DEF 14A: Black Hills Corporation Announces 2024 Annual Meeting of Shareholders and Executive Compensation Details

Black Hills Corporation's proxy statement details the agenda for the 2024 annual shareholder meeting, director nominations, executive compensation, and corporate governance practices.

Summary

• Black Hills Corporation is holding its annual meeting of shareholders on April 23, 2024, in Rapid City, South Dakota.
• Shareholders of record as of March 4, 2024, are eligible to vote on the election of four directors, ratification of Deloitte & Touche LLP as the independent accounting firm, and an advisory vote on executive compensation.
• The Board of Directors recommends voting 'FOR' all director nominees, ratification of the accounting firm, and approval of executive compensation.
• The company's mission is 'Improving Life with Energy', focusing on safe, reliable, and cost-effective energy solutions for over 1.3 million customers in eight states.
• Black Hills Corporation has set goals to reduce electric utilities' greenhouse gas emissions intensity by 40% by 2030 and 70% by 2040, compared to a 2005 baseline.
• The company also aims for Net Zero emissions for its natural gas distribution utilities by 2035.
• In 2023, Black Hills Corporation achieved earnings per share of $3.91, exceeding its guidance range of $3.65 to $3.85.
• The company deployed $590 million in capital projects and commenced construction on the 260-mile Ready Wyoming Electric Transmission Expansion Project.
• Executive compensation includes base salary, short-term incentives, and long-term incentives, with a focus on aligning executive interests with shareholder value.
• The short-term incentive plan payout for 2023 was 153.67% of target, based on performance metrics including EPS, safety, customer interaction, and diversity.
• The long-term incentive plan includes performance share units and restricted stock, with performance measured against total shareholder return, earnings per share, and cost to serve.
• The company has stock ownership guidelines for executives and a clawback policy for executive compensation in the event of financial restatements or misconduct.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting financial achievements, sustainability initiatives, and strong corporate governance. While there are some areas where performance did not meet targets, the overall tone is optimistic and forward-looking.

Positives

• Black Hills Corporation exceeded its earnings per share guidance in 2023, demonstrating strong financial performance.
• The company is actively investing in utility infrastructure and systems, including the Ready Wyoming Electric Transmission Expansion Project.
• Black Hills Corporation is committed to sustainability, with goals to reduce greenhouse gas emissions and achieve Net Zero emissions for natural gas distribution.
• The company has a comprehensive executive compensation program that aligns executive interests with shareholder value through performance-based incentives and stock ownership guidelines.
• The company has a clawback policy in place to recover executive compensation in the event of financial restatements or misconduct, promoting accountability.
• The company grew its dividend for the 53rd consecutive year.

Negatives

• The long-term incentive (2021-2023 Plan) payout was only 16.21% of target due to low TSR relative to peers and not meeting the target for average EPS as adjusted.
• The company's TCIR (Total Case Incident Rate) and PMVI (Preventable Motor Vehicle Incident Rate) did not meet the target, resulting in no payout for those metrics in the short-term incentive plan.
• Customer Brand/Perception: JD Power Electric vs Industry did not meet the target, resulting in no payout for those metrics in the short-term incentive plan.

Risks

• The company faces risks related to achieving its greenhouse gas emission reduction goals and transitioning to cleaner energy sources.
• The company's performance is subject to regulatory approvals and constructive settlements for rate reviews.
• The company's executive compensation program is subject to market competitiveness and the ability to attract and retain qualified executives.
• The company's long-term incentive plan is subject to the volatility of total shareholder return and the performance of peer companies.

Future Outlook

The company will continue executing its strategy of investing in cost-effective renewables and new technologies to further reduce its environmental impact, while continuing to deliver safe, reliable and cost effective energy to customers.

Management Comments

• Black Hills Corporation delivered on our financial commitments during an inflationary macroeconomic environment.
• We achieved our financial targets, advanced our key strategic initiatives, executed our capital plan and delivered excellent operations performance.

Industry Context

The document references the Edison Electric Institute (EEI) Index as a peer group for performance comparison, indicating the company benchmarks itself against other electric utilities. The company also references American Gas Association (AGA) reports for safety performance metrics.

Comparison to Industry Standards

• The company compares its safety performance preventable motor vehicle incident rate of 1.65 to a 2022 American Gas Association report top quartile average of 1.72.
• The company uses the Edison Electric Institute (EEI) Index as a peer group for performance comparison.
• The company's compensation peer companies included in the analysis for 2023 compensation decisions ranged in annual revenue size from approximately $656 million to $8.1 billion, with the median at $2.4 billion.

Related Party Transactions

• There were no reportable related party transactions in 2023.

Stakeholder Impact

• The company's performance and initiatives impact shareholders through financial returns and long-term value creation.
• Employees are impacted through compensation, benefits, and a focus on safety and diversity.
• Customers benefit from safe, reliable, and cost-effective energy solutions.
• Communities benefit from the company's investments and commitment to sustainability.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will continue to execute its capital plan and invest in utility infrastructure.
• The company will continue to focus on sustainability and reduce its environmental impact.
• The Board will consider the outcome of the advisory vote on executive compensation when making future decisions.

Key Dates

Keywords

executive compensation, annual meeting, sustainability, greenhouse gas emissions, corporate governance, director nominees, shareholder value, financial performance, Black Hills Corporation, proxy statement