EXECUTIVE ANNUAL INCENTIVE PLAN

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)