Jennifer O. Smestad
Otter TailAbout Jennifer O. Smestad
Jennifer O. Smestad is Vice President, General Counsel and Corporate Secretary of Otter Tail Corporation (OTTR), serving in this role since January 1, 2018; she has also served as General Counsel for Otter Tail Power Company since March 1, 2013. She is 54 years old as disclosed in the Company’s 2024 Form 10-K executive officer section . Under her tenure as a named executive officer, OTTR’s 2021–2023 performance share cycle achieved 3-year TSR of 110% at the 100th percentile of the EEI peer group and a 3-year average adjusted ROE of 22.28%, resulting in a maximum 150% payout for those performance shares . Annual plan results also show strong pay–for–performance: corporate EPS/ROE hit maximum in 2022–2024 (EPS $6.78 in 2022; $7.00 in 2023; $7.17 in 2024), with corresponding 200% metric payouts; platform metrics paid between 92–200% depending on year .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Otter Tail Power Company | General Counsel | 2013–present (served concurrently with corporate role since 2018) | Led legal for OTP; continuity across utility regulatory, capital and operations initiatives |
External Roles
No external public-company directorships or outside board roles are disclosed for Ms. Smestad in the Company’s recent proxy statements or 10-K. If any exist, they were not disclosed.
Fixed Compensation
Multi-year cash compensation and salary/bonus structure from OTTR proxy statements:
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary | $382,000 | $401,000 | $425,000 |
| Target Bonus % of Salary (Executive Annual Incentive Plan) | 50% | 50% | 50% |
| Bonus ($) – Discretionary/Individual | $66,852 | $68,170 | $85,000 |
| Non-Equity Incentive Plan Compensation ($) | $286,500 | $309,106 | $331,148 |
Notes:
- Target award as % of salary for Ms. Smestad is 50% in each year shown .
- Annual incentive payout reflects financial and non-financial metric attainment under the Executive Annual Incentive Plan; “Bonus” reflects the separate individual performance component .
Performance Compensation
Annual Incentive Plan Structure (metric mix, targets, and payout)
- Ms. Smestad’s weighting: Corporate EPS 35%, Corporate ROE 35%, Individual 20%, ESG/Safety/DEI/Environmental 10% (all years shown) .
| Year | Corporate EPS (Target/Actual; Payout) | Corporate ROE (Target/Actual; Payout) | Platform Metrics (if applicable) | Individual Payout | ESG/Safety/DEI/Environmental |
|---|---|---|---|---|---|
| 2022 | Target $3.93; Actual $6.78 → 200% | Target 14.50%; Actual 25.57% → 200% | N/A for Ms. Smestad | 182% avg across NEOs | Safety: Corporate achieved (100%); Electric not achieved (0%); Manufacturing achieved (100%) |
| 2023 | Target $3.91; Actual $7.00 → 200% | Target 13.00%; Actual 22.11% → 200% | N/A for Ms. Smestad | 174% | Environmental split (Renewables MWh; Scope 1–2 inventory); applies within ESG 10% bucket |
| 2024 | Target $5.30; Actual $7.17 → 200% | Target 14.75%; Actual 19.30% → 200% | N/A for Ms. Smestad | 171% | ESG updated to include Sustainability deliverables; 10% weight |
Long-Term Incentives (PSUs and RSUs)
- Plan design: PSUs are 50% based on 3-year relative TSR vs. EEI Index and 50% on 3-year adjusted ROE; payout range 0–150% of target. RSUs vest 25% annually over four years, with retirement and change-in-control provisions as described below .
- 2021–2023 PSU outcomes: 3-year TSR 110% at EEI 100th percentile (max) and 3-year avg ROE 22.28% (max); combined payout 150% .
Representative grant details (latest disclosed grant counts/values):
| Grant Year | Instrument | Grant Date | Target/Max Shares | Grant-Date Fair Value |
|---|---|---|---|---|
| 2021 | PSUs (TSR/ROE) | Feb 10, 2021 | 5,600 target; 8,400 max | $211,624 |
| 2021 | RSUs | Feb 10, 2021 | 1,600 | $67,752 |
| 2022 | PSUs (TSR/ROE) | Feb 7, 2022 | 3,800 target; 5,700 max | $204,934 |
| 2022 | RSUs | Feb 7, 2022 | 1,100 | $67,507 |
Vesting schedule: RSUs vest 25% per year over four years, fully vest upon qualifying retirement; PSUs vest after 3-year performance period based on certified results; certain retirement prorations apply in some cases .
Stock vested: In 2022, 7,600 shares vested to Ms. Smestad, with $465,795 value realized .
Equity Ownership & Alignment
Beneficial Ownership (end of year)
| As of | Shares Beneficially Owned | % of Class | Notes |
|---|---|---|---|
| Dec 31, 2020 | 6,999 | <1% | Includes 900 RSUs and 4,626 PSUs vested in Feb 2021; joint holdings and ESOP shares noted in footnotes |
| Dec 31, 2021 | 12,001 | <1% | Includes 1,300 RSUs and 6,300 PSUs vesting Feb 2022; no pledges |
| Dec 31, 2022 | 15,802 | <1% | Includes 477 ESOP shares; no pledges |
| Dec 31, 2023 | 21,687 | <1% | Footnote: includes joint holdings; 1,300 RSUs and 8,400 PSUs vested Feb 6, 2024; no pledges |
- Pledging/Hedging: Company policy prohibits hedging and pledging of company securities by executives; none of the directors or executive officers had pledged shares as of 2023–2024 reporting .
- Stock Ownership Guidelines: Minimum ownership equals 1× base salary for Ms. Smestad; executives must hold 100% of net-after-tax shares from awards until guidelines are met. The Company reports all executive officers met the guidelines (or are within accumulation period), with explicit confirmation in 2024 and 2025 proxies .
Outstanding and Unvested Equity (as of fiscal year-end)
As of Dec 31, 2023 (market price $84.97):
- Unvested RSUs: 2023: 1,300 ($110,461); 2022: 825 ($70,100); 2021: 800 ($67,976); 2020: 300 ($25,491) .
- Unearned PSUs (reported at max for 2021–2023 awards): 2023: 6,000 ($509,820); 2022: 5,700 ($484,329); 2021: 8,400 ($713,748) .
Employment Terms
- Executive Severance Plan: For Ms. Smestad, severance upon involuntary termination without Cause or resignation for Good Reason equals 1.5× (base salary + target annual cash incentive), payable in lump sum, subject to release and restrictive covenants (non-disparagement, non-compete, non-solicit, IP assignment). CEO multiple is 2.0×; plan applies to covered executives including Ms. Smestad .
- Change in Control: Double-trigger required (CIC + qualifying termination). Equity treatment typically includes RSUs vesting and PSUs vesting at target on CIC-related termination; health benefits are included per the table footnotes .
- Estimated Termination Benefits (as of Dec 31, 2024 valuation): Retirement $0 (not yet retirement-eligible under plans); Death/Disability $732,862; Without Cause $1,306,990 (includes pro rata PSUs assuming 150% performance + severance); Change in Control $2,430,461 (includes PSUs at target, severance, RSUs, and health benefits) .
- Clawback/Recovery: The Incentive Compensation Recovery Policy (Rule 10D-1 compliant) requires recoupment of erroneously awarded incentive comp after a required accounting restatement; the policy is filed as a 10-K exhibit. In Feb 2025, the Board adopted a Supplemental Incentive Compensation Recovery Policy allowing discretionary recovery for “detrimental misconduct” across participants, overseen by the Compensation and HCM Committee .
- Term/Age/Tenure: Executive officers are elected for one-year terms and can be removed by the Board at any time; Ms. Smestad has held the corporate officer role since 1/1/2018 and has been OTP’s General Counsel since 3/1/2013. Age 54 as of 2025 .
Pension, Deferred Compensation, and Other Benefits
- Pension: Present value of accumulated benefit under the qualified Pension Plan for Ms. Smestad was $868,085 as of Dec 31, 2023; she is not a participant in the ESSRP (supplemental DB plan) .
- Executive Restoration/Deferred Comp: Ms. Smestad participates in the Executive Restoration Plus Plan (ERPP), a non-qualified defined contribution plan. At Dec 31, 2023 she had an aggregate balance of $663,846; 2023 contributions: $68,368 (executive) and $50,213 (registrant); aggregate earnings $91,144 for the year . Plan mechanics (deferrals, employer contributions, vesting and CIC/retirement vesting) are described in the proxies .
Say-on-Pay & Shareholder Feedback
- Say-on-Pay approval was 95.7% at the 2022 annual meeting and 96.0% at the 2024 annual meeting, indicating strong investor support for the compensation program .
- 2025 annual meeting vote results (Form 8-K): advisory approval votes 26,315,793 For; 673,258 Against; 257,635 Abstentions .
Compensation Structure Analysis
- Mix and trajectory: Ms. Smestad’s base rose from $382k (2022) to $425k (2024) while non-equity incentive rose from $286.5k (2022) to $331.1k (2024). Stock awards grant-date value rose from $272,441 (2022) to $376,680 (2024), keeping the program weighted to at-risk equity and performance .
- Metrics rigor: Annual plan consistently used Corporate EPS and ROE (each 35% weight for Ms. Smestad) plus ESG/Safety/DEI/Environmental and individual components; EPS and ROE paid at maximum in 2022–2024 on substantial over-target results .
- Long-term alignment: 2021–2023 PSU cycle paid the maximum 150% on both TSR and 3-year ROE performance, aligning realized pay with shareholder outcomes .
- Governance protections: Robust no-hedge/no-pledge policy, ownership guidelines with 100% net-share hold until compliance, and updated clawback policies (SEC Rule 10D-1 plus a 2025 supplemental policy) reduce risk of misalignment or windfalls .
Equity Ownership & Potential Selling Pressure
- Vesting cadence: RSUs vest annually each February; PSUs settle after each three-year period in February, creating predictable vest events that can lead to sell-to-cover activity. In 2022, Ms. Smestad realized value on 7,600 vested shares; 2024 footnotes show RSUs and PSUs (1,300 RSUs and 8,400 PSUs) that vested on Feb 6, 2024; 2025 footnotes show additional RSUs and PSUs vesting in February 2025 .
- No pledging: No shares by directors/executives are pledged, reducing forced-sale risk .
- Ownership guidelines met: Ms. Smestad meets the 1× salary ownership guideline; continued RSU/PSU vesting supports alignment and retention .
Performance & Track Record
- Company outcomes during her NEO tenure include: 2021–2023 PSU cycle at max on TSR and ROE (TSR 110% at 100th percentile; 3-yr avg ROE 22.28%) ; annual plan overachievement on EPS and ROE 2022–2024 (EPS actuals $6.78, $7.00, $7.17 vs targets; ROE actuals 25.57%, 22.11%, 19.30%) .
- Governance roles: As corporate secretary and GC, she is the signatory on multiple SEC filings and plan exhibits (e.g., ERPP, ESSRP restatements; CIC agreements), reflecting central involvement in governance and compensation plan design .
Investment Implications
- Pay-for-performance alignment is strong: maximum payouts on EPS/ROE and PSUs only occur with superior outcomes; 3-year TSR and ROE metrics have paid at the top end, supporting the view that realized pay follows performance .
- Limited selling/pledging risk: Prohibitions on hedging/pledging and high share-ownership/holding requirements limit adverse trading signals; predictable February vesting may create routine sell-to-cover flow but not structural overhang .
- Retention risk appears contained: A 1.5× salary+target-bonus severance (and CIC double-trigger protection with equity treatment) plus ongoing RSU/PSU vesting provide meaningful retention hooks; Ms. Smestad is not yet retirement-eligible under plans, which also extends retention incentives .
- Governance enhancements (Rule 10D-1 clawback and 2025 supplemental recovery policy) reduce headline risk around incentive programs and bolster investor confidence in compensation governance .