SCHEDULE 14A INFORMATION
Proxy Statement PursuantPursant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
[ ] Confidential, for Use of the Commission Only
MDU Resources Group, Inc.
(Name of Registrant as Specified In Its Charter
.................................................................Charter)
.............................................................................
(Name of Person(s) Filing Proxy Statement)Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ][X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
14a-6(i)Item 22(a)(2). of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
...........................................................................................................................
2) Aggregate number of securities to which transaction applies:
...........................................................................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
4) Proposed maximum aggregate value of transaction:
...........................................................................................................................
5) Total Fee Paid:
..............................................................
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[X][ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Formform or Schedule and the date of its filing.
1)(1) Amount Previously Paid:
$125
..............................................................
2)(2) Form, Schedule or Registration Statement No.:
Schedule 14A Preliminary Proxy Material
..............................................................
3)(3) Filing Party:
..............................................................
(4) Date Filed:
..............................................................
MDU Resources
Group Inc.
..............................................................
4) Date Filed:
February 11, 1994
..............................................................
MDU RESOURCES
GROUP, INC.
- -----------------------------------------------------------------------------------------------------------------------------------------------------------
400 North Fourth Street John A. Schuchart
Bismarck, ND 58501 Chairman &of the Board
(701) 222-7900
Chief Executive Officer
March 7, 19946, 1995
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held on Tuesday, April 26, 1994,25, 1995, at 11:00 A.M., Central Daylight Time, at 909
Airport Road, Bismarck, North Dakota 58504. The other directors and officers
join me in extending this invitation.
The formal matters to be acted upon at the meeting are described in the
accompanying Notice of Meeting and Proxy Statement. I would like to note for
your special attention that the Board of Directors has recommended that the
holders of Common Stock of the Company approve two proposals to amend the Certificate of Incorporation. First, Article THIRD, which states the purposes
and powers of the Company, has not been amended since the original Certificate
was filed in 1924. As was the custom in those days itNon-Employee Director Stock
Compensation Plan. This is lengthy and specific.
Current law permits a general statement. The name change authorizedanother step taken by the
stockholders in 1985 reflects the multidimensional nature of our Company. This
amendment is consistent with the operations of our Company. Second, the first
paragraph of Article FOURTH states the number of authorized shares and the par
value of Common Stock. The proposed amendment will increase the number of
authorized shares of Common Stock from 50,000,000 to 75,000,000 and reduce the
par value of Common Stock from $5.00 per share to $3.33 per share. The increase
in the number of authorized shares will insure that the Company will be able to
raise needed capital expeditiously and economically; provide sufficient Common
Stock for use in the several investment plans of the Company; and provide an
assured source of unissued Common Stock for issuance for other corporate
purposes which may develop from time to time. The reduction in par value will
enable theyour Company to effect a stock split instrengthen the
future without going to thecommonality of interest among our stockholders, for approval, should the Board of Directors decide it is in the
best interests of the Company to do so.management and board members. In
addition to the formal issues, a brief report on current matters of interest
will be presented. Luncheon will be served following the meeting.
We were pleased with the response of our stockholders at the 19931994 Annual
Meeting at which 87.586.8 percent of the Common Stock was represented in person or
by proxy. We hope that participation by our stockholders in the affairs of the
Company will increase and that there will be an even greater representation at
the 19941995 meeting. If you are unable to attend the meeting but have questions or
comments on the Company's operations, we would like to hear from you.
Representation of your shares at the meeting is very important and we urge
that, whether or not you now plan to attend the meeting, you promptly mark,
date, sign and return the enclosed proxy card in the envelope provided for that
purpose. If you do attend the meeting, you may, if you wish, withdraw your proxy
and vote in person.
I hope you will find it possible to attend the meeting.
Sincerely,
/s/ JOHN A. SCHUCHART
JOHN A. SCHUCHART
MDU RESOURCES GROUP, INC.
400 NORTH FOURTH STREET
BISMARCK, NORTH DAKOTANorth Fourth Street
Bismarck, North Dakota 58501
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 1994
- -----------------------------------------------------------------------------------------------
Notice of Annual Meeting of Stockholders
to be held April 25, 1995
---------------
March 7, 19946, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MDU
Resources Group, Inc. will be held at 909 Airport Road, Bismarck, North Dakota
58504, on Tuesday, April 26, 1994,25, 1995, at 11:00 A.M., Central Daylight Time, for the
following purposes:
(1) To elect four directors to three year terms;
(2) To consider and take action upon a proposal, declared advisable by the
Board of Directors of the Company, to amend Article THIRD ofapprove the Certificate of Incorporation pertaining to the corporate purposes and powers
of the Company,Non-Employee Director Stock
Compensation Plan, all as more fully described in the accompanying Proxy
Statement dated March 7, 1994;6, 1995 and;
(3) To consider and take action upon a proposal, declared advisable by
the Board of Directors of the Company, to amend Article FOURTH of the
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 50,000,000 with a par value of $5.00 per share to
75,000,000 with a par value of $3.33 per share, all as more fully described
in the accompanying Proxy Statement dated March 7, 1994; and
(4) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on February 28, 1994,27,
1995, as the record date for the determination of common stockholders who will
be entitled to notice of and to vote at the meeting.
All stockholders who find it convenient to do so are cordially invited and
urged to attend the meeting in person. It is requested that you date, sign and
return the accompanying proxy in the enclosed return envelope, to which no
postage need be affixed if mailed in the United States. Your cooperation will be
appreciated.
By order of the Board of Directors,
/s/ LESTER H. LOBLE, II,
LESTER H. LOBLE, II,
Secretary
MDU RESOURCES GROUP, INC.
400 NORTH FOURTH STREET
BISMARCK, NORTH DAKOTANorth Fourth Street
Bismarck, North Dakota 58501
- -----------------------------------------------------------------------------------------------
PROXY STATEMENT
- -----------------------------------------------------------------------------------------------
This Proxy Statement is furnished to the holders of Common Stock of MDU
Resources Group, Inc. (Company) on behalf of the Board of Directors of the
Company in connection with the solicitation of proxies to be used in voting at
the Annual Meeting of Stockholders to be held on April 26, 1994.25, 1995. The proxy
material was first forwarded to the holders of Common Stock on March 7, 1994.6, 1995.
Any stockholder giving a proxy may revoke it at any time prior to its use
at the meeting by filing with the Secretary either a written instrument of
revocation or a duly executed proxy bearing a later date. In addition, the
powers of a proxy holder are suspended if the person executing the proxy is
present at the meeting and informs the Secretary in open meeting that he wishes
to revoke his proxy and vote in person. Attendance at the meeting will not in
and of itself revoke a proxy.
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of shares of the Common Stock of the
Company. In addition to the use of the mails, proxies may be solicited by
officers and regular employees of the Company, by personal interview, by
telephone or by telegraph. Banks, brokerage houses and other institutions,
nominees and fiduciaries will be requested to forward the soliciting material to
their principals and to obtain authorizations for the execution of proxy cards
and will, upon request, be reimbursed for reasonable expenses incurred.
Additional solicitation of proxies will be made in the same manner under the
special engagement and direction of Georgeson & Company, Inc. at an anticipated
cost to the Company of approximately $6,000 plus out-of-pocket expenses.
VOTING SECURITIES OUTSTANDING
Only holders of record of Common Stock at the close of business on
February 28, 1994,27, 1995, will be entitled to vote at the meeting. On such date there
were outstanding 18,984,654 shares of Common Stock. Each outstanding share of
Common Stock entitles the holder to one vote.
The Bylaws of the Company provide that a majority of the shares of Common
Stock issued and outstanding and entitled to vote in person or by proxy shall
constitute a quorum at a meeting of shareholders of the Company. Shares of
Common Stock represented by a properly signed and returned proxy are considered
present for purposes of determining a quorum.
Under Delaware law, if a quorum is present, the nominees for election as
directors who receive a plurality of the votes of shares present in person or
represented by proxy and entitled to vote shall be elected as directors.
"Withheld" votes are not included in the total vote cast for a nominee for
purposes of determining whether a plurality was received and, therefore, have no
negative effect.
Under Delaware law,Approval of the proposed amendments to the Certificate of
Incorporation requireNon-Employee Director Stock Compensation Plan (discussed
below) requires the affirmative votes of the holders of a majority of the outstanding sharesCommon
Stock present or represented and entitled to vote. Abstentions will have the
effect of Common Stock. Shares that are not voted for the
amendments, including abstentions ora "no" vote; broker non-votes will have the same effect
as a vote against the amendments.no effect.
As of February 28, 1994,27, 1995, no person held of record, or, to the knowledge of
the management of the Company, owned beneficially, 5 percent or more of the
outstanding shares of Common Stock of the Company.
PROPOSAL FOR AMENDMENT OF CERTIFICATE OF INCORPORATION: ARTICLE THIRD
On November 4, 1993, the Board of Directors unanimously adopted a resolution
declaring it advisable to amend Article THIRD of the Company's Certificate of
Incorporation to restate Article THIRD and to submit the
1
amendment to the stockholders for approval at the Annual Meeting. The proposed
amendment is set forth in Exhibit A to this Proxy Statement.
The current purpose and powers clause of the Certificate, which has not been
amended since the original Certificate was filed in 1924, contains three major
paragraphs and eighteen subparagraphs. Since 1924, custom, usage and the laws of
the state of Delaware have changed. Under current Delaware law, this specific
enumeration of business functions is no longer necessary, and a brief statement
of business purpose suffices. The Amendment would not restrict the Company's
current operations, would be consistent with those operations, and would
generally permit any kind of corporate activity so long as it is lawful.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Approval of the
proposed amendment to amend the purpose and powers clause requires the
affirmative vote of the holders of a majority of all of the outstanding Common
Stock of the Company. If a choice has been specified by a stockholder by means
of the ballot on the Proxy, the shares of Common Stock will be voted
accordingly. If no choice has been specified, the shares will be voted "FOR" the
proposal.
PROPOSAL FOR AMENDMENT OF CERTIFICATE OF INCORPORATION: ARTICLE FOURTH
As of the close of business on February 28, 1994, the authorized capital
stock of the Company consisted of 52,000,000 shares divided into four classes,
namely, Preferred Stock, Preferred Stock A, Preference Stock, and Common Stock.
The total number of shares of such Preferred Stock authorized is 500,000 shares
of the par value of $100 per share; the total number of shares of such Preferred
Stock A authorized is 1,000,000 shares without par value; the total number of
shares of such Preference Stock authorized is 500,000 without par value; and the
total number of shares of Common Stock authorized is 50,000,000 with a par value
of $5 per share. As of February 28, 1994, 18,984,654 common shares were issued
with 1,029,229 shares reserved for issuance under the Dividend Reinvestment and
the Tax Deferred Compensation Savings Plans of the Company.
The Board of Directors of the Company has proposed an amendment to the
Certificate of Incorporation of the Company to increase the authorized number of
common shares from 50,000,000 to 75,000,000 shares and to reduce the par value
of the Common Stock from $5.00 per share to $3.33 per share. The Resolution
adopted by the Board of Directors of the Company proposing this amendment to the
Certificate of Incorporation is attached hereto as Exhibit B.
The Board of Directors believes that the additional authorized common shares
may be needed to enable the Company to raise additional capital funds
expeditiously and economically for its ongoing operational needs, for issuance
in the Company's several investment plans or for possible acquisitions, stock
distributions or split, or other corporate purposes. The Board believes it
advisable to authorize additional shares to permit the issuance of shares of
Common Stock without the delay and the expense involved in obtaining stockholder
approval at the time such issuance is determined to be appropriate. The Company
would seek and obtain all necessary regulatory authority prior to the issuance
of additional shares of Common Stock.
The Board of Directors has no plan at the present time for the issuance or
use of the additional shares of Common Stock to be authorized by the amendment.
The issuance of additional shares of authorized Common Stock would be within the
discretion of the Board of Directors, without the requirement of further action
by stockholders unless such action is required by applicable law or the rules of
any stock exchange on which the Company's securities may then be listed. All
newly authorized shares would have the same rights as the presently authorized
shares, including the right to cast one vote per share and to participate in
dividends when and to the extent declared and paid. The Board of Directors
believes that the reduction in par value will enable the Company to effect a
stock split in the future without further shareholder approval should economic
conditions so warrant and the Board so determine.
The Board of Directors is unaware of any specific effort to obtain control of
the Company, and has no present intention of using the proposed increase in the
number of authorized shares of Common Stock as an anti-takeover device. However,
the Company's authorized but unissued capital stock could be used to make an
attempt to effect a change in control more difficult.
Decreasing the par value is not intended to have any effect on the market
value of the Common Stock.
2
Under the Company's Certificate of Incorporation, no holders of any class of
stock of the Company are entitled to any preemptive rights with respect to any
shares of the Company's capital stock.
None of the directors or officers of the Company has any interest, direct or
indirect, in the adoption of the proposed amendment except as a holder of shares
of the Common Stock of the Company.
No financial statements are furnished in connection with this proposal as
they are not deemed material for the exercise of prudent judgment with respect
thereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Approval of the
proposed amendment to increase the authorized number of shares of Common Stock
and reduce the par value of Common Stock requires the affirmative vote of the
holders of a majority of all of the outstanding Common Stock of the Company. If
a choice has been specified by a stockholder by means of the ballot on the
Proxy, the shares of Common Stock will be voted accordingly. If no choice has
been specified, the shares will be voted "FOR" the proposal.
ELECTION OF DIRECTORS
At the meeting, four Directors will be elected to serve for a term of
three years until 19971998 and until their respective successors are elected and
qualify. All of the nominees are incumbent Directors and are nominated for
reelection. Unless otherwise marked on the proxy, shares of the Common Stock
represented by the proxy will be voted for the four nominees named below. If any
nominee becomes unavailable for any reason, or if a vacancy should occur before
the election (which events are not anticipated), the shares represented by the
proxy will be voted for another person in the discretion of the persons named in
the proxy. Information concerning the nominees, including their ages, periods of
service as directors and business experience, according to information furnished
to the Company by the respective nominees, is set forth as follows:
FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- -----------------------------First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -----------------------------------------------
San W. Orr, Jr. ........... 52 1978 Mr. Orr is an attorney and is in the business
(to be elected for a term of of financial and estate management. He is
three years expiring in 1997) Chairman of the Boards and a Director
of Marathon Electric Manufacturing
Corporation, Mosinee Paper Corporation,
and Wausau Paper Mills Company. He is a
Director of Wausau Insurance Companies,
M & I First American National Bank, and
M & I Marshall & Ilsley Bank. Mr. Orr
also serves various civic and
charitable organizations in Wisconsin
including the Board of Regents of the
University of Wisconsin System. He
currently serves on the Audit and
Compensation Committees of the Board of
Directors.
John A. Schuchart .......... 64 1976 Mr. Schuchart, Chairman of the Board and Chief
(to be elected for a term of Executive Officer, was named Chief Executive
three years expiring in 1997) Officer in June 1980 and Chairman in
May 1983. Mr. Schuchart also serves as
the Chairman of the Board and a
Director of Alaska Basic Industries,
Inc., Anchorage Sand and Gravel
Company, Inc., Concrete, Inc., Fidelity
Oil Co., Fidelity Oil Holdings, Inc.,
KRC Aggregate, Inc., KRC Holdings,
Inc., Knife River Coal Mining Company,
LTM, Incorporated, Rogue Aggregates,
Inc., Williston Basin Interstate
Pipeline Company; as a Director and the
President of Centennial Energy
Holdings, Inc., and Wibaux Gas Co.; all
being subsidiaries of the Company. Mr.
Schuchart is also Chairman of the
Managing Committee of Montana-Dakota
Utilities Co., a Division of the
Company.
3
FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------- --- ----------- -----------------------------------------------
Homer A. Scott, Jr. ....... 59 1981 Mr. Scott is engaged in the banking and
(to be elected for a term of ranching business in the states of Wyoming and
three years expiring in 1997) Montana. He is a Director and Chairman
of the Boards of First Interstate
BancSystem of Montana, Inc., and First
Interstate Bank of Commerce, Sheridan,
Wyoming, and a Director of First
Interstate Bank of Commerce, Billings,
Montana. Mr. Scott is a Director and
President of Sugarland Enterprises,
Inc., and the managing partner of
Sugarland Development Company, a
commercial property development company
in Sheridan, Wyoming. Mr. Scott also is
a Director of Flying V Cattle Company
and Padlock Ranch Company and a partner
in Scott Land and Livestock. He
currently serves on the Audit and
Compensation Committees of the Board of
Directors.
Sister Thomas Welder, 53 1988 Sister Welder is the President of the
O.S.B. ................... University of Mary, Bismarck, North Dakota. She
(to be elected for a term of is a Director of St. Alexius Medical
three years expiring in 1997) Center of Bismarck. She is also a
member of the North Dakota Vision 2000
Committee, the Theodore Roosevelt
Medora Foundation, and the
Accreditation Review Council of the
North Central Association of Colleges
and Schools. She currently serves on
the Nominating and Finance Committees
of the Board of Directors.
Certain information concerning the remaining directors, whose terms expire
either in 1995 or in 1996, including their ages, periods of service as directors
and business experience, according to information furnished to the Company, is
set forth as follows:
-------------------
Douglas C. Kane ............ 4445 1991 Mr. Kane joined the Company as Executive Vice (term expiring in 1995) President
(to be elected for a term of and Chief Operating Officer in January 1991. Prior to
three years expiring in 1998) that time he was President and Chief Executive
Officer of Knife River Coal Mining Company from May
1990, President from September 1987 and previously had
served as Senior Vice President--Operations. Mr. Kane
is a Director of Alaska Basic Industries, Inc.,
Anchorage Sand and Gravel Company, Inc., Concrete,
Inc., Fidelity Oil Co., Fidelity Oil Holdings, Inc.,
KRC Aggregate, Inc., KRC Holdings, Inc., Knife River
Coal Mining Company, LTM, Incorporated, and Rogue
Aggregates, Inc., and Williston Basin Interstate
Pipeline Company, all being subsidiaries of the
Company. Mr. Kane is also Vice President and a
Director of Centennial Energy Holdings, Inc. and a
member of the Managing Committee of Montana-Dakota
Utilities Co., a Division of the Company.
[PICTURE]
Richard L. Muus ............ 6465 1985 Mr. Muus retired in April 1989 after 35 years (term expiring in 1995) with the
(to be elected for a term of Midwest Federal Savings Bank, Minot, North Dakota.
three years expiring in 1998) At the time of his retirement Mr. Muus was the
President and a Director of the bank. Mr. Muus is a
member and past Director and Officer of the Minot Area
Chamber of Commerce and a past Director of the Minot
Area Development Corporation. He is a member of the
Military Affairs and Diplomats Committee of the
Chamber of Commerce. He is a member of the Military AffairsBoard of
Regents of Minot State University and Diplomatsalso serves on
the Finance Committee of St. Joseph Hospital, Minot,
North Dakota. He currently serves on the Chamber of Commerce.
He is a memberAudit and
Finance Committees of the Board of Regents
of Minot State University and also
serves on the Finance Committee of St.
Joseph Hospital, Minot, North Dakota.
He currently serves on the Audit and
Finance Committees of the Board of
Directors.
4
FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------- --- ----------- -----------------------------------------------
Directors.
[PICTURE]
John L. Olson ............. 5455 1985 Mr. Olson is President and the owner of Blue (term expiring in 1995) Rock ProductsProd-
(to be elected for a term of ucts Company and of Blue Rock Distributing Company
three years expiring in 1998) located in Sidney, Montana, a beverage bottling and
distributing company, respectively. Mr. Olson also is
the Chairman of the Board and a Director of Admiral
Beverage Corporation, Worland, Wyoming, and Ogden,
Utah; he is Chairman of the Board and Director of the
Foundation for Community Care, Sidney, Montana; he is
trustee for Blue Rock Products Company Profit Sharing
Trust.Trust, Sidney, Montana. He currently serves on the
Audit and Nomi-
natingNominating Committees of the Board of
Directors.
[PICTURE]
2
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
Joseph T. Simmons ......... 5859 1984 Mr. Simmons is professor of Accounting and (term expiring in 1995) Finance,
(to be elected for a term of University of South Dakota, Vermillion and Visitingwas Visit-
three years expiring in 1998) ing Professor of Finance, University of
Warsaw, Warsaw, Poland (February -- July,(February--July, 1994). Mr.
Simmons is the Chairman and President of Simmons
Financial Management, Inc. and owner of Simmons &
Associates. He also serves on the BoardsBoard of RE/SPEC and GRO/TECH in
Rapid City, South Dakota. He currently serves on the
Finance Committee of the Board of Directors.
[PICTURE]
Certain information concerning the remaining directors, whose terms expire
either in 1996 or in 1997, including their ages, periods of service as directors
and business experience, according to information furnished to the Company, is
set forth as follows:
Harold J. Mellen, Jr. .... 59Jr 60 1989 Mr. Mellen joined the Company in 1985 as Vice President
(term expiring in 1996) President--Corporate--Corporate Development and was named Senior Vice
President--Finance and Chief Financial Officer in May
1987, Executive Vice President and Chief Financial and
Corporate Development Officer in August 1989, and
President and Chief Corporate Development Officer in
May 1992. Mr. Mellen is a director
of General Atlantic Resources, Inc. of
Denver, Colorado, a public company of
which approximately 7.5 percent is
owned by Fidelity Oil Holdings, Inc. (a
subsidiary ofbecame the Company).President and Chief
Executive Officer on January 1, 1995. During 1994 Mr.
Mellen servesserved all subsidiaries as a Director and/or an
officer except Gwinner Propane, Inc.; and Prairielands
Energy Marketing, Inc. Mr. Mellen also serves as a
member of the Managing Committee of Montana-Dakota
Utilities Co., a Division of the Company and became
Chairman on January 1, 1995. On January 1, 1995, Mr.
Mellen became the Chairman of the Board of Alaska
Basic Industries, Inc., Anchorage Sand and Gravel
Company, Inc., Concrete, Inc., Fidelity Oil Co.,
Fidelity Oil Holdings, Inc., KRC Aggregate, Inc., KRC
Holdings, Inc., Knife River Coal Mining Company, LTM,
Incorporated, Rogue Aggregates, Inc., Williston Basin
Interstate Pipeline Company and the President of
Centennial Energy Holdings, Inc., and Wibaux Gas Co.;
all being subsidiaries of the Company.
[PICTURE]
Robert L. Nance .......... 5758 1993 Mr. Nance is the majority owner and President of Nance
(term expiring in 1996) of Nance Petroleum Corporation, Billings, Montana, an oil and
gas exploration and production company. He is also a
Director of First Interstate Bank of Commerce,
Billings, Montana. He is Chairmana Director of the Deaconess
Billings Clinic Health Organization, Deaconess Medical
Center and Billings Clinic, all of Billings, Montana.
He currently serves on the Finance Committee of the
Board of the Deaconess
Billings Clinic Health Organization,
Deaconess Medical Center and Billings
Clinic, allDirectors.
[PICTURE]
3
First Year
of Billings, Montana. He
currently serves on the Finance
Committee of the Board of Directors.
5
FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- -----------------------------Service
Name Age as Director Business Experience
---- --- ----------- -----------------------------------------------
-------------------
Charles L. Scofield ....... 6970 1978 Mr. Scofield is the owner and President of The Scofield
(term expiring in 1996) Scofield Broadcasting Co., Inc. which is the sole owner and
licensee of KLPZ radio station, Parker, Arizona. He is
the sole owner of KEYZ and KYYZ radio stations in
Williston, North Dakota. He is a Director of the First
National Bank & Trust Company of Williston, North
Dakota, a Director of the North Dakota Automobile Club
(AAA) of Fargo, North Dakota and the owner of a cattle
ranch in Montana. He currently serves on the
Nominating and Finance Committees of the Board of
Directors.
[PICTURE]
Stanley F. Staples, Jr. ..... 69Jr 70 1984 Mr. Staples is President of Alexander Properties, Inc.,
(term expiring in 1996) Properties, Inc., an investment management firm, and of Northern Chief
Iron Company. Mr. Staples also serves on the Board of
Directors of Wausau Paper Mills Company, M & I First
American National Bank, Marathon Electric
Manufacturing Corporation, Mosinee Paper Corporation,
and Murray Machinery, Inc. He currently serves on the
Compensation and Nominating Committees of the Board of
Directors.
[PICTURE]
San W. Orr, Jr. 53 1978 Mr. Orr is an attorney and is in the business of
(term expiring in 1997) financial and estate management. He is Chairman of the
Boards and a Director of Marathon Electric
Manufacturing Corporation, Mosinee Paper Corporation,
and Wausau Paper Mills Company. He is a Director of
Wausau Insurance Companies, Marshall & Ilsley
Corporation, M & I First American National Bank, and M
& I Marshall & llsley Bank. Mr. Orr also serves
various civic and charitable organizations in
Wisconsin including the Board of Regents of the
University of Wisconsin System. He currently serves on
the Audit and Compensation Committees of the Board of
Directors.
[PICTURE]
John A. Schuchart 65 1976 Mr. Schuchart, Chairman of the Board, was named Chief
(term expiring in 1997) Executive Officer in June 1980 and Chairman in May
1983. He retired as Chief Executive Officer on
December 31, 1994. During 1994, Mr. Schuchart also
served as the Chairman of the Board and a Director of
Alaska Basic Industries, Inc., Anchorage Sand and
Gravel Company, Inc., Concrete, Inc., Fidelity Oil
Co., Fidelity Oil Holdings, Inc., KRC Aggregate, Inc.,
KRC Holdings, Inc., Knife River Coal Mining Company,
LTM, Incorporated, Rogue Aggregates, Inc., Williston
Basin Interstate Pipeline Company; as a Director and
the President of Centennial Energy Holdings, Inc., and
Wibaux Gas Co.; all being subsidiaries of the Company.
Mr. Schuchart was also Chairman of the Managing
Committee of Montana-Dakota Utilities Co., a Division
of the Company. He resigned as a Director of all
subsidiaries and from the Managing Committee on
December 31, 1994.
[PICTURE]
4
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
Homer A. Scott, Jr 60 1981 Mr. Scott is engaged in the banking and ranching business
(term expiring 1997) in the states of Wyoming and Montana. He is a Director
and Chairman of the Board of First Interstate
BancSystem of Montana, Inc., and a Director of First
Interstate Bank of Commerce, Billings, Montana. Mr.
Scott is a Director and President of Sugarland
Enterprises, Inc., and the managing partner of
Sugarland Development Company, a commercial property
development company in Sheridan, Wyoming. Mr. Scott
also is a Director of Flying V Cattle Company and
Padlock Ranch Company and a partner in Scott Land and
Livestock. He is the owner of the Sheridan Holiday
Inn, principal owner of Sports Mate, Inc., and owner
of Powder Horn Ranch, a housing development and golf
course in Sheridan, Wyoming. He currently serves on
the Audit and Compensation Committees of the Board of
Directors.
[PICTURE]
Sister Thomas Welder, O.S.B 54 1988 Sister Welder is the President of the University of Mary,
(term expiring in 1997) Bismarck, North Dakota. She is a Director of St.
Alexius Medical Center of Bismarck and Chair of its
Marketing Committee. She is also a Director of the
Bismarck-Mandan Development Association and is a
member and past Director of the Bismarck-Mandan Area
Chamber of Commerce. She is also a member of the North
Dakota Vision 2000 Committee, the North Dakota State
Women's Business Leadership Council, the Theodore
Roosevelt Medora Founder's Society, and
Consultant-Evaluator Corps for the North Central
Association of Colleges and Schools. She currently
serves on the Nominating and Finance Committees of the
Board of Directors.
Except where expressly noted, no corporation or organization named above is a
parent, subsidiary or other affiliate of the Company.
During 1993,1994, the Board of Directors had four meetings. The Board of
Directors has an Audit Committee, discussed under "Accounting and Auditing
Matters," a Nominating Committee, a Finance Committee and a Compensation
Committee. The Nominating Committee, which met threefive times during 1993,1994,
recommends to the full Board of Directors nominees for directors and for
executive officers. The Nominating Committee will consider nominees recommended
by stockholders if the names of such nominees are submitted to the Secretary of
the Company on or before November 1, 1994,1995, for the annual meeting expected to be
held on April 25, 1995.23, 1996 . The Compensation Committee, which met four times during
1993,1994, sets compensation levels for executive officers and recommends to the full
Board of Directors compensation for the Directors of the Company. The Finance
Committee, which met three times during 1993,1994, reviews corporate financial plans,
policies, budgets, investments, acquisitions, and reviews and authorizes actions
necessary to issue and sell Common Stock and debt securities of the Company.
6
5
EXECUTIVE COMPENSATION
Shown in the Summary Compensation Table below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the calendar
years ending December 31, 1994, 1993, and 1992, and 1991, and in the next
two Tables the option exercises and long-term incentive plan awards for the last
fiscal year of those persons who were, at
December 31, 1993,1994, (i) the Chief Executive Officer and (ii) the other four most
highly compensated executive officers of the Company (the Named Officers).
Footnotes supplement the information contained in the Tables.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------- ----------------------------
AWARDS PAYOUTS
------------------ --------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS1 SATION2 AWARD(S) SARS3 PAYOUTS SATION4
PRINCIPAL POSITION YEAR ($) ($)Long term
Annual compensation compensation
------------------------- ------------
Awards
------------
(a) (b) (c) (d) (e) (f)
Securities
underlying All other
Options/ compen-
Name and Salary Bonus1 SARs2 sation3
principal position Year ($) ($) (#) ($)
($)
- ---------------------------------------- ---- -------- -------- -------- -------- -------- -------------- ------ ------- --------
John A. Schuchart 1994 385,926 98,371 0 12,278
--Chairman of the 1993 314,000 68,432 -- 0 0 0 4,497
--Chairman of
theBoard & C.E.O. 1992 296,808 33,686 -- 0 28,530 0 4,364
Board & C.E.O. 1991 281,923 135,895 -- 0 0 0 4,238
Harold J. Mellen, Jr. 1994 191,779 50,577 0 10,470
--President & Chief 1993 176,995 42,328 -- 0 0 0 4,497
--President &
ChiefCorporate Development Officer 1992 160,334 21,600 -- 0 13,740 0 4,402
Corporate
Development
Officer 1991 151,691 81,000 -- 0 0 0 4,200
Joseph R. Maichel 1993 164,837 0 --1994 173,121 0 0 0 3,77710,470
--President & C.E.O. of 1993 164,837 0 0 3,777
Montana-Dakota Utilities Co. 1992 156,409 8,516 -- 0 13,740 0 4,331
Montana-Dakota
Utilities Co. 1991 150,100 45,001 -- 0 0 0 4,238
Douglas C. Kane 1994 138,519 44,878 0 8,311
--Executive Vice President 1993 131,960 35,264 -- 0 0 0 3,944
--Executive
Vice President 1992 125,723 20,412 -- 0 13,740 0 4,236
& Chief Operating Officer 1991 105,908 67,364 -- 0 0 0 2,9211992 125,723 20,412 13,740 4,236
Martin A. White 1994 123,369 24,030 0 6,270
--Vice President-- 1993 119,352 20,700 -- 0 0 0 920
--Vice
President--Corporate Development 1992 115,000 11,040 -- 0 6,130 0
0
Corporate
Development 1991 13,269 0 -- 0 0 0 0- ----------
- ------------------------------------------------------------
1 Granted pursuant to the Management Incentive Compensation Plan.
2 Perquisites and other personal benefits paid to each Named Officer
aggregate less than the minimum disclosure levels.
3 No options were granted during 1993.1993 or 1994. "SAR" is an acronym for "stock
appreciation right." The Company has no plan or program which uses stock
appreciation rights.
43 Totals include Company contributions to the Tax Deferred Compensation Savings
Plan (401(k) Plan).in the amounts of $9,000 each for Messrs. Schuchart, Mellen and Maichel,
and $8,311 and $6,270 for Messrs. Kane and White, respectively; and insurance
premiums in the amounts of $3,278 for Mr. Schuchart and $1,471 each for
Messrs. Mellen and Maichel.
7
AGGREGATED OPTION/SAR1 EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR1 VALUES
(D)
NUMBER OF (E)
(B) SECURITIES UNDERLYING VALUE OF UNEXERCISED,
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED (C) ATAGGREGATED OPTION/SAR(1) EXERCISES IN LAST FISCAL YEAR-END3 ATYEAR
AND FISCAL YEAR-END ON VALUEOPTION/SAR(1) VALUES
(a) (b) (c)
Number of
securities underlying Value of unexercised,
unexercised options/SARs in-the-money options/SARs
at fiscal year-end(2) at fiscal year-end
(#) ($)
(A) EXERCISE2 REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- -------- ----------- ------------- ----------- -------------------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----- ---------- ------------ ---------- ------------
John A. Schuchart.... 9,640 121,085Schuchart 0 28,530 0 224,6740 0
Harold J. Mellen, Jr................... 5,340 69,754Jr. 0 13,740 0 108,20248,090
Joseph R. Maichel....Maichel 0 0 0 13,740 0 108,202
Douglas C. Kane...... 0 0Kane 0 13,740 0 108,20248,090
Martin A. White...... 0 0White 0 6,130 0 48,27421,455
- ----------
- ------------------------------------------------------------
1 "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.
2 Reflects exerciseMr. Schuchart and Mr. Maichel both retired at year end. Under the Plan they
forfeited all of options under the 1983 Key Employees' Stock Option
Plan. No further options have been or will be granted under this plan and
no options remain outstanding.
3 The unexercised options are options granted under the 1992 Key Employee
Stock Option Plan (none of which are exercisable at this time).their options.
SALARIED PENSION PLAN AND SUPPLEMENTAL INCOME SECURITY PLAN6
YEARS OF CREDITED SERVICE 2
----------------------------------------------------------------------
REMUNERATION1PENSION PLAN TABLE
Years of Service
---------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 OR MOREor more
- ------------------------ -------- -------- -------- -------- ----------------------- --------- --------- --------- --------- ---------
$125,000...$125,000................ $ 77,94077,916 $ 86,66586,604 $ 95,365 $104,090 $112,790
150,000... 92,030 102,555 113,080 123,605 134,130
175,000... 106,120 118,445 130,795 143,120 155,445
200,000... 120,185 134,335 148,485 162,635 176,785
225,000... 134,275 150,225 166,200 182,150 198,100
250,000... 145,265 162,015 178,740 195,515 210,681
300,000... 162,545 179,295 196,020 212,795 227,961
400,000... 171,185 187,935 204,660 221,435 236,601
450,000... 171,185 187,935 204,660 221,435 236,601
- ------------------------------------------------------------
1 Pension benefits are determined by the step-rate formula which places
emphasis on the highest consecutive 60 months of earnings within the final
10 years of service. Benefits for single participants under the Salaried
Pension Plan are paid as straight life amounts and benefits for married
participants are paid as actuarially reduced pensions with a survivorship
benefit for spouses, unless participants choose otherwise. The Salaried
Pension Plan also permits pre-retirement survivorship benefits upon
satisfaction of certain conditions. Additionally, certain reductions are
made for employees electing early retirement.
The Internal Revenue Code places maximum limitations on the amount of
benefits that may be paid in dollars under the Salaried Pension Plan. The
Company has adopted a non-qualified Supplemental Income Security Plan
(SISP) for senior management personnel. In 1993, 81 senior management
personnel participated in the SISP including the Named Officers. Both
plans cover salary shown in column (c) of the Summary Compensation Table
and exclude bonuses and other forms of compensation.
Upon retirement and attainment of age 65, participants in the SISP may
elect a retirement benefit or a survivors' benefit with the benefits
payable monthly for a period of 15 years.
2 As of December 31, 1993, the Named Officers were credited with the
following years of service under the plans; Mr. Schuchart: Pension, 18,
SISP, 11; Mr. Maichel: Pension, 23, SISP, 11; Mr. Mellen: Pension, 8,
SISP, 8; Mr. Kane: Pension, 3, SISP, 11; and Mr. White: Pension, 2, SISP,
2.95,304 $103,992 $112,680
150,000................ 91,992 102,492 113,004 123,504 134,004
175,000................ 106,068 118,380 130,704 143,016 155,328
200,000................ 120,144 134,280 148,404 162,528 176,664
225,000................ 134,220 150,168 166,104 182,052 197,988
250,000................ 148,308 166,056 183,816 201,564 219,324
300,000................ 176,460 197,832 219,216 240,588 261,972
400,000................ 206,844 235,476 264,108 292,740 321,360
450,000................ 217,716 249,972 282,228 314,484 346,740
500,000................ 228,600 264,480 300,360 336,228 372,108
The table covers the amounts payable under the Salaried Pension Plan and
non-qualified Supplemental Income Security Plan. Pension benefits are determined
by the step-rate formula which places emphasis on the highest consecutive 60
months of earnings within the final 10 years of service. Benefits for single
participants under the Salaried Pension Plan are paid as straight life amounts
and benefits for married participants are paid as actuarially reduced pensions
with a survivorship benefit for spouses, unless participants choose otherwise.
The Salaried Pension Plan also permits pre-retirement survivorship benefits upon
satisfaction of certain conditions. Additionally, certain reductions are made
for employees electing early retirement.
The Internal Revenue Code places maximum limitations on the amount of
benefits that may be paid in dollars under the Salaried Pension Plan. The
Company has adopted a non-qualified Supplemental Income Security Plan (SISP) for
senior management personnel. In 1994, 80 senior management personnel
participated in the SISP including the Named Officers. Both plans cover salary
shown in column (c) of the Summary Compensation Table and exclude bonuses and
other forms of compensation.
Upon retirement and attainment of age 65, participants in the SISP may
elect a retirement benefit or a survivors' benefit with the benefits payable
monthly for a period of 15 years.
As of December 31, 1994, the Named Officers were credited with the
following years of service under the plans; Mr. Schuchart: Pension, 19, SISP,
11; Mr. Maichel: Pension, 24, SISP, 11; Mr. Mellen: Pension, 9, SISP, 9; Mr.
Kane: Pension, 4, SISP, 11; and Mr. White: Pension, 3, SISP, 3. The maximum
years of service for benefits under the Pension Plan is 35 and under the SISP
vesting begins at 3 years and is complete after 10 years. Benefit amounts under
both plans are not subject to reduction for offset amounts.
8
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTIONIntroduction
Decisions on compensation for the Company's executive officers are made by
the Compensation Committee of the Board of Directors. The Committee was created
in 1967 and has been and is composed entirely of non-employee directors. In the
late part of each calendar year, the Committee reviews and approves, with any
modifications it deems appropriate, the Executive Compensation Policy for the
executive officers including the Chief Executive Officer. The approved plan is
implemented the following calendar year.
EXECUTIVE COMPENSATION POLICYExecutive Compensation Policy
The Executive Compensation Policy is designed to attract and retain
qualified executive officers, to recognize above-average job performance and to
provide a direct and strong link between Company performance and executive pay.
The Board of Directors in 1994 adopted Stock Ownership Guidelines under which
executives are required to own Company Common Stock valued from two times their
annual salary to four times their annual salary (in the case of the Chief
Executive Officer). Total compensation is intended to be competitive with that
paid by comparable companies in the regulated electric and gas utility industry
and relevant segments of the energy and mining industries. There are four
components of total executive compensation:
(1) Base salary;
(2) Management Incentive Compensation Plan;
(3) 1992 Key Employee Stock Option Plan; and
(4) Restricted Stock Bonus Plan.
As indicated above, the base salary component of compensation is designed
to be competitive with that paid by comparable companies. An external consultant
provides comparative surveys (Edison Electric Institute Executive Compensation
7
Survey, American Gas Association Top Management Survey, and Executive
Compensation Services Top Management Survey). While the companies used in these
surveys are not the same as the peer group of companies used in the Performance
Graph, the Compensation Committee believes the Edison Electric Institute
Executive Compensation Survey, American Gas Association Top Management Survey,
and Executive Compensation Services Top Management Survey provide a broader base
of data and are commonly used in the utility industry to set executive salaries.
The consultant also uses, as appropriate, an oil and gas survey and a mining
company survey for executives in those positions. The Edison Electric Institute
Executive Compensation Survey is a 19921994 survey prepared by Edison Electric
Institute and includes 100 participants of diverse size, comprised of electric
or electric/gas utility companies, utility parent companies or diversified
parent companies. The American Gas Association Top Management surveySurvey is a 19921993
survey of salary for 95 natural gas companies -- distribution,companies--distribution, transmission,
combination (gas and electric) and integrated. The Executive Compensation
Services Top Management Survey is a 1993-94 survey of executive compensation for
1,149 companies cutting across all major industry lines. The consultant then
used the 40 utility respondents from this survey -- water,survey--water, telephone, electric and
gas -- forgas--for comparison purposes. The oil and gas survey and the mining company
survey are private surveys done by the consultant using companies he considers
appropriate. Since these surveys are confidential, the Compensation Committee
does not know the names or any characteristics of the companies used by the
consultant. The external data from those surveys is used to develop a
market-consensus salary for each executive position. "Market-consensus salary"
refers to the average of the salaries for utility executives as shown in the
referenced surveys. A range of compensation from 80%-120% is set around the
market-consensus salary. It is the policy of the Compensation Committee to set
95% of the market-consensus salary as the market value for the executive
positions in the Company. The
companies are not the same as the peer group of companies used for the graph
showing the comparison of five year total shareholder returns, immediately
following this report. The Compensation Committee believes the Edison Electric
Institute Executive Compensation Survey, American Gas Association Top Management
Survey, and Executive Compensation Services Top Management Survey provide a
broader base of data and are commonly used in the utility industry to set
executive salaries. A range of compensation from 80%-120% is set around the
targeted 95% of the market consensus salary. The Compensation Committee uses the market value of
the position together with an analysis of the value of the executive position
and individual evaluation to establish base salaries for executive officers
within the targeted range. To determine theA premium which
should beis added to the market-consensus salary usedin
order to set the salary of the Chief Executive Officer to reflect the
diversified nature of the Company, theCompany. The consultant uses a group of 12 peer companies (10 of which are the same as those
in the peer group used forof
companies in the graph showingPerformance Graph to determine the comparison of five year total
shareholder returns, immediately following this report). These 12 companies are
selected from utilities comparable to the Company. The other two companies are
Hawaiian Electric Industries, Inc. and IES Industries, Inc., both diversified
utility holding companies. There was no specific intent that these companies be
different from the peer group. For 1994 they will be the same.premium. The Compensation
Committee looked atconcluded, based on the data fromaverage of the 12 peerutility-diversified companies
in the Performance Graph, adjusted for company size, and concluded the average of
9
the 12 utility-diversified companies indicated that the market-consensus
salary for the Chief Executive Officer should be increased by a premium of 15%12%.
A similar procedure was used for the other executive officers.
All executive officers are eligible for awards under the Company's various
incentive plans referred to above. The Compensation Committee believes that
offering incentivesincentive to executive officers will enhance the long-term performance
of the Company, promote cost efficiency and further overall shareholder returns.
The Committee uses these plans as it deems appropriate to achieve these goals.
The Compensation Committee determines awards pursuant to these plans based
generally on what it believes other similar companies are doing.
1993 COMPENSATION FOR EXECUTIVE OFFICERS AND CHIEF EXECUTIVE OFFICERThe Company has not formulated any policy with regard to the deductibility
of qualifying compensation paid to executive officers under Section 162(m) of
the Internal Revenue Code.
1994 Compensation for Executive Officers and Chief Executive Officer
Compensation paid to executive officers of the Company in 19931994 was
comprised of base salary, and cash awards under the Management Incentive
Compensation Plan.
AdditionalPlan and awards and dividend equivalents automatically accrued on options granted in 1992
to 16 executives of the Company (including all executive officers) pursuant tounder the 1992 Key
Employee Stock Option Plan. No awards were made in 19931994 under the
1992 Key Employee Stock Option Plan or the Restricted
Stock Bonus Plan (except
for one award of restricted stock made to one officer).Plan.
Base salary increases for executive officers during 19931994 ranged from 3.1%3.3%
to 5.9%5.6% and averaged 5.2%4.8%. Salary increases were a function of (1) the
Compensation Committee's assessment of the individual performance of each
executive and (2) the current salary of each executive compared to that paid by
comparable companies as determined by the external consultant (as discussed
above). A more favorable performance appraisal permitted a larger increase. If
the current salary lagged that paid by comparable companies, a larger increase
was permitted. The base salaries during 19931994 averaged 85%88.7% of the
market-consensus salary for the Company's executive positions. The Chief
Executive Officer's base salary for 19931994 reflected an increase of 5.9%5.6% over his
19921993 base salary. This was 90%92.7% of the market-consensus salary as adjusted by
the premium of 15%12%. The Chief Executive Officer's achievements and his 1819 years
with the Company were considered as well as his achievementthe excellent financial performance
and integration of his goal during 1993the construction materials businesses into the Company's
operations and the exceptional financial performance of major
acquisitionsthe oil and gas
subsidiary, including the sale of profitable companies not subject to rate regulation.one of its investments at a substantial gain.
The Compensation Committee did not give formal weighting to the criteria used in
order to set salary increases for the executive officers or for the Chief
Executive Officer.
8
The Management Incentive Compensation Plan is structured so that cash
incentive awards reflect the attainment of specific annual levels of
performance. The performance measures used reflect both the shareholder'sstockholder's
interest (earnings) and the customer'scustomers' interest (cost efficiency). Additionally,
individual performance is evaluated and appropriate adjustments to target award
levels may be made. Target award levels are a percentage of each participant's
assigned salary grade midpoint. The percentage for the Chief Executive Officer
was 35% and for the other executive officers ranged from 20%25% to 30%. A target
incentive fund is developed at the beginning of each plan year based upon the
aggregate target award levels of all participants. The size of the fund will
increase or decrease based upon actual Company performance in relation to the
pre-established goals. Individual awards will be greater or lesser than target
amounts based upon an assessment of individual performance. Awards can range
from 0% (less than 90% of budgeted earnings per share) to 150% (more than 108%
of budgeted earnings per share) of the target amount. The annual corporate
performance targets for 19931994 were based on the degree of achievement of 105%103% of
budgeted earnings. As a result of actual earnings exceeding threshold level of
performance, and individual performance goals being met, cash awards were made
under the plan for the year 19931994 to 9four executive officers in the aggregate
amount of $265,350.$119,485. The Chief Executive Officer received $68,432$98,371 for the year
1993.1994. This amount was a payout of 68%82.7% of the targeted award, based on the
Company's actual earnings exceeding the threshold level of performance and upon
individual performance. The cost efficiency performance measure in 19931994 affected
only one
named executive officer, Mr. Maichel, whose award opportunity was based 75%
on cost efficiency and 25% on budgeted earnings of his division. Neither goal
was met and Mr. Maichel received no award.
The 1992 Key Employee Stock Option Plan is designed to motivate executives
to achieve specified long-term performance goals of the Company and to encourage
ownership by them of the common stock of the Company. It is designedintended to
reinforce financial and strategic objectives, to emphasize pay for performance,
and to focus executive effort on long-term sustainable value creation. This
aligns the interests of the executives with those of the shareholder.stockholders. The plan
consists of two elements: stock option grants and dividend equivalents. 10
SinceThe
three-year performance period for options granted in 1992 under the Plan ended
on December 31, 1994. The goals for the performance period were return on equity
(25%), earnings per share (25%) and relatedtotal relative shareholder return (50%).
100% of the options granted to the executive officers became exercisable at the
end of the performance period because 110.8% of the performance goals were met.
The Company reached 96.8% of its return on equity goal, 93.2% of its earnings
per share goal, and 143% of its total shareholder return goal. No weighting was
given to individual performance. In addition, the dividend equivalents granted
on the options during 1992 through 1994 were earned at 110.8% based on the
attainment of the goals as described above. No additional options were granted
in 19921994. The Chief Executive Officer and the
initial 3 year performance cycle (1992-94) is still running, the Compensation
Committee determined that it was not necessary to grant further awards in 1993
to achieve the goals stated above.Mr. Maichel both retired at year-end
and forfeited all of their options.
The Restricted Stock Bonus Plan provides for awards of restricted stock to
individuals when designated by the Compensation Committee as having demonstrated
superior individual performance. The awards serve as a motivator for long-term
performance and as a retention device for individuals who have demonstrated
superior performance. The executive has a stake in the company'sCompany's financial
performance. Again, this aligns the interest of the executives with those of the
shareholder.stockholders. No awards have been made under this plan to executive officers of
the Company since 1988.
Restrictions lapsed with respect to 1000 shares granted
to Messrs. Kane and Mellen in 1988 pursuant to the Restricted Stock Bonus Plan
after expiration of the five-year restriction period.
26%36.2% of the Chief Executive Officer's total compensation during 19931994 was
based on objective annual performance criteria (through the Management Incentive
Compensation Plan) or long-term performance criteria (through the 1992 Key
Employee Stock Option Plan, reflecting the acceleration of options granted in
1992 and dividend equivalents accrued on the 1992 option grants). An average of
22%30.6% of the total compensation of the other executive officers was based on
objective annual performance criteria (through the Management Incentive
Compensation Plan) or long-term performance criteria (through the 1992 Key
Employee Stock Option Plan, reflecting acceleration of options granted in 1992
and dividend equivalents accrued on the 1992 option grants). The Committee
believes that having 26%36.2% of the compensation of Chief Executive Officer and an
average of 22%30.6% of the compensation of other executive officers'officers at risk is
sufficient to provide a direct and strong link between Company performance and
executive pay.
San W. Orr, Jr., Homer A. Scott, Jr., Member
Chairman Stanley F. Staples, Jr., Member
11
9
MDU RESOURCES GROUP, INC.
COMPARISON OF FIVE YEAR TOTAL SHAREHOLDER RETURN1
1988[PRINTED MATERIAL CONTAINS A LINE GRAPH REPRESENTED BY THE TABLE BELOW]
1989 1990 1991 1992 1993 1994
--- --- --- --- --- ---
MDU 100 97 124 141 177 161
S&P 500 100 97 126 136 150 152
PEER GROUP 100 104 136 151 166 152
(1) All data is indexed to December 31, 1989, 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
MDU 100 128 124 159 180 226
S&P 500 100 132 128 166 179 197
PEER GROUP 100 128 133 175 194 213
(1) All data is indexed to December 31, 1988, for the Company, the S&P 500, and
the peer group. Total shareholder return is calculated using the December 31
price for each year. It is assumed that all dividends are reinvested in
stock at the frequency paid, and the returns of each component peer issuer
of the group is weighted according to the issuer's stock market
capitalization at the beginning of the period. The peer issuers are Black
Hills Corp., Cilcorp Inc., Equitable Resources Inc., Florida Progress Corp.,
Minnesota Power & Light Company, The Montana Power Company, Oneok Inc.,
Questar Corp., South Jersey Industries, Teco Energy Inc., UGI Corp., and
Utilicorp United Inc.
DIRECTORS' COMPENSATION
Each Director who is not an officer of the Company receives a $13,000
annual retainer for Board Service, Audit and Compensation Committee Chairmen
each receive a $2,500 annual retainer, and Finance and Nominating Committee
Chairmen each receive a $1,000 annual retainer. All such Directors must defer
$1,000 of the annual Board retainer which amount is credited to a deferral
account quarterly. The deferral amount is divided by the market price of Company
Common Stock and converted to investment units. If dividends are paid on Company
Common Stock then an equivalent amount is credited for each investment unit and
the resulting amount is converted to investment units and credited to such
Directors' accounts. When a participating Director leaves the Board, dies or
becomes disabled, then the investment units credited to that Director's account
are multiplied times the market price of the Company Common Stock at that time,
converted to a dollar value and paid to the Director or named beneficiary in
equal monthly payments (with interest) over a five year period. Each Director
may also defer all or any part of the $12,000 Board retainer paid in cash.
Additionally, each Director who is not an officer of the Company receives $700
for each meeting of the Board of Directors attended and each Committee member
who is not an officer of the Company receives $700 for each Committee meeting
attended.
The Company also has a post-retirement arrangement for Directors who are
not officers of the Company which provides that after retirement from the Board,
a Director is entitled to receive annual compensation in an amount equal to the
sum of all annual retainers in effect at the time of retirement. Such amount
will be paid to the Director or named beneficiary in equal monthly installments
over a period of time equal to the period of service on the Board.
12
The Company also has a program whereby past Directors of the Company may be
chosen each year as "Director Emeritus" and each such past Director so chosen
may be invited to participate as a nonvoting member of the Company's Board of
10
Directors. Each such "Director Emeritus" serves for five years and receives no
compensation, other than reimbursement by the Company for reasonable travel
expenses in connection with attendance at meetings of the Company's Board of
Directors.
NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
The Board of Directors at its meeting on February 9, 1995, adopted a
Non-Employee Director Stock Compensation Plan (the "Plan"), subject to
ratification by the stockholders. The complete text of the Plan is set forth in
Exhibit "A" hereto. The following is a summary of the material features of the
Plan and is qualified in its entirety by reference to Exhibit "A".
Purpose. The purpose of the Plan is to provide ownership of MDU Resources
common stock to non-employee members of the Board of Directors in order to
improve the Company's ability to attract and retain highly qualified individuals
to serve as directors of the Company and to strengthen the commonality of
interest between directors and stockholders.
Administration. The Plan is intended to be a formula plan for purposes of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Plan will be administered by a committee appointed by the Board of
Directors, which will consist of at least two persons (who need not be
directors) not eligible to participate in the Plan.
Awards Under the Plan. The Plan provides for each non-employee director to
receive a stock payment of 200 shares as a portion of the annual retainer
payable to such director. The stock payment will be in addition to the cash
retainer currently paid to each non-employee director. The award is made
automatically on the fifteenth business day after each annual meeting of
stockholders. The Plan also provides each non-employee director with the right
to elect to increase the amount of common stock that will be granted by reducing
the balance of the annual retainer.
Shares Subject to the Plan. Shares to be issued under the Plan may be
authorized but unissued shares of common stock, treasury stock or shares
purchased in the open market. The maximum number of shares that may be issued
under the Plan is 50,000. If any corporate transaction occurs that causes a
change in MDU Resources' capitalization, the Committee shall make appropriate
adjustments to the number or kind of shares subject to the Plan and the annual
stock payment.
Eligibility and Participation. Non-employee directors of the Company will
participate in the Plan. There are currently ten non-employee directors of the
Company.
Amendment and Termination. Unless previously terminated by the Board, the
Plan will terminate when all shares have been granted. The Board may amend,
suspend or terminate the Plan at any time; provided, however, that no amendment
requiring stockholder approval for the Plan to continue to comply with Rule
16b-3 under the Exchange Act will be effective unless approved by the
stockholders. In addition, the number of shares to be granted may not be changed
by the Board more than once every six months, or otherwise in contravention of
Rule 16b-3, except as required by law.
New Plan Benefits
Non-Employee Director Stock Compensation Plan
Name & Position Dollar Value ($) Number of Units (Shares)
--------------- -------------- ----------------------
Non-Employee Director Group $5475.00 200
The table reflects the number of shares that will be granted to each
participating non-employee director on the fifteenth business day after the
Annual Meeting if the Plan is approved by stockholders. The dollar value is
based on the closing price of $27.375 per share on January 24, 1995.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Approval of
the Plan requires the affirmative votes of the holders of a majority of the
Common Stock present or represented and entitled to vote. Abstentions will have
the effect of a "no" vote; broker non-votes will have no effect.
11
INFORMATION CONCERNING EXECUTIVE OFFICERS
Executive officers of the Company are elected by the Board of Directors and
serve until the next annual meeting of the Board. Any executive officer so
elected may be removed at any time by the affirmative vote of a majority of the
Board. Certain information concerning such executive officers, including their
ages, present corporate positions and business experience is set forth below.
PRESENT CORPORATE POSITION
NAME AGE AND BUSINESS EXPERIENCE
- ----------------------------- --- ---------------------------------------------------------
John A. Schuchart............ 64 Chairman of the BoardPresent Corporate Position
Name Age and Business Experience
----- ---- -----------------------
Harold J. Mellen, Jr.............. 60 President and Chief Executive Officer. For information about Mr. Schuchart,Mellen, see
"Election of Directors."
Cathleen M. Christopherson... 49Christopherson........ 50 Ms. Christopherson was elected Vice President-Corporate Communications
effective November 1989. Prior to that she served as Assistant Vice
President-Corporate Communications effective September 1989 and Division
Manager of Montana-Dakota Utilities Co., a Division of the Company, from
August 1984.
Douglas C. Kane.............. 44Kane................... 45 Executive Vice President and Chief Operating Officer. For information about
Mr. Kane, see "Election of Directors."
Lester H. Loble, II.......... 52II............... 53 Mr. Loble was elected General Counsel and Secretary of the Company effective
May 1987. Mr. Loble also serves as a Director and/or General Counsel and
Secretary of all subsidiaries of the Company except Wibaux Gas Co.;
Prairielands Energy Marketing, Inc.; and Gwinner Propane, Inc. Mr. Loble is
also a member and the Secretary of the Managing Committee of Montana-Dakota
Utilities Co., a Division of the Company.
Joseph R. Maichel............ 59 Mr. Maichel has been President, Chief Executive Officer
and a member of the Managing Committee of Montana-Dakota
Utilities Co., a Division of the Company, since
May 1990 and President since August 1985 and was
Group Vice President-Distribution of the Company
from February 1982.
Harold J. Mellen, Jr......... 59 President and Chief Corporate Development Officer. For
information about Mr. Mellen, see "Election of
Directors."
Vernon A. Raile.............. 49Raile................... 50 Mr. Raile was elected Vice President, Controller and Chief Accounting Officer
effective August 1992. Prior to that he was Controller and Chief Accounting
Officer from May 1989, Assistant Treasurer from December 1987, and Tax
Manager from March 1980.
Warren L. Robinson........... 43Robinson................ 44 Mr. Robinson was elected Vice President, Treasurer and Chief Financial
Officer of the Company effective August 1992. He is also Treasurer and
Assistant Secretary of Centennial Energy Holdings, Inc., Fidelity Oil Co.,
Fidelity Oil Holdings, Inc., Wibaux Gas Co. and Treasurer and Secretary of
Prairielands Energy Marketing, Inc., all being subsidiaries of the Company.
Prior to that he served as Treasurer and Assistant Secretary from December
1989, and as Manager of Corporate Development and Assistant Treasurer from
May 1989 to December 1989 and Manager of Corporate Development from October
1988.
Ronald D. Tipton.................. 48 Mr. Tipton was elected President and Chief Executive Officer of
Montana-Dakota Utilities Co. on January 1, 1995. Prior to that time he
served asWilliston Basin Interstate Pipeline Company in the Senior Vicefollowing
capacities: President and Chief FinancialExecutive Officer from May 1994, President
from May 1990, Executive Vice President from May 1989, Vice President--gas
supply from January 1985. From January 1983 to January 1985 he was the
Assistant Vice President--gas supply of Great Falls Gas Company,
Great Falls, Montana.
13
PRESENT CORPORATE POSITION
NAME AGE AND BUSINESS EXPERIENCE
- ----------------------------- --- ---------------------------------------------------------
Montana-Dakota Utilities Co.
Martin A. White.............. 52White................... 53 Mr. White was elected Vice President-Corporate Development November, 1991.
Prior to that he was Chairman and Chief Executive Officer of White
Resources Corp., a mining company, from January 1990, and Executive Vice
President and Chief Operating Officer of Consolidated TVX Mining
Corporation from January 1988. Prior to that he was President and Chief
Operating Officer of Entech, Inc., a subsidiary of The Montana Power
Company.
12
Present Corporate Position
Name Age and Business Experience
----- ---- -----------------------
Rodney J. White.............. 57White................... 58 Mr. White was elected Vice President-Marketing Strategy September 1992. Prior
to that he was Vice President-Administration of Williston Basin Interstate
Pipeline Company from August 1986 to August 1989 when he became President
and a Director of Prairielands Energy Marketing, Inc., and in 1993
President and a Director of Gwinner Propane, Inc., subsidiaries of the
Company.
Robert E. Wood............... 51Wood.................... 52 Mr. Wood has been Vice President-Public Affairs and Environmental Policy of
the Company since August, 1991. Before that he was Vice President-Public
Affairs from June 1986. For five years prior thereto he served as Manager
of Legislative Affairs for the Company.
SECURITY OWNERSHIP
The table below sets forth the number of shares of capital stock of the
Company owned beneficially as of December 31, 1993,1994, by each director and each
nominee for director, each Named Officer and by all directors and executive
officers of the Company as a group.
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS
---------------------------Amount and Nature
of Beneficial Ownership Percentage of Class
-------------------------- -------------------
NAME COMMON PREFERRED COMMON PREFERRED
- ----------------------------------------------- ------- --------- ------ ---------Name Common Preferred Common Preferred
----- -------- -------- -------- --------
Douglas C. Kane................................ 8,014(a)Kane......................................... 8,763(a) -- * --
Joseph R. Maichel.............................. 19,514(a)Maichel....................................... 20,560(a) -- * --
Harold J. Mellen, Jr........................... 14,963(a)Jr.................................... 15,729(a) -- * --
Richard L. Muus................................ 2,934Muus......................................... 3,097 -- * --
Robert L. Nance................................ 1,400Nance......................................... 1,900 -- * --
John L. Olson.................................. 3,000Olson........................................... 6,000 -- * --
San W. Orr, Jr.................................Jr.......................................... 123,232(b) -- * --
John A. Schuchart.............................. 82,811(a)Schuchart....................................... 84,075(a)(f) -- * --
Charles L. Scofield............................Scofield..................................... 8,000 -- * --
Homer A. Scott, Jr.............................Jr...................................... 2,000(c) -- *
--
Joseph T. Simmons.............................. 3,476Simmons....................................... 3,668 -- * --
Stanley F. Staples, Jr......................... 83,680(d)Jr.................................. 84,076(d) 300(d) * *
Sister Thomas Welder........................... 12,763(e)Welder.................................... 12,783(e) -- * --
Martin A. White................................ 3,682(a)White......................................... 4,217(a) -- * --
All directors and executive officers of the Company as
a group (20 in number)...... 392,531 300................................ 405,164 306 2.1 *
- ----------------------------------------------------------------------
* Less than one percent of the class.
(a) Includes full shares allocated to the officer's account in the Tax Deferred
Compensation Savings Plan.
(b) Mr. Orr serves as a co-trustee with shared voting and investment power of
various trusts and as an officer and director of the corporate trustee for
various other trusts holding these shares. Mr. Orr disclaims beneficial
ownership of all but 562 shares held by the trusts.
(c) Shares held by Homer A. Scott, Jr. Trust. Mr. Scott is a co-trustee of the
trust and shares voting and investment power with respect to these shares.
(d) All except 1000 shares of Common Stock are held in the name of Judd S.
Alexander Foundation, Inc. and Walter Alexander Foundation, Inc. Mr.
Staples, as President of the Judd S. Alexander Foundation, Inc., and
Secretary of the Walter Alexander Foundation, Inc., disclaims all
beneficial ownership of the shares held by the Foundations.
(e) Shares of Common Stock owned by University of Mary. Sr. Welder, as
President of the University of Mary, disclaims all beneficial ownership of
these shares.
(f) Includes 52,489 shares owned by Mr. Schuchart's wife. Mr. Schuchart
disclaims all beneficial ownership of the shares held by the Foundations.
(e) Shares of Common Stock owned by University of Mary. Sr. Welder, as President of the
University of Mary, disclaims all beneficial ownership of these shares.
(f) Includes 52,489 shares owned by Mr. Schuchart'shis wife.
Mr. Schuchart disclaims all
beneficial ownership of the shares owned by his wife.
14
13
ACCOUNTING AND AUDITING MATTERS
The Board of Directors of the Company has appointed Arthur Andersen & Co.,LLP,
Certified Public Accountants, as independent auditors for the year ending
December 31, 1993.1994. The appointment was made on the recommendation of the Audit
Committee of the Board of Directors which is presently composed of Messrs.
Richard L. Muus, John L. Olson, San W. Orr, Jr., and Homer A. Scott, Jr.
(Chairman).
The Audit Committee, established in 1972, meets regularly with management,
internal auditors, and representatives of the Company's independent public
accountants. The independent accountants have free access to the Committee and
the Board of Directors. In 1993,1994, the Committee met three times and reviewed the
scope, timing and fees for the annual audit, other services provided by the
independent auditors, and the results of audit examinations completed by the
independent auditors, including the recommendations to improve internal controls
and the follow-up reports prepared by management. The Audit Committee reports
the results of its activities to the full Board of Directors. No member of the
Audit Committee is or has been an employee of the Company.
A representative of Arthur Andersen & Co.LLP is expected to be present at the
Annual Meeting of Stockholders of the Company with the opportunity to make a
statement if he desires to do so and to respond to appropriate questions.
OTHER BUSINESS
The management of the Company knows of no other matter to come before the
meeting. However, if any matter requiring a vote of the stockholders should
arise, it is the intention of the persons named in the enclosed form of proxy to
vote in accordance with their best judgment.
19951996 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to submit a proposal for inclusion in the proxy
material relating to the Company's Annual Meeting of Stockholders expected to be
held on April 25, 1995,23, 1996, must submit such proposal to the Secretary of the
Company on or before November 1, 1994.
- --------------------------------------------------------------------------------1995.
--------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) FOR
THE YEAR ENDED DECEMBER 31, 1993,1994, WHICH IS REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE MADE AVAILABLE TO STOCKHOLDERS TO
WHOM THIS PROXY STATEMENT IS MAILED, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE
OFFICE OF THE TREASURER OF MDU RESOURCES GROUP, INC., 400 NORTH FOURTH STREET,
BISMARCK, NORTH DAKOTA 58501.
By order of the Board of Directors,
/s/ LESTER H. LOBLE, II
LESTER H. LOBLE, II
Secretary
March 7, 1994
15
6, 1995
14
EXHIBIT A
RESOLVED, thatMDU RESOURCES GROUP, INC.
NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
I. Purpose
The purpose of the MDU Resources Group, Inc. Non-Employee Director Stock
Compensation Plan is to provide ownership of the Company's stock to non-employee
members of the Board of Directors in order to improve the Company's ability to
attract and retain highly qualified individuals to serve as directors of the
Company and to strengthen the commonality of interest between directors and
stockholders.
II. Definitions
When used herein, the following terms shall have the respective meanings
set forth below:
"Agent" means a securities broker-dealer selected by the Company and
registered under the Exchange Act.
"Annual Retainer" means the annual retainer payable by the Company to
Non-Employee Directors (exclusive of any per meeting fees or expense
reimbursements.)
"Annual Meeting of Stockholders" means the annual meeting of stockholders
of the Company at which directors of the Company are elected.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Committee" means a committee whose members meet the requirements of
Section IV(A) hereof, and who are appointed from time to time by the Board
to administer the Plan.
"Common Stock" means the common stock, $3.33 par value, of the Company.
"Company" means MDU Resources Group, Inc., (the
"Corporation") hereby declares it advisable:
(A) that,a Delaware corporation, and any
successor corporation.
"Effective Date" means the date as permittedof which the Plan is approved by law, the
purposestockholders of the CorporationCompany.
"Employee" means any officer or other common law employee of the Company or
of any of its business units or divisions or of any Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Non-Employee Director" or "Participant" means any person who is elected or
appointed to the Board of Directors of the Company and who is not an
Employee.
"Plan" means the Company's Non-Employee Director Stock Compensation Plan,
adopted by the Board on February 9, 1995, and approved by the stockholders
on April 25, 1995, as it may be amended from time to includetime.
"Plan Year" means the period commencing on the Effective Date of the Plan
and ending the next following December 31 and, thereafter, the calendar
year.
"Stock Payment" means that portion of the Annual Retainer to be paid to
Non-Employee Directors in shares of Common Stock rather than cash for
services rendered as a director of the Company, as provided in Section V
hereof, including that portion of the Stock Payment resulting from any
lawful act or activity for which corporationselection specified in Section VI hereof.
"Subsidiary" means any corporation that is a "subsidiary corporation" of
the Company, as that term is defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended.
III. Shares of Common Stock Subject to the Plan
Subject to Section VII below, the maximum aggregate number of shares of
Common Stock that may be organizeddelivered under the General Corporation LawPlan is 50,000 shares. The Common
Stock to be delivered under the Plan will be made available from authorized but
unissued shares of DelawareCommon Stock, treasury stock or shares of Common Stock
purchased on the open market. Shares of Common Stock purchased on the open
market shall be purchased by the Agent in compliance with Rule 10b-6 and Rule
10b-18 under the Exchange Act to reflect the factextent compliance shall be required. Shares
A-1
of Common Stock purchased on the open market by the Agent shall be purchased and
held in such manner that such shares are not returned to the Corporation
isstatus of treasury
stock or authorized but unissued shares of Common Stock.
IV. Administration
A. The Plan will be administered by a multidimensional natural resource company; and
(B) that,committee appointed by the Board,
consisting of two or more persons who are not eligible to participate in order to effect the
foregoing the Certificate of IncorporationPlan. Members of the Corporation, as heretofore amended,Committee need not be further amended by deleting Article
THIRD in its entirety, and by inserting in place thereof a new Article THIRD to
read as follows:
THIRD. The purposemembers of the Corporation isBoard. The Company
shall pay all costs of administration of the Plan.
B. Subject to engage in any lawful act or
activity for which corporationsand not inconsistent with the express provisions of the Plan,
the Committee has and may exercise such powers and authority of the Board as may
be organizednecessary or appropriate for the Committee to carry out its functions under
the General
Corporation Law of Delaware. Included within this purpose, withoutPlan. Without limiting the generality of the foregoing, sentence is (1) to own and
operate electric and gas public utility systems and (2) to transact
business as a multidimensional natural resource company.
The Corporationthe Committee shall
have full power and exerciseauthority (i) to determine all questions of fact that may
arise under the powers conferred upon
corporationsPlan, (ii) to interpret the Plan and to make all other
determinations necessary or advisable for the administration of the Plan and
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan, including, without limitation, any rules which the Committee determines
are necessary or appropriate to ensure that the Company and the Plan will be
able to comply with all applicable provisions of any federal, state or local
law. All interpretations, determinations and actions by the General Corporation LawCommittee will be
final and binding upon all persons, including the Company and the Participants.
V. Determination of Delaware.
FURTHER RESOLVED, thatAnnual Retainer and Stock Payments
A. The Board shall determine the BoardAnnual Retainer payable to all
Non-Employee Directors of Directors hereby directs that the proposed amendment be attached as an exhibit toCompany.
B. Each director who is a Non-Employee Director immediately following the
proxy statement fordate of the Company's Annual Meeting of Stockholders to be heldshall receive on April 26, 1994, for
consideration by the
Stockholders entitled to vote in respect thereof.
EXHIBIT B
RESOLVED, thatfifteenth business day following the BoardAnnual Meeting a Stock Payment of Directors of MDU Resources Group, Inc., hereby
declares it advisable:
(A) That the number of200
shares of Common Stock as a portion of the Annual Retainer payable to such
director for the Plan Year in which such date occurs. Certificates evidencing
the Company is authorized
to issue be increased from 50,000,000 shares of Common Stock with the par value
of $5.00 to 75,000,000 shares with the par value of $3.33, effective at the
close of business on the date on which the appropriate Certificate of Amendment
to the Company's Certificate of Incorporation is filedconstituting Stock Payments shall be registered in
the officerespective names of the Secretary of StateParticipants and shall be issued to each
Participant. The cash portion of the State of Delaware;
(B) That,Annual Retainer shall be paid to
Non-Employee Directors at such times and in order to effect the foregoing, the Certificate of Incorporation
of the Company,such manner as heretofore amended,may be further amendeddetermined by deleting the first
paragraph of Article FOURTH, and by inserting in place thereof a new first
paragraph of said Article FOURTH to read as follows:
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is Seventy-seven Million (77,000,000) divided into
four classes, namely, Preferred Stock, Preferred Stock A, Preference
Stock, and Common Stock. The total number of shares of such Preferred
Stock authorized is Five Hundred Thousand (500,000) shares of the par
value of One Hundred Dollars ($100) per share (hereinafter called the
"Preferred Stock") amounting in the aggregate to Fifty Million Dollars
($50,000,000). The total number of shares of such Preferred Stock A
authorized is One Million (1,000,0000) shares without par value
(hereinafter called the "Preferred Stock A"). The total number of shares
of such Preference Stock authorized is Five Hundred Thousand (500,000)
shares without par value (hereinafter called the "Preference Stock"). The
total number of shares of such Common Stock authorized is Seventy-five
Million (75,000,000) of the par value of Three and 33/100 Dollars ($3.33)
per share (hereinafter called the "Common Stock"), amounting in the
aggregate to Two Hundred Forty-nine Million Seven Hundred Fifty Thousand
Dollars ($249,750,000).
FURTHER RESOLVED, that
the Board of Directors hereby directsDirectors.
C. Any director may decline a Stock Payment for any Plan Year; provided,
however, that the
proposed amendmentno cash compensation shall be attached as an exhibitpaid in lieu thereof. Any director
who declines a Stock Payment must do so in writing prior to the proxy statementperformance of
any services as a Non-Employee Director for the Plan Year to which such Stock
Payment relates.
D. No Non-Employee Director shall be required to forfeit or otherwise
return any shares of Common Stock issued as a Stock Payment pursuant to the Plan
(including any shares of Common Stock received as a result of an election under
Section VI) notwithstanding any change in status of such Non-Employee Director
which renders him ineligible to continue as a Participant in the Plan. Any
person who is a Non-Employee Director immediately following the Company's Annual
Meeting of Stockholders shall be entitled to receive a Stock Payment as a
portion of the applicable Annual Retainer.
VI. Election to Increase Amount of Stock Payment
In lieu of receiving the cash portion of the Annual Retainer for any Plan
Year, a Participant may make a written election to reduce the cash portion of
such Annual Retainer by a specified dollar amount and have such amount applied
to purchase additional shares of Common Stock of the Company. The election shall
be made on a form provided by the Committee and must be returned to the
Committee no later than six months prior to the applicable Annual Meeting of
Stockholders of the Company. The election form shall state the amount by which
the Participant desires to reduce the cash portion of the Annual Retainer, which
shall be applied toward the purchase of Common Stock to be helddelivered on April 26, 1994, for
considerationthe same
date that the Stock Payment is made; provided, however, that no fractional
shares may be purchased. Cash in lieu of any fractional share shall be paid to
the Participant. An election shall continue in effect until changed or revoked
by the StockholdersParticipant. No Participant shall be allowed to change or revoke any
election for the then current year, but may change an election for any
subsequent Plan Year.
VII. Adjustment For Changes in Capitalization
If the outstanding shares of Common Stock of the Company are increased,
decreased or exchanged for a different number or kind of shares or other
securities, or if additional shares or new or different shares or other
A-2
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all of
the property of the Company, reorganization or recapitalization,
reclassification, stock dividend, stock split, reverse stock split, combinations
of shares, rights offering, distribution of assets or other distribution with
respect to such shares of Common Stock or other securities or other change in
the corporate structure or shares of Common Stock, the number of shares to be
granted annually, the maximum number of shares and/or the kind of shares that
may be issued under the Plan shall be appropriately adjusted by the Committee.
Any determination by the Committee as to any such adjustment will be final,
binding and conclusive. The maximum number of shares issuable under the Plan as
a result of any such adjustment shall be rounded down to the nearest whole
share.
VIII. Amendment and Termination of Plan
A. The Board will have the power, in its discretion, to amend, suspend or
terminate the Plan at any time; provided, however, that no amendment which
requires stockholder approval in order for the Plan to continue to comply with
Rule 16b-3 under the Exchange Act, including any successor to such Rule, shall
be effective unless such amendment shall be approved by the requisite vote of
the stockholders of the Company entitled to vote thereon.
B. Notwithstanding the foregoing, any provision of the Plan that either
states the amount and price of securities to be issued under the Plan and
specifies the price and timing of such issuances, or sets forth a formula that
determines the amount, price and timing of such issuances, shall not be amended
more than once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
IX. Effective Date and Duration of the Plan
The Plan will become effective upon the Effective Date, and shall remain in
effect, subject to the right of the Board of Directors to terminate the Plan at
any time pursuant to Section VIII, until all shares subject to the Plan have
been purchased or acquired according to the Plan's provisions.
X. Miscellaneous Provisions
A. Continuation of Directors in Same Status
Nothing in the Plan or any action taken pursuant to the Plan shall be
construed as creating or constituting evidence of any agreement or
understanding, express or implied, that the Company will retain a Non-Employee
Director as a director or in any other capacity for any period of time or at a
particular retainer or other rate of compensation, as conferring upon any
Participant any legal or other right to continue as a director or in any other
capacity, or as limiting, interfering with or otherwise affecting the right of
the Company to terminate a Participant in his capacity as a director or
otherwise at any time for any reason, with or without cause, and without regard
to the effect that such termination might have upon him as a Participant under
the Plan.
B. Compliance with Government Regulations
Neither the Plan nor the Company shall be obligated to issue any shares of
Common Stock pursuant to the Plan at any time unless and until all applicable
requirements imposed by any federal and state securities and other laws, rules
and regulations, by any regulatory agencies or by any stock exchanges upon which
the Common Stock may be listed have been fully met. As a condition precedent to
any issuance of shares of Common Stock and delivery of certificates evidencing
such shares pursuant to the Plan, the Board or the Committee may require a
Participant to take any such action and to make any such covenants, agreements
and representations as the Board or the Committee, as the case may be, in its
discretion deems necessary or advisable to ensure compliance with such
requirements. The Company shall in no event be obligated to register the shares
of Common Stock deliverable under the Plan pursuant to the Securities Act of
1933, as amended, or to qualify or register such shares under any securities
laws of any state upon their issuance under the Plan or at any time thereafter,
or to take any other action in order to cause the issuance and delivery of such
shares under the Plan or any subsequent offer, sale or other transfer of such
shares to comply with any such law, regulation or requirement. Participants are
responsible for complying with all applicable federal and state securities and
other laws, rules and regulations in connection with any offer, sale or other
transfer of the shares of Common Stock issued under the Plan or any interest
therein including, without limitation, compliance with the registration
A-3
requirements of the Securities Act of 1933, as amended (unless an exemption
therefrom is available), or with the provisions of Rule 144 promulgated
thereunder, if applicable, or any successor provisions. Certificates for shares
of Common Stock may be legended as the Committee shall deem appropriate.
C. Nontransferability of Rights
No Participant shall have the right to assign the right to receive any
Stock Payment or any other right or interest under the Plan, contingent or
otherwise, or to cause or permit any encumbrance, pledge or charge of any nature
to be imposed on any such Stock Payment (prior to the issuance of stock
certificates evidencing such Stock Payment) or any such right or interest.
D. Severability
In the event that any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect thereof.
whatsoever, the
validity of any other provision of the Plan.
E. Governing Law
To the extent not preempted by Federal law, the Plan shall be governed by
the laws of the State of North Dakota.
A-4
MDU RESOURCES GROUP, INC. PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON APRIL 26, 1994.25, 1995
The undersigned hereby appoints John A. Schuchart, Harold J. Mellen, Jr., and
Lester H. Loble, II, and each of them, proxies, with full power of substitution,
to vote all Common Shares of the undersigned at the Annual Meeting of
Stockholders to be held at 11:00 a.m. (CDT), April 26, 1994,25, 1995, at 909 Airport
Road, Bismarck, ND 58504, and at any adjournment thereof, upon all subjects that
may properly come before the meeting, including the matters described in the
proxy statement furnished herewith, subject to any directions indicated on the
reverse side of this card. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR
THE ELECTION OF ALL LISTED NOMINEES, IN ACCORD WITH THE DIRECTORS'
RECOMMENDATIONS ON THE OTHER MATTERS LISTED ON THE REVERSE SIDE OF THIS CARD AND
AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING. We are unable to respond to comments noted on this proxy. If you have
comments please send in a separate letter.
YOUR VOTE FOR THE ELECTION OF DIRECTORS MAY BE INDICATED ON THE REVERSE SIDE OF
THIS CARD. Nominees are: Sen. W. Orr, Jr.,Douglas C. Kane, Richard L. Muus, John A. Schuchart, Homer A. Scott,
Jr.,L. Olson and
Sister Thomas Welder, O.S.B.Joseph T. Simmons.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO 400 NORTH FOURTH STREET,
BISMARCK, ND 58501, ND 58501, SO THAT YOUR SHARES CAN BE REPRESENTED AT THE
MEETING.
- --------------------------------------------------------------------------------
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE: /X/|X| DIRECTORS RECOMMEND A VOTE "FOR"
ON A., AND B. AND C. BELOW
To vote for all director nominees, mark the "FOR" box on item "A." To withhold
voting for all nominees, mark the "WITHHELD" box. To withhold voting for a
particular nominee, mark the "FOR ALL EXCEPT" box and enter name(s) of the
exception(s) in the space provided; your shares will be voted for the remaining
nominees.
FOR ALL
FOR WITHHELD EXCEPT
FOR WITHHELD FOR ALL EXCEPT
A. Election of All Director Nominees. Exceptions / / / / / /_________________________ |_| |_| |_|
FOR AGAINST ABSTAIN
B. Amend Article THIRD ofApprove the Certificate of Incorporation regarding the purposes
and powers of the Company. / / / / / /
C. Amend Article FOURTH of the Certificate of Incorporation increasing the number
of shares of CommonNon-Employee Director Stock and decreasing the par value of Common Stock. / / / / / /Compensation Plan. |_| |_| |_|
SIGN HERE AS NAME(S) APPEAR AT LEFT
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PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING. IF SIGNING FOR A CORPORATION
OROF PARTNERSHIP OR AS AGENT, ATTORNEY OF FIDUCIARY, INDICATE
THE CAPACITY IN WHICH YOU ARE SIGNING. IF YOU DO ATTEND THE
MEETING AND DECIDE TO VOTE BY BALLOT, SUCH VOTE WILL
SUPERSEDE THIS PROXY.
DATE_________________________, 1994DATE ________________________, 1995