 2001, can vote at our annual meeting. Each share of our common
stock gets one vote. Cumulative voting is permitted in the election of
directors. Each share is entitled to three votes, one each for the election
of three directors, and the three votes may be cast for a single person or
may be distributed among two or three persons.
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Q: How do I vote?
A: Sign and date each proxy card that you receive and return it in the prepaid
envelope. If we receive your signed proxy before the annual meeting, we
will vote your shares as you direct. You can specify on your proxy whether
your shares should be voted for all, some or none of the nominees for
director. You can also specify whether you approve, disapprove or abstain
from the other three proposals.
If you do not mark any sections, your proxy card will be voted:
in favor of the election of the directors named in Proposal 1; and
in favor of Proposals 2, 3 and 4.
You have the right to revoke your proxy any time before the meeting by:
notifying our secretary in writing; or
in person at the meeting at any time before the proxy is exercised.
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Q: Who will count the vote?
A: Representatives of Wells Fargo Bank Minnesota, N.A. will count the votes
and serve as judges of the election.
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Q: What constitutes a quorum?
A: As of the record date, March 16, 2001, 22,977,508 shares of our common
stock were issued and outstanding. In order to conduct the annual meeting,
more than one-half of the outstanding shares must be present or be
represented by proxy. This is referred to as a "quorum." If you submit a
properly executed proxy card, you will be considered as part of the quorum.
Proxies marked as abstaining on any proposal to be acted on by shareholders
will be treated as present at the annual meeting for purposes of a quorum.
Proxies marked as abstaining, however, will not be counted as votes cast on
that proposal. Abstaining proxies include proxies containing broker
non-votes.
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Q: What vote is needed for these proposals to be adopted?
A: More than one-half of shares present either in person or by proxy and
entitled to vote at the annual meeting must vote for a proposal in order
for it to be adopted. For the election of directors, votes "withheld" will
be considered votes against the directors. For all other proposals,
abstentions and broker non-votes will not be counted as "votes" cast.
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Q: What should I do now?
A: You should mail your signed and dated proxy card in the enclosed envelope
as soon as possible, so that your shares will be represented at the annual
meeting.
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Q: Who conducts the proxy solicitation and how much will it cost?
A: We are asking for your proxy for the annual meeting and will pay all the
cost of asking for shareholder proxies. We have hired Georgeson Shareholder
Communications, Inc. to help us send out the proxy materials and ask for
proxies. Georgeson Shareholder Communications, Inc.'s fee for these
services is anticipated to be $5,000, plus out-of-pocket expenses. We can
ask for proxies through the mail or by telephone, fax, or in person. We can
use our directors, officers and regular employees to ask for proxies. These
people do not receive additional compensation for these services. We will
reimburse brokerage houses and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses for forwarding solicitation
material to the beneficial owners of our common stock.
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Q: Can I change my vote after I have mailed my signed proxy card?
A: Yes. You can change your vote in one of three ways at any time before your
proxy is used. First, you can revoke your proxy by written notice. Second,
you can send a later dated proxy changing your vote. Third, you can attend
the meeting and vote in person.
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Q: How will my shares be voted if they are held in a broker's name?
A: Your broker may vote shares nominally held in its name, or in what is
commonly called "street name", on discretionary matters such as the
election of directors. On matters that are considered non-discretionary,
brokers can only vote if you provide the broker with written instructions
on how to vote.
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Q: What happens if I do not give my broker instructions?
A: Absent your instructions, these shares will not be voted on
non-discretionary matters. Therefore, we urge you to instruct your broker
in writing to vote shares held in street name.
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Q: Who should I call with questions?
A: If you have questions about the transaction, you should call Steven J.
Helmers, our General Counsel and Corporate Secretary, at (605) 721-1700.
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Q: When are the shareholder proposals for the annual meeting held in the Year
2002 due?
A: In order to be considered, you must submit proposals for next year's annual
meeting in writing to our secretary at our home offices at 625 Ninth
Street, P.O. Box 1400, Rapid City, South Dakota 57709, prior to November
27, 2001.
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ITEM I: ELECTION OF DIRECTORS
In accordance with our Bylaws and Article Sixth of our Articles of
Incorporation, members of our Board of Directors are elected to three classes of
staggered terms consisting of three years each. Under the terms of the
shareholder's agreement we entered into, in connection with the acquisition of
Indeck Capital, Inc., the former Indeck shareholders are entitled to nominate
one Director to our Board of Directors. Gerald R. Forsythe was their nominee for
Director and he is currently serving as a Director in Class III. At this annual
meeting of our shareholders, three Directors will be elected to Class I of the
Board of Directors to hold office for a term of three years until our annual
meeting of shareholders in 2004 and until their respective successors shall be
duly elected and qualified.
Each of the nominees for director is presently a member of our Board of
Directors. The proxy attorneys will vote your stock for the election of the
three nominees for director listed below, unless otherwise instructed. If, at
the time of the meeting, any of such nominees shall be unable to serve in the
capacity for which they are nominated or for good cause will not serve, an event
which the Board of Directors does not anticipate, it is the intention of the
persons designated as proxy attorneys to vote, at their discretion, for nominees
to replace those who are unable to serve. The affirmative vote of a majority of
the common shares present and entitled to vote with respect to the election of
directors is required for the election of the nominees to the Board of
Directors.
The following information, including principal occupation or employment
for the past five or more years, is furnished with respect to each of the
following persons who are nominated as Class I Directors, each to serve for a
term of three years to expire in 2004.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
FOLLOWING NOMINEES:
Nominees for Election Until
2004 Annual Meeting - Class I
Name, Age, Principal Occupation for Director
Last Five Years and Other Directorships Since
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Adil M. Ameer, 48 1997
President and Chief Executive Officer,
Rapid City Regional Hospital.
Rapid City, South Dakota
Everett E. Hoyt, 61 1991
President and Chief Operating Officer of
Black Hills Corporation.
Rapid City, South Dakota
Thomas J. Zeller, 53 1997
President, RE/SPEC Inc., a technical consulting
and services firm. Chairman of the Board,
Teachmaster Technologies, Inc., an educational
software and consulting firm.
Rapid City, South Dakota
Directors Whose Terms Expire at
2002 Annual Meeting - Class II
Name, Age, Principal Occupation for Director
Last Five Years and Other Directorships Since
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David S. Maney, 37 1999
Telecommunications Venture Capital Investor
and Consultant
Founder, Former President and CEO Worldbridge
Broadband Services, Inc. and Open Access
Broadband Networks, Inc. 1994 - 2000
Golden, Colorado
Bruce B. Brundage, 65 1986
President and Director, Brundage &
Company, a firm specializing in corporate
financing. Director of Vicorp Restaurants, Inc.
Englewood, Colorado
Kay S. Jorgensen, 49 1992
Co-Owner and Vice President, Jorgensen-Thompson
Creative Broadcast Services.
Spearfish, South Dakota
Directors Whose Terms Expire at
2003 Annual Meeting - Class III
Name, Age, Principal Occupation for Director
Last Five Years and Other Directorships Since
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Daniel P. Landguth, 54 1989
Chairman and Chief Executive
Officer of Black Hills Corporation.
Rapid City, South Dakota
John R. Howard, 60 1977
President, Industrial Products, Inc., an
industrial parts distributor. Special Projects
Manager for Linweld, Inc.
Rapid City, South Dakota
David C. Ebertz, 55 1998
Consultant, Dave Ebertz Risk Management
Consulting, since January 2000. Owner and
President, Barlow Agency, Inc., an insurance agency,
until December 31, 1999.
Gillette, Wyoming
Gerald R. Forsythe, 60 2000
Chairman and Chief Executive Officer,
Indeck Power Equipment Company and
Indeck Energy Services, Inc., an emergency and
back-up steam generating company, Director of
Championship Autoracing Teams, Inc.
Inverness, Illinois
Security Ownership of Management and Principal Shareholders
The following table sets forth the beneficial ownership of our common
stock as of February 28, 2001 for each director, each executive officer named in
the summary compensation table, all of our directors and executive officers as a
group, and each person or entity known by us to beneficially own more than 5
percent of our outstanding shares of common stock. Beneficial ownership includes
shares a director or executive officer has the power to vote or transfer, and
stock options that are exercisable currently or within 60 days of February 28,
2001.
Except as otherwise indicated by footnote below, we believe that each
individual or entity named has sole investment and voting power with respect to
the shares of common stock indicated as beneficially owned by that individual or
entity.
Shares of
Common Options Directors'
Stock Exercisable Common
Beneficially Within Stock
Beneficial Owner Owned 60 Days Equivalents(1) Total Percentage(2)
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Directors
and Named
Executive Officers
Adil M. Ameer 1,401(3) 910 2,311 *
Bruce B. Brundage 5,422(4) 6,381 11,803 *
David C. Ebertz 2,182(5) 638 2,820 *
Gary R. Fish 9,218(6) 47,166 56,384 *
Gerald R. Forsythe 1,029,577(7) 119 1,029,696 4.5%
John R. Howard 16,864 5,135 21,999 *
Everett E. Hoyt 12,289 40,332 52,621 *
Kay S. Jorgensen 2,967 2,015 4,982 *
Daniel P. Landguth 18,620 93,433 112,053 *
David S. Maney 1,438(8) 411 1,849 *
Thomas M. Ohlmacher 6,407(9) 36,666 43,073 *
Mark T. Thies 3,506(10) 27,666 31,172 *
Thomas J. Zeller 1,476(11) 910 2,386 *
All directors and executive
officers as a group
(19 persons) 1,137,293 379,043 16,519 1,532,855 6.7%
Five Percent Shareholders
Gerald R. Forsythe; Michelle R.
Fawcett, et. al.
1111 S. Willis Avenue
Wheeling, IL 60090 1,657,191(12) 119 1,657,310 7.2%
FMR Corp.
82 Devonshire Street
Boston, Mass. 02109 1,546,145(13) 1,546,145 6.7%
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* Represents less than 1% of the common stock outstanding.
(1)Represents common stock allocated to the directors' accounts in the
directors' stock based compensation plan, of which the trustee has sole voting
and investment authority.
(2)Shares of common stock which were not outstanding but could be
acquired by a person upon exercise of an option within sixty days of February
28, 2001, or conversion of the Series 2000-A Convertible Preferred Stock are
deemed outstanding for the purpose of computing the percentage of outstanding
shares beneficially owned by such person. Such shares, however, are not deemed
to be outstanding for the purpose of computing the percentage of outstanding
shares beneficially owned by any other person.
(3)Includes 150 shares owned jointly with Mr. Ameer's spouse as to
which he shares voting and investment authority.
(4)Includes 5,400 shares owned by the Brundage & Co. Pension Plan
and Trust of which Mr. Brundage is the trustee with sole voting and investment
authority.
(5)Shares owned jointly with Mr. Ebertz's spouse as to which he shares
voting and investment authority.
(6)Includes 7,592 shares owned jointly with Mr. Fish's spouse as to
which he shares voting and investment authority.
(7)Includes 11,400 shares owned by Indeck Power Equipment, Inc., which
Mr. Forsythe controls, and 70,857 shares of common stock issuable upon
conversion of 2,480 shares of Series 2000-A Preferred Stock, which are currently
convertible at his option and will be automatically converted on July 7, 2005.
Does not include other shares of common stock that Mr. Forsythe may be deemed to
beneficially own as a result of a group. See Note 12 below for further
information with respect to this group. Mr. Forsythe disclaims beneficial
ownership of such other shares.
(8)Includes 1,000 shares owned jointly with Mr. Maney's spouse as to
which he shares voting and investment authority.
(9)Includes 2,400 shares owned jointly with Mr. Ohlmacher's spouse as
to which he shares voting and investment authority.
(10)Includes 3,106 shares owned jointly with Mr. Thies's spouse as to
which he shares voting and investment authority.
(11)Includes 225 shares owned jointly with Mr. Zeller's spouse as to
which he shares voting and investment authority.
(12)Represents shares held by the following individuals who became
shareholders as a result of the Indeck Capital acquisition: Gerald R. Forsythe
(1,029,696 shares), Michelle R. Fawcett (107,317 shares), Marsha Fournier
(107,317 shares), Monica J. Breslow (107,428 shares), Melissa S. Forsythe
(107,428 shares) and John W. Salyer, Jr. (198,124 shares). The shares include
114,286 shares of common stock issuable upon conversion of 4,000 shares of
Series 2000-A Preferred Stock, which are currently convertible at their option
and will be automatically converted on July 7, 2005. Information relating to the
shareholders is based on the shareholders' Schedule 13D dated July 5, 2000, Mr.
Forsythe's Forms 3 and 4 filed with the Securities and Exchange Commission and
our shareholder records. The Schedule 13D indicates that the shareholders may be
deemed to be a group for purposes of the Securities Exchange Act of 1934. Each
shareholder disclaims beneficial ownership of shares over which such shareholder
does not have sole investment authority.
(13)As of December 31, 2000, (a) FMR Corp. had sole dispositive power
with respect to all of these shares and sole voting power with respect to
1,045,405 of these shares, (b) Edward C. Johnson 3d, Chairman of FMR Corp., and
Abigail P. Johnson, a Director of FMR Corp., each had sole dispositive power
with respect to all of these shares, and (c) these shares represent (i) 500,740
shares beneficially owned by Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp. ("Fidelity"), as a result of acting as
investment adviser to various investment companies, (ii) 934,655 shares
beneficially owned by Fidelity Management Trust Company, a wholly-owned
subsidiary of FMR Corp., as a result of serving as investment manager of certain
institutional accounts, and (iii) 110,750 shares beneficially owned by Fidelity
International Limited, which is independent of FMR Corp. and Fidelity, as a
result of investment advisory and management services and such 110,750 shares
are included on a voluntary basis by FMR Corp.. Information relating to the
shareholder is based on the shareholder's Schedule 13G dated February 14, 2001.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of our records and copies of reports on
Forms 3, 4 and 5 furnished to us, we believe that during 2000 all persons
subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended, filed the required reports on a timely basis.
The Board and Committees
Our Executive Committee is comprised of Adil M. Ameer, Gerald R. Forsythe,
John R. Howard, Everett E. Hoyt, Daniel P. Landguth, David S. Maney and Thomas
J. Zeller, with Mr. Landguth serving as Chairperson. The Committee exercises the
authority of the Board of Directors in the interval between meetings of the
Board, recommends to the Board of Directors persons to be elected as officers,
and recommends persons to be appointed to Board Committees. The Executive
Committee held two meetings during 2000.
Our Compensation Committee is comprised of Bruce B. Brundage, David C.
Ebertz, Gerald R. Forsythe, John R. Howard, Kay S. Jorgensen and David S. Maney,
with Mr. Ebertz serving as Chairperson. The Committee performs functions
required by the Board of Directors in the administration of all federal and
state statutes relating to employment and compensation, recommends to the Board
of Directors compensation for officers, and considers and approves our
compensation program including benefits, stock option plans and stock ownership
plans. The Compensation Committee held three meetings in 2000.
Our Audit Committee is comprised of Adil M. Ameer, David C. Ebertz, John R.
Howard, Kay S. Jorgensen and Thomas J. Zeller, with Mr. Ameer serving as
Chairperson. The Committee annually recommends to the Board of Directors an
independent accounting firm to be appointed by the Board for ratification by our
shareholders, reviews the scope and results of the annual audit including
reports and recommendations of the firm, reviews our internal audit function,
and periodically confers with the internal audit group, our management, and our
independent accountants. The Audit Committee held five meetings in 2000.
Our Nominating Committee is comprised of Bruce B. Brundage, Kay S.
Jorgensen, David S. Maney and Thomas J. Zeller, with Mr. Zeller serving as
Chairperson. The Committee recommends to the Board of Directors persons to be
nominated as directors or to be elected to fill vacancies on the Board. Our
Bylaws require that an outside director serve as Chairperson of the Committee.
The Nominating Committee held one meeting in 2000.
Pursuant to our Bylaws, nominations from our shareholders for membership on
the Board of Directors will be considered by the Nominating Committee. Our
shareholders who wish to submit names for future consideration for Board
membership should do so in writing prior to November 27, 2001, addressed to
Nominating Committee, c/o Corporate Secretary, Black Hills Corporation, P.O. Box
1400, Rapid City, South Dakota 57709.
Members of the above Committees are designated by our Directors upon
recommendation of the Executive Committee each year at a meeting held following
our annual meeting of shareholders.
Our Board of Directors held 16 meetings during 2000. All Directors except
Mr. Forsythe and Mr. Maney attended at least 75 percent of the combined total of
Board meetings and Committee meetings on which the Director served.
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee is solely comprised of the following outside
directors: Bruce B. Brundage, David C. Ebertz, Gerald R. Forsythe, John R.
Howard, Kay S. Jorgensen and David S. Maney.
Mr. Forsythe is the owner of two companies providing services to Black
Hills Energy Capital, a subsidiary of ours. Forsythe Building Fund leases an
office building to Black Hills Energy Capital for approximately $8,200 per month
and A&R Leasing leases vehicles ot Black Hills Energy Capital for approximately
$3,200 per month. On July 7, 2000, we completed the acquisition of Indeck
Capital, Inc. Mr. Forsythe was the majority shareholder of Indeck. We issued
approximately 1.54 million shares of our common stock and 4,000 shares of our
convertible preferred stock to the shareholders of Indeck for a total
consideration of approximately $38 million. In addition, we assumed
approximately $40 million of debt. Additional consideration, consisting of our
common stock and convertible preferred stock may be paid in the form of an
earn-out over a four-year period. The earn-out is based on the acquired
company's earnings during such period and cannot exceed $35 million in total.
The purchase price was determined through arms-length negotiations between us
and the Indeck shareholders. The other shareholders of Indeck were Michelle R.
Fawcett, Marsha Fournier, Monica Breslow, Melissa S. Forsythe and John W.
Salyer, Jr. These individuals and Mr. Forsythe, as holders of our convertible
preferred stock, are entitled to receive cumulative quarterly cash dividends at
a rate equal to one percent per year computed on the basis of $1,000 per share
plus an amount equal to any dividend payable with respect to our common stock.
Certain Transactions
Western Health, a division of Rapid City Regional Hospital, is a third
party administrator for our healthcare plans. Adil M. Ameer, a Director, is
President and Chief Executive Officer of Rapid City Regional Hospital. We paid
approximately $103,000 to Western Health in 2000 for its services.
For additional disclosures with respect to transactions with related
parties, see "--Compensation Committee Interlocks and Insider Participation"
above.
Directors' Fees
Directors who are not officers or employees of ours receive an annual fee
of $15,500 plus a fee of $600 for each board meeting and committee meeting
attended, provided such committee meetings are substantive in nature and
content.
In addition, each outside director receives common stock equivalents equal
to $7,000 per year divided by the market price of our common stock. The common
stock equivalents are payable in stock or cash at retirement or can be deferred
at the election of the director.
Members of our Board of Directors are required to beneficially own 100
shares of our common stock when they are initially elected a director and to
apply at least 50 percent of his or her retainer toward the purchase of
additional shares until the director has accumulated at least 2,000 shares of
our common stock.
Executive Compensation
Compensation Committee Report
The Compensation Committee of our Board of Directors is composed
entirely of directors who are not employees of Black Hills Corporation. The
Compensation Committee is responsible for developing and making recommendations
to the Board of Directors on the executive compensation program. The components
of our executive compensation program consist of a base salary, annual incentive
plan and a long-term incentive stock option plan The committee oversees and
administers the incentive compensation programs including the determination of
the annual and long-term incentive awards.
The executive compensation strategy is based on principles designed to:
Promote the relationship between pay and performance;
Attract, retain and encourage the development of highly qualified and
motivated executives;
Recognize and reward outstanding performance;
Provide compensation that is competitive; and
Promote overall corporate performance linked to the interest of our
shareholders.
The Committee retains the services of an independent international
consulting firm, Hewitt Associates, to review and evaluate our compensation
program as compared to compensation practices of other companies with similar
characteristics, including size, type of business and compensation philosophy.
In response to the increased competition in the energy industry and changes in
the size and mix of our business, the comparative groups are comprised of both
utility and general industry companies. (The companies included in the
comparative group are not identical to those included in the EEI Index in the
Stock Performance Graph included in this proxy statement). The Committee seeks
to establish a market based level for each salary range that is at or near the
median, 50th percentile, of the comparative groups surveyed. Recommendations
made by the Committee are based upon the market analysis, company performance
and achievement of individual performance objectives. The 2000 compensation
analysis indicated that the market values increased significantly due to our
growth in revenue size and in industry wide executive compensation levels.
In April 2000, the Compensation Committee reviewed the base salary of
our Chief Executive Officer. In determining the base salary, the Committee
considered the recommendations from the Hewitt Associates study as well as the
goals and objectives of the strategic plan which included a target return on
equity, earnings growth and common stock performance. Consolidated earnings per
share increased 8 percent in 1999 to $1.73 compared to $1.60 in 1998 (excluding
a non-cash charge to earnings related to abnormally low oil prices). Our 1999
consolidated return on equity was 17.1 percent and dividends increased 3.8
percent. The Compensation Committee recommended and the Board of Directors
approved a 22 percent base salary increase in the amount of $63,600 for the
Chief Executive Officer. In addition to the recognition for performance
achievements, the increase in base salary more closely aligned the Chief
Executive Officer's base salary to the market.
We currently maintain a variety of employee benefit plans and programs
in which our executive officers may participate, including the short-term annual
incentive compensation program, the stock option plan, the retirement savings
plan, the pension plan, and the Pension Equalization Plan. With the exception of
the Short-Term Annual Incentive Plan and the Pension Equalization Plan, these
benefit plans and programs are generally available to all of our employees.
The Short-Term Annual Incentive Compensation Program was designed to
recognize and reward the contribution that group performance makes to corporate
success. Only our executive officers are eligible to participate in the plan at
this time. The program has a corporate goal that is based upon the percentage of
consolidated earnings per share that exceeds targeted amounts. Target award
levels are a percentage of each executive officer's base salary. The target
percentage for our Chief Executive Officer was 45 percent and for the other
executive officers ranged from 30 percent to 35 percent with one business unit
executive eligible to receive 100 percent. Individual awards may be greater or
less than target amounts based on an assessment of individual performance.
Awards can range from 0 percent to 150 percent of the target amount. As a result
of strong 2000 actual earnings and the furtherance of our corporate goals, cash
awards were made to ten executive officers in the aggregate amount of $908,742.
The Chief Executive Officer received $233,960, the maximum amount, for the year
2000. The executive officers are required to purchase our common stock with 50
percent of the Short-Term Annual Incentive Bonus.
Long-term incentive compensation is based on stock options granted by
the Compensation Committee under our 1999 Stock Option Plan ("Stock Option
Plan"), approved by our shareholders at the 1999 Annual Meeting. The Stock
Option Plan is intended to promote our interests and our shareholders by aiding
us in attracting and retaining employees and officers capable of attaining our
future success. The Compensation Committee oversees the administration of the
Stock Option Plan, with full power and authority to determine when and to whom
awards will be granted and the type, amount and other terms and conditions of
each award. The Compensation Committee believes that executive compensation tied
to stock price appreciation is an effective way to align the interests of
management with those of our shareholders.
In 2000, awards of nonqualified stock options for 369,000 common shares
were granted to all executive officers as a group. Our Chief Executive Officer
received an option award of 84,000 shares and awards for our other executive
officers ranged from 23,000 shares to 41,000 shares. The size of the grant
awarded to each executive officer was intended to be competitive with awards to
officers in similar positions in comparable companies, based on market data
prepared by Hewitt Associates. All options were granted with an exercise price
equal to the market price of our common stock on the date of grant and vest
one-third a year over a three-year period. All the options expire in ten years.
COMPENSATION COMMITTEE
David C. Ebertz, Chairperson Bruce B. Brundage Gerald R. Forsythe
John R. Howard Kay S. Jorgensen David S. Maney
The following table is furnished for the fiscal year ended December 31,
2000, with respect to our Chief Executive Officer and the four other most highly
compensated executive officers for 2000.
- --------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------- -------- --------------------------- -------------------------- ----------------
- ----------------------------------------------- -------- --------------------------- -------------------------- ----------------
- ----------------------------------------------- -------- --------------------------- -------------------------- ----------------
Annual Compensation Long-Term Compensation All Other
Compensation
- ----------------------------------------------- -------- --------------------------- -------------------------- ----------------
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
Name and Principal Position Year Salary Bonus(1) Securities Underlying 401 K Match
Options Granted
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
Daniel P. Landguth 2000 $314,800 $233,955 84,000 -
Chairman and 1999 262,600 127,350 23,500 -
Chief Executive Officer 1998 237,550 47,683 18,000 -
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
Everett E. Hoyt 2000 $191,200 $92,430 41,000 -
President and 1999 169,100 53,100 8,000 -
Chief Operating Officer 1998 158,100 18,135 7,500 -
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
Gary R. Fish 2000 $190,050 $107,677 41,000 $4,025
President and Chief Operating 1999 142,300 61,250 10,500 -
Officer of Independent Energy 1998 123,350 18,154 10,500 -
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
Mark T. Thies 2000 $145,035 $81,000 30,000 $5,100
Senior Vice President and 1999 102,300 31,800 8,000 -
Chief Financial Officer 1998 94,300 11,092 7,500 -
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
Thomas M. Ohlmacher 2000 $137,000 $269,750 30,000 $3,335
Senior Vice President - Power Supply and 1999 126,500 35,700 8,000 -
Power Marketing 1998 112,350 12,825 7,500 -
- ----------------------------------------------- -------- --------------- ----------- ------------------------- -----------------
(1)Bonus amounts include amounts earned under the Short-Term Annual
Incentive Plan. Mr. Ohlmacher's bonus in 2000 includes a $200,000 energy
marketing bonus.
- ----------------------------------------------------------------------------------------------------------------------
BLACK HILLS CORPORATION STOCK OPTION GRANTS IN 2000(1)
- ----------------------------------------------------------------------------------------------------------------------
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
Name Number of Percent of Exercise Expiration Grant Date
Securities Total Options Price Per Date Present
Underlying Granted to Share Value(2)
Options Employees
Granted(1)
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
Daniel P. Landguth 84,000 17.1% $21.875 04/25/10 $220,080
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
Everett E. Hoyt 41,000 8.3% $21.875 04/25/10 $107,420
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
Gary R. Fish 41,000 8.3% $21.875 04/25/10 $107,420
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
Mark T. Thies 30,000 6.1% $21.875 04/25/10 $78,600
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
Thomas M. Ohlmacher 30,000 6.1% $21.875 04/25/10 $78,600
- --------------------------------------- ---------------- ---------------- -------------- ------------- ---------------
(1)Options vest annually in installments of 33 percent per year
beginning on the first anniversary of the date of grant. All options become
fully vested if a change in control occurs.
(2)The Black-Scholes option-pricing model was used in determining the
present value of the options granted. The assumptions utilized in the
Black-Scholes model are as follows: 20.14 percent for expected volatility; 6.62
percent for risk free rate of return; 4.2 percent for dividend yield; and 10
years for the time of exercise.
====================================================================================================================
STOCK OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES(1)
====================================================================================================================
Number of Securities Underlying Value of Unexercised In-the-Money Options at
Unexercised Options at 12/31/00 12/31/00 Exercisable/Unexercisable(2)
Name Exercisable/Unexercisable
- ---------------------------- ------------------------------------- -------------------------------------------------
Daniel P. Landguth 93,433/71,667 $2,437,440/$1,443,066
- ---------------------------- ------------------------------------- -------------------------------------------------
Everett E. Hoyt 40,332/32,668 $1,036,623/$680,439
- ---------------------------- ------------------------------------- -------------------------------------------------
Gary R. Fish 47,166/34,334 $1,215,484/$697,671
- ---------------------------- ------------------------------------- -------------------------------------------------
Mark T. Thies 27,666/25,334 $700,014/$512,674
- ---------------------------- ------------------------------------- -------------------------------------------------
Thomas M. Ohlmacher 36,666/25,334 $952,764/$512,674
- ---------------------------- ------------------------------------- -------------------------------------------------
(1)No options were exercised by the above named individuals in 2000.
(2)Value of unexercised options is the market value of the shares at year-end
minus the exercise price.
Retirement Plans
We offer a tax-qualified defined benefit retirement plan for our
employees. This pension plan provides benefits at retirement based on length of
employment service and average monthly pay in the five consecutive calendar
years of highest earnings out of the last ten years. Our employees do not
contribute to the plan. The amount of annual contribution by us to the plan is
based on an actuarial determination. Accrued benefits become 100 percent vested
after an employee completes five years of service.
We amended the plan in 2000, to decrease future benefits under the
retirement plan and to offer a matching contribution under our 401(k) Plan in
return. Our employees who were age 50 on December 31, 1999 could make a one-time
election to remain under the old plan without the 401(k) match or to participate
under the revised plan with a 401(k) match.
We also offer a Pension Equalization Plan. The Pension Equalization Plan is
a nonqualified supplemental plan in which benefits are not tax deductible until
paid. The plan designed to provide our higher paid executive employees a
retirement benefit which, when added to social security benefits and the pension
to be received under the defined benefit retirement plan, will approximate
retirement benefits being paid by other employers to their employees in similar
executive positions. The employee's pension payable from the qualified pension
plan is limited under current law to $140,000 annually, and the compensation
taken into account in determining contributions and benefits cannot exceed
$170,000 and cannot include nonqualified deferred compensation. The amount of
deferred compensation paid under nonqualified plans such as the Pension
Equalization Plan is not subject to these limits. A participant under the
Pension Equalization Plan does not qualify for benefits until the benefits
become vested under a vesting schedule -- 20 percent after three years of
employment under the plan, increasing up to 100 percent vesting after eight
years of employment under the plan. No credit for past service is granted under
the Pension Equalization Plan. The annual benefit is 25 percent of the
employee's average earnings, if salary was less than two times the Social
Security Wage Base, or 30 percent, if the employee's salary was more than two
times the Social Security Wage Base, multiplied by the vesting percentage.
Average earnings are normally an employee's average earnings for the five
highest consecutive full years of employment during the ten full years of
employment immediately preceding the year of calculation. The annual Pension
Equalization Plan benefit is paid on a monthly basis for 15 years to each
participating employee and, if deceased, to the employee's designated
beneficiary or estate, commencing at the earliest of death or when the employee
is both retired and 62 years of age or more.
In the event that at the time of a participant's retirement, the
participant's salary level exceeds the qualified pension plan annual
compensation limitation of $170,000 or includes nonqualified deferred
compensation, the participant will receive an additional benefit which is
measured by the difference between the monthly benefit which would have been
provided to the participant under the defined benefit retirement plan as if
there were no annual compensation limitation and no exclusion on nonqualified
deferred compensation, and the monthly benefit to be provided to the participant
under the defined benefit retirement plan.
We amended the Pension Equalization Plan, effective January 30, 2001,
to provide for an additional benefit to compensate for the $140,000 annual
defined benefit pension limitation. The additional benefit is equal to the
difference between the monthly benefit which would have been provided to the
participant under the defined benefit retirement plan as if there were no annual
defined benefit pension limitation and the monthly benefit to be provided to the
participant under the defined benefit retirement plan.
Participants in the Pension Equalization Plan are designated by our
Board of Directors upon recommendation of the Chief Executive Officer. Selection
is based on key employees as determined by management and consideration of
performance, rather than being based solely on salary. The minimum salary
component applied in the selection process is the maximum annual Social Security
taxable wage base that is presently $80,400.
Retirement Benefits
The following table illustrates estimated annual benefits payable under
the defined benefit retirement plan and the Pension Equalization Plan to our
employees who retire at the normal retirement date.
Years of Service
===================== ================== ================== ================== ================== ==================
Annual Pay 15 20 25 30 35
Years Years Years Years Years
===================== ================== ================== ================== ================== ==================
$110,000 $ 51,464 $ 59,562 $ 67,660 $ 75,758 $ 83,856
125,000 58,769 68,067 77,365 86,663 95,961
150,000 70,944 82,242 93,540 104,838 116,136
175,000 91,869 105,167 118,465 131,763 145,061
200,000 105,294 120,592 135,890 151,188 166,486
225,000 118,719 136,017 153,315 170,613 187,911
250,000 132,144 151,442 170,740 190,038 209,336
275,000 145,569 166,867 188,165 209,463 230,761
300,000 158,994 182,292 205,590 228,888 252,186
350,000 185,844 213,142 240,440 267,738 295,036
400,000 212,694 243,992 275,290 306,588 337,886
450,000 239,544 274,842 310,140 345,438 380,736
The years of credited service under the defined benefit retirement plan
for the executive officers shown in the preceding summary compensation table are
as follows: Daniel P. Landguth, 31 years; Everett E. Hoyt, 26 years; Gary R.
Fish, 14 years; Mark T. Thies, three years; and Thomas M. Ohlmacher, 26 years.
Mr. Hoyt's benefits will be reduced for service from prior employment.
The benefits in the foregoing table were calculated as a straight life
annuity. Amounts shown are exclusive of Social Security benefits and include
benefits from both the defined benefit retirement plan and from the Pension
Equalization Plan assuming a 100 percent vested interest in the Pension
Equalization Plan.
Nonqualified Deferred Compensation Plan
We have a Nonqualified Deferred Compensation Plan for a select group of
management or highly compensated employees. Eligibility is determined by the
Compensation Committee. Eligible employees may elect to defer up to 50 percent
of their base salary and up to 100 percent of their Short-term Annual Incentive
Plan Award, including Company stock. The deferrals are deposited into a trust
account where the participants may direct the investment of the deferrals
(except for Company stock deferrals) as allowed by the plan. Investment earnings
are credited to the participants' accounts. Upon retirement, the Company will
distribute the account balance to the participant according to the distribution
election filed with the Compensation Committee. The participants may elect
either a lump sum payment to be paid within 30 days of retirement, or annual or
monthly installments over a period of years designated by the participant, but
not to exceed 15 years.
Retirement Savings Plan
We have a Retirement Savings Plan under Section 401(k) of the Internal
Revenue Code of 1986, as amended, which permits our employees and those of our
subsidiaries, including officers, to elect to invest up to 20 percent of their
eligible earnings on a pre-tax basis into an investment fund subject to
limitations imposed by the Internal Revenue Code.
In 2000, we began to provide a matching contribution of 100 percent of
the employee's tax deferred contribution, subject to a maximum of three percent
of the employee's compensation.
Distribution from the fund will be made to employees at termination of
employment, retirement, death, or in case of hardship. No amounts were paid or
distributed pursuant to the Retirement Savings Plan to the executive officers
named herein nor to the officers as a group.
Severance Agreements
We have entered into change of control severance agreements with each
of the executive officers names in the summary compensation table and some of
our other executive officers and key employees. The change of control severance
agreements provide for certain payments and other benefits to be payable upon a
change in control and a subsequent termination of employment, either involuntary
or by the employee for a "good reason."
A change in control is defined in the agreements as:
an acquisition of 30 percent or more of our common stock,
except for certain defined acquisitions, such as acquisition
by employee benefit plans, us, or any of our subsidiaries; or
members of our incumbent Board of Directors at the time the
agreements were executed cease to constitute at least
two-thirds of the members of the Board of Directors, with the
incumbent Board of Directors being defined as those
individuals consisting of the Board of Directors on the date
the agreement was executed and any other directors elected
subsequently whose election was approved by the incumbent
Board of Directors; or
approval by our shareholders of:
a merger, consolidation, or reorganization;
liquidation or dissolution; or
an agreement for the sale or other disposition of all
or substantially all of our assets, with exceptions
for transactions which do not involve an effective
change in control of voting securities or Board of
Directors membership, and transfers to subsidiaries
or sales of subsidiaries.
A change in control will not be deemed to occur until all regulatory
approvals required to effect a change in control have been obtained.
A "good reason" for termination which would trigger payment of benefits
is defined to include:
a change in the executive's status, title, position or
responsibilities;
a reduction in the executive's annual compensation or any failure
to pay the executive any compensation or benefits to which he or
she is entitled within seven days of the date due;
any material breach by us of any provisions of the change of
control severance agreement;
requiring the executive to be based outside a 50-mile radius from
Rapid City, South Dakota; or
our failure to obtain an agreement from any successor company to
assume and agree to perform the change of control severance
agreement.
The agreement with Mr. Landguth, also contains an "optional window period," a
30-day period of time beginning on the one-year anniversary after a change in
control, during which time Mr. Landguth may resign for any reason and receive
the payments and benefits.
Upon a change in control, the executive will have an employment
contract for a three-year period, but not beyond age 65. During this employment
term, each executive will receive annual compensation at least equal to the
highest rate in effect at any time during the one-year period preceding the
change in control and will also receive employment welfare benefits, pension
benefits, and supplemental retirement benefits on a basis no less favorable than
those received prior to the change in control.
If the executive's employment is terminated during the three-year
employment term involuntarily, for a "good reason," or, in the case of the
Chief Executive Officer, for any reason during the "optional window period,"
that executive will be entitled to the following benefits:
severance pay equal to 2.99 times executive's five-year average
taxable compensation for the remainder of the three-year
employment term; and
continuation of employee welfare benefits for the remainder of the
employment term, with an offset for similar benefits received,
along with additional credited service under our Pension
Equalization Plan and our defined benefit retirement plan equal to
the remainder of the employment term.
The change of control severance agreements contain a "cap" provision
which reduces any amounts payable to an amount which would prevent any payments
from being nondeductible under the Internal Revenue Code. The change of control
severance agreements also provide for reimbursement of legal fees and expenses
of the executive incurred by the executive after the change in control in
seeking to obtain or enforce any benefits provided by the change of control
severance agreement. Our executives are not required to mitigate the amount of
any payment or benefit by seeking other employment or otherwise, and the
payments or benefits are not reduced if our executive obtains other employment
and/or benefits, except for employee welfare benefits.
Audit Committee Report
In accordance with the written charter of the Audit Committee adopted
by the Board of Directors, a copy of which is attached as Appendix A, the Audit
Committee assists the Board in fulfilling its responsibility for oversight of
the quality and integrity of our accounting, auditing and financial reporting
practices. Under the rules of the New York Stock Exchange, all of the members of
the Audit Committee are "independent." During the current year, the Audit
Committee held five meetings, and the Committee chairperson, as representative
of the Committee, discussed the interim financial information contained in each
quarterly earnings announcement with the Chief Financial Officer, Vice President
- - Controller and independent auditors prior to public release.
The Audit Committee oversees our financial process on behalf of the
Board of Directors. Management has the primary responsibility for the financial
statements and the reporting process including the systems of internal controls.
In fulfilling its oversight responsibilities, the Audit Committee reviewed the
audited financial statements in the Annual Report with management including a
discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Audit Committee obtained from the independent auditors a formal
written statement describing all relationships between the auditors and us that
might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees,"
discussed with the auditors any relationships that may impact their objectivity
and independence and satisfied itself as to the auditors' independence. The
Committee also discussed the quality and adequacy of our internal controls with
management, the internal auditors and the external auditors. In addition the
Committee reviewed with both the internal and independent auditors their audit
plans, audit scope and identification of risks.
The Audit Committee reviewed and discussed with the independent
auditors all communications required by generally accepted auditing standards,
including those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees," and, with and without management present,
discussed and reviewed the results of the internal audit examinations and
independent auditors' examination of the financial statements.
Based on the above-mentioned review and discussions with management and
the independent auditors, the Audit Committee recommended to the Board that our
audited financial statements be included in our Annual Report on Form 10-K for
the year ended December 31, 2000, for filing with the Securities and Exchange
Commission. The Audit Committee also recommended the reappointment, subject to
shareholder approval, of the independent auditors and the Board of Directors
concurred with the recommendation.
AUDIT COMMITTEE
Adil M. Ameer, Chairperson David C. Ebertz John R. Howard
Kay S. Jorgensen Thomas J. Zeller
Principal Accounting Firm Fees
The following table sets forth the aggregate fees billed to us for the
fiscal year ended December 31, 2000 by our principal accounting firm, Arthur
Andersen LLP.
Audit Fees $510,000
Financial Information Systems
Design and Implementation Fees $0
All Other Fees $1,035,000
Stock Performance Graph
The graph below compares the cumulative shareholder return on our
common stock for the last five fiscal years with the cumulative total return of
the S&P 500 Index and the Edison Electric Institute Electric Index over the same
period, assuming the investment of $100 on December 31, 1995, and the
reinvestment of all dividends.
Cumulative Total Return
-------------------------------------------------
12/95 12/96 12/97 12/98 12/99 12/00
----- ----- ----- ----- ----- -----
BLACK HILLS CORPORATION 100.00 120.20 158.37 185.40 163.07 343.06
S&P 500 100.00 122.96 163.98 210.84 255.22 231.98
EEI INVESTOR-OWNED ELECTRICS 100.00 101.20 128.90 146.80 119.50 176.82
ITEM II: AUTHORIZATION OF INCREASE IN INDEBTEDNESS
Under the provisions of Article XVII, ss.8 of the Constitution of the
State of South Dakota, the maximum amount of indebtedness a company is
authorized to issue may not be increased without the consent of its
shareholders. We believe that South Dakota is the only state in the nation that
requires companies incorporated under its law to receive the consent of their
shareholders in order to increase their authorized indebtedness, and that this
provision unnecessarily limits our flexibility to manage the Company. Pursuant
to this provision, the maximum amount of indebtedness which we are currently
authorized by our shareholders to issue is $500 million.
Our capital expenditure forecast for the next three years is as
follows:
2001 2002 2003
---- ---- ----
(in thousands)
Independent energy $287,200 $208,390 $195,540
Electric utility 18,340 18,160 16,450
Communications 25,390 5,920 3,290
--------- ----------- --------
$330,930 $232,470 $215,280
Because of our future growth plans and the unique and outdated nature
of this provision, our Board of Directors is recommending that the shareholders
authorize an increase in our authorized debt level to $2 billion. This level of
debt authorization will give our Board of Directors the flexibility of
determining the timing of debt issuances and the ability to carry out our
strategic plan without needing further shareholder approval for the foreseeable
future.
Accordingly, the following resolution will be presented at the meeting:
RESOLVED, That the consent of the shareholders be, and it is
hereby given to an increase in our authorized indebtedness to not
exceed $2 billion at any one time outstanding; that for the purpose of
effecting such increase, bonds, debentures, notes and other instruments
evidencing our indebtedness may be issued from time to time in such
form and of such character as seems desirable to the Board of
Directors; and that for the purpose of consenting to an increase of our
authorized indebtedness, it is the intention of this resolution that
bonds, debentures, notes, and other instruments evidencing indebtedness
are authorized to be issued whenever the maximum indebtedness by this
resolution is not thereby exceeded; said bonds, debentures, notes and
other evidences of indebtedness to be issued when and as the Board of
Directors shall deem advantageous for our interest and upon such terms
and conditions as shall be approved by the Board.
The Board of Directors of Black Hills Corporation recommends
a vote "FOR" the increase in authorized indebtedness.
ITEM III: PROPOSAL TO APPROVE THE BLACK HILLS CORPORATION
OMNIBUS INCENTIVE COMPENSATION PLAN
Background
The Board of Directors adopted, subject to shareholder approval, the
Black Hills Corporation Omnibus Incentive Compensation Plan (the "Plan"). A full
copy of the Plan is attached as Appendix B. The following is a summary of the
material features of the Plan and is qualified in its entirety by reference to
Appendix B.
Purpose
The objectives of the Plan are to optimize the profitability and growth
of Black Hills Corporation through annual and long-term incentives that are
consistent with our goals and that link the personal interests of participants
to those of our shareholders; to provide participants with an incentive for
excellence in individual performance; and to provide teamwork among
participants. The Plan is further intended to provide flexibility to us in our
ability to motivate, attract, and retain the services of participants who make
significant contributions to our success and to allow participants to share in
such success.
Duration
The Plan shall commence on May 30, 2001 and shall remain in effect,
subject to the right of the Board of Directors to amend or terminate the Plan at
any time, until all shares subject to it shall have been purchased or acquired,
but in no event shall any awards be granted on or after May 30, 2011. The Board
may, at any time and from time to time, alter, amend, suspend or terminate the
Plan in whole or in part, subject to certain restrictions stated in the Plan.
Shares Available
The Board of Directors has reserved an aggregate of 1,200,000 shares of
common stock ("Shares") for issuance under the Plan of which no more than
240,000 shares may be granted in the form of Restrictive Stock. Shares may be
authorized but unissued Shares, treasury Shares or Shares purchased on the open
market. If there is a lapse, expiration, termination or cancellation of any
award prior to the issuance of the Shares thereunder, those Shares may again be
used for new awards under the Plan. Shares received as payment for an award,
shares withheld by us to satisfy tax withholding and stock based awards that are
ultimately settled in cash shall be available for grant of future awards under
the Plan. The market value of a share of our common stock on February 28, 2001
was $39.37.
Administration
The Plan provides for administration by a Committee of non-employee
Directors appointed by the Board of Directors from the Compensation Committee of
the Board.
Eligibilty
Persons eligible to participate in this Plan include all employees and
Directors. The selection of participants from eligible employees and Directors
is within the discretion of the Committee.
Grants under the Plan
Section 162(m). Unless and until the Committee determines that an award
to a covered employee shall not be designed to comply with the performance-based
exception of Section 162(m) of the Internal Revenue Code of 1986, the following
rules shall apply to grants of such awards under the Plan. A covered employee
means those persons specified in Section 162(m) of the Code--generally the Chief
Executive Officer and the next four highly compensated employees.
(a) Stock Options. The maximum aggregate number of Shares that may be
granted in the form of Stock Options, pursuant to any award
granted in any one fiscal year to any one single participant shall
be 500,000 shares.
(b) SARs. The maximum aggregate number of Shares that may be granted
in the form of Stock Appreciation Rights, pursuant to any award
granted in any one fiscal year to any one single participant shall
be 500,000 shares.
(c) Restricted Stock. The maximum aggregate grant with respect to
awards of Restricted Stock granted in any one fiscal year to any
one participant shall be 100,000 shares.
(d) Performance Shares/Performance Units and Cash-Based Awards. The
maximum aggregate grant with respect to awards of Performance
Shares made in any one fiscal year to any one participant shall be
50,000 shares. The maximum aggregate amount awarded with respect
to Cash-Based Awards or Performance Units to any one participant
in any one fiscal year may not exceed $2,000,000.
Stock Options. The Committee may grant incentive stock options ("ISOs")
and nonqualified stock options ("NQSOs"). Options shall be exercisable for such
prices, shall expire at such times and shall have such other terms and
conditions as the Committee may determine at the time of grant and as set forth
in the award agreement. The option exercise price is payable in cash, by
tendering previously acquired Shares having an aggregate fair market value at
the time of exercise equal to the total option price, by cashless exercise or
any combination of the foregoing.
Stock Appreciation Rights. The Committee may grant SARs with such terms
and conditions as the Committee may determine at the time of grant and as set
forth in the award agreement. SARs granted under the Plan may be in the form of
freestanding SARs, Tandem SARs or any combination of these forms of SARs. The
grant price of a freestanding SAR shall equal the fair market value of a share
on the date of grant of the SAR. The grant price of Tandem SARs shall equal the
option price of the related option.
Freestanding SARs may be exercised upon such terms and conditions as
are imposed by the Committee and as set forth in the SAR award agreement. A
tandem SAR may be exercised only with respect to the Shares of our common stock
for which its related option is exercisable.
Upon exercise of an SAR, a participant will receive the product of (a)
the difference between the fair market value of a Share on the date of exercise
over the grant price and (b) the number of Shares with respect to which the SAR
is exercised. Payment due to the participant upon exercise may be in cash, in
Shares of equivalent value, in some combination of cash and Shares or in any
other manner approved by the Committee at the time of grant and as set forth in
the award agreement.
Restricted Stock. Restricted Stock may be granted in such amounts and
subject to such terms and conditions as determined by the Committee at the time
of grant and as set forth in the award agreement. The Committee may impose
performance goals for Restricted Stock. The Committee may authorize the payment
of dividends and voting rights for the Restricted Stock during the restricted
period.
Performance Units, Performance Shares and Cash-Based Awards.
Performance Units, Performance Shares and Cash-Based Awards may be granted in
such amounts and subject to such terms and conditions as determined by the
Committee at time of grant and as set forth in the award agreement. The
Committee shall set performance goals, which, depending on the extent to which
they are met, will determine the number and/or value of Performance Units/Shares
and Cash-Based Awards that will be paid out to the participant.
Participants shall receive payment of the value of Performance
Units/Shares earned after the end of the performance period. Payment of
Performance Units/Shares shall be made in cash, Shares or a combination thereof
that have an aggregate fair market value equal to the value of the earned
Performance Units/Shares and Cash-Based Awards at the close of the applicable
performance period as the Committee determines. Shares may be granted subject to
any restrictions deemed appropriate by the Committee and the Committee may
authorize the payment of dividend units with respect to dividends declared with
respect to the Shares.
Other Awards. The Committee may make other awards which may include,
without limitation, the grant of Shares based upon attainment of performance
goals established by the Committee, the payment of Shares in lieu of cash or
cash based on performance goals and the payment of Shares in lieu of cash under
other incentive or bonus programs.
Performance Goals. Performance goals, which are established by the
Committee, shall be based on one or more of the following measures: earnings per
share; net income (before or after taxes); return measures (including, but not
limited to, return on assets, equity or sales); cash flow (including, but not
limited to, operating cash flow and free cash flow); cash flow return on
investments; earnings before or after taxes, interest, depreciation and/or
amortization; internal rate of return or increase in net present value;
dividends paid; gross revenues; gross margins; and share price ( including, but
not limited to, growth measures and total shareholder return). The Committee may
set the performance measures at the corporate level or the business unit level.
Termination of Employment or Board Service
Each award agreement shall set forth the participant's rights with
respect to each award following termination of employment with us or service on
our Board of Directors.
Transferability
Except as otherwise determined by the Committee at the time of grant
and subject to the provisions of the Plan, awards may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution, and a participant's rights shall be
exercisable only by the participant.
Taxes
Share withholding for taxes is permitted.
Change in Control
Upon a Change in Control (as defined in Appendix B):
(a) Any and all options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;
(b) Any restriction periods and restrictions imposed on restricted Shares
that are not performance-based shall lapse; and
(c) The target payout opportunities attainable under all outstanding
awards of performance-based restricted stock, performance units,
performance shares and cash-based awards be deemed to have been fully
earned for the entire performance period(s) as of the effective date
of the Change in Control. The vesting of all awards denominated in
Shares shall be accelerated as of the effective date of the Change in
Control, and there shall be paid out to participants within 30 days
following the effective date of the Change in Control a pro rata
number of Shares based upon an assumed achievement of all relevant
targeted performance goals and upon the length of time within the
performance period that has elapsed prior to the Change in Control.
Awards denominated in cash shall be paid pro rata to participants in
cash within 30 days following the effective date of the Change in
Control, with the proration determined as a function of the length of
time within the performance period that has elapsed prior to the
Change in Control, and based on an assumed achievement of all relevant
targeted performance goals.
Award Information
It is not possible at this time to determine awards that will be made
pursuant to the Plan or the number of persons who will be eligible to receive
awards under the Plan.
Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences related to options to be awarded under the Plan. This summary is
based on our understanding of present federal income tax law and regulations.
The summary does not purport to be complete or applicable to every specific
situation.
Consequences to the Optionholder
Grant. There is no federal income tax consequences to the
optionholder solely by reason of the grant of ISOs or NQSOs under the Plan.
Exercise. The exercise of an ISO is not a taxable event for regular
federal income tax purposes if certain requirements are satisfied, including the
requirement that the optionholder generally must exercise the ISO no later than
three months following the termination of the optionholder's employment with us.
However, such exercise may give rise to alternative minimum tax liability (see
"Alternative Minimum Tax" below).
Upon the exercise of a NQSO, the optionholder will generally recognize
ordinary income in an amount equal to the excess of the fair market value of the
Shares at the time of exercise over the amount paid by the optionholder as the
exercise price. The ordinary income recognized in connection with the exercise
by an optionholder of a NQSO will be subject to both wage and employment tax
withholding.
The optionholder's tax basis in the Shares acquired pursuant to the
exercise of an option will be the amount paid upon exercise plus, in the case of
a NQSO, the amount of ordinary income, if any, recognized by the optionholder
upon exercise thereof.
Qualifying Disposition. If an optionholder disposes of shares of our
common stock acquired upon exercise of an ISO in a taxable transaction, and such
disposition occurs more than two years from the date on which the option was
granted and more than one year after the date on which the shares were
transferred to the optionholder pursuant to the exercise of the ISO, the
optionholder will realize long-term capital gain or loss equal to the difference
between the amount realized upon such disposition and the optionholder's
adjusted basis in such shares (generally the option exercise price).
Disqualifying Disposition. If the optionholder disposes of shares of
our common stock acquired upon the exercise of an ISO (other than in certain tax
free transactions) within two years from the date on which the ISO was granted
or within one year after the transfer of shares to the optionholder pursuant to
the exercise of the ISO, at the time of disposition the optionholder will
generally recognize ordinary income equal to the lessor of (i) the excess of
each such share's fair market value on the date of exercise over the exercise
price paid by the optionholder or (ii) the optionholder's actual gain. If the
total amount realized on a taxable disposition (including return on capital and
capital gain) exceeds the fair market value on the date of exercise of the
shares of our common stock purchased by the optionholder under the option, the
optionholder will recognize a capital gain in the amount of the excess. If the
optionholder incurs a loss on the disposition (the total amount realized is less
than exercise price paid by the optionholder), the loss will be a capital loss.
Other Disposition.. If an optionholder disposes of shares of our common
stock acquired upon exercise of a NQSO in a taxable transaction, the
optionholder will recognize capital gain or loss in an amount equal to the
difference between the optionholder's basis (as discussed above) in the shares
sold and the total amount realized upon disposition. Any such capital gain or
loss (and any capital gain or loss recognized on a disqualifying disposition of
shares of our common stock acquired upon exercise of ISOs as discussed above)
will be short-term or long-term depending on whether the shares of our common
stock were held for more than one year from the date such shares were
transferred to the optionholder.
Alternative Minimum Tax. Alternative minimum tax ("AMT") is payable if
and to the extent the amount thereof exceeds the amount of the taxpayer's
regular tax liability, and any AMT paid generally may be credited against future
regular tax liability (but not future AMT liability). AMT applies to alternative
minimum taxable income; generally regular taxable income as adjusted for tax
preferences and other items is treated differently under the AMT.
For AMT purposes, the spread upon exercise of an ISO (but not a NQSO)
will be included in alternative minimum taxable income, and the taxpayer will
receive a tax basis equal to the fair market value of the shares of our common
stock at such time for subsequent AMT purposes. However, if the optionholder
disposes of the ISO shares in the year of exercise, the AMT income cannot exceed
the gain recognized for regular tax purposes, provided that the disposition
meets certain third party requirements for limiting the gain on a disqualifying
disposition. If there is a disqualifying disposition in a year other than the
year of exercise, the income on the disqualifying disposition is not considered
alternative minimum taxable income.
Consequences to Black Hills Corporation
There are no federal income tax consequences to Black Hills Corporation
by reason of the grant of ISOs or NQSOs or the exercise of an ISO (other than
disqualifying dispositions).
At the time the optionholder recognizes ordinary income from the
exercise of a NQSO, we will be entitled to a federal income tax deduction in the
amount of the ordinary income so recognized (as described above), provided that
we satisfy our reporting obligations described below. To the extent the
optionholder recognizes ordinary income by reason of a disqualifying disposition
of the stock acquired upon exercise of an ISO, we will be entitled to a
corresponding deduction in the year in which the disposition occurs.
We are required to report to the Internal Revenue Service any ordinary
income recognized by any optionholder by reason of the exercise of a NQSO. We
are required to withhold income and employment taxes (and pay the employer's
share of the employment taxes) with respect to ordinary income recognized by the
optionholder upon the exercise of NQSOs.
Other Tax Consequences
The foregoing discussion is not a complete description of the federal
income tax aspects of options to be granted under the Plan. In addition,
administrative and judicial interpretations of the application of the federal
income tax laws are subject to change. Furthermore, the foregoing discussion
does not address state or local tax consequences.
The Board of Directors of Black Hills Corporation
recommends a vote "FOR" the Black Hills Corporation
Omnibus Incentive Compensation Plan.
ITEM IV: APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP, independent public accountants, conducted
the audit of Black Hills Corporation and its subsidiaries for 2000.
Representatives of Arthur Andersen LLP will be present at our annual meeting and
will have the opportunity to make a statement, if they desire to do so, and to
respond to appropriate questions.
Audit services performed by Arthur Andersen LLP during 2000 included audits
of our financial statements and those of our subsidiaries and analysis of
interim financial information.
Our Board of Directors, on recommendation of the Audit Committee and
subject to ratification by our shareholders, has appointed Arthur Andersen LLP
to perform an audit of our consolidated financial statements and those of our
subsidiaries for the year 2001 and to render their opinion thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP TO SERVE AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR 2001
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Shareholder proposals intended to be presented at our 2002 annual meeting
of shareholders must be received by our Secretary in writing at our home offices
at 625 Ninth Street, P.O. Box 1400, Rapid City, South Dakota 57709, prior to
November 27, 2001. Any proposal submitted must be in compliance with Rule 14a-8
of Regulation 14A of the Securities and Exchange Commission.
If a shareholder, who intends to present a proposal at our 2002 annual
meeting of shareholders and has not sought inclusion of the proposal in our
proxy materials pursuant to Rule 14a-8, fails to provide us with notice of such
proposal by February 12, 2002, then the persons named in the proxies solicited
by our Board of Directors for our 2002 annual meeting of shareholders may
exercise discretionary voting power with respect to such proposals.
ITEM V: TRANSACTION OF OTHER BUSINESS
Our Board of Directors does not intend to present any business for action
by our shareholders at the meeting except the matters referred to in this proxy
statement. If any other matters should be properly presented at the meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
thereon in accordance with the recommendations of our Board of Directors.
Please complete and sign the accompanying form of proxy whether or not you
expect to be present at the meeting and promptly return it in the enclosed
postage paid envelope.
By Order of the Board of Directors,
STEVEN J. HELMERS
General Counsel
and Corporate Secretary
Dated: March 29, 2001
===============================================================================
PLEASE COMPLETE, SIGN AND RETURN PROMPTLY
THE ENCLOSED PROXY SO THAT YOUR STOCK MAY
BE REPRESENTED AND VOTED AT THE ANNUAL MEETING.
===============================================================================
APPENDIX A
Charter of the Audit Committee of the Board of Directors
Black Hills Corporation
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities.
The Audit Committee's primary duties and responsibilities are
to:
Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding
finance, accounting, and legal compliance.
Review areas of potential significant financial risk to
the Company.
Monitor the independence and performance of the Company's
independent auditors and internal auditing department.
Provide an avenue of communication among the independent
auditors, management, the internal auditing department,
and the Board of Directors.
The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities,
and it has direct access to the independent auditors as well
as anyone in the organization. The Audit Committee has the
ability to retain, at the Company's expense, special legal,
accounting, or other consultants or experts it deems necessary
in the performance of its duties.
II. Audit Committee Composition and Meetings
The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be
independent nonexecutive directors, free from any relationship
that would interfere with the exercise of his or her
independent judgment. All members of the Committee shall 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 shall have accounting or
related financial management expertise.
Audit Committee members shall be appointed by the Board on
recommendation of the Executive Committee. If an Audit
Committee Chair is not designated or present, the members of
the Committee may designate a Chair by majority vote of the
Committee membership.
The Committee shall meet at least three times annually, or
more frequently as circumstances dictate. The Audit Committee
Chair shall prepare and/or approve an agenda in advance of
each meeting. The Committee should meet privately in executive
session at least annually with management, the manager of
internal audit, the independent auditors, and as a committee
to discuss any matters, that the Committee or each of these
groups believe should be discussed. In addition, the
Committee, or at least its Chair, should communicate with
management and the independent auditor's quarterly to review
the Company's financial statements and significant findings
based upon the auditors limited review procedures.
III. Audit Committee Responsibilities and Duties
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually,
submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
2. Review the company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control, and
report such exposures. Review significant findings prepared by the
independent auditors and the internal auditing department together
with management's responses.
4. Review with financial management and the independent auditors the
company's quarterly financial results prior to the release of earnings
and/or the company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with SAS 61. The Chair of the
Committee may represent the entire Audit Committee for purposes of
this review.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and The Board of Directors. The Audit Committee shall review
the independence and performance of the auditors and annually
recommend to the Board of Directors the appointment of the independent
auditors or approve any discharge of auditors when circumstances
warrant.
6. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence.
7. Review the independent auditors audit plan - discuss scope, staffing,
reliance upon management, and internal audit and general audit
approach.
8. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to audit committees in accordance with AICPA SAS
61.
9. Discuss with the independent auditors the quality and appropriateness
of the Company's accounting principles as applied in its financial
reporting.
Internal Audit Department and Legal Compliance
10. Review the plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as
needed.
11. Review significant reports, prepared by the internal audit department
together with management's response and follow-up to these reports.
12. Review annually with the Internal Audit Manager the results of the
monitoring of compliance with the Company's code of conduct.
13. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations and inquiries received from regulators
or governmental agencies.
Other Audit Committee Responsibilities
14. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be included in
the Company's annual proxy statement.
15. Perform any other activities consistent with this Charter, the
Company's By-Laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
16. Submit the minutes of all meetings of the Audit Committee to the Board
of Directors.
17. Annually review a summary of director and officers' related party
transactions and potential conflicts of interest.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and
the independent auditor or to assure compliance with laws and regulations
and the Company's Code of Conduct.
APPENDIX B
Omnibus Incentive Compensation Plan
Black Hills Corporation
Effective May 30, 2001
TABLE OF CONTENTS
Page
Article 1. Establishment, Objectives, and Duration..............................................................1
1.1 Establishment of the Plan.......................................................................1
1.2 Objectives of the Plan..........................................................................1
1.3 Duration of the Plan............................................................................1
Article 2. Definitions.....................................................................................1
Article 3. Administration..................................................................................6
3.1 General.........................................................................................6
3.2 Authority of the Committee......................................................................7
3.3 Decisions Binding...............................................................................7
Article 4. Shares Subject to the Plan and Maximum Awards...................................................7
4.1 Number of Shares Available for Grants...........................................................7
4.2 Lapsed Awards and Awards Not Paid in Shares.....................................................8
4.3 Adjustments in Authorized Shares................................................................8
Article 5. Eligibility and Participation...................................................................8
5.1 Eligibility.....................................................................................8
5.2 Actual Participation............................................................................8
Article 6. Stock Options...................................................................................8
6.1 Grant of Options................................................................................8
6.2 Award Agreement.................................................................................9
6.3 Option Price....................................................................................9
6.4 Duration of Options.............................................................................9
6.5 Exercise of Options.............................................................................9
6.6 Payment.........................................................................................9
6.7 Restrictions on Share Transferability...........................................................9
6.8 Termination of Employment/Directorship.........................................................10
6.9 Nontransferability of Options..................................................................10
6.10 No Cancellation and Reissuance of Options......................................................10
Article 7. Stock Appreciation Rights......................................................................10
7.1 Grant of SARs..................................................................................10
7.2 SAR Agreement..................................................................................11
7.3 Term of SARs...................................................................................11
7.4 Exercise of Freestanding SARs..................................................................11
7.5 Exercise of Tandem SARs........................................................................11
7.6 Payment of SAR Amount..........................................................................11
7.7 Termination of Employment/Directorship.........................................................11
7.8 Nontransferability of SARs.....................................................................12
Article 8. Restricted Stock...............................................................................12
8.1 Grant of Restricted Stock......................................................................12
8.2 Restricted Stock Agreement.....................................................................12
8.3 Transferability................................................................................12
8.4 Other Restrictions.............................................................................12
8.5 Voting Rights..................................................................................13
8.6 Dividends and Other Distributions..............................................................13
8.7 Termination of Employment/Directorship.........................................................13
Article 9. Performance Units, Performance Shares, and Cash-Based Awards...................................13
9.1 Grant of Performance Units/Shares and Cash-Based Awards........................................13
9.2 Value of Performance Units/Shares and Cash-Based Awards........................................13
9.3 Earning of Performance Units/Shares and Cash-Based Awards......................................13
9.4 Form and Timing of Payment of Performance Units/Shares and Cash-Based Awards...................14
9.5 Termination of Employment/Directorship.........................................................14
9.6 Nontransferability.............................................................................14
Article 10. Other Awards...................................................................................14
Article 11. Performance Measures...........................................................................14
Article 12. Beneficiary Designation........................................................................16
Article 13. Deferrals......................................................................................16
Article 14. Rights of Employees/Directors..................................................................16
14.1 Employment.....................................................................................16
14.2 Participation..................................................................................16
14.3 Rights as a Stockholder........................................................................16
Article 15. Change in Control..............................................................................16
15.1 Treatment of Outstanding Awards................................................................16
15.2 Termination, Amendment, and Modifications of Change-in-Control Provisions......................17
14.3 Pooling of Interests Accounting................................................................17
Article 16. Amendment, Modification, Termination and Bifurcation ..........................................18
16.1 Amendment, Modification, and Termination.......................................................18
16.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.............18
16.3 Awards Previously Granted......................................................................18
16.4 Compliance with Code Section 162(m)............................................................18
16.5 Bifurcation of the Plan........................................................................18
Article 17. Withholding....................................................................................18
17.1 Tax Withholding................................................................................19
17.2 Share Withholding..............................................................................19
Article 18. Indemnification................................................................................19
Article 19. Successors.....................................................................................19
Article 20. General Provisions.............................................................................19
20.1 Gender and Number..............................................................................19
20.2 Severability...................................................................................20
20.3 Requirements of Law............................................................................20
20.4 Securities Law Compliance......................................................................20
20.5 Listing........................................................................................20
20.6 Delivery of Title..............................................................................20
20.7 Investment Representations.....................................................................20
20.8 No Additional Rights...........................................................................20
20.9 Uncertificated Shares..........................................................................21
20.10 Unfunded Status of the Plan....................................................................21
20.11 Governing Law..................................................................................21
Black Hills Corporation
Omnibus Incentive Compensation Plan
Article 1. Establishment, Objectives, and Duration
1.1 Establishment of the Plan. Black Hills Corporation, a South Dakota
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "Black Hills Corporation Omnibus
Incentive Compensation Plan" (hereinafter referred to as the "Plan"), as set
forth in this document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares, Performance Units, and Cash-Based Awards.
The Plan shall become effective when approved by the Shareholders at
the 2001 annual meeting of Shareholders on May 30, 2001, (the "Effective Date")
and shall remain in effect as provided in Section 1.3 hereof.
1.2 Objectives of the Plan. The objectives of the Plan are to optimize
the profitability and growth of the Company through annual and long-term
incentives that are consistent with the Company's goals and that link the
personal interests of Participants to those of the Company's stockholders; to
provide Participants with an incentive for excellence in individual performance;
and to promote teamwork among Participants. The Plan is further intended to
provide flexibility to the Company, its Affiliates, and Subsidiaries, in their
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in such success.
1.3 Duration of the Plan. The Plan shall commence on the Effective
Date, as described in Section 1.1 hereof, and shall remain in effect, subject to
the right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 16 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after the tenth (10th ) anniversary
of the Effective Date.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings
set forth below, and when the meaning is intended, the initial letter of the
word shall be capitalized:
2.1 "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations of the Exchange Act.
2.2 "Award" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares, Performance Units, or Cash-Based
Awards.
2.3 "Award Agreement" means an agreement entered into by the Company
and each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan.
2.4 "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule l3d-3 of the General Rules and Regulations under
the Exchange Act.
2.5 "Board" or "Board of Directors" means the Board of Directors of
the Company.
2.6 "Cash-Based Award" means an Award granted to a Participant as
described in Article 9 herein.
2.7 "Change in Control" shall mean any of the following events:
(a) An acquisition (other than directly from the Company) of any
Common Stock of the Company by any "Person" (as the term
person is used for purposes of Section 13(d) or 14(d) of the
Exchange Act, as amended (the "Exchange Act"), immediately
after which such Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated under the Exchange
Act) of thirty percent (30%) or more of the Common Stock of
the Company; provided, however, in determining whether a
Change in Control has occurred, Common Stock which is
acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would
cause a Change in Control. A "Non-Control Acquisition" shall
mean an acquisition by (1) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company
or (B) any corporation or other Person of which a majority
of its voting power or its voting equity securities ("Voting
Securities") or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition,
a "Subsidiary"), (ii) the Company or its Subsidiaries, or
(iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(b) The individuals who, as of the Effective Date are members of
the Board (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the members of the Board;
provided, however, that if the election, or nomination for
election by the Company's common shareholders, of any new
director was approved by a vote of at least two-thirds of
the Incumbent Board, such new director shall, for purposes
of this Plan, be considered as a member of the Incumbent
Board; provided further, however, that no individual shall
be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in
Rule 14a-11 promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(c) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization involving the
Company, unless such merger, consolidation or
reorganization is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a merger,
consolidation or reorganization of the Company where:
(A) The shareholders of the Company, immediately before
such merger, consolidation or reorganization, own
directly or indirectly immediately following such
merger, consolidation or reorganization, at least
seventy percent (70%) of the combined voting power of
the outstanding Voting Securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the Voting Securities immediately before such merger,
consolidation or reorganization,
(B) The individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement
providing for such merger, consolidation or
reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities
of the Surviving Corporation, and
(C) No Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any
trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any Subsidiary,
or (iv) any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial
Ownership of thirty percent (30%) or more of the then
outstanding Voting Securities), has Beneficial
Ownership of thirty percent (30%) or more of the
combined voting power of the Surviving Corporation's
then outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the Company;
or
(iii) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to
any Person other than (x) a transfer to a Subsidiary or
(y) a sale or transfer of a Subsidiary by the Company
except if such sale or transfer would be a sale or
other disposition of all or substantially all of the
assets of the Company.
(d) Notwithstanding the foregoing, (i) a Change in Control shall
not be deemed to occur solely because any person (the
"Subject Person") acquired Beneficial Ownership of more than
the permitted amount of the then outstanding Common Stock as
a result of the acquisition of Common Stock by the Company
which, by reducing the number of shares of Common Stock then
outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if
a Change in Control would occur (but for the operation of
this sentence) as a result of the acquisition of Common
Stock by the Company, and after such stock acquisition by
the Company, the Subject Person becomes the Beneficial Owner
of any additional Common Stock which increases the
percentage of the then outstanding Common Stock Beneficially
Owned by the Subject Person, then a Change in Control shall
occur; and (ii) a Change in Control shall not be deemed to
occur unless and until all regulatory approvals required to
effect a Change in Control of the Company have been
obtained.
2.8 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.9 "Committee" means the committee appointed by the Board to
administer Awards to Employees, as specified in Article 3 herein.
2.10 "Common Stock" means the $1 par value common stock of the Company.
2.11 "Company" means Black Hills Corporation, a South Dakota
corporation and any successor thereto as provided in Article 19 herein.
2.12 "Covered Employee" means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is, or, in the judgment of the
Board, might then be one of the group of "covered employees," as defined in the
regulations promulgated under Code Section 162(m), or any successor statute.
2.13 "Director" means any individual who is a member of the Board of
Directors of the Company; provided, however, that any Director who is employed
by the Company shall be considered an Employee under the Plan.
2.14 "Disability" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan, or if no such plan exists, at
the discretion of the Committee.
2.15 "Effective Date" shall have the meaning ascribed to such term in
Section1.1 hereof.
2.16 "Employee" means any employee of the Company or its
Subsidiaries or Affiliates.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
2.18 "Fair Market Value" shall be determined on the basis of the
closing sale price on the principal securities exchange on which the Shares are
traded or, if there is no such sale on the relevant date, then on the last
previous day on which a sale was reported.
2.19 "Freestanding SAR" means an SAR that is granted independently of
any Options, as described in Article 7 herein.
2.20 "Incentive Stock Option" or "ISO" means an option to purchase
Shares granted under Article 6 herein and that is designated as an Incentive
Stock Option and that is intended to meet the requirements of Code Section 422.
2.21 "Insider" shall mean an individual who is, on the relevant date,
an officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.
2.22 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and that is not intended to meet the
requirements of Code Section 422, or that otherwise does not meet such
requirements.
2.23 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.
2.24 "Option Price" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
2.25 "Other Award" means an Award granted under Article 10 hereunder.
2.26 "Participant" means an Employee or Director who has been selected
to receive an Award or who has outstanding an Award granted under the Plan.
2.27 "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).
2.28 "Performance Share" means an Award granted to a Participant,
as described in Article 9 herein.
2.29 "Performance Unit" means an Award granted to a Participant, as
described in Article 9 herein.
2.30 "Period of Restriction" means the period during which the transfer
of Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, at its discretion), and the Shares are
subject to a substantial risk of forfeiture, as provided in Article 8 herein.
2.31 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.32 "Restricted Stock" means an Award granted to a Participant
pursuant to Article 8 herein.
2.33 "Retirement" shall have the meaning ascribed to such term in the
Company's tax-qualified defined benefit retirement plan.
2.34 "Rule 16b-3" means Rule 16b-3 of the regulations promulgated under
Section 16 of the Exchange Act, as amended, or any successor rule in effect from
time to time.
2.35 "Shares" means the shares of Common Stock of the Company.
2.36 "Stock Appreciation Right" or "SAR" means an Award, granted alone
or in connection with a related Option, designated as an SAR, pursuant to the
terms of Article 7 herein.
2.37 "Subsidiary" means any corporation, partnership, joint venture, or
other entity in which the Company has a majority voting interest.
2.38 "Tandem SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).
Article 3. Administration
3.1 General. Subject to the terms and conditions of the Plan, the Plan
shall be administered by the Committee. The members of the Committee shall be
appointed by the Board from the Compensation Committee of the Board, and shall
serve at the discretion of, the Board of Directors. All members of the Committee
shall meet the definition of "nonemployee directors" as defined in 17 C.F.R. ss.
240.16b-3(b)(3)(i) and "outside directors" as defined in Code regulation ss.
1.162-27(e)(3). The Committee shall have the authority to delegate
administrative duties to officers of the Company; provided, that no delegation
may be made of all or any part of authority under the Plan to the extent such
delegation would result in noncompliance with Rule 16b-3 or Code regulation ss.
1.162-27.
3.2 Authority of the Committee. Except as limited by law or by the
articles of incorporation or bylaws of the Company, and subject to the
provisions of the Plan herein, the Committee shall have full power to select
Employees and Directors who shall participate in the Plan; determine the sizes
and types of Awards; determine the terms and conditions of Awards in a manner
consistent with the Plan; construe and interpret the Plan and any agreement or
instrument entered into under the Plan; establish, amend, or waive rules and
regulations for the Plan's administration; and amend the terms and conditions of
any outstanding Award as provided in the Plan. Further, the Committee shall make
all other determinations that may be necessary or advisable for the
administration of the Plan.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Committee shall be final, conclusive, and binding on all
persons, including the Company, its stockholders, Directors, Employees,
Participants, and their estates and beneficiaries.
Article 4. Shares Subject to the Plan and Maximum Awards
4.1 Number of Shares Available for Grants. Subject to adjustment as
provided in Section 4.2 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be one million two hundred
thousand (1,200,000), no more than two hundred forty thousand (240,000) of which
may be granted in the form of Restricted Shares. Such Shares may be authorized
but unissued Shares, treasury shares, shares acquired on the open market
specifically for distribution under this Plan, or any combination thereof, as
the Committee may from time to time determine. The Committee shall determine the
appropriate methodology for calculating the number of shares issued pursuant to
the Plan. Unless and until the Committee determines that an Award to a Covered
Employee shall not be designed to comply with the Performance-Based Exception,
the following rules shall apply to grants of such Awards under the Plan:
(a) Stock Options: The maximum aggregate number of Shares that
may be granted in the form of Stock Options, pursuant to any
Award granted in any one fiscal year to any one single
Participant shall be five hundred thousand (500,000);
provided, that the aggregate Fair Market Value (determined
as of the time an Incentive Stock Option is granted) of the
Common Stock with respect to which Incentive Stock Options
are exercisable for the first time during any calendar year
shall not exceed $100,000.
(b) SARs:.... The maximum aggregate number of Shares that may be
granted in the form of Stock Appreciation Rights, pursuant
to any Award granted in any one fiscal year to any one
single Participant shall be five hundred thousand (500,000).
(c) Restricted Stock: The maximum aggregate grant with respect
to Awards of Restricted Stock granted in any one fiscal year
to any one Participant shall be one hundred thousand
(100,000).
(d) Performance Shares/Performance Units and Cash-Based Awards:
The maximum aggregate grant with respect to Awards of
Performance Shares made in any one fiscal year to any one
Participant shall be equal to the value of fifty thousand
(50,000) Shares; the maximum aggregate amount awarded with
respect to Cash-Based Awards or Performance Units to any one
Participant in any one fiscal year may not exceed Two
Million Dollars ($2,000,000).
4.2 Lapsed Awards and Awards Not Paid in Shares. If any Award granted
under this Plan is canceled, terminates, expires, or lapses for any reason, any
Shares subject to such Award again shall be available for the grant of an Award
under the Plan. Shares received by the Company as payment for an Award (e.g.,
stock-for-stock exercises), Shares withheld by the Company to satisfy tax
withholding and stock-based Awards that are ultimately settled in cash shall be
available for grant of future Awards under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares that may be delivered under
Section 4.1, in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, and in the Award limits set forth in
subsections 4.1 (a) and 4.1 (b), as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares subject to
any Award shall always be a whole number.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan include
all Employees and Directors.
5.2 Actual Participation. Subject to the provisions of the Plan, the
Commitee may, from time to time, select from all eligible Employees and
Directors, those to whom Awards shall be granted and shall determine the nature
and amount of each Award.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine which are not inconsistent with the terms of the Plan.
The Award Agreement also shall specify whether the Option is intended to be an
ISO within the meaning of Code Section 422, or an NQSO whose grant is intended
not to fall under the provisions of Code Section 422.
6.3 Option Price. The Option Price for each grant of an Option under
this Plan shall be as determined by the Committee; provided, that the Option
Price may in no event be less than the Fair Market Value of the Shares subject
to the Option on the date of grant of the Option.
6.4 Duration of Options. Each Option granted to a Participant shall
expire at such time as the Committee shall determine at the time of grant;
provided, however, that no ISO shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5 Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
6.6 Payment. Options granted under this Article 6 shall be exercised by
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent; or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares that are
tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price); or (c) by a combination of
(a) and (b); or (d) any other method approved by the Committee in its sole
discretion.
The Committee also may allow cashless exercise as permitted under
Federal Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
Subject to any governing rules or regulations or to the provisions of
Article 13, as soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
Unless otherwise determined by the Committee, all payments under all of
the methods indicated above shall be paid in United States dollars.
6.7 Restrictions on Share Transferability. The Committee may impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities or tax laws, under
the requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
6.8 Termination of Employment/Directorship. Each Participant's Award
Agreement shall set forth the extent to which the Participant shall have the
right to exercise the Option following termination of the Participant's
employment or directorship with the Company. Such provisions shall be determined
in the sole discretion of the Committee, shall be included in the Award
Agreement entered into with each Participant, need not be uniform among all
Options issued pursuant to this Article 6, and may reflect distinctions based on
the reasons for termination.
6.9 Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under the
Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution.
Further, all ISOs granted to a Participant under the
Plan shall be exercisable during his or her lifetime
only by such Participant.
(b) Nonqualified Stock Options. Except as otherwise
provided in a Participant's Award Agreement, no NQSO
granted under this Article 6 may be sold,
transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by
the laws of descent and distribution. Further, except
as otherwise provided in a Participant's Award
Agreement, all NQSOs granted to a Participant under
this Article 6 shall be exercisable during his or her
lifetime only by such Participant.
6.10 No Cancellation and Reissuance of Options. In no event shall the
Board or the Committee permit the repricing of Options by any method, including
by cancellation and reissuance.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of the Plan,
SARs may be granted to Participants at any time and from time to time as shall
be determined by the Committee. The Committee may grant Freestanding SARs,
Tandem SARs, or any combination of these forms of SAR.
Subject to the terms and conditions of the Plan, the Committee shall
have complete discretion in determining the number of SARs granted to each
Participant and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value
of a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2 SAR Agreement. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
7.3 Term of SARs. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion.
7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.
7.5 Exercise of Tandem SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (b) the value of
the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (c) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.6 Payment of SAR Amount. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on
the date of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR exercise may
be in cash, in Shares of equivalent value, in some combination thereof, or in
any other manner approved by the Committee at its sole discretion. The
Committee's determination regarding the form of SAR payout shall be set forth in
the Award Agreement pertaining to the grant of the SAR.
7.7 Termination of Employment/Directorship. Each Award Agreement shall
set forth the extent to which the Participant shall have the right to exercise
the SAR following termination of the Participant's employment or directorship
with the Company, its Affiliates, and/or its subsidiaries, as the case may be.
Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Award Agreement entered into with Participants, need
not be uniform among all SARs issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination.
7.8 Nontransferability of SARs. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant.
Article 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Award Agreement that shall specify the Period(s)
of Restriction, the number of Shares of Restricted Stock granted, and such other
provisions as the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, the Shares
of Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and specified in the
Restricted Stock Award Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant.
8.4 Other Restrictions. The Committee shall impose such other
conditions and/or restrictions on any Shares of Restricted Stock granted
pursuant to the Plan as it may deem advisable including, without limitation, a
requirement that Participants pay a stipulated purchase price for each Share of
Restricted Stock, restrictions based upon the achievement of specific
performance goals, time-based restrictions on vesting following the attainment
of the performance goals, time-based restrictions, and/or restrictions under
applicable federal or state securities laws.
To the extent deemed appropriate by the Committee, the Company may
retain the certificates representing Shares of Restricted Stock in the Company's
possession until such time as all conditions and/or restrictions applicable to
such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the applicable
Period of Restriction.
8.5 Voting Rights. If the Committee so determines, Participants holding
Shares of Restricted Stock granted hereunder may be granted the right to
exercise full voting rights with respect to those Shares during the Period of
Restriction.
8.6 Dividends and Other Distributions. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
may, if the Committee so determines, be credited with dividends paid with
respect to the underlying Shares while they are so held. The Committee may apply
any restrictions to the dividends that the Committee deems appropriate. Without
limiting the generality of the preceding sentence, if the grant or vesting of
Restricted Shares granted to a Covered Employee is designed to comply with the
requirements of the Performance-Based Exception, the Committee may apply any
restrictions it deems appropriate to the payment of dividends declared with
respect to such Restricted Shares, such that the dividends and/or the Restricted
Shares maintain eligibility for the Performance-Based Exception.
8.7 Termination of Employment/Directorship. Each Award Agreement shall
set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant's employment
or directorship with the Company. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Shares of
Restricted Stock issued pursuant to the Plan, and may reflect distinctions based
on the reasons for termination.
Article 9. Performance Units, Performance Shares, and Cash-Based Awards
9.1 Grant of Performance Units/Shares and Cash-Based Awards. Subject to
the terms of the Plan, Performance Units, Performance Shares, and/or Cash-Based
Awards may be granted to Participants in such amounts and upon such terms, and
at any time and from time to time, as shall be determined by the Committee.
9.2 Value of Performance Units/Shares and Cash-Based Awards. Each
Performance Unit shall have an initial value that is established by the
Committee at the time of grant. Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the date of grant. Each
Cash-Based Award shall have a value as may be determined by the Committee. The
Committee shall set performance goals in its discretion which, depending on the
extent to which they are met, will determine the number and/or value of
Performance Units/Shares and Cash-Based Awards that will be paid out to the
Participant. For purposes of this Article 9, the time period during which the
performance goals must be met shall be called a "Performance Period."
9.3 Earning of Performance Units/Shares and Cash-Based Awards. Subject
to the terms of this Plan, after the applicable Performance Period has ended,
the holder of Performance Units/Shares and Cash-Based Awards shall be entitled
to receive payout on the number and value of Performance Units/Shares and
Cash-Based Awards earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance
goals have been achieved.
9.4 Form and Timing of Payment of Performance Units/Shares and
Cash-Based Awards.
Payment of earned Performance Units/Shares and Cash-Based Awards shall
be as determined by the Committee and as evidenced in the Award Agreement.
Subject to the terms of the Plan, the Committee, in its sole discretion, may pay
earned Performance Units/Shares and Cash-Based Awards in the form of cash or in
Shares (or in a combination thereof) that have an aggregate Fair Market Value
equal to the value of the earned Performance Units/Shares and Cash-Based Awards
at the close of the applicable Performance Period. Such Shares may be granted
subject to any restrictions deemed appropriate by the Committee. The
determination of the Committee with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the Award.
At the discretion of the Committee, Participants holding Performance
Units/Shares may be entitled to receive dividend units with respect to dividends
declared with respect to the Shares. Such dividends may be subject to the same
accrual, forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in Section 8.6 herein, as
determined by the Committee.
9.5 Termination of Employment/Directorship. In the event the employment
or directorship terminates for any reason, including by reason of death,
Disability, or Retirement, all Performance Units/Shares and Cash-Based Awards
shall be forfeited by the Participant to the Company unless determined otherwise
by the Committee, as set forth in the Participant's Award Agreement.
9.6 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares and Cash-Based Awards may not be sold,
transferred, pledged, assigned, or other-wise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, a Participant's rights
under the Plan shall be exercisable during the Participant's lifetime only by
the Participant.
Article 10. Other Awards
The Committee shall have the right to grant other Awards which may
include, without limitation, the grant of shares based on attainment of
performance goals established by the Committee, the payment of Shares in lieu of
cash or cash based on attainment of performance goals established by the
Committee, and the payment of Shares in lieu of cash under other Company
incentive or bonus programs. Payment under or settlement of any such Awards
shall be made in such manner and at such times as the Committee may determine.
Article 11. Performance Measures
Unless and until the Committee proposes for shareholder vote and
shareholders approve a change in the general performance measures set forth in
this Article 11, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees that are designed to
qualify for the Performance-Based Exception, the performance measure(s) to be
used for purposes of such grants shall be based upon one or more of the
following performance based criteria, either on a Company-specific basis or in
comparison with peer group performance:
(a) Earnings per share;
(b) Net income (before or after taxes);
(c) Return measures (including, but not limited to, return on
assets, equity, or sales);
(d) Cash flow (including, but not limited to, operating cash
flow and free cash flow);
(e) Cash flow return on investments, which equals net cash flows
divided by owner's equity;
(f) Earnings before or after taxes, interest, depreciation and/or
amortization;
(g) Internal rate of return or increase in net present value;
(h) Dividends paid;
(i) Gross revenues;
(j) Gross margins;
(k) Share price performance (including, but not limited to,
growth measures and total shareholder return);
(l) Customer satisfaction measures; and
(m) Price earnings ratio.
The Committee in its sole discretion shall have the ability to set such
performance measures at the corporate level or the business unit level.
The Committee may exclude various items and occurrences from business
results before determining Awards under the Plan. To the extent such exclusions
affect Awards to executives covered by Section 162(m), they will be prescribed
in resolutions that meet the requirements of Section 162(m) for deductibility.
Notwithstanding anything contained herein, Awards that are designed to
qualify for the Performance-Based Exception, and that are held by Covered
Employees, may not be adjusted upward (the Committee shall retain the discretion
to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards that shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m). No payment for Awards that are designed to qualify for the
Performance-Based Exception shall be paid until the Committee certifies in
writing that the performance goals and all material terms of the Award were in
fact satisfied. Approved minutes of the Committee meeting in which the
certification is made shall be treated as a written certification.
Article 12. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
Article 13. Deferrals
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock, or the satisfaction of any requirements or goals with respect to
Performance Units/Shares and Cash-Based Awards. If any such deferral election is
required or permitted, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals.
Article 14. Rights of Employees/Directors
14.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company, or any right in any Director to be retained in the service of the
Company.
14.2 Participation. No Employee or Director shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.
14.3 Rights as a Stockholder. A Participant shall have none of the
rights of a shareholder with respect to shares of Common Stock covered by any
Award until the Participant becomes the record holder of such shares.
Article 15. Change in Control
15.1 Treatment of Outstanding Awards. Upon the occurrence of a Change
in Control, unless otherwise specifically prohibited under applicable laws, or
by the rules and regulations of any governing governmental agencies or national
securities exchanges, or unless the Committee shall determine otherwise in the
Award Agreement:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout
their entire term;
(b) Any restriction periods and restrictions imposed on Restricted
Shares that are not performance-based shall lapse; and
(c) The target payout opportunities attainable under all outstanding
Awards of performance-based Restricted Stock, Performance Units,
Performance Shares, and Cash-Based Awards shall be deemed to have
been fully earned for the entire Performance Period(s) as of the
effective date of the Change in Control. The vesting of all
Awards denominated in Shares shall be accelerated as of the
effective date of the Change in Control, and there shall be paid
out to Participants within thirty (30) days following the
effective date of the Change in Control a pro rata number of
shares based upon an assumed achievement of all relevant targeted
performance goals and upon the length of time within the
Performance Period that has elapsed prior to the Change in
Control. Awards denominated in cash shall be paid pro rata to
participants in cash within thirty (30) days following the
effective date of the Change in Control, with the proration
determined as a function of the length of time within the
Performance Period that has elapsed prior to the Change in
Control, and based on an assumed achievement of all relevant
targeted performance goals.
15.2 Termination, Amendment, and Modifications of Change-in-Control
Provisions.
Notwithstanding any other provision of this Plan (but subject to the
limitations of Section 16.3 hereof) or any Award Agreement provision, the
provisions of this Article 15 may not be terminated, amended, or modified on or
after the date of a Change in Control to affect adversely any Award theretofore
granted under the Plan without the prior written consent of the Participant with
respect to said Participant's outstanding Awards; provided, however, the Board
may terminate, amend, or modify this Article 15 at any time and from time to
time prior to the date of a Change in Control.
15.3 Pooling of Interests Accounting. Notwithstanding any other
provision of the Plan to the contrary, in the event that the consummation of a
Change in Control is contingent on using pooling of interests accounting
methodology, the Board may take any action necessary to preserve the use of
pooling of interests accounting.
Article 16. Amendment, Modification, Termination and Bifurcation
16.1 Amendment, Modification, and Termination. Subject to the terms of
the Plan, the Committee may at any time and from time to time, alter, amend,
suspend, or terminate the Plan in whole or in part; provided, that no such
amendment shall be made without the approval of the Company shareholders (a)
that would increase the number of Shares available for issuance in accordance
with the Plan; or (b) if such approval is required, (i) to comply with Section
422 of the Code with respect to Incentive Stock Options; or (ii) for purposes of
Section 162(m) of the Code.
16.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events.
The Committee may make adjustments in the terms and conditions of, and
the criteria included Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4.3 hereof)
affecting the Company or the financial statements of the Company or of changes
in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided that, no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's or any Award's meeting the requirements of Section 162(m) of the Code, as
from time to time amended.
16.3 Awards Previously Granted. Notwithstanding any other provision of
the Plan to the contrary (but subject to Section 15.2 hereof), no termination,
amendment, or modification of the Plan shall adversely affect in any material
way any Award previously granted under the Plan, without the written consent of
the Participant holding such Award.
16.4 Compliance with Code Section 162(m). At all times when Code
Section 162(m) is applicable, all Awards granted under this Plan to Employees
who are or could reasonably become Covered Employees as determined by the
Committee shall comply with the requirements of Code Section 162(m); provided,
however, that in the event the Committee determines at the time it makes an
Award or Award(s) available for grant under the Plan that such compliance is not
desired with respect to any Award or Awards available for grant under the Plan,
then compliance with Code Section 162(m) will not be required. In addition, in
the event that changes are made to Code Section 162(m) to permit greater
flexibility with respect to any Award or Awards available under the Plan, the
Committee may, subject to this Article 16, make any adjustments it deems
appropriate.
16.5 Bifurcation of the Plan. Notwithstanding anything in the Plan to
the contrary, the Committee, in its sole discretion, may bifurcate the Plan so
as to restrict, limit or condition the use of any provision of the Plan to
Participants who are subject to Section 16 of the Exchange Act without so
restricting, limiting, or conditioning the Plan with respect to other
Participants.
Article 17. Withholding
17.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
17.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Board, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax that could be imposed on the transaction. All
such elections shall be irrevocable, made in writing, signed by the Participant,
and shall be subject to any restrictions or limitations that the Committee, in
its sole discretion, deems appropriate.
Article 18. Indemnification
Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's articles of incorporation or bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
Article 19. Successors
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of' a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
Article 20. General Provisions
20.1 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
20.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
20.3 Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
20.4 Securities Law Compliance. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act., unless determined otherwise by the
Committee. To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee. All grants and exercises of Options
and other Awards under the Plan shall be executed in accordance with the
requirements of Section 16 of the Exchange Act, as amended and any regulations
promulgated thereunder. To the extent that any of the provisions contained
herein do not conform with Rule 16b-3 of the Act or any amendments thereto, or
any successor regulation, then the Committee may make such modifications so as
to conform the Plan and any Options or other Awards granted hereunder to the
Rules requirements, except only such modifications as to a Performance-Based
Exception as may be prohibited by Code regulation ss. 1.162-27.
20.5 Listing. The Company may use reasonable endeavors to register
Shares allotted pursuant to the exercise of an Option with the United States
Securities and Exchange Commission or to the effect compliance with the
registration, qualification, and listing requirements of any national securities
laws, stock exchange, or automated quotation system.
20.6 Delivery of Title. The Company shall have no obligation to issue
or deliver evidence of title for shares of Shares under the Plan prior to:
(a) Obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable; and
(b) Completion of any registration or other qualification of the
Shares under any applicable national or foreign law or ruling of
any governmental body that the Company determines to be necessary
or advisable.
20.7 Investment Representations. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
20.8 No Additional Rights. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant's
employment at any time, or confer upon any Participant any right to continue in
the employ of the Company, or upon any Director the right to continue in service
with the Company.
20.9 Uncertificated Shares. To the extent that the Plan provides for
issuance of certificates to reflect the transfer of Shares, the transfer of such
Shares may be effected on a non-certificated basis, to the extent not prohibited
by applicable law or the rules of any stock exchange.
20.10 Unfunded Status of the Plan. The Plan is intended to constitute
an "unfunded" Plan. With respect to any payments or deliveries of Shares not yet
made to a Participant by the Company, nothing contained herein shall give any
rights that are greater than those of a general creditor of the Company.
20.11 Governing Law. The Plan and each Award Agreement shall be
governed by the laws of' the state of South Dakota, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of the Plan to the substantive law of another jurisdiction.
Unless otherwise provided in the Award Agreement, recipients of an Award under
the Plan are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts of South Dakota, to resolve any and all issues that may
arise out of or relate to the Plan or any related Award Agreement.
BLACK HILLS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
Wednesday, May 30, 2001
9:30 a.m., Local Time
Journey Museum
222 New York Street
Rapid City, SD 57701
Black Hills Corporation
PO Box 1400, Rapid City, SD 57709 PROXY
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This proxy is solicited by the Board of Directors for use at the Annual Meeting
on May 30, 2001.
The Shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify below.
If no choice is specified, the proxy will be voted "FOR" Items 1,2,3 and 4.
By signing the proxy, you revoke all prior proxies and appoint Daniel P.
Landguth, Mark T. Thies, and Steven J. Helmers, and each of them, with full
power of substitution, to vote your shares on the matters shown on the reverse
side and any other matters which may come before the Annual Meeting and all
adjournments.
HOW TO VOTE YOUR PROXY
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Black Hills Corporation, c/o Shareowner Services,
P.O. Box 64873, St. Paul, MN 55164-9397.
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The Board of Directors Recommends a Vote FOR Items 1, 2, 3 and 4.
1. Election of
Class I Directors: 01 Adil M. Ameer Vote FOR Vote WITHHELD
02 Everett E. Hoyt all nominees from all nominees
03 Thomas J. Zeller
(Instructions: To withhold authority to vote for any indicated
nominee, write the number(s) of the nominee(s) in the box
provided to the right. To cumulate votes so indicate.)
For Against Abstain
2. Authorize an increase in the Company's
authorized indebtedness from
$500 million to $2 billion.
3. Authorize the Black Hills Corporation
Omnibus Incentive Compensation Plan.
4. Ratify the appointment of Arthur Andersen
LLP to serve as Black Hills Corporation's
independent auditors in 2001.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address change? Mark Box
Indicate changes below: _______________________________
Date
Signature(s) Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name or corporation and title of
authorized officer signing the proxy.
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Proxy # Account # Issue or Issuer #
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