SCHEDULE 14A INFORMATION
Proxy Statement PursantPursuant 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.
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(Name of Registrant as Specified Inin Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
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:
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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)
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4) Proposed maximum aggregate value of transaction:
..............................................................
5) Total Fee Paid:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Fee paid previously with preliminary materials.
[ ][X] 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:
..............................................................
(2)$125
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2) Form, Schedule or Registration Statement No.:
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(3)Schedule 14A Preliminary Proxy Material
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3) Filing Party:
..............................................................
(4) Date Filed:
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MDU Resources Group, Inc.
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4) Date Filed:
March 4, 1996
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[LOGO] MDU RESOURCES
GROUP, INC.
- --------------------------------------------------------------------------------
400 North Fourth Street John A. Schuchart
Bismarck, ND 58501 Chairman of the Board
(701) 222-7900
March 6, 19954, 1996
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held on Tuesday, April 25, 1995,23, 1996, 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 the Non-Employee Director Stock
Compensation Plan. This is another step taken by your Company to strengthen the
commonality of interest among our stockholders, 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 19941995 Annual
Meeting at which 86.883.9 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 19951996 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 Dakota 58501
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Notice of Annual Meeting of Stockholders
to be held April 25, 1995
---------------23, 1996
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March 6, 19954, 1996
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 25, 1995,23, 1996, at 11:00 A.M., Central Daylight Time, for the
following purposes:
(1) To elect fourthree 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 approve the Non-Employee Director Stock
Compensation Plan, all as more fully described in the accompanying Proxy
Statement dated March 6, 1995 and;
(3) 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 27,
1995,26,
1996, 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 Dakota 58501
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PROXY STATEMENT
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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 25, 1995.23, 1996. The proxy
material was first forwarded to the holders of Common Stock on March 6, 1995.4, 1996.
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
27, 1995,26, 1996, will be entitled to vote at the meeting. On such date there were
outstanding 18,984,65428,476,981 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 shareholdersstockholders 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.
Approval of the Non-Employee Director Stock Compensation Plan (discussed
below) 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.
As of February 27, 1995,26, 1996, 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.
1
ELECTION OF DIRECTORS
At the meeting, fourthree Directors will be elected to serve for a term of
three years until 19981999 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
1
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
---- --- ----------- -------------------
Thomas Everist .......................... 45 1995 Mr. Everist is the President and Chief Executive Officer of
(to be elected for a term of three years L. G. Everist, Sioux Falls, South Dakota, an aggregate
expiring in 1999) production company. He is Vice President of Spencer
(PICTURE) Quarries, Spencer, South Dakota, a rock quarry, and
Director of Power Plant Aggregates and Midwest Fly Ash,
both of Sioux City, Iowa, which market fly ash, kiln
dust and concrete additives, and a Director of Standard
Ready Mix, of Sioux City, Iowa.
Harold J. Mellen, Jr .................... 61 1989 Mr. Mellen joined the Company in 1985 as Vice President
(to be elected for a term of three years --Corporate Development and was named Senior Vice
expiring in 1999) President--Finance and Chief Financial Officer in May
(PICTURE) 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 became the President and Chief
Executive Officer on January 1, 1995. During 1995, Mr.
Mellen served as Chairman of the Board, a Director
and/or an officer of all principal subsidiaries and
Chairman of the Managing Committee of the utility
Division of the Company.
Robert L. Nance ......................... 59 1993 Mr. Nance is the majority owner and President of Nance
(to be elected for a term of three years Petroleum Corporation, Billings, Montana, an oil and
expiring in 1999) gas exploration and production company. He is also a
(PICTURE) Director of First Interstate Bank of Commerce,
Billings, Montana. He is a Director of the Deaconess
Billings Clinic Health Organization, Deaconess Medical
Center and Billings Clinic, all of Billings, Montana,
serves on the National Board of Governors of the
Independent Petroleum Association of America, and
serves on the Board and is Vice Chairman of the
Petroleum Technology Transfer Council. He currently
serves on the Finance and Nominating Committees of the
Board of Directors.
2
Certain information concerning the remaining directors, whose terms expire
either in 1997 or in 1998, including their ages, periods of service as directors
and business experience, according to information furnished to the Company, is
set forth as follows:
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
San W. Orr, Jr. 54 1978 Mr. Orr is an attorney and is in the business of financial
(term expiring in 1997) ................. and estate management. He is Chairman of the Boards and
(PICTURE) 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 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.
John A. Schuchart ....................... 66 1976 Mr. Schuchart, Chairman of the Board, was named Chief
(term expiring in 1997) Executive Officer in June 1980 and Chairman in May
(PICTURE) 1983. He retired as Chief Executive Officer on December
31, 1994. Mr. Schuchart also serves as an ex officio
Director of the subsidiaries of the Company, the
Managing Committee of Montana-Dakota Utilities Co., and
the MDU Resources Foundation. Mr. Schuchart serves on
various civic and charitable organizations in Bismarck,
North Dakota, including the Board of Regents of the
University of Mary.
Homer A. Scott, Jr ...................... 61 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
(PICTURE) and Chairman of the Board of First Interstate
BancSystem of Montana, Inc., a Director of First
Interstate Bank of Commerce, Montana and Chairman of
the Board and a Director of First Interstate Bank of
Commerce, Wyoming. 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. 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.
Sister Thomas Welder, O.S.B ............. 55 1988 Sister Welder is the President of the University of Mary,
(term expiring in 1997) Bismarck, North Dakota. She is a Director of St.
(PICTURE) 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
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.
3
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
Douglas C. Kane 45......................... 46 1991 Mr. Kane joined the Company as Executive Vice President (to be elected for a term of and
(term expiring in 1998) Chief Operating Officer in January 1991. Prior to three years expiring in 1998) that
(PICTURE) 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. During 1995, Mr.
Kane is aserved as Director and/or officer 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., and Williston Basin Interstate
Pipeline Company, all beingprincipal
subsidiaries of the Company. Mr. Kane is also Vice PresidentCompany and a
Director of Centennial Energy Holdings, Inc. andas a member of the
Managing Committee of Montana-Dakota
Utilities Co., a Division of the Company.
[PICTURE]Company's utility Division.
Richard L. Muus 65......................... 66 1985 Mr. Muus retired in April 1989 after 35 years with the
(to be elected for a term of(term expiring in 1998) Midwest Federal Savings Bank, Minot, North Dakota. three years expiring in 1998) At
(PICTURE) 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 Board of Regents of
Minot State University andUniversity. He also servesserved on the Advisory
Board and Finance Committee of St. Joseph Hospital,
Minot, North Dakota.Dakota for 30 years. He currently serves
on the Audit and Finance Committees of the Board of
Directors.
[PICTURE]
John L. Olson 55........................... 56 1985 Mr. Olson is President and the owner of Blue Rock Prod-
(to be elected for a term of uctsProducts
(term expiring in 1998) Company and of Blue Rock Distributing Company three years expiring in 1998) located
(PICTURE) 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;Montana and a
trustee of the University of Montana Foundation; he is
trustee for Blue Rock Products Company Profit Sharing
Trust, Sidney, Montana. He currently serves on the
Audit and NominatingCompensation Committees of the Board of
the Board of
Directors.
[PICTURE]
2Directors.
4
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
Joseph T. Simmons 59....................... 60 1984 Mr. Simmons is professor of Accounting and Finance,
(to be elected for a term of(term expiring in 1998) University of South Dakota, Vermillion and was Visit-
three years expiring in 1998) ingVisiting
(PICTURE) Professor of Finance, University of Warsaw, Warsaw,
Poland (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 BoardBoards of GRO/TECH and RE/SPEC in Rapid City,
South Dakota and Dairilean, Inc. in Sioux Falls, 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 60 1989 Mr. Mellen joined the Company in 1985 as Vice President
(term expiring in 1996) --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 became the President and Chief
Executive Officer on January 1, 1995. During 1994 Mr.
Mellen served 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 58 1993 Mr. Nance is the majority owner and President of Nance
(term expiring in 1996) 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 a 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 Directors.
[PICTURE]
3
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
Charles L. Scofield 70 1978 Mr. Scofield is the owner and President of The Scofield
(term expiring in 1996) 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 70 1984 Mr. Staples is President of Alexander Properties, Inc.,
(term expiring in 1996) 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 1994,1995, 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. All committees are composed entirely of outside
directors. 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 1995, the Committee met four times and
reviewed the scope, timing and fees for the annual audit, other services
provided by the independent accountants, and the results of audit examinations
completed by the independent accountants, 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. The Nominating Committee, which met fivefour times during 1994,1995, 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, 1995,4, 1996, for the annual meeting expected to be
held on April 23, 1996 .22, 1997. The Compensation Committee, which met four times during
1994,1995, 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 1994,1995, 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. All
incumbent Directors attended more than 75 percent of the combined total of the
meetings of the Board and of the committees on which the Director served.
5
EXECUTIVE COMPENSATION
Shown 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, 1995, 1994, 1993, and 1992,1993, for those persons who were, at
December 31, 1994,1995, (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.
TABLE 1: SUMMARY COMPENSATION TABLE
Long term
Annual compensation compensation
----------------------------- -------------------------
------------
Awards
-------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Securities
Restricted underlying All other
stock Options/ compen-
Name and Salary Bonus1 SARs2 sation3Bonus(1) award(s) SARs(3) sation(4)
principal position Year ($) ($) ($) (#) ($)
--------------------------------- ---- ------ ------ ------- -------- ---------- ---------- ---------
John A. Schuchart 1994 385,926 98,371 0 12,278
--Chairman of the 1993 314,000 68,432 0 4,497
Board & C.E.O. 1992 296,808 33,686 28,530 4,364
Harold J. Mellen, Jr. 1995 249,553 104,824 0 49,740 5,886
--President & C.E.O. 1994 191,779 50,577 0 10,470
--President & Chief0 4,500
1993 176,995 42,328 0 0 4,497
Corporate Development Officer 1992 160,334 21,600 13,740 4,402
Joseph R. Maichel 1994 173,121 0 0 10,470Ronald D. Tipton 1995 179,039 101,997 31,680(2) 32,955 3,975
--President & C.E.O. of 1993 164,837 0 0 3,7771994 -- -- -- -- --
Montana-Dakota Utilities Co. 1992 156,409 8,516 13,740 4,3311993 -- -- -- -- --
Douglas C. Kane 1995 181,210 58,910 0 27,952 4,500
--Executive Vice President 1994 138,519 44,878 0 8,311
--Executive Vice President0 4,156
& Chief Operating Officer 1993 131,960 35,264 0 0 3,944
& Chief Operating Officer 1992 125,723 20,412 13,740 4,236
Martin A. White 1995 128,312 23,514 0 8,925 3,849
--Senior Vice President-- 1994 123,369 24,030 0 6,270
--Vice President--0 3,135
Corporate Development 1993 119,352 20,700 0 0 920
Corporate Development 1992 115,000 11,040 6,130Lester H. Loble, II 1995 119,006 26,163 0 - ----------
1 Granted pursuant to the Management Incentive Compensation Plan.
2 No options were granted during9,900 3,041
--General Counsel & 1994 115,446 22,279 0 0 3,080
Secretary 1993 or 1994. "SAR" is an acronym for "stock
appreciation right." The Company has no plan or program which uses stock
appreciation rights.
3 Totals include Company contributions to the Tax Deferred Compensation Savings
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.
111,122 22,275 0 0 3,284
- ----------
1. Granted pursuant to the Management Incentive Compensation Plan.
2. Non-preferential dividends are paid on the 1,500 shares of stock shown
above.
3. "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.
4. Totals shown are the Company contributions to the Tax Deferred Compensation
Plan, with the exception of Mr. Mellen, whose totals also include insurance
premiums in each year of $1,386.
6
TABLE 2: OPTION/SAR(1) GRANTS IN LAST FISCAL YEAR
Grant date
Individual Grants(2) value
------------------------------------------------------------- ---------------
Number of Percent of
securities total options
underlying granted to Exercise or Grant date
options granted employees in base price Expiration present value(3)
Named Officer (#) fiscal year ($/share) date ($)
(a) (b) (c) (d) (e) (f)
------------ ------------- ----------- --------- ---------- ----------------
Harold J. Mellen, Jr.......... 49,740 16.9 18.50 02/08/05 132,806
Ronald D. Tipton.............. 32,955 11.2 18.50 02/08/05 87,990
Douglas C. Kane............... 27,952 9.5 18.50 02/08/05 74,637
Martin A. White............... 8,925 3.0 18.50 02/08/05 23,830
Lester H. Loble, II........... 9,900 3.4 18.50 02/08/05 26,433
- ----------
1. "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.
2. The options granted under the 1992 Key Employee Stock Option Plan become
exercisable automatically in nine years on February 8, 2004. Vesting is
accelerated upon change in control or upon attainment of certain
performance goals, as follows: during the three year performance cycle
(1995-1997) performance goals established for the Company by the
Compensation Committee are based on return on equity (25%), earnings per
share (25%) and total relative shareholder return (50%). From 50% to 100%
of the options granted may become exercisable at the end of the three year
performance cycle if from 90% to 100% of the goals are met. Performance
goals for Montana-Dakota Utilities Co., which are applicable to Mr. Tipton,
are based on regulatory return (50%), and net income (50%), and at least
94% of the goals must be met to accelerate vesting.
Dividend Equivalents granted with the options are described in Table 4.
3. Present values were calculated using the Black-Scholes option pricing model
which has been adjusted to take dividends into account. Use of this model
should not be viewed in any way as a forecast of the future performance of
the Company's stock. The estimated present value of each stock option is
$2.67 based on the following inputs:
Stock Price (fair market value) at Grant (2/8/95)........... $18.50
Exercise Price.............................................. $18.50
Option Term................................................. 10 Years
Stock Price Volatility...................................... 15.8%
Dividend Yield.............................................. 5.8%
The model assumes: (a) a risk-free interest rate of 7.8 percent on a U.S.
Treasury Note with a maturity date of approximately 10 years; (b) Stock
Price Volatility is calculated using a one year average of stock prices for
calendar year 1994; (c) Dividend Yield is calculated using the annual
dividend rate in effect at the date of grant ($1.07 per share). The option
value was not discounted to reflect any accelerated vesting of the options
or to reflect any exercise of the options prior to the end of the 10 year
period. Notwithstanding the fact that these options are non-transferable,
no discount for lack of marketability was taken.
7
TABLE 3: AGGREGATED OPTION/SAR(1) EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR(1) VALUES
(a) (b) (c) (d) (e)
Shares Number of
acquired securities underlying Value of unexercised,
on Value unexercised options/SARsoptions in-the-money options/SARsoptions
exercise realized at fiscal year-end(2)year-end at fiscal year-end
(#) ($) -------------------------(#) ($)
------- ------ --------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----- ---------- ------------ ---------- ----------------------- ------------- ----------- -------------
John A. Schuchart 0 0 0 0
Harold J. Mellen, Jr. 0 13,740 0 48,090
Joseph R. Maichel 0 0 0 0......... -- -- 20,610 49,740 85,016 68,393
Ronald D. Tipton ............. -- -- 14,685 32,955 60,576 45,313
Douglas C. Kane 0 13,740 0 48,090.............. 1,500 9,375 18,360 27,952 75,735 38,434
Martin A. White 0 6,130 0 21,455.............. 770 3,030 8,040 8,925 33,165 12,272
Lester H. Loble, II .......... 1,000 6,250 7,695 9,900 31,742 13,613
- ----------
1. "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.
TABLE 4: LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
Estimated future payouts
under non-stock price-based plans
-------------------------------------------
(a) (b) (c) (d) (e) (f)
Performance
Number of or other
shares, units period until
or other maturation Threshold Target Maximum
Named Officer rights (#)(1) or payout ($) ($) ($)
------------ ----------- ----------- ----------
1 "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.
2 Mr. Schuchart and Mr. Maichel both retired at year end. Under the Plan they
forfeited all of their options.
---------- --------------
Harold J. Mellen, Jr.......... 49,740 12/31/97 81,325 162,650 243,975
Ronald D. Tipton.............. 32,955 12/31/97 53,881 107,763 161,644
Douglas C. Kane............... 27,952 12/31/97 45,702 91,403 137,105
Martin A. White............... 8,925 12/31/97 14,592 29,185 43,777
Lester H. Loble, II........... 9,900 12/31/97 16,187 32,373 48,560
6
- ----------
1. Dividend equivalents were granted pursuant to the 1992 Key Employee Stock
Option Plan based on the number of options granted to each Named Officer
(see Table 2). Dividend equivalents entitle the recipient to the cash
amount equal to any dividend declared by the Board of Directors on the
common stock of the Company. The table assumes the current level of
dividends. Dividend equivalents may be earned, from 0% to 150%, at the end
of the three year performance cycle (1995-1997) depending upon (1) the
level of achievement of performance goals established for the Company and
Montana-Dakota Utilities Co. by the Compensation Committee and (2)
individual performance. Vesting is accelerated upon a change in control.
See Table 2 for a description of the goals. Dividend equivalents that are
not earned are forfeited.
PENSION PLAN TABLE
Years of Service
----------------------------------------------------------------------------------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 or more
- ------------- --------- --------- --------- --------- ---------
$125,000................ $ 77,91677,904 $ 86,60486,592 $ 95,304 $103,992 $112,68095,280 $103,968 $112,656
150,000................ 91,992 102,492 113,004 123,504 134,00491,980 102,480 112,980 123,480 133,980
175,000................ 106,068 118,380 130,704 143,016 155,328106,056 118,368 130,692 143,004 155,316
200,000................ 120,144 134,280 148,404 162,528 176,664120,132 134,256 148,392 162,516 176,640
225,000................ 134,220 150,168 166,104 182,052 197,988134,208 150,156 166,092 182,028 197,964
250,000................ 148,308 166,056 183,816 201,564 219,324148,296 166,044 183,792 201,540 219,288
300,000................ 176,460 197,832 219,216 240,588 261,972176,448 197,820 219,204 240,576 261,948
400,000................ 206,844 235,476 264,108 292,740 321,360206,832 235,464 264,084 292,716 321,336
450,000................ 217,716 249,972 282,228 314,484 346,740249,960 282,216 314,460 346,716
500,000................ 228,600 264,480 300,360 336,228 372,108228,588 264,456 300,336 336,216 372,084
8
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 1994,1995, 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, 1994,1995, the Named Officers were credited with the
following years of service under the plans; Mr. Schuchart:Mellen: Pension, 19,10, SISP, 10;
Mr. Tipton: Pension, 12 , SISP, 11; Mr. Maichel:Kane: Pension, 24,5, SISP, 11; Mr. Mellen: Pension, 9, SISP, 9; Mr.
Kane:White:
Pension, 4, SISP, 11;4; and Mr. White:Loble: Pension, 3,8, SISP, 3.8. 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.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
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 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)Report, KPMG Peat Marwick LLP Oil and Gas Compensation
Survey and PAS Inc. Executive Compensation Survey for Contractors). 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 Surveythese surveys
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 1994 survey
prepared by Edison Electric Institute and includes nearly 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 Survey is a 19931994 survey of salary for 95 natural gas
companies--distribution,companies-distribution, transmission, combination (gas and electric) and
integrated. The Executive Compensation Services Top Management SurveyReport is a
1993-941995-96 survey of executive compensation for 1,1491,270 companies cutting across all
major industry lines. The consultant then used the 4061 utility respondents from
this survey--water,survey-water, telephone, electric and gas--forgas-for comparison purposes. The KPMG
9
Survey includes 123 participants from the oil and gas surveyindustry 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.PAS
Survey for Contractors has over 250 participants. The external data from those
surveys is used to develop a market-consensus salary for each executive
position. "Market-consensus salary" refers torepresents the average ofmarket value for each
position based upon the salaries for utility executives as shown in theabove referenced surveys. A rangeFor executive officers the
consensus reflects a 60 percent weighting of compensation from 80%-120% is set around the
market-consensus salary.general industry data and a 40
percent weighting of utility industry data. It is the policy of the Compensation
Committee to set a targeted range of compensation from 80%-120% around the
market-consensus salary and to set 95% of the market-consensus salary as the
market valuesalary administration objective for the executive positions in the Company. The
Compensation Committee uses the market value of
the positionthis objective 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. A premium is added to
the market-consensus salary in order to set the salary of the Chief Executive
Officer and other executive officers to reflect the diversified nature of the
Company. The consultant uses the peer group of companies in the Performance
Graph to determine the premium.
The Compensation
Committee concluded, based on the average of the utility-diversified companies
in the Performance Graph, adjusted for company size, that the market-consensus
salary for the Chief Executive Officer should be increased by a premium of 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 incentiveincentives to executive officers will enhance the long-term performance
of the Company, promote cost efficiency and further overall shareholderstockholder 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.
The 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.
19941995 Compensation for Executive Officers and Chief Executive Officer
Compensation paid to executive officers of the Company in 19941995 was
comprised of base salary, cash awards under the Management Incentive
Compensation Plan and awardsstock option grants and dividend equivalents under the
1992 Key Employee Stock Option Plan. No awards were made in 1994 under the Restricted
Stock Bonus Plan.Mr. Tipton also received an award of
restricted stock.
Base salary increases for executive officers during 19941995 ranged from 3.3%3% to
5.6%32.3% and averaged 4.8%11.1%. 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 19941995 averaged 88.7%81.25% of the
market-consensus salary for the Company's executive positions. TheMr. Mellen was
elected Chief Executive Officer'sOfficer effective January 1, 1995. At that time his base
salary for 1994was $240,000. Effective July 1, 1995, his base salary was increased to
$261,600. This reflected an increase of 5.6% over his
1993a 9% increase. His base salary. This was 92.7%salary is 72.9% of the
market-consensus salary as adjusted by the premium of 12%.15% as recommended by the
consultant. The Committee also considered the Company's financial results during
the six months he had been Chief Executive Officer's achievements and his 19 years
with the Company were considered as well as the excellent financial performance
and integration of the construction materials businesses into the Company's
operationsOfficer and the exceptional financial performance of the oil and gas
subsidiary, including the sale of one of its investments at a substantial gain.smooth transition
under his leadership. 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 stockholder'sstockholders'
interest (earnings) and the customers' 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 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 19941995 were based on the degree of achievement of 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 19941995 to four executive officers in the aggregate
amount of $119,485.$202,736. The Chief Executive Officer received $98,371$104,824 for the year
1994.1995. This amount was a payout of 82.7%85.5% 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 19941995 affected
10
only one executive officer, Mr. Maichel,Tipton, whose award opportunity was based 75% on
cost efficiency and 25% on budgeted earnings of his division. Neither goal
was met and Mr. MaichelTipton
received no award.$101,997.
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 intendeddesigned 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 stockholders.shareholders. The plan
consists of two elements: stock option grants and dividend equivalents.
The
three-year performance period forTen year options and dividend equivalents were granted in 1992 under the Plan endedplan in
1995 to 13 executives of the Company, including all executive officers. The
options become exercisable (at the fair market value on December 31, 1994. Thethe date of the grant)
automatically in nine years but vesting may be accelerated if certain
performance goals are achieved. A performance cycle of three years was
established by the Committee: 1995-1997. Performance cycles for the performance periodremainder of
the nine years have not yet been set. Performance goals were also established by
the Committee based on return on equity (25%)(25 percent), earningsearning per share (25%)(25
percent), and total relative shareholderstockholder return (50%)compared to a peer group of 12
energy diverse companies (50 percent). 100%The companies are identified in the notes
to the graph following this report. Performance goals for Montana-Dakota
Utilities Co., which are applicable to Mr. Tipton, are based on regulatory
return (50 percent) and net income (50 percent). Individual performance is also
weighed. Dividend equivalents are accrued based on the number of options held
and are earned from 0% to 150% at the end of each performance cycle based upon
the achievement of the stated performance goals. As shown on the Tables, the
Chief Executive Officer received a grant of 49,740 options and dividend
equivalents. The number of options and dividend equivalents granted to the
executive officers became exercisable atwas established based upon the endmid-point of the 1995 salary
range for employees of that level and the length of the performance period because 110.8%cycle. The
grants ranged from 10% for lower level executive officers to 35% for the Chief
Executive Officer. The Compensation Committee made grants under the 1992 Key
Employee Stock Option Plan 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,performance-accelerated options and 143% of its total shareholder return goal. No weighting was
given to individual performance. In addition, the dividend
equivalents granted
onto serve as an incentive to the options during 1992 through 1994 were earned at 110.8% based on the
attainmentexecutive officers to meet corporate
goals and to subject a larger percentage of the goals as described above. Noexecutive officers' total salary
package to risk. The Compensation Committee may grant additional options were granted
in 1994. The Chief Executive Officer and
Mr. Maichel both retired at year-end
and forfeited all of their options.dividend equivalents each year, as it determines.
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's financial
performance. Again, this aligns the interest of the executives with those of the
stockholders. No awards have been made under this planIn November, 1995, Mr. Tipton received an award of 1,500 shares.
In addition, restrictions lapsed with respect to executive officers1,500 shares of the Company since 1988.
36.2%restricted
stock previously granted to Mr. Tipton.
51.5% of the Chief Executive Officer's total compensation during 19941995 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
19921995 option grants). An average of 30.6%43% 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
andthe dividend
equivalents accrued on the 19921995 option grants). The Committee believes that
having 36.2%51.5% of the compensation of Chief Executive Officer and an average of
30.6%43% of the compensation of other executive officers at risk is sufficient to
provide a direct and strong link between Company performance and executive pay.
San W. Orr, Jr., Chairman Homer A. Scott, Jr., Member
ChairmanJohn L. Olson, Member Stanley F. Staples, Jr., Member
911
MDU RESOURCES GROUP, INC.
COMPARISON OF FIVE YEAR TOTAL SHAREHOLDER RETURN1
[PRINTED MATERIAL CONTAINS A LINE GRAPH REPRESENTED BY THE TABLE BELOW]
1989STOCKHOLDER RETURN(1)
Total Stockholder Return Index (1990 = 100)
[The following table was represented as a line graph in the printed material]
- --------------------------------------------------------------------------------
1990 1991 1992 1993 1994 --- --- --- --- --- ---1995
---- ---- ---- ---- ----------------
MDU 100 97 124 141 177 161128 145 182 166 193
S&P 500 100 97 126 136 150 152130 140 155 157 215
PEER GROUP 100 104 136 151 166 152131 145 160 146 180
- --------------------------------------------------------------------------------
(1) All data is indexed to December 31, 1989,1990, for the Company, the S&P 500, and
the peer group. Total shareholderstockholder 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 isare 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 and 300
shares of Company common stock as an annual retainer for Board Service,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.
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. All such Directors must defer $1,000 of the annual Board cash 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 remaining
$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.12
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.
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
----- ---- -----------------------
Harold J. Mellen, Jr.............. 60 President and Chief Executive Officer. For information about Mr. Mellen, see
"Election of Directors."
Cathleen M. Christopherson........ 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................... 45 Executive Vice President and Chief Operating Officer. For information about
Mr. Kane, see "Election of Directors."
Lester H. Loble, II...............Present Corporate Position
Name Age and Business Experience
----- --- -----------------------
Harold J. Mellen, Jr........... 61 President and Chief Executive Officer.
For information about Mr. Mellen, see
"Election of Directors."
Cathleen M. Christopherson..... 51 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................ 46 Executive Vice President and Chief
Operating Officer. For information
about Mr. Kane, see "Election of
Directors."
Lester H. Loble, II............ 54 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 the principal
subsidiaries of the Company. Mr. Loble
is also a member and the Secretary of
the Managing Committee of
Montana-Dakota Utilities Co., a
Division of the Company.
Vernon A. Raile................ 51 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............. 45 Mr. Robinson was elected Vice President,
Treasurer and Chief Financial Officer
of the Company effective August 1992.
He is also Treasurer and Assistant
Secretary, or Secretary, of
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............... 49 Mr. Tipton was elected President and
Chief Executive Officer of
Montana-Dakota Utilities Co. on
January 1, 1995. Prior to that time he
served Williston Basin Interstate
Pipeline Company in the following
capacities: President and Chief
Executive 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
Montana-Dakota Utilities Co.
13
Present Corporate Position
Name Age and Business Experience
----- --- -----------------------
Martin A. White................ 54 Mr. White was elected Senior Vice
President--Corporate Development
November 1995. Prior to that he served
as Vice President--Corporate
Development from 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.
Robert E. Wood................. 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.
Vernon A. Raile................... 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................ 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 Williston Basin Interstate Pipeline Company in the following
capacities: President and Chief Executive 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 Montana-Dakota Utilities Co.
Martin A. White................... 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................... 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.................... 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.
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
certain officers of the Company to file reports concerning their ownership of
Company stock. During 1995, Mr. Tipton inadvertently filed one late report on
Form 4 with respect to an award of restricted stock under the Company's
Restricted Stock Bonus Plan.
SECURITY OWNERSHIP
The table below sets forth the number of shares of capital stock of the
Company owned beneficially as of December 31, 1994,1995, 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
-------------------------- -------------------
Name Common Preferred Common Preferred
----- -------- -------- -------- --------
Thomas Everist.......................................... -- -- -- --
Douglas C. Kane......................................... 8,763(a)34,959(a) -- * --
Joseph R. Maichel....................................... 20,560(a)Lester H. Loble, II..................................... 17,637(a) -- * --
Harold J. Mellen, Jr.................................... 15,729(a)35,910(a) -- * --
Richard L. Muus......................................... 3,0975,509 -- * --
Robert L. Nance......................................... 1,9003,150 -- * --
John L. Olson........................................... 6,00015,300 -- * --
San W. Orr, Jr.......................................... 123,232(b)171,883(b) -- * --
John A. Schuchart....................................... 84,075(a)(f)127,583(c) -- * --
Charles L. Scofield..................................... 8,00012,300 -- * --
Homer A. Scott, Jr...................................... 2,000(c)3,300(d) -- * --
Joseph T. Simmons....................................... 3,6686,115 -- * --
Stanley F. Staples, Jr.................................. 84,076(d) 300(d)125,820(e) 300 * *
Ronald D. Tipton........................................ 12,550(a) -- * --
Sister Thomas Welder.................................... 12,783(e)19,198(f) -- * --
Martin A. White......................................... 4,217(a)16,175(a) -- * --
All directors and executive officers of the Company as
a group (20(18 in number)................................ 405,164688,243(a) 306 2.12.4 *
- ----------
* 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 owned by his wife.
13- ----------
* Less than one percent of the class.
(a) Includes full shares allocated to the officer's account in the Tax Deferred
Compensation Savings Plan. Also includes presently exercisable stock
options in the following amounts: Mr. Kane, 18,360; Mr. Loble, 7,695; Mr.
Mellen, 20,610; Mr. Tipton, 14,685 (also included is Mr. Tipton's grant of
1,500 shares of restricted stock); Mr. White, 8,040; and all directors and
executive officers as a group: 89,390.
(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 1,143 shares held by the trusts.
(c) Includes shares owned by Mr. Schuchart's wife. Mr. Schuchart disclaims all
beneficial ownership of the shares owned by his wife.
(d) 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.
(e) All except 1,800 shares of Common Stock are held in the name of the Judd S.
Alexander Foundation, Inc. and Walter Alexander Foundation, Inc. Mr.
Staples as the Chief Executive Officer of the Judd S. Alexander Foundation,
Inc., and the Secretary of the Walter Alexander Foundation, Inc., disclaims
all beneficial ownership of the shares held by the Foundations.
(f) 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.
14
ACCOUNTING AND AUDITING MATTERS
The Board of Directors of the Company has appointed Arthur Andersen LLP,
Certified Public Accountants, as independent auditors for the year ending
December 31, 1994. The appointment was made on theUpon recommendation of the Audit Committee, of the Board of Directors whichhas
selected and employed the firm of Arthur Andersen LLP as the Company's
independent certified public accountants to audit its financial statements for
the fiscal year 1995. The Audit Committee is presently composed of Messrs.
Richard L. Muus, John L. Olson, San W. Orr, Jr., and Homer A. Scott, Jr.
(Chairman). The Audit Committee, establishedThis will be the tenth year in 1972, meets regularly with management,
internal auditors, and representatives ofwhich the Company's independent public
accountants. The independent accountants have free access to the Committee and
the Board of Directors. In 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 orfirm has been an employee of the Company.acted in this
capacity. A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting of Stockholders ofStockholders. It is not anticipated that the Company with the opportunity torepresentative
will make a prepared statement ifat the meeting. However, he desiresor she will be free
to do so and to respondif he or she so chooses as well as responding 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.
19961997 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 23, 1996,22, 1997, must submit such proposal to the Secretary of the
Company on or before November 1, 1995.
--------------4, 1996.
----------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) FOR
THE YEAR ENDED DECEMBER 31, 1994,1995, 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 6, 1995
14
EXHIBIT A
MDU 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., a Delaware corporation, and any
successor corporation.
"Effective Date" means the date as of which the Plan is approved by the
stockholders of the Company.
"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 time.
"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
election 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 delivered under the Plan is 50,000 shares. The Common
Stock to be delivered under the Plan will be made available from authorized but
unissued shares of Common 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 the extent 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 status of treasury
stock or authorized but unissued shares of Common Stock.
IV. Administration
A. The Plan will be administered by a committee appointed by the Board,
consisting of two or more persons who are not eligible to participate in the
Plan. Members of the Committee need not be members of the Board. The Company
shall pay all costs of administration of the Plan.
B. Subject to and 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 necessary or appropriate for the Committee to carry out its functions under
the Plan. Without limiting the generality of the foregoing, the Committee shall
have full power and authority (i) to determine all questions of fact that may
arise under the Plan, (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 Committee will be
final and binding upon all persons, including the Company and the Participants.
V. Determination of Annual Retainer and Stock Payments
A. The Board shall determine the Annual Retainer payable to all
Non-Employee Directors of the Company.
B. Each director who is a Non-Employee Director immediately following the
date of the Company's Annual Meeting of Stockholders shall receive on the
fifteenth business day following the Annual Meeting a Stock Payment of 200
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 shares of Common Stock constituting Stock Payments shall be registered in
the respective names of the Participants and shall be issued to each
Participant. The cash portion of the Annual Retainer shall be paid to
Non-Employee Directors at such times and in such manner as may be determined by
the Board of Directors.
C. Any director may decline a Stock Payment for any Plan Year; provided,
however, that no cash compensation shall be paid in lieu thereof. Any director
who declines a Stock Payment must do so in writing prior to the performance 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 delivered on the 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 Participant. 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 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-44, 1996
15
MDU RESOURCES GROUP, INC. PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON APRIL 25, 1995================================================================================
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders on April 23, 1996.
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 25, 1995,23, 1996, 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.If no directions are given, the proxies will vote for
the election of all listed nominees, 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.Your vote for the election of Directors may be indicated on the reverse side of
this card. Nominees are: Douglas C. Kane, RichardThomas Everist, Harold J. Mellen, Jr. and Robert L.
Muus, John L. OlsonNance.
Your vote is important! Please sign and 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 TOdate on the reverse and return promptly
in the enclosed postage-paid envelope or otherwise to 400 NORTH FOURTH STREET,
BISMARCK,North Fourth Street,
Bismarck, ND 58501, ND 58501, SO THAT YOUR SHARES CAN BE REPRESENTED AT THE
MEETING.
- --------------------------------------------------------------------------------so that your shares can be represented at the meeting.
================================================================================
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE: |X| DIRECTORS RECOMMEND A VOTEPlease mark your vote as in this example: [X]
Directors recommend a vote "FOR" ONon A. AND B. BELOWbelow
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 WITHHELD FOR ALL EXCEPT
A. Election of All Director Nominees. Exceptions _________________________ |_| |_| |_|
FOR AGAINST ABSTAIN
B. Approve the Non-Employee Director Stock Compensation Plan. |_| |_| |_|
SIGN HERE AS NAME(S) APPEAR AT LEFT
____________________________________________________________
____________________________________________________________
PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING. IF SIGNING- --------------------------------------------------------------------------------
FOR A CORPORATION
OF 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 ________________________, 1995WITHHELD FOR ALL EXCEPT
A. Election of All Director Nominees. [ ] [ ] [ ]
Exceptions__________________________
- --------------------------------------------------------------------------------
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 or partnership or
as agent, attorney or
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 ___________________, 1996