8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 11, 2005

OTTER TAIL CORPORATION

(Exact name of registrant as specified in its charter)

Minnesota	0-00368	41-0462685
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
215 South Cascade Street, P.O. Box 496, Fergus Falls, MN		56538-0496
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code:		(866) 410-8780

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 1.01 Entry into a Material Definitive Agreement
	Item 9.01 Financial Statements and Exhibits
Signature
Exhibit Index
Form of 2005 Performance Award Agreement
Executive Annual Incentive Plan

Item 1.01 Entry into a Material Definitive Agreement

     (1) On April 11, 2005 the Board of Directors of Otter Tail Corporation (the “Company”) approved compensation for directors. Following are the retainer and meeting fees as approved:

Retainer — Chairman of the Board	$	63,000
Retainer — Director	$	27,000
Retainer — Committee Chair	$	5,000
Board Meeting Fee (per meeting)	$	1,500

In addition each director was awarded a restricted stock grant under the 1999 Stock Incentive Plan of 1,300 shares that vests over four years.

     (2) On April 11, 2005 the Board of Directors of the Company granted performance-based stock incentive awards to the Company’s executive officers under the 1999 Stock Incentive Plan. Under these awards, the Company’s executive officers could earn up to an aggregate of 75,150 shares based on the Company’s stock performance relative to the stock performances of its peer group in the Edison Electric Institute Index over the performance period of January 1, 2005 through December 31, 2007. The target share award by executive officer is as follows: John Erickson, 19,500 shares; Lauris Molbert, 15,200 shares; Kevin Moug, 9,100 shares and George Koeck, 6,300 shares. The executive officers have no voting or dividend rights related to these shares until the shares are issued at the end of the performance period. The form of 2005 Performance Award Agreement is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

     (3) On April 11, 2005 the Company’s Board of Directors approved performance targets for 2005 under the terms of the Otter Tail Corporation Executive Annual Incentive Plan (the “Incentive Plan”). The Incentive Plan provides incentives to executive officers if the Company achieves certain performance targets. The Compensation Committee of the Board of Directors is responsible for setting performance targets under the Incentive Plan near the end of the first quarter each year and establishing total target payout percentages for each of the executive officers. For 2005 the performance targets are as follows:

1.	Corporate Earnings per Share. Each executive officer receives 33 1/3 percent of the total target payout if the Company achieves the targeted earnings per share. Each executive officer receives 8 1/3 percent of the total target payout if the Company achieves the minimum performance level, and additional increments for performance above the target.
2.	Corporate Return on Equity. Each executive officer receives 33 1/3 percent of the total target payout if the Company achieves the targeted return on equity. Each executive officer receives 8 1/3 percent of the total target payout if the Company achieves the minimum performance level, and additional increments for performance above the target.
3.	Cash Flow from Operations. Each executive officer receives 33 1/3 percent of the total target payout if the Company achieves the targeted cash flow from operations. Each

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executive officer receives 8 1/3 percent of the total target payout if the Company achieves the minimum performance level and additional increments for performance above the target.

     The Compensation Committee has discretion over treatment of extraordinary gains, write-offs, or other events in determining the amount of incentive bonus to be paid. The Incentive Plan is filed as Exhibit 10.2 hereto and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

     (c) Exhibits

10.1       Form of 2005 Performance Award Agreement

10.2       Executive Annual Incentive Plan (Effective April 1, 2005)

Signature

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	OTTER TAIL CORPORATION
Date: April 15, 2005
	By	/s/ Kevin G. Moug
		Kevin G. Moug Chief Financial Officer and Treasurer

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Exhibit Index

     10.1       Form of 2005 Performance Award Agreement

     10.2       Executive Annual Incentive Plan (Effective April 1, 2005)

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EX-10.1

Exhibit 10.1

OTTER TAIL CORPORATION
1999 STOCK INCENTIVE PLAN
2005 PERFORMANCE AWARD AGREEMENT

     This Performance Award Agreement is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and you, as an employee of the Corporation or one of its Affiliates, effective as of the date of grant (the “Grant Date”) set forth in the attached Performance Award Certificate.

     WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 1999 Stock Incentive Plan (the “Plan”), wishes to grant to you the opportunity and right to receive a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to the terms and conditions contained in this Agreement and in the attached Performance Award Certificate, which is made a part of this Agreement.

     NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and you hereby agree as follows:

     1. Performance Award. The Corporation hereby grants to you, effective as of the Grant Date, a Performance Award representing the right to receive a specified number of Common Shares, as set forth in the attached Performance Award Certificate and subject to the terms and conditions set forth in this Agreement, the Performance Award Certificate and the Plan. The Performance Award, to the extent it becomes payable, shall be paid in Common Shares of the Corporation (the “Shares”).

     2. Performance Period and Performance Goals. The performance period for purposes of determining whether the Performance Award will be paid shall be January 1, 2005 through December 31, 2007 (the “Performance Period”). The performance goals for purposes of determining whether, and the extent to which, the Performance Award will be paid are set forth in Exhibit 1 to this Agreement, which Exhibit is made a part of this Agreement.

     3. Payment. Subject to the provisions of Sections 4 and 5 of this Agreement, the Performance Award shall be paid as soon as practicable after the Compensation Committee of the Corporation’s Board of Directors (the “Committee”) determines, in its discretion after the end of the Performance Period, whether and to what extent the performance goals have been achieved in accordance with the terms set forth in Exhibit 1 to this Agreement.

     4. Forfeiture; Early Payment. Notwithstanding the provisions of Section 3 of this Agreement, in the event your employment is terminated during the Performance Period, the Performance Award and your right to receive any Shares shall be immediately and irrevocably forfeited, unless such termination is by reason of:

     (a) disability (as determined under any long-term disability program then maintained by the Corporation or any of its Affiliates that is applicable to you),

     (b) retirement (normal or early retirement under any retirement plan of the Corporation or any of its Affiliates that is applicable to you),

     (c) death,

     (d) your resignation for “Good Reason” (as defined in your Executive Employment Agreement, dated on or before the Grant Date, between the Corporation and you), or

     (e) your termination “Without Cause” (as defined in your Executive Employment Agreement, dated on or before the Grant Date, between the Corporation and you).

In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clauses (a) through (e) above, then you or your estate shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would be achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made promptly following the date of such termination. If a payment is made pursuant to this Section 4, no payment shall be made pursuant to Section 3 of this Agreement.

     5. Change in Control. Notwithstanding the provisions of Section 3 of this Agreement, in the event of a “Change in Control” (as defined in the Change in Control Severance Agreement, dated on or before the Grant Date, between the Corporation and you) during the Performance Period that occurs prior to your termination of employment, you shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would have been achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made promptly following the date of the Change in Control. If a payment is made pursuant to this Section 5, no payment shall be made pursuant to Section 3 of this Agreement.

     6. Restriction on Transfer. The Performance Award, and the right to receive Shares, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer the Performance Award, and the right to receive the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Performance Award or the Shares. No transfer by will or the applicable laws of descent and distribution of the Performance Award shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

     7. Issuance of Shares. After the Performance Award becomes payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in your name or in the name of your legal representatives, beneficiaries or heirs, as the case may be, representing the Shares (less any shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to you or your legal representatives, beneficiaries or heirs, as the case may be.

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     8. Income Tax Matters.

     (a) You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Performance Award, the receipt of Shares upon any payment of the Performance Award, the subsequent disposition of the Shares and any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

     (b) In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Corporation Common Shares having a Fair Market Value equal to the amount of such taxes. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

     9. Miscellaneous.

     (a) Nothing contained in this Agreement or the Plan shall confer on you any right to continue in the employ of the Corporation or any Affiliate or affect in any way the right of the Corporation or any Affiliate to terminate your employment at any time.

     (b) You shall not have any rights of a holder of Common Shares unless and until Shares are actually issued to you after the end of the Performance Period as provided in this Agreement.

     (c) The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

     (d) This Agreement is subject to the terms of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to you upon request.

     (e) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

     (f) Headings in this Agreement are for convenience of reference only and shall not be deemed in any way to be material or relevant to the construction or interpretation of this Agreement or any provision hereof.

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     (g) THIS PERFORMANCE AWARD AGREEMENT IS ATTACHED TO AND MADE A PART OF A PERFORMANCE AWARD CERTIFICATE AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH PERFORMANCE AWARD CERTIFICATE IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND YOU.

* * * * * * * *

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OTTER TAIL CORPORATION
1999 STOCK INCENTIVE PLAN

PERFORMANCE AWARD CERTIFICATE

     This certifies the Performance Award, as specified below, has been granted under the Otter Tail Corporation 1999 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein and made a part hereof. In addition, the award shown in this Certificate is nontransferable and is subject to the terms and conditions set forth in the attached 2005 Performance Award Agreement of which this Certificate is a part.

[Name and Address of the Participant]

[Social Security Number of the Participant]

     You have been granted the following Award:

Grant Type:	Performance Award
Target Number of Common
Shares Subject to Award:
Maximum Number of Common
Shares Subject to Award:
Grant Date:	April 11 ¸ 2005
Performance Period:	January 1, 2005 — December 31, 2007
Performance Goals:	Set forth in Exhibit 1 to the 2005 Performance Award Agreement

     By the Corporation’s and your signature below, it is agreed that this Performance Award is governed by the terms and conditions of the Performance Award Agreement, a copy of which is attached and made a part of this document, and the Plan.

OTTER TAIL CORPORATION
By:
	[Name of Authorized Officer]
	[Title]
	[Name of Participant]

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Exhibit 1

Performance Goals for Three-Year Performance Period
(January 1, 2005 — December 31, 2007)

Threshold

Target

Maximum

Otter Tail TSR

performance

Performance

relative to peer

75th %ile

Goal

group

<10 %ile

10 %ile

25th %ile

50th %ile

or greater

Payment Levels

% of target shares

0

%

50

%

50

%

100

%

150

%

Amounts payable for performance between the 25th and 75th percentile will be interpolated.

Total Shareholders Return (TSR) = stock price appreciation plus value of dividends.

Peer group = Edison Electric Institute Index

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EX-10.2

Exhibit 10.2

Otter Tail Corporation
Executive Annual Incentive Plan
Effective April 1, 2005

BACKGROUND

Otter Tail Corporation (the “Corporation”) has established the Executive Annual Incentive Plan (the “Plan”) to reward top Corporate executives (“Participants”) who are directly involved in ensuring that the Corporation reaches its performance goals. The key objectives of the Plan are to focus the executive’s attention on the Corporation’s operating results to ensure that the Corporation will achieve its desired results currently and in the future.

ELIGIBILITY

Participants include executive officers of the Corporation as named by the President and Chief Executive Officer and the Compensation Committee of the Board of Directors. Participants who terminate employment, for reasons other than death, disability, retirement or transfer to a Corporation subsidiary before the end of a calendar year will receive payments under this Plan, if any, under the terms of their Employment Agreements. Prorated bonus payments will be paid to the estates of Participants who die during a year for which a Plan payment is made and to Participants who terminate employment due to disability, retirement or transfer to a subsidiary.

DEFINITIONS

Base Pay is the annualized base amount paid to Participants as of December 31 of the current plan year. Base Pay includes amounts deferred under Section 401(k) of the Internal Revenue Code, salary reduction amounts under Section 125 of the Internal Revenue Code, and amounts deferred under any deferred compensation program sponsored by Otter Tail Corporation. Base Pay does not include incentive payments, moving expenses, expense reimbursements, imputed income or any similar amounts.

Target Bonus is the percentage of Base Pay payable if all applicable performance goals are achieved at the stated target level. The Target Bonus levels shall be established by the Compensation Committee.

Corporate Earnings per Share (EPS) is diluted earnings per share for the calendar year, as reported in the Corporation’s year-end financial reports, subject to adjustment for items deemed to be unusual or extraordinary by the Compensation Committee. The Compensation Committee shall establish threshold, target and maximum performance standards for EPS for each year.

Corporate Return on Equity (ROE) is the combined average return, as a percentage of total outstanding equity for all business operations, as reported in the Corporation’s annual year-end financial reports, subject to adjustment for items deemed to be unusual or extraordinary by the

Compensation Committee. The Compensation Committee shall establish threshold, target and maximum performance standards for ROE for each year.

Cash Flow from Operations is the net cash provided by operating activities as reported in the Corporation’s annual year-end financial reports, subject to adjustment for items deemed to be unusual or extraordinary by the Compensation Committee. The Compensation Committee shall establish threshold, target, and maximum performance standards for cash flow from operations for each year.

CASH BONUS

Payment of any cash bonus under the Plan is subject to achievement of the applicable Otter Tail Corporation annual performance goals. The Participant’s Target Bonus is based on competitive market practice, internal equity needs and the Corporation’s philosophy of pay for performance.

Earning the Target Bonus payout is dependent upon achieving the three corporate performance goals. Each goal accounts for one-third of the Participant’s Target Bonus and includes a threshold, target and maximum performance level. No payment is made for performance below the threshold level. For each goal, 25% of the target amount payable is paid if the threshold performance level is achieved, 100% of the target amount payable is paid if the target performance level is achieved, and 200% of the target amount payable is paid if the maximum performance level is achieved. For performance between the threshold and the target performance levels, the payment amount shall increase at an even rate up to the target performance level. For performance between the target performance level and the maximum performance level, the payment amount shall increase at an even rate up to the maximum performance level.

The treatment of extraordinary gains, write-offs and similar unusual events will be at the discretion of the Compensation Committee.

ADMINISTRATION

The Plan is not funded and all bonuses will be paid out of the Corporation’s general assets. Bonus payments will be paid in cash, through the appropriate payroll system, as soon as administratively possible after annual performance results are approved by the Board of Directors. The Corporation will deduct from any Plan payment and transmit to the proper taxing authority, such amount as it may be required to withhold under any applicable federal, state or other law. The Corporation retains sole discretion, authority, and responsibility to decide all factual and legal questions under the Plan.

MISCELLANEOUS

The terms of this document shall not constitute a term of employment for any Participant, and the Corporation shall not be obligated to continue the Plan. The terms of this document shall not give any Participant the right to be retained in employment with the Corporation.

Payments under this Plan are not considered part of base pay and, except for contributions to the Corporation’s Retirement Savings Plan, will not be considered in any Corporation or subsidiary tax-

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qualified Participant benefit plan. Payments under this Plan will be considered part of Recognized Compensation under the Otter Tail Corporation Retirement Savings Plan, or its successor, and will, therefore, be included in determining the Participant’s Retirement Savings Plan contributions.

AMENDMENT AND TERMINATION

The Plan’s performance goals and payment structure will be reviewed annually and adjusted to reflect current market conditions and Corporation needs. The Corporation, by action of the Compensation Committee of the Board of Directors, reserves the right to amend or terminate this Plan at any time.

For the Compensation Committee of the Board of Directors:

Arvid Liebe, Compensation Committee Chair		Date
OTTER TAIL CORPORATION
By:	John Erickson Its: President and CEO	Date

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