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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.)

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Materials under §240.14a-12

Black Hills Corporation

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

 

 

 

Fee paid previously with preliminary materials.

 

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-16(i)(1) and 0-11.

 

 

(1)

 

Amount Previously Paid:

 

 

(2)

 

Form, Schedule or Registration Statement No.:

 

 

(3)

 

Filing Party:

 

 

(4)

 

Date Filed:

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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https://cdn.kscope.io/f28ec8035e8977e730017bbc17ec2e3d-img148042164_0.jpg 

 

 

BLACK HILLS CORPORATION

 

Notice of 2023

Annual Meeting of Shareholders

and Proxy Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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BLACK HILLS CORPORATION

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

 

WHEN:

 

 

WHERE:

 

 

 

 

 

 

 

 

 

Horizon Point

Tuesday, April 25, 2023

 

Company’s Corporate Headquarters

9:30 a.m., local time

 

 

7001 Mount Rushmore Road

 

 

 

Rapid City, South Dakota 57702

 

We are pleased to invite you to attend the annual meeting of shareholders of Black Hills Corporation.

 

In the event it is not possible to attend our annual meeting in person, we encourage you to listen to the meeting by calling in: 605-782-9484, Conference ID: 744 233 731#. The presentation for this meeting can be located at www.blackhillscorp.com by clicking on "Events and Presentations" in the "Investor Relations" section. The presentation will be posted on the website before the call. Please note, if you attend by calling in, you will not be able to vote your shares or submit questions. Accordingly, it is important that you vote your shares as instructed below.

 

Proposals:

 

1.
Election of three directors in Class II: Scott M. Prochazka, Rebecca B. Roberts, and Teresa A. Taylor.
2.
Ratification of Deloitte & Touche LLP to serve as our independent registered public accounting firm for 2023.
3.
Advisory vote to approve our executive compensation.
4.
Advisory vote on the frequency of the advisory vote on our executive compensation.
5.
Any other business that properly comes before the annual meeting.

 

Record Date:

 

The Board set March 6, 2023 as the record date for the meeting. This means that our shareholders as of the close of business on that date are entitled to receive this notice of the meeting and vote at the meeting and any adjournments or postponements of the meeting.

 

How to Vote:

 

Your vote is very important. You may vote your shares by telephone, by the Internet or by returning the enclosed proxy. 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 vote each proxy received. To make sure that your vote is counted if voting by mail, you should allow enough time for the postal service to deliver your proxy before the meeting.

 

 

Sincerely,

 

 

 

/s/ AMY K. KOENIG

 

Amy K. Koenig

 

Vice President - Governance, Corporate Secretary and Deputy General Counsel

 

 


 

PROXY SUMMARY

 

 

BLACK HILLS CORPORATION OVERVIEW

 

We are a customer-focused energy solution provider that invests in our communities’ safety, sustainability and growth with a mission of Improving Life with Energy and a vision to be the Energy Partner of Choice. The Company’s core mission – and our primary focus – is to provide safe, reliable and cost-effective electric and natural gas service to 1.3 million utility customers in over 800 communities in eight states, including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming.

 

Items of Business to be Considered at the Annual Meeting

 

Proposal

 

Board Recommendation

Page

1

Election of Directors

þ FOR

each Director Nominee

6

2

Ratification of Deloitte & Touche LLP to Serve as Independent Registered Public Accounting Firm for 2023

þ FOR

21

3

Advisory Vote to Approve Executive Compensation

þ FOR

24

4

Advisory Vote on the Frequency of the Advisory Vote on our Executive Compensation

þ 1 YEAR

51

 

BOARD OF DIRECTORS

 

Director Nominees

 

Our Board of Directors ("Board") is committed to oversight that promotes the long-term interests of our shareholders and other stakeholders. We believe this is best achieved with directors who bring a diverse and relevant set of skills, expertise, experiences and perspectives. Our Board is nominating three individuals for election at this annual meeting. The following table provides summary information about the nominees:

 

Name

Age

Director Since

Independent

Committee Membership

Other Public Boards

Scott M. Prochazka

57

2020

X

Compensation

Li-Cycle Holdings Corp.

Peridot Acquisition Corp. II

Rebecca B. Roberts

70

2011

X

Compensation Governance (Chair)

AbbVie, Inc.

MSA Safety, Inc.

Teresa A. Taylor

59

2016

X

Compensation (Chair)

Governance

T-Mobile USA, Inc.

 

 

 

 

Proxy Summary ‖ 1


 

 

Director Skills and Demographics

 

 

Evans

Granger

Jensen

McAllister

Mills

Otto

Prochazka

Roberts

Schober

Taylor

Skills and Experience

 

 

 

 

 

 

 

 

 

 

Business Operations

X

X

X

X

X

 

X

X

 

X

Customer Service

X

 

 

 

 

 

X

 

 

X

Cybersecurity/Technology

 

 

 

X

 

X

 

 

 

 

ESG/Sustainability

X

 

 

X

 

 

 

X

 

 

Financial Acumen

 

X

X

X

X

X

X

X

X

 

Government/Regulatory

X

X

 

 

 

X

X

 

X

X

Health and Safety

X

X

X

X

 

X

X

X

 

 

Human Capital Management/Compensation

 

 

X

 

 

 

X

X

 

X

Legal/Governance/Compliance

X

X

X

X

 

 

 

 

 

 

Mergers and Acquisitions

X

 

X

X

X

 

 

 

X

X

Risk Management

X

X

X

X

X

X

X

X

X

X

Strategic Planning

X

X

X

X

X

X

X

X

X

X

Utility Industry

X

 

 

 

 

 

X

 

X

 

Board Tenure

 

 

 

 

 

 

 

 

 

 

Years

4

2

3

3

11

6

2

11

7

6

Age

 

 

 

 

 

 

 

 

 

 

Years Old

60

63

60

58

67

63

57

70

67

59

Gender

 

 

 

 

 

 

 

 

 

 

Female

 

 

 

X

 

 

 

X

 

X

Male

X

X

X

 

X

X

X

 

X

 

Race/Ethnicity

 

 

 

 

 

 

 

 

 

 

African American/Black

 

X

 

 

 

 

 

 

 

 

White/Caucasian

X

 

X

X

X

X

X

X

X

X

 

OUR COMMITMENT TO SUSTAINABILITY

 

Our mission of Improving Life with Energy means we must be ready to make tomorrow even better than today. That is why we are committed to creating a cleaner energy future which builds upon our responsibility to provide the safe, reliable and cost-effective energy that improves our customers’ lives. By investing in the success of our employees, continually innovating, thoughtfully utilizing resources and keeping people at the core of our decision-making, we are dedicated to the sustainability of our Company, communities and planet.

 

Environmental, Social and Governance (ESG) Strategy and Oversight

 

We are excited to announce significant advancements in our decarbonization journey. We are building upon our success of delivering cost-effective energy for customers and strong returns for investors by seeking renewable energy growth opportunities, minimizing risk and responding to stakeholders’ evolving expectations. ESG and sustainability are inherently connected throughout our business and our ESG management is structured accordingly. Our Board oversees ESG, with management leadership from our CEO and executive steering committee, our dedicated department and our cross functional sustainability working group.

 

 

 

Proxy Summary ‖ 2


 

 

Responsibly Reducing Greenhouse Gas Emissions

 

In November 2020, we announced clean energy goals to reduce greenhouse gas (GHG) emissions intensity for our Electric Utilities of 40% by 2030 and 70% by 2040 and achieve GHG reductions of 50% by 2035 for our Gas Utilities. In August 2022, we announced a new "Net Zero by 2035" target for our Gas Utilities, which doubles the previous target of a 50% reduction by 2035. Net Zero will be achieved through pipeline material and main replacements, advanced leak detection, third-party damage reduction, expanding the use of renewable natural gas (RNG) and hydrogen, and utilizing carbon credit offsets.

 

Electric Utilities Goals(1)(2)

 

Natural Gas Utilities Goals(1)(3)

 

â

40% by 2030

 

 

â

Net Zero by 2035

 

â

70% by 2040

 

 

 

 

 

(1)
Our goals are compared to a 2005 baseline.
(2)
Electric Utilities goals include Scope 1 emissions from electric utility generating units and Scope 3 emissions from purchased power for sales.
(3)
Natural Gas Utilities goals include all Scope 1 sources of methane emissions on our distribution system, including fugitive emissions from pipeline mains and service lines, meters, transfer stations, system damages and system blow downs.

 

We are proud of our sustainability efforts and continue to pursue initiatives to enable the transition to a cleaner energy future, including:

 

Since 2005, we have reduced GHG emissions intensity from our natural gas distribution system mains and services by more than 33% and achieved a 33% reduction in electric utility emissions (a nearly 10% reduction since announcing our goal in 2020 for our electric utilities).
We have advanced our role in RNG. In 2021, we developed a voluntary RNG and carbon offset program to help our residential and small business natural gas customers offset up to 100% or more of the emissions associated with their own natural gas usage. We've filed for approval to launch these programs in three of our states, have received approval in two states, and plan to seek approval to offer to all customers in 2023.
As we look to the future, our more than 520 MW of planned battery storage, renewable generation and additions, and investments in innovation, such as our hydrogen pilot study, position us to achieve deeper carbon reductions that also deliver reliable and cost-effective energy to our customers.

 

We will continue executing our strategy of investing in cost-effective renewables and new technologies to further reduce our environmental impact across all states in which we operate, while continuing to deliver safe, reliable and cost effective energy to customers.

 

For additional information on our commitment to sustainability, you can review the following 2021 ESG reports on our website at www.blackhillsenergy.com/our-company/commitment-sustainability/sustainability-and-esg-reports:

 

2021 Corporate Sustainability Report
2021 Edison Electric Institute ESG Disclosure
2021 American Gas Association ESG Disclosure
2021 Natural Gas Sustainability Initiative Disclosure
2021 Sustainability Accounting Standards Board Disclosure
2021 Task Force on Climate Related Financial Disclosure Index

 

 

 

 

Proxy Summary ‖ 3


 

 

EXECUTIVE COMPENSATION

 

We have an Executive Compensation Philosophy that establishes the framework our Compensation Committee applies in structuring compensation for our executive officers ("Named Executive Officers" or "NEOs"). The components of our executive pay program consist of a base salary, a short-term incentive plan, and long-term incentives. Our executive pay program aligns the interest of our Named Executive Officers with our stakeholders by tying incentive pay to achievement of performance metrics.

https://cdn.kscope.io/f28ec8035e8977e730017bbc17ec2e3d-img148042164_1.jpghttps://cdn.kscope.io/f28ec8035e8977e730017bbc17ec2e3d-img148042164_2.jpg 

Variable

78

%

 

Variable

63

%

Linked to Share Value

57

%

 

Linked to Share Value

40

%

*Percentages may differ from above due to rounding.

 

The performance measures for our incentive compensation plans are discussed in greater detail on page 28 of the Proxy Statement. We also require our executive officers to hold a significant amount of our common stock (between 3 and 6 times the base salary) to further align their performance with the interest of our stakeholders.

 

Our compensation practices and policies demonstrate the alignment between executive compensation and the interests of our stakeholders. Our shareholders share our confidence in our compensation philosophy as reflected by the support of shareholders owning 95 percent of the shares who voted to approve our 2021 executive compensation at last year's annual meeting.

 

The following table summarizes our 2022 performance metrics and results for incentive plans that ended in 2022.

 

Pay Element

 

Performance Measure

 

2022 Results

Short-term Incentive: Payout of 71.48% of Target

70 Percent

 

EPS from ongoing operations, as adjusted, target set at $4.05; threshold set at $3.77

 

$3.97 per share for

incentive plan purposes

7.5 Percent

 

System Average Interruption Duration Index (SAIDI), target set at 65.80; threshold set at 74.40

 

SAIDI:70.14

7.5 Percent

 

Hits Per Thousand (HPT), target set

at 2.05; threshold set at 2.16

 

HPT: 2.26

7.5 Percent

 

Total Case Incident Rate (TCIR), target set at 1.00; threshold set at 1.25

 

TCIR: 1.39

7.5 Percent

 

Diversity Training

 

Diversity Training: 100% of Target

Long-term Incentive (2020-2022 Plan): Payout of 26.98% of Target

Performance Share

Award

 

Total Shareholder Return (TSR)

relative to our Performance Peer Group

measured over a three-year period

 

TSR: 0.14%

 

 

26th Percentile Ranking in

Performance Peer Group

 

 

 

 

Proxy Summary ‖ 4


 

 

 

2022 ACCOMPLISHMENTS AND PERFORMANCE

 

Black Hills Corporation reported excellent operational performance in 2022. Earnings per share for the year increased 6% compared to 2021. Consistent execution of our strategy focusing on our customer's needs, cultivating growth, and achieving fair and timely regulatory recovery successfully offset the impact of higher interest rates and inflation in 2022. Significant accomplishments for the year included:

 

 

 

Ÿ

Provided the safe and reliable service our communities and customers depend on and achieved several notable operations performance metrics:

 

*

Achieved top-quartile reliability metrics by our three electric utilities

 

*

Achieved a safety performance total case incident rate of 1.39 compared to a 2020 American Gas Association second quartile reported average of 1.52

 

*

Achieved a safety performance preventable motor vehicle incident rate of 1.33 compared to a 2020 American Gas Association reported top quartile average of 1.56

 

*

Served ongoing demand growth through 11 new summer or winter electric demand peaks

 

*

Wyodak received its CORESafety Certification through the National Mining Association

 

*

Energy Star Partner of the Year for sustained excellence in Arkansas

Ÿ

Completed financing activity to accomplish our long-term objective of investing to meet the needs of our customers, including:

 

*

Issued 1.3 million shares of new common stock for net proceeds of $90 million under our at-the-market equity offering program

 

*

Grew our dividend for the 52nd consecutive year with a 5.2 percent increase in calendar year 2022 over 2021

Ÿ

Invested in our utility infrastructure and systems:

 

*

Deployed $598 million in capital projects

 

*

Secured adequate liquidity to serve customers through compounding impacts of Winter Storm Uri in 2021, Storm Elliot and high natural gas prices in 2022

Ÿ

Executed a number of regulatory accomplishments:

 

*

Successfully completed rate review requests for Arkansas Gas and Wyoming Electric

 

*

All Winter Storm Uri regulatory recovery plans approved; more than 33% of $546 million of fuel costs recovered to date

 

*

Reached a constructive settlement for Colorado Electric's Clean Energy Plan which, if approved, will result in nearly 70% of the electricity to meet customers' needs being generated by carbon-free sources by 2030

 

*

Received a Certificate of Public Convenience and Necessity for the Ready Wyoming 260-mile multi-phase transmission expansion project

Ÿ

Continued our focus on sustainability, including:

 

*

Announced a new commitment to achieve Net Zero emission by 2035 for our natural gas distribution system

 

*

Issued an updated sustainability report and EEI, AGA, SASB, and NGSI disclosures, and provided new TCFD disclosures

 

*

Our electric utilities surpassed the one-third reduction of GHG emission mark and achieved a nearly 10% reduction in emissions intensity since announcing our goals

 

 

 

 

 

 

 

 

Proxy Summary ‖ 5


 

BLACK HILLS CORPORATION

 

7001 Mount Rushmore Road

Rapid City, South Dakota 57702

 

 

 

PROXY STATEMENT

 

 

 

 

 

ü

A proxy in the accompanying form is solicited by the Board of Black Hills Corporation, a South Dakota corporation, to be voted at the annual meeting of our shareholders to be held Tuesday, April 25, 2023, and at any adjournment of the annual meeting.

 

 

 

 

 

ü

The enclosed form of proxy, when executed and returned, will be voted as set forth in the proxy. 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.

 

 

 

 

 

ü

This proxy statement and the accompanying form of proxy are to be first mailed on or about March 15, 2023. Our 2022 annual report to shareholders is being mailed to shareholders with this proxy statement.

 

 

 

 

 

 

 

 

VOTING RIGHTS AND PRINCIPAL HOLDERS

 

 

 

 

 

ü

Only our shareholders of record at the close of business on March 6, 2023 are entitled to vote at the meeting. Our outstanding voting stock as of the record date consisted of 66,277,565 shares of our common stock.

 

 

 

 

 

ü

Each outstanding share of our common stock is entitled to one vote. Cumulative voting is permitted in the election of directors in the same class.

 

 

 

 

 

 

 

1


 

TABLE OF CONTENTS

 

 

 

 

Page

Commonly Asked Questions and Answers About the Annual Meeting Process

3

 

 

Proposal 1 - Election of Directors

6

Corporate Governance

12

Meetings and Committees of the Board

15

Director Compensation

17

Security Ownership of Management and Principal Shareholders

19

 

 

Proposal 2 - Ratification of Appointment of Independent Registered Public Accounting Firm

21

Fees Paid to the Independent Registered Public Accounting Firm

22

Audit Committee Report

23

 

 

Proposal 3 - Advisory Vote on Our Executive Compensation

24

Executive Compensation

25

Compensation Discussion and Analysis

25

Report of the Compensation Committee

36

Summary Compensation Table

37

Grants of Plan Based Awards in 2022

38

Outstanding Equity Awards at Fiscal Year-End 2022

39

Option Exercises and Stock Vested During 2022

40

Pension Benefits for 2022

40

Nonqualified Deferred Compensation for 2022

42

Potential Payments Upon Termination or Change in Control

43

Pay Ratio for 2022

47

Pay versus Performance

47

 

 

Proposal 4 - Advisory Vote on the Frequency of the Advisory Vote on our Executive Compensation

51

 

 

Transaction of Other Business

52

Shareholder Proposals for 2024 Annual Meeting

52

Shared Address Shareholders

53

Annual Report on Form 10-K

53

Notice Regarding Availability of Proxy Materials

53

 

 

 

 

2


 

 

COMMONLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING PROCESS

 

 

Who is soliciting my proxy?

 

 

The Board of Directors of Black Hills Corporation is soliciting your proxy.

 

 

Where and when is the annual meeting?

 

 

The annual meeting is at 9:30 a.m., local time, April 25, 2023 at Horizon Point, the Company’s corporate headquarters, 7001 Mount Rushmore Road, Rapid City, South Dakota.

 

 

Who can vote?

 

 

Holders of our common stock as of the close of business on the record date, March 6, 2023, can vote at our annual meeting. Each share of our common stock has one vote for Proposals 2, 3, and 4. Related to Proposal 1, Election of Directors, cumulative voting is permitted in the election of directors in the same class.

 

 

How do I vote?

 

 

There are three ways to vote by proxy:

 

by calling the toll free telephone number on the enclosed proxy;
by going to the website identified on the enclosed proxy; or
by returning the enclosed proxy in the envelope provided.

 

You may be able to vote by telephone or over the Internet if your shares are held in the name of a bank or broker. If this is the case, you will need to follow their instructions.

 

 

What constitutes a quorum?

 

 

Shareholders representing at least 50 percent of our common stock issued and outstanding as of the record date must be present at the annual meeting, either in person or by proxy, for there to be a quorum. Abstentions and broker non-votes are counted as present for establishing a quorum. A broker non-vote occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner.

 

 

 

 

3


 

 

What am I voting on and what is the required vote for the proposals to be adopted?

 

 

The required vote and method of counting votes for the various business matters to be considered at the annual meeting are described in the table below. If you sign and return your proxy card without indicating your vote, your shares will be voted in accordance with the Board recommendations as set forth below.

 

 

Item of Business

Board

Recommendation

Voting Approval Standard

Effect of Abstention

Effect of Broker

 Non-Vote

Proposal 1:

FOR

election of each director nominee

 

The three nominees with the most "FOR" votes are elected to their respective classes.

No effect

No effect

 

Election of Directors

 

If a nominee receives more "WITHHOLD AUTHORITY" votes than "FOR" votes, the nominee must submit a resignation for consideration by the Governance Committee and final Board decision.

Proposal 2:

FOR

The votes cast "FOR" must exceed the votes cast "AGAINST".

No effect

Not applicable; broker may vote shares without instruction

 

Ratification of Appointment of Independent Registered Public Accounting Firm

 

Proposal 3:

FOR

The votes cast "FOR" must exceed the votes cast "AGAINST".

No effect

No effect

Advisory Vote to Approve Executive Compensation

 

This advisory vote is not binding on the Board, but the Board will consider the vote results when making future executive compensation decisions.

Proposal 4:

1 YEAR

The frequency receiving the greatest number of votes will be considered by the advisory vote of the shareholders.

 

This advisory vote is not binding on the Board, but the Board will consider the vote result when determining the frequency of the say on pay vote.

No effect

No effect

Advisory Vote on the Frequency of the Advisory Vote to Approve Executive Compensation

 

 

 

Is cumulative voting permitted for the election of directors?

 

 

In the election of directors, you may cumulate your vote. Cumulative voting allows you to allocate among the director nominees in the same class, as you see fit, the total number of votes equal to the number of director positions to be filled multiplied by the number of shares you hold. For example, if you own 100 shares of stock, and there are three directors to be elected in a class at the annual meeting, you could allocate 300 “For” votes (three times 100) among as few or as many of the three nominees to be voted on at the annual meeting as you choose.

 

If you choose to cumulate your votes, you will need to submit a proxy card or a ballot and make an explicit statement of your intent to cumulate your votes, either by indicating in writing on the proxy card or by indicating in writing on your ballot when voting at the annual meeting. If you hold shares beneficially in street name and wish to cumulate votes, you should contact your broker, trustee or nominee.

 

 

 

4


 

 

How will my shares be voted if they are held in a broker’s name?

 

 

If you hold your shares through an account with a bank or broker, the bank or broker may vote your shares on some matters even if you do not provide voting instructions. Brokerage firms have the authority under the New York Stock Exchange ("NYSE") rules to vote shares on certain matters (such as the ratification of auditors) when their customers do not provide voting instructions. However, on most other matters when the brokerage firm has not received voting instructions from its customers, the brokerage firm cannot vote the shares on that matter and a “broker non-vote” occurs. This means that brokers may not vote your shares on the election of directors, the “say on pay” advisory vote and the "say on frequency" advisory vote if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted.

 

 

What should I do now?

 

 

You should vote your shares by telephone, over the Internet or by returning 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.

 

 

Who will count the vote?

 

 

Representatives of our transfer agent, Equiniti Trust Company, will count the votes and serve as judges of the election.

 

 

Who conducts the proxy solicitation and how much will it cost?

 

 

We are asking for your proxy for the annual meeting and will pay all the costs of asking for shareholder proxies. We have hired Georgeson LLC to help us send out the proxy materials and ask for proxies. Georgeson LLC’s fee for these services is anticipated to be $12,250 plus out-of-pocket expenses. We can ask for proxies through the mail, by telephone or in person. We can use our directors, officers and employees to ask for proxies. These people do not receive additional compensation for these services. We will reimburse brokers 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.

 

 

Can I revoke my proxy?

 

 

Yes. You can change your vote in one of four ways at any time before your proxy is used. First, you can enter a new vote by telephone or Internet. Second, you can revoke your proxy by written notice. Third, you can send a later dated proxy changing your vote. Fourth, you can attend the meeting and vote in person.

 

 

Who should I call with questions?

 

 

If you have questions about the annual meeting, you should call Amy K. Koenig, Vice President - Governance, Corporate Secretary and Deputy General Counsel, at (605) 721-1700.

 

 

 

 

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PROPOSAL 1

ELECTION OF DIRECTORS

 

Our Board is nominating three individuals for election as directors at this annual meeting. All of the nominees are currently serving as our directors. In accordance with our Bylaws and Article VI of our Articles of Incorporation, members of our Board are elected to three classes of staggered terms consisting of three years each, and until their successors are duly elected and qualified. At this annual meeting, three directors will be elected to Class II for a term of three years until our annual meeting in 2026.

 

Nominees for director at the annual meeting are Scott M. Prochazka, Rebecca B. Roberts, and Teresa A. Taylor. Our Bylaws require a minimum of nine directors. Currently, the Board has set the size of the Board at 10 directors.

 

Pursuant to our Bylaws, directors must resign from the Board at the annual meeting after attaining 72 years of age. Accordingly, Ms. Roberts, who will turn 72 prior to our 2025 annual meeting, is required to resign effective at our 2025 annual meeting and therefore will serve only two years of her term.

 

If, at the time of the annual meeting, any nominees are unable to stand for election, the Board may designate a substitute or reduce the number of directors to no less than nine. In that case, shares represented by proxies may be voted for a substitute director nominated by the Board. We do not expect that any nominee will be unavailable or unable to serve.

 

The Board and the Governance Committee believe that the combination of the various qualifications, skills and experiences of the directors contribute to an effective and well-functioning Board, and that, individually and as a whole, the directors possess the necessary qualifications to provide effective oversight of the business and quality advice to the Company’s management. Included in each director’s biography below is an assessment of the specific qualifications, attributes, skills and experience that have led to the conclusion that each individual should serve as a director in light of our current business and structure.

 

The Board recommends a vote FOR the election of the following nominees:

Director Nominee

Class

Year Term Expiring

Scott M. Prochazka

II

2026

Rebecca B. Roberts

II

2026

Teresa A. Taylor

II

2026

 

 

 

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DIRECTOR SKILLS AND EXPERIENCE

 

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Linden R. Evans

Outside Directorships:

President and Chief Executive Officer of the Company

None

 

Director since: 2018

 

Director Class: III, term expiring in 2024

 

Age: 60

 

Summary:

Mr. Evans has been President and Chief Executive Officer of the Company since January 1, 2019. He previously served as President and Chief Operating Officer from 2016 to 2018, and President and Chief Operating Officer – Utilities from 2004 to 2015. He began his career with Black Hills Corporation in 2001 as Corporate Counsel. Prior to joining the Company, Mr. Evans was a mining engineer and an attorney specializing in environmental and corporate legal matters.

Skills Relevant to BHC:

As CEO of Black Hills Corporation, Mr. Evans brings historic institutional knowledge of the Company and its operations that assist the Board in its evaluation of the Company’s financial and operational risks and strategy.

 

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Barry M. Granger

Standing Board Committees:

Managing Partner and Co-Founder of Vonbar Investments LLC

Audit Committee

 

Director since: 2020

 

Director Class: III, term expiring in 2024

Outside Directorships:

Age: 63

None

Summary:

Mr. Granger has over 35 years of experience in the chemical, materials and industrial markets. He is the Managing Partner of Vonbar Investments LLC, a consulting firm he founded in 2018. He held roles as Vice President of Government Marketing and Government Affairs at DuPont from 2010 to 2017 and Vice President and General Manager, Tyvek® from 2007 to 2010. Early in his career, he served as the Executive Assistant to the Chairman and CEO of DuPont. He has held a variety of leadership positions with increasing responsibilities in operations, product management, sales and marketing.

Skills Relevant to BHC:

Mr. Granger’s leadership roles in the areas of governmental affairs and operations offer the Board insight regarding oversight of operations, regulatory affairs, and safety.

 

 

7


 

 

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Tony A. Jensen

Standing Board Committees:

Retired Director, President and Chief Executive Officer of Royal Gold, Inc.

Compensation Committee

 

Director since: 2019

 

Director Class: III, term expiring in 2024

Outside Directorships:

Age: 60

None

Summary:

Mr. Jensen has over 35 years of experience in the international mining and mining finance industries. From 2003 until his retirement in 2019, Mr. Jensen served in several leadership roles at Royal Gold, Inc., a public precious metals company, including Director, President and Chief Executive Officer from 2006 to 2019, and Chief Operating Officer from 2003 to 2006. Prior to 2003, he held progressively more responsible roles in engineering, finance, strategic growth, safety, environmental excellence, and operational efficiency.

Skills Relevant to BHC:

As a former CEO of a publicly traded precious metals stream and royalty company, Mr. Jensen brings business, leadership, governance, and financial expertise that assists Board in evaluating the Company’s financial risks and strategy and capital deployment.

 

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Kathleen S. McAllister

Standing Board Committees:

Retired Director, President and Chief Executive Officer of Transocean Partners LLC

Audit Committee

 

Director since: 2019

 

Director Class: I, term expiring in 2025

Outside Directorships:

Age: 58

Silverbow Resources, Inc. (since 2023)

TMC The Metals Company Inc. (since 2022)

Summary:

Ms. McAllister has over 30 years of experience in diverse leadership roles with global, capital intensive companies in the energy value chain. She served as Director, President and CEO of Transocean Partners LLC, an international provider of offshore contract drilling services from 2014 to 2016, and as CFO in 2016. She held the roles of Vice President and Treasurer of Transocean Ltd. from 2011 to 2014. Prior to 2011, she served in roles with increasing responsibility in finance, information technology, tax and treasury. Ms. McAllister is a National Association of Corporate Directors Board Fellow and a Certified Public Accountant. She previously served on the board of Maersk Drilling from 2019 to 2021, where she chaired the Audit and Risk Committee. She is a Board Member of Silverbow Resources, Inc. and TMC The Metals Company Inc., where she chairs the Audit Committees.

Skills Relevant to BHC:

As a former CEO, CFO and Treasurer of publicly traded companies, Ms. McAllister's broad business perspective, financial acumen and experience in capital raising and allocation contributes to the Board's oversight of strategy and risk. Her experience serving as a corporate director and audit and risk committee chair on other public company boards provides a valuable perspective on the Board's role in management oversight and corporate governance.

 

 

 

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Steven R. Mills

Standing Board Committees:

Chairman of the Board

Retired Public Company Financial Executive

Governance Committee

 

Director since: 2011

 

Director Class: III, term expiring in 2024

Outside Directorships:

Age: 67

Amyris, Inc. (since 2018)

Summary:

Mr. Mills has more than 40 years of experience in the fields of accounting, corporate finance, strategic planning, risk management, and mergers and acquisitions. He is a Board Member of Amyris, Inc., a renewable products company, where he serves as Chair of the Audit Committee and as a member of the Leadership, Development, Inclusion and Compensation Committee. Mr. Mills is also a consultant and advisor to Arianna S.A., a European-based specialized investment fund. Previously, Mr. Mills served as Chief Financial Officer of Amyris, Inc. from 2012 to 2013. Prior to joining Amyris, he had a 33-year career at Archer Daniels Midland Company, one of the world’s largest agricultural processors and food ingredient providers, where he held various senior executive roles, including Senior Executive Vice President Performance and Growth, Chief Financial Officer, Controller, and Senior Vice President Strategic Planning.

Skills Relevant to BHC:

Mr. Mills brings to the Board executive leadership and financial experience as a former CFO of publicly traded companies and strategic planning experience as both a former senior vice president of strategic planning and a senior executive vice president performance and growth for a publicly traded company. These roles also position Mr. Mills to provide the Board perspectives on mergers and acquisitions and capital deployment.

 

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Robert P. Otto

Standing Board Committees:

Owner of Bob Otto Consulting LLC

Audit Committee

Director since: 2017

 

Director Class: I, term expiring in 2025

Outside Directorships:

Age: 63

None

Summary:

Since 2017, Mr. Otto has provided strategic planning and advisory services in cybersecurity and intelligence through his company, Bob Otto Consulting LLC. With 34 years of U.S. Air Force service, he served as a general officer from 2008 to 2016, culminating as lieutenant general and the Deputy Chief of Staff for Intelligence, Surveillance and Reconnaissance. He was directly responsible for intelligence policy, planning, implementation, oversight, and leadership of a 27,000-person workforce.

Skills Relevant to BHC:

Mr. Otto’s experience in cybersecurity and intelligence through his lengthy career with the U.S. Air Force provide the Board information technology and cybersecurity expertise. His leadership and oversight of a large workforce position him to provide the Board insights regarding human capital management.

 

 

9


 

 

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Scott M. Prochazka

Standing Board Committees:

Former Board Member, President and Chief Executive Officer of CenterPoint Energy

Compensation Committee

 

Director since: 2020

 

Director Nominee Class: II, term expiring in 2026

Outside Directorships:

Age: 57

Peridot Acquisition Corp. II

(since 2021)

Li-Cycle Holdings Corp. (since 2021)

Summary:

Mr. Prochazka served as Board Member, President and Chief Executive Officer of CenterPoint Energy, a public energy delivery company with electric transmission and distribution, power generation and natural gas distribution operations, from 2014 until his retirement in 2020. Prior to that he was Chief Operating Officer from 2012 to 2013, Senior Vice President of Electric Business from 2011 to 2012, and Vice President of Gas Business Unit from 2009 to 2011. He held other management positions including Vice President Customer Care and Support Services and Vice President Texas Gas Region. Before his time at CenterPoint Energy, Mr. Prochazka held roles of increasing responsibility at Dow Chemical. Mr. Prochazka was a Board Member of Enable Midstream Partners, LP from 2014 to 2020, and Chairman from 2015 to 2017. Mr. Prochazka was previously a Board Member of Peridot Acquisition Corporation, from 2020 to 2021, where he served on the Audit and Compensation Committees. He is a Board Member of Peridot Acquisition Corp. II where he serves on the Audit and Compensation Committees, and Li-Cycle Holdings Corp. (successor to Peridot Acquisition Corp.) where he chairs the Audit Committee and serves on the Nominating/Governance Committee and the Compensation Committee.

Skills Relevant to BHC:

Mr. Prochazka’s executive experience as a former CEO of a publicly traded electric and gas utility company, with a market cap more than four times that of Black Hills Corporation, and leadership experience as COO of both gas and electric utility divisions, provides a valuable perspective regarding utility business operations, regulatory and governmental affairs, safety, capital deployment and risk management.

 

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Rebecca B. Roberts

Standing Board Committees:

Retired President of Chevron Pipe Line Company

Compensation Committee

Governance Committee (Chair)

Director since: 2011

 

Director Nominee Class: II, term expiring in 2026

Outside Directorships:

Age: 70

AbbVie, Inc. (since 2018)

MSA Safety, Inc. (since 2013)

Summary:

Ms. Roberts has over 35 years of experience in the energy industry, including managing pipelines in North America and global pipeline projects, and managing a portfolio of power plants in the United States, Asia, and the Middle East. From 2006 until her retirement in 2011, Ms. Roberts served as the President of Chevron Pipe Line Company, a pipeline company transporting crude oil, refined petroleum products, liquefied petroleum gas, natural gas, and chemicals within the United States. From 2003 until 2006, she was the President of Chevron Global Power Generation. She was previously a Board Member of Enbridge, Inc., from 2015 to 2018. Ms. Roberts is a Board Member of Abbvie, Inc. and MSA Safety, Inc., where she serves as the Chair of the Compensation Committee.

Skills Relevant to BHC:

Ms. Robert’s executive experience overseeing natural gas pipelines and power generation facilities positions her to assist the Board as it evaluates the Company’s operational, health and safety risks. Her prior and ongoing experience on other public company boards provides insight as to the Board’s role in oversight of management as well as corporate governance.

 

 

10


 

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Mark A. Schober

Standing Board Committees:

Retired Senior Vice President and Chief Financial Officer of ALLETE, Inc.

Audit Committee (Chair)

Governance Committee

Director since: 2015

 

Director Class: I, term expiring in 2025

Outside Directorships:

Age: 67

None

Summary:

Mr. Schober has more than 35 years of experience in the utility and energy industry. From 2006 until his retirement in 2014, Mr. Schober served as the Senior Vice President and Chief Financial Officer of ALLETE, Inc., a public energy company. His extensive industry experience in the upper Midwest provides expertise in the regulated business model and the unique challenges of the geographic and regulatory environment in which we operate.

Skills Relevant to BHC:

Mr. Schober brings to the Board business and leadership experience as a former executive of a public company, regulated utility experience as a former executive of a publicly traded Midwest based energy company, and financial expertise having served as a CFO. He also provides insight to the Company regarding potential exposures and risks in these areas.

 

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Teresa A. Taylor

Standing Board Committees:

Chief Executive Officer of Blue Valley Advisors, LLC

Compensation Committee (Chair)

Governance Committee

Director since: 2016

 

Director Nominee Class: II, term expiring in 2026

Outside Directorships:

Age: 59

T-Mobile USA, Inc. (since 2013)

Summary:

Ms. Taylor has over 30 years of experience in the technology, media, and telecom sectors. She has been the Chief Executive Officer of Blue Valley Advisors, LLC, a consulting firm that she founded, since 2011. She was the Chief Operating Officer of Qwest Communications, Inc., a telecommunications carrier, from 2009 to 2011, where she led the daily operations and a senior management team responsible for 30,000 employees in field support, technical development, sales, marketing, customer support and information technology systems. She is a Board Member of T-Mobile USA, Inc. She was previously a Board Member of First Interstate BancSystem, Inc. from 2012 to 2020, Columbia Pipeline Group Inc. from 2015 to 2016, and NiSource, a public utility company from 2012 to 2015.

Skills Relevant to BHC:

Ms. Taylor’s broad range of experience over her three decades-long career, including in the fields of human resources, customer support, information technology systems, and business operations, add breadth and depth to the board. Her experience leading large employee teams lends toward engagement with the Board in the areas of compensation practices and human capital management. Ms. Taylor’s experience as a lead independent director of a publicly traded company provides further insight into Board governance and oversight of management.

 

 

 

 

11


 

CORPORATE GOVERNANCE

 

 

Corporate Governance Guidelines

 

Our Board has adopted “Corporate Governance Guidelines of the Board,” which guide the operation of our Board and assist the Board in fulfilling its obligations to shareholders and other constituencies. The guidelines lay the foundation for the Board’s responsibilities, operations, leadership, organization and committee matters. The Governance Committee reviews the guidelines annually, and the guidelines may be amended at any time, upon recommendation by the Governance Committee and approval of the Board. These guidelines can be found in the “Governance” section of our website (www.blackhillscorp.com/investor-relations/corporate-governance).

 

Board Leadership Structure

 

On May 1, 2020, Steven R. Mills, an independent director, was appointed Chairman of the Board. As Chairman, Mr. Mills leads our Board in the performance of its duties by working with the CEO to establish meeting agendas, facilitating board meetings and executive sessions, and collaborating with the Board to annually evaluate the performance of the CEO.

 

As provided in our Corporate Governance Guidelines, the Board does not have a policy on whether or not the roles of Chairman and CEO should be separate or combined. The Governance Committee annually reviews the appropriate leadership structure for the Company and recommends a Chairman for Board approval. While our Bylaws and Corporate Governance Guidelines do not require that our Chairman and CEO positions be held by separate individuals, the Board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for the Company at this time because it allows our CEO to focus on business operations and our Chairman to focus on Board governance.

 

Risk Oversight

 

Our Board oversees an enterprise risk management ("ERM") approach to risk management that supports our operational and strategic objectives. It fulfills its oversight responsibilities through receipt of quarterly reports from management regarding material risks involving strategic planning and execution, operations, physical and cybersecurity, environmental, social and governance ("ESG"), financial, legal, safety, regulatory, and human resources risks. While our full Board retains responsibility for risk oversight, it delegates oversight of certain risk considerations to its committees within each of their respective areas of responsibility as defined in the charter for each committee.

 

Our management is responsible for day-to-day risk management and operates under our ERM program that addresses enterprise risks. The ERM program includes practices to identify risks, assess the impact and likelihood of occurrence, and develop action plans to prevent the occurrence or mitigate the impact of the risk. The ERM program includes regular reporting to our senior management team, quarterly reporting to our Board, and monitoring and testing by the Risk Management, Compliance and Internal Audit groups.

 

Sustainability Oversight

 

We are committed to creating a cleaner energy future that builds upon our responsibility to provide the safe, reliable and economic energy that improves our customers' lives. The Board oversees management's execution of our sustainability objectives and receives quarterly updates from management regarding sustainability matters. Under the oversight of the Board, we published our 2021 Corporate Sustainability Report in the third quarter of 2022. In addition to announcing significant advancements in our decarbonization journey, the Report announced a goal for our natural gas distribution system to achieve net zero emissions by 2035 and shared our progress towards our goal to reduce electric utility emission intensity 40 percent by 2030 and 70 percent by 2040. Also in the third quarter of 2022, we issued updated Edison Electric Institute and American Gas Association ESG disclosures, Natural Gas Sustainability Initiative (NGSI) disclosures, Sustainability Accounting Standards Board (SASB) disclosures, and new disclosures under the Task Force on Climate Related Financial Disclosure Index.

 

Cyber and Physical Security Oversight

 

Our Board retains oversight of cyber and physical security. Our Chief Information Officer provides the Board quarterly reports that summarize material security risks and the measures that have been put in place to mitigate the associated risks. These reports address a variety of topics including updates on strategic initiatives, industry trends, threat vulnerability assessments, and efforts to prevent, detect and respond to internal and external critical threats.

 

 

12


 

Human Capital Management Oversight

 

Primary responsibility for oversight of human capital management rests with our Compensation Committee. As part of its oversight, the Committee reviews regular reports from management regarding diversity and inclusion, pay equity, strategic workforce planning, talent retention, employee benefits programs, employee engagement, human rights, and company culture.

 

Succession Planning Oversight

 

Our Board is actively engaged in succession planning for our key executive positions to ensure a strong bench of future leaders. To assist the Board, our CEO and our Senior Vice President - Chief Human Resources Officer perform talent reviews and discuss succession planning and leadership development. Semi-annually, their assessment of senior executive talent, including potential of such talent to succeed our CEO or other executive officers, readiness for succession and development opportunities are presented to our Board.

 

Director Nominees

 

The Governance Committee uses a variety of methods for identifying and evaluating nominees for director. The Governance Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event vacancies are anticipated, or otherwise arise, the Governance Committee considers various potential candidates for director. Board candidates are considered based upon various criteria, including diversity of gender, race and ethnicity; business, administrative and professional skills or experiences; an understanding of relevant industries, technologies and markets; financial literacy; independence status; the ability and willingness to contribute time and special competence to Board activities; personal integrity and independent judgment; and a commitment to enhancing shareholder value. The Governance Committee considers these and other factors as it deems appropriate, given the needs of the Board. Our goal is a diverse, talented, and highly engaged Board, with members whose skills, background and experience are complementary and, together, cover the spectrum of areas that impact our business currently and in the future. The Governance Committee considers candidates for Board membership suggested by a variety of sources, including current or past Board members, the use of third-party executive search firms, members of management, and shareholders. Any shareholder may make recommendations for consideration by the Governance Committee for membership on the Board by sending a written statement of the qualifications of the recommended individual to the Corporate Secretary. The Committee evaluates all director candidates in the same manner using the same criteria regardless of who recommends them.

 

Shareholders who intend to nominate persons for election to the Board must provide timely written notice of the nomination in accordance with Article I, Section 9 of our Bylaws. Generally, our Corporate Secretary must receive the written notice at our executive offices at 7001 Mount Rushmore Road, P.O. Box 1400, Rapid City, South Dakota 57709, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. For the 2024 shareholder meeting, those dates are January 26, 2024 and December 27, 2023. The notice must include at a minimum the information set forth in Article I, Section 9 of our Bylaws, including the shareholder’s identity, contingent ownership interests, description of any agreement made with others acting in concert with respect to the nomination, specific information about the nominee and certain representations by the nominee to us.

 

Board Independence

 

In accordance with NYSE rules, the Board through its Governance Committee, affirmatively determines the independence of each director and director nominee in accordance with guidelines it has adopted, which include all elements of independence set forth in the NYSE listing standards. These guidelines are contained in our Policy for Director Independence, which can be found in the "Governance" section of our website (www.blackhillscorp.com/investor-relations/corporate-governance). Based on these standards, the Governance Committee determined that each of the following non-employee directors is independent and has no relationship with us, except as a director and shareholder: Barry M. Granger, Tony A. Jensen, Kathleen S. McAllister, Steven R. Mills, Robert P. Otto, Scott M. Prochazka, Rebecca B. Roberts, Mark A. Schober, and Teresa A. Taylor. In addition, based upon these standards, the Governance Committee determined that Mr. Evans is not independent because he is an officer of the Company.

 

Director Resignation Policies

 

The Corporate Governance Guidelines require members of the Board to submit a letter of resignation for consideration by the Board in certain circumstances. The Corporate Governance Guidelines include a plurality plus voting policy. Pursuant to the policy, any nominee for election as a director in an uncontested election who receives a greater number of votes “Withheld” from his or her election than votes “For” his or her election will promptly tender his or her resignation as a director to the Chairman of the Board following certification of the election results. Broker non-votes will not be deemed to be votes “For” or “Withheld” from a director’s election for purposes of the policy. The Governance Committee (without the participation of the affected director) will consider each resignation tendered under the policy and recommend to the Board whether to accept or reject it. The Board will then take the appropriate action on each tendered resignation, taking into account the Governance Committee’s recommendation. The Governance Committee in making its recommendation, and the Board in making its decision, may consider any factors or other information that it considers appropriate, including the reasons why the

 

13


 

Governance Committee believes shareholders “Withheld” votes for election from such director and any other circumstances surrounding the “Withheld” votes, any alternatives for curing the underlying cause of the “Withheld” votes, the qualifications of the tendering director, his or her past and expected future contributions to us and the Board, and the overall composition of the Board, including whether accepting the resignation would cause us to fail to meet any applicable SEC or NYSE requirements. The Board will publicly disclose its decision and rationale by filing a Form 8-K with the SEC within 90 days after receipt of the tendered resignation.

 

The Corporate Governance Guidelines also require members of the Board to tender a letter of resignation in the event of a change in professional responsibilities that may directly or indirectly impact that Board member’s ability to fulfill directorship obligations. The Board is not obligated to accept that resignation. The Governance Committee will review the affected member’s service and qualifications and recommend to the Board the continued appropriateness of Board membership under the circumstances.

 

Codes of Business Conduct and Ethics

 

The Code of Business Conduct and the Code of Ethics that apply to our Chief Executive Officer and Senior Financial Officers can be found in the “Corporate Governance” section of our website (www.blackhillscorp.com/investor-relations/corporate-governance). We intend to disclose any amendments to, or waivers of, the Code of Ethics on our website. Please note that none of the information contained on our website is incorporated by reference in this proxy statement.

 

Certain Relationships and Related Party Transactions

 

We recognize related party transactions can present potential or actual conflicts of interest and create the appearance that decisions are based on considerations other than the best interests of us and our shareholders. Accordingly, as a general matter, it is our preference to avoid related party transactions. Nevertheless, we recognize that there are situations where related party transactions may be in, or may not be inconsistent with, the best interests of us and our shareholders, including but not limited to situations where we may obtain products or services of a nature, quantity or quality, or on other terms, that are not readily available from alternative sources or when we provide products or services to related parties on an arm’s length basis on terms comparable to those provided to unrelated third parties or on terms comparable to those provided to employees generally.

 

 

Therefore, our Board has adopted a policy for the review of related party transactions. This policy requires directors and officers to promptly report to our Vice President - Governance all proposed or existing transactions in which the Company and they, or persons related to them, are parties or participants. Our Vice President - Governance presents those transactions to our Governance Committee. Our Governance Committee reviews the material facts presented and either approves or disapproves entry into the transaction. In reviewing the transaction, the Governance Committee considers the following factors, among other factors it deems appropriate: (i) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; (ii) the extent of the related party’s interest in the transaction; and (iii) the impact on a director’s independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer. There were no reportable related party transactions in 2022.

 

Communications with the Board

 

We value the views and input of our shareholders and believe that fostering productive dialogue with our shareholders contributes to our long-term success. Shareholders and others interested in communicating directly with the Chairman, with the independent directors as a group, or the Board may do so in writing to the Chairman, Black Hills Corporation, 7001 Mount Rushmore Road, P.O. Box 1400, Rapid City, South Dakota 57709.

 

14


 

MEETINGS AND COMMITTEES OF THE BOARD

 

 

THE BOARD

 

Our Board held nine meetings during 2022. Each regularly scheduled meeting of the Board includes an executive session of only independent directors. We encourage our directors to attend the annual shareholders’ meeting. During 2022, each current director attended at least 75 percent of the combined total of Board meetings and Committee meetings on which the director served. In addition, all directors attended the 2022 annual meeting of shareholders either in person or virtually.

 

COMMITTEES OF THE BOARD

 

Our Board has three standing committees to facilitate and assist the Board in the execution of its responsibilities. Those standing committees are the Audit Committee, the Compensation Committee and the Governance Committee. Each committee operates under a charter, which is available on our website at www.blackhillscorp.com/investor-relations/corporate-governance and is also available in print to any shareholder who requests it. In addition, our Board creates special committees from time to time for specific purposes. Members of the committees are designated by our Board upon recommendation of the Governance Committee.

 

Audit Committee

Primary Responsibilities

9 Meetings in 2022

© Assist the Board in fulfilling its oversight responsibility to our shareholders relating to the quality and integrity of our accounting, auditing and financial reporting processes;

 

Members:

 

Mark A. Schober (Chair)

Barry M. Granger

Kathleen S. McAllister

Robert P. Otto

 

© Oversee the integrity of our financial statements, financial reporting systems of internal controls and disclosure controls regarding finance, accounting and legal compliance;

 

© Review areas of potential significant financial risk to us;

© Review consolidated financial statements and disclosures;

© Appoint an independent registered public accounting firm for ratification by our shareholders;

 

© Monitor the independence and performance of our independent registered public accountants and internal auditing department;

 

© Pre-approve all audit and non-audit services provided by our independent registered public accountants;

 

© Review the scope and results of the annual audit, including reports and recommendations of our independent registered public accountants;

 

 

© Review the internal audit plan results of internal audit work and our process for monitoring compliance with our Code of Business Conduct and other policies and practices established to ensure compliance with legal and regulatory requirements; and

Independence:

100%

© Periodically meet, in private sessions, with our VP - Internal Audit, Chief Financial Officer, Chief Compliance Officer, other management, and our independent registered public accounting firm.

 

 

Committee Report:

Page 23 of this

Proxy Statement

In accordance with the rules of the NYSE, all of the members of the Audit Committee are financially literate. In addition, the Board determined that Ms. McAllister and Mr. Schober have the requisite attributes of an “audit committee financial expert” as provided in regulations promulgated by the SEC, and that such attributes were acquired through relevant education and/or experience.

 

 

 

 

15


 

Compensation Committee

Primary Responsibilities

5 Meetings in 2022

 

 

 

Members:

 

Teresa A. Taylor (Chair)

Tony A. Jensen

Scott M. Prochazka

Rebecca B. Roberts

 

 

Independence:

100%

 

 

Committee Report:

Page 36 of this

Proxy Statement

 

© Discharge the Board's responsibilities related to executive and director compensation philosophy, policies and programs;

 

© Perform functions required of directors in the administration of all federal and state laws and regulations pertaining to executive employment and compensation;

 

© Consider and recommend for approval by the Board all executive compensation programs including executive benefit programs and stock ownership plans;

 

© Promote an executive compensation program that supports the overall objective of enhancing shareholder value; and

 

© Provide oversight of Company culture, diversity and inclusion, human rights, pay equity, and employee engagement.

 

The Compensation Committee has authority under its charter to retain compensation consultants and other advisors as the Committee may deem appropriate in its sole discretion. The Committee engaged Meridian Compensation Partners, LLC (Meridian), an independent consulting firm, to conduct an annual review of our 2022 total compensation program for executive officers. The Committee reviewed the independence of Meridian and the individual representatives of Meridian who served as consultants to the Committee, in accordance with the SEC and NYSE requirements. The Compensation Committee concluded that Meridian was independent and Meridian’s performance of services raised no conflict of interest. The Committee’s conclusions were based in part on a report that Meridian provided to the Committee intended to reveal any potential conflicts of interest and a schedule of the type and amount of non-executive compensation services provided by Meridian to the Company. During 2022, the cost of these non-executive compensation services was less than $25,000.

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Committee Interlocks. None of our executive officers serve as a member of a board of directors or compensation committee of any entity that has one or more executive officers who serve on our Board or on our Compensation Committee.

 

Governance Committee

Primary Responsibilities

3 Meetings in 2022

 

 

 

 

Members:

 

Rebecca B. Roberts (Chair)

Steven R. Mills

Teresa A. Taylor

Mark A. Schober

 

 

 

 

Independence:

100%

© Assess the size of the Board and qualifications for Board membership;

© Identify and recommend prospective directors to the Board to fill vacancies;

© Review and evaluate director nominations submitted by shareholders, including reviewing the qualifications and independence of shareholder nominees;

© Consider and recommend existing Board members to be renominated at our annual meeting of shareholders;

© Consider the resignation of an incumbent director who makes a principal occupation change (including retirement) or who receives a greater number of votes "Withheld" than votes "For" in an uncontested election of directors and recommend to the Board whether to accept or reject the resignation;

© Establish and review guidelines for corporate governance;

© Recommend to the Board for approval committee membership and chairs of the committees;

© Recommend to the Board for approval a Chairman or an independent director to serve as a Lead Director;

 

© Review the independence of each director and director nominee;

©  Administer an annual evaluation of the performance of the Board and each Committee and a biennial evaluation of each individual director;

© Ensure that the Board oversees the evaluation and succession planning of management;

© Oversee the reporting framework the Company utilizes to track and monitor progress associated with ESG activities; and

 

© Oversee company political engagement.

 

 

 

16


 

DIRECTOR COMPENSATION

 

 

DIRECTOR FEES

 

Compensation to our non-employee directors consists of cash retainers for Board members, Committee members, the Board Chairman and Committee Chairs. Prior to January 1, 2022, the Board members received their equity compensation in the form of common stock equivalents that are deferred until after they leave the Board. Effective January 1, 2022, the Board adopted a new Non-Employee Director Equity Compensation Plan that provides equity compensation to our Board members in the form of restricted stock units and changed the date of the annual equity grant to May to better align with the timing of director elections. For the period of January 1, 2022 through April 30, 2022, the Board members received a pro rata amount of equity compensation in the form of restricted stock units. On May 1, 2022, Board members received an annual equity award of restricted stock units that will vest at the 2023 annual meeting. Dividend equivalents accrue on the common stock equivalents and restricted stock units. We do not pay meeting fees.

 

In setting non-employee director compensation, the Compensation Committee recommends the form and amount of compensation to the Board, which makes the final determination. In considering and recommending the compensation of non-employee directors, the Compensation Committee considers such factors as it deems appropriate, including historical compensation information, level of compensation necessary to attract and retain non-employee directors meeting our desired qualifications and market data. In the review of director compensation in 2022, Meridian completed a market compensation review of our peer companies' director fees. Based on this review, the cash retainer and equity pay were increased effective May 1, 2022, to more closely align with the median director compensation for our peer utility companies. The fee structure for director fees in 2022 is as follows:

 

 

 

Fees Effective
January 1, 2022

 

 

Fees Effective
May 1, 2022

 

 

 

Cash

 

 

Restricted Stock Units

 

 

Cash

 

 

Restricted Stock Units

 

Board Retainer

 

$

85,000

 

 

$

105,000

 

 

$

95,000

 

 

$

120,000

 

Board Chairman

 

$

100,000

 

 

 

 

 

$

100,000

 

 

 

 

Committee Chair Retainer

 

 

 

 

 

 

 

 

 

 

 

 

Audit Committee

 

$

15,000

 

 

 

 

 

$

15,000

 

 

 

 

Compensation Committee

 

$

12,500

 

 

 

 

 

$

12,500

 

 

 

 

Governance Committee

 

$

10,000

 

 

 

 

 

$

10,000

 

 

 

 

Committee Member Retainer

 

 

 

 

 

 

 

 

 

 

 

 

Audit Committee

 

$

10,000

 

 

 

 

 

$

10,000

 

 

 

 

Compensation Committee

 

$

7,500

 

 

 

 

 

$

7,500

 

 

 

 

Governance Committee

 

$

7,500

 

 

 

 

 

$

7,500

 

 

 

 

 

The Committee did not recommend a change to director compensation for 2023.

 

17


 

 

DIRECTOR COMPENSATION FOR 2022 AND COMMON STOCK EQUIVALENTS OUTSTANDING AS OF DECEMBER 31, 2022(1)

 

Name(2)

 

Fees Earned or Paid in Cash

Stock Awards(3)

Total

Number of Common Stock Equivalents Outstanding at December 31, 2022(4)

Barry M. Granger

 

$101,667

$146,250

$247,917

4,410

Tony A. Jensen

 

$99,167

$146,250

$245,417

12,392

Kathleen A. McAllister

 

$101,667

$146,250

$247,917

10,780

Steven R. Mills

 

$199,167

$146,250

$345,417

39,515

Robert P. Otto

 

$101,667

$146,250

$247,917

13,710

Scott M. Prochazka

 

$99,167

$146,250

$245,417

4,410

Rebecca B. Roberts

 

$116,667

$146,250

$262,917

26,904

Mark A. Schober

 

$121,667

$146,250

$267,917

18,375

Teresa A. Taylor

 

$119,167

$146,250

$265,417

13,548

John B. Vering(5)

 

$34,167

$26,250

$60,417

 

(1)
Our directors did not receive any stock option awards, non-equity incentive plan compensation, pension benefits or perquisites in 2022 and did not have any stock options outstanding at December 31, 2022.
(2)
Mr. Evans, our President and CEO, is not included in this table because he is our employee and thus receives no compensation for his services as director. Mr. Evans’ compensation received as an employee is shown in the Summary Compensation Table for our Named Executive Officers.
(3)
Each non-employee director received a pro-rata amount of the annual equity compensation at the beginning of 2022 in the form of restricted stock units for the period of January 1, 2022 through April 30, 2022. Effective May 1, 2022, each non-employee director received an annual equity award of restricted stock units equivalent to $120,000 that will vest at our 2023 annual meeting. The grant date fair value of a restricted stock unit is the closing price of a share of our common stock on the grant date.
(4)
The common stock equivalents are fully vested in that they are not subject to forfeiture; however, the shares are not issued until after the director ends his or her service on the Board. The common stock equivalents are payable in stock or cash or can be deferred further at the election of the director.
(5)
Mr. Vering's retirement from our Board was effective at our 2022 Annual Meeting.

 

 

DIRECTOR STOCK OWNERSHIP GUIDELINES

 

Each member of our Board is required to hold shares of common stock, common stock equivalents, or restricted stock units equal to five times the annual cash Board retainer. Currently, all of our directors have met the stock ownership guideline except for Messrs. Granger and Prochazka, who have been on the Board for less than three years.

 

 

18


 

SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS

 

 

The following table sets forth the beneficial ownership of our common stock as of February 24, 2023 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 known by us to beneficially own more than five percent of our outstanding shares of common stock. Beneficial ownership includes shares a director or executive officer has or shares the power to vote or transfer. There were no stock options outstanding for any of our directors or executive officers as of February 24, 2023.

 

Except as otherwise indicated by footnote below, we believe that each individual named has sole investment and voting power with respect to the shares of common stock indicated as beneficially owned by that individual.

 

Name of Beneficial Owner (1)

 

Shares of
Common Stock
Beneficially
Owned
(2)

 

 

Directors
Common
Stock
Equivalents
(3)

 

 

Total

 

 

Percentage

Outside Directors

 

 

 

 

 

 

 

 

 

 

 

Barry M. Granger

 

 

2,382

 

 

 

2,028

 

 

 

4,410

 

 

*

Tony A. Jensen

 

 

8,700

 

 

 

3,692

 

 

 

12,392

 

 

*

Kathleen S. McAllister

 

 

7,089

 

 

 

3,692

 

 

 

10,781

 

 

*

Steven R. Mills

 

 

20,318

 

 

 

19,197

 

 

 

39,515

 

 

*

Robert P. Otto

 

 

5,230

 

 

 

8,480

 

 

 

13,710

 

 

*

Scott M. Prochazka

 

 

2,382

 

 

 

2,028

 

 

 

4,410

 

 

*

Rebecca B. Roberts

 

 

6,546

 

 

 

20,358

 

 

 

26,904

 

 

*

Mark A. Schober

 

 

7,499

 

 

 

10,877

 

 

 

18,375

 

 

*

Teresa A. Taylor

 

 

4,529

 

 

 

9,019

 

 

 

13,548

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

Named Executive Officers

 

 

 

 

 

 

 

 

 

 

 

Linden R. Evans

 

 

141,373

 

 

 

-

 

 

 

141,373

 

 

*

Brian G. Iverson

 

 

39,704

 

 

 

-

 

 

 

39,704

 

 

*

Erik D. Keller

 

 

8,083

 

 

 

-

 

 

 

8,083

 

 

*

Richard W. Kinzley

 

 

51,828

 

 

 

-

 

 

 

51,828

 

 

*

Jennifer C. Landis

 

 

20,237