Otter Tail Corp

This section should be read in conjunction with the CD&A, which includes additional discussion of the objectives of Otter Tail Corporation’s executive compensation and benefit program and how they are aligned with the company’s financial and operational performance.

Pay Versus Performance

Included in the table below is the annual compensation paid to our executives and our financial performance for each of the four previous fiscal years.

(1)For the years 2020-2023, this is the total compensation, as depicted in the Summary Compensation Table above, for CEOMr. MacFarlane, our Principal Executive Officer.

(2)For the years 2020-2023, this is the average total compensation, as depicted in the Summary Compensation Table above, for the following executives, Mr. Moug, Sr. Vice President and Chief Financial Officer; Mr. Rogelstad, Sr. Vice President, Electric Platform, President, Electric Platform; Mr. Abbott, Sr. Vice President, Manufacturing Platform, President, Varistar Corporation; and Ms. Smestad, Vice President, General Counsel and Corporate Secretary.

(3)Our TSR assumes the investment of $100 in our common stock on the last trading day before the earliest fiscal year in the above table through and including the end of the fiscal year for which TSR is depicted, and reinvestment of all dividends during such period. Peer group TSR is based on the weighted-average TSR of the 38 companies included in the EEI Index, excluding Otter Tail Corporation, weighted on the basis of market capitalization at the beginning of each period.

(4)Return on equity is equal to Otter Tail Corporation’s annual net income divided by the 13-month average of total outstanding common equity using the 13 months ending at the end of the fiscal year.

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To calculate “compensation actually paid” to the Chief Executive Officer and the average “compensation actually paid” to the other Named Executive Officers, the following amounts were deducted from and added to total compensation, as depicted in the Summary Compensation Table:

(1)Certain stock awards are subject to accelerated vesting at the time of an executive’s retirement. In the above table these awards are only depicted as vested if an executive retired during the year, even though an executive may have been retirement-eligible during the during the year of grant or any year depicted above. This methodology is consistent with clarifying guidance issued by the Securities and Exchange Commission in November 2023, and prior year amounts have been revised to be consistent with the current year presentation.

The fair value of stock awards includes the value of both restricted stock unit awards and performance share awards. The measurement date fair value of restricted stock unit awards was determined based on the market price of the Company's common stock on the measurement date. The performance share awards include two separate components, i) a performance based component which is determined based on a ROE measure, and ii) a market based component which is determined based on a TSR measure. The measurement date fair value of the performance based component of the performance share awards was determined based upon the measurement date stock price and a discounted cash flow analysis to adjust for expected unearned dividends during the vesting period, taking into account the estimated number of shares to be granted relative to target and using a Monte Carlo fair value simulation model incorporating the assumptions outlined below.

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The measurement date assumptions outlined above are different from the assumptions utilized in determining the grant date fair value in some instances. The assumptions utilized in estimating the grant date fair value of the market based component of the performance share awards for awards granted in 2018 through 2023 are outlined below.

COMPENSATION ACTUALLY PAID VERSUS COMPANY PERFORMANCE

The graph below depicts the relationship between each of financial performance measures in the pay versus performance table above and compensation actually paid (“CAP”) to our CEO and, on average, to our other Named Executive Officers , for each of the four years ended December 31, 2023.

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PERFORMANCE MEASURES

The performance measures which we believe are most important and are used in determining compensation paid to each of our Named Executive Officers can vary by individual. Included in the table below are the most important performance measures used to link compensation actually paid to company performance, by executive officer, for the year ended December 31, 2023.

(1)For a description of this performance measure, refer to the Elements of Executive Compensation section.

(2)For a description of this performance measure, refer to footnote (3) of the Pay Versus Performance Table.

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TOTAL REALIZED PAY

Compensation “actually” paid, as described above, is defined by SEC rules and includes components not traditionally associated with realized pay. We will continue to present the following calculation of Named Executive Officers’ Total Realized Pay, which is the compensation actually received by the executive officers in a particular year, because we believe it is an important additional measure of total compensation. Information related to Total Realized Pay is meant to supplement, rather than to replace, the information found in the Summary Compensation Table and the above Pay versus Performance analysis. Total Realized Pay reflects the compensation actually received during the year, which can differ substantially from Total Compensation as presented in the Summary Compensation Table and the above Pay versus Performance analysis. For example, Total Compensation as presented in the Summary Compensation Table contains estimated values of performance shares that are based on multiple assumptions that may or may not be realized and can only be realized at the end of a three-year performance period. In addition, Total Compensation as presented in the Summary Compensation Table may show change in the actuarial present value of pension benefits, which are based on multiple assumptions and discount rates. Compensation “actually” paid, as described in the Pay versus Performance analysis, includes the fair value, and changes in fair value, of outstanding equity awards as of the end of each fiscal year, even if those outstanding awards do not vest in the year.

Otter Tail Corporation calculates Total Realized Pay as the sum of:

•base salary paid during the year, as reported in the Summary Compensation Table;

•annual incentive award received during the year;

•the value realized upon the vesting of long-term incentive awards, including cash paid in lieu of dividends on unvested restricted stock units; and

•other compensation received during the year as reported in the Summary Compensation Table, excluding employer contributions to retirement benefit plans.

When calculating Total Realized Pay, Otter Tail Corporation excludes the following amounts that will not actually be received until a future date:

•change in pension value as reported in the Summary Compensation Table because it is largely driven by accounting and valuation assumptions that do not reflect the compensation realized by the executive officer in a particular year;

•employer contributions to retirement benefit plans, including the Otter Tail Corporation 401(k) Retirement Savings Plan, the Employee Stock Ownership Plan and the ERPP; and

•the value of long-term incentive awards that do not vest in that year.

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The following table compares Total Realized Pay for our Named Executive Officers employed as of December 31, 2023 to the total compensation amounts as presented in the Summary Compensation Table. As noted above, this table is not intended to be a substitute for the Summary Compensation Table:

(1)Base pay during the year, as reflected in the “Salary” column of the Summary Compensation Table.

(2)The total of bonuses and annual incentive awards received in the year.

(3)Value realized upon vesting of performance shares, restricted stock and restricted stock units during the year based on the fair market value of Otter Tail Corporation’s common shares at the time of vesting, as reported in the “Stock Vested Table” and cash paid in lieu of dividends on unvested restricted stock units.

(4)As reported in the “All Other Compensation” column of the Summary Compensation Table, excluding employer contributions to retirement benefit plans, which include the Otter Tail Corporation 401(k) Retirement Savings Plan, the Employee Stock Ownership Plan and the ERPP, as well as other amounts reported in that column.

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