|
|
|
|
|
1200 West Century Avenue | Terry D. Hildestad |
| President and |
| Chief Executive Officer |
Mailing Address: |
|
P.O. Box 5650 |
|
Bismarck, ND 58506-5650 |
|
(701) 530-1000 |
|
March 12, 2010
To Our Stockholders:
Please join us for the 2010 Annual Meeting of Stockholders. The meeting will be held on Tuesday, April 27, 2010,
March 11, 2011 | |
To Our Stockholders: | |
Please join us for the 2011 Annual Meeting of Stockholders. The meeting will be held on Tuesday, April 26, 2011, at 11:00 a.m., Central Daylight Saving Time, at 909 Airport Road, Bismarck, North Dakota. | |
The formal matters are described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. We also will have a brief report on current matters of interest. Lunch will be served following the meeting. | |
We were pleased with the stockholder response for the
| |
You may vote your shares by telephone, by the Internet, or by returning the enclosed proxy card. Representation of your shares at the meeting is very important. We urge you to submit your proxy promptly. | |
Brokers may not vote your shares on four of the five matters to be presented if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted. | |
All stockholders who find it convenient to do so are cordially invited and urged to attend the meeting in person. Registered stockholders will receive a request for admission ticket(s) with their proxy card that can be completed and returned to us postage-free. Stockholders whose shares are held in the name of a bank or broker will not receive a request for admission ticket(s). They should, instead, (1) call (701) 530-1000 to request an admission ticket(s), (2) bring a statement from their bank or broker showing proof of stock ownership as of February 25, 2011 to the annual meeting, and (3) present their admission ticket(s) and photo identification, such as a driver’s license. Directions to the meeting will be included with your admission ticket. | |
I hope you will find it possible to attend the meeting. |
|
|
| Sincerely yours, |
|
|
| Terry D. Hildestad |
|
|
|
|
MDU Resources Group, Inc.Proxy Statement |
|
|
Proxy Statement |
MDU RESOURCES GROUP, INC.
1200 West Century Avenue
Mailing Address:
P.O. Box 5650
Bismarck, North Dakota 58506-5650
(701) 530-1000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 201026, 2011
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to Be Held on April 27, 201026, 2011
The 20102011 Notice of Annual Meeting and Proxy Statement and 20092010 Annual Report
to Stockholders are available at www.mdu.com/proxymaterials.
March 12, 201011, 2011
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, on Tuesday, April 27, 2010,26, 2011, at 11:00 a.m., Central Daylight Saving Time, for the following purposes:
|
|
(1) |
|
|
|
(2) |
|
|
|
(3) |
|
|
|
(4) |
|
|
|
(5) |
|
|
|
(6) |
|
|
|
The board of directors has set the close of business on February 26, 201025, 2011 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. Registered stockholders will receive a request for admission ticket(s) with their proxy card that can be completed and returned to us postage-free. Stockholders whose shares are held in the name of a bank or broker will not receive a request for admission ticket(s). They should, instead, (1) call (701) 530-1000 to request an admission ticket(s), (2) bring a statement from their bank or broker showing proof of stock ownership as of February 26, 201025, 2011 to the annual meeting, and (3) present their admission ticket(s) and photo identification, such as a driver’s license. Directions to the meeting will be included with your admission ticket. We look forward to seeing you.
|
|
| By order of the Board of Directors, |
|
|
| Paul K. Sandness |
|
|
|
|
MDU Resources Group, Inc.Proxy Statement |
|
|
Proxy Statement |
|
|
|
|
| Page |
|
|
|
Notice of Annual Meeting of Stockholders |
|
|
|
|
|
| 1 | |
|
|
|
| 1 | |
|
|
|
| 3 | |
|
|
|
| 3 | |
|
|
|
|
| |
|
|
|
| ||
| ||
|
| |
|
|
|
|
| |
|
|
|
|
| |
19 | ||
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
| A-1 | |
B-1 |
|
|
| |
| |
| MDU Resources Group, Inc.Proxy Statement |
|
Proxy Statement |
The board of directors of MDU Resources Group, Inc. is furnishing this proxy statement beginning March 12, 201011, 2011 to solicit your proxy for use at our annual meeting of stockholders on April 27, 2010.26, 2011.
We will pay the cost of soliciting your proxy and reimburse brokers and others for forwarding proxy material to you. Georgeson Inc. additionally will solicit proxies for approximately $8,000 plus out-of-pocket expenses.
The Securities and Exchange Commission’s e-proxy rules allow companies to post their proxy materials on the Internet and provide only a Notice of Internet Availability of Proxy Materials to stockholders as an alternative to mailing full sets of proxy materials except upon request. For 2010,2011, we have elected to use the Securities and Exchange Commission’s full set delivery option, which means that while we are posting our proxy materials online, we are also mailing a full set of our proxy materials to our stockholders. We believe that mailing a full set of proxy materials will help ensure that a majority of outstanding shares of our common stock are present in person or represented by proxy at our meeting. We also hope to help maximize stockholder participation. Therefore, even if you previously consented to receiving your proxy materials electronically, you will receive a full set of proxy materials in the mail for this year’s annual meeting. However, we will continue to evaluate the option of providing only a Notice of Internet Availability of Proxy Materials to some or all of our stockholders in the future.
Who may vote?You may vote if you owned shares of our common stock at the close of business on February 26, 2010.25, 2011. You may vote each share that you owned on that date on each matter presented at the meeting. As of February 26, 2010,25, 2011, we had 188,053,936188,793,564 shares of common stock outstanding entitled to one vote per share.
What am I voting on?You are voting on:
|
|
• |
|
|
|
• | approval of the |
|
|
• | ratification of the |
|
|
• | advisory vote to approve the |
|
|
• | advisory vote on frequency of vote to approve the |
|
|
|
|
• | any other business that is properly brought before the meeting. |
What vote is required to pass an item of business?A majority of our outstanding shares of common stock entitled to vote must be present in person or represented by proxy to hold the meeting.
If you hold shares through an account with a bank or broker, the bank or broker may vote your shares on some matters even if you do not provide voting instructions. Brokerage firms have the authority under the New York Stock Exchange rules to vote shares on certain matters when their customers do not provide voting instructions. However, on other matters, when the brokerage firm has not received voting instructions from its customers, the brokerage firm cannot vote the shares on that matter and a “broker non-vote” occurs.Please note that the New York Stock Exchange rules have changed and an uncontested election of directors is no longer considered a routine matter. This means that brokers may not vote your shares on the election of directorsitems 1, 2, 4, and 5 if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted.
|
|
| |
| |
MDU Resources Group, Inc.Proxy Statement | 1 |
|
Proxy Statement |
|
Our policy on majority voting for directors and our corporate governance guidelines require any nominee for re-election as a director to tender to the board, prior to nomination, his or her irrevocable resignation from the board that will be effective, in an uncontested election of directors only, upon
|
|
• | receipt of a greater number of votes “against” than votes “for” election at our annual meeting of stockholders and |
|
|
• | acceptance of such resignation by the board of directors. |
Following certification of the stockholder vote, the nominating and governance committee will promptly recommend to the board whether or not to accept the tendered resignation. The board will act on the nominating and governance committee’s recommendation no later than 90 days following the date of the annual meeting.
Unless you specify otherwise when you submit your proxy, the proxies will vote your shares of common stock “for” all directors nominated by the board of directors, “for” proposalsitems 2, 3, and 4 and 5 and “against” proposal 6.for “1 year” in item 5.
How do I vote?There are three ways to vote by proxy:
|
|
• | by calling the toll free telephone number on the enclosed proxy card |
|
|
• | by using the Internet as described on the enclosed proxy card or |
|
|
• | by returning the enclosed proxy card in the envelope provided. |
You may be able to vote by telephone or the Internet if your shares are held in the name of a bank or broker. Follow their instructions.
|
|
| |
| |
2 | MDU Resources Group, Inc.Proxy Statement |
|
Proxy Statement |
Can I revoke my proxy?Yes. You can revoke your proxy by:
|
|
• | filing written revocation with the corporate secretary before the meeting |
|
|
• | filing a proxy bearing a later date with the corporate secretary before the meeting or |
|
|
• | revoking your proxy at the meeting and voting in person. |
At our 2007 annual meeting of stockholders, our board of directors proposed and our stockholders approved the declassification of our board of directors. The declassification was phased in over a three-year period from 2008 - 2010. Directors elected at our 2007 annual meeting comprise the last class elected to serve a three-year term, and their terms will expire at this year’s annual meeting. As a result, commencing with this year’s annual meeting, our board will be completely declassified. All nominees for director are nominated to serve one-year terms, until the annual meeting of stockholders in 20112012 and until their respective successors are elected and qualified, or until their earlier resignation, removal from office, or death. Effective as of the date of this year’s annual meeting, the board of directors has set the number of directors at ten.
The board of directors expresses its thanks to John L. Olson and Sister Thomas Welder, O.S.B. Mr. Olson retired from the board effective August 13, 2009 after reaching the mandatory retirement age of 70 for outside directors. Mr. Olson served on the board for 24 years and on the audit committee for 23 years. He also served on the compensation and nominating and governance committees during his tenure. Sister Welder chose not to seek re-election at this annual meeting because, pursuant to our bylaws’ mandatory retirement policy, she would be required to retire on May 13, 2010, which is the first regular meeting of the board after she attains the mandatory retirement age. Sister Welder served on the board for 22 years and on the nominating and governance committee for 21 years. She also served on the finance and audit committees during her tenure. Their dedicated service and expertise will be missed.
We have provided information below about our nominees, all of whom are incumbent directors, including their ages, years of service as directors, business experience, and service on other boards of directors, including any other directorships held during the past five years. We have also included information about each nominee’s specific experience, qualifications, attributes, or skills that led the board to conclude that he or she should serve as a director of MDU Resources Group, Inc. at the time we file our proxy statement, in light of our business and structure. Unless we specifically note below, no corporation or organization referred to below is a subsidiary or other affiliate of ours.
|
|
| |
| Thomas Everist | Director Since 1995 | |
Age | Compensation Committee | ||
| |||
Mr. Everist has served as president and chairman of The Everist Company, Sioux Falls, South Dakota, an aggregate, concrete, and asphalt production company, since April 15, 2002. He has been a managing member of South Maryland Creek Ranch, LLC, a land development company, since June 2006, and president of SMCR, Inc., an investment company, since June 2006. He was previously president and chairman of L.G. Everist, Inc., Sioux Falls, South Dakota, an aggregate production company, from 1987 to April 15, 2002. He held a number of positions in the aggregate and construction industries prior to assuming his current position with The Everist Company. He is a director of Showplace Wood Products, Sioux Falls, South Dakota, a custom cabinets manufacturer, and has been a director of Raven Industries, Inc., Sioux Falls, South Dakota, a general manufacturer of electronics, flow controls, and engineered films since 1996, and its chairman of the board since April 1, 2009. Mr. Everist has been a director of Genetics Squared, Inc. (Everist Geonomics, Inc.), Ann Arbor, Michigan, which provides solutions for personalized medicines, since May 2002, and has been a director of Angiologix Inc., Mountain View, California, a medical diagnostic device company, since July 2010. | |||
| |||
Mr. Everist attended Stanford University where he received a bachelor’s degree in mechanical engineering and a master’s degree in construction management. He is active in the Sioux Falls community and currently serves as a director on the Sanford Health Foundation, a non-profit charitable health services organization. From July 2001 to June 2006, he served on the South Dakota Investment Council, the state agency responsible for prudently investing state funds. | |||
| |||
|
| ||
|
|
| |
| |
MDU Resources Group, Inc.Proxy Statement | 3 |
|
Proxy Statement |
|
experience serving as a director and now chairman of another public company, which enhances his contributions to our board. His leadership skills and experience with his own companies and on other boards enable him to be an effective board member and compensation committee chairman. With the retirement of John L. Olson and Sister Thomas Welder, Mr. Everist becomes our longest serving board member, providing 15 years of board experience as well as extensive knowledge of our business.
|
|
| |
| Karen B. Fagg | Director Since 2005 | |
Age | Nominating and Governance Committee | ||
| |||
Ms. Fagg has served as vice president of DOWL LLC, d/b/a DOWL HKM, an engineering and design firm, since April 2008. Ms. Fagg was president from April 1, 1995 through March 2008, and chairman and majority owner from June 2000 through March 2008 of HKM Engineering, Inc., Billings, Montana, an engineering and physical science services firm. HKM Engineering, Inc. merged with DOWL LLC on April 1, 2008. Ms. Fagg was employed with MSE, Inc., Butte, Montana, an energy research and development company, from 1976 through 1988 and from 1993 to April 1995. She served as vice president of operations and corporate development director. From 1989 through 1992, Ms. Fagg served a four-year term as director of the Montana Department of Natural Resources and Conservation, Helena, Montana, the state agency charged with promoting stewardship of Montana’s water, soil, energy, and rangeland resources; regulating oil and gas exploration and production; and administering several grant and loan | |||
| |||
| Ms. Fagg has a bachelor’s degree in mathematics from Carroll College in Helena, Montana. She served on the board for St. Vincent’s Healthcare from October 2003 until October 2009, including a term as board chair and on the board of Deaconess Billings Clinic Health System from 1994 to | ||
| |||
|
| ||
|
|
| |
| Terry D. Hildestad | Director Since 2006 | |
Age | President and Chief Executive Officer | ||
| |||
Mr. Hildestad was elected president and chief executive officer and a director of the company effective August 17, 2006. He had served as president and chief operating officer from May 1, 2005 until August 17, 2006. Prior to that, he served as president and chief executive officer of our subsidiary, Knife River Corporation, from 1993 until May 1, 2005. He began his career with the company in 1974 at Knife River Corporation, where he served in several operating positions before becoming its president. He additionally serves as an executive officer and as chairman of the company’s principal subsidiaries and of the managing committees of Montana-Dakota Utilities Co. and Great Plains Natural Gas Co. | |||
Mr. Hildestad has a bachelor’s degree from Dickinson State University and has completed the Advanced Management Program at Harvard School of Business. Mr. Hildestad is a member of the U.S. Bancorp Western North Dakota Advisory Board of Directors. | |||
| |||
The board concluded that Mr. Hildestad should serve as a director of MDU Resources Group, Inc., in light of our business and structure, at the time we file our proxy | |||
|
|
| |
| |
4 | MDU Resources Group, Inc.Proxy Statement |
|
Proxy Statement |
|
the only officer of the company to sit on our board, consistent with our past practice. With over 35 years of experience at our company, Mr. Hildestad has a deep knowledge and understanding of MDU Resources Group, Inc., its operating companies and its lines of business. Mr. Hildestad has demonstrated his leadership abilities and his commitment to our company since he was elected president and chief executive officer and a director in 2006 and prior to that time through his long service as chief operating officer of the company and as president and chief executive officer at Knife River Corporation, our construction materials and contracting subsidiary. The board also believes that Mr. Hildestad’s integrity, values, and good judgment make him well-suited to serve on our board.
|
|
| |
| A. Bart Holaday | Director Since 2008 | |
Age | Audit Committee | ||
| |||
| |||
Mr. Holaday headed the Private Markets Group of UBS Asset Management and its predecessor entities for 15 years prior to his retirement in 2001, during which time he managed more than $19 billion in investments. Prior to that he was vice president and principal of the InnoVen Venture Capital | |||
| |||
| Mr. Holaday has a bachelor’s degree in engineering sciences from the U.S. Air Force Academy. He was a Rhodes Scholar, earning a bachelor’s degree and a master’s degree in politics, philosophy, and economics from Oxford University. He also earned a law degree from George Washington Law School and is a Chartered Financial Analyst. In 2005, he was awarded an honorary Doctor of Letters from the University of North Dakota. | ||
| |||
|
| ||
|
| ||
| Dennis W. Johnson | Director Since 2001 | |
Age | Audit Committee | ||
| |||
Mr. Johnson is chairman, chief executive officer and president of TMI Corporation, and chairman and chief executive officer of TMI Systems Design Corporation, TMI Transport Corporation, and TMI Storage Systems Corporation, all of Dickinson, North Dakota, manufacturers of casework and architectural woodwork. He has been employed at TMI since 1974 serving as president or chief executive officer since 1982 and has been the majority stockholder since 1985. Mr. Johnson is serving his | |||
| |||
Mr. Johnson has a bachelor of science degree in electrical and electronics engineering, as well as a master of science degree in industrial engineering from North Dakota State University. He has served on numerous industry, state, and community boards, including the North Dakota Workforce Development Council (chairperson), the Decorative Laminate Products Association, the North Dakota Technology Corporation, St. Joseph Hospital Life Care Foundation, St. John Evangelical Lutheran Church, Dickinson State University Foundation, the executive operations committee of the University of Mary Harold Schafer Leadership Center, the Dickinson United Way, and the business advisory council of the Steffes Corporation, a metal manufacturing and engineering firm. He also served on North Dakota Governor Sinner’s Education Action Commission, the North Dakota Job Service Advisory Council, the North Dakota State University President’s Advisory Council, North Dakota Governor Schafer’s Transition Team, and chaired North Dakota Governor Hoeven’s Transition Team. | |||
|
|
| |
| |
MDU Resources Group, Inc.Proxy Statement | 5 |
|
Proxy Statement |
| He has received numerous awards including the 1991 Regional Small Business Person of the Year Award and the Greater North Dakotan Award. | ||
Mr. Johnson has a bachelor of science degree in electrical and electronics engineering as well as a master of science degree in industrial engineering from North Dakota State University. He has served on numerous industry, state, and community boards, including the North Dakota Workforce Development Council (chairperson), the Decorative Laminate Products Association, the North Dakota Technology Corporation, St. Joseph Hospital Life Care Foundation, St. John Evangelical Lutheran Church, Dickinson State University, the executive operations committee of the University of Mary Harold Shafer Leadership Center, and the Dickinson United Way. He also served on North Dakota Governor Sinner’s Education Action Commission, the North Dakota Job Service Advisory Council, the North Dakota State University President’s Advisory Council, North Dakota Governor Schafer’s Transition Team, and chaired North Dakota Governor Hoeven’s Transition Team. He has received numerous awards including the 1991 Regional Small Business Person of the Year Award and the Greater North Dakotan Award.
For the following reasons, the board concluded that Mr. Johnson should serve as a director of MDU Resources Group, Inc., in light of our business and structure, at the time we file our proxy statement. Mr. Johnson has over 27 years of experience in business management, manufacturing, and finance, and has demonstrated his success in these areas, through his positions as chairman, president, and CEO of TMI, as well as through his prior service as a director of the Federal Reserve Bank of Minneapolis. His finance experience and leadership skills enable him to make valuable contributions to our audit committee, which he has chaired for six
The board concluded that Mr. Johnson should serve as a director of MDU Resources Group, Inc., in light of our business and structure, at the time we file our proxy statement for the following reasons. Mr. Johnson has over 28 years of experience in business management, manufacturing, and finance, and has demonstrated his success in these areas, through his positions as chairman, president, and chief executive officer of TMI, as well as through his prior service as a director of the Federal Reserve Bank of Minneapolis. His finance experience and leadership skills enable him to make valuable contributions to our audit committee, which he has chaired for seven years. As a result of his service on a number of state and local organizations in North Dakota, Mr. Johnson has significant knowledge of local, state, and regional issues involving North Dakota, a state where we have significant operations and assets.
|
|
| |
| Thomas C. Knudson | Director Since 2008 | |
Age | Compensation Committee | ||
| |||
Mr. Knudson has been president of Tom Knudson Interests, LLC, since its formation on January 14, 2004. Tom Knudson Interests, LLC, provides consulting services in energy, sustainable development, and leadership. Mr. Knudson began employment with Conoco Oil Company (Conoco) in May 1975 and retired in 2004 from Conoco’s successor, ConocoPhillips, as senior vice president of human resources and government affairs and | |||
| |||
| Mr. Knudson has a bachelor’s degree in aerospace engineering from the U.S. Naval Academy and a master’s degree in aerospace engineering from the U.S. Naval Postgraduate School. He served as a naval aviator, flying combat missions in Vietnam, and was a lieutenant commander in 1974 when he was honorably discharged. Mr. Knudson has served on the boards of a number of petroleum industry associations, Covenant House Texas, The Houston Museum of Natural Science, and Alpha USA/Houston. He has served as an adjunct professor at the Jones Graduate School of Management at Rice University. | ||
| |||
|
| ||
|
|
|
|
|
|
| Richard H. Lewis | Director Since 2005 |
Age | Audit Committee | |
| ||
Mr. Lewis has been the managing general partner of Brakemaka LLLP, a private investment partnership for managing family investments, and president of the Lewis Family Foundation since August 2004. Mr. Lewis serves as chairman of the board of Entre Pure Industries, Inc., a privately held company involved in the purified water and ice business. He serves as a director of Colorado State Bank and Trust and on the senior advisory board of TPH Partners, L.P., a private equity fund with an energy-only focus. Mr. Lewis founded Prima Energy Corporation, a natural gas and oil exploration and production company in 1980, and served as chairman and chief executive officer of the company until its sale in July 2004. During his | ||
6 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
tenure, Prima Energy was named to Forbes Magazine’s 200 Best Small Companies in America list seven times and was ranked the No. 1 Colorado public company for the decade of the | |||
| |||
| Mr. Lewis has a bachelor’s degree in finance and accounting from the University of Colorado. He served as a board member on the Colorado Oil and Gas Association from November 1999 to November 2009, including a term as its president. In 2000, Mr. Lewis was inducted into the Ernst & Young Entrepreneur of the Year Hall of Fame and in 2004 was inducted into the Rocky Mountain Oil and Gas Hall of Fame. Mr. Lewis serves as the chairman of the Development Board of Colorado Uplift, a non-profit organization whose mission is to build long-term, life-changing relationships with urban youth. He also serves on the Board of Trustees of Alliance for Choice in Education, which provides scholarships to inner city youth. He has also served on the Board of Trustees of the Metro Denver YMCA, the Advisory Council to the Leeds School of Business at the University of Colorado, and as a director for the Partnership for the West. | ||
| |||
|
| ||
|
|
| |
| Patricia L. Moss | Director Since 2003 | |
Age | Compensation Committee | ||
| |||
Ms. Moss has served as the president and chief executive officer of Cascade Bancorp, a financial holding company in Bend, Oregon, since 1998, and as a director since 1993. She has served as the chief executive officer of Cascade Bancorp’s principal subsidiary, Bank of the Cascades, since 1993, serving also as president from 1993 to | |||
Ms. Moss graduated magna cum laude with a bachelor of science degree in business administration from Linfield College in Oregon and did master’s studies at Portland State University. She received commercial banking school certification at the ABA Commercial Banking School at the University of Oklahoma. She served as a director of the Oregon Business Council, whose mission is to mobilize business leaders to contribute to Oregon’s quality of life and economic prosperity; the Cascades Campus Advisory Board of the Oregon State University; the North Pacific Group, Inc., a wholesale distributor of building materials, industrial and hardwood products, and other specialty products; the Aquila Tax Free Trust of Oregon, a mutual fund created especially for the benefit of Oregon residents; Clear Choice Health Plans Inc., a multi-state insurance company; and as a director and chair of the St. Charles Medical Center. | |||
In August 2009, the Federal Deposit Insurance Corporation and the Oregon Division of Finance and Corporate Securities entered into a consent agreement with Bank of the Cascades that requires the bank to develop and adopt a plan to maintain the capital necessary for it to be “well-capitalized,” to improve its lending policies and its allowance for loan losses, to increase its liquidity, to retain qualified management, and to increase the participation of its board of directors in the affairs of the bank. In October 2009, the bank’s parent, Cascade Bancorp, entered into a written agreement with the Federal Reserve Bank of San Francisco and the Oregon Division relating largely to improving the financial condition of Cascade Bancorp and the Bank of the Cascades. Cascade Bancorp completed a sale of common stock in January 2011 to private investors that raised sufficient capital to meet the agreement requirements. | |||
The board concluded that Ms. Moss should serve as a director of MDU Resources Group, Inc., in light of our business and structure, at the time we file our proxy statement for the following reasons. A significant portion of MDU Resources Group, Inc.’s utility, construction services, and contracting operations are located in the Pacific Northwest. Ms. Moss has first-hand business experience and knowledge of the Pacific Northwest economy and local, state, and regional issues through her position as president, chief executive officer, and a director at Cascade Bancorp and her positions at Bank of the Cascades, where she has over 29 years of experience. Ms. Moss provides to our board her experience in finance and banking, as well as her experience in business development through her work at Cascade | |||
|
|
| |
| |
MDU Resources Group, Inc.Proxy Statement | 7 |
|
Proxy Statement |
| |||
management, and to increase the participation of its board of directors in the affairs of the bank. In October 2009, the bank’s parent, Cascade Bancorp, entered into a written agreement with the Federal Reserve Bank of San Francisco and the Oregon Division relating largely to improving the financial condition of Cascade Bancorp and the Bank of the Cascades.
For the following reasons, the board concluded that Ms. Moss should serve as a director of MDU Resources Group, Inc., in light of our business and structure, at the time we file our proxy statement. A significant portion of MDU Resources Group, Inc.’s utility, construction services, and contracting operations are located in the Pacific Northwest. Ms. Moss has first-hand business experience and knowledge of the Pacific Northwest economy and local, state, and regional issues through her position as president, chief executive officer, and a director at Cascade Bancorp and Bank of the Cascades, where she has over 28 years of experience. Ms. Moss provides to our board her experience in finance and banking as well as her experience in business development through her work at Cascade Bancorp and on the Oregon Investment Advisory Council and the Oregon Business Council. This business experience demonstrates her leadership abilities and success in the finance and banking industry. Ms. Moss is also certified as a Senior Professional in Human Resources, which makes her well-suited for our compensation committee. In deciding that Ms. Moss should be renominated as a director, the board was mindful of the consent agreement with Bank of the Cascades, but concluded that Ms. Moss brought the many skills and experiences discussed above to our board and had proved herself to be a dedicated and hard-working director.
|
|
| |
| Harry J. Pearce | Director Since 1997 | |
Age | Chairman of the Board | ||
| |||
Mr. Pearce was elected chairman of the board of the company on August 17, 2006. Prior to that, he served as lead director effective February 15, 2001 and was vice chairman of the board from November 16, 2000 until February 15, 2001. Mr. Pearce has been a director of Marriott International, Inc., a major hotel chain, since 1995. He was a director of Nortel Networks Corporation, a global telecommunications company, from January 11, 2005 to August 10, 2009, serving as chairman of the board from June 29, 2005. He retired on December 19, 2003, as chairman of Hughes Electronics Corporation, a General Motors Corporation subsidiary and provider of digital television entertainment, broadband satellite network, and global video and data broadcasting. He had served as chairman since June 1, 2001. Mr. Pearce was vice chairman and a director of General Motors Corporation, one of the world’s largest automakers, from January 1, 1996 to May 31, | |||
| |||
|
| ||
| |
|
|
|
|
| ||
| John K. Wilson | Director Since 2003 | |
Age | Audit Committee | ||
| |||
Mr. Wilson was president of Durham Resources, LLC, a privately held financial management company, in Omaha, Nebraska, from 1994 to December 31, 2008. He previously was president of Great Plains Energy Corp., a public utility holding company and an affiliate of Durham Resources, LLC, from 1994 to July 1, 2000. He was vice president of Great Plains Natural Gas Co., an affiliate company of Durham Resources, LLC, until July 1, 2000. The company bought Great Plains Energy Corp. and Great Plains Natural Gas Co. on July 1, 2000. Mr. Wilson also served as president of the Durham Foundation and was a director of Bridges Investment Fund, a mutual fund, and the Greater Omaha Chamber of Commerce. He is presently a director of HDR, Inc., an international architecture and engineering firm, Tetrad Corporation, a privately held investment company, both based in Omaha, and serves on the advisory | |||
8 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
| |
| Mr. Wilson is a certified public accountant. He received his bachelor’s degree in business administration, cum laude, from the University of Nebraska – Omaha. During his career, he was |
| |
|
|
The board of directors recommends a vote “for” each nominee.
A majority of votes cast is required to elect a director in an uncontested election. A majority of votes cast means the number of votes cast “for” a director’s election must exceed the number of votes cast “against” the director’s election. “Abstentions” and “broker non-votes” do not count as votes cast “for” or “against” the director’s election. In a contested election, which is an election in which the number of nominees for director exceeds the number of directors to be elected and which we do not anticipate, directors will be elected by a plurality of the votes cast.
Unless you specify otherwise when you submit your proxy, the proxies will vote your shares of common stock “for” all directors nominated by the board of directors. If a nominee becomes unavailable for any reason or if a vacancy should occur before the election, which we do not anticipate, the proxies will vote your shares in their discretion for another person nominated by the board.
Our policy on majority voting for directors and our corporate governance guidelines require any nominee for re-election as a director to tender to the board, prior to nomination, his or her irrevocable resignation from the board that will be effective, in an uncontested election of directors only, upon:
|
|
• | receipt of a greater number of votes “against” than votes “for” election at our annual meeting of stockholders and |
|
|
• | acceptance of such resignation by the board of directors. |
Following certification of the stockholder vote, the nominating and governance committee will promptly recommend to the board whether or not to accept the tendered resignation. The board will act on the nominating and governance committee’s recommendation no later than 90 days following the date of the annual meeting.
Please note that the New York Stock Exchange rules have changed. Brokers may not vote your shares on the election of directors if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted.
ITEM 2. APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE MDU RESOURCES GROUP, INC. LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN FOR PURPOSES OF INTERNAL REVENUE CODE SECTION 162(m)
The board of directors recommends that stockholders approve the material terms of the performance goals under the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan to preserve our ability to deduct compensation associated with future performance-based incentive awards to be made under the plan.
Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1,000,000 on the amount we may deduct in any one year for compensation paid to our “covered employees.” A covered employee means a person specified in Section 162(m), which generally includes our chief executive officer and each of our other three most highly-compensated executive officers other than our chief financial officer.
There is, however, an exception to this limit for certain performance-based compensation, and awards made pursuant to the plan may constitute performance-based compensation not subject to the deductibility limitation of Internal Revenue Code Section 162(m). In order to continue to qualify for this exception, the stockholders must re-approve, every five years, the material terms of the performance goals of
|
|
| |
| |
MDU Resources Group, Inc.Proxy Statement | 9 |
|
Proxy Statement |
the plan under which compensation will be paid. Stockholders last approved these goals in 2006, and, therefore, the board is submitting the plan’s performance goals for re-approval at the 2011 annual meeting of stockholders. The board of directors has also amended the plan on November 11, 2010 and February 17, 2011, subject to approval of this item by stockholders at the annual meeting, to include the following new performance goals: safety, sustainability, capital efficiency, enterprise value, company value, asset value growth, net asset value, shareholders’ equity, dividends, oil and/or gas production (growth, value and costs) and oil and/or gas reserves (including proved, probable and possible reserves and growth, value and costs) and finding or development costs. Your vote for this item will constitute approval of the new performance goals and approval of the material terms of the performance goals for purposes of Internal Revenue Code Section 162(m).
The material terms of the performance goals are (i) eligibility and participation, (ii) the business criteria on which the performance goals are based, and (iii) maximum awards under the plan, which we describe further below.
Eligibility and Participation
All officers and key employees of the company and our subsidiaries, including employees who are members of the board, as determined by the compensation committee, are eligible to participate in the plan. The approximate number of employees who are currently eligible to participate in the plan is 49.
Performance Goals
The compensation committee establishes the performance goals, which will be based on one or more of the following measures: sales or revenues, earnings per share, shareholder return and/or value, funds from operations, operating income, gross income, net income, cash flow, return on equity, return on capital, capital efficiency, earnings before interest, operating ratios, stock price, enterprise value, company value, asset value growth, net asset value, shareholders’ equity, dividends, customer satisfaction, accomplishment of mergers, acquisitions, dispositions or similar extraordinary business transactions, safety, sustainability, profit returns and margins, financial return ratios, market performance, oil and/or gas production (growth, value and costs) and oil and/or gas reserves (including proved, probable and possible reserves and growth, value and costs) and finding or development costs. Performance goals may be measured solely on a corporate, subsidiary, or business unit basis, or a combination of the foregoing. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure.
Maximum Awards under the Plan
Awards under the plan may be made in the form of stock, stock options, stock appreciation rights, performance units, performance shares, dividend equivalents, restricted stock, and other awards permitted under article 10 of the plan. Except as provided in the plan’s anti-dilution adjustment provisions, the per share exercise price of stock options and the grant price of stock appreciation rights granted under the plan will not be less than the fair market value of our common stock on the date of grant.
Subject to adjustment pursuant to the anti-dilution provisions in the plan, (i) the total number of shares with respect to which stock options or stock appreciation rights may be granted in any calendar year to any covered employee under Section 162(m) shall not exceed 2,250,000 shares, (ii) the total number of shares of restricted stock intended to qualify as performance-based compensation that may be granted in any calendar year to any covered employee shall not exceed 2,250,000 shares, (iii) the total number of performance shares or performance units that may be granted in any calendar year to any covered employee shall not exceed 2,250,000 performance shares or performance units, as the case may be, (iv) the total number of shares that are intended to qualify as performance-based compensation granted pursuant to article 10 of the plan in any calendar year to any covered employee shall not exceed 2,250,000 shares, (v) the total cash award that is intended to qualify as performance-based compensation that may be paid pursuant to article 10 of the plan in any calendar year to any covered employee shall not exceed $6,000,000, and (vi) the aggregate number of dividend equivalents that are intended to qualify as performance-based compensation that a covered employee may receive in any calendar year shall not exceed $6,000,000.
|
ITEM 2. REPEAL OF ARTICLE TWELFTH OF OUR RESTATED CERTIFICATE OF INCORPORATION, WHICH CONTAINS PROVISIONS RELATING TO BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS, AND RELATED AMENDMENTS TO ARTICLES THIRTEENTH AND FOURTEENTH
In November 2009, we received a stockholder proposal requesting that the board of directors take the steps necessary to change the stockholder vote requirements that call for a greater than simple majority vote in our restated certificate of incorporation, as amended, and bylaws to a majority of votes cast for or against any proposal.
Article TWELFTH of our restated certificate of incorporation, which has “fair price” provisions relating to business combinations with interested stockholders, contains a supermajority vote requirement. Article TWELFTH provides that, unless the transaction is approved by two-thirdsThe other material features of the continuing directors, the fair price and procedural requirements of article TWELFTH will apply to the business combination,plan are described below, and the business combination must be approved by at least 80%complete text of the voting power of the outstanding voting stock. Inplan is attached to this proxy statement we sometimes refer to the provisions of article TWELFTH as the “fair price” provisions.Exhibit “A.”
Article TWELFTH requires the affirmative vote of at least 80%Purpose of the voting powerPlan
The purpose of the plan is to promote the success and enhance the value of the company by linking the personal interests of officers and key employees to those of our outstanding voting stockstockholders and customers. The plan is further intended to approve certain transactions involving an “interested stockholder,” which is a person or group that beneficially owns more than 10%provide flexibility in our ability to motivate, attract, and retain the services of participants upon whose judgment, interest, and special effort the successful conduct of our outstanding voting stock.
The supermajority vote requirement applies to the following transactions:operations largely depends.
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
The supermajority vote requirement does not apply to transactions that have been approved by two-thirds of the continuing directors. Continuing directors are members of the board who are unaffiliated with, and not nominees of, an interested stockholder and who were members of the board prior to the time the interested stockholder became an interested stockholder. Continuing directors also include directors designated to succeed continuing directors.
We added article TWELFTH to our restated certificate of incorporation in 1985. As we discussed in our proxy statement at that time, there had been a number of instances in which an unsolicited bidder had acquired control of a company over the objections of management and, after acquiring control, had compelled a merger, consolidation or sale of assets without an arm’s length negotiation of the terms. While tender offers or other takeover attempts could be made at a price substantially above the market price of a company’s common stock, they frequently were made for less than all of the outstanding shares of a target company. Such partial offers could present stockholders with the alternative of either partially liquidating their investment at a time when that may be disadvantageous or retaining an investment in an enterprise under new management whose objectives may differ from those of the remaining stockholders. Article TWELFTH was designed to deal with then recently-developed takeover strategies such as two-tiered transactions that often resulted in inequitable treatment of long-term stockholders. Article TWELFTH was designed to encourage a person making an unsolicited bid for the company to negotiate with our board of directors to reach terms that were fair and in the best interests of the stockholders.
In more recent years, however, some investors have viewed fair price provisions as inconsistent with principles of good corporate governance and believe that these provisions make it more difficult for stockholders to effect change and participate in important decisions affecting the company. These investors believe that the supermajority vote requirement that is part of the fair price provisions limits the ability of a majority of stockholders to effect change by providing a veto right to a large minority stockholder or group of stockholders. They also assert that supermajority vote provisions cause boards and management to be less responsive or accountable to stockholders. Others have argued that supermajority vote requirements not only offer little, if any, protection to minority stockholders, but also have the effect of discouraging legitimate offers for a company by making them more expensive.
After receiving the stockholder proposal, the board of directors reviewed the advantages and disadvantages of the provisions contained in article TWELFTH and after this review decided to propose the repeal of article TWELFTH to further our goal of ensuring that our corporate governance policies maximize our accountability to stockholders.
| ||
10 | MDU Resources Group, Inc. Proxy Statement | |
|
Proxy Statement |
Effective Date and Duration
The companyplan was approved by the board of directors on February 7, 1997, and became effective upon approval by stockholders at the annual meeting on April 22, 1997. The plan will continueremain in effect, subject to the right of the board of directors to terminate the plan at any time, until all shares subject to the plan have been issued.
Amendment and Termination
The board may, at any time and from time to time, alter, amend, suspend, or terminate the plan in whole or in part, provided that no amendment will be made without stockholder approval if the amendment would (i) increase the total number of shares that may be issued under the plan, (ii) materially modify the requirements for participation in the plan, or (iii) materially increase the benefits accruing to participants under the plan. The board also is authorized to amend the plan and stock options granted under the plan to maintain qualification as incentive stock options within the meaning of Internal Revenue Code Section 422, if applicable.
Administration of the Plan
The plan is administered by the compensation committee or by any other committee appointed by the board of directors. Subject to the terms of the plan, the committee has full power under the plan to determine persons to receive awards, the type of awards, and their terms. The committee may amend outstanding awards subject to restrictions stated in the plan. The committee may not amend an outstanding stock option for the sole purpose of reducing the stock option’s exercise price.
Shares Subject to the Plan
When it originally became effective in 1997, the plan authorized the issuance of up to 1,200,000 shares of MDU Resources Group, Inc. common stock. In 2001, the stockholders approved an amendment to increase the number of shares that could be issued under the plan by 4,000,000 shares. On February 17, 2005, the Board of Directors amended the plan to reduce the number of shares that could be issued by 2,000,000 shares. As of February 17, 2011, after giving effect to stock splits and awards pursuant to the plan, 5,686,140 shares remain available for issuance under the plan, excluding 764,835 outstanding target level performance share awards granted in 2009, 2010, and 2011.
Shares underlying lapsed or forfeited restricted stock awards are not treated as having been issued under the plan. Shares withheld from a restricted stock award to satisfy tax withholding obligations are counted as shares issued under the plan. Shares that are potentially deliverable under an award that expires or is canceled, forfeited, settled in cash, or otherwise settled without the delivery of shares are not treated as having been issued under the plan. Shares that are withheld to satisfy the exercise price of a stock option or tax withholding obligations related to a stock option, stock appreciation right, or other award under which the shares withheld have not yet been issued are not treated as having been issued under the plan.
Shares issued under the plan may be authorized but unissued shares of common stock, treasury stock, or shares purchased on the open market. The last reported sale price of a share of our common stock on the New York Stock Exchange on February 17, 2011 was $21.42.
In the event of any equity restructuring such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend, the committee will cause an equitable adjustment to be made (i) in the number and kind of shares that may be delivered under the plan, (ii) in the individual limitations set forth in the plan, and (iii) with respect to outstanding awards, in the number and kind of shares subject to Section 203outstanding awards, the stock option exercise price, base value, or other price of shares subject to outstanding awards, any performance goals relating to shares, the market price of shares, or per-share results, and other terms and conditions of outstanding awards, in the case of (i), (ii), and (iii) to prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation, or liquidation, the committee may, in its sole discretion, cause an equitable adjustment as described in the foregoing sentence to be made, to prevent dilution or enlargement of rights. The number of shares subject to any award will always be rounded down to a whole number when adjustments are made pursuant to these provisions of the Delaware General Corporation Law, whether or notplan. Adjustments made by the proposed amendmentscommittee pursuant to these provisions are approved. With some exceptions, Section 203 provides that a business combination, as defined in Section 203, with an interested stockholder, whichfinal, binding, and conclusive.
Types of Awards under the Plan
Following is a person owning 15% or moregeneral description of the types of awards that the compensation committee may make under the plan. The compensation committee will determine the terms and conditions of awards on a company’s outstanding votinggrant-by-grant basis, subject to limitations contained in the plan.
Stock Options.The committee may grant incentive stock cannotoptions and nonqualified stock options. Except as provided in the plan’s anti-dilution adjustment provisions, the exercise price for each such award shall be completed for a three-year period afternot less than the average of the high and low sale prices of our common stock on the date of grant. Stock options shall expire at such times and shall have such other terms and conditions as the person became an interested stockholder, unlesscommittee may determine at the time of grant, provided, however, that no incentive stock option shall be exercisable later than the tenth anniversary of its date of grant. Dividend equivalents may also be granted.
|
| |
|
| |
|
| |
|
| |
In addition to the deletion of article TWELFTH, the board of directors has proposed related amendments to articles THIRTEENTH and FOURTEENTH of our restated certificate of incorporation. These amendments add to article THIRTEENTH some definitions of terms currently included in article TWELFTH that are relevant to other articles of our restated certificate of incorporation. These definitions of terms have been modified to reflect the repeal of article TWELFTH. In addition, in article FOURTEENTH, the amendments substitute the term “business combination” that was previously defined in article TWELFTH with a description of the term’s meaning, which is no longer limited to transactions with “interested stockholders.”
The board of directors has approved the proposed amendments to our restated certificate of incorporation described above. The board resolution setting forth the proposed amendments to our restated certificate of incorporation is included in Exhibit A to this proxy statement and shows the changes that would result from the amendments. If approved by our stockholders, the amendments will become effective upon filing with the Secretary of State of the State of Delaware, which filing we would make promptly after the annual meeting.
The board of directors recommends a vote “for” the proposal to repeal article TWELFTH of our restated certificate of incorporation, which contains provisions relating to business combinations with interested stockholders, and related amendments to articles THIRTEENTH and FOURTEENTH.
Approval requires the affirmative vote of a majority of the outstanding shares of common stock. Abstentions will count as votes against this proposal.
ITEM 3. REPEAL OF ARTICLE FIFTEENTH OF OUR RESTATED CERTIFICATE OF INCORPORATION, WHICH CONTAINS SUPERMAJORITY VOTE REQUIREMENTS FOR AMENDMENTS TO CERTAIN ARTICLES OF OUR RESTATED CERTIFICATE OF INCORPORATION
As discussed above under Item 2, in November 2009, we received a stockholder proposal requesting that the board of directors take the steps necessary to change the stockholder vote requirements that call for a greater than simple majority vote in our restated certificate of incorporation and bylaws to a majority of votes cast for or against any proposal.
Article FIFTEENTH of our restated certificate of incorporation, as amended, requires the affirmative vote of at least 80% of the voting power of the outstanding voting stock to amend, alter, change or repeal, or to adopt any provision inconsistent with, the following provisions of our restated certificate of incorporation:
|
|
|
|
|
|
|
|
|
|
| ||
MDU Resources Group, Inc. Proxy Statement | 11 | |
|
Proxy Statement |
The supermajority vote requirement does not applystock option exercise price is payable in cash, in shares of our common stock having a fair market value equal to amendments that are recommended to stockholdersthe exercise price, by two-thirdsshare withholding, cashless exercise or any combination of the continuing directors.foregoing.
We added article FIFTEENTHStock Appreciation Rights.The committee may grant stock appreciation rights with such terms and conditions as the committee may determine. Stock appreciation rights may be in the form of freestanding stock appreciation rights or tandem stock appreciation rights. Except as provided in the plan’s anti-dilution adjustment provisions, the base value of a freestanding stock appreciation right shall be equal to our restated certificatethe average of incorporation in 1985. The supermajority vote requirement was intended to prevent one or more stockholders controllingthe high and low sale prices of a simple majorityshare of our votingcommon stock from repealingon the date of grant. The base value of a tandem stock appreciation right shall be equal to the stock option exercise price of the related stock option.
Freestanding stock appreciation rights may be exercised upon such terms and conditions as are imposed by the committee and as set forth in the stock appreciation right award agreement. A tandem stock appreciation right may be exercised only with respect to the shares of our common stock for which its related stock option is exercisable.
Upon exercise of a stock appreciation right, a participant will receive the product of the excess of the fair pricemarket value of a share of our common stock on the date of exercise over the base value multiplied by the number of shares with respect to which the stock appreciation right is exercised, subject to satisfaction of applicable tax withholding. Payment due to the participant upon exercise may be made in cash, in shares of our common stock having a fair market value equal to such cash amount, or in a combination of cash and shares, as determined by the Committee.
Restricted Stock.Restricted stock may be granted in such amounts and subject to such terms and conditions as determined by the committee, including time-based or performance-based vesting restrictions. The committee may establish performance goals, as described above, for restricted stock.
Participants holding restricted stock may exercise full voting rights with respect to those shares during the restricted period and, subject to the committee’s right to determine otherwise at the time of grant, will receive regular cash dividends. All other provisions referreddistributions paid with respect to in article FIFTEENTHthe restricted stock will be credited subject to the same restrictions on transferability and forfeitability as the shares of restricted stock with respect to give minority stockholders holdingwhich they were paid.
Performance Units and Performance Shares.Performance units and performance shares may be granted in the aggregate in excessamounts and subject to such terms and conditions as determined by the committee. The committee will set performance goals, which, depending on the extent to which they are met during the performance periods established by the committee, will determine the number and/or value of 20%performance units/shares that will be paid out to participants. Dividend equivalents may also be granted.
Participants will receive payment of the voting powervalue of performance units/shares earned after the ability to prevent amendments to the fair price and other provisions referred to in article FIFTEENTH.
However, as with fair price provisions, in more recent years, some investors have viewed supermajority vote requirements as inconsistent with principles of good corporate governance and argue that such provisions make it more difficult for stockholders to effect change and participate in important decisions affecting the company. These investors believe that supermajority vote requirements limit the ability of a majority of stockholders to effect change by providing a veto right to a large minority stockholder or group of stockholders. They also assert that supermajority vote provisions cause boards and management to be less responsive or accountable to stockholders. Others have argued that supermajority vote requirements not only offer little, if any, protection to minority stockholders, but also have the effect of discouraging legitimate offers for the company by making them more expensive. A number of major corporations have determined that, regardlessend of the meritsperformance period. Payment of supermajority vote provisions, principles of good corporate governance dictate that such requirementsperformance units/shares will be eliminated.
After receiving the stockholder proposal, the board of directors reviewed the advantages and disadvantages of supermajority vote requirements containedmade in article FIFTEENTH and, after this review, decided to propose the repeal of article FIFTEENTH to further our goal of ensuring that our corporate governance policies maximize our accountability to stockholders.
If article FIFTEENTH is repealed, the stockholder vote required to approve amendments to the provisions of our restated articles of incorporation identified in article FIFTEENTH that are not recommended to stockholders by two-thirds of our continuing directors would be reduced from an 80% supermajority vote to a majority of our outstanding voting stock. Section 242(b) of the Delaware General Corporation Law would apply to all amendments to our restated certificate of incorporation and require that charter amendments be approved by a majority of the outstanding stock entitled to vote thereon and by a majority of the outstanding stock of each class entitled to vote thereon as a class, unless the Delaware General Corporation Law cash and/or our restated certificate of incorporation specifically provides for a greater than majority vote.
The board of directors has approved the proposed amendment as described above. The board resolution setting forth the proposed amendment to our restated certificate of incorporation is included in Exhibit A to this proxy statement and shows the changes that would result from the amendment. If approved by our stockholders, the amendment will become effective upon filing with the Secretary of State of the State of Delaware, which filing we would make promptly after the annual meeting.
The board of directors recommends a vote “for” the proposal to repeal article FIFTEENTH of our restated certificate of incorporation, which contains supermajority vote requirements for amendments to certain articles of our restated certificate of incorporation.
Approval requires the affirmative vote of a majority of the outstanding shares of common stock. Abstentions will countstock which have an aggregate fair market value equal to the value of the earned performance units/shares at the end of the applicable performance period, in such combination as votes against this proposal.the committee determines. Shares may be granted subject to any restrictions deemed appropriate by the committee.
ITEM 4. REPEAL OF SECTION (c) OF ARTICLE THIRTEENTH OF OUR RESTATED CERTIFICATE OF INCORPORATION, WHICH PROVIDES THAT DIRECTORS MAY BE REMOVED BY STOCKHOLDERS ONLY FOR CAUSE, AND TECHNICAL AMENDMENTS TO SECTION (a) OF ARTICLE THIRTEENTHOther Awards.The committee may make other awards which may include, without limitation, the grant of shares of common stock based upon attainment of performance goals established by the committee as described above, the payment of shares in lieu of cash, the payment of cash based on attainment of performance goals, and the payment of shares in lieu of cash under our other incentive or bonus programs.
Section (c)Minimum Vesting Requirements
Under the plan, the minimum vesting period for full value awards, which are awards other than stock options and stock appreciation rights, that have no performance-based vesting characteristics is three years. Vesting may occur ratably each month, quarter, or anniversary of article THIRTEENTHthe grant date. The minimum vesting period for full value awards with performance-based vesting characteristics is one year. The committee does not have discretion to accelerate vesting of our restated certificatefull value awards except in the event of incorporation, as amended, provides that any directora change in control of the company or similar transaction, or the entire boarddeath, disability, or termination of directorsemployment of a participant. The committee may be removed by stockholders onlygrant a “de minimis” number of full value awards that have a shorter vesting period. For this purpose, “de minimis” means 331,279 shares, which was five percent of the total number of shares reserved for cause and setsissuance under the plan.
Termination of Employment
Each award agreement will set forth the requirements for such removal.
In 2007, our boardparticipant’s rights with respect to each award following termination of directors proposed and our stockholders approved the declassification of our board. The declassification has been phased in over a three-year period from 2008 to 2010. Directors elected at our 2007 annual meeting comprise the last class of directors elected to serve a three-year term, and their terms will expire with this year’s annual meeting. As a result, commencing with this year’s annual meeting, our board will be completely declassified, and all directors at this year’s annual meeting will be elected to serve one-year terms.employment.
|
|
| |
| |
12 | MDU Resources Group, Inc. Proxy Statement |
|
Proxy Statement |
Transferability
Except as otherwise determined by the committee and set forth in the award agreement and subject to the provisions of the plan, awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and a participant’s rights shall be exercisable only by the participant or the participant’s legal representative during his or her lifetime.
Change in Control
Upon a change in control, as defined below,
• | any and all stock options and stock appreciation rights granted under the plan will become immediately exercisable |
• | any restriction periods and restrictions imposed on restricted stock or awards granted pursuant to article 10 of the plan, if not performance-based, will be deemed to have expired, and such restricted stock or awards will become immediately vested in full and |
• | the target payout opportunity attainable under all outstanding awards of performance units, performance shares, and other awards granted pursuant to article 10 of the plan, if performance-based, will be deemed to have been fully earned for the entire performance period(s) as of the effective date of the change in control and will be paid out promptly in shares or cash pursuant to the terms of the award agreement, or in the absence of such designation, as the committee shall determine. |
The plan defines “change in control” as the earliest to occur of: | |
• | the acquisition by an individual, entity, or group of 20% or more of our outstanding common stock |
• | a change in a majority of our board of directors since April 22, 1997 without the approval of a majority of the board members as of April 22, 1997, or whose election was approved by such board members |
• | consummation of a merger or similar transaction or sale of all or substantially all of our assets, unless our stockholders immediately prior to the transaction beneficially own more than 60% of the outstanding common stock and voting power of the resulting corporation in substantially the same proportions as before the merger, no person owns 20% or more of the resulting corporation’s outstanding common stock or voting power except for any such ownership that existed before the merger and at least a majority of the board of the resulting corporation is comprised of our directors or |
• | stockholder approval of our liquidation or dissolution. |
Accounting Restatements
The plan provides that if our audited financial statements are restated, the committee may, in accordance with ourGuidelines for Repayment of Incentives Due to Accounting Restatements, take such actions as it deems appropriate in its sole discretion with respect to outstanding awards if the terms of such awards are directly impacted by the restatement. To the extent payment of vested, earned, or exercised awards was made within the three-year period prior to the restatement, the committee may, without limitation on its ability to take other action,
• | secure repayment of awards |
• | grant additional awards |
• | rescind vesting of outstanding awards and |
• | cause the forfeiture of outstanding awards. |
The committee may take different actions with respect to different awards and different participants, but is not obligated to take any action.
Section 409A
To the extent applicable, it is intended that the plan and any awards made under the plan comply with the requirements of Internal Revenue Code Section 409A. Any provision that would cause the plan or any award to fail to satisfy Section 409A will have no force or effect until amended to comply with Section 409A, which amendment may be retroactive to the extent permitted by Section 409A.
Award Information
It is not possible at this time to determine awards that will be made in the future pursuant to the plan.
| |
MDU Resources Group, Inc. Proxy Statement | 13 |
Proxy Statement |
WithStock Option Awards under MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan
The following table lists all stock options granted to the completionindividuals and groups indicated below since the adoption of the declassificationplan in 1997, whether exercised, lapsed, or forfeited and sets forth the title and number of securities underlying stock option awards, the exercise prices, and expiration dates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Position |
| Title of |
| Number of |
| Exercise |
| Expiration |
| ||||
Terry D. Hildestad |
|
| Common |
|
| 74,520 |
| $ | 13.2178 |
|
| 2/15/11 |
|
Vernon A. Raile |
|
| Common |
|
| 46,800 |
| $ | 13.2178 |
|
| 2/15/11 |
|
Doran N. Schwartz |
|
| — |
|
| — |
|
| — |
|
| — |
|
John G. Harp |
|
| Common |
|
| 36,000 |
| $ | 13.2178 |
|
| 4/30/01 |
|
Steven L. Bietz |
|
| Common |
|
| 16,875 |
| $ | 13.2178 |
|
| 2/15/11 |
|
David L. Goodin |
|
| Common |
|
| 75,937 |
| $ | 13.2178 |
|
| 2/15/11 |
|
All current executive officers |
|
| Common |
|
| 65,205 |
| $ | 13.2178 |
|
| 2/15/11 |
|
as a group |
|
| Common |
|
| 7,762 |
| $ | 16.1956 |
|
| 2/15/11 |
|
All current directors, who are not executive |
|
| — |
|
| — |
|
| — |
|
| — |
|
Each nominee for election as a director |
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Everist |
|
| — |
|
| — |
|
| — |
|
| — |
|
Karen B. Fagg |
|
| — |
|
| — |
|
| — |
|
| — |
|
Terry D. Hildestad* |
|
| — |
|
| — |
|
| — |
|
| — |
|
A. Bart Holaday |
|
| — |
|
| — |
|
| — |
|
| — |
|
Dennis W. Johnson |
|
| — |
|
| — |
|
| — |
|
| — |
|
Thomas C. Knudson |
|
| — |
|
| — |
|
| — |
|
| — |
|
Richard H. Lewis |
|
| — |
|
| — |
|
| — |
|
| — |
|
Patricia L. Moss |
|
| — |
|
| — |
|
| — |
|
| — |
|
Harry J. Pearce |
|
| — |
|
| — |
|
| — |
|
| — |
|
John K. Wilson |
|
| — |
|
| — |
|
| — |
|
| — |
|
Each associate of such persons |
|
| — |
|
| — |
|
| — |
|
| — |
|
Each other person who received 5% |
|
| — |
|
| — |
|
| — |
|
| — |
|
All employees, including all |
|
| Common |
|
| 369,604 |
| $ | 13.2178 |
|
| 2/15/11 |
|
current officers who |
|
| Common |
|
| 34,918 |
| $ | 16.1956 |
|
| 2/15/11 |
|
are not executive officers, |
|
| Common |
|
| 15,030 |
| $ | 12.2778 |
|
| 2/15/11 |
|
as a group |
|
| Common |
|
| 48,035 |
| $ | 13.0889 |
|
| 2/15/11 |
|
|
|
| Common |
|
| 19,506 |
| $ | 11.5289 |
|
| 2/15/11 |
|
* Mr. Hildestad’s stock options are shown above |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Income Tax Consequences
The following description is a summary of material U.S. federal income tax consequences relating to stock options granted under the plan, based on applicable U.S. federal income tax laws. The description may be affected by future legislation, Internal Revenue Service rulings and regulations, or court decisions. The portions of the following description relating to our reporting and withholding obligations and ability to take a federal income tax deduction are based on the assumption that the optionholder provided services to MDU Resources Group, Inc.
The following description does not address all of the potential tax consequences of the optionholder’s participation in the plan, such as potential state or local taxes that may apply. The optionholder is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the optionholder in connection with the optionholder’s participation in the plan, including any taxes and penalties that may arise under Section 409A of the Internal Revenue Code, and neither we nor any of our board, section (c)affiliates have any obligation to indemnify or otherwise hold the optionholder or any beneficiary harmless from any or all of article THIRTEENTH will not be consistent with Section 141(k)such taxes or penalties.
14 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
Consequences to the Optionholder
Award. There are no federal income tax consequences to the optionholder solely by reason of the Delaware General Corporation Law, which providesaward of incentive stock options or nonqualified stock options under the plan.
Exercise.The exercise of an incentive stock option is not a taxable event for regular federal income tax purposes if certain requirements are satisfied, including the requirement that the rightoptionholder generally must exercise the incentive stock option no later than three months following the termination of stockholdersthe optionholder’s employment with the company, or one year following a termination due to remove directorsdisability, and that the optionholder holds the shares acquired upon exercise of the stock option for the requisite period described below. However, such exercise may give rise to alternative minimum tax liability as discussed below.
Upon the exercise of a nonqualified stock option, the optionholder will recognize ordinary income in an amount equal to the excess of the fair market value of the shares of our common stock at the time of exercise over the total stock option exercise price. The ordinary income recognized in connection with the exercise of a nonqualified stock option will be subject to income and employment tax withholding.
The optionholder’s tax basis in the shares acquired upon exercise of a stock option will be the option exercise price plus, in the case of a nonqualified stock option, the amount of ordinary income, if any, the optionholder recognized upon exercise of the stock option.
Disposition of Shares Acquired upon Exercise of Incentive Stock Options.The shares of common stock received pursuant to the exercise of an incentive stock option are subject to holding period rules that affect the federal income tax consequences of selling these shares. To satisfy the holding period rules applicable to shares acquired upon the exercise of an incentive stock option, unless an exception applies, you must not dispose of such shares within two years after the stock option is granted or within one year after exercise of the stock option.
• | Qualifying Disposition. If an optionholder’s disposition of shares of our common stock acquired upon exercise of an incentive stock option satisfies the holding period rules, at the time of disposition the optionholder will recognize long-term capital gain or loss equal to the difference between the amount realized upon such disposition and the optionholder’s basis in the shares. The optionholder’s basis in the shares will generally equal the stock option exercise price. |
• | Disqualifying Disposition. If the optionholder’s disposition of shares of our common stock acquired upon the exercise of an incentive stock option does not satisfy the holding period rules, at the time of disposition the optionholder will recognize ordinary income equal to the lesser of (i) the excess of the shares’ fair market value on the date of exercise over the total stock option exercise price or (ii) the optionholder’s actual gain, i.e., the excess, if any, of the amount realized on the disposition over the total stock option exercise. If the total amount realized in the disposition of the shares exceeds the fair market value of the shares on the date of exercise, the optionholder will recognize a capital gain in the amount of such excess. If the optionholder incurs a loss on the disposition, i.e., if the total amount realized is less than the total stock option exercise price, the loss will be a capital loss. |
Other Disposition.If an optionholder disposes of shares acquired upon exercise of a nonqualified stock option in a taxable transaction, the optionholder will recognize capital gain or loss in an amount equal to the difference between the optionholder’s basis, as discussed above, in the shares sold and the total amount realized upon disposition. Any such capital gain or loss, and any capital gain or loss recognized on a disqualifying disposition of shares acquired upon exercise of incentive stock options as discussed above, will be limitedshort-term or long-term depending on whether the optionholder held the shares of our common stock for more than one year from the date of exercise.
Alternative Minimum Tax.The spread between the fair market value of shares of our common stock at the time of exercise of an incentive stock option and the total option exercise price is included in alternative minimum taxable income and thus may trigger alternative minimum tax.
Consequences to removal for causethe Company
There are no federal income tax consequences to the company upon award of incentive stock options or nonqualified stock options or the exercise of an incentive stock option, unless the exercise results in a disqualifying disposition.
We will be entitled to a federal income tax deduction in the amount of the ordinary income recognized by the optionholder upon exercise of a nonqualified stock option. To the extent the optionholder recognizes ordinary income by reason of a disqualifying disposition of the stock acquired upon exercise of an incentive stock option, we will be entitled to a corresponding deduction in the year in which the disposition occurs.
MDU Resources Group, Inc. Proxy Statement | 15 |
Proxy Statement |
We will be required to report to the Internal Revenue Service any ordinary income recognized by any optionholder by reason of the exercise of a nonqualified stock option or by reason of a disqualifying disposition of the stock acquired upon exercise of an incentive stock option. We will be required to withhold income and employment taxes and pay our share of employment taxes with respect to ordinary income the optionholder recognized upon the exercise of nonqualified stock options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (c) |
| |||
|
| (a) |
|
|
| Number of securities |
| |||
|
| Number of securities |
| (b) |
| remaining available for |
| |||
|
| to be issued upon |
| Weighted average |
| future issuance under |
| |||
|
| exercise of |
| exercise price of |
| equity compensation plans |
| |||
|
| outstanding options, |
| outstanding options, |
| (excluding securities |
| |||
Plan Category |
| warrants and rights |
| warrants and rights |
| reflected in column (a)) |
| |||
Equity compensation plans approved by stockholders (1) |
|
| 882,142 | (2) |
| $20.09 |
|
| 6,365,397 | (3)(4) |
Equity compensation plans not approved by stockholders (5) |
|
| 228,527 |
|
| 13.22 |
|
| 2,375,474 | (6) |
Total |
|
| 1,110,669 |
|
| $18.68 |
|
| 8,740,871 |
|
(1) | Consists of the Non-Employee Director Long-Term Incentive Compensation Plan, the Long-Term Performance-Based Incentive Plan, and the Non-Employee Director Stock Compensation Plan. |
(2) | Includes 669,685 performance shares. |
(3) | In addition to being available for future issuance upon exercise of stock options, 357,757 shares under the Non-Employee Director Long-Term Incentive Compensation Plan may instead be issued in connection with stock appreciation rights, restricted stock, performance units, performance shares, or other equity-based awards, and 5,686,140 shares under the Long-Term Performance-Based Incentive Plan may instead be issued in connection with stock appreciation rights, restricted stock, performance units, performance shares, or other equity-based awards. |
(4) | This amount also includes 321,500 shares available for issuance under the Non-Employee Director Stock Compensation Plan. Under this plan, in addition to a cash retainer, nonemployee directors are awarded 4,050 shares annually. A non-employee director may acquire additional shares under the plan in lieu of receiving the cash portion of the director’s retainer or fees. |
(5) | Consists of the 1998 Option Award Program and the Group Genius Innovation Plan. |
(6) | In addition to being available for future issuance upon exercise of stock options, 219,050 shares under the Group Genius Innovation Plan may instead be issued in connection with stock appreciation rights, restricted stock, restricted stock units, performance units, performance stock, or other equity-based awards. |
The following equity compensation plans have not been approved by our stockholders.
Unvested stock options are forfeited upon termination of employment. Subject to the terms and conditions of the plan, the plan’s administrative committee determines the number of shares subject to options granted to each participant and the other terms and conditions pertaining to such options, including vesting provisions. All options become immediately exercisable in the event of a change in control of the company.
In 2001, 450 options (adjusted for the three-for-two stock splits in October 2003 and July 2006) were granted to each of approximately 5,900 employees. No officers received grants. These stock options vested on February 13, 2004. As of December 31, 2010, options covering 228,527 shares of common stock were outstanding under the plan and 2,156,424 shares remained available for future grant. Options covering 1,410,379 shares had been exercised.
16 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
The board of directors has therefore proposedbelieves that it is in the best interests of the company and our stockholders to repeal section (c) of article THIRTEENTH and to make technical amendments to section (a) of article THIRTEENTH.
receive the full income tax deduction for performance-based compensation paid under the plan. The board is therefore asking the stockholders to approve, for purposes of directors has approvedSection 162(m), the proposed amendments to our restated certificatematerial terms of incorporation describedthe performance goals as set forth above. The board resolution setting forthplan will remain in effect if the proposed amendments to our restated certificate of incorporation is included in Exhibit A to this proxy statement and shows the changes that would result from the amendments. If approved by our stockholders, the amendments will become effective upon filing with the Secretary of State of the State of Delaware, which filing we would make promptly after the annual meeting. However, even if our stockholders do not approve the repealmaterial terms of section (c), itthe performance goals, and failure to obtain stockholder approval will no longer havenot affect the rights of participants under the plan or under any effect because its provisions will be inconsistent with the Delaware General Corporation Law.outstanding award agreements.
The board of directors recommends a vote “for” the proposal to repeal section (c) of article THIRTEENTH of our restated certificate of incorporation, which provides that directors may be removed by stockholders only for cause, and technical amendments to section (a) of article THIRTEENTH.this proposal.
For purposes of Internal Revenue Code Section 162(m), approval requires a majority of the votes cast to be in favor of approval. Abstentions will not count as votes cast for purposes of Internal Revenue Code approval. Approval for purposes of Delaware law requires the affirmative vote of a majority of the outstanding shares of our common stock. Abstentionsstock present in person or represented by proxy at the meeting and entitled to vote on the item. Under the Delaware voting standard, abstentions will count as votes against this proposal.“against” the item. Broker non-votes will not count as voting power present and, therefore, are not counted in the vote for purposes of Internal Revenue Code approval or under the Delaware voting standard.
ITEM 5.3. RATIFICATION OF INDEPENDENT AUDITORS
The audit committee at its February 20102011 meeting appointed Deloitte & Touche LLP as our independent auditors for fiscal year 2010.2011. The board of directors concurred with the audit committee’s decision. Deloitte & Touche LLP has served as our independent auditors since fiscal year 2002.
Although your ratification vote will not affect the appointment or retention of Deloitte & Touche LLP for 2010,2011, the audit committee will consider your vote in determining its appointment of our independent auditors for the next fiscal year. The audit committee, in appointing our independent auditors, reserves the right, in its sole discretion, to change an appointment at any time during a fiscal year if it determines that such a change would be in our best interests.
A representative of Deloitte & Touche LLP will be present at the annual meeting and will be available to respond to appropriate questions. We do not anticipate that the representative will make a prepared statement at the meeting; however, he or she will be free to do so if he or she chooses.
The board of directors recommends a vote “for” the ratification of
Deloitte & Touche LLP as our independent auditors for 2010.2011.
Ratification of the appointment of Deloitte & Touche LLP as our independent auditors for 20102011 requires the affirmative vote of a majority of our common stock present in person or represented by proxy at the meeting and entitled to vote on the proposal. Abstentions will count as votes against this proposal.
MDU Resources Group, Inc.Proxy Statement | 17 |
Proxy Statement |
In connection with the audit of our financial statements for 2010,2011, the parties have drafted an agreement for audit committee approval that contains provisions for alternative dispute resolution and for the exclusion of punitive damages.resolution. The agreement provides that disputes arising out of our engagement of Deloitte & Touche LLP are resolved through mediation or arbitration, commonly referred to as alternative dispute resolution procedures, and that the company’s and Deloitte & Touche LLP’sprocedures. The alternative dispute resolution provision does not have a waiver of rights to pursue punitive damages or other forms of relief not based uponon actual damages are waived.damages. The alternative dispute resolution provisions do not apply to claims by third parties, such as our stockholders or creditors.
|
|
|
ACCOUNTING AND AUDITING MATTERS
2009 2008* Audit Fees(a) $ 2,393,800 $ 2,535,253 Audit-Related Fees(b) 52,292 78,511 Tax Fees(c) 17,600 33,653 All Other Fees(d) 130,016 0 Total Fees(e) $ 2,593,708 $ 2,647,417 Ratio of Tax and All Other Fees to Audit and Audit-Related Fees 6.03 % 1.29 % 2010 2009* Audit Fees(a) $2,230,200 $2,366,154 Audit-Related Fees(b) 26,400 52,292 Tax Fees(c) 9,800 17,600 All Other Fees(d) 15,493 130,016 Total Fees(e) $2,281,893 $2,566,062 Ratio of Tax and All Other Fees to Audit and Audit-Related Fees 1.12 % 6.10 % * The (a) Audit fees for (b) Audit-related fees for 2010 and 2009 are associated with the audit of the Intermountain Gas Company’s benefit plans and accounting research assistance. (c) Tax fees for 2010 include services associated with Section 199 tax credits. Tax fees for 2009 include support services associated with the Cascade Natural Gas Corporation IRS audit. (d) All other fees for 2010 consist of training provided by Deloitte & Touche LLP on the topic of utility taxes. All other fees for 2009 are for services provided by Deloitte FAS, LLP in connection with the review of accounting practices and procedures at one of the company’s operating locations. (e) Total fees reported above include out-of-pocket expenses related to the services provided of The policy defines the permitted services in each of the audit, audit-related, tax, and all other services categories, as well as prohibited services. The pre-approval policy requires management to submit annually for approval to the audit committee a service plan describing the scope of work and anticipated cost associated with each category of service. At each regular audit committee meeting, management reports on services performed by Deloitte & Touche LLP and the fees paid or accrued through the end of the quarter preceding the meeting. Management may submit requests for additional permitted services before the next scheduled audit committee meeting to the designated member of the audit committee, Dennis W. Johnson, for approval. The designated member updates the audit committee at the next regularly scheduled meeting regarding any services that he approved during the interim period. At each regular audit committee meeting, management may submit to the audit committee for approval a supplement to the service plan containing any request for additional permitted services. In addition, prior to approving any request for audit-related, tax, or all other services of more than $50,000, Deloitte & Touche LLP will provide a statement setting forth the reasons why rendering of the proposed services does not compromise Deloitte & Touche LLP’s independence. This description and statement by Deloitte & Touche LLP may be incorporated into the service plan or as an exhibit thereto or may be delivered in a separate written statement. MDU Resources Group, Inc.Proxy Statement Proxy Statement In Our • • • we review competitive compensation data for each named executive officer position and incorporate internal equity in the final determination of target compensation levels and • Approval of the compensation paid to our named executive officers requires the affirmative vote of a majority of our common stock present in person or represented by proxy at the meeting and entitled to vote on the proposal. Abstentions will count as votes against this proposal. Broker non-votes are not counted as voting power present and, therefore, are not counted in the vote. ITEM 5. ADVISORY VOTE ON FREQUENCY OF VOTE TO APPROVE THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS In accordance with recently-adopted Section 14A of the Securities Exchange Act of 1934 and Rule 14a-21(b), we are asking our stockholders to indicate whether future advisory votes to approve the compensation paid to our named executive officers should be held every year, every two years, or every three years. Our board of directors has determined that our stockholders should have the opportunity to vote on the compensation of our named executive officers every year. The board of directors believes that giving our stockholders the right to cast an advisory vote every year on the compensation of our named executive officers is a good corporate governance practice and is in the best interests of our stockholders. Annual advisory votes provide the highest level of accountability and direct communication with our stockholders. MDU Resources Group, Inc.Proxy Statement 19 Proxy Statement By voting on this Item 5, stockholders are not approving or disapproving the board of directors’ recommendation, but rather are indicating whether they prefer an advisory vote on named executive officer compensation be held every year, every two years, or every three years. Stockholders may also abstain from voting. As this is an advisory vote, the results will not be binding on the board of directors or the company, and the board of directors may decide that it is in the best interests of our stockholders and the company to hold an advisory vote on executive compensation more or less frequently than the option selected by our stockholders. We will provide our stockholders with the opportunity to vote on the frequency of advisory votes on our named executive officer compensation at our annual meetings at least once every six calendar years. Under rules adopted by the Securities and Exchange Commission, if a majority of the votes cast approves a particular frequency and we adopt a policy that is consistent with that frequency, we may exclude from our proxy statements in the future any stockholder proposals providing for an advisory vote or seeking future advisory votes on the compensation paid to our named executive officers or relating to the frequency of such votes, including those drafted as requests to amend our governing documents. A majority of the votes cast means that the number of votes cast for one frequency must exceed the aggregate number of votes cast for the other two frequencies. Abstentions and broker non-votes do not count as votes cast. The board of directors recommends that an advisory vote Under Delaware law, the frequency of every year, every two years, or every three years that receives the affirmative vote of a majority of our common stock present in person or represented by proxy at the meeting and entitled to vote on the proposal will be the frequency for the advisory vote on executive compensation that has been recommended by our stockholders. Abstentions will count as votes against any frequency. Broker non-votes are not counted as voting power present and, therefore, are not counted in the vote. 20 MDU Resources Group, Inc.Proxy Statement Proxy Statement Compensation Discussion and Analysis The following compensation discussion and analysis may contain statements regarding corporate performance targets and goals. These targets and goals are disclosed in the limited context of our compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts. For Our • • we determine performance based on financial criteria that are important to stockholder value – earnings per share, return on invested capital, and total stockholder return relative to our peers • we review competitive compensation data for each named executive officer and incorporate internal equity in the • through our PEER4 Analysis, we compare our pay-for-performance results with the The compensation committee regularly reviews our compensation policies and practices to ensure our compensation program is structured to pay for performance. The compensation committee took the following actions with respect to 2010 compensation for our named executive officers: • froze 2010 base salaries at their 2009 levels, except for one promotion and one modest merit-based increase • did not increase the percentages of base salary used to • linked more closely our corporate executives’ 2010 annual incentive awards to the achievement of our business units’ performance goals • capped payment with respect to the return on invested • provided for reductions in any performance shares earned pursuant to awards granted in 2010 or thereafter, if our total stockholder return for the performance period is negative, and • granted no SISP increases. MDU Resources Group, Inc. Proxy Statement 21 Proxy Statement The compensation committee also: • terminated the change of control employment agreement between the company and Terry D. Hildestad, our president and chief executive officer, effective June 15, 2010, upon Mr. Hildestad’s request • notified each of our other executive officers with change of control employment agreements that their agreements would not be extended beyond their current expiration dates • imposed mandatory stock holding requirements for a portion of shares earned pursuant to long-term incentive awards granted in 2011 or thereafter and • amended our stock ownership policy to clarify that our executive officers are required, rather than expected, to acquire and hold company stock equal to or greater in value than a multiple of their base salaries. We believe that our 2010 compensation program has been effective at motivating and rewarding our named executive officers in the achievement of positive results. Our earnings per share of $1.27 for 2010 demonstrates the value of our diversified business strategy. Despite lower natural gas prices and a challenging economic environment, we maintained a strong balance sheet and generated significant cash flows from operations, as well as from successful property sales. • recruit, motivate, reward, and retain the high performing executive talent required to create superior long-term total stockholder return in comparison to our peer group • reward executives for short-term performance, as well as the growth in enterprise value over the long-term • provide a competitive package relative to industry-specific and general industry comparisons and internal equity, as appropriate • ensure effective utilization and development of talent by working in concert with other management processes – for example, performance appraisal, succession planning, and management • help ensure that compensation programs do not encourage or reward excessive or imprudent risk taking. We pay/grant:20092010 and 2008: 20082009 amounts were adjusted from amounts shown in the 20092010 proxy statement to reflect actual amounts.both 2009 and 20082010 consisted of services rendered for the audit of our annual financial statements;statements, reviews of our quarterly financial statements; comfort letters;statements, statutory and regulatory audits, compliance with loan covenants, reviews of financial statements for MDU Construction Services Group, Inc. and consentssubsidiaries, agreed upon procedures associated with the annual submission of financial assurance to the North Dakota Department of Health, comfort letters to underwriters (2009 only), and other serviceswork related to the filing of Form S-8 with the Securities and Exchange Commission matters.(2009 only). Audit-related fees for 2008 are associated with accounting research assistance; consultation on accounting process improvements, including recommended practices and opportunities for control improvement; and assistance in the transition of benefit plan audits to another accounting firm. Tax fees for 2008 are associated with tax planning, compliance, and support services. No fees under the category of all other fees were incurred during 2008.$267,708$260,000 for 20092010 and $269,618$240,062 for 2008.2009.20092010 in accordance with the pre-approval policy and procedures the audit committee adopted at its August 12, 2003 meeting. This policy is designed to achieve the continued independence of Deloitte & Touche LLP and to assist in our compliance with Sections 201 and 202 of the Sarbanes-Oxley Act of 2002 and related rules of the Securities and Exchange Commission.ITEM 6. STOCKHOLDER PROPOSAL REQUESTING A REPORT ON COAL COMBUSTION WASTEA stockholder has notified us that it intends to present a resolution for action by the stockholders at the annual meeting. We will provide the name, address and stock ownership of the proponent to stockholders promptly after receiving an oral or written request. The text of the resolution and the supporting statement submitted by the proponent are as follows.1418Stockholder ProposalReport On Risks Associated With Coal Combustion WasteWHEREAS:ITEM 4. ADVISORY VOTE TO APPROVE THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS Coal combustion waste (CCW) is a by-product of burning coal that contains high concentrations of arsenic, mercury, heavy metals and other toxins that pollution control equipment filters out of smokestacks. Across the country, over 130 million tons of CCW are being stored in surface waste ponds, impoundments and abandoned mines.Our company’s electricity generation mix is 54% coal, 17% Gas, 4% Renewables, and 26% Purchased power/capacity agreements.According to the company, our company operates CCW impoundment sites. CCW is therefore a significant issue for our company.2007, the U.S. Environmental Protection Agency (EPA) published a draft risk assessment that found extremely high risks to human health from the disposal of CCW in waste ponds and landfills. EPA’s analysesaccordance with recently-adopted Section 14A of the behaviorSecurities Exchange Act of CCW1934 and Rule 14a-21(a), we are asking our stockholders to approve, in unlined disposal sites predict that some metals will migrate and contaminate nearby groundwatera separate advisory vote, the compensation of our named executive officers as disclosed in this proxy statement pursuant to levels extremely dangerous to people.The EPA has found ample evidence at over 60 sitesItem 402 of Regulation S-K. As discussed in the U.S. that CCW has polluted groundcompensation discussion and surface waters.EPA has identified over 580 CCW impoundment facilities around the country. At least 49 of these have been labeled “high hazard potential” sites where a dam breachanalysis, our compensation committee and subsequent spill of CCW material would likely result in a loss of human life and significant environmental consequences.Recent reports by the New York Times and others have drawn attention to the impactful presence of CCW in the nation’s air and waterways, through leakage from CCW impoundments and through direct discharge to surrounding rivers and streams.The Tennessee Valley Authority’s (TVA) 1.1 billion gallon CCW spill in December 2008 that covered over 300 acres in eastern Tennessee with toxic sludge highlights the serious environmental risks associated with storing CCW. TVA estimates a total cleanup cost of $1.2 billion. This figure does not contain the extensive litigation costs that ensued, including the large class action lawsuit filed against TVA in February 2009.EPA officials have indicated that the agency will determine by the end of 2009 whether certain power plant by-products such as coal ash should be treated as hazardous waste, which would subject CCW to stricter regulations.RESOLVED: Shareholders request that the board prepare a report, at reasonable cost and omitting proprietary information, on the company’s efforts, above and beyond legal compliance, to reduce environmental and health hazards associated with coal combustion waste ponds, impoundments and mines, and how those efforts reduce risks to the company’s finance and operations. This report should be available to shareholders by August 2010.Company ResponseThe board of directors recommendsbelieve that our current executive compensation program directly links compensation of our named executive officers to our financial performance and aligns the interests of our named executive officers with those of our stockholders. Our compensation committee and board of directors also believe that our executive compensation program provides our named executive officers with a vote “against” this proposal.balanced compensation package that includes an appropriate base salary along with competitive annual and long-term incentive compensation targets. These incentive programs are designed to reward our named executive officers on both an annual and long-term basis if they attain specified goals.companyoverall compensation program and Montana-Dakota Utilities Co.,philosophy is built on a divisionfoundation of our company (“Montana-Dakota”), are committed to environmental stewardship and compliance with all applicable environmental laws and regulations.Our company has three primary environmental goals:these guiding principles:minimize waste and maximize resourceswe pay for performancesupport environmental laws and regulationswe determine performance based on financial criteria that are basedimportant to stockholder value – earnings per share, return on sound scienceinvested capital, and cost-effective technologytotal stockholder return relative to our peerscomplythrough our PEER4 Analysis, we compare our pay-for-performance results with or exceed all applicable environmental laws, regulations and permit requirements.the pay-for-performance results of our peers.Montana-Dakota’s electric operationsWe are subjectasking our stockholders to federal, stateindicate their approval of our named executive officer compensation as disclosed in this proxy statement, including the compensation discussion and local lawsanalysis, the executive compensation tables, and regulations providingnarrative discussion. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers for air, water and solid waste pollution control; federal health and safety regulations; and state hazard communication standards.2010. Accordingly, the following resolution is submitted for stockholder vote at the 2011 annual meeting:MDU Resources Group, Inc. Proxy Statement15“RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”Proxy StatementThe Environmental Protection Agency (“EPA”) has previously determined that fossil fuel combustion wastes, including coal combustion waste (“CCW”), didAs this is an advisory vote, the results will not warrant regulation as a hazardous waste and exempted them from regulation under Subtitle C (hazardous waste) ofbe binding on the Resource Conservation and Recovery Act (“RCRA”). However, CCW disposed of in landfills and surface impoundments is regulated under Subtitle D (solid waste regulations) ofcompany, the RCRA, and CCW used as minefill is regulated under Subtitle D and/or under the Surface Mining Control and Reclamation Act. The EPA announced its intention to propose new regulations in December 2009 governing management and storage of CCW in landfills and surface impoundments and to determine whether to continue to regulate CCW as a non-hazardous solid waste under Subtitle D or to designate it as hazardous and regulate it under Subtitle C of the RCRA. In December 2009, however, the EPA announced that it was deferring taking action on this for a short period of time due to the complexity of the analysis. The EPA has also announced its intention to revise existing standards under the Clean Water Act, which would include discharge from CCW ponds.Four of Montana-Dakota’s nine existing electric generating stations have steam turbines using coal for fuel. Montana-Dakota will also obtain electricity from Wygen III, a coal-fired electric generating station, when it becomes operational in spring 2010. Two stations, Coyote and Heskett, are located in North Dakota; Big Stone is located in South Dakota; Lewis & Clark is located in Montana; and Wygen III is located in Wyoming. Montana-Dakota is the owner and operator of Heskett and Lewis & Clark and has a 25 percent interest in Coyote, a 22.7 percent ownership interest in Big Stone and a 25 percent interest in Wygen III. CCW at these facilities is managed either in a wet state in ponds with dry disposal, or entirely in a dry state.The states of North Dakota, South Dakota, and Wyoming have regulations relating to CCW that far exceed any current federal regulations. North Dakota, South Dakota, and Wyoming require facilities located within each state - Coyote and Heskett in North Dakota, Big Stone in South Dakota, and Wygen III in Wyoming - to obtain permits for managing CCW impoundments and for long-term CCW disposal. The permits for each facility require that impoundments for CCW be appropriately designed and that ground water be monitored. Site staff and state environmental agency staff routinely inspect each site. Annual reports for these facilities, summarizing ground water results and activities conducted at these sites, are submitted to each respective regulatory agency: North Dakota Department of Health, South Dakota Department of Environment and Natural Resources, and Wyoming Department of Environmental Quality.While the state of Montana has no requirements at this time for managing CCW, Montana-Dakota has adopted what it considers to be “best practices” at the Lewis & Clark Station, where it manages CCW in ponds and dewaters the waste prior to ultimate dry disposal at a naturally clay lined disposal area adjacent to the mine from which the plant receives its coal.The ponds were designed and constructed under the supervision of a consulting professional engineer, requiring liners (clay or high density polyethylene), and appropriate stability and erosion prevention measures. There are ground water monitoring wells, which are sampled semiannually.There are also weekly visual inspections of the ponds by plant technicians and a biennial visual inspection by the Montana Department of Environmental Quality Water Protection Bureau. The yard crews inspect the ash handling system daily, and in winter, the inspections are conducted twice daily.The board of directors, respectsor the compensation committee and will not require us to take any action. The final decision on the compensation of our stockholders’ interest in environmentalnamed executive officers remains with our compensation committee and health matters. However,our board of directors, although our board and compensation committee will consider the board believes that Montana-Dakota has already taken appropriate actionsoutcome of this vote when making future compensation decisions. We will provide our stockholders with the opportunity to manage its CCW and that the investment of human and financial resources that would be required to produce such a report would not be a necessary or prudent use of stockholder assets.vote on our named executive officer compensation at our annual meetings at least once every three calendar years.Therefore, theThe board of directors recommends a vote “against”“for” the approval, on an advisory basis,
of the compensation paid to our named executive officers, as disclosed in this proposal.proxy statement.16
on compensation paid to our named executive officers be held every year.20092010 compensation for our named executive officers.2009,2010, our named executive officers were Terry D. Hildestad, Vernon A. Raile, Doran N. Schwartz, John G. Harp, William E. Schneider, and Steven L. Bietz.Bietz, and David L. Goodin. Mr. Bietz,Goodin, president and chief executive officer of WBI Holdings, Inc.Montana-Dakota Utilities, Co., Great Plains Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain Gas Company, which we refer to as the combined utility group, is a named executive officer for the first time. Mr. Raile retired as executive vice president, treasurer and chief financial officer on February 16, 2010, and Mr. Schwartz was promoted to vice president and chief financial officer effective February 17, 2010.Each year we conductstrategic analysisbalanced compensation package that includes an appropriate base salary along with competitive annual and long-term incentive compensation targets. These incentives are designed to identify opportunitiesreward our named executive officers on both an annual and challenges associated with the operating environments in which we do business. long-term basis if they attain specified goals.strategyoverall compensation program and philosophy is to apply our expertise in three core linesbuilt on a foundation of business – energy, construction materials, and utility resources – to increase market share, increase profitability, and enhance stockholder value through:these guiding principles:organic growth as well as a continued disciplined approachwe pay for performance, with 55.9% to 71.4% of our named executive officers’ 2010 total target direct compensation in the acquisitionform of well-managed companies and propertiesincentiveseliminationfinal determination of system-wide cost redundancies through increased focus on integration of operations and standardization and consolidation of various support services and functions across companies within the organizationtarget compensation levels anddevelopmentpay-for-performance results of projects that are accretiveour peers over five-year periods.earnings per share andestablish target incentive awards, except for one promotioncapital.capital portion of the 2010 annual incentive awards at three out of four of our business units at 100 percent of the target incentive award, unless return on invested capital equaled or exceeded the business unit’s weighted average cost of capital anddevelopment.development and
|
|
• | base salaries in order to provide executive officers with sufficient, regularly-paid income and attract, recruit, and retain executives with the knowledge, skills, and abilities necessary to successfully execute their job duties and responsibilities |
|
|
• | annual incentives in order to be competitive from a total remuneration standpoint and ensure focus on annual financial and operating results and |
|
|
• | long-term incentives in order to be competitive from a total remuneration standpoint and ensure focus on stockholder return. |
If earned, incentive compensation, which consists of annual cash incentive awards and three-year performance share awards under our Long-Term Performance-Based Incentive Plan, makes up the greatest portion of our named executive officers’ total compensation. The compensation committee believes incentive compensation that comprised approximately 61%55.9% to 71%71.4% of total target compensation for the named executive officers for 20092010 is appropriate because:
|
|
• | our named executive officers are in positions to drive, and therefore bear high levels of responsibility for, our corporate performance |
|
|
• | incentive compensation is more variable than base salary and dependent upon our performance |
|
|
|
|
|
• | variable compensation helps ensure focus on the goals that are aligned with our overall strategy and |
|
|
• | the interests of our named executive officers will be aligned with those of our stockholders by making a majority of the named executive officers’ target compensation contingent upon results that are beneficial to stockholders. |
22 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
The following table shows the allocation of total target compensation for 20092010 among the individual components of base salary, annual incentive, and long-term incentive:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
| % of Total |
|
|
| |||||||||||||||||||||
|
| Target |
| % of Total Target Compensation |
| |||||||||||||||||||||
|
| Compensation |
| Allocated to Incentives |
| |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allocated to |
|
|
|
|
| Annual + |
| ||||
Name |
| % of Total |
| % of Total Target Compensation |
|
| Base Salary (%) |
| Annual (%) |
| Long-Term (%) |
| Long-Term (%) |
| ||||||||||||
|
|
| ||||||||||||||||||||||||
|
| Annual (%) |
| Long-Term (%) |
| Annual + |
| |||||||||||||||||||
| ||||||||||||||||||||||||||
Terry D. Hildestad |
| 28.6 |
| 28.6 |
| 42.8 |
| 71.4 |
|
| 28.6 |
| 28.6 |
| 42.8 |
| 71.4 |
| ||||||||
Vernon A. Raile |
| 39.2 |
| 25.5 |
| 35.3 |
| 60.8 |
| |||||||||||||||||
John G. Harp * |
| 39.2 |
| 25.5 |
| 35.3 |
| 60.8 |
| |||||||||||||||||
William E. Schneider |
| 39.2 |
| 25.5 |
| 35.3 |
| 60.8 |
| |||||||||||||||||
Vernon A. Raile(1) |
| — |
| — |
| — |
| — |
| |||||||||||||||||
Doran N. Schwartz |
| 44.1 |
| 21.8 |
| 34.1 |
| 55.9 |
| |||||||||||||||||
John G. Harp |
| 39.2 |
| 25.5 |
| 35.3 |
| 60.8 |
| |||||||||||||||||
Steven L. Bietz |
| 39.2 |
| 25.5 |
| 35.3 |
| 60.8 |
|
| 39.2 |
| 25.5 |
| 35.3 |
| 60.8 |
| ||||||||
| ||||||||||||||||||||||||||
David L. Goodin |
| 39.2 |
| 25.5 |
| 35.3 |
| 60.8 |
| |||||||||||||||||
|
| |
|
| |
In order to reward long-term growth, as well as short-term results, the compensation committee establishes incentive targets that emphasize long-term compensation as much as or more than short-term compensation for all Section 16our named executive officers. The annual incentive targets for 20092010 range from 30%45% to 100% of base salary and the long-term incentive targets range from 30%50% to 150% of base salary, depending on the executive’snamed executive officer’s salary grade. Generally, our approach is to allocate a higher percentage of total target compensation to the long-term incentive than to the short-term incentive for our higher level executives, since they are in a better position to influence our long-term performance.
Additionally, the long-term incentive, if earned, is paid in company common stock. These awards, combined with our stock ownership guidelines,policy, promote ownership of our stock by the named executive officers. The compensation committee believes that, as stockholders, the named executive officers will be motivated to consistently deliver financial results that build wealth for all stockholders over the long-term.
We also offer our Section 16 officers, including all
All of our named executive officers have change of control employment agreements. The change of control employment agreements define “change of control” to include consummation of a merger or similar transaction rather than merely stockholder approval of the merger.
We believe it is important to encourage our executive officers to continue working for us during any change of control transaction periods and to provide severance payments and benefits if employment is terminated for no fault of the officer following a change of control. These agreements provide a measure of job and financial security so that potentially disruptive transactions do not affect the officers’ judgment when working on behalf of the company and its stockholders prior to and after a change of control. We do not view the change of control agreements as additional compensation and do not take them into account when determining the amount of compensation provided because the events required to trigger these payments and benefits may never occur.
In addition to these agreements, the Long-Term Performance-Based Incentive Planpolicy provides for accelerated vesting and paymentan assessment of performance awards at the time of a change of control. In 2009, we amended the plan’s “change of control” definition so that vesting and payment of awards are not triggered prematurely. The compensation committee believes that these protections are necessary to reassure the officers that they will not lose prior incentive awards or otherwise be adversely affected by a change of control. We discuss the amendments to the plan’s change of control definition in “Potential Payments upon Termination or Change of Control.”
|
|
|
Role of Compensation Consultants and ManagementRole of Compensation ConsultantsIn 2008, the compensation committee retained Towers Perrin, a nationally recognized consulting firm, to assess the competitive pay levels for base salary and incentive compensation for each Section 16 officer position to be conducted at least every two years by an independent consulting firm. In 2008, the compensation committee retained Towers Watson (formerly Towers Perrin), a nationally recognized consulting firm, to perform this assessment and to assist the compensation committee in establishing competitive 2009 compensation targets for our Section 16 officers.officers for 2009.
In May 2009, the compensation committee decided not to retain a compensation consultant for assistance with 2010 compensation. Instead, the compensation committee directed the vice president-human resources and the human resources department to prepare the competitive assessment on Section 16 officer positions for 2010. The assessment included identifying any material changes to the positions analyzed, updating competitive compensation information, gathering and analyzing relevant general and industry-specific survey data, and updating the base salary structure. Towers PerrinThe human resources department assessed competitive pay levels for base salary, total annual cash, which is base salary plus annual incentives, and total direct compensation, which is the sum of total annual cash and the expected value of long-term incentives. TheyIt compared our positions to like positions contained in general industry compensation surveys, industry-specific compensation surveys and, for our chief executive officer theand chief executive officersfinancial officer, those positions in our performance graph peer group. Except for the Watson Wyatt Top Management Compensation Survey, the human resources department used the same surveys to construct the 2010 competitive assessment that were used to construct the 2009 competitive assessment. For the Watson Wyatt Top Management Compensation Survey, the human resources department used the 2008/2009 publication which contained more recent data than the 2007/2008 publication that was used to construct the 2009 competitive assessment. The human resources department also aged the data from the date of the surveys by 4% annualized to estimate 2010 competitive targets. To augment the analysis, Equilar was used to provide information on what public companies disclosed for comparable positions in their SEC filings. The compensation surveys and databases used by Towers Perrinthe human resources department were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Survey* |
| Number of |
| Median |
| Number of |
| Median |
| ||||
| |||||||||||||
Towers Perrin’s Executive Compensation Database |
|
| 395 |
|
| 18,529 |
|
| 283 |
|
| 5,730,000 |
|
Towers Perrin’s Energy Services Industry Executive Compensation Database |
|
| 91 |
|
| 3,300 |
|
| 63 |
|
| 2,960,000 |
|
Effective Compensation, Inc.’s Oil & Gas Exploration and Production Survey |
|
| 119 |
|
| 140 |
|
| 69 |
|
| 247,000 |
|
Mercer’s Energy Compensation Survey |
|
| 217 |
|
| 610 |
|
| 173 |
|
| 774,172 |
|
Watson Wyatt’s Report on Top Management Compensation |
|
| 2,309 |
|
| – | (2) |
| – | (2) |
| – | (2) |
| |||||||||||||
|
|
| 23 |
Proxy Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number of |
|
|
| ||||
|
| Number of |
| Median |
| Publicly- |
| Median |
| ||||
|
| Companies |
| Number of |
| Traded |
| Revenue |
| ||||
|
| Participating |
| Employees |
| Companies |
| (000s) |
| ||||
Survey* |
| (#) |
| (#) |
| (#)(1) |
| ($) |
| ||||
Towers Perrin’s 2008 General Industry Executive Compensation Database |
|
| 973 |
|
| 20,000 |
|
| 582 |
|
| 5,804,000 |
|
Towers Perrin’s 2008 Energy Industry Executive Compensation Database |
|
| 103 |
|
| 3,315 |
|
| 67 |
|
| 3,284,000 |
|
Effective Compensation, Inc.’s 2008 Oil & Gas Compensation Survey |
|
| 119 |
|
| 140 |
|
| 69 |
|
| 247,000 |
|
Mercer’s 2008 Total Compensation Survey for the Energy Sector |
|
| 262 |
|
| Not reported |
|
| 188 |
|
| 1,057,254 |
|
Watson Wyatt’s 2008/2009 Top Management Compensation Survey |
|
| 2,206 |
|
| – | (2) |
| – | (2) |
| – | (2) |
(1) | For the Towers Perrin 2008 General Industry Executive Compensation | |
(2) | The | |
* | The information in the table is based solely upon information provided by the publishers of the surveys and is not deemed filed or a part of this compensation discussion and analysis for certification purposes. For a list of companies that participated in the compensation surveys and databases and companies included in the Equilar information, see Exhibit B. | |
Our revenues for 2007, 2008, 2009, and 20092010 were approximately $5.0 billion, $4.2 billion, $5.0 billion, and $4.2$3.9 billion, respectively.
In addition to the above compensation surveys, for the chief executive officer comparison, Towers Perrinand chief financial officer comparisons, the human resources department used information for the chief executive officersthese positions at the following companies, which comprised our performance graph peer group in July of 2007:2009:
|
|
|
|
|
• | Alliant Energy Corporation |
| • |
|
• | Berry Petroleum Company |
| • |
|
• | Black Hills Corporation |
| • |
|
• | Comstock Resources, Inc. |
| • |
|
• | Dycom Industries, Inc. |
| • |
|
• | EMCOR Group, Inc. |
| • |
|
• | Encore Acquisition Company |
|
| |
|
|
| • | St. Mary Land & Exploration Company |
• |
|
| • | Swift Energy Company |
• | Granite Construction Inc. |
| • | U.S. Concrete, Inc. |
• | Martin Marietta Materials, Inc. |
| • | Vectren Corporation |
• | National Fuel Gas Co. |
| • | Vulcan Materials Company |
• | Northwest Natural Gas Company |
| • | Whiting Petroleum Corporation |
• | NSTAR |
Role of Management
The chief executive officer played an important role in recommending 20092010 compensation to the committee for the other named executive officers. The chief executive officer assessed the performance of the named executive officers and reviewed the relative value of the named executive officers’ positions and their salary grade classifications. He then reviewed the competitive assessment prepared by the human resources department and worked with the human resources department to prepare 2010 compensation recommendations for the compensation committee, other than for himself. The chief executive officer attended compensation committee meetings; however, he was not present during discussions regarding his compensation. In addition, he assessed
The compensation committee reviewed the competitive assessment and established 2010 salary grades at its August 2009 meeting. At the November 2009 meeting, it established individual base salaries, target annual incentive award levels, and target long-term incentive award levels for 2010. At the February and March 2010 meetings of the named executive officerscompensation committee and workedthe board of directors, annual and long-term incentive awards were determined, along with the human resources departmentpayouts based on performance from the recently completed performance period for prior annual and long-term awards. The compensation consultants to recommend:committee determined Mr. Schwartz’s compensation in connection with his promotion at the March 2010 meeting. The February and March 2010 meetings occurred after the release of earnings for the prior year.
|
|
| |
24 |
|
|
|
|
|
|
|
|
|
|
Proxy Statement |
Our human resources personnel
|
|
|
|
|
|
Once performance goals are approved by the compensation committee, the committee generally does not modify the goals. However, if major unforeseen changes in economic and environmental conditions or other significant factors beyond the control of management substantially affected their ability to achieve the specified performance goals, the compensation committee, in consultation with the chief executive officer, may modify the performance goals. Such goal modifications will only be considered in years of unusually adverse or favorable external conditions.
Internal Equity – Relative Value of Named Executive Officer PositionsFrom an internal equity standpoint, the compensation committee considers, upon recommendation of the chief executive officer, the relative value of each named executive officer position when making compensation decisions. Aa position’s relative value is determined by considering:
|
|
|
|
|
|
This consideration impacts the assignment of a salary grade, short-term incentive targets, and long-term incentive targets. The compensation committee may make adjustments from competitive data in one or more of these items to ensure the pay differences between the chief executive officer and the other named executive officers are reasonable in their judgment in light of the internal equity factors described above. For example, the compensation committee has historically assigned a long-term incentive target percentage to the chief executive officer position that is lower than the competitive level indicated through market data. The committee’s rationale is to have the chief executive officer’s compensation closer to the compensation of his direct reports than what the market data would otherwise indicate.
To test the reasonableness of the company’s approach on pay equity, the compensation committee measured the chief executive officer’s compensation as a multiple of the compensation paid to our other four named executives, then compared these multiples to competitive pay information provided by Towers Perrin. The chart below shows the company’s pay multiples and the competitive pay multiples.
We calculated the four multiples in the chart by dividing our chief executive officer’s target total direct compensation by the target total direct compensation of each of our four named executives. We calculated the four competitive pay multiples by dividing the target total direct compensation for the chief executive officer position, as provided by Towers Perrin, by the target total direct compensation of each position similar to each of our four named executives, as provided by Towers Perrin. For purposes of this comparison, target total direct compensation consists of base salary plus target annual incentive plus target long-term incentive.
|
|
|
|
| ||
|
|
The company’s chief executive officer multiples are less than chief executive officer pay multiples as calculated with competitive data.* The compensation committee views the lower multiples as support for the belief that compensation targets among the named executives are equitably distributed.
|
|
| |
| |
| |
| |
| |
|
|
|
Our named executive officers’ salary grade classifications are listed below along with the 20092010 base salary ranges associated with each classification:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
| 2009 Base Salary (000s) |
| 2010 Base Salary (000s) | ||||||||||||||||
|
|
|
|
|
| Minimum |
| Midpoint |
| Maximum |
| Minimum |
| Midpoint |
| Maximum | ||||
Position |
| Grade |
| Name |
| ($) |
| ($) |
| ($) |
| Grade |
| Name |
| ($) |
| ($) |
| ($) |
President and CEO |
| K |
| Terry D. Hildestad |
| 620 |
| 775 |
| 930 |
| K |
| Terry D. Hildestad |
| 620 |
| 775 |
| 930 |
Executive Vice President, Treasurer and CFO |
| J |
| Vernon A. Raile |
| 312 |
| 390 |
| 468 |
| J |
| Vernon A. Raile |
| 312 |
| 390 |
| 468 |
Vice President and CFO |
| I |
| Doran N. Schwartz |
| 260 |
| 325 |
| 390 | ||||||||||
President and CEO, MDU Construction Services Group, Inc. |
| J |
| John G. Harp |
| 312 |
| 390 |
| 468 |
| J |
| John G. Harp |
| 312 |
| 390 |
| 468 |
President and CEO, Knife River Corporation |
| J |
| William E. Schneider |
| 312 |
| 390 |
| 468 | ||||||||||
President and CEO, combined utility group |
| J |
| David L. Goodin |
| 312 |
| 390 |
| 468 | ||||||||||
President and CEO, WBI Holdings, Inc. |
| J |
| Steven L. Bietz |
| 312 |
| 390 |
| 468 |
| J |
| Steven L. Bietz |
| 312 |
| 390 |
| 468 |
The executive vice president, treasurer and chief financial officer and the president and chief executive officers of MDU Construction Services Group, Inc., Knife River Corporation,the combined utility group, and WBI Holdings, Inc. arewere assigned to salary grade “J.”“J” and were unchanged for 2010. The committee believes that from an internal equity standpoint, these positions should carry the same salary grade. TheWhen Mr. Raile, who served as our executive vice president, treasurer and chief financial officer, retired in February 2010, Mr. Schwartz was elected vice president and chief financial officer, with another officer being elected treasurer. Mr. Schwartz’s position was assigned salary grades for ourgrade “I,” rather than salary grade “J” because of the creation of a separate treasurer position. After reviewing the competitive analysis, the compensation committee made no changes in the base salary ranges associated with each named executive officers remained unchanged for 2009.officer’s salary grade classification. The compensation committee did not reconsider the relative value of the named executive officers’ positions, except in the case of Mr. Schwartz, because of its decision to freeze base salaries and incentive target percentages.
The compensation committee determines where, within each salary grade, an individual’s base salary should be. The compensation committee believes that having a range of possible salaries within each salary grade gives the committee the flexibility to assign different salaries to individual executives within a salary grade to reflect one or more of the following:
|
|
• |
|
| executive’s performance on financial goals |
|
|
|
|
• | executive’s experience, tenure, and future potential |
|
|
• | position’s relative value compared to other positions within the company |
|
|
• | relationship of the salary to the competitive salary market value |
|
|
• | internal equity with other executives and |
|
|
• | economic environment of the corporation or executive’s business unit. |
Our performance assessment program rates performance of our executive officers, except for our chief executive officer, in the following areas, which help determine actual salaries within the range of salaries associated with the executive’s salary grade:
|
|
|
|
|
• | visionary leadership |
| • | leadership |
• | strategic thinking |
| • | mentoring |
• | leading with integrity |
| • | relationship building |
• | managing customer focus |
| • | conflict resolution |
• | financial responsibility |
| • | organizational savvy |
• | achievement focus |
| • | safety |
• | judgment |
| • | Great Place to Work® |
• | planning and organization |
|
|
|
MDU Resources Group, Inc.Proxy Statement | 25 |
Proxy Statement |
An executive’s overall performance in our performance assessment program is rated on a scale of one to five, with five as the highest rating denoting distinguished performance. An overall performance above 3.75 is considered commendable performance.
The chief executive officer assessed each named executive officer’s performance under the performance assessment program, and the compensation committee, as well as the full board of directors, assessed the chief executive officer’s performance.
The board of directors rates our chief executive officer’s performance in the following areas:
|
|
| |
|
|
|
Base Salaries of the Named Executive Officers for 2009
Terry D. HildestadMr. Hildestad has served as chief executive officer since August 2006. For 2009, the committee increased his salary by 7.1%, from $700,000 to $750,000. The reasons for Mr. Hildestad’s 2009 increase were:
|
| |||
• |
| • | succession planning | |
• | integrity and values | • | human resources | |
• | strategic planning | • | external relations | |
• | financial results | • | board relations | |
• | communications |
|
| |
|
| |||
|
| |||
|
|
Our chief executive officer’s performance was rated on a scale of one to five, with five as the highest rating denoting performance well above expectations.
Base Salaries of the Named Executive Officers for 2010
|
|
|
|
|
|
John G. Harp
|
|
|
|
|
|
William E. SchneiderMr. Schneider has served as president and chief executive officer of Knife River CorporationIntermountain Gas Company since May 2005. Mr. Schneider’s 2009 base salary was maintained at $447,400, representing no increase fromOctober 1, 2008. The committee did not grant Mr. Schneider a base salary increase because Knife River Corporation’s 2008 nine-month financial results were less than target and becauseUpon recommendation of the committee wished to be consistent with the overall wage freeze imposed across Knife River Corporation.
Steven L. BietzMr. Bietz has served as president and chief executive officer, of WBI Holdings, Inc. since March 2006. For 2009,for 2010, his base salary was set at $350,000,$322,000, representing an increase of 11.8%3.2% over his 2008 base salary of $313,100. The committee set his 2009 base salary at $350,000, belowof $312,100. The committee selected a 3.2% increase for Mr. Goodin to recognize the successful integration of the Cascade Natural Gas Corporation and Intermountain Gas Company acquisitions and because a 3.2% increase was consistent with salary increases across the combined utility group employees. Mr. Goodin’s salary increase made his salary equal to 83% of the midpoint of histhe salary grade due tofor his commendable performance assessment rating and due to results associated with these key achievements:
|
|
|
|
|
|
|
|
|
The following table shows each named executive officer’s base salary for 20082009 and 20092010 and the percentage change.change:
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Base Salary |
| Base Salary |
|
|
| |||||||||||||
|
| for 2009 |
| for 2010 |
|
|
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| (000s) |
| (000s) |
| % Change |
| |||
Name |
| Base Salary |
| Base Salary |
| % Change |
|
| ($) |
| ($) |
| (%) |
| ||||||
Terry D. Hildestad |
| 700.0 |
| 750.0 |
| 7.1 |
|
| 750.0 |
| 750.0 |
| 0.0 |
| ||||||
Vernon A. Raile |
| 400.0 |
| 450.0 |
| 12.5 |
|
| 450.0 |
| 450.0 |
| 0.0 |
| ||||||
Doran N. Schwartz(1) |
| 201.4 |
| 260.0 |
| 29.1 |
| |||||||||||||
John G. Harp |
| 400.0 |
| 450.0 |
| 12.5 |
|
| 450.0 |
| 450.0 |
| 0.0 |
| ||||||
William E. Schneider |
| 447.4 |
| 447.4 |
| 0.0 |
| |||||||||||||
Steven L. Bietz |
| 313.1 |
| 350.0 |
| 11.8 |
|
| 350.0 |
| 350.0 |
| 0.0 |
| ||||||
David L. Goodin |
| 312.0 |
| 322.0 |
| 3.2 |
| |||||||||||||
(1) | Elected vice president and chief financial officer effective February 17, 2010. Salary shown is not prorated. | |
20092010 Annual Incentives
26 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
For the named executive officers working at MDU Resources Group, Inc., who were Messrs. Hildestad and Schwartz, prior to 2010, the compensation committee used corporate-wide return on invested capital and earnings per share, both compared to a target, as performance measures. However, effective for 2010, the compensation committee discontinued this approach and based 2010 annual incentives for MDU Resources Group, Inc. executives on the weighted average of the incentive payments made to the four business unit president and chief executive officers. The 2009 safety resultssum of WBI Holdings,these individual products determined the payment percentage of the MDU Resources Group, Inc. officers. The compensation committee’s rationale for this approach was alsoto provide greater alignment between the MDU Resources Group, Inc. executives and the business unit executives’ annual incentive payments and performance. The new methodology requires that all business unit executives receive a measure for Mr. Bietz’s 2009maximum annual incentive.incentive payment before the MDU Resources Group, Inc. executives receive a maximum annual incentive payment.
The compensation committee believes earnings per share and return on invested capital are very good measurements in assessing companya business unit’s performance from a financial standpoint. Earnings per share is a generally accepted accounting principle measurement and is a key driver of stockholder return over the long-term. Return on invested capital measures how efficiently and effectively management deploys its capital. Sustained returns on invested capital in excess of oura business unit’s cost of capital create wealthvalue for our stockholders.
Allocated earnings per share for a business unit is calculated by dividing that business unit’s earnings by the business unit’s portion of the total company weighted average shares outstanding. Return on invested capital for the company is calculated by dividing our earnings, without regard to after tax interest expense and preferred stock dividends, by our average capitalization for the calendar year. Return on invested capital for a business unit is calculated by dividing the business unit’s earnings, without regard to after tax interest expense and preferred stock dividends, by the business unit’s average capitalization for the calendar year.
The compensation committee determines the weighting of the performance measures each year based upon recommendations from the chief executive officer. The compensation committee weighted the 20092010 performance measures for return on invested capital compared to targeted results and allocated earnings per share compared to targeted results each at 50%. The compensation committee believes both measures are equally important in driving stockholder value in the short term and over time.
We limit the after-tax annual incentive compensation we will pay above the target amount to 20% of earnings in excess of planned earnings. We calculate the earnings in excess of planned earnings without regard to the after-tax annual incentive amounts above target. We measure the 20% limitation at the major business unit level for business unit executives, which include Messrs. Harp, Schneider and Bietz, and at the corporate level for corporate executives, which include Messrs. Hildestad and Raile. In 2009, the 20% limitation was calculated without regard to the noncash ceiling test impairment charge that we discuss later and an associated depletion, depreciation and amortization benefit.long term.
We establish our incentive plan performance targets in connection with our annual financial planning process, where we assess the economic environment, competitive outlook, industry trends, and company specific conditions to set projections of results. The compensation committee evaluates the projected results and uses this evaluation to establish the incentive plan performance targets.targets based upon recommendation of the chief executive officer. The compensation committee also considers annual improvement in the return on invested capital measure for incentive purposesin establishing targets to help ensure that return on invested capital will equal or exceed the weighted average cost of capital. Historically, this consideration tookcapital over time. The weighted average cost of capital is a composite cost of the formindividual sources of funds including equity and debt used to finance a minimum annual increasecompany’s assets. It is calculated by averaging the cost of debt plus the cost of equity by the proportion each represents in a business unit’s and/orour capital structure. For 2010, the company’s return on invested capital incentive plan performance target(s). For 2009, thecompensation committee chose to
|
|
|
use the stretch return on invested capital target approved by the board in the 20092010 business plan rather thanplan. Furthermore, except for the required annual minimum increase in recognitioncombined utility group, the compensation committee imposed an additional requirement for the 2010 return on invested capital portion of the soft economic environmentannual incentives. Results above the 2010 return on invested capital target would not generate additional annual incentive compensation for business unit executives, unless 2010 return on invested capital results met or exceeded a business unit’s weighted average cost of capital. In that case, the business unit president and depressed commodity prices. Inchief executive officer would earn 200% of the committee’s discretion, it may establishannual incentive plan performance targets higher, lower, or attarget attributable to the same level asreturn on invested capital portion of the prior year’s target and/or results.annual incentive.
What the Named Executive Officers’ Incentive Targets Are and Why We Chose Them
The chief executive officer’sMr. Hildestad’s target annual incentive was 100% of his base salary. Messrs. Raile, Harp, Schneider,Goodin, and Bietz’s target annual incentives were 65% of their base salaries. These incentive targets were derived in part from the competitive data provided by Towers Perrinassessment and in part by the compensation committee’s desire, based on internal equity, to have a uniform annual incentive target for the business unit president and chief executive officer positionspositions. Mr. Schwartz’s annual incentive target was increased from 45% to 50% of base salary effective with his promotion. His new salary grade “I” has a target annual incentive of 50% of base salary. The target percentage for the other named executive officers remained unchanged from 2008 and 2009 levels.
MDU Resources Group, Inc. Proxy Statement | 27 |
Proxy Statement |
Terry L. Hildestad and Doran N. Schwartz
As discussed above, Messrs. Hildestad and Schwartz were awarded 2010 incentives based on the executive viceweighted average of the payments made to the four business unit president treasurer and chief financial officer position. The target annual incentivesexecutive officers, with each payment weighted by the business unit’s average invested capital for the named executives did not change in 2009 from 2008.2010. The award opportunities and results for the four business units are discussed below.
As a result of the awards earned by the presidents and chief executive officers of the four business units, weighted for each business unit’s average invested capital, Messrs. Hildestad and Schwartz earned 101.7% of their target awards, resulting in a payment of $762,750 for Mr. Hildestad and $127,053 for Mr. Schwartz.
John G. Harp
The 2010 award opportunity available to each named executive officerMr. Harp ranged from no payment if the goalsresults were met below the 85% level to a 200% payout if:
• | the 2010 allocated earnings per share for MDU Construction Services Group, Inc. were at or above the 115% level and |
• | the 2010 return on invested capital was at least equal to MDU Construction Services Group, Inc.’s 2010 weighted average cost of capital. |
We set Mr. Harp’s 2010 earnings per share and return on invested capital target levels below his 2009 target levels and below the 2009 actual levels to reflect significant continued weakness in the overall construction market. MDU Construction Services Group, Inc.’s 2010 earnings per share and return on invested capital exceeded their respective 2010 targets, but Mr. Harp’s payment with respect to the return on invested capital component was limited to the target amount of $146,250 because MDU Construction Services Group, Inc.’s return on invested capital was less than its weighted average cost of capital, resulting in an overall payment of $438,750.
Steven L. Bietz
The 2010 award opportunity available to Mr. Bietz ranged from no payment if the goalsresults were metbelow the 85% level to a 200% payout if:
• | the 2010 allocated earnings per share for WBI Holdings, Inc. were at or above the 115% level |
• | the 2010 return on invested capital was at least equal to WBI Holdings, Inc.’s 2010 weighted average cost of capital and |
• | the five safety goals were met. |
We set Mr. Bietz’s 2010 earnings per share and return on invested capital target levels above his 2009 target levels due largely to higher anticipated oil prices. The 2010 return on invested capital target was also higher than the 115% level. In 2009 actual results due to reduced invested capital for 2010. However, the 2010 allocated earnings per share target was lower than 2009 actual results due to higher anticipated lease operating expenses and higher depreciation, depletion, and amortization expenses. WBI Holdings, Inc.’s 2010 earnings per share and return on invested capital exceeded their respective 2010 targets. However, payment with respect to the return on invested capital component was limited to the target amount of $113,750 because WBI Holdings, Inc.’s 2010 return on invested capital was less than its weighted average cost of capital.
Mr. Bietz also had five individual goals relating to WBI Holdings, Inc.’s safety results andwith each goal that was not met reducedreducing his annual incentive award by 1%. The five individual goals were:
• | each established local safety committee will conduct 8 meetings per year, preferably 2 per quarter |
• | each established local safety committee must conduct 4 site assessments per year, preferably 1 per quarter |
• | report vehicle accidents and personal injuries by the end of the next business day |
• | achieve the targeted vehicle accident incident rate of 2.5 or less and |
• | achieve the targeted personal injury incident rate of 2.0 or less. |
Two of the five 2010 safety goals were not met. The 2010 actual vehicle accident incident rate was 2.69 and the 2010 actual personal injury incident rate was 3.11. This reduced his annual incentive payment by $5,005 or 2.0%. As a result, Mr. Bietz received $245,245 as a 2010 incentive payment.
David L. Goodin
The table2010 award opportunity available to Mr. Goodin ranged from no payment if the allocated earnings per share and return on invested capital results were below lists each namedthe 85% level to a 200% payout if results were at or above the 115% level.
28 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
We set Mr. Goodin’s 2010 targets for allocated earnings per share and return on invested capital targets higher than his 2009 targets and higher than 2009 actual results to reflect higher projected 2010 earnings. For 2010, the combined utility group’s 2010 earnings per share and return on invested capital exceeded their respective 2010 targets. As a result, Mr. Goodin received $320,438 as a 2010 incentive payment.
Knife River Corporation
For Knife River Corporation, the 2010 award opportunity for its president and chief executive officer’s 2009 base salary,officer ranged from no payment if the results were below the 85% level to a 200% payout if:
• | the 2010 allocated earnings per share for Knife River Corporation were at or above the 115% level and |
• | the 2010 return on invested capital was at least equal to Knife River Corporation’s 2010 weighted average cost of capital. |
For the president and chief executive officer of Knife River Corporation, we set the 2010 allocated earnings per share and return on invested capital target levels below the 2009 annual incentive target percentage, the officer’s 2009 incentive plan performance targets,levels and below the 2009 actual results. The 2010 target levels reflect a continued downturn in construction activity and a continued shift towards public sector projects, which generally carry lower profit margins. Knife River Corporation’s 2010 results for allocated earnings per share and return on invested capital were 81.48% and 85.22% of their respective targets. These results equated to a payment of 13% of the president and chief executive officer of Knife River Corporation’s 2010 incentive plan results, and the annual incentive earned for 2009.target.
|
| 2009 |
| 2009 |
| 2009 |
| 2009 |
| 2009 | |||||
Name |
|
|
| EPS |
| ROIC |
| EPS |
| ROIC |
| ||||
Terry D. Hildestad (1) |
| 750.0 |
| 100 |
| 1.09 |
| 5.7 |
| 1.30 |
| 6.6 |
| 1,500.00 | |
Vernon A. Raile (1) |
| 450.0 |
| 65 |
| 1.09 |
| 5.7 |
| 1.30 |
| 6.6 |
| 585.00 | |
John G. Harp (2) |
| 450.0 |
| 65 |
| 3.17 |
| 10.2 |
| 3.21 |
| 10.4 |
| 392.50 | |
William E. Schneider (3) |
| 447.4 |
| 65 |
| 0.52 |
| 4.3 |
| 0.68 |
| 5.3 |
| 581.62 | |
Steven L. Bietz (4) |
| 350.0 |
| 65 |
| 1.69 |
| 5.6 |
| 2.22 |
| 7.1 |
| 450.45 | |
(1) | Based on earnings per share and return on invested capital for MDU Resources Group, Inc. The 2009 incentive plan results were adjusted to exclude the 2009 noncash impairment charge as discussed below. | ||||||||||||||
(2) | Based on allocated earnings per share and return on invested capital for MDU Construction Services Group, Inc. The amount for Mr. Harp includes an additional $100,000 incentive as described below. | ||||||||||||||
(3) | Based on allocated earnings per share and return on invested capital for Knife River Corporation. | ||||||||||||||
(4) | Based on allocated earnings per share and return on invested capital for WBI Holdings, Inc. The 2009 incentive plan results were adjusted to exclude the 2009 noncash impairment charge as discussed below. Also in 2009, WBI Holdings, Inc. met four of five safety goals, and therefore Mr. Bietz’s 2009 Annual Incentive Earned reflects a reduction of 1% or $4,550.00. | ||||||||||||||
The following table shows the changes in our performance targets and achievements for both 20082009 and 2009.2010:
|
| 2008 |
| 2008 |
| 2009 |
| 2009 | |||||||||
Name |
| EPS |
| ROIC |
| EPS |
| ROIC |
| EPS |
| ROIC |
| EPS |
| ROIC | |
Terry D. Hildestad (1) |
| 1.77 |
| 9.1 |
| 1.59 |
| 8.0 |
| 1.09 |
| 5.7 |
| 1.30 |
| 6.6 | |
Vernon A. Raile (1) |
| 1.77 |
| 9.1 |
| 1.59 |
| 8.0 |
| 1.09 |
| 5.7 |
| 1.30 |
| 6.6 | |
John G. Harp (2) |
| 2.73 |
| 10.5 |
| 5.03 |
| 17.7 |
| 3.17 |
| 10.2 |
| 3.21 |
| 10.4 | |
William E. Schneider (3) |
| 1.03 |
| 7.5 |
| 0.42 |
| 3.5 |
| 0.52 |
| 4.3 |
| 0.68 |
| 5.3 | |
Steven L. Bietz (4) |
| — |
| — |
| — |
| — |
| 1.69 |
| 5.6 |
| 2.22 |
| 7.1 | |
(1) | Based on earnings per share and return on invested capital for MDU Resources Group, Inc. The 2009 incentive plan results were adjusted to exclude the 2009 noncash impairment charge as discussed below. | ||||||||||||||||
(2) | Based on allocated earnings per share and return on invested capital for MDU Construction Services Group, Inc. | ||||||||||||||||
(3) | Based on allocated earnings per share and return on invested capital for Knife River Corporation. | ||||||||||||||||
(4) | Based on allocated earnings per share and return on invested capital for WBI Holdings, Inc. The 2009 incentive plan results were adjusted to exclude the 2009 noncash impairment charge as discussed below. | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2009 |
| 2009 |
| 2010 |
| 2010 |
| ||||||||||||
Name | EPS | ROIC | EPS | ROIC | EPS | ROIC | EPS | ROIC |
| ||||||||||||
Terry D. Hildestad |
|
| 1.09 |
|
| 5.7 |
|
| 1.30 |
|
| 6.6 |
| See table below |
| See table below |
| ||||
Doran N. Schwartz |
|
| — |
|
| — |
|
| — |
|
| — |
| See table below |
| See table below |
| ||||
John G. Harp(1) |
|
| 3.17 |
|
| 10.2 |
|
| 3.21 |
|
| 10.4 |
| 2.22 |
| 6.7 |
| 3.46 |
| 9.0 |
|
Steven L. Bietz(2) |
|
| 1.69 |
|
| 5.6 |
|
| 2.22 |
|
| 7.1 |
| 2.02 |
| 8.4 |
| 2.08 |
| 8.6 |
|
David L. Goodin(3) |
|
| — |
|
| — |
|
| — |
|
| — |
| 1.07 |
| 6.1 |
| 1.17 |
| 6.5 |
|
Knife River Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President & CEO(4) |
|
| 0.52 |
|
| 4.3 |
|
| 0.68 |
|
| 5.3 |
| 0.54 |
| 4.6 |
| 0.44 |
| 3.9 |
|
(1) | Based on allocated earnings per share and return on invested capital for MDU Construction Services Group, Inc. |
(2) | Based on allocated earnings per share and return on invested capital for WBI Holdings, Inc. |
(3) | Based on allocated earnings per share and return on invested capital for the combined utility group. |
(4) | Based on allocated earnings per share and return on invested capital for Knife River Corporation. |
2009 Annual Incentive ResultsThe table below lists each named executive officer’s 2010 base salary, annual incentive target percentage, incentive plan performance targets, incentive plan results, and the Impact of the 2009 Noncash Impairment Chargesannual incentive earned.
The company uses the full-cost method of accounting for its natural gas and oil activities. Under this method, the company is required to perform quarterly “ceiling tests” to compare the present value of the future net cash flow from proven reserves to the book value of those reserves at the balance sheet date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2010 |
| 2010 |
| 2010 |
| 2010 |
| 2010 |
| 2010 |
| |||||||||||||||
Name |
|
|
| EPS |
| ROIC |
| EPS |
| ROIC |
| EPS |
| ROIC |
|
| ||||||||||||
Terry D. Hildestad |
|
| 750.0 |
|
| 100 |
| See table below |
| See table below |
| See table below |
|
| 762.75 |
| ||||||||||||
Doran N. Schwartz(1) |
|
| 25.9 |
|
| 45 |
| See table below |
| See table below |
| See table below |
|
| 127.05 |
| ||||||||||||
|
|
| 226.5 |
|
| 50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John G. Harp(2) |
|
| 450.0 |
|
| 65 |
|
| 2.22 |
|
| 6.7 |
|
| 3.46 |
|
| 9.0 |
|
| 200.0 |
|
| 100.0 |
|
| 438.75 |
|
Steven L. Bietz(3) |
|
| 350.0 |
|
| 65 |
|
| 2.02 |
|
| 8.4 |
|
| 2.08 |
|
| 8.6 |
|
| 120.0 |
|
| 100.0 |
|
| 245.25 |
|
David L. Goodin(4) |
|
| 322.0 |
|
| 65 |
|
| 1.07 |
|
| 6.1 |
|
| 1.17 |
|
| 6.5 |
|
| 162.3 |
|
| 143.7 |
|
| 320.44 |
|
(1) | Reflects the impact of Mr. Schwartz’s promotion. |
(2) | Based on allocated earnings per share and return on invested capital for MDU Construction Services Group, Inc. |
(3) | Based on allocated earnings per share and return on invested capital for WBI Holdings, Inc. Also in 2010, WBI Holdings, Inc. met three of five safety goals; therefore, Mr. Bietz’s 2010 annual incentive earned reflects a reduction of 2% or $5,005. |
(4) | Based on allocated earnings per share and return on invested capital for the combined utility group. |
|
|
| |
| |
MDU Resources Group, Inc.Proxy Statement |
|
|
Proxy Statement |
Due to the low energy prices at the beginning of 2009, the compensation committee, upon recommendation of the chief executive officer, at the February 2009 meeting decided to disregard, for purposes of calculating 2009 annual incentives, the effects of any potential noncash ceiling test impairment charges related to the company’s natural gas and oil properties. Consistent with this determination, no associated earnings benefit resulting from lower depletion, depreciation and amortization expenses would be considered in the calculation. The committee’s rationale for the decision was:
|
|
|
|
|
|
|
|
On March 31, 2009, the company recorded a $384.4 million after-tax noncash charge in response to the natural gasMessrs. Hildestad’s and oil pricesSchwartz’s 2010 annual incentives were paid at that time. If the committee had not excluded the noncash charge, our named executives would not have received an incentive payment for 2009.
Terry D. Hildestad’s 2009 Annual Incentive AwardAs president and chief executive officer101.7% of MDU Resources Group, Inc., Mr. Hildestad’s 2009 incentive plan performance targets were based on our earnings per share and return on invested capital. We set his 2009 earnings per share target level and return on invested capital below his 2008 targets and actual results to reflect significantly lower commodity prices and the continued effects of the soft economic activity in the construction industries.
For 2009 incentive plan results, the company’s 2009 earnings per share and return on invested capital results were 119.3% and 115.8% of their respective 2009 targets. Therefore, we paid $1,500,000 to Mr. Hildestad as a 2009 incentive.
Vernon A. Raile’s 2009 Annual Incentive AwardAs executive vice president, treasurer and chief financial officer of MDU Resources Group, Inc., Mr. Raile’s 2009 incentive plan performance targets were based on our earnings per share and return on invested capital. As discussed above for Mr. Hildestad, we set his 2009 earnings per share target level and return on invested capital below his 2008 targets and actual results to reflect significantly lower commodity prices and the continued effects of the soft economic activity in the construction industries.
For 2009 incentive plan results, the company’s 2009 earnings per share and return on invested capital results were 119.3% and 115.8% of their respective 2009 targets. Therefore, we paid $585,000 to Mr. Raile as a 2009 incentive.
John G. Harp’s 2009 Annual Incentive AwardAs president and chief executive officer of MDU Construction Services Group, Inc., we based Mr. Harp’s 2009 incentive plan performance targets on allocated earnings per share and return on invested capital for MDU Construction Services Group, Inc. We set his 2009 earnings per share target level above his 2008 earnings per share target level to reflect the 2009 planned dividend to MDU Resources Group, Inc., which we projected would reduce the allocated shares for MDU Construction Services Group, Inc. and therefore increase its allocated earnings per share. We set the 2009 return on invested capital target slightly lower than the 2008 return on invested capital target to reflect lower anticipated earnings. The 2009 earnings per share and return on invested capital targets were lower than the actual results for 2008 to reflect the downturn in the Las Vegas construction market.
For 2009 incentive plan results, MDU Construction Services Group, Inc.’s 2009 earnings per share results and return on invested capital results were 101.3% and 102.0% of their respective 2009 targets. These results would normally equate to an incentive payment of $323,798. However, as discussed earlier, we limit incentive payments above target to 20% of after-tax earnings above planned earnings. Since MDU Construction Services Group, Inc.’s 2009 actual earnings were below 2009 planned earnings, we limited Mr. Harp’s 2009 actual incentive to his 2009 target incentive amount of $292,500. Therefore, we paid $292,500 to Mr. Harp as a 2009 incentive.
|
|
|
John G. Harp’s Additional 2009 IncentiveIn addition to the 2009 annual incentive award, Mr. Harp had the opportunity to earn an additional incentive, which the compensation committee structured as follows:
| |||
|
| ||
|
| ||
|
| ||
|
|
Throughout 2009, MDU Construction Services Group, Inc. accumulated significant amounts of cash through effective working capital management. These amounts exceeded the amounts anticipated at the beginning of 2009, resulting in the reduction of all of its commercial paper and more dividends to MDU Resources Group, Inc. than originally projected. In addition, MDU Construction Services Group, Inc. was able to lend the remaining excess cash to other MDU Resources Group, Inc.’s subsidiaries, reducing debt at the MDU Resources Group, Inc. level. Although the remaining excess cash did not lower the invested capital at MDU Construction Services Group, Inc. on a standalone basis, it did lower the overall invested capital of MDU Resources Group, Inc. Therefore, the compensation committee, upon recommendation from the chief executive officer, approved calculating MDU Construction Services Group, Inc.’s 2009 return on invested capital to reflect the excess cash accumulated. The compensation committee’s rationale for this decision was:
|
|
|
|
MDU Construction Services Group, Inc.’s 2009 return on invested capital, as adjusted for the excess cash, was 12.5% compared to its 2009 weighted average cost of capital of 11.1%. Because the 2009 return on invested capital of 12.5% was higher than the reported 2009 weighted average cost of capital of 11.1%, Mr. Harp received $100,000 in additional incentive for 2009.
William E. Schneider’s 2009 Annual Incentive AwardAs president and chief executive officer of Knife River Corporation, Mr. Schneider’s 2009 incentive plan performance targets were based on allocated earnings per share and return on invested capital for Knife River Corporation. We set his 2009 targets for allocated earnings per share and return on invested capital lower than his 2008 targets and higher than 2008 actual results. The compensation committee arrived at these targets based on the current economic softness in the construction markets, partially offset by a significant reduction in Knife River Corporation’s cost structure.following:
For 2009, Knife River Corporation’s 2009 earnings per share and return on invested capital results were 130.8% and 123.3% of their respective 2009 targets. Therefore, we paid $581,620 to Mr. Schneider as a 2009 incentive.
Steven L. Bietz’s 2009 Annual Incentive AwardAs president and chief executive officer of WBI Holdings, Inc., Mr. Bietz’s 2009 incentive plan performance targets were based on allocated earnings per share and return on invested capital for WBI Holdings, Inc. We set his 2009 earnings per share and return on invested capital target levels below his 2008 target and 2008 actual results largely to reflect lower commodity prices and lower anticipated production due to reduced capital expenditures.
For 2009 incentive plan results, the company’s 2009 earnings per share and return on invested capital results were 131.4% and 126.8% of their respective 2009 targets. These results equated to an incentive of $455,000, which was reduced by $4,550 or 1% due to not achieving one of the five 2009 safety goals. Therefore, we paid $450,450 to Mr. Bietz as a 2009 incentive.
|
|
|
|
|
|
|
|
|
|
|
President and Chief Executive Officer of: |
| Column A |
| Column B |
| Column A x Column B |
| |||
MDU Construction Services Group, Inc. |
| 150.0 | % |
| 5.6 | % |
| 8.4 | % |
|
Combined Utility Group |
| 153.1 | % |
| 35.0 | % |
| 53.6 | % |
|
WBI Holdings, Inc. |
| 107.8 | % |
| 33.8 | % |
| 36.4 | % |
|
Knife River Corporation |
| 13.0 | % |
| 25.6 | % |
| 3.3 | % |
|
Total |
|
|
|
|
|
|
| 101.7 | % |
|
Deferral of Annual Incentive Compensation
We provide executives the opportunity to defer receipt of earned annual incentives. If an executive chooses to defer his or her annual incentive, we will credit the deferral with interest at a rate determined by the compensation committee. For 2009,2010, the committee discontinued usingchose to use the prime rate in favoraverage of using(i) the number that results from adding the daily Moody’s U.S. Long-Term Corporate Bond Yield Average for “A” rated companies.companies as of the last day of each month for the 12-month period ending October 31 and dividing by 12 and (ii) the number that results from adding the daily Moody’s U.S. Long-Term Corporate Bond Yield Average for “BBB” rated companies as of the last day of each month for the 12-month period ending October 31 and dividing by 12. The compensation committee’s reasons for using this approach recognized:
|
|
• | incentive deferrals are a low-cost source of capital for the company, and |
|
|
• | incentive deferrals are unsecured obligations and, therefore, carry a higher risk to the executives. |
|
|
|
20092010 Long-Term Incentives
Awards Granted in 20092010 under the Long-Term Performance-Based Incentive Plan
We use the Long-Term Performance-Based Incentive Plan, which is an omnibus plan and has been approved by our stockholders, for long-term incentive compensation. We discontinued the use of stock options in 2003 and now use performance shares as the only form of long-term incentive compensation.
The compensation committee usesused the performance graph peer group as the comparator group to determine relative stockholder return and potential payments under the Long-Term Performance-Based Incentive Plan for its 2009-20112010-2012 performance share award cycle. The companies comprising our performance graph peer group areat the time of grant were the same companies listed above under the heading “Role of Compensation Consultants” with the exception of Florida Rock Industries, which was acquired in late 2007.Management.”
The performance measure is our total stockholder return over a three-year measurement period as compared to the total stockholder returns of the companies in our performance graph peer group over the same three-year period. For the awards granted in 2010, the compensation committee revised the award agreement to 1) reduce payment amounts by at least 50% if our stockholder return over the three-year measurement period is negative, and 2) increase the payment amount for relative total stockholder return results above the 50th percentile, assuming our total stockholder return is positive. This is set forth in the Long-Term Incentive Payout Percentages chart below.
The compensation committee selected this goalthe relative stockholder return performance measure because it believes executive pay under a long-term, capital accumulation program such as this should mirror our long-term performance in stockholder return as compared to other public companies in our industries. Payments are made in company stock; dividend equivalents are paid in cash.
Total stockholder return is the percentage change in the value of an investment in the common stock of a company, from the closing price on the last trading day in the calendar year preceding the beginning of the performance period, through the last trading day in the final year of the performance period. It is assumed that dividends are reinvested in additional shares of common stock at the frequency paid.
As with the annual incentive target, we determined the long-term incentive target for a given position by reference to the salary grade. We derived these incentive targets in part from the competitive data provided by Towers Perrinassessment and in part by the compensation committee’s judgment on the impact each position has on our total stockholder return. The compensation committee also believed consistency across positions in the same salary grades and keeping the chief executive officer’s long-term incentive target below a level indicated by the competitive dataassessment were important from an internal equity standpoint. The 20092010 long-term incentive targets for each named executive were unchanged from 2008.2009 except for Mr. Schwartz, whose long-term incentive target increased from 50% of base salary to 75% of base salary upon his appointment to vice president and chief financial officer. The 75% long-term incentive target for Mr. Schwartz corresponds to the long-term incentive target for salary grade “I.”
30 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
On February 12, 2009,March 5, 2010, the board of directors, upon recommendation of the compensation committee, made performance share grants to the named executive officers.officers, except for Mr. Raile. The compensation committee determined the target number of performance shares granted to each named executive officer by multiplying the named executive officer’s 20092010 base salary by his or her long-term incentive target and then dividing this product by the average of the closing prices of our stock from January 2, 20094, 2010 through January 22, 2009,2010, as shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
| 2009 |
| 2009 |
| 2009 |
| Average |
| Resulting |
|
| 2010 |
| 2010 |
| 2010 |
| Average |
| Resulting |
| ||||||||||
Terry D. Hildestad |
| 750,000 |
| 150 |
| 1,125,000 |
| 20.52 |
| 54,824 |
|
| 750,000 |
| 150 |
| 1,125,000 |
| 23.58 |
| 47,709 |
| ||||||||||
Vernon A. Raile |
| 450,000 |
| 90 |
| 405,000 |
| 20.52 |
| 19,736 |
|
| — |
| — |
| — |
| — |
| — |
| ||||||||||
Doran N. Schwartz |
| 260,000 | (1) |
| 75 | (1) |
| 195,000 |
| 23.58 |
| 8,269 |
| |||||||||||||||||||
John G. Harp |
| 450,000 |
| 90 |
| 405,000 |
| 20.52 |
| 19,736 |
|
| 450,000 |
| 90 |
| 405,000 |
| 23.58 |
| 17,175 |
| ||||||||||
William E. Schneider |
| 447,400 |
| 90 |
| 402,660 |
| 20.52 |
| 19,622 |
| |||||||||||||||||||||
Steven L. Bietz |
| 350,000 |
| 90 |
| 315,000 |
| 20.52 |
| 15,350 |
|
| 350,000 |
| 90 |
| 315,000 |
| 23.58 |
| 13,358 |
| ||||||||||
David L. Goodin |
| 322,000 |
| 90 |
| 289,800 |
| 23.58 |
| 12,290 |
| |||||||||||||||||||||
(1) | Base Salary and Long-Term Incentive Target percentage reflect February 17, 2010 promotion. |
FromAssuming our three-year (2010 – 2012) total stockholder return is not negative, from 0% to 200% of the target grant will be paid out in February 20122013 depending on our three-year 2009-2011 total stockholder return compared to the total three-year stockholder returns of companies in our performance graph peer group. The payout percentage will be a function of our rank against our performance graph peer group as follows:
Long-Term Incentive Payout Percentages
|
|
|
|
| ||||||
The Company’s |
| Payout Percentage of |
| |||||||
| 90th or higher |
| 200 | % |
| |||||
| 70th |
| 150 | % |
| |||||
50th |
| 100 | % |
| ||||||
40th |
| 10 | % |
| ||||||
Less than 40th |
| 0 | % |
| ||||||
Payouts for percentile ranks falling between the intervals will be interpolated. We also will pay dividend equivalents in cash on the number of shares actually earned for the performance period. The dividend equivalents will be paid in 20122013 at the same time as the performance awards are paid.
|
|
|
Awards Paid on February 12, 200911, 2010 under the Long-Term Performance-Based Incentive Plan
Performance Shares
We granted performance shares to our named executive officers under the Long-Term Performance-Based Incentive Plan on February 16, 200615, 2007 for the 20062007 through 20082009 performance period. Our total stockholder return for the 20062007 through 20082009 performance period was 5.46%(0.87)%, which corresponded to a percentile rank of 48%50% against our performance graph peer group. The percentile rank of 48%50% corresponded to a payout percentage of 82%100%, meaning 82%100% of the target shares originally granted plus dividend equivalents were paid to the named executive officers. The table below lists the shares granted on February 16, 2006,15, 2007, the shares paid on February 12, 200911, 2010, based on the payout percentage and the dividend equivalents earned.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
| Shares |
| Payout |
| Shares |
| Dividend |
|
| Shares |
| Payout |
| Shares |
| Dividend |
| ||||||||
Terry D. Hildestad |
| 23,883 |
| 82 |
| 19,584 |
| 32,968 |
|
| 33,091 |
| 100 |
| 33,091 |
| 58,985 |
| ||||||||
Vernon A. Raile |
| 12,429 |
| 82 |
| 10,192 |
| 17,157 |
|
| 12,564 |
| 100 |
| 12,564 |
| 22,395 |
| ||||||||
Doran N. Schwartz |
| 3,463 |
| 100 |
| 3,463 |
| 6,173 |
| |||||||||||||||||
John G. Harp |
| 10,072 |
| 82 |
| 8,259 |
| 13,903 |
|
| 10,181 |
| 100 |
| 10,181 |
| 18,148 |
| ||||||||
William E. Schneider |
| 15,285 |
| 82 |
| 12,534 |
| 21,100 |
| |||||||||||||||||
Steven L. Bietz |
| 7,018 |
| 82 |
| 5,755 |
| 9,688 |
|
| 10,354 |
| 100 |
| 10,354 |
| 18,456 |
| ||||||||
(1) Shares are adjusted for the 3-for-2 stock split effective July 26, 2006. | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||
David L. Goodin |
| 4,279 |
| 100 |
| 4,279 |
| 7,627 |
| |||||||||||||||||
MDU Resources Group, Inc. Proxy Statement | 31 |
Proxy Statement |
Accelerated Restricted Stock
We granted shares of restricted stock to some of our named executive officers in 2001, which would automatically vest on February 15, 2010. Vesting of some or all of the shares could accelerate if total stockholder return equaled or exceeded the 50th percentile of the performance graph peer group during three-year performance cycles: 2001-2003, 2004-2006 and 2007-2009. Some shares accelerated vesting with respect to the 2001-2003 and 2004-2006 performance cycles but not for the 2007-2009 performance cycle. The remaining shares vested automatically on February 15, 2010. The named executive officers’ shares that vested on February 15, 2010 are: Mr. Hildestad – 3,712 shares; Mr. Raile – 1,114 shares; Mr. Bietz – 558 shares; and Mr. Goodin – 1,485 shares.
PEER4 Analysi$:Analysis: Comparison of Pay for Performance Ratios
Each year we compare our named executive officers’ pay for performance ratios to the pay for performance ratios of the named executive officers in the performance graph peer group. This analysis looks atcompares the relationship between our compensation levels and our average annual total stockholder return in comparison to the peer group over a five-year period. All data used in the analysis, including the valuation of long-term incentives and calculation of stockholder return, were compiled by Equilar, Inc., an independent service provider, which usesis based on each company’s annual filings as a basis offor its data collection.
This analysis consisted of dividing what we paid our named executive officers for the years 20042005 through 20082009 by our average annual total stockholder return for the same five-year period to yield our pay ratio. Our pay ratio was then compared to the pay ratio of the companies in the performance graph peer group, which was calculated by dividing total direct compensation for all the proxy group executives by the sum of each company’s average annual total stockholder return for the same five-year period. The results are shown in the following chart.chart:
5 Year Total Direct Compensation to 5 Year Total Stockholder Return*
|
|
|
|
|
|
|
|
| MDU Resources |
| Performance |
Dollars of Total Direct Compensation (1) per Point of Total Stockholder Return |
| 5,489,386 |
| 5,390,223 | |
(1) | Total direct compensation is the sum of annual base salaries, annual incentives, the value of long-term incentives at grant and all other compensation as reported in the proxy statements. For 2006, 2007 and 2008, total direct compensation also includes the change in pension values and nonqualified deferred compensation earnings as reported in the proxy statements. | ||||
* | The chart is not deemed filed or a part of this compensation discussion and analysis for certification purposes. | ||||
| |||||
|
|
|
|
|
|
|
|
|
| MDU Resources |
| Performance |
| ||
Dollars of Total Direct Compensation (1) per Point of Total Stockholder Return |
|
| 6,117,468 |
|
| 8,077,747 |
|
(1) | Total direct compensation is the sum of annual base salaries, annual incentives, the value of long-term incentives at grant (as valued by Equilar, Inc.) and all other compensation as reported in the proxy statements. For 2006, 2007, 2008, and 2009, total direct compensation also includes the values reported in the change in pension values and nonqualified deferred compensation earnings column in the summary compensation table. |
* | The chart is not deemed filed or a part of this compensation discussion and analysis for certification purposes. |
The results of the analysis showed that we paid our named executive officers slightly moreless than what the performance graph peer group companies paid their named executive officers for comparable levels of stockholder return over the five-year period. Specifically, as indicated in the chart, the data shows that we paid our named executive officers approximately $99,000 more$2,000,000 less per point of stockholder return than our performance graph peer group. We have been conducting our PEER4 Analysi$Analysis since 2004.
Post-Termination Compensation and Benefits
Pension Plans
Effective in 2006, we no longer offer defined benefit pension plans to new non-bargaining unit employees. The defined benefit plans available to employees hired before 2006 were amended to cease benefit accruals as of December 31, 2009. The frozen benefit provided through our qualified defined benefit pension plans is determined by years of service and base salary. Effective 2010, for those employees who were participants in defined benefit pension plans and for executives and other non-bargaining unit employees hired after 2006, the company offers increased company contributions to our 401(k) plan. These retirement contributions are based on the participant’s age as of December 31, 2009. The retirement contribution is 11.5% for each of the named executive officers, except Mr. Schwartz who is eligible for 10.5%. To the extent the contributions into the 401(k) plan exceed the Internal Revenue Code Section 415 limit, a cash payment was made to the named executive officers. The maximum amount distributed in the form of cash was $5,475.
|
|
|
Supplemental Income Security Plan
Benefits Offered
We offer certain key managers and executives, including all of our named executive officers, benefits under our nonqualified retirement plan, which we refer to as the Supplemental Income Security Plan or SISP. The SISP has a ten-year vesting schedule and was amended to add an additional vesting requirement for benefit level increases occurring on or after January 1, 2010. The SISP provides participants with additional retirement income and death benefits. The additional retirement income may take two forms:
|
| |
|
| |
| ||
32 | MDU Resources Group, Inc. Proxy Statement | |
| |
|
|
A death benefit is provided if SISP participants die before their supplemental retirement benefits commence or if they elect to receive death benefits in lieu of all or a part of their supplemental retirement benefits. The death benefit is payable for 15 years.
We believe the SISP is critical in retaining the talent necessary to drive long-term stockholder value. In addition, we believe that the ten-year vesting provision of the SISP, augmented by an additional three years of vesting for benefit level increases occurring on or after January 1, 2010, helps promote retention of key executive officers.
Benefit Level IncreasesLevels
The chief executive officer recommends benefit level increases to the compensation committee for participants except himself. The chief executive officer considers, among other things, the participant’s salary in relation to the salary ranges that correspond with the SISP benefit levels, the participant’s performance, the performance of the applicable business unit or the company, and the cost associated with the benefit level increase.
Each November, the compensation committee considersThe chief executive officer did not recommend a 2010 SISP benefit level increasesincrease for any of the upcoming year as recommended bynamed executive officers, and the chief executive officer and also considerscommittee chose not to grant a 2010 SISP benefit level increases forincrease to the chief executive officer. In November 2008, Messrs. Raile, Harp, and Bietz each received an increase in their SISP benefit levels, which were effective on January 1, 2009. The primary reasons for no benefit level increases recognized each named executive’s contribution towere cost containment and the successabsence of the company and individual business unit, where applicable. The committee, however, approved the chief executive officer’s recommendation to limit the benefit increases for Messrs. Harp and Bietz to a level below the levels that corresponded to each named executive’s base salary. The chief executive officer’s rationale was to limit additional costs associated with the benefit level increases in light of the uncertain economic times. The committee believed Mr. Hildestad’s benefit level was appropriate and therefore did not grant him an increase.
In November 2009, Messrs. Harp, Schneider, and Bietz each received an increase in their SISP benefit levels which was effective on December 1, 2009. The committee’s rationale for Messrs. Harp and Bietz’s benefit level increases was recognition of their continued contribution to the financial success of the company and to bring their SISP benefit levels in line with their current salary. Mr. Schneider was awarded a benefit level increase to one level above the level corresponding to his current base salary in recognition of his leadership in the financial turnaround of Knife River Corporation.increases. The following table reflects our named executive officers’ SISP levels including the changes effectiveas of December 1, 2009:31, 2010:
|
| January 1, 2009 |
| December 31, 2009 | |||||
Name |
| Survivors |
| Retirement |
| Survivors |
| Retirement |
|
Terry D. Hildestad |
| 1,025,040 |
| 512,520 |
| 1,025,040 |
| 512,520 | |
Vernon A. Raile |
| 548,400 |
| 274,200 |
| 548,400 |
| 274,200 | |
John G. Harp |
| 468,600 |
| 234,300 |
| 548,400 |
| 274,200 | |
William E. Schneider |
| 468,600 |
| 234,300 |
| 548,400 |
| 274,200 | |
Steven L. Bietz |
| 328,080 |
| 164,040 |
| 386,640 |
| 193,320 | |
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2010 |
| ||||
Name |
| Survivor |
| Retirements |
| ||
Terry D. Hildestad |
|
| 1,025,040 |
|
| 512,520 |
|
Doran N. Schwartz |
|
| 175,200 |
|
| 87,600 |
|
John G. Harp |
|
| 548,400 |
|
| 274,200 |
|
Steven L. Bietz |
|
| 386,640 |
|
| 193,320 |
|
David L. Goodin |
|
| 291,480 |
|
| 145,740 |
|
Clawback
In November 2005, we implemented a guideline for repayment of incentives due to accounting restatements, commonly referred to as a clawback policy, whereby the compensation committee may seek repayment of annual and long-term incentives paid to executives if accounting restatements occur within three years after the payment of incentives under the annual and long-term plans. Under our clawback policy, the compensation committee may require employeesexecutives to forfeit awards and may rescind vesting, or the acceleration of vesting, of an award.
Impact of Tax and Accounting Treatment
The compensation committee may consider the impact of tax and/or accounting treatment in determining compensation. Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount of compensation paid to certain officers that we may deduct as a business expense in any tax year unless, among other things, the compensation qualifies as performance-based compensation, as that term is used in Section 162(m). Generally, long-term incentive compensation and annual incentive awards for our chief executive officer and those executive officers whose overall compensation is likely to exceed $1 million are structured to be deductible for purposes of Section 162(m) of the Internal Revenue Code, but we may pay compensation to an executive officer that is not deductible. All annual or long-term incentive compensation paid to our named executive officers for 20092010 satisfied the requirements for deductibility.
Section 409A of the Internal Revenue Code imposes additional income taxes on executive officers for certain types of deferred compensation if the deferral does not comply with Section 409A. We have amended our compensation plans and arrangements affected by Section 409A with the objective of not triggering any additional income taxes under Section 409A.
Section 4999 of the Internal Revenue Code imposes an excise tax on payments to executives and others of amounts that are considered to be related to a change of control if they exceed levels specified in Section 280G of the Internal Revenue Code. The potential impact of the Section 4999 excise tax is addressed with the modified tax payment provisions in the change of control employment agreements, which are described earlier in this compensation discussion and analysis and later in the proxy statement under the heading “Potential Payments upon Termination or Change of Control.” We do not consider the potential impact of Section 4999 or 280G when designing our compensation programs.
The compensation committee also considers the accounting and cash flow implications of various forms of executive compensation. In our financial statements, we record salaries and annual incentive compensation as expenses in the amount paid, or to be paid, to the named executive officers. For our equity awards, accounting rules also require that we record an expense in our financial statements. We calculate the accounting expense of equity awards to employees in accordance with FASBFinancial Accounting Standards Codification Topic 718.Board generally accepted accounting principles for stock-based compensation.
MDU Resources Group, Inc. Proxy Statement | 33 |
Proxy Statement |
Stock Ownership GuidelinesRequirements
We instituted stock ownership guidelines on May 5, 1993, which we revised in February 2003,November 2010 to encourageprovide that executives to own a multiple of their base salary in our common stock. All officers who participate in our Long-Term Performance-Based Incentive Plan are subjectrequired, rather than expected, to the guidelines. The guidelines call for the executive to reach the multipleown our common stock within five years.years equal to a multiple of their base salaries. Stock owned through our 401(k) plan and stock owned by a spouse are considered in ownership calculations. Unvested performance shares and other unvested equity awards doare not count towardsconsidered in ownership calculations. The level of stock ownership compared to the guidelines. In 2009,requirements is determined based on the compensation committee reviewed these guidelines againstclosing sale price of the performance graph peer companies that published ownership guidelines,stock on the last trading day of the year and determined no change was necessary.base salary at December 31 of each year. Each February, the compensation committee receives a report on the status of stock holdings by executives. The Committee may, in its sole discretion, grant an extension of time to meet the ownership requirements or take such other action as it deems appropriate to enable the executive to achieve compliance with the policy. The table shows the named executive officers’ holdings as of December 31, 2009:2010:
|
|
|
|
|
|
|
|
|
|
|
Name |
| Assigned |
| Actual |
| Number of |
| |||
Terry D. Hildestad |
|
| 4X |
|
| 5.79 |
|
| 4.67 |
|
Vernon A. Raile |
|
| 3X |
|
| 2.96 |
|
| 4.00 |
|
John G. Harp |
|
| 3X |
|
| 4.06 |
|
| 5.25 |
|
William E. Schneider |
|
| 3X |
|
| 5.43 |
|
| 8.00 |
|
Steven L. Bietz |
|
| 3X |
|
| 3.95 |
|
| 7.33 |
|
The compensation committee may consider the guidelines and the executive’s stock ownership in determining compensation. The committee, however, did not do so with respect to 2009 compensation.
|
|
|
|
|
|
|
|
Name |
| Assigned |
| Actual |
| Number of |
|
Terry D. Hildestad |
| 4X |
| 5.79 |
| 5.67 |
|
Doran N. Schwartz |
| 3X |
| 1.15 |
| 0.87 | (1) |
John G. Harp |
| 3X |
| 3.83 |
| 6.25 |
|
Steven L. Bietz |
| 3X |
| 3.90 |
| 8.33 |
|
David L. Goodin |
| 3X |
| 1.98 |
| 2.83 | (2) |
|
| |
(1) | Participant must meet ownership requirement by January 1, 2015. | |
|
| |
|
|
| |
|
Policy Regarding Hedging Stock Ownership
Our executive compensation policy
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Reg. S-K, Item 402(b), with management. Based on the review and discussions referred to in the preceding sentence, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in our proxy statement on Schedule 14A.
Thomas Everist, Chairman
Karen B. Fagg
Thomas C. Knudson
Patricia L. Moss
34 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
Summary Compensation Table for 20092010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Name and |
| Year |
| Salary |
| Bonus |
| Stock |
| Option |
| Non-Equity |
| Change in |
| All Other |
| Total |
|
| Year |
| Salary |
| Bonus |
| Stock |
| Option |
| Non-Equity |
| Change in |
| All Other |
| Total |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Terry D. Hildestad |
| 2009 |
| 750,000 |
| — |
| 1,117,861 |
| — |
| 1,500,000 |
| 825,319 |
| 9,824 | (3) |
| 4,203,004 |
|
| 2010 |
| 750,000 |
| — |
| 830,137 |
| — |
| 762,750 |
| 480,532 |
| 37,499 | (3) |
| 2,860,918 |
| ||||||||||||||||
President and CEO |
| 2008 |
| 700,000 |
| — |
| 1,200,485 |
| — |
| 310,800 |
| 898,941 |
| 9,476 |
| 3,119,702 |
|
| 2009 |
| 750,000 |
| — |
| 1,117,861 |
| — |
| 1,500,000 |
| 825,319 |
| 9,824 |
| 4,203,004 |
| ||||||||||||||||||
|
| 2007 |
| 625,000 |
| — |
| 779,293 |
| — |
| 1,250,000 |
| 1,362,413 |
| 7,026 |
| 4,023,732 |
|
| 2008 |
| 700,000 |
| — |
| 1,200,485 |
| — |
| 310,800 |
| 898,941 |
| 9,476 |
| 3,119,702 |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Vernon A. Raile |
| 2009 |
| 450,000 |
| — |
| 402,417 |
| — |
| 585,000 |
| 695,177 |
| 8,124 | (3) |
| 2,140,718 |
| ||||||||||||||||||||||||||||||||||||
Vernon A. Raile(4) |
| 2010 |
| 57,945 |
| — |
| — |
| — |
| — |
| 86,663 |
| 14,465 | (3) |
| 159,073 |
| ||||||||||||||||||||||||||||||||||||
Executive Vice President, |
| 2008 |
| 400,000 |
| — |
| 411,575 |
| — |
| 115,440 |
| 498,210 |
| 7,176 |
| 1,432,401 |
|
| 2009 |
| 450,000 |
| — |
| 402,417 |
| — |
| 585,000 |
| 695,177 |
| 8,124 |
| 2,140,718 |
| ||||||||||||||||||
Treasurer and CFO |
| 2007 |
| 350,700 |
| — |
| 295,882 |
| — |
| 350,700 |
| 555,248 |
| 7,026 |
| 1,559,556 |
|
| 2008 |
| 400,000 |
| — |
| 411,575 |
| — |
| 115,440 |
| 498,210 |
| 7,176 |
| 1,432,401 |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Doran N. Schwartz |
| 2010 |
| 252,454 |
| — |
| 143,881 |
| — |
| 127,053 |
| 71,302 |
| 33,549 | (3) |
| 628,239 |
| ||||||||||||||||||||||||||||||||||||
Vice President and CFO |
| 2009 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||||||||||
|
| 2008 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
John G. Harp |
| 2009 |
| 450,000 |
| — |
| 402,417 |
| — |
| 392,500 | (4) |
| 761,670 | (6) |
| 23,272 | (7) |
| 2,029,859 |
|
| 2010 |
| 450,000 |
| — |
| 298,845 |
| — |
| 438,750 |
| 307,935 (7 | ) |
| 48,545 | (3) |
| 1,544,075 |
| |||||||||||||
President and CEO of |
| 2008 |
| 400,000 |
| — |
| 411,575 |
| — |
| 720,000 | (5) |
| 338,774 | (6) |
| 23,230 | (7) |
| 1,893,579 |
|
| 2009 |
| 450,000 |
| — |
| 402,417 |
| — |
| 392,500 (5 | ) |
| 761,670 (7 | ) |
| 23,272 | (8) |
| 2,029,859 |
| ||||||||||||
MDU Construction |
| 2007 |
| 341,000 |
| — |
| 239,763 |
| — |
| 341,000 |
| 47,334 | (6) |
| 23,080 | (7) |
| 992,177 |
|
| 2008 |
| 400,000 |
| — |
| 411,575 |
| — |
| 720,000 (6 | ) |
| 338,774 (7 | ) |
| 23,230 | (8) |
| 1,893,579 |
| |||||||||||||
Services Group, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
William E. Schneider |
| 2009 |
| 447,400 |
| — |
| 400,093 |
| — |
| 581,620 |
| 726,646 |
| 9,324 | (3) |
| 2,165,083 |
| ||||||||||||||||||||||||||||||||||||
President and CEO of |
| 2008 |
| 447,400 |
| — |
| 460,374 |
| — |
| — |
| 180,801 |
| 8,976 |
| 1,097,551 |
| |||||||||||||||||||||||||||||||||||||
Knife River Corporation |
| 2007 |
| 422,000 |
| — |
| 356,052 |
| — |
| 206,780 |
| 450,347 |
| 7,026 |
| 1,442,205 |
| |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
Steven L. Bietz |
| 2009 |
| 350,000 |
| — |
| 312,987 |
| — |
| 450,450 |
| 475,985 |
| 8,084 | (3) |
| 1,597,506 |
|
| 2010 |
| 350,000 |
| — |
| 232,429 |
| — |
| 245,245 |
| 302,863 |
| 36,218 | (3) |
| 1,166,755 |
| ||||||||||||||||
President and CEO of |
| 2008 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| 2009 |
| 350,000 |
| — |
| 312,987 |
| — |
| 450,450 |
| 475,985 |
| 8,084 |
| 1,597,506 |
| ||||||||||||||||||
WBI Holdings, Inc. |
| 2007 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| 2008 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||
David L. Goodin |
| 2010 |
| 322,000 |
| — |
| 213,846 |
| — |
| 320,438 |
| 240,494 |
| 39,127 | (3) |
| 1,135,905 |
| ||||||||||||||||||||||||||||||||||||
President and CEO of |
| 2009 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||||||||||
Combined Utility Group |
| 2008 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||||||||||
|
|
(1) | Amounts in this column represent the aggregate grant date fair value of the performance share awards calculated in accordance with Financial Accounting Standards Board |
|
|
(2) | Amounts shown represent the change in the actuarial present value for years ended December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
| Above Market |
| ||||||||||||||
Name |
| 12/31/2008 |
| 12/31/2009 |
| 12/31/2010 |
| 12/31/2008 |
| 12/31/2009 |
| 12/31/2010 |
| ||||||
Terry D. Hildestad |
|
| 883,351 |
|
| 806,554 |
|
| 462,186 |
|
| 15,590 |
|
| 18,765 |
|
| 18,346 |
|
Vernon A. Raile |
|
| 469,755 |
|
| 661,243 |
|
| 54,221 |
|
| 28,455 |
|
| 33,934 |
|
| 32,442 |
|
Doran N. Schwartz |
|
| — |
|
| — |
|
| 71,302 |
|
| — |
|
| — |
|
| — |
|
John G. Harp |
|
| 331,558 |
|
| 743,334 |
|
| 294,023 |
|
| — |
|
| — |
|
| — |
|
Additional Retirement (7) |
|
| 7,216 |
|
| 18,336 |
|
| 13,912 |
|
| — |
|
| — |
|
| — |
|
Steven L. Bietz |
|
| — |
|
| 475,985 |
|
| 302,863 |
|
| — |
|
| — |
|
| — |
|
David L. Goodin |
|
| — |
|
| — |
|
| 240,494 |
|
| — |
|
| — |
|
| — |
|
|
| |
| ||
| MDU Resources Group, Inc.Proxy Statement | 35 |
|
Proxy Statement |
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 401(k) |
| Payment to |
| Life |
| Matching |
| Office and |
| Additional |
| Total |
| |||||||
Terry D. Hildestad |
|
| 32,500 |
|
| 3,025 |
|
| 174 |
|
| 1,800 |
|
| — |
|
| — |
|
| 37,499 |
|
Vernon A. Raile |
|
| 14,436 |
|
| — |
|
| 29 |
|
| — |
|
| — |
|
| — |
|
| 14,465 |
|
Doran N. Schwartz |
|
| 32,500 |
|
| 575 |
|
| 174 |
|
| 300 |
|
| — |
|
| — |
|
| 33,549 |
|
John G. Harp |
|
| 32,500 |
|
| 3,025 |
|
| 174 |
|
| — |
|
| 12,100 |
|
| 746 |
|
| 48,545 |
|
Steven L. Bietz |
|
| 35,444 |
|
| — |
|
| 174 |
|
| 600 |
|
| — |
|
| — |
|
| 36,218 |
|
David L. Goodin |
|
| 32,500 |
|
| 5,475 |
|
| 852 |
|
| 300 |
|
| — |
|
| — |
|
| 39,127 |
|
|
|
| |||||||||||||||||
| (a) |
| |||||||||||||||||
|
| ||||||||||||||||||
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
| |||||||||||||
| |||||||||||||||||||
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
| Represents additional payment when company contributions to 401(k) plan in lieu of pension plan accruals were limited by Internal Revenue Code Section 415. | ||||||||||||
|
|
(4) |
|
|
|
| Includes one-time incentive payment of $100,000 in addition to his annual incentive compensation. |
| Includes one-time incentive payment of $200,000 in addition to his |
| In addition to the change in the actuarial present value of Mr. Harp’s accumulated benefit under the pension plan, excess SISP, and SISP, this amount also includes the following amounts attributable to Mr. Harp’s additional retirement benefit: |
|
|
| ||||||||
|
|
|
| |||||||
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2008 |
| 2009 |
| 2010 |
| |||
Change in present value of additional years of service for pension plan |
| $ | 3,570 |
| $ | 13,077 |
| $ | 12,240 |
|
Change in present value of additional years of service for excess SISP |
|
| 3,646 |
|
| 5,259 |
|
| 1,672 |
|
Change in present value of additional years of service for SISP |
|
| — |
|
| — |
|
| — |
|
|
|
| Mr. Harp’s additional retirement benefit is described in the narrative that follows the Pension Benefits for |
|
|
| Includes |
Grants of Plan-Based Awards in 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| All Other |
| All Other |
| Exercise |
| Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
| Estimated Future |
| Estimated Future |
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Name |
| Grant |
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
|
|
|
|
| ||||
Terry D. Hildestad |
| 2/12/09(1) |
| 187,500 |
| 750,000 |
| 1,500,000 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
|
|
| 2/12/09(2) |
| — |
| — |
| — |
| 5,482 |
| 54,824 |
| 109,648 |
| — |
| — |
| — |
| 1,117,861 |
|
Vernon A. Raile |
| 2/12/09(1) |
| 73,125 |
| 292,500 |
| 585,000 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
|
|
| 2/12/09(2) |
| — |
| — |
| — |
| 1,973 |
| 19,736 |
| 39,472 |
| — |
| — |
| — |
| 402,417 |
|
John G. Harp |
| 2/12/09(1) |
| 73,125 |
| 292,500 |
| 585,000 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
|
|
| 2/12/09(2) |
| — |
| — |
| — |
| 1,973 |
| 19,736 |
| 39,472 |
| — |
| — |
| — |
| 402,417 |
|
|
| 2/12/09(3) |
| 100,000 |
| 200,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
|
William E. Schneider |
| 2/12/09(1) |
| 72,703 |
| 290,810 |
| 581,620 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
|
|
| 2/12/09(2) |
| — |
| — |
| — |
| 1,962 |
| 19,622 |
| 39,244 |
| — |
| — |
| — |
| 400,093 |
|
Steven L. Bietz |
| 2/12/09(4) |
| 56,875 |
| 227,500 |
| 455,000 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
|
|
| 2/12/09(2) |
| — |
| — |
| — |
| 1,535 |
| 15,350 |
| 30,700 |
| — |
| — |
| — |
| 312,987 |
|
|
|
| MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
Grants of Plan-Based Awards in 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| All Other |
| All Other |
| Exercise |
| Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
| Estimated Future |
| Estimated Future |
|
|
|
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Name |
| Grant |
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
|
|
|
|
| ||||
Terry D. Hildestad |
| 3/5/10(1) |
| 187,500 |
| 750,000 |
| 1,500,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 3/5/10(2) |
| — |
| — |
| — |
| 4,771 |
| 47,709 |
| 95,418 |
| — |
| — |
| — |
| 830,137 |
|
Vernon A. Raile |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Doran N. Schwartz |
| 3/5/10(3) |
| 31,233 |
| 124,930 |
| 249,860 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 3/5/10(2) |
| — |
| — |
| — |
| 827 |
| 8,269 |
| 16,538 |
| — |
| — |
| — |
| 143,881 |
|
John G. Harp |
| 3/5/10(1) |
| 73,125 |
| 292,500 |
| 585,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 3/5/10(2) |
| — |
| — |
| — |
| 1,718 |
| 17,175 |
| 34,350 |
| — |
| — |
| — |
| 298,845 |
|
Steven L. Bietz |
| 3/5/10(1) |
| 56,875 |
| 227,500 |
| 455,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 3/5/10(2) |
| — |
| — |
| — |
| 1,336 |
| 13,358 |
| 26,716 |
| — |
| — |
| — |
| 232,429 |
|
David L. Goodin |
| 3/5/10(1) |
| 52,325 |
| 209,300 |
| 418,600 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 3/5/10(2) |
| — |
| — |
| — |
| 1,229 |
| 12,290 |
| 24,580 |
| — |
| — |
| — |
| 213,846 |
|
(1) | Annual incentive for |
(2) | Performance shares for the |
(3) |
|
| Annual incentive for |
|
|
|
Narrative Discussion Relating to the Summary Compensation Table |
Incentive Awards
Executive officers may receive a payment of annual cash incentive awards based upon achievement of annual performance measures with a threshold, target, and maximum level. A target incentive award is established based on a percent of the executive’s base salary. Actual payment may range from zero to 200% of the target based upon achievement of corporate goals.
In order to be eligible to receive a payment of an annual incentive award under the Long-Term Performance-Based Incentive Plan, Messrs. Hildestad, Raile, Schneider,Harp, Bietz, and HarpGoodin must have remained employed by the company through December 31, 2009,2010, unless the compensation committee determines otherwise. The committee has full discretion to determine the extent to which goals have been achieved, the payment level, whether any final payment will be made, and whether to adjust awards downward based upon individual performance. Unless the compensation committee determines otherwise, performance measure targets shall be adjusted to take into account unusual or nonrecurring events affecting the company, a subsidiary, or a division, or business unit, or any of their financial statements, or changes in applicable laws, regulations or accounting principles to the extent such unusual or nonrecurring events or changes in applicable laws, regulations or accounting principles otherwise would result in dilution or enlargement of the annual incentive award intended to be provided. Such adjustments are made in a manner that will not cause the award to fail to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code.
With respect to annual incentive awards granted pursuant to the WBI Holdings,MDU Resources Group, Inc. Executive Incentive Compensation Plan, which includes Mr. Bietz,Schwartz, participants who retire at age 65 during the year remain eligible to receive an award. Subject to the compensation committee’s discretion, executives who terminate employment for other reasons are not eligible for an award.
The compensation committee has full discretion to determine the extent to which goals have been achieved, the payment level, and whether any final payment will be made. Once performance goals are approved by the committee for executive incentive compensation plan awards, the committee generally does not modify the goals. However, if major unforeseen changes in economic and environmental
MDU Resources Group, Inc. Proxy Statement | 37 |
Proxy Statement |
conditions or other significant factors beyond the control of management substantially affected management’s ability to achieve the specified performance goals, the committee, in consultation with the chief executive officer, may modify the performance goals. Such goal modifications will only be considered in years of unusually adverse or favorable external conditions.
For Messrs. HildestadHarp’s, Bietz’s, and Raile, theGoodin’s performance measuresgoals for annual incentive awards2010 are our annualbudgeted earnings per share achieved and budgeted return on invested capital achieved, compared to target and our annual earnings per share achieved compared to target. For Messrs. Schneider,each weighted 50%. The goals are measured at the business unit level, as allocated, for Mr. Harp, and Bietz, the performance measures for annual incentive awards are their respective business unit’s annual return on invested capital achieved compared to target and their respective business unit’s allocated earnings per share achieved compared to target. In 2009, Mr. Bietz, hadand Mr. Goodin. In addition to these performance goals, Mr. Bietz also has five individual performance goals relating to WBI Holdings, Inc.’s safety results, and each goal that wasis not met reducedwill reduce his annual incentive award payment by 1%.
For 2009, the compensation committee weighted the goals for annualMessrs. Harp and Bietz, achievement of budgeted earnings per share and return on invested capital compared towould result in payment of 100% of the target andamount. Their 2010 award opportunities ranged from no payment if the allocated earnings per share comparedand return on invested capital were below the 85% level to a 200% payout for achievement of 115% of budgeted earnings per share and a return on invested capital equal to or greater than the business unit’s weighted average cost of capital would result in payment of 200% of the target eachamount.
The 2010 award opportunity available to Mr. Goodin ranged from no payment if the allocated earnings per share and return on invested capital results were below the 85% level to a 200% payout if results were at 50%.
We limit the after-tax annual incentive compensation we will payor above the target amount to 20% of earnings in excess of planned earnings. We calculate the earnings in excess of planned earnings without regard to the after-tax annual115% level.
Annual incentive amounts above target. We measure the 20% limitation at the major business unit levelaward payments for business unit and operating company executives, which include Messrs. Harp, Schneider, and Bietz, and at the corporate level for corporate executives, which include Messrs. Hildestad and Raile. In 2009,Schwartz were determined based on the 20% limitation was calculated without regardannual incentive award payments made to the noncash ceiling test impairment chargepresident and an associated depletion, depreciationchief executive officers of the four business units – MDU Construction Services Group, Inc., combined utility group, WBI Holdings, Inc., and amortization benefitKnife River Corporation – and were calculated as discussed infollows: each business unit president and chief executive officer’s annual incentive award payment, expressed as a percentage of his annual target award, was multiplied by that business unit’s percentage share of average invested capital for 2010. These four products were added together, and the Compensation Discussionsum was multiplied by the Messrs. Hildestad’s and Analysis.Schwartz’s 2010 target incentive. Messrs. Hildestad’s and Schwartz’s 2010 annual incentives were paid at 101.7% of target based on the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief Executive Officer of: |
| Column A |
| Column B |
| Column A x Column B |
| |||||||||
MDU Construction Services Group, Inc. |
|
|
| 150.0% |
|
|
|
| 5.6% |
|
|
|
| 8.4% |
|
|
Combined Utility Group |
|
|
| 153.1% |
|
|
|
| 35.0% |
|
|
|
| 53.6% |
|
|
WBI Holdings, Inc. |
|
|
| 107.8% |
|
|
|
| 33.8% |
|
|
|
| 36.4% |
|
|
Knife River Corporation |
|
|
| 13.0% |
|
|
|
| 25.6% |
|
|
|
| 3.3% |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
| 101.7% |
|
|
The award opportunities available to Messrs. Harp and Bietz were:
|
|
|
|
|
|
|
|
2010 return on invested capital |
| Corresponding payment of |
| 2010 earnings per share |
| Corresponding payment of |
|
Less than 85% |
| 0% |
| Less than 85% |
| 0% |
|
85% |
| 25% |
| 85% |
| 25% |
|
90% |
| 50% |
| 90% |
| 50% |
|
95% |
| 75% |
| 95% |
| 75% |
|
100% |
| 100% |
| 100% |
| 100% |
|
103% |
| 100% |
| 103% |
| 120% |
|
106% |
| 100% |
| 106% |
| 140% |
|
109% |
| 100% |
| 109% |
| 160% |
|
112% |
| 100% |
| 112% |
| 180% |
|
Up to weighted |
|
|
| 115% |
| 200% |
|
average cost of capital |
| 100% |
|
|
|
|
|
Weighted average |
|
|
|
|
|
|
|
cost of capital or higher |
| 200% |
|
|
|
|
|
|
|
| |
| |
| MDU Resources Group, Inc. Proxy Statement |
|
Proxy Statement |
The award opportunitiesopportunity available to each named executive officer were:Mr. Goodin was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 earnings per share |
| Corresponding payment of | |||||||||||||
2010 return on invested capital | 2010 return on invested capital |
| Corresponding payment of |
| 2010 earnings per share |
| Corresponding payment of | ||||||||
Less than 85% | Less than 85% |
| 0 | % | Less than 85% |
| 0 | % |
| Less than 85% |
| 0 | % | ||
85 | % |
| 25 | % | % |
| 25 | % |
| 85 | % |
| 25 | % | |
90 | % |
| 50 | % | % |
| 50 | % |
| 90 | % |
| 50 | % | |
95 | % |
| 75 | % | % |
| 75 | % |
| 95 | % |
| 75 | % | |
100 | % |
| 100 | % | % |
| 100 | % |
| 100 | % |
| 100 | % | |
103 | % |
| 120 | % | % |
| 120 | % |
| 103 | % |
| 120 | % | |
106 | % |
| 140 | % | % |
| 140 | % |
| 106 | % |
| 140 | % | |
109 | % |
| 160 | % | % |
| 160 | % |
| 109 | % |
| 160 | % | |
112 | % |
| 180 | % | % |
| 180 | % |
| 112 | % |
| 180 | % | |
115 | % |
| 200 | % | % |
| 200 | % |
| 115 | % |
| 200 | % | |
|
|
| |||||||||||||
2009 return on invested capital |
| Corresponding payment of | |||||||||||||
Less than 85% |
| 0 | % | ||||||||||||
85 | % |
| 25 | % | |||||||||||
90 | % |
| 50 | % | |||||||||||
95 | % |
| 75 | % | |||||||||||
100 | % |
| 100 | % | |||||||||||
103 | % |
| 120 | % | |||||||||||
106 | % |
| 140 | % | |||||||||||
109 | % |
| 160 | % | |||||||||||
112 | % |
| 180 | % | |||||||||||
115 | % |
| 200 | % | |||||||||||
For discussion of the specific incentive plan performance targets and results, please see the Compensation Discussion and Analysis.
In addition to his 2009 annual incentive award opportunity under our Long-Term Performance-Based Incentive Plan, Mr. Harp had an opportunity to earn an additional incentive, which was structured as follows:
|
| |||
|
| |||
|
| |||
|
| |||
For a specific discussion of this additional incentive opportunity and the compensation committee’s determination with respect to payment, please refer to the Compensation Discussion and Analysis.
Long-Term Incentive
On February 11, 2009,March 5, 2010, the compensation committee recommended long-term incentive grants to the named executive officers in the form of performance shares, and the board approved these grants at its meeting on February 12, 2009.March 5, 2010. These grants are reflected in columns (f), (g), (h), and (l)(i) of the Grants of Plan-Based Awards table and in column (e) of the Summary Compensation Table.
FromIf the company’s 2010-2012 total shareholder return is positive, from 0% to 200% of the target grant will be paid out in February 2012,2013, depending on our 2009-20112010-2012 total stockholder return compared to the total three-year stockholder returns of companies in our performance graph peer group. The payout percentage is determined as follows:
|
|
|
| ||
The Company’s Percentile Rank |
| Payout Percentage of | |||
| 90th or higher |
| 200 | % | |
| 70th |
| 150 | % | |
50th |
| 100 | % | ||
40th |
| 10 | % | ||
Less than 40th |
| 0 | % | ||
Payouts for percentile ranks falling between the intervals will be interpolated. We also will pay dividend equivalents in cash on the number of shares actually earned for the performance period. The dividend equivalents will be paid in 20122013 at the same time as the performance awards are paid.
If the company’s 2010–2012 total shareholder return is negative, the committee will reduce the shares otherwise earned by at least 50%.
Company Contributions to 401(k) Plan and Cash Payments to Named Executive Officers Salary and Bonus in Proportion to Total Compensation Name Salary Total Salary as % of Salary Total Salary as % of Terry D. Hildestad 750,000 4,203,004 17.8 750,000 2,860,918 26.2 Vernon A. Raile 450,000 2,140,718 21.0 57,945 159,073 36.4 Doran N. Schwartz 252,454 628,239 40.2 John G. Harp 450,000 2,029,859 22.2 450,000 1,544,075 29.1 William E. Schneider 447,400 2,165,083 20.7 Steven L. Bietz 350,000 1,597,506 21.9 350,000 1,166,755 30.0 David L. Goodin 322,000 1,135,905 28.3 MDU Resources Group, Inc. Proxy Statement 39 Proxy Statement Outstanding Equity Awards at Fiscal Year-End Option Awards Stock Awards Option Awards Stock Awards Name Number of Number of Equity Option Option Number Market Equity Equity Number of Number of Equity Option Option Number Market Equity Equity Terry D. Hildestad — — — — — 3,712 87,603 181,830 4,291,188 — — — — — — — 14,162 287,064 Vernon A. Raile — — — — — 1,114 26,290 65,438 1,544,337 — — — — — — — 2,108 42,729 Doran N. Schwartz — — — — — — — 1,672 33,891 John G. Harp — — — — — — — 63,055 1,488,098 — — — — — — — 5,032 101,999 William E. Schneider — — — — — 2,970 70,092 69,354 1,636,754 Steven L. Bietz — — — — — 558 13,169 51,545 1,216,462 — — — — — — — 3,920 79,458 David L. Goodin — — — — — — — 3,215 65,168 (1) Below is a breakdown by year of the plan awards: Named Executive Officer Award Shares End of Terry D. Hildestad 2008 3,909 12/31/10 2009 5,482 12/31/11 2010 4,771 12/31/12 Vernon A. Raile 2008 1,340 12/31/10 2009 768 12/31/11 2010 — — Doran N. Schwartz 2008 354 12/31/10 2009 491 12/31/11 2010 827 12/31/12 John G. Harp 2008 1,340 12/31/10 2009 1,974 12/31/11 2010 1,718 12/31/12 Steven L. Bietz 2008 1,049 12/31/10 2009 1,535 12/31/11 2010 1,336 12/31/12 David L. Goodin 2008 618 12/31/10 2009 1,368 12/31/11 2010 1,229 12/31/12 Shares for the 2008 award are shown at the below threshold. Shares for the Value based on the number of performance shares reflected in column (i) multiplied by Option Exercises and Stock Vested during 2010 Option Awards Stock Awards Name Number of Value Realized Number of Value Realized Terry D. Hildestad — — 36,803 793,972 Vernon A. Raile — — 13,678 295,606 Doran N. Schwartz — — 3,463 75,398 John G. Harp — — 10,181 221,666 Steven L. Bietz — — 10,912 236,480 David L. Goodin 10,000 74,901 5,764 122,567 (1) Adjusted for the 3-for-2 stock split effective July 26, 2006. (2) Reflects performance shares for the 2007-2009 performance period that vested on February 11, 2010 and restricted stock granted in 2001 that vested automatically on February 15, 2010. (3) Reflects the value of performance shares based on our closing stock price of $19.99 on February 11, 2010, and the dividend equivalents that were paid on the vested shares; as well as the value of restricted shares based on our closing stock price of $19.80 on February 12, 2010 as February 15, 2010 was a holiday. MDU Resources Group, Inc. Proxy Statement Proxy Statement Option Awards Stock Awards Name Number of Value Realized Number of Value Realized Plan Name Number of Present Value Payments Terry D. Hildestad — — 19,584 397,426 MDU Pension Plan 35 1,471,844 — SISP I(1)(3) 10 1,674,919 — SISP II(2)(3) 10 2,765,541 — SISP Excess(4) 35 706,848 — Vernon A. Raile — — 10,192 206,830 MDU Pension Plan 30 1,088,131 74,301 SISP I(1)(3) 10 891,431 73,000 SISP II(2)(3) 10 1,898,870 157,016 Doran N. Schwartz MDU Pension Plan 4 54,721 — SISP II(2)(3) 3 279,585 — John G. Harp — — 8,259 167,603 MDU Pension Plan 5 202,141 — William E. Schneider — — 12,534 254,358 SISP II(2)(3) 5 2,045,166 — SISP Excess(4) 5 36,989 — Harp Additional Retirement Benefit 3 134,049 — Steven L. Bietz — — 5,755 116,789 WBI Pension Plan 28 799,534 — SISP I(1)(3) 10 544,926 — SISP II(2)(3) 10 523,700 — SISP Excess(4) 28 81,672 — David L. Goodin MDU Pension Plan 26 624,022 — SISP I(1)(3) 10 142,762 — SISP II(2)(3) 10 550,778 — SISP Excess(4) 26 24,546 — (1) Name Plan Name Number of Present Value Payments Terry D. Hildestad Pension Plan 35 1,369,893 — SISP I(1) 27 1,487,740 — SISP II(2) 27 2,456,479 — SISP Excess 27 842,854 — Vernon A. Raile Pension Plan 30 1,033,470 — SISP I(1) 27 891,572 — SISP II(2) 27 1,899,169 — SISP Excess 27 — — John G. Harp Pension Plan 5 172,100 — SISP I(1) 4 — — SISP II(2) 4 1,784,336 — SISP Excess 4 33,837 — Harp Additional Retirement Benefit 4 120,136 — William E. Schneider Pension Plan 16 667,138 — SISP I(1) 15 1,081,798 — SISP II(2) 15 1,278,020 — SISP Excess 15 128,798 — Steven L. Bietz Pension Plan 28 675,382 — SISP I(1) 15 458,686 — SISP II(2) 15 440,819 — SISP Excess 15 72,082 — Grandfathered under Section 409A. (2) Not grandfathered under Section 409A. (3) Years of credited service only affects vesting under SISP I and SISP II. The number of years of credited service in the table reflects the years of vesting service completed in SISP I and SISP II as of December 31, 2010, rather than years of service with the company, which we disclosed in prior proxy statements. Ten years of vesting service is required of the named executive officers as of December 31, 2010, to obtain the full benefit under these plans. The present value of accumulated benefits was calculated by assuming the named executive officer would have ten years of vesting service on the assumed benefit commencement date; therefore, no reduction was made to reflect actual vesting levels. (4) The number of years of credited service under the SISP excess reflects the years of credited benefit service in the appropriate pension plan as of December 31, 2009 when the pension plans were frozen, rather than reflecting the years of participation in the SISP excess which we disclosed in prior proxy statements. This is due to the fact that the SISP excess provides a benefit in excess of benefits payable under the pension plans. The amounts shown for the pension plan and SISP excess Pension Plans Messrs. Hildestad, Raile, Schwartz, Harp, and MDU Resources Group, Inc. Proxy Statement 41 Proxy Statement Each of the pension plans was amended to cease benefit accruals as of December 31, 2009, meaning the normal retirement benefit will not change. The years of credited service reflect the years as of December 31, 2009 and have not changed. To receive unreduced retirement benefits under Benefits for single participants under the pension plans are paid as straight life The Internal Revenue Code Supplemental Income Security Plan We also offer key managers and executives, including all of our named executive officers, benefits under our nonqualified retirement plan, which we refer to as the Supplemental Income Security Plan or SISP. Benefits under the SISP consist of: • a supplemental retirement benefit intended to augment the retirement income provided under • an excess retirement benefit relating to Internal Revenue Code limitations on retirement benefits provided under • death benefits Effective January 1, 2010, we amended the SISP to: • reduce by 20% the regular SISP and death benefit levels in the benefit schedule used to determine regular SISP and death benefits for new participants and participants whose benefit levels increase on or after January 1, 2010 • impose an additional vesting period applicable to any increased regular SISP benefit and SISP death benefit occurring on or after January 1, 2010 • eliminate the SISP excess • freeze SISP excess SISP benefits are forfeited if the participant’s employment is terminated for cause. Regular SISP Benefits and Death Benefits Regular SISP benefits and death benefits are determined by reference to one of two schedules attached to the SISP - the original schedule or the amended schedule. Our compensation committee, after receiving recommendations from our chief executive officer, determines the level at which participants are placed in the schedules. A participant’s placement is generally, but not always, determined by reference to the participant’s annual base salary. Benefit levels in the amended schedule, which became effective on January 1, 2010, are 20% lower than the benefit levels in the original schedule. The amended schedule applies to new participants and participants who receive a benefit level increase on or after January 1, 2010. Participants can elect to receive (1) the regular SISP benefit only, (2) the SISP death benefit only, or (3) a combination of both. Regardless of the participant’s election, if the participant dies before the regular SISP benefit would commence, only the SISP death benefit is provided. If the participant elects to receive both a regular SISP benefit and a SISP death benefit, each of the benefits is reduced proportionately. 42 MDU Resources Group, Inc. Proxy Statement Proxy Statement The regular SISP benefits reflected in the table above are based on the assumption that the participant elects to receive only the regular SISP benefit. The present values of the SISP death benefits that would be provided if the named executive officers The time and manner in which the regular SISP benefits are paid depend on a variety of factors, including the time and form of benefit elected by the participant and whether the benefits are SISP I or SISP II benefits. Unless the participant elects otherwise, the SISP I benefits are paid over 180 months, with benefits commencing when the participant attains age 65 or, if later, when the participant retires. The SISP II benefits commence when the participant attains age 65 or, if later, when the participant retires, subject to a six-month delay if the participant is subject to the provisions of Rather than receiving their regular SISP I benefits in equal monthly installments over 15 years commencing at age 65, participants can elect a different form and time of commencement of their SISP I benefits. Participants can elect to defer commencement of the regular SISP I benefits. If this is elected, the participant retains the right to receive a monthly SISP death benefit if death occurs prior to the commencement of the regular SISP I benefit. Participants also can elect to receive their SISP I benefits in one of three actuarially equivalent forms To promote retention, the regular SISP benefits are subject to the following ten-year vesting schedule: • 0% vesting for less than 3 years of participation • 20% vesting for 3 years of participation • 40% vesting for 4 years of participation, and • an additional 10% vesting for each additional year of participation up to 100% vesting for 10 years of participation. requirement for benefit level increases is pro-rated for participants who are officers, attain age 65, and, • 33% of the increase vests for participants required to retire at least one year but less than two years after the increase is granted, and • 66% of the increase vests for participants required to retire at least two years but less than three years after the increase is granted. The benefit level increases of participants who attain age 65 and are required to retire pursuant to the company’s bylaws will be further reduced to the extent the participants are not fully vested in their regular SISP benefit under the 10-year vesting schedule described above. The additional vesting period associated with a benefit level increase may be waived by the compensation committee. SISP death benefits become fully vested if the participant dies while actively employed. Otherwise, the SISP death benefits are subject to the same vesting schedules as the regular SISP benefits. The SISP also provides that if a participant becomes totally disabled, the participant will continue to receive credit for up to two additional years under the SISP as long as the participant is totally disabled during such time. Since the named executive officers other than MDU Resources Group, Inc. Proxy Statement 43 Proxy Statement Messrs. Harp and Schwartz are fully vested in their SISP benefits, this would not result in any incremental benefit for the named executive officers other than Messrs. Harp and Schwartz. The present value of these two additional years of service for Messrs. Harp and Schwartz are reflected in the table in “Potential Payments upon Termination or Change of Control” below. SISP Excess Benefits generally commence six months after the participant’s employment terminates and continue to age 65 or until the death of the participant, if prior to age 65. If a participant who dies prior to age 65 elected a joint and survivor benefit, the survivor’s SISP excess Mr. Harp’s Additional Retirement Benefit To encourage Mr. Harp to remain with the company, on November 16, 2006, upon recommendation of our chief executive officer and the compensation committee, our board of directors approved an additional retirement benefit for Mr. Harp. The benefit provides for Mr. Harp to receive payments that represent the equivalent of an additional three years of service under Nonqualified Deferred Compensation for Name Executive Registrant Earnings in Aggregate Aggregate Terry D. Hildestad — — 52,314 — 835,932 Vernon A. Raile — — 94,556 — 1,510,791 John G. Harp — — — — — William E. Schneider — — 83,840 — 1,339,689(1) Steven L. Bietz — — — — — Name Executive Registrant Earnings in Aggregate Aggregate Terry D. Hildestad — — 59,628 — 895,559 Vernon A. Raile — — 107,777 — 1,618,568 Doran N. Schwartz — — — — — John G. Harp — — — — — Steven L. Bietz — — — — — David L. Goodin — — — — — Participants in the executive incentive compensation plans may elect to defer up to 100% of their annual incentive awards. Deferred amounts accrue interest at a rate determined annually by the compensation committee. The interest rate in effect for 44 MDU Resources Group, Inc. Proxy Statement Proxy Statement dividing by 12 and (ii) the number that results from adding the daily Moody’s U.S. Long-Term Corporate Bond Yield Average for “BBB” rated companies as of the last day of each month for the 12-month period ending October 31 and dividing by 12. The deferred amount will be paid in accordance with the participant’s election, following termination of employment or beginning in the fifth year following the year the award was granted. The amounts will be paid in accordance with the participant’s election in a lump sum or in monthly installments not to exceed 120 months. In the event of a change of control, all amounts become immediately payable. A change of control is defined as • an acquisition during a 12-month period of 30% or more of the total voting power of our stock • an acquisition of our stock that, together with stock already held by the acquirer, constitutes more than 50% of the total fair market value or total voting power of our stock • replacement of a majority of the members of our board of directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of our board of directors or • acquisition of our assets having a gross fair market value at least equal to 40% of the total gross fair market value of all of our assets. The following tables show the payments and benefits our named executive officers would receive in connection with a variety of employment termination scenarios and upon a change of control. The tables exclude We provide disability benefits to some of our salaried employees equal to 60% of their base salary, subject to a cap on the amount of base salary taken into account when calculating benefits. For officers, the limit on base salary is $200,000. For other salaried employees, the limit is $100,000. For all salaried employees, disability payments continue until age 65 if disability occurs at or before age 60 and for 5 years if disability occurs between the ages of 60 and 65. Disability benefits are reduced for amounts paid as retirement benefits. The amounts in the tables reflect the present value of the disability benefits attributable to the additional $100,000 of base salary recognized for executives under our disability program, subject to the 60% limitation, after reduction for amounts that would be paid as retirement benefits. Upon a change of control, share-based awards granted under our Long-Term Performance-Based Incentive Plan vest and non-share-based awards are paid in cash. All • the acquisition by an individual, entity, or group of 20% or more of our outstanding • a • consummation of a merger or • stockholder approval of MDU Resources Group, Inc. Proxy Statement 45 Proxy Statement Performance shares are forfeited if termination of employment occurs during the first year of the performance period. If a termination of employment occurs for a reason other than cause, performance share awards granted prior to 2009 are prorated as follows: • if the termination of employment occurs during the second year of the performance period, the executive receives a prorated portion of any performance shares earned based on the number of months employed during the performance period and • if the termination of employment occurs during the third year of the performance period, the executive receives the full amount of any performance shares earned. Beginning with performance share awards granted in 2009, these awards will be forfeited if the participant’s employment terminates for any reason before the participant has reached age 55 and completed 10 years of service. Performance shares and related dividend equivalents for those participants whose employment is terminated other than for cause after the participant has reached age 55 and completed 10 years of service will be prorated as described above. Accordingly, if a December 31, The value of the vesting of For these purposes, we define “change of control” as: • the acquisition by an individual, entity, or group of 20% or more of our • a • consummation of a merger of similar transaction or • stockholder approval of our liquidation or dissolution. If a change of control occurs, the agreements provide for a three-year employment period from the date of the change of control, during which the named executive officer is entitled to receive: • a base salary of not less than twelve times the highest monthly salary paid within the preceding twelve months • annual incentive opportunity of not less than the highest annual incentive paid in any of the three years before the change of control • participation in our incentive, savings, retirement, and welfare benefit plans • reasonable vehicle allowance, home office allowance, and subsidized annual physical examinations and • office and support staff, vacation, and expense reimbursement consistent with such benefits as they were provided before the change of control. 46 MDU Resources Group, Inc. Proxy Statement Proxy Statement Assuming a change of control occurred on December 31, • if we terminate the named executive officer’s employment during the employment period, other than for cause or disability, or • the named executive officer resigns for good reason. “Cause” means the named executive officer’s willful and continued failure to substantially perform his duties or willfully engaging in illegal conduct or gross misconduct materially injurious to the company. “Good reason” includes: • a material diminution of the named executive officer’s authority, duties, or responsibilities • a material change in the named executive officer’s work location and • our material breach of the agreement. In such event, the named executive officer would receive: • accrued but unpaid base salary and accrued but unused vacation • a lump sum payment equal to three times his (a) annual salary using the higher of the then current annual salary or twelve times the highest monthly salary paid within the twelve months before the change of control and (b) annual incentive using the highest annual incentive paid in any of the three years before the change of control or, if higher, the annual incentive for the most recently completed fiscal year • a pro-rated annual incentive for the year of termination • an amount equal to the actuarial equivalent of the additional benefit the named executive officer would receive under the SISP and any other supplemental or excess retirement plan if employment continued for an additional three years • outplacement benefits and • a payment equal to any federal excise tax on excess parachute payments if the total parachute payments exceed 110% of the safe harbor amount for that tax. If this 110% threshold is not exceeded, the named executive officer’s payments and benefits would be reduced to avoid the tax. The named executive officers are not reimbursed for any taxes imposed on this tax reimbursement payment. This description of severance payments and benefits reflects the terms of the agreements as in effect on December 31, The compensation committee may also consider providing severance benefits on a case-by-case basis for employment terminations not related to a change of control. The compensation committee adopted a checklist of factors in February 2005 to consider when determining whether any such severance benefits should be paid. The tables do not reflect any such severance benefits, as these benefits are made in the discretion of the committee on a case-by-case basis and it is not possible to estimate the severance benefits, if any, that would be paid. MDU Resources Group, Inc. Proxy Statement Proxy Statement Terry D. Hildestad Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 2,250,000 Short-term Incentive(1) 6,000,000 �� 750,000 750,000 2007-2009 Performance Shares 836,653 836,653 836,653 836,653 836,653 836,653 2008-2010 Performance Shares 645,270 645,270 645,270 645,270 967,893 967,893 864,986 864,986 2009-2011 Performance Shares 1,326,741 1,326,741 786,809 786,809 786,809 786,809 1,180,224 1,180,224 Restricted Stock 87,603 87,603 2010-2012 Performance Shares 997,357 997,357 Benefits and Perquisites: Regular SISP(2) 3,944,219 3,944,219 3,944,219 3,944,219 4,440,460 4,440,460 4,440,460 4,440,460 Excess SISP(3) 842,838 842,838 842,838 842,838 706,848 706,848 706,848 706,848 SISP Death Benefits(4) 10,335,773 10,762,627 Disability Benefits Outplacement Services 50,000 280G Tax(5) 1,940,878 Total 6,268,980 6,268,980 11,817,696 6,268,980 18,246,825 3,218,890 5,934,117 5,934,117 11,549,436 5,934,117 8,939,875 3,792,567 (1) (2) Represents the present value of Mr. Hildestad’s vested regular SISP benefit as of December 31, (3) Represents the present value of all excess SISP benefits Mr. Hildestad would be entitled to upon termination of employment under the SISP. Present value was determined using a (4) Represents the present value of 180 monthly payments of $85,420 per month, which would be paid as a SISP death benefit under the SISP. Present value was determined using a MDU Resources Group, Inc.Proxy Statement Proxy Statement Vernon A. Raile Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 1,350,000 Short-term Incentive(1) 2,340,000 2007-2009 Performance Shares 317,661 317,661 317,661 317,661 317,661 317,661 2008-2010 Performance Shares 221,231 221,231 221,231 221,231 331,834 331,834 2009-2011 Performance Shares 477,611 477,611 Restricted Stock 26,290 26,290 Benefits and Perquisites: Regular SISP(2) 2,790,741 2,790,741 2,790,741 2,790,741 SISP Death Benefits(3) 5,529,675 Disability Benefits Outplacement Services 50,000 280G Tax(4) 856,992 Total 3,329,633 3,329,633 6,068,567 3,329,633 8,541,129 1,153,396 Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary Short-term Incentive 2008-2010 Performance Shares 296,553 2009-2011 Performance Shares 165,224 165,224 2010-2012 Performance Shares Total 165,224 461,777 (1) Mr. Raile retired on February 16, 2010. The information in this table relates to his actual retirement on February 16, 2010 and assumes that a change of control occurred on December 31, 2010. His termination qualified as normal retirement under our qualified pension plan and our SISP. The amount shown for the 2009-2011 Performance Shares is the target award, prorated based on the number of months Mr. Raile worked during the performance period. Mr. Raile also had an accumulated benefit under our nonqualified deferred compensation plan. These plans and Mr. Raile’s benefits under them are described in the Pension Benefits for 2010 table and the Nonqualified Deferred Compensation for 2010 table and accompanying narratives. 49 Proxy Statement Doran N. Schwartz Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 780,000 Short-term Incentive(1) 725,040 2008-2010 Performance Shares 78,243 78,243 2009-2011 Performance Shares 105,635 105,635 2010-2012 Performance Shares 172,863 172,863 Benefits and Perquisites: �� Regular SISP 110,271 (2) 137,839 (3) SISP Death Benefits(4) 1,839,550 Disability Benefits(5) 781,632 Outplacement Services 50,000 280G Tax(6) 362,763 Total 1,839,550 891,903 2,412,383 356,741 (1) Includes the prorated annual incentive for the year of termination, which is the full annual incentive since we assume termination occurred on December 31, (2) Represents the present value of the additional SISP retirement benefit due to an additional two years vesting under our SISP. The terms of the regular SISP benefit are described following the Pension Benefits for 2010 table. Present value was determined using a 5.12% discount rate. (3) Represents the payment that would be made under Mr. Schwartz’s change of control agreement based on the increase in actuarial present value of his regular SISP benefit that would result if he continued employment for an additional three years. (4) Represents the present value of 180 monthly payments of $14,600 per month, which would be paid as a SISP death benefit under the SISP. Present value was determined using a 5.12% discount rate. The terms of the SISP death benefit are described following the Pension Benefits for 2010 table. (5) Represents the present value of the disability benefit after reduction for amounts that would be paid as retirement benefits. Present value was determined using a 5.20% discount rate. (6) Determined applying the Internal Revenue Code Section 4999 excise tax of 20% only if 110% threshold is exceeded. MDU Resources Group, Inc.Proxy Statement Proxy Statement John G. Harp Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 1,350,000 Short-term Incentive 2,880,000 (1) 292,500 (2) 2008-2010 Performance Shares 296,553 296,553 2009-2011 Performance Shares 424,867 424,867 2010-2012 Performance Shares 359,043 359,043 Benefits and Perquisites: Incremental Pension(3) 119,420 119,420 119,420 119,420 Regular SISP 1,636,132 (4) 1,636,132 (4) 2,045,166 (5) 2,045,166 (6) SISP Death Benefits(7) 5,758,043 Disability Benefits(8) 202,911 Outplacement Services 50,000 280G Tax(9) 968,473 Total 1,755,552 1,755,552 5,758,043 2,367,497 8,493,522 1,372,963 (1) Includes the prorated annual incentive for the year of termination, which is the full annual incentive since we assume termination occurred on December 31, 2010, and the additional severance payment of three times the annual incentive. For each of these, we used the higher of (1) the annual incentive earned in 2010 or (2) the highest annual incentive paid in 2008, 2009, and 2010. (2) Represents the target 2010 annual incentive, which would be deemed earned upon change of control under the Long-Term Performance-Based Incentive Plan. (3) Represents the equivalent of three additional years of service that would be provided under the Harp additional retirement benefit described following the Pension Benefits for 2010 table. Present value was determined using a 5.20% discount rate. (4) Represents the present value of Mr. (5) Represents the present value of Represents the present value of Mr. Harp’s vested SISP benefit described in footnote 4, adjusted to reflect the increase in the present value of his regular SISP benefit that would result if he continued employment for an additional three years. Present value was determined using a 5.12% discount rate. (7) Represents the present value of 180 monthly payments of $45,700 per month, which would be paid as a SISP death benefit under the SISP. Present value was determined using a Represents the present value of the disability benefit after reduction for amounts that would be paid as retirement benefits. Present value was determined using a 5.20% discount rate. (9) Determined applying the Internal Revenue Code MDU Resources Group, Inc.Proxy Statement Proxy Statement Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 1,350,000 Short-term Incentive(1) 2,880,000 2007-2009 Performance Shares 257,410 257,410 257,410 257,410 257,410 257,410 2008-2010 Performance Shares 221,231 221,231 221,231 221,231 331,834 331,834 2009-2011 Performance Shares 477,611 477,611 Restricted Stock Benefits and Perquisites: Incremental Pension(2) 107,307 107,307 107,307 107,307 Regular SISP 1,249,035 (3) 1,249,035 (3) 1,603,546 (4) 1,784,336 (5) Excess SISP(6) 193,615 SISP Death Benefits(7) 5,529,675 Disability Benefits(8) 227,839 Outplacement Services 50,000 280G Tax(9) 1,068,156 Total 1,834,983 1,834,983 6,008,316 2,417,333 8,500,269 1,066,855 (1) Includes the prorated annual incentive for the year of termination, which is the full annual incentive since we assume termination occurred on December 31, 2009, and the additional severance payment of three times the annual incentive. For each of these, we used the higher of (1) the annual incentive earned in 2009 or (2) the highest annual incentive paid in 2007, 2008, and 2009. (2) Represents the equivalent of three additional years of service that would be provided under the Harp additional retirement benefit described following the Pension Benefits for 2009 table. Present value was determined using a 5.75% discount rate. (3) Represents the present value of Mr. Harp’s vested regular SISP benefit as of December 31, 2009, which was $15,995 per month for 15 years, commencing at age 65. Present value was determined using a 5.75% discount rate. The terms of the regular SISP benefit are described following the Pension Benefits for 2009 table. Also includes the additional benefit attributable to three additional years of service that would be provided under the retirement benefit agreement described following the Pension Benefits for 2009 table. (4) Represents the present value of Mr. Harp’s vested SISP benefit described in footnote 3, adjusted to reflect the increase in the present value of his regular SISP benefit that would result from an additional two years of vesting under the SISP. Present value was determined using a 5.75% discount rate. (5) Represents the present value of Mr. Harp’s vested SISP benefit described in footnote 3, adjusted to reflect the increase in the present value of his regular SISP benefit that would result if he continued employment for an additional three years. Present value was determined using a 5.75% discount rate. (6) Represents the present value of all excess SISP benefits Mr. Harp would be entitled to, calculated with the assumption of three additional years of employment, as provided under Mr. Harp’s change of control agreement. Present value was determined using a 5.75% discount rate. The terms of the excess SISP benefit are described following the Pension Benefits for 2009 table. (7) Represents the present value of 180 monthly payments of $45,700 per month, which would be paid as a SISP death benefit under the SISP. Present value was determined using a 5.75% discount rate. The terms of the SISP death benefit are described following the Pension Benefits for 2009 table. (8) Represents the present value of the disability benefit after reduction for amounts that would be paid as retirement benefits. Present value was determined using a 5.75% discount rate. (9) Determined applying the Internal Revenue Code section 4999 excise tax of 20% only if 110% threshold is exceeded. Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 1,342,200 1,050,000 Short-term Incentive 2,326,480 1,801,800 (1) 227,500 (2) 2007-2009 Performance Shares 382,260 382,260 382,260 382,260 382,260 382,260 2008-2010 Performance Shares 247,451 247,451 247,451 247,451 371,177 371,177 232,140 232,140 2009-2011 Performance Shares 474,852 474,852 330,447 330,447 Restricted Stock 70,092 70,092 2010-2012 Performance Shares 279,249 279,249 Benefits and Perquisites: Regular SISP(2) 2,359,818 2,359,818 2,359,818 2,359,818 Excess SISP(3) 126,868 126,868 126,868 126,868 SISP Death Benefits(4) 5,529,675 Disability Benefits Regular SISP(3) 1,068,626 1,068,626 1,068,626 1,068,626 Excess SISP 158,394 (4) 158,394 (4) 158,394 (4) 274,347 (5) SISP Death Benefits(6) 4,059,609 Outplacement Services 50,000 50,000 280G Tax(5) 808,830 280G Tax(7) 646,371 Total 3,116,397 3,116,397 6,159,386 3,116,397 8,312,577 1,298,381 1,227,020 1,227,020 4,059,609 1,227,020 5,732,980 1,069,336 (1) Includes the prorated annual incentive for the year of termination, which is the full annual incentive since we assume termination occurred on December 31, (2) Represents the (3) Executive Benefits and Voluntary Not for Death Disability Not for Change of Compensation: Base Salary 1,050,000 Short-term Incentive(1) 1,801,800 2007-2009 Performance Shares 261,784 261,784 261,784 261,784 261,784 261,784 2008-2010 Performance Shares 173,171 173,171 173,171 173,171 259,757 259,757 2009-2011 Performance Shares 371,470 371,470 Restricted Stock 13,169 13,169 Benefits and Perquisites: Regular SISP(2) 899,505 899,505 899,505 899,505 Excess SISP 146,033 (3) 146,033 (3) 146,033 (3) 388,504 (4) SISP Death Benefits(5) 3,898,602 Disability Benefits Outplacement Services 50,000 280G Tax(6) 671,881 Total 1,480,493 1,480,493 4,333,557 1,480,493 5,767,870 906,180 Represents the present value of Mr. Bietz’s vested regular SISP benefit as of December 31, Represents the present value of all excess SISP benefits Mr. Bietz would be entitled to upon termination of employment under the SISP. Present value was determined using a Represents the present value of all excess SISP benefits Mr. Bietz would be entitled to, calculated with the assumption of three additional years of employment, as provided under Mr. Bietz’s change of control agreement. Present value was determined using a Represents the present value of 180 monthly payments of $32,220 per month, which would be paid as a SISP death benefit under the SISP. Present value was determined using a Determined applying the Internal Revenue Code MDU Resources Group, Inc.Proxy Statement Proxy Statement Name Fees Stock Option Non-Equity Change in All Other Total Thomas Everist 57,083 69,445 — (3) — — 174 126,702 Karen B. Fagg 55,250 (4) 69,445 — — — 174 124,869 �� A. Bart Holaday 50,583 69,445 — — — 174 120,202 Dennis W. Johnson 59,083 69,445 — — — 174 128,702 Thomas C. Knudson 52,083 69,445 — — — 174 121,702 Richard H. Lewis 55,083 69,445 — — — 174 124,702 Patricia L. Moss 52,083 (5) 69,445 — — — 174 121,702 John L. Olson 40,083 (6) 69,445 — (7) — — 563,060 (9) 672,588 Harry J. Pearce 130,000 69,445 — (8) — — 174 199,619 Sister Thomas Welder 50,583 69,445 — — — 174 120,202 John K. Wilson 53,583 (10) 69,445 — — — 174 123,202 Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 966,000 Short-term Incentive 1,281,752 (1) 209,300 (2) 2008-2010 Performance Shares 136,748 136,748 2009-2011 Performance Shares 294,582 294,582 2010-2012 Performance Shares 256,922 256,922 Benefits and Perquisites: Regular SISP(3) 693,540 693,540 693,540 693,540 SISP Death Benefits(4) 3,060,457 Disability Benefits(5) 239,891 Outplacement Services 50,000 280G Tax(6) 502,299 Total 693,540 693,540 3,060,457 933,431 4,181,843 897,552 (1) Includes the prorated annual incentive for the year of termination, which is the full annual incentive since we assume termination occurred on December 31, 2010, and the additional severance payment of three times the annual incentive. For each of these, we used the higher of (1) the annual incentive earned in 2010 or (2) the highest annual incentive paid in 2008, 2009, and 2010. (2) Represents the target 2010 annual incentive, which would be deemed earned upon change of control under the Long-Term Performance-Based Incentive Plan. (3) Represents the present value of Mr. Goodin’s vested regular SISP benefit as of December 31, 2010, which was $12,145 per month for 15 years, commencing at age 65. Present value was determined using a 5.12% discount rate. The terms of the regular SISP benefit are described following the Pension Benefits for 2010 table. The three additional years of vesting credit assumed for purposes of calculating the additional SISP benefit under Mr. Goodin’s change of control agreement would not increase the actuarial present value of his SISP amount. (4) Represents the present value of 180 monthly payments of $24,290 per month, which would be paid as a SISP death benefit under the SISP. Present value was determined using a 5.12% discount rate. The terms of the SISP death benefit are described following the Pension Benefits for 2010 table. (5) Represents the present value of the disability benefit after reduction for amounts that would be paid as retirement benefits. Present value was determined using a 5.20% discount rate. (6) Determined applying the Internal Revenue Code Section 4999 excise tax of 20% only if 110% threshold is exceeded. Proxy Statement Director Compensation for 2010 Name Fees Stock Option Non-Equity Change in All Other Total Thomas Everist 60,000 79,064 — (3) — — 174 139,238 Karen B. Fagg 60,000 (4) 79,064 — — — 174 139,238 A. Bart Holaday 55,000 (5) 79,064 — — — 174 134,238 Dennis W. Johnson 65,000 79,064 — — — 174 144,238 Thomas C. Knudson 55,000 79,064 — — — 174 134,238 Richard H. Lewis 55,000 79,064 — — — 174 134,238 Patricia L. Moss 55,000 (6) 79,064 — — — 174 134,238 Harry J. Pearce 130,000 79,064 — — — 174 209,238 Sister Thomas Welder(7) 18,333 — — — — 425,187 (8) 443,520 John K. Wilson 55,000 (9) 79,064 — — — 174 134,238 (1) This column reflects the grant date fair value of MDU Resources Group, Inc. common stock awarded to our non-employee directors measured in accordance with Financial Accounting Standards Board generally accepted accounting principles for stock-based compensation. The grant date fair value is based on (2) Group life insurance (3) Mr. Everist had (4) Includes (5) Includes (6) Includes $54,990 that Ms. Moss received in our common stock in lieu of cash. Comprised of a group life insurance premium of Includes Effective June 1, 2009 Prior to June 1, 2009 Base Retainer $ 55,000 $ 30,000 Additional Retainers: Non-Executive Chairman 75,000 (2) 100,000 (1)(2) Lead Director, if any 33,000 33,000 Audit Committee Chairman 10,000 10,000 Compensation Committee Chairman 5,000 5,000 Nominating and Governance Committee Chairman 5,000 5,000 Meeting Fees: Board Meeting — 1,500 Committee Meeting — 1,500 Annual Stock Retainer 4,050 shares 4,050 shares Base Retainer $ 55,000 Additional Retainers: Non-Executive Chairman 75,000 Lead Director, if any 33,000 Audit Committee Chairman 10,000 Compensation Committee Chairman 5,000 Nominating and Governance Committee Chairman 5,000 Annual Stock Grant: 4,050 shares There are no meeting fees. In addition to liability insurance, we maintain group life insurance in the amount of $100,000 on each non-employee director for the benefit of each director’s beneficiaries during the time each director serves on the board. The annual cost per director is $174. Directors may defer all or any portion of the annual cash retainer Directors are reimbursed for all reasonable travel expenses including spousal expenses in connection with attendance at meetings of the board and its committees. All amounts together with any other perquisites were below the disclosure threshold for Our post-retirement income plan for directors was terminated in May 2001 for current and future directors. The net present value of each director’s benefit was calculated and converted into phantom stock. Payment is deferred pursuant to the Deferred Compensation Plan for Directors and will be made in cash over a five-year period after the director’s retirement from the board. 54 MDU Resources Group, Inc. Proxy Statement Proxy Statement The board In our Director Compensation Policy, we prohibit our directors from hedging their ownership of company common stock. Directors may not enter into transactions that allow the director to benefit from devaluation of our stock or otherwise own stock technically but without the full benefits and risks of such ownership. As part of its assessment of the risks arising from our Business management and governance practices • hedging on oil and gas production to reduce commodity price volatility • board of director oversight on capital expenditure and operating plans that promotes careful consideration of financial assumptions • limitation on business acquisitions without board of director approval • employee integrity training programs and anonymous reporting systems • quarterly risk assessment reports at audit committee meetings and • prohibition on hedging of company stock by Section 16 officers and directors. Compensation practices • active compensation committee review of executive compensation, including comparison of executive compensation to total shareholder return ratio to the ratio for the performance graph peer group (PEER4 Analysis) • the initial determination of a position’s salary grade to be at or near the 50th percentile of base salaries paid to similar positions at peer group companies and/or relevant industry companies • consideration of peer group and/or relevant industry practices to establish appropriate compensation target amounts • a balanced compensation mix of fixed salary and annual or long-term incentives tied to our financial performance • use of interpolation for annual and long-term incentive awards to avoid payout cliffs • negative discretion to adjust any annual or long-term incentive award downward • use of caps on annual incentive awards and stock granted under long-term incentive awards (200% of target) • discretionary clawbacks on incentive payments in the event of a financial restatement • use of performance shares, rather than stock options or stock appreciation rights, as equity component of incentive compensation • use of performance shares with a relative, rather than an absolute, total stockholder return performance goal and mandatory reduction in award if total stockholder return is negative • use of three-year performance periods to discourage short-term risk-taking 55 Proxy Statement • substantive incentive goals measured by return on invested capital and earnings per share criteria, which encourage balanced performance and are important to stockholders • use of financial performance metrics that are readily monitored and reviewed • regular review of the appropriateness of the companies in the performance graph peer group • stock ownership requirements for executives participating in the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan and for the board of directors • mandatory holding periods for 50% of any net after-tax shares earned under long-term incentive awards granted in 2011 and thereafter and • use of independent consultants in establishing pay targets at least biennially. 56 MDU Resources Group, Inc.Proxy Statement Proxy Statement Name Age Present Corporate Position and Business Experience Terry D. Hildestad President and Chief Executive Officer. For information about Mr. Hildestad, see “Election of Directors.” Steven L. Bietz Mr. Bietz was elected president and chief executive officer of WBI Holdings, Inc. effective March 4, 2006; president effective January 2, 2006; executive vice president and chief operating officer effective September 1, 2002; vice president-administration and chief accounting officer effective November 3, 1999; vice president-administration effective February 1997; and controller effective January 1994. William R. Connors Mr. Connors was elected vice president–renewable resources of MDU Resources Group, Inc., effective September 1, 2008. Prior to that, he was vice president-business development of Cascade Natural Gas Corporation effective November 2007; vice president-origination, contracts & regulatory of Centennial Energy Resources, LLC, effective January 2007; vice president-origination, contracts & regulatory of Centennial Power, Inc., effective July 2005; and, was first employed as vice president-contracts & regulatory of Centennial Power, Inc., effective July 2004. Prior to that Mr. Connors was of counsel to Miller Nash, LLP, a law firm in Seattle, Washington. Mark A. Del Vecchio Mr. Del Vecchio was elected vice president–human resources on October 1, 2007. From November 3, 2003 to October 1, 2007, Mr. Del Vecchio was director of executive programs and compensation. From April 1996 to October 31, 2003, Mr. Del Vecchio was vice president and member of The Carter Group, LLC, an executive search and management consulting company. David L. Goodin Mr. Goodin was elected president and chief executive officer of Montana-Dakota Utilities Co., Great Plains Natural Gas Co., and Cascade Natural Gas Corporation effective June 6, 2008, and president and chief executive officer of Intermountain Gas Company effective October 1, 2008. Prior to that, he was president of Montana-Dakota Utilities Co. and Great Plains Natural Gas Co. effective March 1, 2008; president of Cascade Natural Gas Corporation effective July 2, 2007; executive vice president-operations and acquisitions of Montana-Dakota Utilities Co. effective January 2007; vice president-operations effective January 2000; electric systems manager effective April 1999; electric systems supervisor effective August 1993; division electric superintendent effective February 1989; and division electrical engineer effective May 1983. John G. Harp Mr. Harp was elected president and chief executive officer of Utility Services Inc., which is now MDU Construction Services Group, Inc., effective September 29, 2004. From May 2004 to September 29, 2004, Mr. Harp was vice president of Ledcor Technical Services Inc., a provider of fiber optic cable maintenance services. From April 2001 to May 2004, he was president of JODE CORP., a broadband maintenance company. Mr. Harp sold JODE CORP. to Ledcor Construction in May 2004. Prior to that, he was president of Harp Line Constructors Co. and Harp Engineering, Inc. from July 1998, when they were bought by Utility Services Inc., to April 2001. Nicole A. Kivisto Ms. Kivisto was elected vice president, controller and chief accounting officer effective February 17, 2010. Prior to that she was controller effective December 1, 2005; a financial analyst IV in the Corporate Planning Department effective May 2003; a financial and investor relations analyst in the Investor Relations Department effective May 2000; and a financial analyst in the Corporate Accounting Department effective July 1995. Douglass A. Mahowald Mr. Mahowald was elected treasurer and assistant secretary effective February 17, 2010. Prior to that he was the assistant treasurer and assistant secretary effective August 1992; treasury services manager effective November 1982; and budget statistician effective February 1982. Cynthia J. Norland Ms. Norland was elected vice president–administration effective July 16, 2007. Prior to that she was the assistant vice president–administration effective January 17, 2007; associate general counsel in the Legal Department effective March 6, 2004; and senior attorney in the Legal Department effective June 1, 1995. Paul K. Sandness Mr. Sandness was elected general counsel and secretary of the company, its divisions and major subsidiaries effective April 6, 2004. He also was elected a director of the company’s principal subsidiaries and was appointed to the Managing Committees of Montana-Dakota Utilities Co. and Great Plains Natural Gas Co. Prior to that he served as a senior attorney effective 1987 and as an assistant secretary of several subsidiary companies. William E. Schneider Mr. Schneider was elected president and chief executive officer of Knife River Corporation effective May 1, 2005; and senior vice president-construction materials effective from September 15, 1999 to April 30, 2005. MDU Resources Group, Inc.Proxy Statement 57 Proxy Statement Doran N. Schwartz Mr. Schwartz was elected vice president and chief financial officer effective February 17, 2010. Prior to that, he was vice president and chief accounting officer effective March 1, 2006; and assistant vice president-special projects effective September 6, 2005. He was director of membership rewards for American Express, a financial services company, from November 2004 to August 1, 2005; audit manager for Deloitte & Touche, an audit and professional services company, from June 2002 to November 2004; and audit manager/senior for Arthur Andersen, an audit and professional services company, from December 1997 to June 2002. John P. Stumpf Mr. Stumpf was elected vice president–strategic planning effective December 1, 2006. Mr. Stumpf was vice president–corporate development for Knife River Corporation from July 1, 2002 to November 30, 2006, and director of corporate development of Knife River Corporation from January 14, 2002 to June 30, 2002. Prior to that, he was special projects manager for Knife River Corporation from May 1, 2000 to January 13, 2002. Common Shares Beneficially Name Common Shares Shares Shares Held By Percent Deferred Steven L. Bietz 58,516 (5) * Thomas Everist 1,870,623 (6) 18,562 1.0 26,642 Karen B. Fagg 19,381 * John G. Harp 77,356 (5) * Terry D. Hildestad 184,043 (5) * A. Bart Holaday 14,050 * Dennis W. Johnson 67,506 (7) 4,560 * Thomas C. Knudson 9,500 * Richard H. Lewis 16,200 * 10,152 Patricia L. Moss 42,276 * Harry J. Pearce 158,850 13,500 * 43,806 Vernon A. Raile 56,426 (5) * William E. Schneider 102,898 (5) * Sister Thomas Welder 46,942 (8) * 20,271 John K. Wilson 67,578 * All directors and executive officers as a group 2,929,144 42,512 14,146 1.6 100,871 * Less than one percent of the class. (1) “Beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or investment power with respect to a security. (2) Indicates shares of our stock that executive officers and directors have the right to acquire within 60 days pursuant to stock options. These shares are included in the “Common Shares Beneficially Owned” column. (3) These shares are included in the “Common Shares Beneficially Owned” column. (4) These shares are not included in the “Common Shares Beneficially Owned” column. Directors may defer all or a portion of their cash compensation pursuant to the Deferred Compensation Plan for Directors. Deferred amounts are held as phantom stock with dividend accruals and are paid out in cash over a five-year period after the director leaves the board. (5) Includes full shares allocated to the officer’s account in our 401(k) retirement plan. (6) Includes 1,820,000 shares of common stock acquired through the sale of Connolly-Pacific to us. (7) Mr. Johnson disclaims all beneficial ownership of the 4,560 shares owned by his wife. (8) The total includes shares held by the Annunciation Monastery, of which community Sister Welder is a member, and by the University of Mary, of which Sister Welder is the president emerita. The monastery owns 33,260 shares. Sister Welder disclaims all beneficial ownership of the shares owned by the monastery and the university. Common Shares Beneficially Owned Include: Shares Individuals Deferred Have Rights Director Fees Common Shares to Acquire Shares Held By Held as Beneficially Within 60 Family Percent Phantom Name Owned(1) Days(2) Members(3) of Class Stock(4) Steven L. Bietz 67,347 (5) * Thomas Everist 1,874,673 (6) 13,500 1.0 27,502 Karen B. Fagg 24,736 * David L. Goodin 31,531 (5) 8,603 * John G. Harp 85,025 (5) * Terry D. Hildestad 214,073 * A. Bart Holaday 28,831 * Dennis W. Johnson 73,574 (7) 4,560 * Thomas C. Knudson 13,550 * Richard H. Lewis 20,250 * 13,273 Patricia L. Moss 49,007 * Harry J. Pearce 207,100 * 45,218 Vernon A. Raile 89,582 (5) 2,000 * Doran N. Schwartz 14,736 (5) * John K. Wilson 74,309 * All directors and executive officers as a group (23 in number) 3,127,161 13,950 19,932 1.7 85,993 * Less than one percent of the class. (1) “Beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or investment power with respect to a security. (2) Indicates shares of our stock that executive officers and directors have the right to acquire within 60 days pursuant to stock options. These shares are included in the “Common Shares Beneficially Owned” column. (3) These shares are included in the “Common Shares Beneficially Owned” column. (4) These shares are not included in the “Common Shares Beneficially Owned” column. Directors may defer all or a portion of their cash compensation pursuant to the Deferred Compensation Plan for Directors. Deferred amounts are held as phantom stock with dividend accruals and are paid out in cash over a five-year period after the director leaves the board. (5) Includes full shares allocated to the officer’s account in our 401(k) retirement plan. (6) Includes 1,820,000 shares of common stock acquired through the sale of Connolly-Pacific to us. (7) Mr. Johnson disclaims all beneficial ownership of the 4,560 shares owned by his wife. MDU Resources Group, Inc. Proxy Statement Proxy Statement The table below sets forth information with respect to any person we know to be the beneficial owner of more than five percent of any class of our voting securities. Name and Address Amount and Nature Percent Title of Class Name and Address Amount and Nature Percent of Beneficial Owner of Beneficial Ownership of Class Common Stock New York Life Trust Company 10,494,741 (1) 5.59 % New York Life Trust Company 10,092,631 (1) 5.36 % Common Stock BlackRock, Inc. 10,863,566 (2) 5.79 % BlackRock, Inc. 10,729,371 (2) 5.70 % (1) In a Schedule 13G/A, Amendment No. (2) In a Schedule The audit committee reviews related person transactions in which we are or will be a participant to determine if they are in the best interests of our stockholders and the company. Financial transactions, arrangements, relationships, or any series of similar transactions, arrangements, or relationships in which a related person had or will have a material interest and that exceed $120,000 are subject to the committee’s review. Related persons are directors, director nominees, executive officers, holders of 5% or more of our voting stock, and their immediate family members. Immediate family members are spouses, parents, stepparents, mothers-in-law, fathers-in-law, siblings, brothers-in-law, sisters-in-law, children, stepchildren, daughters-in-law, sons-in-law, and any person, other than a tenant or domestic employee, who shares After its review, the committee makes a determination or a recommendation to the board and officers of the company with respect to the related person transaction. Upon receipt of the committee’s recommendation, the board of directors or officers, as the case may be, The audit committee and the board of directors reviewed two leases between an indirect subsidiary of the company and a Nevada limited liability company, MOJO Montana, • have no material relationship with us and • are independent in accordance with our director independence guidelines and the New York Stock Exchange listing standards. MDU Resources Group, Inc. Proxy Statement Proxy Statement The board of directors determined that prior to her retirement on April 27, 2010, Sister Thomas Welder had no material relationship with us and was independent in accordance with our director independence guidelines and the New York Stock Exchange listing standards. In determining director independence for • Mr. Everist’s ownership • charitable contributions to St. Vincent Healthcare in the amount of $50,000 – Ms. Fagg was a director on the Foundation for St. Vincent Healthcare; charitable contributions in the amount of $13,825 to the Montana State University – Ms. Fagg serves as a member of the Montana State University’s Engineering Advisory Council • charitable contributions in the amount of $16,150 to the University of North Dakota Foundation – Mr. Holaday serves as the Chairman of the Board and as a Trustee for the University of North Dakota Center for Innovation Foundation and also serves as a director for the University of North Dakota Foundation; charitable contributions in the amount of $1,250 to Jamestown College – Mr. Holaday serves as a director for Jamestown College • charitable contributions to the City of Dickinson in the amount of $20,000 – Mr. Johnson • charitable contributions to Colorado UpLift in the amount of $25,000 – Mr. Lewis • charitable contributions • payment of our employees’ tuition and education-related expenses and charitable contributions in the amount of Director Resignation Upon Change of Job Responsibility Code of Conduct We intend to satisfy our disclosure obligations regarding: • amendments to, or waivers of, any provision of the code of conduct that applies to our principal executive officer, principal financial officer, and principal accounting officer and that relates to any element of the code of ethics definition in Regulation S-K, Item 406(b) and • waivers of the code of conduct for our directors or executive officers, as required by New York Stock Exchange listing standards by posting such information on our website at http://www.mdu.com/Documents/Governance/IntegrityGuide.pdf. Board Leadership Structure and Board’s Role in Risk Oversight 60 MDU Resources Group, Inc. Proxy Statement Proxy Statement adopting its final business plans and strategies. While our bylaws and corporate governance guidelines do not require that our chairman and chief executive officer positions be separate, the board MDU Resources Group, Inc. Proxy StatementIn 2010, the company made additional contributions to the 401(k) plan and cash payments to the named executive officers to make up for pension benefits that did not accrue under the plans as a result of amendments that froze the pension plans effective December 31, 2009. The cash payments were made because the Internal Revenue Code limited the amount of additional contributions that could be made under the 401(k) plan.35Proxy Statement
The following table shows the proportion of salary to total compensation. We paid no bonuses to our named executive officers in 2009.2010.
($)
Compensation
($)
Total Compensation
($)
Compensation
($)
Total Compensation20092010
(a)
Securities
Underlying
Unexercised
Options
Exercisable
(#)
(b)
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
(c)
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
Exercise
Price
($)
(e)
Expiration
Date
(f)
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
(g)(1,2)
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
(h)
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)
(i)(3)
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)
(j)(4)
Securities
Underlying
Unexercised
Options
Exercisable
(#)
(b)
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
(c)
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
Exercise
Price
($)
(e)
Expiration
Date
(f)
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
(g)
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
(h)
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)
(i)(1)
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)
(j)(2)Adjusted for the 3-for-2 stock split effective July 26, 2006.(2)These shares of restricted stock were granted in 2001 and vest automatically on February 15, 2010. Vesting of some or all shares may be accelerated upon change of control or if the total stockholder return equals or exceeds the 50th percentile of the performance graph peer group during the final three-year performance cycle 2007-2009. Non-preferential dividends are paid on these shares.(3)Named Executive OfficerAwardSharesEnd ofPerformancePeriodTerry D. Hildestad200733,09112/31/09200839,09112/31/102009109,64812/31/11Vernon A. Raile200712,56412/31/09200813,40212/31/10200939,47212/31/11John G. Harp200710,18112/31/09200813,40212/31/10200939,47212/31/11William E. Schneider200715,11912/31/09200814,99112/31/10200939,24412/31/11Steven L. Bietz200710,35412/31/09200810,49112/31/10200930,70012/31/11
Performance
PeriodShares for the 2007 award are shown at the target level (100%) based on results for the 2007-2009 performance cycle at target.targetthreshold level (100%(10%) based on results for the 2008-2010 performance cycle below threshold. Shares for the 2009 award are shown at the threshold level (10%) based on results for the first two years of the 2008-20102009-2011 performance cycle at target.20092010 award are shown at the maximumthreshold level (200%(10%) based on results for the first year of the 2009-20112010-2012 performance cycle above target.below threshold.(4)(2)$23.60,$20.27, the year-end closing price for 2009.2010.
(a)
Shares Acquired
on Exercise
(#)
(b)(1)
on Exercise
($)
(c)
Shares Acquired
on Vesting
(#)
(d)(1,2)
on Vesting
($)
(e)(3) 3640Option Exercises and Stock Vested during 2009Pension Benefits for 2010
(a)
Shares Acquired
on Exercise
(#)
(b)
on Exercise
($)
(c)
Shares Acquired
on Vesting
(#)
(d)(1,2)
on Vesting
($)
(e)(3)
(b)
Years Credited
Service
(#)
(c)
of Accumulated
Benefit
($)
(d)
During Last
Fiscal Year
($)
(e)Adjusted for the 3-for-2 stock split effective July 26, 2006.(2)Reflects performance shares for the 2006-2008 performance period that vested on February 12, 2009.(3)Reflects the value of performance shares based on our stock price of $18.61 on February 12, 2009, and the dividend equivalents that were paid on the vested shares.
(a)
(b)
Years Credited
Service
(#)
(c)
of Accumulated
Benefit
($)
(d)
During Last
Fiscal Year
($)
(e)(1) SISP represent the actuarial present values of the executives’ accumulated benefits accrued as of December 31, 2009,2010, calculated using a 5.75%5.12%, 5.20%, and 5.34% discount rate for the 1994 Group AnnuitySISP excess, MDU pension plan, and WBI pension plan, respectively, the RP-2000 Combined Healthy Mortality Table Projected to 2010 for post-retirement mortality, and no recognition of future salary increases or pre-retirement mortality. The assumed retirement ages for these benefits was age 60 for Messrs. Schwartz, Harp, and Bietz, and age 62 for Mr. Schneider. These areGoodin. This is the earliest agesage at which the executives could begin receiving unreduced benefits. Retirement on December 31, 2009,2010, was assumed for Messrs.Mr. Hildestad, and Raile, who werewas age 60 and 64, respectively,61 on that date. Mr. Raile’s benefits reflect his actual retirement commencement date of February 16, 2010. The amounts shown for the SISP I and SISP II were determined using a 5.75%5.12% discount rate and assume benefits commenced at age 65. The assumptions used to calculate Mr. Harp’s additional retirement benefit are described below.HarpGoodin participate in the MDU Resources Group, Inc. Pension Plan for Non-Bargaining Unit Employees, which we refer to as our pension plan. Mr. Schneider participates in the Knife River Corporation Salaried Employees’ Pension Plan, which we refer to as the KRMDU pension plan. Mr. Bietz participates in the Williston Basin Interstate Pipeline Company Pension Plan, which we refer toMDU Resources Group, Inc. Proxy Statement37Proxy Statementas the WBI pension plan. Pension benefits under our pension plan and the WBI pension plan as the WBI pension plan. Pension benefits under the pension plans are based on the participant’s average annual salary over the 60 consecutive month period in which the participant received the highest annual salary during the participant’s final 10 years of service. For this purpose, only a participant’s salary is considered; incentives and other forms of compensation are not included. Benefits are determined by multiplying (1) the participant’s years of credited service by (2) the sum of (a) the average annual salary up to the social security integration level times 1.1% and (b) the average annual salary over the social security integration level times 1.45%. The KR pension plan uses the same formula except that 1.2% and 1.6% are used instead of 1.1% and 1.45%. The maximum years of service recognized when determining benefits under each of the pension plans is 35. Pension plan benefits are not reduced for social security benefits.ourthe pension plan and the WBI pension plan,plans, participants must either remain employed until age 60 or elect to defer commencement of benefits until age 60. Under the KR pension plan, participants must remain employed until age 62 or elect to defer commencement of benefits until age 62 to receive unreduced benefits. Messrs.Mr. Hildestad and Raile werewas eligible for unreduced retirement benefits under ourthe MDU pension plan on December 31, 2009.2010. Participants whose employment terminates between the ages of 55 and 60, with 5 years of service in ourunder the pension plan or the WBI pension plan and between the ages of 55 and 62, with 5 years of service, in the KR pension planplans are eligible for early retirement benefits. Early retirement benefits are determined by reducing the normal retirement benefit by 0.25% per month for each month before age 60 in ourthe pension plan and the WBI pension plan and age 62 in the KR pension plan.plans. If a participant’s employment terminates before age 55, the same reduction applies for each month the termination occurs before age 62, with the reduction capped at 21%. Messrs.Mr. Harp and Schneider areis currently eligible for early retirement benefits.amountsannuities and benefits for married participants are paid as actuarially reduced pensionsannuities with a survivor benefit for spouses, unless participants choose otherwise. Participants hired before January 1, 2004, who terminate employment before age 55 may elect to receive their benefits in a lump sum. Mr.Messrs. Bietz is currentlyand Goodin would have been eligible for a lump sum.sum if they had retired on December 31, 2010.places limitations on benefitlimits the amounts that may be paid under the pension plans and on the amount of compensation that may be recognized when determining benefits. In 2009 when the pension plans were frozen, the maximum annual benefit payable under the pension plans was $195,000 and the maximum amount of compensation that could be recognized when determining benefits was $245,000.our qualifiedthe pension plans –— we refer to this benefit as the regular SISP benefitour qualifiedthe pension plans -— we refer to this benefit as the SISP excess SISP benefit, and–— we refer to these benefits as the SISP death benefit. SISP benefit for new participants and current participants who were not already eligible for the SISP excess SISP benefit, and SISP benefit accruals.38MDU Resources Group, Inc. Proxy StatementProxy Statementwere to diehad died on December 31, 2010, prior to the commencement of regular SISP benefits, are reflected in the table that appears in the section entitled “Potential Payments upon Termination or Change of Control.”The SISP was amended to address changes in applicable tax laws resulting from the enactment of section 409A of the Internal Revenue Code. Regular SISP benefits that were vested as of December 31, 2004 and were thereby grandfathered under sectionSection 409A of the Internal Revenue Code remain subject to SISP provisions then in effect, which we refer to as SISP I benefits. Regular SISP benefits that are subject to sectionSection 409A of the Internal Revenue Code, which we refer to as SISP II benefits, are governed by amended provisions intended to comply with sectionSection 409A. Participants generally have more discretion with respect to the distributions of their SISP I benefits.sectionSection 409A of the Internal Revenue Code that require delayed commencement of these types of retirement benefits. The SISP II benefits are paid over 180 months or, if commencement of payments is delayed for six months, 173 months. If the commencement of benefits is delayed for six months, the first payment includes the payments that would have been paid during the six-month period.period plus interest equal to one-half of the annual prime interest rate on the participant’s last date of employment. If the participant dies after the regular SISP benefits have begun but before receipt of all of the regular SISP benefits, the remaining payments are made to the participant’s designated beneficiary.–— a life annuity, 100% joint and survivor annuity, or a joint and two-thirds joint and survivor annuity, provided that the cost of providing these actuarial equivalent forms of benefits does not exceed the cost of providing the normal form of benefit. Neither the election to receive an actuarial equivalent benefit nor the administrator’s right to pay the regular SISP benefit in the form of an actuarially equivalent lump sum are available with respect to SISP II benefits.In 2009, the plan was amended to imposeThere is an additional vesting requirement on benefit level increases for the regular SISP benefit granted on or after January 1, 2010. The requirement applies only to the increased benefit level. The increased benefit vests after the later of three additional years of participation in the SISP or the end of the regular vesting schedule described above. The additional three-year vestingMDU Resources Group, Inc. Proxy Statement39Proxy Statementare required to retire, pursuant to the company’s bylaws, are required to retire prior to the end of the additional vesting period as follows: SISP BenefitsExcess SISP excess benefits are equal to the difference between (1) the monthly retirement benefits that would have been payable to the participant under the qualified pension plans absent the limitations under the Internal Revenue Code and (2) the actual benefits payable to the participant under the qualified pension plan.plans. Participants are only eligible for the SISP excess SISP benefits if (1) the participant is fully vested under the qualified pension plan, (2) the participant’s employment terminates prior to age 65, and (3) benefits under the qualified pension plan are reduced due to limitations under the Internal Revenue Code on plan compensation. Effective January 1, 2005, participants who were not then vested in the SISP excess SISP benefits were also required to remain actively employed by the company until age 60. In 2009, the plan was amended to limit eligibility offor the SISP excess SISP benefit to current SISP participants (1) who are already vested in the SISP excess SISP benefit or (2) who will become vested in the SISP excess SISP benefits if they remain employed with the company until age 60. The plan was further amended to freeze the SISP excess SISP benefits to a maximum of the benefit level payable based on the participant’s years of service and compensation level as of December 31, 2009. With the exception of Mr. Harp, each of the named executive officersMessrs. Hildestad and Bietz would be entitled to the SISP excess SISP benefit if they were to terminate employment prior to age 65. Mr.Messrs. Goodin and Harp must remain employed until age 60 to become entitled to their SISP excess benefit. Mr. Raile was not eligible for this benefit due to his excess SISPretirement upon attainment of age 65. Mr. Schwartz is not eligible for this benefit. SISP benefit is paid until the date the participant would have attained age 65.ourthe pension plan, theSISP excess, and SISP and the SISP.II. The additional three years of service recognize Mr. Harp’s previous employment with a subsidiary of the company. To calculate payments Mr. Harp could receive due to his additional retirement benefit, we applied the additional years of service to each of the retirement arrangements and assumed he remained employed until age 60, for purposes of calculating the additional benefit under the pension plan and SISP excess, SISP, and age 65, for purposes of calculating the additional benefit under the SISP II. Since the pension plan and SISP excess were frozen as of December 31, 2009, no additional accruals will be recognized. Because Mr. Harp would be fullywe calculate the amounts shown in the table based on an assumption that the named executive officers are 100% vested in thetheir SISP II benefit if he retired at age 65,benefits, the additional years of service provided by the agreement would not increase his SISP II benefit.benefit reflected in the table. Consequently, the additional retirement benefit amount shown in the table does not include any additional benefit attributable to the SISP II. If Mr. Harp were to retire before achieving 10 years of service and becoming fully vested in his SISP II benefit, the additional years of service provided by the additional retirement benefit would increase his vesting percentage under the SISP II and, therefore, would result in an additional payment.increase his benefits under the SISP II. For a description of the payments that could be provided under the additional retirement benefit if Mr. Harp’s employment were to be terminated on December 31, 2009,2010, refer to the table and related notes in “Potential Payment upon Termination or Change of Control” below.The SISP also provides that if a participant becomes totally disabled, the participant will continue to receive credit for up to two additional years under the SISP as long as the participant is totally disabled during such time. Since the named executive officers other than Mr. Harp are fully vested in their SISP benefits, this would not result in any incremental benefit for the named executive officers other than Mr. Harp. The present value of these two additional years of service for Mr. Harp is reflected in the table that appears in the section entitled “Potential Payments upon Termination or Change of Control.”40MDU Resources Group, Inc. Proxy StatementProxy Statement20092010
(a)
Contributions in
Last FY
($)
(b)
Contributions in
Last FY
($)
(c)
Aggregate
Last FY
($)
(d)
Withdrawals/
Distributions
($)
(e)
Balance at
Last FYE
($)
(f)(1)Includes $392,000, which was reported in the Summary Compensation Table for 2006 in column (g).
(a)
Contributions in
Last FY
($)
(b)
Contributions in
Last FY
($)
(c)
Aggregate
Last FY
($)
(d)
Withdrawals/
Distributions
($)
(e)
Balance at
Last FYE
($)
(f) 20092010 was 6.48%6.91% or the “Moody’s Rate,” which was defined by reference to the U.S. Long-Term Corporate Bond Yield Average for “A” rated companies. Effective January 1, 2009,2010, “Moody’s Rate” is the average of (i) the number that results from adding the daily Moody’s U.S. Long-Term Corporate Bond Yield Average for “A” rated companies as of the last business day of each month for the 12-month period ending October 31 2008,andTheFor the named executive officers other than Mr. Raile, the information assumes the terminations and the change of control occurred on December 31, 2009.2010. For Mr. Raile, the information relates to his actual retirement on February 16, 2010 and assumes that a change of control occurred on December 31, 2010. All of the payments and benefits described below would be provided by the company or its subsidiaries. base salary, 2009 annual incentives, stock awards the named executive officers earned due to employment through December 31, 2009, and compensation and benefits provided under plans or arrangements that do not discriminate in favor of the named executive officers and that are generally available to all salaried employees, such as benefits under our qualified defined benefit pension plan, accrued vacation pay, continuation of health care benefits, and life insurance benefits. The tables also do not include the named executive officers’ benefits under our nonqualified deferred compensation plans, thatwhich are reported in the Nonqualified Deferred Compensation for 20092010 table. See the Pension Benefits for 20092010 table and the Nonqualified Deferred Compensation for 20092010 table, and accompanying narratives, for a description of the named executive officers’ accumulated benefits under our qualified defined benefit pension plans and our nonqualified deferred compensation plans.The present value of the disability benefits was determined using a discount rate of 5.75%. As the tables reflect, with the exception of Mr.Messrs. Schwartz, Harp, and Goodin, the reduction for amounts paid as retirement benefits would eliminate disability benefits assuming a termination of employment on December 31, 2009.2010.MDU Resources Group, Inc. Proxy Statement41Proxy Statementshares of restricted stock would vest in full upon a change of control. All performance share awards and the annual incentives for Messrs. Hildestad, Harp, Bietz, and Goodin, which were awarded under the Long-Term Performance-Based Incentive Plan, would vest at their target levels. For this purpose, the term change“change of controlcontrol” is defined as:voting securitiescommon stockturnoverchange in a majority of our board of directors since April 22, 1997 without the approval of a majority of the members of the board who were members of the board as of the plan’s effective dateApril 22, 1997 or whose election was approved by such board membersconsolidationsimilar transaction or sale or other disposition of all or substantially all of the company’sour assets, unless the company’sour stockholders immediately prior to the transaction beneficially own more than 60% of the outstanding sharescommon stock and voting power of the resulting corporation afterin substantially the same proportions as before the merger, no person owns 20% or more of the resulting corporation’s outstanding common stock or voting power except for any such ownership that existed before the merger and at least a majority of the board of the resulting corporation that acquires the company’s assets, as the case may beis comprised of our directors orthe company’sour liquidation or dissolution.Shares of restricted stock and associated dividends are forfeited upon termination of employment. 20092010 termination other than for cause without a change of control is assumed, the named executive officers’ 2009-20112010-2012 performance share awards would be forfeited, any amounts earned under the 2008-20102009-2011 performance share awards for Mr. Hildestad would be reduced by one-third and such awards for Messrs. Schwartz, Harp, Bietz, and Goodin would be forfeited, and any amounts earned under the 2007-20092008-2010 performance share awards would not be reduced. The number of performance shares earned following a termination depends on actual performance through the full performance period. As actual performance for the 2007-20092008-2010 performance share awards has been determined, the amounts for these awards in the event of a non-changetermination without a change of control termination were based on actual performance, which resulted in vesting of 100%0% of the target award. Amounts forFor the 2008-20102009-2011 performance share awards, are also shown at target, based uponbecause we do not know what actual performance through the entire performance period will be, we have assumed target performance.performance will be achieved and, therefore, show two-thirds of the target award. No amounts are shown for the 2009-20112010-2012 performance share awards because such awards would be forfeited. Although vesting would only occur after completion of the performance period, the amounts shown in the tables were not reduced to reflect the present value of the performance shares that could vest. Dividend equivalents attributable to earned performance shares would also be paid. Dividend equivalents accrued through December 31, 20092010 are included in the amounts shown.shares of restricted stock and performance shares shown in the tables was determined by multiplying the number of shares of restricted stock or performance shares that would vest upondue to termination or a change of control by the closing price of our stock on December 31, 2009.2010.WeExcept for Mr. Hildestad, we also have change of control employment agreements with our named executive officers and other executives, which provide certain protections to the executives in the event there is a change of control of the company. Mr. Hildestad requested that his change of control employment agreement be terminated in June 2010. The compensation committee notified other executives with change of control employment agreements that their agreements would not be extended beyond their current expiration dates.voting securitiesoutstanding common stockturnoverchange in a majority of our board of directors since the date of the agreement without the approval of a majority of the members of the board who were members of the board as of the date of the agreement date or whose election was approved by such board membersconsolidation,sale of all or substantially all of our assets, unless our stockholders immediately prior to the mergertransaction beneficially own more than 60% of the outstanding sharescommon stock and voting power of the resulting corporation afterin substantially the same proportions as before the merger, no person owns 20% or more of the resulting corporation’s outstanding common stock or voting power except for any such ownership that existed before the merger and at least a majority of the board of the resulting corporation is comprised of our directors or42MDU Resources Group, Inc. Proxy StatementProxy Statement2009,2010, the guaranteed minimum level of base salary provided over the three-year employment period would not result in an increase in any of the named executive officers’ base salaries. The minimum annual incentive amountsopportunities Messrs. Hildestad, Raile,Schwartz, Harp, Schneider,Bietz, and BietzGoodin would be entitledeligible to earn over the three-year employment period would be $1,500,000, $585,000, $720,000, $581,620,$780,000, $1,350,000, $1,050,000, and $450,450,$966,000, respectively. The agreements also provide that severance payments and benefits will be provided:2009.2010.4347
Payments Upon
Termination or
Change of Control
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)IncludesRepresents the proratedtarget 2010 annual incentive, forwhich would be deemed earned upon change of control under the year of termination, which is the full annual incentive since we assume termination occurred on December 31, 2009, and the additional severance payment of three times the annual incentive. For each of these, we used the higher of (1) the annual incentive earned in 2009 or (2) the highest annual incentive paid in 2007, 2008, and 2009.Long-Term Performance-Based Incentive Plan.2009,2010, which was $42,710 per month for 15 years, commencing at age 65. Present value was determined using a 5.75%5.12% discount rate. The terms of the regular SISP benefit are described following the Pension Benefits for 20092010 table. The three additional years of vesting credit assumed for purposes of calculating the additional SISP benefit under Mr. Hildestad’s change of control agreement would not increase the actuarial present value of his SISP amount.5.75%5.12% discount rate. The terms of the excess SISP benefit are described following the Pension Benefits for 20092010 table. The three additional years of employment assumed for purposes of calculating the additional retirement plan payment under Mr. Hildestad’s change of control agreement would not increase the actuarial present value of his excess SISP benefits.5.75%5.12% discount rate. The terms of the SISP death benefit are described following the Pension Benefits for 20092010 table.(5)Determined applying the Internal Revenue Code section 4999 excise tax of 20% only if 110% threshold is exceeded.4448Proxy Statement
Payments Upon
Termination or
Change of Control
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)
Payments Upon
Termination or
Change of Control(1)
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)(1)MDU Resources Group, Inc.Proxy Statement
Payments Upon
Termination or
Change of Control
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)2009,2010, and the additional severance payment of three times the annual incentive. For each of these, we used the higher of (1) the annual incentive earned in 20092010 or (2) the highest annual incentive paid in 2007, 2008, 2009, and 2009.2010.(2)50
Payments Upon
Termination or
Change of Control
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)Raile’sHarp’s vested regular SISP benefit as of December 31, 2009,2010, which was $22,850$18,280 per month for 15 years, commencing at age 65. Present value was determined using a 5.75%5.12% discount rate. The terms of the regular SISP benefit are described following the Pension Benefits for 20092010 table. TheAlso includes the additional benefit attributable to three additional years of vesting credit assumedservice that would be provided under the retirement benefit agreement described following the Pension Benefits for purposes2010 table.calculating the additionalMr. Harp’s vested SISP benefit under Mr. Raile’s change of control agreement would notdescribed in footnote 4, adjusted to reflect the increase in the actuarial present value of his regular SISP amount.benefit that would result from an additional two years of vesting under the SISP. Present value was determined using a 5.12% discount rate.(3)(6)5.75%5.12% discount rate. The terms of the SISP death benefit are described following the Pension Benefits for 20092010 table.(4)(8)sectionSection 4999 excise tax of 20% only if 110% threshold is exceeded.4551John G. Harp
Payments Upon
Termination or
Change of Control
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)46MDU Resources Group, Inc. Proxy StatementProxy StatementWilliam E. SchneiderSteven L. Bietz
Payments Upon
Termination or
Change of Control
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)(1)2009,2010, and the additional severance payment of three times the annual incentive. For each of these, we used the higher of (1) the annual incentive earned in 20092010 or (2) the highest annual incentive paid in 2007, 2008, 2009, and 2009.2010.present value of Mr. Schneider’s vested regular SISP benefit as of December 31, 2009,target 2010 annual incentive, which was $22,850 per month for 15 years, commencing at age 65. Present value was determined using a 5.75% discount rate. The terms of the regular SISP benefit are described following the Pension Benefits for 2009 table. The three additional years of vesting credit assumed for purposes of calculating the additional SISP benefit under Mr. Schneider’swould be deemed earned upon change of control agreement would not increaseunder the actuarial present value of his SISP amount.Long-Term Performance-Based Incentive Plan.Represents the present value of all excess SISP benefits Mr. Schneider would be entitled to upon termination of employment under the SISP. Present value was determined using a 5.75% discount rate. The terms of the excess SISP benefit are described following the Pension Benefits for 2009 table. The three additional years of employment assumed for purposes of calculating the additional retirement plan payment under Mr. Schneider’s change of control agreement would not increase the actuarial present value of his excess SISP benefits.(4)Represents the present value of 180 monthly payments of $45,700 per month, which would be paid as a SISP death benefit under the SISP. Present value was determined using a 5.75% discount rate. The terms of the SISP death benefit are described following the Pension Benefits for 2009 table.(5)Determined applying the Internal Revenue Code section 4999 excise tax of 20% only if 110% threshold is exceeded.MDU Resources Group, Inc. Proxy Statement47Proxy StatementSteven L. Bietz
Payments Upon
Termination or
Change of Control
Termination
($)
Cause
Termination
($)
For Cause
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)(1)Includes the prorated annual incentive for the year of termination, which is the full annual incentive since we assume termination occurred on December 31, 2009, and the additional severance payment of three times the annual incentive. For each of these, we used the higher of (1) the annual incentive earned in 2009 or (2) the highest annual incentive paid in 2007, 2008, and 2009.(2)2009,2010, which was $16,110 per month for 15 years, commencing at age 65. Present value was determined using a 5.75%5.12% discount rate. The terms of the regular SISP benefit are described following the Pension Benefits for 20092010 table. The three additional years of vesting credit assumed for purposes of calculating the additional SISP benefit under Mr. Bietz’s change of control agreement would not increase the actuarial present value of his SISP amount.(3)(4)5.75%5.12% discount rate. The terms of the excess SISP benefit are described following the Pension Benefits for 20092010 table.(4)(5)5.75%5.12% discount rate. The terms of the excess SISP benefit are described following the Pension Benefits for 20092010 table.(5)(6)5.75%5.12% discount rate. The terms of the SISP death benefit are described following the Pension Benefits for 20092010 table.(6)(7)sectionSection 4999 excise tax of 20% only if 110% threshold is exceeded.4852Director Compensation for 2009David L. Goodin
(a)
Earned
or Paid
in Cash
($)
(b)
Awards
($)
(c)(1)
Awards
($)
(d)
Incentive Plan
Compensation
($)
(e)
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)
Compensation
($)
(g)(2)
($)
(h)
Payments Upon
Termination or
Change of Control
Termination
($)
Cause
Termination
($)
Termination
($)
($)
($)
Cause
or Good
Reason
Termination
Following
Change of
Control
($)
Control
(Without
Termination)
($)(1)MDU Resources Group, Inc. Proxy StatementValued53
(a)
Earned
or Paid
in Cash
($)
(b)
Awards
($)
(c)(1)
Awards
($)
(d)
Incentive Plan
Compensation
($)
(e)
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)
Compensation
($)
(g)(2)
($)
(h) $17.147, the purchase price of theMDU Resources Group, Inc. common stock on the date of grant, May 18, 2009, which is the grant date fair value.on May 17, 2010, which was $19.522.premiums, except for Mr. Olson.premium.18,56213,500 stock options outstanding as of December 31, 2009.2010.$17,984$11,999 that Ms. Fagg received in our common stock in lieu of cash.$52,064$14,994 that Mr. Holaday received in our common stock in lieu of cash.(6)(7)Mr. Olson retired on August 13, 2009.Retired effective April 27, 2010.(7)(8)Mr. Olson had 18,562 stock options outstanding as of December 31, 2009.(8)Mr. Pearce had 13,500 stock options outstanding as of December 31, 2009.(9)$116$58, payments of $14,302 made during 2010 from Sister Thomas Welder’s deferred compensation and the value of Mr. Olson’sSister Thomas Welder’s deferred compensation at December 31, 2009,2010, which is payable over five years in monthly installments.(10)(9)$44,578$54,990 that Mr. Wilson received in our common stock in lieu of cash.Effective June 1, 2009, the board approved changes to the MDU Resources Group, Inc. Directors’ Compensation Policy, and theThe following table shows the cash and stock retainers payable to our non-employee directors.(1)$50,000 of this amount was paid in company common stock prior to January 1, 2009.(2)The Non-Executive Chairman does not receive board or committee meeting fees. meeting fees, if any, and any other cash compensation paid for service as a director pursuant to the Deferred Compensation Plan for Directors. Deferred amounts are held as phantom stock with dividend accruals and are paid out in cash over a five-year period after the director leaves the board.2009.2010.MDU Resources Group, Inc.Proxy Statement49Proxy Statementadoptedrevised our stock ownership guidelinespolicy for directors in November 2005.2010. Each director is required, rather than expected, to own our common stock equal in value to five times the director’s base retainer. A director, with good cause and with the knowledge of the board, may donate or assign all of the director’s company common stock to a charitable, religious, or non-profit organization in lieu of ownership. Shares acquired through purchases on the open market and participation in our director stock plans will be considered in ownership calculations as will ownership of our common stock by a spouse. A director is allowed five years commencing January 1 of the year following the year of that director’s initial election to the board to meet the guideline requirements. The level of common stock ownership is monitored with an annual report made to the compensation committee of the board. For stock ownership, please see “Security Ownership.”
as They Relate to Risk ManagementWe have reviewedanynone of these risks arising from our policies and programs are notis reasonably likely to have a material adverse effect on the company. After review and discussion with senior management, the compensation committee concurred with this assessment.company.50MDU Resources Group, Inc. Proxy Statement606151524849505148495758363760615556Vernon A. Raile65Mr. Raile retired on February 16, 2010. He served as executive vice president, treasurer and chief financial officer effective March 1, 2006; executive vice president and chief financial officer effective January 3, 2006; and senior vice president, controller and chief accounting officer effective November 2002. He served as controller until May 2003. He was vice president, controller and chief accounting officer from August 1992 until November 2002.MDU Resources Group, Inc. Proxy Statement51Proxy Statement55566162404150512009.
Owned Include:
Beneficially
Owned(1)
Individuals
Have Rights
to Acquire
Within 60
Days(2)
Family
Members(3)
of Class
Director Fees
Held as
Phantom
Stock(4)
(23 in number)5258
of Beneficial Owner
of Beneficial Ownership
of Class
51 Madison Avenue
New York, NY 10010
51 Madison Avenue
New York, NY 10010
40 East 52nd Street
New York, NY 10022
40 East 52nd Street
New York, NY 1002210,11, filed on February 12, 2010,11, 2011, New York Life Trust Company indicates that it holds these shares as directed trustee of our 401(k) plan and has sole voting and dispositive power with respect to all shares.13G,13G/A, Amendment No. 1, filed on January 29, 2010, BlackRock, Inc. reports that it completed its acquisition of Barclays Global Investors on December 1, 2009 and amends the most recent Schedule 13G filing made by Barclays Global Investors, NA and certain of its affiliates with respect to our common stock.February 2, 2011, BlackRock, Inc. reports sole voting and dispositive power with respect to all shares as the parent holding company or control person of BlackRock Asset Management Japan Limited,Co. Ltd., BlackRock Advisors (UK) Limited, BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Asset Management Canada Limited, BlackRock Asset Management Australia Limited, BlackRock Advisors, LLC, BlackRock Capital Management, Inc., BlackRock Financial Management, Inc., BlackRock Investment Management, LLC, BlackRock (Luxembourg) S.A.Investment Management (Australia) Limited, BlackRock (Netherlands) B.V., BlackRock Fund Managers Ltd,Limited, BlackRock Asset Management Ireland Limited, BlackRock International LtdLimited, and BlackRock Investment Management UK Ltd.(UK) Limited.in the household of a director, director nominee, executive officer, or holder of 5% or more of our voting stock.takestake such action as they deem appropriate in light of their responsibilities under applicable laws and regulations.partnership, Mojo, owned byLLC (MOJO). John G. Harp, who is President and Chief Executive Officer of MDU Construction Services Group, Inc., and his brother, Michael D. Harp.Harp, are managing members of MOJO. The properties described in these two leases are located in Kalispell and Billings, Montana, and have been leased since 1998. In November 2007,May 2010, the audit committee determined that renewing these leases was in the company’s best interests after it reviewed 20042010 third party appraisals for the properties and a 2007 appraisal of the Kalispell property and considered the consumer price index and our operating companies’ knowledge of local property markets. The audit committee recommended and the board approved three-year leases for these properties that provide for our indirect subsidiary to pay a combined monthly rent of $10,100$9,508 to Mojo, a Montana partnership.MOJO.2010_02_GovGuidelines.pdf.2010_11_CorpGov.pdf. The board of directors has determined that Thomas Everist, Karen B. Fagg, A. Bart Holaday, Dennis W. Johnson, Thomas C. Knudson, Richard H. Lewis, Patricia L. Moss, John L. Olson (until he retired August 13, 2009), Harry J. Pearce, Sister Thomas Welder, and John K. Wilson:53592009,2010, the board of directors considered the following transactions or relationships:at that time of approximately 1.81.85 million shares of our common stockwasis president of the City of Dickinson board of commissioners; payment to the company for utility line relocation done by our division, Montana-Dakota Utilities Co., in the regular course of business at the request of TMI Systems Design Corporation in the amount of $71,530 – Mr. Johnson was Chairman and Chief Executive Officer of TMI Systems Design Corporationcommissionerswas a director and memberis chairman of Colorado UpLift’s executive committeeDevelopment Board; charitable contributions in the amount of $10,000 to the Alliance for Choice in Education – Mr. Lewis serves as a director on the Alliance boardto St. Alexius Medical Center in the amount of $6,000$15,000 to the St. Charles Foundation – Sister Welder wasMs. Moss served as chairman and as a director ofon the St. Alexius; Charles Medical Center and$62,500$86,644 to the University of Mary – Sister Welder was the president of the University of Mary in 2008; andMary; charitable contributions to Missouri Slope Areawide United Way in the amount of $20,500 – Sister Welder wasserves as a director of the Missouri Slope Areawide United Way and•public utility services provided by our utility operations to entities with which directors are affiliated at rates fixed by the regulatory bodies having jurisdiction.Way.
Our corporate governance guidelines require a director to tender his or her resignation after a material change in job responsibility. In 2009,2010, no directors submitted resignations under this requirement.
We have a code of conduct and ethics, which we refer to as the Leading With Integrity Guide, which applies to all employees, directors, and officers.
The board separated the positions of chairman of the board and chief executive officer in 2006 and elected Harry J. Pearce, a non-employee independent director, as our chairman, and Terry D. Hildestad as our president and chief executive officer. Separating these positions allows our chief executive officer to focus on the full-time job of running our day-to-day business, while allowing the chairman of the board to lead the board in its fundamental role of providing advice to and independent oversight of management. The board believes this structure recognizes the time, effort, and energy that the chief executive officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our chairman, particularly as the board’s oversight responsibilities continue to grow.grow and demand more time and attention. The fundamental role of the board of directors is to provide oversight of the management of the company in good faith and in the best interests of the company and its stockholders. Having an independent chairman is a means to ensure the chief executive officer is accountable for managing the company in close alignment with the interests of stockholders. An independent chairman avoids the conflicts of interest that arise when the chairman and chief executive positions are combined and more effectively manages relationships between the board and the chief executive officer. An independent chairman is in a better position to encourage frank and lively discussions and to assure that the company has adequately assessed all appropriate business risks beforebelievescontinues to believe that having separate positions and having an independent outside director serve as chairman is the appropriate leadership structure for the company at this time and demonstrates our commitment to good corporate governance.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including economic risks, environmental and regulatory risks, and others, such as the impact of competition and weather conditions. Management is responsible for the day-to-day management of risks the company faces, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The board believes that establishing the right “tone at the top” and that full and open communication between management and the board of directors are essential for effective risk management and oversight. Our chairman meets regularly with our president and chief executive officer and other senior officers to discuss strategy and risks facing the company. Senior management attends the quarterly board meetings and is available to address any questions or concerns raised by the board on risk management-related and any other
|
|
|
matters. Each quarter, the board of directors receives presentations from senior management on strategic matters involving our operations. The board holds strategic planning sessions with senior management to discuss strategies, key challenges, and risks and opportunities for the company.
While the board is ultimately responsible for risk oversight at our company, our three board committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. The audit committee assists the board in fulfilling its oversight responsibilities with respect to risk assessment and management in a general manner and specifically in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements, and, in accordance with New York Stock Exchange requirements, discusses policies with respect to risk assessment and risk management.management and their adequacy and effectiveness. Risk assessment reports are regularly provided by management to the audit committee. This opens the opportunity for discussions about areas where the company may have material risk exposure, steps taken to manage those exposures, and the company’s risk tolerance in relation to company strategy. The audit committee reports regularly to the board of directors on the company’s management of risks in the audit committees’ areas of responsibility. The compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The nominating and governance committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance.
Board Meetings and Committees
During 2009,2010, the board of directors held fivesix meetings. Each incumbent director attended at least 75% of the combined total meetings of the board and the committees on which the director served during 2009.2010. Director attendance at our annual meeting of stockholders is left to the discretion of each director. FourTwo directors attended our 20092010 annual meeting of stockholders.
Harry J. Pearce was elected non-employee chairman of the board on August 17, 2006. Mr. Pearce served as lead director from February 15, 2001 to August 17, 2006. He presides at the executive session of the non-employee directors held in connection with each regularly scheduled quarterly board of directors meeting. The non-employee directors also meet in executive session with the chief executive officer at each regularly scheduled quarterly board of directors meeting. All of our non-employee directors are independent directors.
The board has a standing audit committee, compensation committee, and nominating and governance committee. These committees are composed entirely of independent directors.
The audit, compensation, and nominating and governance committees have charters, which are available for review on our website at http://www.mdu.com/Governance/Pages/BoardChartersandCommittees.aspx. Our corporate governance guidelines are available at http://www.mdu.com/Documents/Governance/2010_02_GovGuidelines.pdf,2010_11_CorpGov.pdf, and our Leading With Integrity Guide is also on our website at http://www.mdu.com/Documents/Governance/IntegrityGuide.pdf.
Nominating and Governance Committee
The nominating and governance committee met threefour times during 2009.2010. The committee members were John L. Olson, chairman, Karen B. Fagg, chairman, Richard H. Lewis, and Sister Thomas Welder. John L. Olson served as chairman of the committee until he retired from the board on August 13, 2009, and Karen B. Fagg became chairman. A. Bart Holaday, who joined the committee effective February 11, 2010, and Sister Thomas Welder, until she retired from the board on April 27, 2010.
MDU Resources Group, Inc. Proxy Statement | 61 |
Proxy Statement |
The nominating and governance committee provides recommendations to the board with respect to:
|
|
• | board organization, membership, and function |
|
|
• | committee structure and membership |
|
|
• | succession planning for our executive management and directors and |
|
|
• | corporate governance guidelines applicable to us. |
The nominating and governance committee assists the board in overseeing the management of risks in the committee’s areas of responsibility.
The committee identifies individuals qualified to become directors and recommends to the board the nominees for director for the next annual meeting of stockholders. The committee also identifies and recommends to the board individuals qualified to become our principal officers and the nominees for membership on each board committee. The committee oversees the evaluation of the board and management.
In identifying nominees for director, the committee consults with board members, our management, consultants, and other individuals likely to possess an understanding of our business and knowledge concerning suitable director candidates.
|
|
|
Our corporate governance guidelines include our policy on consideration of director candidates recommended to us. We will consider candidates that our stockholders recommend. In November 2008, we amended our policy to include additional information stockholders must provide regarding their recommended candidates. Stockholders may submit director candidate recommendations to the nominating and governance committee chairman in care of the secretary at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650. Please include the following information:
|
|
• | the candidate’s name, age, business address, residence address, and telephone number |
|
|
• | the candidate’s principal occupation |
|
|
• | the class and number of shares of our stock owned by the candidate |
|
|
• | a description of the candidate’s qualifications to be a director |
|
|
• | whether the candidate would be an independent director and |
|
|
• | any other information you believe is relevant with respect to the recommendation. |
These guidelines provide information to stockholders who wish to recommend candidates for director for consideration by the nominating and governance committee. Stockholders who wish to actually nominate persons for election to our board at an annual meeting of stockholders must follow the procedures set forth in section 2.08 of our bylaws. You may obtain a copy of the bylaws by writing to the secretary of MDU Resources Group, Inc. at the address above. Our bylaws are also available on our website at http://www.mdu.com/Documents/Governance/MDU%20ResourcesBylaws.pdf.2010_11_Bylaws.pdf. See also the section entitled “2011“2012 Annual Meeting of Stockholders” later in the proxy statement.
There are no differences in the manner by which the committee evaluates director candidates recommended by stockholders and those recommended by other sources.
In evaluating director candidates, the committee considers an individual’s:
|
|
• | background, character, and experience |
|
|
• | skills and experience which complement the skills and experience of current board members |
|
|
• | success in the individual’s chosen field of endeavor |
|
|
• | skill in the areas of accounting and financial management, banking, general management, human resources, marketing, operations, public affairs, law, and operations abroad |
|
|
• | background in publicly traded companies |
|
|
• | geographic area of residence |
|
|
• | diversity of business and professional experience, skills, gender and ethnic background, as appropriate in light of the current composition and needs of the board |
• | independence, including affiliations or relationships with other groups, organizations, or entities and |
62 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
|
|
• | prior and future compliance with applicable law and all applicable corporate governance, code of conduct and ethics, conflict of interest, corporate opportunities, confidentiality, stock ownership and trading policies, and our other policies and guidelines. |
On February 11, 2010, the board, upon recommendation of the nominating and governance committee, amended our corporate governance guidelines to include diversity as a consideration in identifying nominees for director. WhenAs indicated above, when identifying nominees to serve as director, the nominating and governance committee will consider candidates with diverse business and professional experience, skills, gender, and ethnic background, as appropriate, in light of the current composition and needs of the board. The nominating and governance committee will assessassesses the effectiveness of this policy annually in connection with the nomination of directors for election at the annual meeting of stockholders. The composition of the current board reflects diversity in business and professional experience, skills, and gender.
The committee generally will hire an outside firm to perform a background check on potential nominees.
Audit Committee
The audit committee is a separately-designated standing committee established in accordance with sectionSection 3(a)(58)(A) of the Securities Exchange Act of 1934.
The audit committee met seveneight times during 2009.2010. The audit committee members are Dennis W. Johnson, chairman, A. Bart Holaday, Richard H. Lewis, and John K. Wilson. John L. Olson served on the committee until he retired from the board on August 13, 2009. The
|
|
|
board of directors has determined that Messrs. Johnson, Holaday, Lewis, Olson (until he retired), and Wilson are “audit committee financial experts” as defined by Securities and Exchange Commission regulations and Messrs. Johnson, Holaday, Lewis, Olson (until he retired), and Wilson meet the independence standard for audit committee members under our director independence guidelines and the New York Stock Exchange listing standards, including the Securities and Exchange Commission’s audit committee member independence requirements.
The audit committee assists the board of directors in fulfilling its oversight responsibilities to the stockholders and serves as a communication link among the board, management, the independent auditors, and the internal auditors. The audit committee:
|
|
|
• | assists the board’s oversight of | |
|
|
|
| o | the integrity of our financial statements and system of internal controls |
|
|
|
| o | our compliance with legal and regulatory requirements |
|
|
|
| o | the independent auditors’ qualifications and independence |
|
|
|
| o | the performance of our internal audit function and independent auditors and |
|
|
|
| o | risk management in the audit committee’s areas of responsibility and |
|
|
|
• |
| |
|
| ||
| |
In connection with our financial statements for the year ended December 31, | |
| |
Based on the review and discussions referred to in items (1) through (3) of the above paragraph, the audit committee recommended to the board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, | |
| |
Dennis W. Johnson, Chairman | |
| |
| |
| |
|
|
|
| |
|
|
MDU Resources Group, Inc. Proxy Statement | 63 |
Proxy Statement |
Compensation Committee
The compensation committee met foursix times during 2009.2010. The compensation committee members are Thomas Everist, chairman, Karen B. Fagg, Thomas C. Knudson, and Patricia L. Moss.
The compensation committee’s responsibilities, as set forth in its charter, include:
|
|
• | review and recommend changes to the board regarding our executive compensation policies for directors and executives |
|
|
• | evaluate the chief executive officer’s performance and, either as a committee or together with other independent directors as directed by the board, determine his or her compensation |
|
|
• | recommend to the board the compensation of our other Section 16 officers and directors |
|
|
• | establish goals, make awards, review performance and determine, or recommend to the board, awards earned under our annual and long-term incentive compensation plans |
|
|
• | review and discuss with management the compensation discussion and analysis and based upon such review and discussion, determine whether to recommend to the board that the |
|
|
• | arrange for the preparation of and approve the compensation committee report to be included in our proxy statement and/or Annual Report on Form 10-K and |
|
|
• | assist the board in overseeing the management of risk in the committee’s areas of responsibility. |
|
|
|
The compensation committee and the board of directors have sole and direct responsibility for determining compensation for our Section 16 officers and directors. The compensation committee makes recommendations to the board regarding compensation of all Section 16 officers, and the board then approves the recommendations. The compensation committee and the board may not delegate their authority. They may, however, use recommendations from outside consultants, the chief executive officer, and the human resources department. The chief executive officer, the chief financial officer, the vice president-human resources, and general counsel regularly attend compensation committee meetings. The committee meets in executive session as needed.
We discuss our processes and procedures for consideration and determination of compensation of our Section 16 officers in the Compensation Discussion and Analysis. We also discuss in the Compensation Discussion and Analysis the role of our executive officers and compensation consultants in determining or recommending compensation for our Section 16 officers.
As discussed in the Compensation Discussion and Analysis, the vice president-human resources and the human resources department prepared the 2010 competitive assessment of compensation for our Section 16 officer positions. The vice president-human resources and the human resources department also worked with the chief executive officer to:
• | recommend salary grades, base salaries and annual and long-term incentive targets for our executive officers |
• | review recommended base salary grades, salary increases, and annual and long-term incentive targets submitted by executive officers for officers reporting to them for reasonableness and alignment with company or business unit objectives and |
• | design and update annual and long-term incentive programs. |
During 2010, the compensation committee directed Towers Watson to work with the vice president-human resources on the executive officer and chief executive officer compensation reviews with respect to 2011 compensation.
The compensation committee has sole authority to retain, discharge, and approve fees and other terms and conditions for retention of compensation consultants to assist in consideration of the compensation of the chief executive officer, the other Section 16 officers, and the board of directors. The compensation committee charter requires the committee’s pre-approval of the engagement of the committee’s compensation consultants by the company for any other purpose.
In February 2009, the compensation committee approved the retention of Towers Perrin as its compensation consultant for 2009 to perform duties to be identified in an engagement letter. In an engagement letter dated March 3, 2009April 8, 2010, and signed by the chairman of the compensation committee, the compensation committee requestedretained Towers PerrinWatson for assistance with 2011 compensation for the Section 16 officers and the chief executive officer. The compensation committee asked Towers Watson to provide anprepare executive compensation reviewreviews for the Section 16 officers and for the chief executive officer similar to those prepared in prior years.
The review was to:
|
|
| |
| |
64 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
In its review for the Section 16 officers, excluding the chief executive officer, Towers Watson was asked to | |
|
|
• |
|
|
|
• | address general trends in executive compensation |
• | compare |
|
|
• | construct a recommended |
• | verify the competitiveness of short-term and long-term incentive targets associated with salary |
• | address pay equity as it relates to our chief executive compensation compared to our other executives. |
In the chief executive officer review, Towers Watson was asked to use survey data and data from the company’s performance graph peer group to | |
• | develop competitive estimates for base salary and target short-term and long-term incentives |
• | recommend changes in base |
|
|
• | address general trends in chief executive |
In May 2009, upon recommendation of the chairman, the committee decided not to continue the consultant’s engagement for 2009 due to budget concerns and the company’s ability to access data through other sources.
The compensation committee did authorizeauthorized the company to participate in compensation and employee benefits surveys sponsored by Towers Perrin.Watson.
The board of directors determines compensation for our non-employee directors based upon recommendations from the compensation committee. In February 2009, theThe compensation committee decided thatdid not retain an outside consultant for the 2010 compensation review for the board of directors would be undertaken internally by the company, rather than by an outside consultant.directors. At its May 20092010 meeting, the committee reviewed the analysis of competitive data and recent trends in director compensation prepared by the company.human resources department and the vice president-human resources. The company’s analysis was based on proxy data from our performance graph peer group companies compiled by Equilar and on data from the National Association of Corporate Directors 2008/20092009/2010 Director Compensation Report. The committee compared thisthese data to our directors’ compensation and each of its components. After review and discussion of the market data, which indicated that aggregate director compensation was atbelow the median of the National Association of Corporate Directors 2008/20092009/2010 Director Compensation Report companies and above the median – 65th52nd percentile – of the peer group companies, the compensation committee recommended, and the board approved, that the annual retainerno changes be increased by $25,000made to $55,000 and that the monthly fees be eliminated, effective June 1, 2009.director compensation for 2010.
Stockholder Communications
Stockholders and other interested parties who wish to contact the board of directors or an individual director, including our non-employee chairman or non-employee directors as a group, should address a communication in care of the secretary at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650. The secretary will forward all communications.
|
|
|
MDU Resources Group, Inc. Proxy Statement | 65 |
Proxy Statement |
SHARED ADDRESS STOCKHOLDERS
In accordance with a notice sent to eligible stockholders who share a single address, we are sending only one annual report to stockholders and one proxy statement to that address unless we received instructions to the contrary from any stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, if a stockholder of record wishes to receive a separate annual report to stockholders and proxy statement in the future, he or she may contact the office of the treasurer at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650, Telephone Number: (701) 530-1000. Eligible stockholders of record who receive multiple copies of our annual report to stockholders and proxy statement can request householding by contacting us in the same manner. Stockholders who own shares through a bank, broker, or other nominee can request householding by contacting the nominee.
We hereby undertake to deliver promptly, upon written or oral request, a separate copy of the annual report to stockholders and proxy statement to a stockholder at a shared address to which a single copy of the document was delivered.
20112012 ANNUAL MEETING OF STOCKHOLDERS
Director Nominations: Our bylaws provide that director nominations may be made only by (i) the board at any meeting of stockholders or (ii) at an annual meeting by a stockholder entitled to vote for the election of directors and who has complied with the procedures established by the bylaws. For a nomination to be properly brought before an annual meeting by a stockholder, the stockholder intending to make the nomination must have given timely and proper notice of the nomination in writing to the corporate secretary in accordance with and containing all information and the completed questionnaire provided for in the bylaws. To be timely, such notice must be delivered to or mailed to the corporate secretary and received at our principal executive offices not later than 90 days prior to the first anniversary of the preceding year’s annual meeting of stockholders. For purposes of our annual meeting of stockholders expected to be held April 26, 2011,24, 2012, any stockholder who wishes to submit a nomination must submit the required notice to the corporate secretary on or before January 27, 2011.2012.
Other Meeting Business: Our bylaws also provide that no business may be brought before an annual meeting except (i) as specified in the meeting notice given by or at the direction of the board, (ii) as otherwise properly brought before the meeting by or at the direction of the board or (iii) properly brought before the meeting by a stockholder entitled to vote who has complied with the procedures established by the bylaws. For business to be properly brought before an annual meeting by a stockholder (other than nomination of a person for election as a director which is described above) the stockholder must have given timely and proper notice of such business in writing to the corporate secretary, in accordance with, and containing all information provided for in the bylaws and such business must be a proper matter for stockholder action under the General Corporation Law of Delaware. To be timely, such notice must be delivered or mailed to the corporate secretary and received at our principal offices not later than the close of business 90 days prior to the first anniversary of the preceding year’s annual meeting of stockholders. For purposes of our annual meeting expected to be held April 26, 2011,24, 2012, any stockholder who wishes to bring business before the meeting (other than nomination of a person for election as a director which is described above) must submit the required notice to the corporate secretary on or before January 27, 2011.2012.
Discretionary Voting: Rule 14a-4 of the Securities and Exchange Commission’s proxy rules allows us to use discretionary voting authority to vote on matters coming before an annual stockholders’ meeting if we do not have notice of the matter at least 45 days before the anniversary date on which we first mailed our proxy materials for the prior year’s annual stockholders’ meeting or the date specified by an advance notice provision in our bylaws. Our bylaws contain an advance notice provision that we have described above. For our annual meeting of stockholders expected to be held on April 26, 2011,24, 2012, stockholders must submit such written notice to the corporate secretary on or before January 27, 2011.2012.
|
|
|
Stockholder Proposals: The requirements we describe above are separate from and in addition to the Securities and Exchange Commission’s requirements that a stockholder must meet to have a stockholder proposal included in our proxy statement under Rule 14a-8 of the Exchange Act. For purposes of our annual meeting of stockholders expected to be held on April 26, 2011,24, 2012, any stockholder who wishes to submit a proposal for inclusion in our proxy materials must submit such proposal to the corporate secretary on or before November 12, 2010.2011.
Bylaw Copies: You may obtain a copy of the full text of the bylaw provisions discussed above by writing to the corporate secretary. Our bylaws are also available on our website at: http://www.mdu.com/Documents/Governance/MDU%20ResourcesBylaws.pdf.2010_11_Bylaws.pdf.
66 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
We will make available to our stockholders to whom we furnish this proxy statement a copy of our Annual Report on Form 10-K, excluding exhibits, for the year ended December 31, 2009,2010, which is required to be filed with the Securities and Exchange Commission. You may obtain a copy, without charge, upon written or oral request to the Office of the Treasurer of MDU Resources Group, Inc., 1200 West Century Avenue, Mailing Address: P.O. Box 5650, Bismarck, ND 58506-5650, Telephone Number: (701) 530-1000. You may also access our Annual Report on Form 10-K through our website at www.mdu.com.
|
| |
| By order of the Board of Directors, | |
|
| |
| ||
| Paul K. Sandness | |
| Secretary | |
| March |
|
|
MDU Resources Group, Inc. Proxy Statement | 67 |
Proxy Statement |
(This page has been left blank intentionally.)
|
|
| MDU Resources Group, Inc. Proxy Statement |
|
Proxy Statement |
MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
|
| |
| |
1.1 | Establishment of the Plan.MDU Resources Group, Inc. |
The Plan first became effective when approved by the stockholders at the annual meeting on April 22, 1997. The Plan, as amended, will become effective on April 25, 2006 if it is approved by the stockholders at the 2006 annual meeting. The Plan shall remain in effect as provided in Section 1.3 herein. | |
1.2 | Purpose of the Plan.The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interests of Participants to those of Company stockholders and customers. |
The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract and retain the services of Participants upon whose judgment, interest and special effort the successful conduct of its operations is largely dependent. | |
1.3 | Duration of the Plan.The Plan shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article 15 herein, until all Shares subject to it shall have been purchased or acquired according to the Plan’s provisions. |
Article 2. Definitions | |
Whenever used in the Plan, the following terms shall have the meanings set forth below and, when such meaning is intended, the initial letter of the word is capitalized: | |
2.1 | “Award”means, individually or collectively, a grant under the Plan of NQSOs, ISOs, SARs, Restricted Stock, Performance Units, Performance Shares or any other type of award permitted under Article 10 of the Plan. |
2.2 | “Award Agreement”means an agreement entered into by each Participant and the Company, setting forth the terms and provisions applicable to an Award granted to a Participant under the Plan. |
2.3 | “Base Value”of an SAR shall have the meaning set forth in Section 7.1 herein. |
2.4 | “Board”or“Board of Directors”means the Board of Directors of the Company. |
2.5 | A“Change in Control”shall mean: |
RESOLVED, that the Board of Directors of MDU Resources Group, Inc. (the “Corporation”) hereby declares it advisable:
(A) That the provisions requiring a supermajority vote by stockholders set forth in Articles TWELFTH and FIFTEENTH of the Restated Certificate of Incorporation of the Corporation be repealed, and that certain technical amendments to the provisions of Articles THIRTEENTH and FOURTEENTH of the Restated Certificate of Incorporation of the Corporation be adopted in connection with the repeal of such supermajority vote provisions and the declassification of the Board of Directors of the Corporation effected in 2007, effective at the close of business on the date on which the appropriate Certificate of Amendment to the Corporation’s Restated Certificate of Incorporation is filed in the office of the Secretary of State of the State of Delaware;
(B) That, in order to effect the foregoing, the Restated Certificate of Incorporation of the Corporation, as heretofore amended, be further amended by amending Articles TWELFTH, THIRTEENTH, FOURTEENTH and FIFTEENTH as follows:
TWELFTH.[RESERVED]
Part I. For the purposes of this Article TWELFTH, the following terms shall have the meaning hereinafter set forth:
(a)“Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on January 1, 1985.
(b)A person shall be a “Beneficial Owner” of any Voting Stock:
(i)which such person or any of its Affiliates or Associates (as herein defined) beneficially owns, directly or indirectly; or
(ii)which such person or any of its Affiliates or Associates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding; or
(iii)which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock.
(c)“Business Combination” shall mean any of the following:
(i)any merger or consolidation of the Corporation or any Subsidiary with (A) any Interested Stockholder or (B) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate of an Interested Stockholder; or
(ii)any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value of $5,000,000 or more but shall not include transactions between the Corporation and its Subsidiaries; or
(iii)the issuance or transfer by the Corporation or any subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $5,000,000 or more; or,
(iv)the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Stockholder or any Affiliate of any Interested Stockholder; or
(a) | The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2.5; or |
|
|
| |
| |
MDU Resources Group, Inc. Proxy Statement | A-1 |
|
Proxy Statement |
| (b) | Individuals who, as of April 22, 1997, which is the effective date of the Plan, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or |
(c) | Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or | |
(d) | Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. |
(v)any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, statutory share exchange, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder.
(d)“Continuing Director” shall mean any member of the Board of Directors of the Corporation (the “Board”) who is unaffiliated with, and not a nominee of, the Interested Stockholder (as such term is used in the context of a Business Combination) and was a member of the Board prior to the time that the Interested Stockholder became an Interested Stockholder and any successor of a Continuing Director who is unaffiliated with, and not a nominee of, the Interested Stockholder and is designated to succeed a Continuing Director by two-thirds of Continuing Directors then on the Board.
(e)“Fair Market Value” means:
(i)in the case of stock, the highest closing sale price during the thirty-day period immediately preceding the date in question of a share of such stock on the Composite Tape for the New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape for the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the thirty-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”) or, if NASDAQ is not then in use, any other system then in use, or, if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by two-thirds of the Continuing Directors in good faith; and
(ii)in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by a majority of the Continuing Directors in good faith.
(f)“Institutional Voting Stock” shall mean any class of Voting Stock which was issued to and continues to be held solely by one or more insurance companies, pension funds, commercial banks, savings banks and/or similar financial institutions or institutional investors.
(g)“Interested Stockholder” shall mean any person (other than the Corporation or any Subsidiary) who or which:
(i)is the Beneficial Owner, directly or indirectly, of more than 10 percent of the voting power of the then outstanding Voting Stock; or
(ii)is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question, became the Beneficial Owner, directly or indirectly, of 10 percent or more of the voting power of the then outstanding Voting Stock; or
(iii)is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933.
For the purpose of determining whether a person is an Interested Stockholder pursuant to this paragraph (g), the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of paragraph (b) of this Part I but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(h)In the event of any Business Combination in which the Corporation survives the phrase “consideration other than cash to be received” as used in Sections (a) and (b) of Part II of this Article TWELFTH shall include the shares of Common Stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares.
(i)A “person” shall mean any individual, firm, partnership, trust, corporation or other entity.
|
|
For avoidance of doubt, unless otherwise determined by the Board, the sale of a subsidiary, operating entity or business unit of the Company shall not constitute a Change in Control for purposes of this Agreement. | |
| |
2.6 | “Code”means the Internal Revenue Code of 1986, as amended from time to time. |
2.7 | “Committee”means the Committee, as specified in Article 3, appointed by the Board to administer the Plan with respect to Awards. |
2.8 | “Company”means MDU Resources Group, Inc., a Delaware corporation, or any successor thereto as provided in Article 18 herein. |
2.9 | “Covered Employee”means any Participant who would be considered a “Covered Employee” for purposes of Section 162(m) of the Code. |
2.10 | “Director”means any individual who is a member of the Board of Directors of the Company. |
2.11 | “Disability”means “permanent and total disability” as defined under Section 22(e)(3) of the Code. |
2.12 | “Dividend Equivalent”means, with respect to Shares subject to an Award, a right to be paid an amount equal to dividends declared on an equal number of outstanding Shares. |
2.13 | “Eligible Employee”means an Employee who is eligible to participate in the Plan, as set forth in Section 5.1 herein. |
2.14 | “Employee”means any full-time or regularly-scheduled part-time employee of the Company or of the Company’s Subsidiaries, who is not covered by any collective bargaining agreement to which the Company or any of its Subsidiaries is a party. Directors who are not otherwise employed by the Company shall not be considered Employees for purposes of the Plan. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Subsidiaries (or between Subsidiaries) shall not be deemed a termination of employment. |
| |
A-2 | MDU Resources Group, Inc. Proxy Statement |
|
Proxy Statement |
(j)“Subsidiary” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in paragraph (g) of this Part I, the term “Subsidiary” shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation.
(k)“Voting Stock” shall mean each share of stock of the Corporation generally entitled to vote in elections of directors.
The Continuing Directors of the Corporation shall have the power and duty to determine, for the purposes of this Article TWELFTH, on the basis of information known to them after reasonable inquiry, all facts necessary to determine the applicability of the various provisions of this Article TWELFTH, including (a) whether a person is an Interested Stockholder, (b) the number of shares of Voting Stock beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another, and (d) whether a class of Voting Stock is Institutional Voting Stock. Any such determination made in good faith shall be binding and conclusive on all parties.
PART II.
Except as otherwise expressly provided in Part III of this Article TWELFTH and in addition to any other provision of law and as may otherwise be set forth in the Certificate of Incorporation, the consummation of any Business Combination shall require that all of the following conditions shall have been met:
(a)The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the highest of the following:
(i)(if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it (A) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the “Announcement Date”) or (B) in the transaction in which it became an Interested Stockholder, whichever is highest;
(ii)the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (such latter date is referred to in this Article TWELFTH as the “Determination Date”), whichever is higher; and
(iii)(if applicable) the price per share equal to the Fair Market Value per share of Common Stock determined pursuant to paragraph (ii) above, multiplied by the ratio of (A) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it within the two-year period immediately prior to the Announcement Date to (B) the Fair Market Value per share of Common Stock on the first day in such two-year period upon which the Interested Stockholder acquired any shares of Common Stock.
(b)The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any class of outstanding Voting Stock other than Common Stock (and other than Institutional Voting Stock), shall be at least equal to the highest of the following (it being intended that the requirements of this paragraph (b) shall be required to be met with respect to every class of outstanding Voting Stock, whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock):
(i)(if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it (A) within the two-year period immediately prior to the Announcement Date or (B) in the transaction in which it became an Interested Stockholder, whichever is higher;
(ii)(if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation;
(iii)the Fair Market Value per share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher; and
|
|
2.15 | “Exchange Act”means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. |
| |
2.16 | “Exercise Period”means the period during which an SAR or Option is exercisable, as set forth in the related Award Agreement. |
2.17 | “Fair Market Value”shall mean the average of the high and low sale prices as reported in the consolidated transaction reporting system or, if there is no such sale on the relevant date, then on the last previous day on which a sale was reported. |
2.18 | “Freestanding SAR”means an SAR that is granted independently of any Option. |
2.19 | “Full Value Award”means an Award pursuant to which Shares may be issued, other than an Option or an SAR. |
2.20 | “Incentive Stock Option”or“ISO”means an option to purchase Shares, granted under Article 6 herein, which is designated as an Incentive Stock Option and satisfies the requirements of Section 422 of the Code. |
2.21 | “Nonqualified Stock Option”or“NQSO”means an option to purchase Shares, granted under Article 6 herein, which is not intended to be an Incentive Stock Option under Section 422 of the Code. |
2.22 | “Option”means an Incentive Stock Option or a Nonqualified Stock Option. |
2.23 | “Option Price”means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee and set forth in the Option Award Agreement. |
2.24 | “Participant”means an Employee of the Company who has outstanding an Award granted under the Plan. |
2.25 | “Performance Goals”means the performance goals established by the Committee, which shall be based on one or more of the following measures: sales or revenues, earnings per share, shareholder return and/or value, funds from operations, operating income, gross income, net income, cash flow, return on equity, return on capital, capital efficiency, earnings before interest, operating ratios, stock price, enterprise value, company value, asset value growth, net asset value, shareholders’ equity, dividends, customer satisfaction, accomplishment of mergers, acquisitions, dispositions or similar extraordinary business transactions, safety, sustainability, profit returns and margins, financial return ratios, market performance, oil and/or gas production (growth, value and costs) and oil and/or gas reserves (including proved, probable and possible reserves and growth, value and costs) and finding or development costs. Performance goals may be measured solely on a corporate, subsidiary or business unit basis, or a combination thereof. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure. |
2.26 | “Performance Unit”means an Award granted to an Employee, as described in Article 9 herein. |
2.27 | “Performance Share”means an Award granted to an Employee, as described in Article 9 herein. |
2.28 | “Period of Restriction”means the period during which the transfer of Restricted Stock is limited in some way, as provided in Article 8 herein. |
2.29 | “Person”shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act, as used in Sections 13(d) and 14(d) thereof, including usage in the definition of a “group” in Section 13(d) thereof. |
2.30 | “Qualified Restricted Stock”means an Award of Restricted Stock designated as Qualified Restricted Stock by the Committee at the time of grant and intended to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C). |
2.31 | “Restricted Stock”means an Award of Shares granted to a Participant pursuant to Article 8 herein. |
2.32 | “Shares”means the shares of common stock of the Company. |
2.33 | “Stock Appreciation Right”or“SAR”means a right, granted alone or in connection with a related Option, designated as an SAR, to receive a payment on the day the right is exercised, pursuant to the terms of Article 7 herein. Each SAR shall be denominated in terms of one Share. |
| |
MDU Resources Group, Inc. Proxy Statement | A-3 |
|
Proxy Statement |
(iv)(if applicable) the price per share equal to the Fair Market Value per share of such class of Voting Stock determined pursuant to paragraph (b)(iii) above, multiplied by the ratio of (A) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it within the two-year period immediately prior to the Announcement Date to (B) the Fair Market Value per share of such class of Voting Stock on the first day in such two-year period upon which the Interested Stockholder acquired any shares of such class of Voting Stock.
(c)The consideration to be received by holders of a particular class of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class of Voting Stock. If the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by it.
(d)After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination:
(i)except as approved by two-thirds of the Continuing Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on the outstanding Preferred Stock;
(ii)there shall have been (A) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by two-thirds of the Continuing Directors, and (B) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by two-thirds of the Continuing Directors; and
(iii)such Interested Stockholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an Interested Stockholder.
(e)After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise.
(f)A proxy or information statement describing the proposed Business Combination and containing the information specified for proxy or information statements under the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to stockholders of the Corporation at least thirty days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions).
PART III.
Unless the Business Combination shall have been approved by two-thirds of the Continuing Directors, (a) the provisions of Part II of this Article TWELFTH shall be applicable to each particular Business Combination, and (b) any such Business Combination shall be approved by the affirmative vote of at least four-fifths of the voting power of all shares of Voting Stock (considered for purposes of this Article TWELFTH as one class, it being understood that for purposes of this Article TWELFTH, each share of Voting Stock shall have the number of votes granted to it pursuant to Article FOURTH of the Certificate of Incorporation).
PART IV.
Nothing contained in this Article TWELFTH shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law.
THIRTEENTH.
(a)The business and affairs of the Corporation shall be managed by the Board of Directors consisting of not less than six nor more than fifteen persons. The exact number of directors within the limitations specified in the preceding sentence shall be fixed from
|
|
2.34 | “Subsidiary”means any corporation that is a “subsidiary corporation” of the Company as that term is defined in Section 424(f) of the Code. |
| |
2.35 | “Tandem SAR”means an SAR that is granted in connection with a related Option, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall be similarly canceled). |
Article 3. Administration | |
3.1 | The Committee.The Plan shall be administered by the Compensation Committee of the Board, or by any other Committee appointed by the Board. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. |
3.2 | Authority of the Committee.The Committee shall have full power except as limited by law, the Articles of Incorporation and the Bylaws of the Company, subject to such other restricting limitations or directions as may be imposed by the Board and subject to the provisions herein, to determine the size and types of Awards; to determine the terms and conditions of such Awards in a manner consistent with the Plan; to construe and interpret the Plan and any agreement or instrument entered into under the Plan; to establish, amend or waive rules and regulations for the Plan’s administration; and (subject to the provisions of Article 15 herein) to amend the terms and conditions of any outstanding Award. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate its authorities as identified hereunder. |
3.3 | Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to Awards under the Plan as it may deem advisable, including, without limitation, restrictions to comply with applicable Federal securities laws, with the requirements of any stock exchange or market upon which such Shares are then listed and/or traded and with any blue sky or state securities laws applicable to such Shares. |
3.4 | Approval.The Board or the Committee shall approve all Awards made under the Plan and all elections made by Participants, prior to their effective date, to the extent necessary to comply with Rule 16b-3 under the Exchange Act. |
3.5 | Decisions Binding.All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders or resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its stockholders, Employees, Participants and their estates and beneficiaries. |
3.6 | Costs.The Company shall pay all costs of administration of the Plan. |
Article 4. Shares Subject to the Plan | |
4.1 | Number of Shares.Subject to Section 4.2 herein, the maximum number of Shares that may be issued pursuant to Awards under the Plan shall be 9,242,806. Shares underlying lapsed or forfeited Awards of Restricted Stock shall not be treated as having been issued pursuant to an Award under the Plan. Shares withheld from an Award of Restricted Stock to satisfy tax withholding obligations shall be counted as Shares issued pursuant to an Award under the Plan. Shares that are potentially deliverable under an Award that expires or is canceled, forfeited, settled in cash or otherwise settled without the delivery of Shares shall not be treated as having been issued under the Plan. Shares that are withheld to satisfy the Option Price or tax withholding obligations related to an Option, SAR or other Award pursuant to which the Shares withheld have not yet been issued shall not be deemed to be Shares issued under the Plan. |
Shares issued pursuant to the Plan may be (i) authorized but unissued Shares of Common Stock, (ii) treasury shares, or (iii) shares purchased on the open market. | |
4.2 | Adjustments in Authorized Shares.In the event of any equity restructuring such as a stock dividend, stock split, spinoff, rights offering or recapitalization through a large, nonrecurring cash dividend, the Committee shall cause an equitable adjustment to be made (i) in the number and kind of Shares that may be delivered under the Plan, (ii) in the individual limitations set forth in Section 4.3 and (iii) with respect to outstanding Awards, in the number and kind of Shares subject to outstanding Awards, the Option Price, Base Value or other price of Shares subject to outstanding Awards, any Performance Goals relating to Shares, the market price of Shares, or per-Share results, and other terms and conditions of outstanding Awards, in the case of (i), (ii) and (iii) to prevent dilution |
| |
A-4 | MDU Resources Group, Inc. Proxy Statement |
|
Proxy Statement |
& nbsp;
time to time by the Board of Directors pursuant to a resolution adopted by two-thirds of the Continuing Directors. The directors need not be elected by ballot unless required by the By-Laws of the Corporation.
At each annual meeting of stockholders, the directors shall be elected for terms expiring at the next annual meeting of stockholders;provided, however, that each director elected at the annual meetings of stockholders held in 2005, 2006 and 2007 shall serve for the full three-year term to which such director was elected. Each director shall hold office for the term for which he is elected or appointed and until his successor shall be elected and qualified or until hisearlier resignation, removal from office or death, or until he shall resign or be removed.
In the event of any increase or decrease in the authorized number of directors, each director then serving as such shall nevertheless continue as director until the expiration of his current term, oruntil his earlier resignation, removal from office or death.
(b)Newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled by a two-thirds vote of the Continuing Directors then in office, or a sole remaining director, although less than a quorum, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders. If one or more directors shall resign from the Board effective as of a future date, such vacancy or vacancies shall be filled pursuant to the provisions hereof, and such new directorship(s) shall become effective when such resignation or resignations shall become effec tive, and each director so chosen shall hold office for a term expiring at the next annual meeting of stockholders.
(c)[RESERVED]
Any director or the entire Board of Directors may be removed; however, such removal must be for cause and must be approved as set forth in this Section. Except as may otherwise be provided by law, cause for removal shall be construed to exist only if: (i) the director whose removal is proposed has been convicted, or where a director was granted immunity to testify where another has been convicted, of a felony by a court of competent jurisdiction and such conviction is no longer subject to direct appeal; (ii) such director has been grossly negligent in the performance of his duties to the Corporation; or (iii) such director has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects his ability as a director of the Corporation, and such adjudication is no longer subject to direct appeal.
Removal for cause, as cause is defined above, must be approved by at least a majority vote of the shares of the Corporation then entitled to be voted at an election for that director, and the action for removal must be brought within three months of such conviction or adjudication.
Notwithstanding the foregoing, and except as otherwise provided by law, in the event that Preferred Stock of the Corporation is issued and holders of any one or more series of such Preferred Stock are entitled, voting separately as a class, to elect one or more directors of the Corporation to serve for such terms as set forth in the Certificate of Incorporation, the provisions of this Article THIRTEENTH, Section (c), shall also apply, in respect to the removal of a director or directors so elected to the vote of the holders of the outstanding shares of that class and not to the vote of the outstanding shares as a whole.
(d)Any directors elected pursuant to special voting rights of one or more series of Preferred Stock, voting as a class, shall be excluded from, and for no purpose be counted in, the scope and operation of the foregoing provisions, unless expressly stated.
(e)For purposes of this ArticleTHIRTEENTH, the following terms shall have themeanings hereinafter set forth:
(i)“Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on January 1, 1985.
(ii)A person shall be a “Beneficial Owner” of any Voting Stock:
(A)which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or
(B)which such person or any of its Affiliates or Associates has(1)the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, orotherwise, or (2) the right to vote pursuant to anyagreement, arrangement or understanding; or
|
|
or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation or liquidation, the Committee may, in its sole discretion, cause an equitable adjustment as described in the foregoing sentence to be made to prevent dilution or enlargement of rights. The number of Shares subject to any Award shall always be rounded down to a whole number when adjustments are made pursuant to this Section 4.2. Adjustments made by the Committee pursuant to this Section 4.2 shall be final, binding and conclusive. | |
| |
4.3 | Individual Limitations.Subject to Section 4.2 herein, (i) the total number of Shares with respect to which Options or SARs may be granted in any calendar year to any Covered Employee shall not exceed 2,250,000 Shares; (ii) the total number of shares of Qualified Restricted Stock that may be granted in any calendar year to any Covered Employee shall not exceed 2,250,000 Shares; (iii) the total number of Performance Shares or Performance Units that may be granted in any calendar year to any Covered Employee shall not exceed 2,250,000 Performance Shares or Performance Units, as the case may be; (iv) the total number of Shares that are intended to qualify for deduction under Section 162(m) of the Code granted pursuant to Article 10 herein in any calendar year to any Covered Employee shall not exceed 2,250,000 Shares; (v) the total cash Award that is intended to qualify for deduction under Section 162(m) of the Code that may be paid pursuant to Article 10 herein in any calendar year to any Covered Employee shall not exceed $6,000,000; and (vi) the aggregate number of Dividend Equivalents that are intended to qualify for deduction under Section 162(m) of the Code that a Covered Employee may receive in any calendar year shall not exceed $6,000,000. |
Article 5. Eligibility and Participation | |
5.1 | Eligibility.Persons eligible to participate in the Plan include all officers and key employees of the Company and its Subsidiaries, as determined by the Committee, including Employees who are members of the Board, but excluding Directors who are not Employees. |
5.2 | Actual Participation.Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees those to whom Awards shall be granted and shall determine the nature and amount of each Award. |
Article 6. Stock Options | |
6.1 | Grant of Options.Subject to the terms and conditions of the Plan, Options may be granted to an Eligible Employee at any time and from time to time, as shall be determined by the Committee. |
The Committee shall have complete discretion in determining the number of Shares subject to Options granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such Options. The Committee may grant ISOs, NQSOs, or a combination thereof. | |
6.2 | Option Award Agreement.Each Option grant shall be evidenced by an Option Award Agreement that shall specify the Option Price, the term of the Option, the number of Shares to which the Option pertains, the Exercise Period and such other provisions as the Committee shall determine, including but not limited to any rights to Dividend Equivalents. The Option Award Agreement shall also specify whether the Option is intended to be an ISO or an NQSO. |
The Option Price for each Share purchasable under any Incentive Stock Option granted hereunder shall be not less than one hundred percent (100%) of the Fair Market Value per Share at the date the Option is granted; and provided, further, that in the case of an Incentive Stock Option granted to a person who, at the time such Incentive Stock Option is granted, owns shares of stock of the Company or of any Subsidiary which possess more than ten percent (10%) of the total combined voting power of all classes of shares of stock of the Company or of any Subsidiary, the Option Price for each Share shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share at the date the Option is granted. The Option Price will be subject to adjustment in accordance with the provisions of Section 4.2 of the Plan. | |
No Incentive Stock Option by its terms shall be exercisable after the expiration of ten (10) years from the date of grant of the Option; provided, however, in the case of an Incentive Stock Option granted to a person who, at the time such Option is granted, owns shares of stock of the Company or of any Subsidiary possessing more than ten percent (10%) of the total combined voting power of all classes of shares of stock of the Company or of any Subsidiary, such Option shall not be exercisable after the expiration of five (5) years from the date such Option is granted. | |
6.3 | Exercise of and Payment for Options.Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve. |
| |
MDU Resources Group, Inc. Proxy Statement | A-5 |
|
Proxy Statement |
(C)which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has anyagreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock.
(iii)“Continuing Director” shall mean any member of the Board of Directors of the Corporation who is unaffiliated with, and not a nominee of,any Interested Stockholder and was a member of the Boardof Directors prior to the time that any Interested Stockholder became an Interested Stockholder and any successor of a Continuing Director who is unaffiliated with, and not a nominee of,any Interested Stockholder and is designated to succeed a Continuing Director by two-thirds ofthe Continuing Directors then on the Boardof Direc tors.
(iv)“Interested Stockholder” shall mean any person (other than the Corporation or any Subsidiary) who or which:
(A)is the Beneficial Owner, directly or indirectly, of more than 10 percent of the voting power of the then outstanding Voting Stock; or
(B)is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question, became the Beneficial Owner, directly or indirectly, of more than 10 percent of the voting power of the then outstanding Voting Stock; or
(C)is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933.
For the purpose of determining whether a person is an Interested Stockholder pursuant to thisArticle THIRTEENTH, Section (e)(iv), the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application ofSection (e)(ii) of this Article THIRTEENTH but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(v)A “person” shall mean any individual, firm,partnership, trust, corporation or other entity.
(vi)“Subsidiary” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth inSection (e)(iv) of this Article THIRTEENTH, the term “Subsidiary” shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation.
(vii)“Voting Stock” shall mean each share of stock of the Corporation generally entitled to vote in elections of directors.
The Continuing Directors of the Corporation shall have the power and duty to determine, on the basis of information known to them afterreasonable inquiry, all facts necessary to determine the applicability of the various provisions of this ArticleTHIRTEENTH, including (A) whether a person is an Interested Stockholder,(B) the number of shares of Voting Stock beneficially owned by any person,and (C) whether a person is an Affiliate or Associate of another. Any such determination made in good faith shall be binding and conclusive on all parties.
(f)Capitalized terms used and not defined in Article FOURTEENTH or in Article SIXTEENTH of the Certificate of Incorporation which are defined in Section (e) of this Article THIRTEENTH shall have the meanings, for purposes of Article FOURTEENTH and Article SIXTEENTH of the Certificate of Incorporation, ascribed to such terms in Section (e) of this Article THIRTEENTH.
FOURTEENTH. The Board of Directors, in evaluating any proposal by another party to (a) make a tender or exchange offer for any securities of the Corporation, (b) effect aBusiness Combination (as defined in Article TWELFTH),merger, consolidation or other business combination of the Corporation or (c) effect any other transaction having an effect upon the properties, operations or control of the Corporation similar to a tender or exchange offeror Business Combinationfor any securities of the Corporation or a merger, consolidation or other business combination of the Corporation, as the case may be, whether by an Interested Stockholder
|
|
A Participant may exercise an Option at any time during the Exercise Period. Options shall be exercised by the delivery of a written notice of exercise to the Company or its designee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by provisions for full payment for the Shares. | |
| |
The Option Price upon exercise of any Option shall be payable either: (a) in cash or its equivalent, (b) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), (c) by share withholding, (d) by cashless exercise or (e) by a combination of (a),(b),(c), and/or (d). | |
As soon as practicable after receipt of a written notification of exercise of an Option, provisions for full payment therefor and satisfaction or provision for satisfaction of any tax withholding or other obligations, the Company shall (i) deliver to the Participant, in the Participant’s name or the name of the Participant’s designee, a Share certificate or certificates in an appropriate aggregate amount based upon the number of Shares purchased under the Option, or (ii) cause to be issued in the Participant’s name or the name of the Participant’s designee, in book-entry form, an appropriate number of Shares based upon the number of Shares purchased under the Option. | |
6.4 | Termination of Employment.Each Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee (subject to applicable law), shall be included in the Option Award Agreement entered into with Participants, need not be uniform among all Options granted pursuant to the Plan or among Participants and may reflect distinctions based on the reasons for termination of employment. If the employment of a Participant by the Company or by any Subsidiary is terminated for any reason other than death, any Incentive Stock Option granted to such Participant may not be exercised later than three (3) months (one (1) year in the case of termination due to Disability) after the date of such termination of employment. |
6.5 | Transferability of Options.Except as otherwise determined by the Committee and set forth in the Option Award Agreement, no Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and all Incentive Stock Options granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. |
Article 7. Stock Appreciation Rights | |
7.1 | Grant of SARs.Subject to the terms and conditions of the Plan, an SAR may be granted to an Eligible Employee at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs or any combination of these forms of SAR. |
The Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs. | |
The Base Value of a Freestanding SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR. The Base Value of Tandem SARs shall equal the Option Price of the related Option. | |
7.2 | SAR Award Agreement.Each SAR grant shall be evidenced by an SAR Award Agreement that shall specify the number of SARs granted, the Base Value, the term of the SAR, the Exercise Period and such other provisions as the Committee shall determine. |
7.3 | Exercise and Payment of SARs.Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. |
Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO. | |
| |
A-6 | MDU Resources Group, Inc. Proxy Statement |
|
Proxy Statement |
Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them. | |||
A Participant may exercise an SAR at any time during the Exercise Period. SARs shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of SARs being exercised. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount equal to the product of: | |||
(a) | the excess of (i) the Fair Market Value of a Share on the date of exercise over (ii) the Base Value multiplied by | ||
(b) | the number of Shares with respect to which the SAR is exercised. | ||
At the sole discretion of the Committee, the payment to the Participant upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. | |||
7.4 | Termination of Employment.Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the SAR Award Agreement entered into with Participants, need not be uniform among all SARs granted pursuant to the Plan or among Participants and may reflect distinctions based on the reasons for termination of employment. | ||
| |||
7.5 | Transferability of SARs.Except as otherwise determined by the Committee and set forth in the SAR Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or his or her legal representative. | ||
Article 8. Restricted Stock | |||
8.1 | Grant of Restricted Stock.Subject to the terms and conditions of the Plan, Restricted Stock may be granted to Eligible Employees at any time and from time to time, as shall be determined by the Committee. | ||
The Committee shall have complete discretion in determining the number of shares of Restricted Stock granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such Restricted Stock. | |||
In addition, the Committee may, prior to or at the time of grant, designate an Award of Restricted Stock as Qualified Restricted Stock, in which event it will condition the grant or vesting, as applicable, of such Qualified Restricted Stock upon the attainment of the Performance Goals selected by the Committee. | |||
8.2 | Restricted Stock Award Agreement.Each Restricted Stock grant shall be evidenced by a Restricted Stock Award Agreement that shall specify the Period or Periods of Restriction, the number of Restricted Stock Shares granted and such other provisions as the Committee shall determine. | ||
8.3 | Transferability.Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Award Agreement. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant or his or her legal representative. | ||
8.4 | Certificate Legend.Each certificate representing Restricted Stock granted pursuant to the Plan may bear a legend substantially as follows: | ||
“The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer as set forth in MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan and in a Restricted Stock Award Agreement. A copy of such Plan and such Agreement may be obtained from MDU Resources Group, Inc.” | |||
The Company shall have the right to retain the certificates representing Restricted Stock in the Company’s possession until such time as all restrictions applicable to such Shares have been satisfied. | |||
(as defined in Article TWELFTH)or otherwise, may, in connection with the exercise of its judgment as to what is in the best interests of the Corporation and its stockholders, give due consideration to the following:
(i)the consideration to be received by the Corporation or its stockholders in connection with such transaction in relation not only to the then current market price for the outstanding capital stock of the Corporation, but also to the market price for the capital stock of the Corporation over a period of years, the estimated price that might be achieved in a negotiated sale of the Corporation as a whole or in part through orderly liquidation, the premiums over market price for the securities of other corporations in similar transactions, current political, economic and other factors bearing on securities prices and the Corporation’s financial condition, future prospects and future value as an independent Corporation;
(ii)the character, integrity and business philosophy of the other party or parties to the transaction and the management of such party or parties;
(iii)the business and financial conditions and earnings prospects of the other party or parties to the transaction, including, but not limited to, debt service and other existing or likely financial obligations of such party or parties, the intention of the other party or parties to the transaction regarding the use of the assets of the Corporation to finance the acquisition, and the possible effect of such conditions upon the Corporation and its Subsidiaries and the other elements of the communities in which the Corporation and its Subsidiaries operate or are located;
(iv)the projected social, legal and economic effects of the proposed action or transaction upon the Corporation or its Subsidiaries, its employees, suppliers, customers and others having similar relationships with the Corporation, and the communities in which the Corporation and its Subsidiaries do business;
(v)the general desirability of the continuance of the Corporation as an independent entity; and
(vi)such other factors as the Continuing Directors may deem relevant.
FIFTEENTH.[RESERVED]Notwithstanding anything to the contrary contained in this Certificate of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or the By-Laws of the Corporation), the affirmative vote of the holders of at least four-fifths of the voting power of the then outstanding Voting Stock shall be required to amend, alter, change or repeal, or to adopt any provision inconsistent with, Articles TWELFTH, THIRTEENTH, FOURTEENTH , FIFTEENTH and SIXTEENTH of this Certificate of Incorporation, provided that such four-fifths vote shall not be required for any amendment, alteration, change or repeal recommended to the stockholders by two-thirds of the Continuing Directors, as defined in Article TWELFTH.
FURTHER RESOLVED, that the Board of Directors hereby directs that this resolution and above proposed amendments be attached as an exhibit to the proxy statement for the Corporation’s 2010 Annual Meeting of Stockholders for consideration by the stockholders entitled to vote in respect thereof;
FURTHER RESOLVED, that upon approval of the proposed amendments to the Restated Certificate of Incorporation by the stockholders, the proper officers of the Corporation be, and each of them hereby is, authorized and directed to file a Certificate of Amendment to the Corporation’s Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, to amend the Corporation’s Registration Statement on Form 8-A relating to the common stock of the Corporation, and to file any and all other documents and to take any and all such further action as they deem necessary or appropriate to reflect such amendments.
|
|
| |
| |
MDU Resources Group, Inc. Proxy Statement | A-7 |
|
Proxy Statement |
|
|
8.5 | Removal of Restrictions.Restricted Stock shall become freely transferable by the Participant after the last day of the Period of Restriction applicable thereto. Once Restricted Stock is released from the restrictions, the Participant shall be entitled to have the legend referred to in Section 8.4 removed from his or her stock certificate. |
| |
8.6 | Voting Rights.During the Period of Restriction, Participants holding Restricted Stock may exercise full voting rights with respect to those Shares. |
8.7 | Dividends and Other Distributions.Subject to the Committee’s right to determine otherwise at the time of grant, during the Period of Restriction, Participants holding Restricted Stock shall receive all regular cash dividends paid with respect to all Shares while they are so held. All other distributions paid with respect to such Restricted Stock shall be credited to Participants subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid and shall be paid to the Participant within forty-five (45) days following the full vesting of the Restricted Stock with respect to which such distributions were made. |
8.8 | Termination of Employment.Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to receive unvested Restricted Stock following termination of the Participant’s employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Restricted Stock Award Agreement entered into with Participants, need not be uniform among all grants of Restricted Stock or among Participants and may reflect distinctions based on the reasons for termination of employment. |
Article 9. Performance Units and Performance Shares | |
9.1 | Grant of Performance Units and Performance Shares.Subject to the terms and conditions of the Plan, Performance Units and/or Performance Shares may be granted to an Eligible Employee at any time and from time to time, as shall be determined by the Committee. |
The Committee shall have complete discretion in determining the number of Performance Units and/or Performance Shares granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such Awards. | |
9.2 | Performance Unit/Performance Share Award Agreement.Each grant of Performance Units and/or Performance Shares shall be evidenced by a Performance Unit and/or Performance Share Award Agreement that shall specify the number of Performance Units and/or Performance Shares granted, the initial value (if applicable), the Performance Period, the Performance Goals and such other provisions as the Committee shall determine, including but not limited to any rights to Dividend Equivalents. |
9.3 | Value of Performance Units/Performance Shares.Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The value of a Performance Share shall be equal to the Fair Market Value of a Share. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Performance Shares that will be paid out to the Participants. The time period during which the Performance Goals must be met shall be called a “Performance Period.” |
9.4 | Earning of Performance Units/Performance Shares.After the applicable Performance Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive a payout with respect to the Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved. |
9.5 | Form and Timing of Payment of Performance Units/Performance Shares.Payment of earned Performance Units/Performance Shares shall be made following the close of the applicable Performance Period. The Committee, in its sole discretion, may pay earned Performance Units/Performance Shares in cash or in Shares (or in a combination thereof), which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Performance Shares at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee. |
9.6 | Termination of Employment.Each Performance Unit/Performance Share Award Agreement shall set forth the extent to which the Participant shall have the right to receive a Performance Unit/Performance Share payment following termination of the Participant’s employment with the Company and its Subsidiaries during a Performance Period. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all grants of Performance Units/Performance Shares or among Participants and may reflect distinctions based on reasons for termination of employment. |
| |
A-8 | MDU Resources Group, Inc. Proxy Statement |
|
Proxy Statement |
9.7 | Transferability.Except as otherwise determined by the Committee and set forth in the Performance Unit/Performance Share Award Agreement, Performance Units/Performance Shares may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and a Participant’s rights with respect to Performance Units/Performance Shares granted under the Plan shall be available during the Participant’s lifetime only to such Participant or the Participant’s legal representative. |
Article 10. Other Awards
The Committee shall have the right to grant other Awards which may include, without limitation, the grant of Shares based on attainment of Performance Goals established by the Committee, the payment of Shares in lieu of cash, the payment of cash based on attainment of Performance Goals established by the Committee, and the payment of Shares in lieu of cash under other Company incentive or bonus programs. Payment under or settlement of any such Awards shall be made in such manner and at such times as the Committee may determine.
Article 11. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.
The spouse of a married Participant domiciled in a community property jurisdiction shall join in any designation of beneficiary or beneficiaries other than the spouse.
Article 12. Deferrals
The Committee may permit a Participant to defer the Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under the Plan. If any such deferral election is permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals.
Article 13. Rights of Employees
13.1 | Employment.Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time, for any reason or no reason in the Company’s sole discretion, nor confer upon any Participant any right to continue in the employ of the Company. |
13.2 | Participation.No Employee shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to be selected to receive a future Award. |
Article 14. Change in Control
The terms of this Article 14 shall immediately become operative, without further action or consent by any person or entity, upon a Change in Control, and once operative shall supersede and take control over any other provisions of this Plan.
Upon a Change in Control
|
|
|
(a) | Any and all Options and SARs granted hereunder shall become immediately exercisable; | |
(b) | Any restriction periods and restrictions imposed on Restricted Stock, Qualified Restricted Stock or Awards granted pursuant to Article 10 (if not performance-based) shall be deemed to have expired and such Restricted Stock, Qualified Restricted Stock or Awards shall become immediately vested in full; and | |
(c) | The target payout opportunity attainable under all outstanding Awards of Performance Units, Performance Shares and Awards granted pursuant to Article 10 (if performance-based) shall be deemed to have been fully earned for the entire Performance Period(s) as of the effective date of the Change in Control, and shall be paid out promptly in Shares or cash pursuant to the terms of the Award Agreement, or in the absence of such designation, as the Committee shall determine. |
MDU Resources Group, Inc. Proxy Statement | A-9 |
Proxy Statement |
Article 15. Amendment, Modification and Termination
15.1 | Amendment, Modification and Termination.The Board may, at any time and from time to time, alter, amend, suspend or terminate the Plan, in whole or in part, provided that no amendment shall be made which shall increase the total number of Shares that may be issued under the Plan, materially modify the requirements for participation in the Plan, or materially increase the benefits accruing to Participants under the Plan, in each case unless such amendment is approved by the stockholders. The Board of Directors of the Company is also authorized to amend the Plan and the Options granted hereunder to maintain qualification as “incentive stock options” within the meaning of Section 422 of the Code, if applicable. |
15.2 | Awards Previously Granted.No termination, amendment or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award, unless such termination, modification or amendment is required by applicable law and except as otherwise provided herein. |
Article 16. Withholding
16.1 | Tax Withholding.The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to an Award made under the Plan. |
16.2 | Share Withholding.With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising out of or as a result of Awards granted hereunder, Participants may elect to satisfy the withholding requirement, in whole or in part, by tendering previously-owned Shares or by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All elections shall be irrevocable, made in writing and signed by the Participant. |
Article 17. Minimum Vesting
Notwithstanding any other provision of the Plan to the contrary, (a) the minimum vesting period for Full Value Awards with no performance-based vesting characteristics must be at least three years (vesting may occur ratably each month, quarter or anniversary of the grant date over such vesting period); (b) the minimum vesting period for Full Value Awards with performance-based vesting characteristics must be at least one year; and (c) the Committee shall not have discretion to accelerate vesting of Full Value Awards except in the event of a Change in Control or similar transaction, or the death, disability, or termination of employment of a Participant; provided, however, that the Committee may grant a “de minimis” number of Full Value Awards that do not comply with the foregoing minimum vesting standards. For this purpose “de minimis” means 331,279 Shares available for issuance as Full Value Awards under the Plan, subject to adjustment under Section 4.2 herein.
Article 18. Successors
All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company.
Article 19. Legal Construction
19.1 | Gender and Number.Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural. |
19.2 | Severability.In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. |
19.3 | Requirements of Law.The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. |
19.4 | Governing Law.To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with, and governed by, the laws of the State of Delaware. |
A-10 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
Article 20. Accounting Restatements
This Article 20 shall apply to Awards granted to all Participants in the Plan. Notwithstanding anything in the Plan or in any Award Agreement to the contrary, if the Company’s audited financial statements are restated, the Committee may, in accordance with the Company’sGuidelines for Repayment of Incentives Due to Accounting Restatements, take such actions as it deems appropriate (in its sole discretion) with respect to
(a) | Awards then outstanding (including Awards that have vested or otherwise been earned but with respect to which payment of cash or distribution of Shares, as the case may be, has not been made or deferred and also including unvested or unpaid Dividend Equivalents attributable to such outstanding Awards) (“Outstanding Awards”) and | |
(b) | vested, earned and/or exercised Awards and any cash or Shares received with respect to Awards (including, without limitation, dividends and Dividend Equivalents), in each case to the extent payment of cash or distribution of Shares, as the case may be, was received or deferred within the 3 year period preceding the restatement (“Prior Awards”), provided such Prior Awards were not vested, earned, exercised or paid prior to the date the Plan was amended to add this Article 20, if the terms of any such Outstanding Awards or Prior Awards or the benefits received by a Participant with respect to any such Outstanding Awards or Prior Awards (including, without limitation, dividends or Dividend Equivalents credited or distributed to a Participant and/or consideration received upon the sale of Shares that were acquired pursuant to the vesting, settlement or exercise of a Prior Award) are, or would have been, directly impacted by the restatement, including, without limitation, (i) securing (or causing to be secured) repayment of all or a portion of any amounts paid, distributed or deferred (including, without limitation, dividends or Dividend Equivalents and/or consideration received upon the sale of Shares that were acquired pursuant to the vesting, settlement or exercise of a Prior Award), (ii) granting additional Awards or making (or causing to be made) additional payments or distributions (or crediting additional deferrals) with respect to Prior Awards, (iii) rescinding vesting (including accelerated vesting) of Outstanding Awards and/or (iv) causing the forfeiture of Outstanding Awards. The Committee may, in its sole discretion, take different actions pursuant to this Article 20 with respect to different Awards, different Participants (or beneficiaries) and/or different classes of Awards or Participants (or beneficiaries). The Committee has no obligation to take any action permitted by this Article 20. The Committee may consider any factors it chooses in taking (or determining whether to take) any action permitted by this Article 20, including, without limitation, the following: |
(A) | The reason for the restatement of the financial statements; | ||
(B) | The amount of time between the initial publication and subsequent restatement of the financial statements; and | ||
(C) | The Participant’s current employment status, and the viability of successfully obtaining repayment. |
If the Committee requires repayment of all or part of a Prior Award, the amount of repayment shall be determined by the Committee based on the circumstances giving rise to the restatement. The Committee shall determine whether repayment shall be effected (i) by seeking repayment from the Participant, (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be provided to the Participant under any compensatory plan, program or arrangement maintained by the Company or any of its affiliates, (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices, or (iv) by any combination of the foregoing. Additionally, by accepting an Award under the Plan, Participants acknowledge and agree that the Committee may take any actions permitted by this Article 20 with respect to Outstanding Awards to the extent repayment is to be made pursuant to another plan, program or arrangement maintained by the Company or any of its affiliates.
Article 21. Code Section 409A Compliance
To the extent applicable, it is intended that this Plan and any Awards granted hereunder comply with the requirements of Section 409A of the Code and any related regulations or other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service (“Section 409A”). Any provision that would cause the Plan or any Award granted hereunder to fail to satisfy Section 409A shall have no force or effect until amended to comply with Section 409A, which amendment may be retroactive to the extent permitted by Section 409A.
MDU Resources Group, Inc. Proxy Statement | A-11 |
Proxy Statement |
(This page has been left blank intentionally.)
A-12 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
|
|
|
| |
|
|
|
|
|
Towers Perrin’s 2008 General |
| Applied Materials | CA | |
Industry Executive | ARAMARK | Cablevision Systems | ||
Compensation Database | Arby’s Restaurant Group | California Independent System Operator | ||
Archer Daniels Midland | Calpine | |||
Arclin USA | Cameron International | |||
3M | Areva NP | Campbell Soup | ||
7-Eleven | Armstrong World Industries | Capital Blue Cross | ||
A&P | Arrow Electronics | Capital One Financial | ||
A.H. Belo | Arysta LifeScience North America | Capitol Broadcasting – WRAL | ||
A.T. Cross | Ashmore Energy International | Cardinal Health | ||
AAA Northern California, Utah & Nevada | Associated Banc-Corp | Cargill | ||
AAA of Science | AstraZeneca | Carlson Companies | ||
AARP | AT&T | Carpenter Technology | ||
Abbott Laboratories | Austria Microsystems | CashNetUSA | ||
ABC | Auto Club Group | Catalent Pharma Solutions | ||
Abercrombie & Fitch | Automatic Data Processing | Caterpillar | ||
Accenture | Avaya | Catholic Healthcare West | ||
ACH Food | Avis Budget Group | CB Richard Ellis Group | ||
adidas America | Avista | Cedar Rapids TV – KCRG | ||
Advance Publications | Avon | Celgene | ||
Advanced Medical Optics | AXA Equitable | CenterPoint Energy | ||
Advanced Micro Devices | B&W Y-12 | Centex | ||
Aegon USA | BAE Systems | Century Aluminum | ||
Aerojet | Ball | Cephalon | ||
Aetna | Banco do Brasil | Ceridian | ||
AFLAC | Bank of America | CH2M Hill | ||
Agilent Technologies | Bank of the West | Chanel | ||
AGL Resources | Barr Pharmaceuticals | Cheniere Energy | ||
Agrium U.S. | Barrick Gold of North America | Chesapeake | ||
AIG | Baxter International | Chevron | ||
Air Products and Chemicals | Bayer | Chicago Mercantile Exchange | ||
Alcatel-Lucent | Bayer CropScience | Chiquita Brands | ||
Alcoa | BB&T | Choice Hotels International | ||
Alexander & Baldwin | bebe stores | Chrysler | ||
Allbritton Communications – KATV | Beckman Coulter | CHS | ||
Allegheny Energy | BELCO Holdings | CIGNA | ||
Allergan | Belo | Cisco Systems | ||
Allete | BG US Services | CIT Group | ||
Alliant Energy | BIC | CITGO Petroleum | ||
Alliant Techsystems | Big Lots | Citizens Bank | ||
Allianz | Biogen Idec | City Public Service | ||
Allstate | Bio-Rad Laboratories | Cleco | ||
ALM | Black Hills | CMS Energy | ||
Alstom Power | Blockbuster | CAN | ||
Altria Group | Blue Cross Blue Shield of Florida | COACH | ||
Amazon.com | Blue Shield of California | Cobank | ||
Ameren | Blyth | Coca-Cola | ||
American Airlines | Bob Evans Farms | Colgate-Palmolive | ||
American Crystal Sugar | Boehringer Ingelheim | Colorado Springs Utilities | ||
American Electric Power | Boeing | Columbia Sportswear | ||
American Family Insurance | Bombardier Transportation | Columbian Financial Group | ||
American Transmission | Booz Allen Hamilton | Comerica | ||
American United Life | Boston Scientific | Commerce Insurance | ||
American Water Works | Bovis Lend Lease | Compass Bancshares | ||
Ameriprise Financial | Boy Scouts of America | Connell | ||
Ameritrade | BP | ConocoPhillips | ||
Ameron | Bracco Diagnostics | Consolidated Edison | ||
AMETEK | Brady | Constellation Energy | ||
Amgen | Bremer Financial | Continental Automotive Systems | ||
Anadarko Petroleum | Bristol-Myers Squibb | Convergys | ||
Anchor Danly | Building Materials Holding | Corning | ||
Ann Taylor Stores | Bunge | Corporate Executive Board | ||
APL | Burger King | Corporate Express US | ||
Applera | Burlington Northern Santa Fe | Covidien | ||
Appleton Papers | Bush Brothers | Cox Enterprises |
|
|
| |
|
|
Proxy Statement |
|
|
|
|
|
Crown Castle |
| Fannie Mae | Harris Enterprises | |
CSX | FANUC Robotics America | Harry Winston | ||
Cubic | Farmers Group | Hartford Financial Services | ||
Cullen/Frost Bankers | Federal Home Loan Bank of | Hasbro | ||
CUNA Mutual | San Francisco | Hawaiian Electric | ||
Curtiss-Wright | Federal Reserve Bank of Cleveland | Hayes Lemmerz | ||
Cushman & Wakefield | Federal Reserve Bank of Dallas | HBO | ||
CVS Caremark | Federal Reserve Bank of Philadelphia | HCA Healthcare | ||
Daiichi Sankyo | Federal Reserve Bank of San Francisco | Health Care Services | ||
Daimler Trucks North America | Federal Reserve Bank of St. Louis | Health Net | ||
Dannon | Federal-Mogul | Healthways | ||
Day & Zimmerman | Ferrellgas | Henry Schein | ||
DCP Midstream | Ferrero USA | Hercules | ||
De Lage Landen Financial Services | Fidelity Investments | Herman Miller | ||
Dean Foods | Fifth Third Bancorp | Hershey | ||
Delphi | FINRA | Hertz | ||
Deluxe | Fireman’s Fund Insurance | Hess | ||
DENSO | First Horizon National | Hewlett-Packard | ||
Dentsply | FirstEnergy | Hexion Specialty Chemicals | ||
Devon Energy | Fiserv | HNI | ||
Diageo North American | Fleetwood Enterprises | HNTB | ||
Direct Energy | Flint Group USA | Hoffmann-La Roche | ||
Discovery Communications | Fluor | Hologic | ||
Dispatch Broadcast Group – WBNS | Ford | Honeywell | ||
Dominion Resources | Forest Laboratories | Hormel Foods | ||
Donaldson | Fortune Brands | Hospira | ||
Dow Chemical | Forum Communications – WDAY | Hot Topic | ||
Dow Jones | Fox Networks Group | Houghton Mifflin | ||
Duke Energy | FPL Group | HSBC North America | ||
DuPont | Freddie Mac | Hubbard Broadcasting | ||
Dynegy | Freedom Communications | Humana | ||
E.ON U.S. | Freeport-McMoRan Copper & Gold | Hunt Consolidated | ||
E.W. Scripps | G&K Services | Huntington Bancshares | ||
Eastman Chemical | Gannett | Hyatt Hotels | ||
Eastman Kodak | Gap | IAC/InterActive | ||
Eaton | Gates | IBM | ||
eBay | GATX | IDACORP | ||
Ecolab | GE Healthcare | Idearc Media | ||
EDS | Genentech | IDEX | ||
Eisai | General Atomics | IKON Office Solutions | ||
El Paso Corporation | General Dynamics | IMS Health | ||
Electric Power Research Institute | General Mills | Independence Blue Cross | ||
Eli Lilly | General Motors | IndyMac | ||
Elsevier Science | Genworth Financial | ING | ||
Embarq | Genzyme | Integrys Energy Group | ||
EMC | GEO Group | Intel | ||
EMCOR Group | Getty Images | International Flavors & Fragrances | ||
Emerson | GlaxoSmithKline | International Game Technology | ||
Enbridge Energy | Global Crossing | International Paper | ||
Endo Pharmaceuticals | Goodrich | Interstate Bakeries | ||
Energen | Gorton’s | Invensys Controls | ||
Energy Future Holdings | Great-West Life Annuity | Invitrogen | ||
Energy Northwest | Greif | ION Geophysical | ||
Entergy | GS1 | Iron Mountain | ||
EPCO | GTECH | Irvine Company | ||
Equifax | Guaranty Bank | Irving Oil | ||
Equity Office Properties | Guardian Life | Irwin Financial | ||
Erie Insurance | Guideposts | Itochu International | ||
Ernst & Young | GXS | J. Crew | ||
ESRI | H.B. Fuller | J.C. Penney Company | ||
Essilor of America | Hanesbrands | J.M. Smucker | ||
Evening Post Publishing – KOAA | Hannaford | J.R. Simplot | ||
Evergreen Packaging | Harland Clarke | Jack in the Box | ||
Exelon | Harley-Davidson | Jacobs Engineering | ||
Exterran | Harman International Industries | JEA | ||
ExxonMobil | Harris | JM Family | ||
Fairchild Controls | Harris Bank | John Hancock |
B-2 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
|
|
|
|
| |
|
| Medco Health Solutions |
|
| |
Johnson & Johnson | Media General | Open Text | |||
Johnson Controls | Medtronic | Optos North America | |||
Joint Commission | Mellon Financial | Oshkosh Truck | |||
Jostens | Merck | Otter Tail | |||
Kaiser Foundation Health Plan | Mercury Insurance | Owens Corning | |||
Kaman Industrial Technologies | MessageLabs | Owens-Illinois | |||
KCTS Television | Metavante Technologies | Pacific Gas & Electric | |||
Kellogg | MetLife | Pacific Life | |||
Kennametal | MetroPCS Communications | PacifiCorp | |||
Kerzner International | MGE Energy | Panasonic of North America | |||
KeyCorp | Micron Technology | Parker Hannifin | |||
Kimberly-Clark | Microsoft | Parsons | |||
Kindred Healthcare | Millennium Pharmaceuticals | Pearson Education | |||
King Pharmaceuticals | Millipore | People’s Bank | |||
Kiplinger | Mirant Corporation | Pepco Holdings | |||
KLA-Tencor | MOL America | PepsiAmericas | |||
Knight | Molson Coors Brewing | PepsiCo | |||
Koch Industries | Monaco Coach | PerkinElmer | |||
Kohler | MoneyGram International | PetSmart | |||
Kohl’s | Monsanto | Pfizer | |||
Kroger | Morgan Murphy Stations – WISC | Phillips-Van Heusen | |||
L.L. Bean | Motorola | Phoenix Companies | |||
L-3 Communications | Mountain America | Pinnacle West Capital | |||
Lafarge North America | Mueller Water Products | Pitney Bowes | |||
Land O’Lakes | Munich Re America | PJM Interconnection | |||
Leggett and Platt | Nalco | Plexus | |||
Lenovo | Nash-Finch | Plymouth Rock Assurance | |||
Level 3 Communications | National CineMedia | PMC-Sierra | |||
Levi Strauss | National Geographic Society | PMI Group | |||
LexisNexis | National Renewable Energy Laboratory | PNC Financial Services | |||
Lexmark International | National Semiconductor | PNM Resources | |||
LG Electronics USA | National Starch & Chemical | PolyOne | |||
Liberty Mutual | Nationwide | Popular | |||
Limited | Navistar International | Portland General Electric | |||
Lincoln Financial | NCCI Holdings | Potash | |||
Lockheed Martin | NCR | PPG Industries | |||
Loews | Neoris USA | PPL | |||
Logitech | Nestle USA | Praxair | |||
LOMA | New York Life | Principal Financial | |||
Longs Drug Stores | New York Power Authority | Pro-Build Holdings | |||
Lord | New York Times | Progress Energy | |||
Lorillard Tobacco | Nicor | Progressive | |||
Lower Colorado River Authority | NIKE | Providence Health System | |||
Luck Stone | Nokia | Prudential Financial | |||
M&T Bank | Noranda Aluminum | Public Service Enterprise Group | |||
Magellan Midstream Partners | Norfolk Southern | Puget Energy | |||
Makino | Nortel Networks | Pulte Homes | |||
Marathon Oil | Northeast Utilities | Purdue Pharma | |||
Marriott International | Northrop Grumman | QUALCOMM | |||
Marsh | NorthWestern Energy | Quebecor World – US | |||
Marshall & Ilsley | Northwestern Mutual | Quintiles | |||
Martin Marietta Materials | Novartis Consumer Health | Qwest Communications | |||
Mary Kay | Novartis Pharmaceuticals | R.R. Donnelley | |||
Masco | Novo Nordisk Pharmaceuticals | Ralcorp Holdings | |||
Massachusetts Mutual | Novus Print Media Network | Raley’s Superstores | |||
MasterCard | NRG Energy | Rayonier | |||
Mattel | NSTAR | RBC Dain Rauscher | |||
Mazda North American Operations | NW Natural | Reader’s Digest | |||
McClatchy | NXP Semi-Conductor | Reed Business Information | |||
McDermott | Nycomed US | Reed Elsevier | |||
McDonald’s | Nypro | Reed Exhibitions | |||
McGraw-Hill | Oak Ridge National Laboratory | Regions Financial | |||
McKesson | Occidental Petroleum | Reliant Resources | |||
MDS Pharma Services | OGE Energy | Revlon | |||
MDU Resources | Omaha Public Power | Reynolds American | |||
MeadWestvaco | Omnova Solutions | RF Micro Devices |
| |
| |
| B-3 |
Proxy Statement |
|
|
|
|
|
RGA Reinsurance Group of America | Staples | Uni-Select USA | ||
Rich Products | Starbucks | UniSource Energy | ||
Rio Tinto | Starwood Hotels & Resorts | Unisys | ||
Robert Bosch | State Farm Insurance | United Airlines | ||
Roche Diagnostics | State Street | United Rentals | ||
Roche Palo Alto | Steelcase | United States Cellular | ||
Rockwell Automation | Sterling Bancshares | United Technologies | ||
Rockwell Collins | Stewart & Stevenson | United Water Resources | ||
Rohm and Haas | STP Nuclear Operating | UnitedHealth | ||
Rolls-Royce North American | SUEZ Energy North America | Unitil | ||
Ryder System | Sun Life Financial | Universal Studios Orlando | ||
S.C. Johnson | Sunbeam Television – WHDH | University of Texas – M.D. Anderson | ||
Safety-Kleen Systems | SunGard Data Systems | Cancer Center | ||
SAIC | Sunoco | Univision Communications | ||
Salt River Project | SunTrust Bank | Unum Group | ||
Sanofi Pasteur | SuperValu Stores | USAA | ||
Sanofi-Aventis | SVB Financial | USG | ||
Sara Lee | Swift Newspapers | Valero Energy | ||
Sarkes Tarzian – KTVN | Sybron Dental Specialties | Vanguard | ||
Sarkes Tarzian – WRCB | Syngenta Crop Protection | Verizon | ||
SAS Institute | Synovus | Viacom | ||
SCA Americas | Takeda Pharmaceutical | Virgin Mobile USA | ||
SCANA | Targa Resources | Visa USA | ||
Schering-Plough | Target | Visiting Nurse Service | ||
Schlumberger | Taubman Centers | Vistar | ||
Schneider Electric | TD Banknorth | Visteon | ||
Scholastic | TeleTech Holdings | Volvo Group North America | ||
Schreiber Foods | Tellabs | Voyager Learning Company | ||
Schurz – KYTV | Temple-Inland | Vulcan | ||
Schurz – WAGT | Tenet Healthcare | Vulcan Materials | ||
Schwan’s | Tennessee Valley Authority | Wachovia | ||
Scotts Miracle-Gro | Teradata | Wackenhut Services | ||
Seagate Technology | Terex | Walt Disney | ||
Sealed Air | Terra Industries | Warnaco | ||
Securian Financial Group | Tesoro | Washington Mutual | ||
Securitas Security Services USA | Texas Instruments | Washington Savannah River | ||
Sempra Energy | Textron | Waste Management | ||
SENCORP | Thomas & Betts | Webster Bank | ||
Sensata Technologies | Thomson Reuters Markets Division | Wellcare Health Plans | ||
SES Global | Americas | Wellpoint | ||
Shaw Industries | Thrivent Financial for Lutherans | Wells Fargo | ||
Shell Oil | TIAA-CREF | Wendy’s International | ||
Sherwin-Williams | Time Warner | Westar Energy | ||
Shire Pharmaceuticals | Time Warner Cable | Western Digital | ||
Siemens | Timex | Westinghouse Electric | ||
Sigma-Aldrich | T-Mobile | Whirlpool | ||
Sinclair Broadcast Group | Toro | Whole Foods Market | ||
Sirius Satellite Radio | Trane | Williams Companies | ||
SLM | Trans Union | Wisconsin Energy | ||
Smith & Nephew | TransCanada | Wm. Wrigley Jr. | ||
Smiths Detection | Travelers | Wolters Kluwer US | ||
Smurfit-Stone Container | Travelport | Wray Edwin – KTBS | ||
Sodexho | Tribune | Wyeth | ||
Solvay Pharmaceuticals | Tupperware | Wyndham Worldwide | ||
Sonoco Products | Twin Cities Public Television – TPT | Xcel Energy | ||
Sony Corporation of America | Tyco Electronics | Xerox | ||
Sony Ericsson Mobile Communications | U.S. Bancorp | Yahoo! | ||
South Financial Group | U.S. Foodservice | Young Broadcasting – KRON | ||
Southern Company Services | UCB | Yum! Brands | ||
Sovereign Bancorp | UIL Holdings | Zale | ||
Spectra Energy | Ulticom | Zimmer Holdings | ||
Spirit AeroSystems | Underwriters Laboratories | Zurich North America | ||
Springs Global US | Unifi |
|
| |
Sprint Nextel | Unilever United States | |||
Stanford University | Union Bank of California | |||
Stantec | Union Pacific |
B-4 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
|
|
|
|
|
Towers Perrin’s 2008 Energy | PNM Resources | Denbury Resources Inc. | ||
Industry Executive | PPL | Devon Energy | ||
Compensation Database | PacifiCorp | Dominion Exploration & Production | ||
Pacific Gas & Electric | Duncan Oil Properties, Inc./Walter | |||
Pepco Holdings | Duncan, Inc. | |||
AGL Resources | Pinnacle West Capital | Ellora Energy | ||
Allegheny Energy | Portland General Electric | EnCana Oil & Gas (USA) Inc. | ||
Allete | Progress Energy | Encore Acquisitions Company | ||
Alliant Energy | Public Service Enterprise Group | Energen Resources | ||
Ameren | Puget Energy | Energy Partners, Ltd. | ||
American Electric Power | Reliant Resources | Eni Operating Co. Inc. | ||
American Transmission | SCANA | Equitable Resources, Inc- Equitable | ||
Areva NP | STP Nuclear Operating | Supply | ||
Ashmore Energy International | SUEZ Energy North America | Fasken Oil and Ranch, Ltd. | ||
Avista | Salt River Project | Fidelity Exploration & Production | ||
BG US Services | Seminole Energy Services | Company | ||
Black Hills | Sempra Energy | FIML Natural Resources | ||
CMS Energy | Southern Company Services | Forest Oil Corporation | ||
California Independent System Operator | Southern Union Company | Fortuna Energy, Inc. | ||
Calpine | Spectra Energy | GMT Exploration | ||
CenterPoint Energy | Targa Resources | GMX Resources Inc. | ||
Cheniere Energy | Tennessee Valley Authority | Goodrich Petroleum Corporation | ||
City Public Service | TransCanada | Great Western Drilling Company | ||
Cleco | UIL Holdings | Harvest Natural Resources, Inc. | ||
Colorado Springs Utilities | UniSource Energy | Headington Oil Company, L.P. | ||
Consolidated Edison | Unitil | Henry Petroleum LP | ||
Constellation Energy | Westar Energy | Hilcorp Energy Company | ||
DCP Midstream | Williams Companies | Hunt Oil Company | ||
Dominion Resources | Wisconsin Energy | Hunt Petroleum Corporation | ||
Duke Energy | Wolf Creek Nuclear | J. M. Huber Corporation – Energy Sector | ||
Dynegy | Xcel Energy | Kinder Morgan CO2 Company, L.P. | ||
E.ON U.S. |
|
|
|
|
EPCO |
|
|
| Leed Petroleum LLC (formerly Darcy |
Edison International | Effective Compensation, Inc.’s | Energy) | ||
El Paso Corporation | 2008 Oil & Gas Compensation | Linn Energy, LLC | ||
Electric Power Research Institute | Survey | Mariner Energy, Inc. | ||
Enbridge Energy | Maritech Resources | |||
Energen | Aera Energy Services Company | McElvain Oil and Gas Properties, Inc. | ||
Energy Future Holdings | Alta Mesa Holdings | McMoran Oil and Gas Company | ||
Energy Northwest | Altex Energy Corporation | Medco Energi US LLC | ||
Entergy | Approach Resources Inc. | Mewbourne Oil Company | ||
Exelon | Aramco Services Company | Mustang Fuel Corporation | ||
FPL Group | Ascent Operating, LP | Nearburg Producing Company | ||
FirstEnergy | Aspect Energy, LLC | Newfield Exploration Company | ||
Hawaiian Electric | BEPCO, L.P. | Nexen Petroleum U.S.A. Inc. | ||
IDACORP | Berry Petroleum Company | Noble Energy, Inc. | ||
Integrys Energy Group | Bill Barrett Corporation | Panhandle Oil and Gas Inc. | ||
JEA | BreitBurn Energy Partners LP | Penn Virginia Oil & Gas | ||
Knight | Brigham Exploration Company | Petro-Canada Resources (USA) Inc | ||
Lower Colorado River Authority | Browning Oil Company, Inc. | Petrohawk Energy Corporation | ||
MDU Resources | BTA Oil Producers, LLC | Petro-Hunt, LLC | ||
MGE Energy | Cabot Oil & Gas Corporation | Petroleum Development Corporation | ||
Mirant Corporation | Cano Petroleum, Inc. | PetroQuest Energy LLC | ||
NRG Energy | CDX Gas, LLC | Petsec Energy Inc. | ||
NSTAR | Ceja Corporation | Pioneer Natural Resources USA, Inc. | ||
NW Natural | Chaparral Energy, Inc. | Plains Exploration & Production Company | ||
New York Power Authority | Chesapeake Energy Corporation | Quantum Resources Management, LLC | ||
Nicor | Cimarex Energy Co. | Questar Market Resources Group | ||
NorthWestern Energy | Cohort Energy Company | Quicksilver Resources Inc. | ||
Northeast Utilities | Comstock Resources, Inc. | Range Resources Corporation | ||
OGE Energy | Continental Resources, Inc. | Read and Stevens, Inc. | ||
Omaha Public Power | Crimson Exploration, Inc. | Repsol Services Company | ||
Otter Tail | Dart Oil & Gas | Rex Energy Operating Corp. | ||
PJM Interconnection | Delta Petroleum Corporation | Rosetta Resources Inc. |
MDU Resources Group, Inc.Proxy Statement | B-5 |
Proxy Statement |
|
|
|
|
|
Samson | Baker Hughes, Inc. – Hughes Christensen | Duke Energy – US Franchised Electric | ||
SandRidge Energy, Inc. | Baker Hughes, Inc. – Production Quest | and Gas | ||
Seneca Resources Corporation | Basic Energy Services | Duquesne Light Holdings, Inc. | ||
Sheridan Production Company | Black Stone Minerals Company, LLP | Dynegy, Inc. | ||
Sinclair Oil and Gas Company | Boart Longyear | DynMcDermott Petroleum Operations | ||
Southwestern Energy Production | Brigham Exploration Company | E.ON U.S. | ||
Company | Cameron International | Edge Petroleum Corporation | ||
St. Mary Land & Exploration Company | Cameron International – Compression | Edison Mission Energy | ||
Stone Energy Corporation | Systems | El Paso Corporation | ||
Summit Petroleum LLC | Cameron International – Drilling and | El Paso Corporation – Exploration and | ||
Swift Energy Operating, LLC | Production Systems | Production | ||
T-C Oil Company | Cameron International – Valves & | El Paso Corporation – Pipeline Group | ||
Tema Oil and Gas Company | Measurement | Enbridge Energy Partners, LP | ||
Texas Petroleum Investment Company | Carrizo Oil & Gas, Inc. | EnCana Oil & Gas (USA) Inc. | ||
Thums Long Beach Company | CCS Income Trust – Energy Services | Energen Corporation – Energen Resources | ||
TOTAL E&P USA, INC. | CDX Gas, LLC | Corporation | ||
Triad Energy Corporation | CenterPoint Energy | Energy Future Holdings – Luminant | ||
TXCO Resources, Inc. | CGGVeritas | Energy Future Holdings – Luminant | ||
Ultra Petroleum Corp. | Chesapeake Energy Corporation | Energy | ||
Vanco Energy Company | Chesapeake Energy Corporation – CEMI | Energy Future Holdings Corporation | ||
Vantage Energy L.L.C. | Chesapeake Energy Corporation – | Energy Future Holdings Corporation – | ||
Venoco, Inc. | Chesapeake App | Oncor | ||
Vernon E. Faulconer, Inc. | Chesapeake Energy Corporation – | Energy Partners, Ltd. | ||
Wagner & Brown, Ltd. | Compass | EnergySouth, Inc. | ||
Ward Petroleum Corporation | Chesapeake Energy Corporation – | EnergySouth, Inc. – Bay Gas Storage | ||
Western Production Company | Diamond Y | EnergySouth, Inc. – EnergySouth | ||
Weyerhaeuser Company | Chesapeake Energy Corporation – Great | Midstream, Inc | ||
Whiting Petroleum Corporation | Plains | EnergySouth, Inc. – Mobile Gas Service, | ||
Williams | Chesapeake Energy Corporation – Hodges | Corporation | ||
Woodside Energy (USA) Inc | Chesapeake Energy Corporation – Midcon | Enerplus Resources Fund – Enerplus | ||
Wynn-Crosby | Chesapeake Energy Corporation – Nomac | Resources (USA) Corporation | ||
XTO Energy, Inc. | Chesapeake Energy Corporation – Yost | EnerVest Management Partners, Ltd. | ||
Yuma Exploration and Production | Chief Oil & Gas, LLC | Eni US Operating Company, Inc. | ||
Company, Inc. | CHS Inc. – Energy | ENSCO International, Inc. | ||
Cimarex Energy Company | ENSCO International, Inc. – North & | |||
Cinco Natural Resources Corporation | South America Business Unit | |||
Mercer’s 2008 Total | Citation Oil & Gas Corp. | Ensign United States Drilling, Inc. | ||
Compensation Survey for the | CITGO Petroleum Corporation | Ensign United States Drilling, Inc. – | ||
Energy Sector | Cleco Corporation | California | ||
COG Operating, LLC | Ensign United States Drilling, Inc. – | |||
Abraxas Petroleum Corporation | Colonial Group, Inc. | Ensign Well Services, Inc. | ||
Aera Energy Services Company | Conectiv Energy | Entegra Power Services, LLC | ||
AGL Resources | Constellation Energy Group, Inc. – | EOG Resources, Inc | ||
AGL Resources – Sequent Energy | Constellation Energy Resources | Explorer Pipeline Company | ||
Management | Core Laboratories | Exterran | ||
Alliance Pipeline, Inc. | CPS Energy | Fasken Oil and Ranch, Ltd. | ||
Alliance Pipeline, Inc. – Aux Sable Liquid | Crosstex Energy Services | Forest Oil Corporation | ||
Products | DCP Midstream, LLC | Fortuna Energy Inc. | ||
Ameren Corporation | Det Norske Veritas US | FX Energy, Inc. | ||
American Transmission Company | Devon Energy | FX Energy, Inc. – FX Drilling | ||
Anadarko Petroleum Corporation | Diamond Offshore Drilling, Inc. | Company, Inc. | ||
Apache Corporation | Dominion Resources, Inc. | GE Oil & Gas CONMEC LLC | ||
Arch Coal, Inc | Dominion Resources, Inc. – Dominion | GE Oil & Gas Operations LLC | ||
Aspect Energy, LLC | Energy | Geokinetics | ||
Aspect Energy, LLC – Aspect Abundant | Dominion Resources, Inc. – Dominion | GeoMet, Inc. | ||
Shale LP | Generation | Global Industries | ||
Aspect Energy, LLC – HHE | Dominion Resources, Inc. – Dominion | Halliburton Company | ||
Associated Electric Cooperative, Inc. | Virginia Power | Hallwood Petroleum, LLC | ||
Baker Hughes, Inc. | Dresser-Rand Company | Helmerich & Payne, Inc. | ||
Baker Hughes, Inc. – Baker Atlas | Dresser-Rand Company – Dresser-Rand | Hess Corporation | ||
Baker Hughes, Inc. – Baker Hughes | Product Services | HighMount E&P | ||
Business Support Services | Dresser-Rand Company – Field Operations | Holly Corporation | ||
Baker Hughes, Inc. – Baker Hughes | Dresser-Rand Company – NAO | Hunt Oil Company | ||
Drilling Fluids | Dresser-Rand Company – New Equipment | Information Handling Services (IHS) | ||
Baker Hughes, Inc. – Baker Hughes Inteq | Company | ION Geophysical Corporation | ||
Baker Hughes, Inc. – Baker Oil Tools | Duke Energy | Jacksonville Electric Authority | ||
Baker Hughes, Inc. – Baker Petrolite | Duke Energy – Commercial Power | KCPL | ||
Baker Hughes, Inc. – Centrilift |
|
|
|
B-6 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
Kinder Morgan, Inc. | Parallel Petroleum Corporation | The Williams Companies, Inc. – Williams | ||
Lario Oil & Gas Company | Parker Drilling Company | Gas Pipeline (WGP) | ||
Legacy Reserves, LP | Pepco Holdings, Inc. | Thums Long Beach Company | ||
Mack Energy Co. | Petro-Canada – Petro-Canada | TransCanada | ||
Maersk, Inc. – Maersk Oil America | Resources (USA) | TransCanada – Gas Transmission | ||
Maersk, Inc. – Moller Supply Company | Petron Resources | Northwest (GTN) | ||
Magellan Midstream Holdings, LP | PII North America, Inc. | TransCanada – Northern Border Pipeline | ||
Magellan Midstream Holdings, LP – | Pioneer Natural Resources | TransCanada – US Pipeline Central | ||
Pipeline Operations | PJM Interconnection | Transocean | ||
Magellan Midstream Holdings, LP – | Plains Exploration & Production Company | TXCO Resources, Inc. | ||
Terminal Services | PPL Corporation | TXCO Resources, Inc. – Output | ||
Magellan Midstream Holdings, LP – | Pride International | Acquisition Corp. | ||
Transportation | Questar Market Resources | TXCO Resources, Inc. – Texas Tar | ||
MCN Energy Enterprises | Quicksilver Resources Inc. | Sands, Inc. | ||
MCX Exploration(USA), Ltd. | R. Lacy, Inc. | TXCO Resources, Inc. – TXCO Drilling | ||
MDU Resources Group, Inc. | R. Lacy, Inc. – Lacy Operations, Ltd | Corp. | ||
MDU Resources Group, Inc. – Montana | Regency Gas Services | TXU Corporation – TXU Energy Retail | ||
Dakota Utilities | Renaissance Alaska, LLC | Ultra Petroleum Corp. | ||
MDU Resources Group, Inc. – WBI | Resolute Natural Resources Company | Unit Corporation | ||
Holdings, Inc. | RKI Exploration & Production, LLC | Unit Corporation – Superior Pipeline | ||
Mestena Operating, Ltd. | Rosewood Resources, Inc. | Company, LLC | ||
Mirant Corp | Rosewood Resources, Inc. – Advanced | Unit Corporation – Unit Drilling Company | ||
MitEnergy Upstream LLC | Drilling Technologies | Unit Corporation – Unit Petroleum | ||
Murphy Oil Corporation | Rowan Companies, Inc. | Company | ||
NATCO Group, Inc. | SAIC | Vanco Energy Company | ||
NATCO Group, Inc. – BTO | SCANA Corporation | Venoco, Inc. | ||
NATCO Group, Inc. – S&T | SCANA Corporation – Carolina Gas | Verado Energy, Inc. | ||
Nexen, Inc. – Nexen Petroleum USA, Inc. | Transmission | Washington Gas | ||
Nippon Oil Exploration USA Ltd | SCANA Corporation – PSNC Energy | Weatherford | ||
NiSource Inc. – Bay State Gas Company | (Public Service Company of North | Wells Fargo & Company – Wholesale | ||
NiSource Inc. – Columbia Gas of Ohio | Carolina, Inc.) | Banking | ||
NiSource Inc. – Columbia Gas of | SCANA Corporation – SCE&G (South | Woodside Energy (USA) Inc. | ||
Pennsylvania | Carolina Electric and Gas Company) | Xcel Energy, Inc. | ||
NiSource Inc. – Columbia Gas of Virginia | Schlumberger Oilfield Services | XTO Energy, Inc. | ||
NiSource Inc. – NiSource Corporate | Seneca Resources Corporation | |||
Services Co | Seneca Resources Corporation – | Watson Wyatt’s 2008/2009 Top | ||
NiSource Inc. – Northern Indiana Fuel & | Bakersfield | Management Compensation | ||
Light | Seneca Resources Corporation – | Survey | ||
NiSource Inc. – Northern Indiana Public | Williamsville | |||
Service Co | Shaw – Bredero Shaw LLC | |||
NiSource Inc. – Northern Utilities, Inc | Shaw – Shaw Pipe Protection LLP | 3M Company | ||
NiSource Inc. – Transmission Corp | Southern Company | A N Ansay & Associates | ||
Noble Corporation | Southern Company – Georgia Power | A O Smith Corporation | ||
Noble Corporation – Noble Drilling | Southern Company – Gulf Power | AAA | ||
Services, Inc. | Company | AAF McQuay International | ||
Noble Energy, Inc. | Southern Company – Mississippi Power | ABB, Inc. | ||
North Coast Energy, Inc. | Company | Abbott Laboratories | ||
Nustar Energy LP | Southern Company – SouthernLINC | Abercrombie & Fitch Company | ||
Oceaneering International, Inc. | Southern Union Company | Accor North America | ||
Oceaneering International, Inc. – | Southern Union Company – Missouri | ACI Worldwide | ||
Americas | Gas Energy | Acme Industries | ||
Oceaneering International, Inc. – Multiflex | Southern Union Company – New | ACT Teleconferencing | ||
Oceaneering International, Inc. – OIE | England Gas | The Actors Fund of America | ||
OGE Energy Corp | Southern Union Company – Panhandle | Acuity | ||
OGE Energy Corp – Enogex | Energy | ACUMED LLC | ||
ONEOK, Inc. | Southern Union Gas Services | ADC Telecommunications | ||
ONEOK, Inc. – Kansas Gas Service | Southern Ute Tribe dba Red Willow | A-dec, Inc. | ||
Division | Production Co | Adobe Systems Incorporated | ||
ONEOK, Inc. – Oklahoma Natural Gas | Southwest Gas Corporation | ADTRAN Incorporated | ||
Division | Southwestern Energy Company | Advance Auto Parts, Inc. | ||
ONEOK, Inc. – ONEOK Partners | Sprague Energy Corp | Advanced Measurement Technology, Inc. | ||
ONEOK, Inc. – Texas Gas Services | Superior Natural Gas Corporation | Advanced Micro Devices, Inc. | ||
Division | Tellus Operating Group, LLC | Adventist Health Systems | ||
Osage Resources, LLC | The Williams Companies, Inc. | Aegon USA | ||
Osage Resources, LLC – D & B | The Williams Companies, Inc. – E&P | Aeronix, Inc. | ||
Drilling, LLC | The Williams Companies, Inc. – | AET | ||
PacifiCorp | Midstream | Aetna, Inc. |
MDU Resources Group, Inc.Proxy Statement | B-7 |
Proxy Statement |
Affiliated Computer Services, Inc. | AmTrust Bank | BB&T Corporation | ||
Affinity Plus Federal Credit Union | Anadarko Petroleum Corporation | BDO Seidman, LLP | ||
AFLAC Incorporated | Analog Devices, Inc. | Bechtel Systems & Infrastructure, Inc. | ||
AGC Houston | Andersen Corporation | Beckman Coulter, Inc. | ||
AGCO Corporation | Anheuser-Busch Companies, Inc. | Belk, Inc. | ||
AgFirst | Anixter International Inc. | Bemis Company, Inc. | ||
Agilent Technologies, Inc. | AnnTaylor Stores Corporation | Bemis Manufacturing Company | ||
AGL Resources, Inc. | The Antioch Company | Benchmark Electronics, Inc. | ||
AgriBank | Aon Corporation | Bendix | ||
Ahlstrom Windsor Locks LLC | Apache Corporation | The Bergquist Company | ||
AIG | Apartment Investment and Management | Berwick Offray LLC | ||
Airlines Reporting Corporation | Apollo Group | Best Buy Co., Inc. | ||
AK Steel Holding Corporation | Apple, Inc. | Big Lots, Inc. | ||
Akamai Technologies, Inc. | Applied Materials, Inc. | Biogen Idec, Inc. | ||
Albemarle Corporation | ARAMARK Corporation | Bioscrip, Inc. | ||
Alcoa, Inc. | Arch Capital Group, Ltd. | BJ’s Wholesale Club, Inc. | ||
Aleris International, Inc. | Arch Coal, Inc. | The Black & Decker Corporation | ||
Alfa Laval, Inc. | Archer Daniels Midland Company | Black & Veatch, Inc. | ||
Allegheny County Sanitary Authority | Archstone-Smith | BlackRock, Inc. | ||
Allegheny Energy, Inc. | The Arizona Republic | Blaze Recycling & Metals LLC | ||
Allegheny Technologies Incorporated | Arkansas Foundation for Medical Care | Blockbuster Entertainment | ||
Allergan, Inc. | Arrow Electronics, Inc. | Blue Cross & Blue Shield of Arizona | ||
Alliance Laundry Systems | Asbury Automotive Group, Inc. | Blue Cross & Blue Shield of Louisiana | ||
Alliant Energy | Ascension Parish School Board | Blue Cross & Blue Shield of South | ||
Allied Building Products Corporation | ASCO – Value | Carolina | ||
Allied Waste Industries, Inc. | ASRC Federal Holding Company | Blue Cross of Northeastern Pennsylvania | ||
The Allstate Corporation | Asset Marketing Service, Inc. | BlueLinx Holdings, Inc. | ||
ALON USA Energy, Inc. | Associated Industries of Massachusetts | Board of Governors of the Federal | ||
ALSAC St. Jude’s Children Research | Assurant Health | Reserve System | ||
Hospital | Assurant, Inc. | Bob Evans Farms | ||
ALTERA Corporation | Asurion Corporation | The Boeing Company | ||
Altria Group, Inc. | Aurora Healthcare | Borders Group, Inc. | ||
Amalgamated Bank of New York | The Auto Club Group | BorgWarner, Inc. | ||
Amazon.com, Inc. | Autodesk, Inc. | Boston Market Corporation | ||
Ambac Financial Group, Inc. | Autoliv North America, Inc. | Boston Properties, Inc. | ||
Ameren Corporation | Automatic Data Processing | Boston Scientific Corporation | ||
American Axle & Manufacturing | Automobile Club of Southern California | Boyd Gaming Corporate | ||
Holdings, Inc. | AutoNation, Inc. | Brady Corporation | ||
American Cancer Society, Inc. | Avalonbay Communities, Inc. | The Brink’s Company | ||
American Capital Strategies | Aveda Corporation | Bristol Myers Squibb Company | ||
American Casino & Entertainment | Avery Dennison Corporation | Broadcom Corporation | ||
Properties | Aviall, Inc. | Broadlane, Inc. | ||
American Dehydrated Foods, Inc. | Avis Budget Car Rental Group | Brown Shoe Company, Inc. | ||
American Electric Power Company, Inc. | Avista Corporation | Brownells, Inc. | ||
American Enterprise | Avon Products, Inc. | Brown-Forman Corporation | ||
American Express Company | Axis Capital Holdings | Brunswick Corporation | ||
American Family Insurance | B Braun Medical, Inc. | Bryant University | ||
American Financial Group | B/E Aerospace, Inc. | BSH Home Appliances Corporation | ||
American Greetings Corporation | Babson College | Buffets, Inc. | ||
American Home Mortgage Investment | Baker Hughes Incorporated | Builders FirstSource, Inc. | ||
Company | Ball Corporation | Builders Insurance Group | ||
American Medical Association | Bank of America Corporation | Building Materials Holding Corporation | ||
American Standard Companies, Inc. | The Bank of New York Mellon Corporation | Bunge, Ltd. | ||
American Superconductor | BankAtlantic | Burlington Northern Sante Fe Corporation | ||
American Tower Corporation | Bankers Bank | C H Robinson Worldwide, Inc. | ||
American University | Banner Engineering Corporation | C R Bard, Inc. | ||
American Water | Baptist Health | Cabela’s Incorporated | ||
AMERIGROUP Corporation | Baptist Health System | Cablevision | ||
AmeriPride Services, Inc. | Barilla America, Inc. | Caelum Research Corporation | ||
Ameriprise Financial, Inc. | Barloworld Handling | Calibre Systems | ||
AmerisourceBergen Corporation | Barnes & Noble, Inc. | California Casualty Management Company | ||
Ameristar Casinos | Barr Pharmaceuticals, Inc. | California Dental Association | ||
Ames True Temper | Basler Electric Company | California Water Service Company | ||
Amgen, Inc. | Baxter International, Inc. | Camcraft | ||
Amphenol Corporation | Baylake Bank | Cameron International Corporation | ||
AMR Corporation | Baylor College of Medicine | Canyon Ranch | ||
Amtrak | Baylor Health Care System | Capital One Financial Corporation |
B-8 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
Capital Southwest Corporation | CMS Energy Corporation | Cytec Industries, Inc. | ||
CareFirst BlueCross BlueShield | The CNA Corporation | Dal-Tile, Inc. | ||
Carleton Life Support Systems | CNA Financial Corporation | Danaher Corporation | ||
Carlisle Companies, Inc. | CNL Financial Group | Davis Langdon | ||
Carlson Companies, Inc. | Cobb County School District | DaVita, Inc. | ||
Carlson Systems Corporation | Coca Cola Bottling Company Consolidated | Dawn Food Products | ||
CarMax, Inc. | The Coca-Cola Company | Day & Zimmermann, Inc. | ||
Carnival Corporation | Coca-Cola Enterprises, Inc. | Dean Foods Company | ||
Carpenter Technology Corporation | Cognizant Technology Solutions | The Decurion Corporation | ||
Casino Arizona | Colgate-Palmolive Company | Deere & Company | ||
Caterpillar, Inc. | Colonial Bank | Deere & Company Canada | ||
CB Richard Ellis | Colonial Williamsburg Foundation | Dekalb Regional Healthcare Systems | ||
CBS Corporation | Colorado Springs Utilities | Del Monte Foods Company | ||
CDM | Colsa Corporation | Delek US Holdings, Inc. | ||
CDW Corporation | Comau, Inc. | Delphi Corporation | ||
CEC Entertainment, Inc. | Comcast Corporation | Delta Air Lines, Inc. | ||
Celanese Americas Corporation | Comerica Incorporated | Deluxe Corporation | ||
Celgard, Inc. | Commerce Bancorp, Inc. | Denso Manufacturing Michigan, Inc. | ||
Celgene Corporation | CommScope, Inc. | Deseret Book Company | ||
Cell Therapeutics, Inc. | The Community College of Baltimore | Developers Diversified Realty | ||
Celtic Insurance | County | Devon Energy Corporation | ||
CEMEX, Inc. | Community Health Network | DeVry University | ||
Centene Corporation | Community Health Systems | Dick’s Sporting Goods | ||
Center for Creative Leadership | Compressor Controls Corporation | Dickstein Shapiro LLP | ||
CenterPoint Energy, Inc. | Computer Task Group | Diebold Incorporated | ||
Century Tel, Inc. | ConnectiCare, Inc. | Dillard’s, Inc. | ||
Certegy, Inc. | ConocoPhillips | The DIRECTV Group, Inc. | ||
CGI Technologies and Solutions, Inc. | Conseco Services LLC | Discover Financial Service | ||
Charter Communications, Inc. | CONSOL Energy, Inc. | Doherty Employer Services | ||
Chemtreat, Inc. | Consolidated Edison, Inc. | Dole Fresh Vegetables | ||
Chemtura Corporation | Constellation Energy Group, Inc. | Dollar General Corporation | ||
Chesapeake Energy Corporation | Continental Airlines, Inc. | Dominion Resources, Inc. | ||
Chevron Corporation | Convergys Corporation | Donaldson Company, Inc. | ||
Chicago Bridge & Iron Company | Con-way, Inc. | Dover Corporation | ||
Chicago Transit Authority | Cook Communications Ministries | The Dow Chemical Company | ||
Children’s Healthcare Atlanta | Cooper Industries, Ltd. | DPI West | ||
Chiquita Brands International, Inc. | Cooper Tire & Rubber Company | DST Systems, Inc. | ||
Choice Hotels International | CooperVision, Inc. | DTE Energy | ||
Christian City | Copper and Brass Sales | Duke Energy Corporation | ||
CHS, Inc. | Core Laboratories | Duke Realty Corporation | ||
The Chubb Corporation | Core-Mark Holding Company, Inc. | Duke University & Health System | ||
Chumash Casino | Corinthian Colleges | Dynamex | ||
Church of Jesus Christ of Latter-Day Saints | Cornell University | Dynegy, Inc. | ||
Ciena Corporation | Corning Incorporated | E.I. du Pont de Nemours & Company | ||
CIGNA Corporation | Correctional Medical Services | Eastman Chemical Company | ||
Cincinnati Financial Corporation | Corrections Corporation of America | Eastman Kodak Company | ||
CIT Group, Inc. | Country Insurance & Financial | Eaton Corporation | ||
The Citadel | The Country Vintner | eBay, Inc. | ||
Citigroup, Inc. | Countrywide Financial Corporation | Echostar Communications Corporation | ||
Citi-North America Operations & | County of Spotsylvania | Ecolab, Inc. | ||
Technology | Coventry Health Care, Inc. | Edison International | ||
Citizens Communications | Convidien, Ltd. | Education Sales Management | ||
Citrix Systems, Inc. | Cox Enterprises, Inc. | Edward Jones & Company | ||
City and County of Denver | Cox Target Media | Edwards Lifesciences | ||
City of Charlotte | CPS Energy | EG&G – Defense Materials | ||
City of Garland | Cracker Barrel Old Country Store, Inc. | EG&G Services | ||
City of Houston | Crane Company | El Paso Corporation | ||
City of Philadelphia | Crate and Barrel | Electrolux Homecare of N.A. | ||
City of Rochester | Crosstex Energy, Inc. | Electronic Data Systems Corporation | ||
City of Waterloo | Crown Castle International Corporation | Eli Lilly & Company | ||
Clarian Health Partners | Crown Holdings, Inc. | Embarq Corporation | ||
Clear Channel Communications, Inc. | CSX | EMC Corporation | ||
Clear Channel Outdoor Holdings | CTS Corporation | EMCOR Group, Inc. | ||
Cleco Corporation | Culligan International Company | Emerson Climate Technologies/Copeland | ||
Clopay Corporation | Cummins, Inc. | Emerson Electric | ||
ClubCorp, Inc. | Cummins-Allison Corporation | Enbridge Energy Partners, L.P. | ||
CME Group, Inc. | CVS Caremark | Energy East Corporation |
MDU Resources Group, Inc.Proxy Statement | B-9 |
Proxy Statement |
Energy Enterprise Solutions, Inc. | Flowserve Corporation | Graphic Packaging Holding Company | ||
EnergySouth, Inc. | Fluor Corporation | Great American Insurance / Great | ||
EnPro Industries, Inc. | FMC Corporation | American Financial | ||
ENSCO International Incorporated | FMC Technologies, Inc. | Great Clips, Inc. | ||
Entergy Corporation | Foot Locker, Inc. | Great Plains Energy Incorporated | ||
Entertainment Publications | Ford Motor Company | Group 1 Automotive, Inc. | ||
EOG Resources, Inc. | Fort Worth Independent School District | Growmark, Inc. | ||
EON US LLC | Fortune Brands | Grubb & Ellis Company | ||
Episcopal Retirement Homes | Foseco Metallurgical, Inc. | GuideStone Financial Resources | ||
Equifax, Inc. | Fossil, Inc. | Guitar Center, Inc. | ||
Equity Bank, SSB | Foster Poultry Farms | Gulfstream Aerospace Corporation | ||
Equity Residential | Foster Wheeler, Ltd. | Habitat for Humanity International | ||
Erie Insurance Group | Fox Chase Cancer Center | Halliburton Company | ||
ESCO Corporation | Franklin International | Hamot Medical Center | ||
ESCO Technologies | Frazee Industries | Hannaford Bros. Company | ||
Esterline Technologies Corporation | Freedom Communications, Inc. | Hapag-Lloyd (America), Inc. | ||
Etnyre International, Ltd. | The Freeman Companies | Harley Davidson Motor Company | ||
Everest Re Group, Ltd. | Freeport-McMoRan Copper & Gold, Inc. | Harleysville Insurance Company | ||
Evraz Oregon Steel Mills | Fremont Bank | Harrah’s Entertainment, Inc. | ||
Exel, Inc. | Fremont Group | Harris County Hospital District | ||
Exelon Corporation | Friendly Ice Cream Corporation | Harris Teeter, Inc. | ||
Exempla Health Care, Inc. | Frontier Oil Corporation | Harsco Corporation | ||
Exide Technologies | Funeral Directors Life Insurance Company | Hartford Financial Services | ||
Expedia, Inc. | Furniture Brands International, Inc. | Harvard Vanguard Medical Association | ||
Express Scripts, Inc. | G&K Services | Harvey Industries | ||
Extendicare Health Services | G. Loomis, Inc. | Hasbro, Inc. | ||
Exxon Mobil Corporation | Galamba Companies, Inc. | Hastings Mutual Insurance Company | ||
Fabcon, Inc. | The Gannett Company | Haynes International, Inc. | ||
Fabri-Kal Corporation | The Gap, Inc. | HCC Insurance Holdings, Inc. | ||
Fairfax County Public Schools | Garden Fresh Restaurant Corporation | HCP, Inc. | ||
Farm Credit Council Services | Gas Technology Institute | HD Supply | ||
The Farmers Bank | Gateway, Inc. | Health Management Associates, Inc. | ||
Farmland Foods, Inc. | Gaylord Entertainment | Health Net | ||
FCI USA, Inc. | Geisinger Health System | Health Partners | ||
Federal Express Corporation | Genentech, Inc. | HealthNow New York | ||
Federal National Mortgage | General Cable Corporation | Heat Transfer Research, Inc. | ||
Federal Reserve Bank of Atlanta | General Dynamics Corporation | H-E-B | ||
Federal Reserve Bank of Boston | General Dynamics Information Technology | Helmerich & Payne, Inc. | ||
Federal Reserve Bank of Chicago | General Electric Company | Hendrick Medical Center | ||
Federal Reserve Bank of Cleveland | General Growth Properties, Inc. | Hendrickson International | ||
Federal Reserve Bank of Dallas | General Motors Corporation | Henry Schein, Inc. | ||
Federal Reserve Bank of Kansas City | General Nutrition, Inc. | Hercules Incorporated | ||
Federal Reserve Bank of Minneapolis | Gentiva Health Services | Herman & Kittle Properties | ||
Federal Reserve Bank of Philadelphia | Genuine Parts Company | Herman Miller, Inc. | ||
Federal Reserve Bank of St. Louis | Genworth Financial, Inc. | The Hershey Company | ||
Federal-Mogul Corporation | Genzyme Corporation | Hess Corporation | ||
Federated Department Stores | Georg Fisher Signet LLC | Hewlett-Packard Company | ||
FedEx Kinko’s | Georgia Gulf Corporation | Hexion Specialty Chemicals | ||
Fender Musical Instruments | Georgia Institute of Technology | Highlights for Children, Inc. | ||
Ferguson Enterprises | Georgia System Operations Corporation | Highmark, Inc. | ||
Fermi National Accelerator Laboratory | Gerdau Ameristeel | Hill Phoenix | ||
FerrellGas, Inc. | Gibraltar Steel Corporation | Hilti, Inc. | ||
Ferro Corporation | Gilead Sciences, Inc. | Hilton Hotels Corporation | ||
Fidelity National Financial, Inc. | GITI | Hines Interests | ||
Fifth Third Bancorp | Glatfelter Company | Hirsch Pipe & Supply Co., Inc. | ||
The Finish Line, Inc. | Global Industries Offshore LLC | Hitachi | ||
First American Corporation | Gold Eagle Company | HNI Corporation | ||
First Citizens Bank | Goldman Sachs Group, Inc. | Holden Industries, Inc. | ||
First Data Corporation | Goodrich Corporation | Holly Corporation | ||
First Horizon National Corporation | The Goodyear Tire & Rubber Company | The Home Depot, Inc. | ||
First Interstate BancSystem | Google Inc. | Home State Bank | ||
FirstEnergy Corporation | Government Employees Health | Honeywell International, Inc. | ||
Fiserv, Inc. | Association, Inc. | Horry Telephone Cooperative | ||
Fleetwood Group | Graco, Inc. | Hospira, Inc. | ||
Flexible Steel Lacing Company | Grande Cheese Company | Host Hotels & Resorts, Inc. | ||
Flint Group – North America | Grange Mutual Insurance Companies | Hovnanian Enterprises, Inc. | ||
Florida Power & Light Company | Granite Construction, Inc. | Howard Hughes Medical Institute |
B-10 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
HSBC – North America | Jarden Corporation | Lieberman Research Worldwide | ||
Hubbell Incorporated | Jefferson Science Associates | LifeMasters Supported SelfCare, Inc. | ||
Hudson City Bancorp, Inc. | Jefferson Wells International | LifePoint Hospitals, Inc. | ||
Hu-Friedy Manufacturing Co., Inc. | Jensen Precast | Limbach Facility Services LLC | ||
Humana, Inc. | Jet Blue Airways | Limited Brands | ||
Hunter Douglas, Inc. | JM Family Enterprises | Lincoln National Corporation | ||
Hunter Industries | John Crane, Inc. | Linens & Things | ||
Huntington Bancshares Incorporated | John Wiley & Sons, Inc. | Lithia Motors, Inc. | ||
Huntsman Corporation | Johnson & Johnson | Little Lady Foods | ||
Huron Consulting Group | Johnson Financial Group | Live Nation, Inc. | ||
Hutchinson Technology, Inc. | Jones Apparel Group, Inc. | Liz Claiborne, Inc. | ||
Hyatt Hotels Corporation | Jones Lange LaSalle | Lockheed Martin Corporation | ||
Hydro Automotive Structures | Jostens, Inc. | Loews Corporation | ||
Hyundai Motor America | JPMorgan Chase & Company | The Longaberger Company | ||
IDEARC, Inc. | JSJ Corporation | Longs Drug Stores Corporation | ||
IDEX Corporation | Judicial Council of California | Los Angeles Unified School District | ||
IDEXX Laboratories, Inc. | Juniper Networks, Inc. | Louisiana-Pacific Corporation | ||
Illinois Tool Works, Inc. | J-W Operating Company | Lowe’s Companies, Inc. | ||
IMS Health, Inc. | Kansas Farm Bureau | Lower Colorado River Authority | ||
Indiana State Personnel Department | Katun Corporation | Lozier Corporation | ||
Indianapolis Power & Light Company | KB Home | LRAA | ||
IndyMac Bancorp, Inc. | KBR, Inc. | LSI Corporation | ||
Information Management Service | Kele, Inc. | Lubrizol Corporation | ||
Information Resources | Kellogg Company | Luther Midelfort-Mayo Health System | ||
Ingersoll Rand Co., Ltd. | Kelly Services, Inc. | Lutron Electronics | ||
Ingram Book Group | Kenexa | Luxottica Retail | ||
Ingram Industries, Inc. | Kettering University | Lyondell Chemical Company | ||
Ingram Micro, Inc. | Kewaunee Scientific Corporation | M&T Bank Corporation | ||
INOVA Health Systems | KeyCorp | Macy’s, Inc. | ||
Insight Enterprises, Inc. | Keystone Automotive Industries | Magellan Health Services | ||
In-Sink-Erator | Keystone Foods Corporation | Malco Products, Inc. | ||
Institute for Business and Home Safety | Keywell LLC | Manitowoc Company, Inc. | ||
Insurance Auto Auctions | Kimberly Clark Corporation | MANN+HUMMEL USA, Inc. | ||
Integrys Energy Group, Inc. | Kimco Realty Corporation | Mannington Mills, Inc. | ||
Intel Corporation | Kindred Healthcare | Manpower International, Inc. | ||
INTELSAT | Kinetico, Inc. | ManTech International | ||
IntercontinentalExchange, Inc. | King Pharmaceuticals, Inc. | Marathon Oil Corporation | ||
International Business Machines | Kings Super Markets, Inc. | Maricopa County Office of Management & | ||
Corporation | Kingston Technology | Budget | ||
International Dairy Queen, Inc. | Kohl’s Corporation | Maricopa Integrated Health System | ||
International Flavors & Fragrances, Inc. | Kraft Foods, Inc. | Maritz, Inc. | ||
International Game Technology | The Kroger Company | The Mark Travel Corporation | ||
International Paper Company | Kruger International | Markel Corporation | ||
Interpublic Group of Companies, Inc. | Kum & Go LC | Marriott International, Inc. | ||
Interstate Bakeries | Kyocera America, Inc. | Mars North America | ||
Intertape Polymer Group | L L Bean, Inc. | Marsh & McLennan Companies, Inc. | ||
IREX Corporation | L-3 Communications Holdings, Inc. | Marshfield Clinic | ||
Iron Mountain Group, Inc. | Lab Volt Systems | MARTA | ||
The Irvine Company | Laboratory Corporation of America | Martin Marietta Materials, Inc. | ||
ISS Facility Services, USA | Holdings | Martin’s Point Health Care | ||
Isuzu Motors America, Inc. | Lance, Inc. | Mark Kay, Inc. | ||
Ithaca College | LandAmerica Financial Group, Inc. | Maryland Department of Transportation | ||
Itochu International, Inc. | Landstar System, Inc. | Masco Corporation | ||
ITT Corporation | Lansing Board of Water & Light | Massey Energy Company | ||
ITT Educational Services, Inc. | Lantech.com | Mattel, Inc. | ||
ITT Industries – AES | Lear Corporation | Mayo Clinic | ||
J B Hunt Transport Services, Inc. | Legal & General America | MBIA, Inc. | ||
J C Penney Company, Inc. | Leggett & Platt, Inc. | McDermott Incorporated | ||
J J Keller & Associates, Inc. | Lehman Brothers Holdings, Inc. | McDonald’s Corporation | ||
The J M Smucker Company | Lennox International, Inc. | MCG Health, Inc. | ||
J R Simplot Company | Leo Burnett Company, Inc. | The McGraw-Hill Companies, Inc. | ||
Jackson County Bank | Leucadia National Corporation | McKesson Medical-Surgical | ||
Jackson Hewitt Tax Services, Inc. | Lexmark International, Inc. | MDU Resources Group, Inc. | ||
The Jackson Laboratory | LG Electronics USA, Inc. | MeadWestvaco Corporation | ||
Jacobs Technology, Inc. | LGE MobileComm USA | Mecklenburg County | ||
James Hardie Building Products | Liberty Diversified Industries | MedAire, Inc. | ||
Janus Capital Group, Inc. | Liberty Media Corporation | Medco Health Solutions, Inc. |
MDU Resources Group, Inc.Proxy Statement | B-11 |
Proxy Statement |
Media General, Inc. | National City Corporation | Orbital Science Corporation | ||
Medical Mutual of Ohio | National Futures Association | Oregon State Lottery | ||
Meijer, Inc. | National Oilwell Varco | OSG Tap & Die, Inc. | ||
MEMC Electronic Materials | National Safety Council | Oshkosh Corporation | ||
Mercer University | National Security Technologies LLC | Owens & Minor, Inc. | ||
Merck & Co., Inc. | Nationwide Insurance Company | Owens-Illinois, Inc. | ||
Mercury General Corporation | Nature’s Sunshine Products, Inc. | Oxford Industries | ||
Mercury Insurance Group | Navistar International Corporation | Oxford Instruments Measurement Systems | ||
Merit Medical Systems | Navy Exchange Service Command | PACCAR, Inc. | ||
Meritage Homes Corporation | NCCI Holdings, Inc. | Packaging Corporation of America | ||
MeritCare Health System | NCMIC | Pactive Corporation | ||
Merrill Corporation | NCR Corporation | Pall Corporation | ||
Metaldyne | Nebraska Public Power District | Panasonic Automotive Systems Company | ||
Metavante | Nelnet, Inc. | of America | ||
Methodist Hospital System | New Hanover Regional Medical Center | Panduit Corporation | ||
MetroPCS Communications, Inc. | The New York Times Company | Pantry, Inc. | ||
Metropolitan Life Insurance Company | Newell Rubbermaid, Inc. | Papa John’s International | ||
Metropolitan Transit Authority | Newmont Mining Corporation | PASCO Scientific | ||
MFS Investment Management | NICOR, Inc. | Paychex | ||
MGIC Investment Corporation | The Nielsen Company | Payless Shoesource, Inc. | ||
MGM Mirage | NII Holdings, Inc. | Peabody Energy Corporation | ||
Miami Children’s Hospital | NiSource, Inc. | Pearson Education | ||
Michael Baker Corporation | NJM Insurance Group | Pegasus Solutions, Inc. | ||
Michigan Farm Bureau – Family of | Noble Corporation | Penn State Hershey Medical Center | ||
Companies | Noble Energy, Inc. | Penske Automotive Group, Inc. | ||
Micro Dynamics | Norcal Waste Systems, Inc. | Pentair, Inc. | ||
Microflex Corporation | The Nordam Group | Pentax USA, Inc. | ||
MidAmerican Energy Company | Nordson Corporation | Pepco Holdings | ||
Midwest Airlines | Nordstrom | Pepsi Bottling Group, Inc. | ||
Midwest Research Institute | Norfolk Southern Corporation | PepsiAmericas, Inc. | ||
Mike Albert Leasing, Inc. | Northeast Utilities System | PepsiCo, Inc. | ||
Millipore Corporation | Northern Trust Corporation | Performance Food Group | ||
Millward Brown – North America | Northrop Grumman Corporation | Perini Corporation | ||
Milwaukee Electric Tool Corporation | Northwest Airlines, Inc. | Perkinelmer, Inc. | ||
Mine Safety Appliances Company | Northwestern Mutual Life Insurance | Perot Systems Corporation | ||
Mirant | Novell, Inc. | Perrigo Company | ||
Mission Foods | Novellus Systems, Inc. | Peter Kiewit Sons’, Inc. | ||
Missouri Department of Conservation | NRG Energy, Inc. | PetSmart, Inc. | ||
Missouri Department of Transportation | NRUCFC | Pfizer, Inc. | ||
Mitsubishi International Corporation | NSTAR | PG&E Corporation | ||
Mitsui & Company USA, Inc. | Nucor Corporation | PGT Industries | ||
MMS Consultants, Inc. | Nutri Systems, Inc. | Pharmavite LLC | ||
Mohawk Industries | NVIDIA Corporation | PHH Arval | ||
Mohegan Sun Casino | NVR, Inc. | PHI, Inc. | ||
Molex, Inc. | NYSE Euronext | Phillips Plastics Corporation | ||
Molina Healthcare, Inc. | O’Reilly Automotive, Inc. | Phoenix Companies, Inc. | ||
Molson Coors | Oakland County Road Commission | Piantedosi Baking Company | ||
Moneris Solutions US | Occidental Petroleum Corporation | Pilot Corporation America | ||
Moneygram International, Inc. | Office Depot, Inc. | Pinnacle West Capital Corporation | ||
Monster Worldwide, Inc. | OfficeMax | Pitney Bowes | ||
Moody’s Corporation | OGE Energy Corporation | Plexus Corporation | ||
Morgan Stanley | Ohio Public Employees Retirement System | Plum Creek Timber Co., Inc. | ||
Motorola, Inc. | Ohio State University | PM Company | ||
MPSI Systems, Inc. | Ohio State University Medical Center | PNC Financial Services Group | ||
MSKCC | Oil-Dri Corporation of America | PNM Resources, Inc. | ||
MTA Long Island Bus | Old Dominion Electric Cooperative | Polaris Industries, Inc. | ||
MTD Products, Inc. | Old Republic International Corporation | PolyOne Corporation | ||
MTS Systems Corporation | Olin Corporation | Popular, Inc. | ||
Mueller Industries, Inc. | OM Group, Inc. | The Port Authority of NY & NJ | ||
Murphy Oil Corporation | Omnicare, Inc. | Port of Portland | ||
Mutual of Enumclaw Insurance Company | Onmicom Group, Inc. | PPG Industries, Inc. | ||
Mutual of Omaha | One America Financial Partners, Inc. | PPL Corporation | ||
Mylan, Inc. | One Beacon Insurance Group | Pratt Corporation | ||
Nabors Industries, Ltd. | ONEOK, Inc. | Praxair, Inc. | ||
Nalco Holding Company | Opus Corporation | Preformed Line Products Company | ||
Nash-Finch Company | Orange County Government | Premier, Inc. | ||
National Academies | Orange County Public Schools | Prestolite Wire Corporation |
B-12 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
Pride International, Inc. | Rohm and Haas Company | Southeastern Freight Lines | ||
Prime Therapeutics | Rollins, Inc. | Southern Copper Corporation | ||
Prince William Health System | Roper Industries | Southern Poverty Law Center | ||
Principal Financial Group | Ross Stores, Inc. | Southwest Airlines Company | ||
Priority Health | Rotary International | Southwest Gas Corporation | ||
The Professional Golfers’ Association | Rowan Companies, Inc. | Space Dynamics Laboratory | ||
of America | Royal Bank of Canada | Space Telescope Science Institute | ||
Progress Energy, Inc. | Royal Caribbean Cruise Line | Sparrow Health System | ||
The Progressive Corporation | RR Donnelley & Sons Company | Spectrum Health | ||
Project Management Institute | RSM McGladrey | Spheris | ||
ProLogis | Rush Enterprises, Inc. | Spirit AeroSystems Holdings | ||
Providence Health Center | Rutgers University | Springs Global US, Inc. | ||
Prudential Financial, Inc. | Ryder System, Inc. | Springs Window Fashions Division | ||
PSS World Medical | Ryland Group, Inc. | St. Joseph Health System | ||
Public Service Enterprise Group, Inc. | S&C Electric Company | St. Louis County Government | ||
Public Storage | SAC Federal Credit Union | St. Mary’s at Amsterdam | ||
Public Utility District #1 of Chelan County | Safilo USA | Stampin’ Up! | ||
Publix Super Markets, Inc. | SAGE Publications | Standard Pacific Homes | ||
Puget Energy, Inc. | Sakura Finetek USA, Inc. | Staples, Inc. | ||
Pulte Homes, Inc. | Sally Beauty Company | Starwood Hotels & Resorts Worldwide | ||
QBE Regional Insurance | Salt River Project | State Corporation Commission | ||
QTI Human Resources | Samuel Roberts Noble Foundation | State Employee Credit Union | ||
QUALCOMM, Inc. | San Antonio Water System | State of Ohio – Human Resources | ||
Qualex, Inc. | San Manuel Band of Mission Indians | Department | ||
Quality Ingredients Corporation | Sanofi Pasteur | State of Oregon | ||
Quanta Services, Inc. | Sargent Fletcher, Inc. | State Personnel Administration | ||
Quest Diagnostics Incorporated | Sauer-Danfoss, Inc. | Stephan Company | ||
Questar Corporation | SCANA Corporation | Sterilite Corporation | ||
Qwest Communications International, Inc. | ScenPro, Inc. | STERIS | ||
R L I Insurance Company | SCF of Arizona | Sterling Bank | ||
R L Polk & Company | Schaumburg Township District Library | Stewart & Stevenson | ||
Rackspace | Schlumberger, Ltd. | Strategic Resources, Inc. | ||
Radio Shack Corporation | Schneider Electric | Strattec Security Corporation | ||
Range Resources Corporation | Schneider National, Inc. | Stream | ||
Raytheon Company | Schwan Food Company | Stryker Corporation | ||
RCN | Seaboard Corporation | Subaru of Indiana Automotive, Inc. | ||
REA Magnet Wire Company, Inc. | Sealed Air Corporation | Sulzer Pumps US, Inc. | ||
Recon Optical, Inc. | Sealy, Inc. | Sundt Companies | ||
Recycled Paper Greetings, Inc. | Sears Holdings Corporation | Superior Industries International, Inc. | ||
Red Wing Shoe Company | Seco Tools, Inc. | SuperValue | ||
Redcats USA | Securitas Security Services USA | SureWest Communications Company | ||
Regal Entertainment Group | Self Regional Healthcare | Syar Industries, Inc. | ||
The Regence Group | SEMCO Energy | Sybron Dental Specialties | ||
Regency Centers Corporation | Sensient Technologies Corporation | Sykes Enterprises | ||
Regions Financial Corporation | Sentara Healthcare | SYNNEX Corporation | ||
Reinsurance Group of America | Sentry Group | Synovate | ||
Reliance Steel & Aluminum Company | Sentry Insurance | Synthes | ||
Reliant Energy | The ServiceMaster Company | Syracuse Research Corporation | ||
Renaissance Learning, Inc. | Seventh Generation | T. Rowe Price Group, Inc. | ||
Rent-A-Center, Inc. | Shands HealthCare | Tastefully Simple | ||
Republic Services, Inc. | Sharp Electronics Corporation | TD Banknorth | ||
Resurgent Capital Services | Simmons Bedding Company | Tech Data Corporation | ||
Rewards Network | Simon Property Group, Inc. | Tecolote Research, Inc. | ||
Rexel, Inc. | Simpson Housing LLLP | TelAlaska, Inc. | ||
Reynolds American, Inc. | Sitel | Tele-Consultants, Inc. | ||
Rice University | SJE-Rhombus | Teleflex | ||
RiceTec, Inc. | Skyline Displays, Inc. | Tenet Healthcare Corporation | ||
Rich Products Corporation | SkyWest, Inc. | Tesoro Corporation | ||
Richco | Smead Manufacturing Corporation | Texas County & District Retirement System | ||
Ricoh Electronics, Inc. | SMSC Gaming Enterprise | Texas Industries, Inc. | ||
Rimage Corporation | Smurfit-Stone Container Corporation | Texas Mutual Insurance Company | ||
Rite – Hite Corporation | The Solae Company | Thrifty White Stores | ||
Robert Bosch Corporation | Solo Cup Company | Time Warner, Inc. | ||
Robert Bosch Tool Corporation | Solvere | TIMET | ||
Robert Half International, Inc. | South Jersey Gas Company | Title Resource Group | ||
Roche Diagnostics | Southco, Inc. | TJX Companies, Inc. | ||
Rockwood Holdings, Inc. | Southeast Corporate Federal Credit Union | The Topps Company, Inc. |
MDU Resources Group, Inc.Proxy Statement | B-13 |
Proxy Statement |
The Toro Company | USAA | Westfield Group | ||
Trane | USG Corporation | Westlake Chemical Corporation | ||
Transocean Offshore, Inc. | UST, Inc. | Weston Solutions Inc | ||
Travel Guard - AIG | Utah Retirement Systems | Weyerhaeuser Company | ||
Travis County | Utah Transit Authority | Wheaton Franciscan Healthcare | ||
Treasure Island Resort & Casino | Utica National Insurance | Whirlpool Corporation | ||
Tribune Company | V S E Corporation | White Mountains Insurance Group, Ltd. | ||
Tri-Met | Vail Resorts, Inc. | Whole Foods Market, Inc. | ||
Trinity Health | Valero Energy Corporation | Wilbur Smith Associates | ||
Triwest Healthcare Alliance | The Valspar Corporation | The Wilder Foundation | ||
TRMI, Inc. | Van Andel Institute | Willamette Falls Hospital | ||
Tupperware Corporation | Vangent, Inc. | Williams Companies | ||
Turner Broadcasting System, Inc. | Vectren Corporation | Williams-Sonoma, Inc. | ||
Tyco Electronics | Velcro Group Corporation | WilmerHale | ||
UAL Corporation | Venetian Resort-Hotel-Casino | Windstream Communications | ||
Ulticom, Inc. | Ventura Foods, LLC | Winn-Dixie Stores, Inc. | ||
UMDNJ-University of Medicine & | Venturedyne, Ltd. | Wisconsin Energy Corporation | ||
Dentistry | Verisign, Inc. | Wisconsin Physicians Service Insurance | ||
Underwriters Laboratories, Inc. | Verizon Communications, Inc. | Corporation | ||
Unified Grocers | Vernay Laboratories, Inc. | Wm. Wrigley Jr. Company | ||
Union Pacific Corporation | Vesuvius USA | WMS | ||
Union Tank Car Company | VF Corporation | World Access | ||
UnionBanCal Corporation | Viacom, Inc. | World Fuel Services Corporation | ||
Unisys Corporation | Viant Health Payment Solutions | World Vision United States | ||
United Rentals | Viasystems Group, Inc. | World Wildlife Fund | ||
United States Steel Corporation | Viejas Enterprise | Wyeth | ||
United Stationers, Inc. | Virgin Media, Inc. | Wyle Laboratories | ||
United Technologies Corporation | Virginia Farm Bureau Insurance Service | Wyndham Worldwide | ||
UnitedHealth Group, Inc. | Visiting Nurse Service of New York | Xcel Energy, Inc. | ||
Unitrin, Inc. | Visteon Corporation | Xerox Corporation | ||
Univar USA, Inc. | Vonage Holding Corporation | XL Capital, Ltd. | ||
Universal Forest Products, Inc. | Vornado Realty Trust | XTO Energy, Inc. | ||
Universal Instruments Corporation | Vulcan Materials Company | Yamaha Corporation of America | ||
Universal Orlando | W C Bradley Company | Yankee Candle Company | ||
University Health System Consortium | W R Berkley Corporation | Yokogawa | ||
University of Akron | W R Grace & Company | YRC Worldwide, Inc. | ||
University of Alabama at Birmingham | W W Grainger, Inc. | YSI | ||
University of Alaska | Wachovia Corporation | Yum! Brands, Inc. | ||
University of California at Berkeley | Wackenhut Services, Inc. | Zale Corporation | ||
University of Chicago | Wake County Government | Zeon Chemicals L.P. | ||
University of Georgia | Walgreen Company | Zimmer, Inc. | ||
University of Houston | Wal-Mart Stores, Inc. | Zions Bancorporation | ||
University of Kansas Hospital | Walt Disney Company | Zurich North America | ||
University of Louisville | Walter Industries, Inc. | |||
University of Michigan | Washington Mutual, Inc. | |||
University of Minnesota | The Washington Post Company | Companies Surveyed | ||
University of Missouri | Washington Savannah River Company | Using Equilar | ||
University of Nebraska | Washington University in St. Louis | |||
University of Pennsylvania | Waste Management, Inc. | |||
University of Rochester | Waters Corporation | Alleghany Corp | ||
University of St. Thomas | Watlow Electric | ALLETE Inc | ||
University of Texas at Austin | Watson Pharmaceuticals, Inc. | Alliance One International Inc | ||
University of Texas M D Anderson Cancer | Wayne Memorial Hospital | Alliant Energy Corp | ||
Center | Weatherford International | Allis Chalmers Energy Inc | ||
University of Texas Southwestern Medical | Weis Markets, Inc. | Amcol International Corp | ||
Center | Wellcare Health Plans | Ameren Corp | ||
University of Virginia | Wellmark BlueCross BlueShield | Anixter International Inc | ||
University of Wisconsin Hospital & Clinics | WellPoint, Inc. | Apache Corp | ||
University of Wisconsin Medical | Wells Fargo & Company | Arch Chemicals Inc | ||
Foundation | Wells’ Dairy, Inc. | Arch Coal Inc | ||
University Physicians, Inc. | Wendy’s International | Argan Inc | ||
Unum Group | Werner Enterprises, Inc. | Asbury Automotive Group Inc | ||
UPS | WESCO International, Inc. | ATC Technology Corp | ||
URS Corporation | West Virginia University Hospitals | ATP Oil & Gas Corp | ||
US Airways Group, Inc. | Western Refining, Inc. | Autoliv Inc | ||
US Bancorp | Western Textile Companies | Avista Corporation | ||
US Cellular Corporation | The Western Union Company | Basic Energy Services Inc |
B-14 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
Bemis Co Inc | Haynes International Inc | Pride International Inc | ||
Berry Petroleum Co | Healthways Inc | Primus Telecommunications Group Inc | ||
BJ Services Co | Hecla Mining Co | Progress Software Corp | ||
Black Hills Corp | Helix Energy Solutions Group Inc | Public Service Enterprise Group Inc | ||
Cabot Corp | Helmerich & Payne Inc | Quanta Services Inc | ||
Cabot Oil & Gas Corp | Hercules Inc | Quest Resource Corp | ||
Cal Dive International Inc | Hercules Offshore Inc | Questar Corporation | ||
Caraustar Industries Inc | Hillenbrand Inc | Rackspace Hosting Inc | ||
CB Richard Ellis Group Inc | Horizon Offshore Inc | Range Resources Corp | ||
CH Energy Group Inc | Houston Exploration Co | Readers Digest Association Inc | ||
Chart Industries Inc | Hovnanian Enterprises Inc | RealNetworks Inc | ||
Chicago Bridge & Iron Co | Imation Corp | Regal Beloit Corp | ||
Cimarex Energy Co | Integrys Energy Group Inc | Regency Energy Partners LP | ||
Citadel Broadcasting Corp | Jarden Corp | Rex Energy Corp | ||
Citizens Republic Bancorp Inc | Kaydon Corp | Robbins & Myers Inc | ||
CMS Energy Corp | KB Home | Rowan Companies Inc | ||
CNX Gas Corp | KBR Inc | Rural Cellular Corp | ||
Columbus McKinnon Corp | Kelly Services Inc | Sanderson Farms Inc | ||
Comfort Systems USA Inc | Key Energy Services Inc | Sandridge Energy Inc | ||
Commercial Vehicle Group Inc | KLA Tencor Corp | SCANA Corporation | ||
Compass Minerals International Inc | Kraton Polymers LLC | Seitel Inc | ||
Complete Production Services Inc | Layne Christensen Co | Sempra Energy | ||
Comstock Resources Inc | Leap Wireless International Inc | South Financial Group Inc | ||
Comsys IT Partners Inc | Lexmark International Inc | Southwest Gas Corporation | ||
Concho Resources Inc | Libbey Inc | Southwestern Energy Co | ||
Consolidated Edison Inc | Linn Energy LLC | SRA International Inc | ||
Core Laboratories | Mariner Energy Inc | St Mary Land & Exploration Company | ||
Crosstex Energy LP | MarkWest Energy Partners LP | Standex International Corp | ||
Crown Castle International Corp | MarkWest Hydrocarbon Inc | Stanley Works | ||
Delta Petroleum Corp | Martin Marietta Materials Inc | Stanley Inc | ||
Deluxe Corp | Matrix Service Co | Sterling Constructions Co Inc | ||
Denburgy Resources Inc | McMoRan Exploration Co | Strategic Hotels & Resorts Inc | ||
Diamond Offshore Drilling Inc | Meadow Valley Corp | Suburban Propane Partners LP | ||
Donaldson Co Inc | Nabors Industries Ltd | Superior Energy Services Inc | ||
DPL Inc | National Fuel Gas Co | Superior Well Services Inc | ||
Duke Energy Corp | NETGEAR Inc | Swift Energy Company | ||
Dycom Industries Inc | New York Community Bancorp Inc | SXC Health Solutions Inc | ||
Edge Petroleum Corp | Newfield Exploration Co | Teck Cominco Ltd | ||
EMCOR Group Inc | Nexen Inc | Texas Industries Inc | ||
Encore Acquisition Co | NiSource Inc | Thomas & Betts Corp | ||
EnPro Industries Inc | Noble Corp | Toro Co | ||
Ensco International Inc | Noble Energy Inc | Transmeridian Exploration Inc | ||
EOG Resources Inc | Northeast Utilities | Trimble Navigation Ltd | ||
EQT Corp | NorthWestern Corp | TW Telecom Inc | ||
Exco Resources Inc | Northwestern Natural Gas Company | US Concrete Inc | ||
Exelon Corp | NSTAR | UGI Corp | ||
F5 Networks Inc | NV Energy Inc | Unit Corp | ||
Fluor Corp | Oceaneering International Inc | Unitil Corp | ||
Forest Oil Corp | OGE Energy Corp | USEC Inc | ||
Foster Wheeler AG | Olin Corp | USG Corp | ||
Freightcar America Inc | ONEOK Inc | Valmont Industries Inc | ||
Fuller H B Co | Parallel Petroleum Corp | Vectren Corp | ||
Furniture Brands Internationals Inc | Parker Drilling Co | Venoco Inc | ||
GATX Corp | Patterson UTI Energy Inc | Vulcan Materials Co | ||
Genessee & Wyoming Inc | Paychex Inc | W&T Offshore Inc | ||
Glatfelter P H Co | Penn Virginia Corp | Wellman Inc | ||
Global Industries Ltd | Penn West Energy Trust | Westar Energy Inc | ||
Goodrich Petroleum Corp | Pepco Holdings Inc | Whiting Petroleum Corp | ||
Granite Construction Inc | Petrohawk Energy Corporation | Willbros Group Inc | ||
Great Lakes Dredge & Dock Corp | PG&E Corp | Wisconsin Energy Corp | ||
Green Mountain Coffee Roasters Inc | Pioneer Drilling Co | Xcel Energy Inc | ||
Grey Wolf Inc | Pioneer Natural Resources Co | XTO Energy Inc | ||
Group 1 Automotive Inc | Plains Exploration & Production Co | |||
Harris Corp | Polaris Industries Inc |
MDU Resources Group, Inc.Proxy Statement | B-15 |
Proxy Statement |
(This page has been left blank intentionally.)
B-16 | MDU Resources Group, Inc.Proxy Statement |
 | Shareowner ServicesSM | ||||||
| P.O. Box 64945 | |||||||
| St. Paul, MN 55164-0945 | COMPANY # | ||||||
| Address Change? Mark box, sign, and indicate changes below: o | |||||||
| Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week | |||||||
| Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. | |||||||
 | INTERNET– www.eproxy.com/mdu | ||||||
Use the Internet to vote your proxy until 12:00 p.m. (CDT) on Monday, April | |||||||
| TELEPHONE–1-800-560-1965 | ||||||
Use a touch-tone telephone to vote your proxy until 12:00 p.m. (CDT) on Monday, April | |||||||
| MAIL– Mark, sign and date your proxy card and return it in the postage-paid envelope provided, or return it to MDU Resources Group, Inc., c/o Shareowner Services, P.O. Box 64873, St. Paul, MN 55164-0873. | ||||||
If you vote by Telephone or Internet, please do not mail your Proxy Card.
The Board of Directors Recommends a Vote “FOR” all nominees and “FOR” Items 2, 3 4, and 5.4.
| 1. | Election of directors: | |||||||||||
| FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | |||||||
| 01. | Thomas Everist | o | o | o | 06. | Thomas C. Knudson | o | o | o | |||
| 02. | Karen B. Fagg | o | o | o | 07. | Richard H. Lewis | o | o | o |
| Please fold here – Do not separate |
|
| 03. | Terry D. Hildestad | o | o | o | 08. | Patricia L. Moss | o | o | o | |||
| 04. | A. Bart Holaday | o | o | o | 09. | Harry J. Pearce | o | o | o | |||
| 05. | Dennis W. Johnson | o | o | o | 10. | John K. Wilson | o | o | o |
| 2. | Approval of the material terms of the performance goals under the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan for purposes of Internal Revenue Code Section 162(m). | o | For | o | Against | o | Abstain | ||||
|
|
|
|
|
|
|
| ||||
| 3. | |||||||||||
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
| ||||
| Ratification of Deloitte & Touche LLP as |
|
|
|
|
|
| Abstain | |||
4. | Advisory vote to approve the compensation paid to the company’s named executive officers. | o | For | o | Against | o | Abstain | ||||
| The Board of Directors Recommends a Vote | |||||||||||
|
| o |
|
|
|
|
|
| Abstain | ||
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTEDFOR ALL NOMINEES,FOR ITEMS 2, 3 AND 4, AND 5, ANDAGAINSTFOR 1 YEAR IN ITEM 6.5.
Date _____________________________________ | ||||
Signature(s) in Box | ||||
Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy. | ||||
MDU RESOURCES GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 27, 201026, 2011
11:00 a.m. Central Daylight Saving Time
909 Airport Road
Bismarck, ND
| ||
1200 West Century Avenue | proxy | |
Mailing Address: | ||
P.O. Box 5650 | ||
Bismarck, ND 58506-5650 | ||
(701) 530-1000 | ||
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders on April 27, 2010.26, 2011.
This proxy will also be used to provide voting instructions to New York Life Trust Company, as Trustee of the MDU Resources Group, Inc. 401(k) Retirement Plan, for any shares of Company common stock held in the plan.
The undersigned hereby appoints Harry J. Pearce and Paul K. Sandness and each of them, proxies, with full power of substitution, to vote all Common Stock of the undersigned at the Annual Meeting of Stockholders to be held at 11:00 a.m., Central Daylight Saving Time, April 27, 2010,26, 2011, at 909 Airport Road, Bismarck, ND, and at any adjournment(s) 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.Your vote is important! Ensure that your shares are represented at the meeting.Either (1) submit your proxy by touch-tone telephone, (2) submit your proxy by Internet or (3) mark, date, sign and return this proxy card in the envelope provided (no postage is necessary if mailed in the United States).If no directions are given, the proxies will vote in accordance with the Directors’ recommendation on all matters listed on this proxy, and at their discretion on any other matters that may properly come before the meeting.
See reverse for voting instructions.
100476110683