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1200 West Century Avenue | Terry D. Hildestad |
| President and |
| Chief Executive Officer |
Mailing Address: |
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P.O. Box 5650 |
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Bismarck, ND 58506-5650 |
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(701) 530-1000 |
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| March |
| To Our Stockholders: |
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| Please join us for the |
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| 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. |
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| We were pleased with the stockholder response for the |
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| 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. |
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| Brokers may not vote your shares on |
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| 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 |
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| I hope you will find it possible to attend the meeting. |
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Sincerely yours, | |
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| Terry D. Hildestad |
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MDU Resources Group, Inc.Proxy Statement |
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Proxy Statement
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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 26, 201124, 2012
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to Be Held on April 26, 201124, 2012
The 20112012 Notice of Annual Meeting and Proxy Statement and 20102011 Annual Report
to Stockholders are available at www.mdu.com/proxymaterials.
March 11, 20119, 2012
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 26, 2011,24, 2012, at 11:00 a.m., Central Daylight Saving Time, for the following purposes:
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(1) | Election of ten directors nominated by the board of directors for one-year terms; |
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| Ratification of the appointment of Deloitte & Touche LLP as the company’s independent auditors for |
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| Advisory vote to approve the compensation |
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| Transaction of any other business that may properly come before the meeting or any adjournment or adjournments thereof. |
The board of directors has set the close of business on February 25, 201124, 2012, 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 25, 201124, 2012, 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.
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| By order of the Board of Directors, |
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| Paul K. Sandness |
Secretary |
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MDU Resources Group, Inc.Proxy Statement |
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Proxy Statement |
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| MDU Resources Group, Inc.Proxy Statement |
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Proxy Statement |
The board of directors of MDU Resources Group, Inc. is furnishing this proxy statement beginning March 11, 20119, 2012, to solicit your proxy for use at our annual meeting of stockholders on April 26, 2011.24, 2012.
We will pay the cost of soliciting your proxy and reimburse brokers and others for forwarding proxy material to you. Georgeson Inc.Okapi Partners LLC additionally will solicit proxies for approximately $8,000$7,000 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 2011,2012, 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 25, 2011.24, 2012. You may vote each share that you owned on that date on each matter presented at the meeting. As of February 25, 2011,24, 2012, we had 188,793,564188,830,529 shares of common stock outstanding entitled to one vote per share.
What am I voting on?You are voting on:
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• | election of ten directors nominated by the board of directors for one-year terms |
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| ratification of the appointment of Deloitte & Touche LLP as the company’s independent auditors for |
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• | advisory vote to approve the compensation |
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• | 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.This means that brokers may not vote your shares on items 1 2, 4, and 53 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.
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MDU Resources Group, Inc.Proxy Statement | 1 |
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Proxy Statement |
Our policy on majority voting for directors andcontained in our corporate governance guidelines requirerequires any proposed 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, uponupon:
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• | receipt of a greater number of votes “against” than votes “for” election at our annual meeting of stockholders and |
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• | 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 and “for” items 2 3, and 4 and for “1 year” in item 5.3.
How do I vote?There are three ways to vote by proxy:
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• | by calling the toll free telephone number on the enclosed proxy card |
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• | by using the Internet as described on the enclosed proxy card or |
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• | 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.
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Can I revoke my proxy?Yes. You can revoke your proxy by:
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• | filing written revocation with the corporate secretary before the meeting |
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• | filing a proxy bearing a later date with the corporate secretary before the meeting or |
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• | revoking your proxy at the meeting and voting in person. |
2 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement All nominees for director are nominated to serve one-year terms, until the annual meeting of stockholders in 2013 and until their respective successors are elected and qualified, or until their earlier resignation, removal from office, or death. 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 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. The board concluded that Mr. Everist 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 earnings is derived from its construction services and aggregate mining businesses. Mr. Everist has considerable business experience in this area, with more than Proxy Statement Karen B. Fagg Director Since 2005 Age Nominating and Governance Committee Compensation Committee Ms. Fagg 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, Ms. Fagg submitted a letter of resignation to the board of directors when she retired from DOWL LLC in accordance with our Director Resignation upon Change of Job Responsibility policy. The board 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 statement for the following reasons. As chief executive officer of MDU Resources Group, Inc., Mr. Hildestad is the only officer of the company to sit on our board, consistent with our past practice. With over Proxy Statement 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 leadership abilities, integrity, values, and good judgment make him well-suited to serve on our board, particularly in this challenging economic environment. A. Bart Holaday Director Since 2008 Age Audit Committee Nominating and Governance 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 Group, a venture capital investment firm. He was founder and president of Tenax Oil and Gas Corporation, an onshore Gulf Coast exploration and production company, from 1980 through 1982. He has four years of senior management experience with Gulf Oil Corporation, a global energy and petrochemical company, and eight years of senior management experience with the federal government, including the Department of Defense, Department of the Interior, and the Federal Energy Administration. He is currently the president and owner of Dakota Renewable Energy Fund, LLC, which invests in small companies in North Dakota. He is a member of the investment advisory board of Commons Capital LLC, a venture capital firm; is a director of Hull Investments, LLC, a private entity that combines nonprofit activities and investments; is a member of the board of directors of Adams Street Partners, LLC, a private equity investment 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. The board concluded that Mr. Holaday 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. MDU Resources Group, Inc. has significant operations in the natural gas and oil industry where Mr. Holaday has knowledge and experience. He founded and served as president of Tenax Oil and Gas Corporation. He has four years experience in senior management with Gulf Oil Corporation and 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 Proxy Statement 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. He has received numerous awards including the 1991 Regional Small Business Person of the Year Award and the Greater North Dakotan Award. 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 Thomas C. Knudson Director Since 2008 Age Compensation Committee Mr. Knudson has been president of Tom Knudson Interests 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. He has served as an adjunct professor at the Jones Graduate School of Management at Rice University. 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 on the National Council of Methodist Neurological Institute since October 2011 and as The board concluded that Mr. Knudson 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 our earnings is derived from natural gas and oil production and the transportation, storage, and gathering of natural gas. Mr. Knudson has extensive knowledge and experience in this industry as a result of his prior employment with Conoco and ConocoPhillips, as well as through his service on the boards of Natco Group Inc. and Williams Partners LP. Mr. Knudson has a broad background in engineering, operations, and business development, as well as service on the management committee at Conoco and ConocoPhillips, which bring additional experience and perspective to our board. His service as senior vice president of human resources at ConocoPhillips makes him an excellent fit for our compensation committee. Sustainable business development is also an important aspect of our business, and Mr. Knudson, as the founding chairman of the Business Council for Sustainable Development, brings to our board significant experience and knowledge in this area. Mr. Knudson also has significant knowledge of local, state, and regional issues involving Texas, a state where we have important operations and assets. Proxy Statement Richard H. Lewis Director Since 2005 Age Audit Committee Nominating and Governance 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 also 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 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 1990s in terms of market return. Mr. Lewis represented natural gas producers on a panel that studied electric restructuring in Colorado and has testified before Congressional committees on industry matters. He worked in private practice as a certified public accountant for eight years, now on inactive status, prior to founding Prima Energy. 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 a board director and as the chairman of the The board concluded that Mr. Lewis 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. MDU Resources Group, Inc. derives a significant portion of its earnings from natural gas and oil production, one of our business segments. Mr. Lewis has extensive business experience, recognized excellence, and demonstrated success in this industry through almost 25 years at his company, Prima Energy Corporation, and ten years on the board of the Colorado Oil and Gas Association. In addition to his industry experience, he brings investment experience to our board through his service on the senior advisory board of TPH Partners, L.P., an energy-only private equity fund. As a certified public accountant and a director of Colorado State Bank and Trust, Mr. Lewis also contributes significant finance and accounting knowledge to our board and audit committee. Mr. Lewis also brings to the board his knowledge of local, state, and regional issues involving Colorado and the Rocky Mountain region, where we have important operations. Patricia L. Moss Director Since 2003 Age Compensation Committee Nominating and Governance Committee Ms. Moss 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. MDU Resources Group, Inc.Proxy Statement 7 Proxy Statement 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. Ms. Moss submitted a letter of resignation to the board of directors in connection with her retirement from Cascade Bancorp and Bank of the Cascades in accordance with our Director Resignation upon Change of Job Responsibility policy. The board 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, 2001, and was general counsel from 1987 to 1994. He served on the President’s Council on Sustainable Development and co-chaired the President’s Commission on the United States Postal Service. Prior to joining General Motors, he was a senior partner in the Pearce & Durick law firm in Bismarck, North Dakota. Mr. Pearce is a director of the United States Air Force Academy Endowment, and a member of the Advisory Board of the University of Michigan Cancer Center. He is a Fellow of the American College of Trial Lawyers and a member of the International Society of Barristers. He also serves on the Board of Trustees of Northwestern University. He has served as a chairman or director on the boards of numerous nonprofit organizations, including as chairman of the board of Visitors of the U.S. Air Force Academy, chairman of the National Defense University Foundation, and chairman of the Marrow Foundation. He currently serves as a director of the National Bone Marrow Transplant Link and New York Marrow Foundation. Mr. Pearce received a bachelor’s degree in engineering sciences from the U.S. Air Force Academy and his law degree from Northwestern University’s School of Law. The board concluded that Mr. Pearce 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. MDU Resources Group, Inc. values public company leadership and the experience directors gain through such leadership. Mr. Pearce is recognized nationally, as well as in the State of North Dakota, as a business leader and for his business acumen. He has multinational business management experience and proven leadership skills through his position as vice chairman at General Motors Corporation, as well as through his extensive service on the boards of large public companies, including Marriott International Inc.; Hughes Electronics Corporation, where he was chairman; and Nortel Networks Corporation, where he also was chairman. He also brings to our board his long experience as a practicing attorney. In addition, Mr. Pearce is focused on corporate governance issues and is the founding chair of the Chairmen’s Forum, an organization comprised of non-executive chairmen of publicly-traded companies. Participants in the Chairmen’s Forum discuss ways to enhance the accountability of corporations to owners and promote a deeper understanding of independent board leadership and effective practices of board chairmanship. The board also believes that Mr. Pearce’s values and commitment to excellence make him well-suited to serve as chairman of our board. 8 MDU Resources Group, Inc.Proxy Statement Proxy Statement 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 board of Duncan Aviation, an aircraft service provider, headquartered in Lincoln, Nebraska. He currently serves as deputy executive director of the Robert B. Daugherty Charitable Foundation, Omaha, Nebraska, and formerly served on the advisory board of US Bank NA Omaha. Mr. Wilson is a certified public The board concluded that Mr. Wilson 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. Wilson has an extensive background in finance and accounting, as well as extensive experience with mergers and acquisitions, through his education and work experience at a major accounting firm and his later positions as controller and vice president of Great Plains Natural Gas Co. 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. 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. 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 MDU Resources Group, Inc.Proxy Statement Proxy Statement (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 ITEM The audit committee at its February Although your ratification vote will not affect the appointment or retention of Deloitte & Touche LLP for 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 Ratification of the appointment of Deloitte & Touche LLP as our independent auditors for ACCOUNTING AND AUDITING MATTERS 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 % 2011 2010 * Audit Fees(a) $ 2,425,700 $ 2,250,579 Audit-Related Fees(b) 216,410 26,400 Tax Fees(c) 0 9,800 All Other Fees(d) 0 17,943 Total Fees(e) $ 2,642,110 $ 2,304,722 Ratio of Tax and All Other Fees to Audit and Audit-Related Fees 0.0 % 1.2 % * The 2010 amounts were adjusted from amounts shown in the 2011 proxy statement to reflect actual amounts. (a) Audit fees for 2010 and 2011 consisted of services rendered for the audit of our annual financial statements, reviews of quarterly financial statements, statutory and regulatory audits, compliance with loan covenants, reviews of financial statements for MDU Construction Services Group and subsidiaries, agreed upon procedures associated with the annual submission of financial assurance to the North Dakota Department of Health, filing Form S-3 registration statements (2011 only), and work related to responding to a comment letter from the Securities and Exchange Commission (2011 only). (b) Audit-related fees for 2011 and 2010 are associated with the audit of the Intermountain Gas Company’s benefit plans (2010 only), accounting research assistance, and accounting consultation in connection with due diligence (2011 only). (c) Tax fees for 2010 include services associated with Section 199 tax credits. There were no tax fees for 2011. (d) All other fees for 2010 consist of training provided by Deloitte & Touche LLP on the topic of utility taxes. There were no all other fees for 2011. (e) Total fees reported above include out-of-pocket expenses related to the services provided of $275,000 for 2011 and $274,329 for 2010. 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 10 MDU Resources Group, Inc. Proxy Statement Proxy Statement 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. ITEM In accordance with Our overall compensation program and philosophy is built on a foundation of these guiding principles: • we pay for performance • 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 and • we review competitive compensation data for each named executive officer position and incorporate internal equity in the final determination of target compensation We are asking our stockholders to indicate their approval of our named executive officer compensation as disclosed in this proxy statement, including the compensation discussion and analysis, the executive compensation tables, and narrative discussion. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers for “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.” As this is an advisory vote, the results will not be binding on the company, the board of directors, or the compensation committee and will not require us to take any action. The final decision on the compensation of our named executive officers remains with our compensation committee and our board of directors, although our board and compensation committee will consider the outcome of this vote when making future compensation decisions. The board of directors recommends a vote “for” the approval, on an advisory basis, of Approval of the compensation 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 • electric and natural gas distribution1under the leadership of David L. Goodin, the president and chief executive officer of Montana-Dakota Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain Gas Company • pipeline and energy services under the leadership of Steven L. Bietz, the president and chief executive officer of WBI Holdings, Inc., which is the parent company of WBI Pipeline & Storage Group, Inc. and WBI Energy Services, Inc. • exploration and production under the leadership of J. Kent Wells, the president and chief executive officer of Fidelity Exploration & Production Company, a subsidiary of WBI Holdings, Inc. • construction materials and contracting under the leadership of William E. Schneider, the president and chief executive officer of Knife River Corporation and • construction services under the leadership of John G. Harp, the president and chief executive officer of MDU Construction Services Group, Inc. Our consolidated financial Item 2011 Result 2010 Result Consolidated Earnings on Common Stock $212.3 million $240.0 million Earnings per Share (diluted) $1.12 $1.27 Return on Invested Capital 6.3% 7.0% Total Stockholder Return 9.1% (11.3)% Our business segment results were as follows: • electric and natural gas distribution earnings increased from $65.9 million in 2010 to $67.7 million in 2011 • pipeline and energy services earnings decreased from $23.2 million in 2010 to $23.1 million in 2011 • exploration and production earnings decreased from $85.6 million in 2010 to $80.3 million in 2011 • construction materials and contracting earnings decreased from $29.6 million in 2010 to $26.4 million in 2011 and • construction services earnings increased from $18.0 million in 2010 to $21.6 million in 2011. 1 Natural gas distribution is a separate business segment although we are showing it combined in this discussion. 12 MDU Resources Group, Inc. Proxy Statement Proxy Statement While 2011 performance in our electric and In terms of remuneration, this overview focuses on the total compensation paid to our • the change in pension value, which increased in 2011 due to lower discount rates used to calculate the values. Because the defined benefit pension plans were frozen as of January 1, 2010, and none of our named executives received benefit level increases in our Supplemental Income Security Plan for 2011, their retirement benefits under these programs did not increase. • a grant date fair value assigned to performance share awards, which are potential payments based on multiple assumptions. Performance shares are paid, if at all, three years after grant, based upon our total stockholder return in comparison to our peer group and • all other compensation for the named executives officers, which we excluded from total compensation paid because the dollar amount did not change from 2010 to 2011, except for a very small amount for Mr. Harp. The following table compares total compensation paid to Messrs. Hildestad, Schwartz, Harp, and Total Compensation Paid in 2011 and 2010 Named Year Base Salary Annual Value Value Total Terry D. Hildestad 2011 750,000 954,750 0 (1) — 1,704,750 2010 750,000 762,750 720,474 (2) 73,498 2,306,722 Doran N. Schwartz 2011 273,000 173,765 0 (1) — 446,765 �� 2010 252,454 127,053 75,398 (2) — 454,905 John G. Harp 2011 450,000 438,750 0 (1) — 888,750 2010 450,000 438,750 221,666 (2) — 1,110,416 William E. Schneider 2011 447,400 436,215 0 (1) — 883,615 2010 447,400 37,805 329,179 (2) 58,806 873,190 2011 Total 3,923,880 2010 Total 4,745,233 (1) Performance shares granted for the 2008-2010 performance period that did not vest and were forfeited because performance was below threshold. (2) Performance shares paid for the 2007-2009 performance period. The value realized is based on our closing stock price of $19.99 on February 11, 2010, and includes the dividend equivalents paid on the vested shares. (3) Reflects the value of restricted shares granted in 2001 that vested automatically and were paid on February 15, 2010, based on our closing stock price of $19.80 on February 12, 2010, as February 15, 2010, was a holiday. (4) Total compensation paid is the sum of base salary, annual incentive award paid, and the value realized upon vesting of long-term incentive awards of performance shares and restricted stock. The following table demonstrates our pay for performance policy specifically for our chief executive officer by comparing: • his total compensation paid, which is the sum of base salary, annual incentive awards paid, and the value realized upon the o vesting of restricted stock during 2010 o vesting of performance shares during 2007, 2008, 2009, and 2010 (none vested in 2011) and o exercise of stock options in 2007 • his total compensation as reported in the summary compensation table and • one-year total stockholder returns for 2007 to 2011. MDU Resources Group, Inc.Proxy Statement 13 Proxy Statement 5 Year CEO Compensation and Total Stockholder Return 2007 2008 2009 2010 2011 Total Compensation Paid $3,248,707 $1,680,323 $2,647,426 $2,306,722 $1,704,750 Total Compensation $4,023,732 $3,119,702 $4,203,004 $2,860,918 $3,566,327 1 Year TSR 9.9% (20.1)% 12.9% (11.3)% 9.1% Total Compensation Paid = Base Salary + Annual Bonus Paid + Performance Shares that Vested + Restricted Stock that Vested + 2007 Stock Option Exercise Comparing Mr. Hildestad’s total compensation paid and total compensation as reported in the summary compensation table against annual All nominees for director are nominated to serve one-year terms, until the annual meeting of stockholders in 2012
6162Genetics Squared,Everist Genomics, Inc. (Everist Geonomics, Inc.), Ann Arbor, Michigan, which provides solutions for personalized medicines, since May 2002, and has beenwas a director of Angiologix Inc., Mountain View, California, a medical diagnostic device company, from July 2010 through October 2011 when it was acquired by Everist Genomics, Inc., and has been a director of Bell, Inc., Sioux Falls, South Dakota, a manufacturer of folding cartons and packages, since July 2010.April 2011.3738 years in the aggregate and construction materials industry. He has also demonstrated success in his business and leadership skills, serving as president and chairman of his companies for over 2324 years. We value other public company board service. Mr. Everist has 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. Mr. Everist is our longest serving board member, providing 1617 years of board experience as well as extensive knowledge of our business.
MDU Resources Group, Inc.Proxy Statement
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5758has served as vice president of DOWL LLC, d/b/a DOWL HKM, an engineering and design firm, sincefrom April 2008.2008 until her retirement on December 31, 2011. 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 programs.and on the board of Deaconess Billings Clinic Health System from 1994 to 2002. She is2002, as a member of the Board of Trustees of Carroll College chairman offrom 2005 through 2010, and on the board of advisors of the Charles M. Bair Family Trust andfrom 2008 to July 2011, including a term as board chair. She has been a member of the board of directors of the Billings Chamber of Commerce.Commerce since July 2009 and a member of the Billings Catholic School Board since December 2011. She is also a member of the Montana State University Engineering Advisory Council, whose responsibilities include evaluating the mission and goals of the College of Engineering and assisting in the development and implementation of the college’s strategic plan. From 2002 through 2006, she served on the Montana Board of Investments, the state agency responsible for prudently investing state funds. From 2001 to 2005, she served on the board of Montana State University’s Advanced Technology Park. From 1998 to 2007, she served on the ZooMontana Board and as vice chair from 2005 to 2006.concludeddecided that Ms. Fagg should continue to serve as a director and be renominated to 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. Construction and engineering, energy, and the responsible development of natural resources are all important aspects of our business. Ms. Fagg has business experience in all these areas, including 1617 years of construction and engineering experience at DOWL HKM and its predecessor, HKM Engineering, Inc., where she has served as vice president, president, and chairman. Ms. Fagg has also had 14 years of experience in energy research and development at MSE, Inc., where she served as vice president of operations and corporate development director, and four years focusing on stewardship of natural resources as director of the Montana Department of Natural Resources and Conservation. In addition to her industry experience, Ms. Fagg brings to our board 13 years of business leadership and management experience as president and chairman of her own company, as well as knowledge and experience acquired through her service on a number of Montana state and community boards.
61623637 years of significant, hands-on experience at our company, Mr. Hildestad has a deep knowledge and understanding of MDU Resources Group, Inc., its operating
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MDU Resources Group, Inc. Proxy Statement4MDU Resources Group, Inc.Proxy StatementProxy Statement
6869firm;firm, Alerus Financial, a financial services company;company, Jamestown College;College, the United States Air Force Academy Endowment (chairman);, the Falcon Foundation (director and former vice president), which provides scholarships to Air Force Academy applicants;applicants, the Center for Innovation Foundation at the University of North Dakota (chairman and trustee) and the University of North Dakota Foundation; and is chairman and CEOchief executive officer of the Dakota Foundation.Foundation, a nonprofit foundation that fosters social entrepreneurship. He is a past member of the board of directors of the National Venture Capital Association, Walden University, and the U.S. Securities and Exchange Commission advisory committee on the regulation of capital markets.1516 years of experience managing private equity investments, including investments in oil and gas, as the head of the Private Markets Group of UBS Asset Management and its predecessor organizations. This business experience demonstrates his leadership skills and success in the oil and gas industry. Mr. Holaday brings to the board his extensive finance and investment experience as well as his business development skills acquired through his work at UBS Asset Management, Tenax Oil and Gas Corporation, Gulf Oil Corporation, and several private equity investment firms. This will enhance the knowledge of the board and provide useful insights to management in connection not only with our natural gas and oil business, but with all of our businesses.
61621982 and has been the majority stockholder since 1985.1982. Mr. Johnson is serving his tenthtwelfth year as president of the Dickinson City Commission. He previously wasserved as a director of the Federal Reserve Bank of Minneapolis.Minneapolis from 1993 to 1998. He is a past member and chairman of the Theodore Roosevelt Medora Foundation.
MDU Resources Group, Inc. Proxy Statement
5MDU Resources Group, Inc. Proxy Statement5Proxy Statement2837 years of experience in business management, manufacturing, and finance, and has demonstrated his success in these areas, through hisholding positions as chairman, president, and chief executive officer of TMI for 29 years, 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 seveneight 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.
6465LLC, 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 communications. Mr. Knudson served as a member of ConocoPhillips’ management committee. His diverse career at Conoco and ConocoPhillips included engineering, operations, business development, and commercial assignments. He was the founding chairman of the Business Council for Sustainable Development in both the United States and the United Kingdom. He has been a director of Bristow Group Inc. since June 2004 and its chairman of the board of directors since August 2006, and was a director of Natco Group Inc. from April 2005 to November 2009 and Williams Partners LP from November 2005 to September 2007. Bristow Group Inc. is a leading provider of helicopter services to the offshore oil industry. Natco Group Inc. is a leading manufacturer of oil and gas processing equipment. Williams Partners LP owns natural gas gathering, transportation, processing, and treating assets, and also has natural gas liquids fractionating and storage assets.an adjunct professor ata Trustee of the Jones Graduate SchoolEpiscopal Seminary of Management at Rice University.the Southwest, Austin, Texas, since January 2012.
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MDU Resources Group, Inc. Proxy Statement
6162energy-onlyenergy 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 his6MDU Resources Group, Inc. Proxy StatementProxy StatementDevelopment Boarddevelopment 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.
5758 has served as the president and chief executive officer of Cascade Bancorp, a financial holding company in Bend, Oregon, sincefrom 1998 and as a director since 1993.to January 3, 2012. She has served as the chief executive officer of Cascade Bancorp’s principal subsidiary, Bank of the Cascades, sincefrom 1993 to January 3, 2012, serving also as president from 1993 to 2003. From 1987 to 1998, Ms. Moss served as chief operating officer, chief financial officer, and corporate secretary of Cascade Bancorp. SheMs. Moss has been a director of Cascade Bancorp since 1993 and a director of Bank of the Cascades since 1998 and was elected vice chairman of both boards effective January 3, 2012. Ms. Moss also serves as a director of the Oregon Investment Fund Advisory Council, a state-sponsored program to encourage the growth of small businesses within Oregon.concludeddecided that Ms. Moss should continue to serve as a director and be renominated to 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 directorpositions at Cascade Bancorp and her positions at Bank of the Cascades, where she hasgained over 2930 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 CascadeMDU Resources Group, Inc. Proxy Statement7Proxy Statement
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56578MDU Resources Group, Inc. Proxy StatementProxy Statementaccountant.accountant, on inactive status. He received his bachelor’s degree in business administration, cum laude, from the University of Nebraska – Omaha. During his career, he was an audit manager at Peat, Marwick, Mitchell (now known as KPMG), controller for Great Plains Natural Gas Co., and chief financial officer and treasurer for all Durham Resources entities.;, president of Great Plains Energy Corp.;, and president, chief financial officer, and treasurer for Durham Resources, LLC and all Durham Resources entities. The electric and natural gas utility business was our core business when our company was founded in 1924. That business now operates through four utilities: Montana-Dakota Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain Gas Company. Mr. Wilson is our only non-employee director with direct experience in this area through his prior positions at Great Plains Natural Gas Co. and Great Plains Energy Corp. In addition, Mr. Wilson’s extensive finance and accounting experience make him well-suited for our audit committee.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 ofMDU Resources Group, Inc. Proxy Statement9Proxy Statementthe 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 ParticipationAll 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 GoalsThe 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 PlanAwards 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.The other material features of the plan are described below, and the complete text of the plan is attached to this proxy statement as Exhibit “A.”Purpose of the PlanThe 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 stockholders and customers. The plan is further intended to 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 operations largely depends.10MDU Resources Group, Inc. Proxy StatementProxy StatementEffective Date and DurationThe plan 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 remain 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 TerminationThe 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 PlanThe 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 PlanWhen 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 outstanding 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 plan. Adjustments made by the committee pursuant to these provisions are final, binding, and conclusive.Types of Awards under the PlanFollowing is a general 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 grant-by-grant basis, subject to limitations contained in the plan.Stock Options.The committee may grant incentive stock options and nonqualified stock options. Except as provided in the plan’s anti-dilution adjustment provisions, the exercise price for each such award shall be not 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 committee 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.MDU Resources Group, Inc. Proxy Statement11Proxy StatementThe stock option exercise price is payable in cash, in shares of our common stock having a fair market value equal to the exercise price, by share withholding, cashless exercise or any combination of the foregoing.Stock 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 the average of the high and low sale prices of a share of our common stock on 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 market 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 distributions paid with respect to the restricted stock will be credited subject to the same restrictions on transferability and forfeitability as the shares of restricted stock with respect to which they were paid.Performance Units and Performance Shares.Performance units and performance shares may be granted in the amounts 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 performance units/shares that will be paid out to participants. Dividend equivalents may also be granted.Participants will receive payment of the value of performance units/shares earned after the end of the performance period. Payment of performance units/shares will be made in cash and/or shares of common stock 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 the committee determines. Shares may be granted subject to any restrictions deemed appropriate by the committee.Other 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.Minimum Vesting RequirementsUnder 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 the 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 full value awards except in the event of a change in control of the company or similar transaction, or the death, disability, or termination of employment of a participant. The committee may grant 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 issuance under the plan.Termination of EmploymentEach award agreement will set forth the participant’s rights with respect to each award following termination of employment.12MDU Resources Group, Inc. Proxy StatementProxy StatementTransferabilityExcept 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 ControlUpon 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 RestatementsThe 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 409ATo 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 InformationIt 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 Statement13Proxy StatementStock Option Awards under MDU Resources Group, Inc. Long-Term Performance-Based Incentive PlanThe following table lists all stock options granted to the individuals and groups indicated below since the adoption of the plan 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.
Security
Securities
Underlying
Options
Granted
Price per
Share
($)
Date
President and CEO
Executive Vice President,
Treasurer and CFO
Vice President and CFO
President and CEO,
MDU Construction Services Group, Inc.
President and CEO,
WBI Holdings, Inc.
President and CEO,
Combined Utility Group
officers, as a group
of such stock optionsFederal Income Tax ConsequencesThe 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 affiliates have any obligation to indemnify or otherwise hold the optionholder or any beneficiary harmless from any or all of such taxes or penalties.14MDU Resources Group, Inc. Proxy StatementProxy StatementConsequences to the OptionholderAward. There are no federal income tax consequences to the optionholder solely by reason of the award 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 optionholder generally must exercise the incentive stock option no later than three months following the termination of the optionholder’s employment with the company, or one year following a termination due to disability, 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 short-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 the CompanyThere 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.159We 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.Equity Compensation Plan InformationThe following table includes information as of December 31, 2010, with respect to our equity compensation plans:(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.The 1998 Option Award ProgramThe 1998 Option Award Program is a broad-based plan adopted by the board of directors, effective February 12, 1998. The plan permits the grant of nonqualified stock options to employees of the company and our subsidiaries. The maximum number of shares that may be issued under the plan is 3,795,330. Shares granted may be authorized but unissued shares, treasury shares, or shares purchased on the open market. Option exercise prices are equal to the market value of our shares on the date of the option grant. Optionees receive dividend equivalents on their options, with any credited dividends paid in cash to the optionee if the stock option vests, or forfeited if the stock option is forfeited. Vested stock options remain exercisable for one year following termination of employment due to death or disability and for three months following termination of employment for any other reason.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.16MDU Resources Group, Inc.Proxy StatementProxy StatementThe Group Genius Innovation PlanThe Group Genius Innovation Plan was adopted by the board of directors, effective May 17, 2001, to encourage employees to share ideas for new business directions for the company and to reward them when the idea becomes profitable. Employees of the company and our subsidiaries who are selected by the plan’s administrative committee are eligible to participate in the plan. Officers and directors are not eligible to participate. The plan permits the granting of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance stock, and other awards. The maximum number of shares that may be issued under the plan is 223,150. Shares granted under the plan may be authorized but unissued shares, treasury shares, or shares purchased on the open market. Restricted stockholders have voting rights and, unless determined otherwise by the plan’s administrative committee, receive dividends paid on the restricted stock. Dividend equivalents payable in cash may be granted with respect to options and performance shares. The plan’s administrative committee determines the number of shares or units subject to awards, and the other terms and conditions of the awards, including vesting provisions and the effect of employment termination. Upon a change in control of the company, all options and stock appreciation rights become immediately vested and exercisable, all restricted stock becomes immediately vested, all restricted stock units become immediately vested and are paid out in cash, and target payout opportunities under all performance units, performance stock, and other awards are deemed to be fully earned, with awards denominated in stock paid out in shares and awards denominated in units paid out in cash. As of December 31, 2010, 4,100 shares of stock had been granted to 73 employees.The board of directors believes that it is in the best interests of the company and our stockholders to 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 Section 162(m), the material terms of the performance goals as set forth above. The plan will remain in effect if the stockholders do not approve the material terms of the performance goals, and failure to obtain stockholder approval will not affect the rights of participants under the plan or under any outstanding award agreements.The board of directors recommends a vote “for” 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 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” 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.3.2. RATIFICATION OF INDEPENDENT AUDITORS20112012 meeting appointed Deloitte & Touche LLP as our independent auditors for fiscal year 2011.2012. The board of directors concurred with the audit committee’s decision. Deloitte & Touche LLP has served as our independent auditors since fiscal year 2002.2011,2012, 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.
Deloitte & Touche LLP as our independent auditors for 2011.2012.20112012 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 Statement17Proxy StatementIn connection with the audit of our financial statements for 2011, the parties have drafted an agreement for audit committee approval that contains provisions for alternative dispute 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. The alternative dispute resolution provision does not have a waiver of rights to pursue punitive damages or other forms of relief not based on actual damages. The alternative dispute resolution provisions do not apply to claims by third parties, such as our stockholders or creditors.20102011 and 2009:2010:*The 2009 amounts were adjusted from amounts shown in the 2010 proxy statement to reflect actual amounts.(a)Audit fees for 2009 and 2010 consisted of services rendered for the audit of our annual financial statements, reviews of quarterly financial statements, statutory and regulatory audits, compliance with loan covenants, reviews of financial statements for MDU Construction Services Group, Inc. and subsidiaries, 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 work related to the filing of Form S-8 with the Securities and Exchange Commission (2009 only).(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 $260,000 for 2010 and $240,062 for 2009.20102011 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.18MDU Resources Group, Inc.Proxy StatementProxy Statement4.3. ADVISORY VOTE TO APPROVE THE COMPENSATION PAID TOOF THE COMPANY’S NAMED EXECUTIVE OFFICERS recently-adopted Section 14A of the Securities Exchange Act of 1934 and Rule 14a-21(a), we are asking our stockholders to approve, in a separate advisory vote, the compensation of our named executive officers as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K. As discussed in the compensation discussion and analysis, our compensation committee and board of directors believe 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 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.levels and•through our PEER4 Analysis, we compare our pay-for-performance results with the pay-for-performance results of our peers.levels.2010.2011. Accordingly, the following resolution is submitted for stockholder vote at the 20112012 annual meeting:WeAs the board of directors determined at its meeting in May 2011, we will provide our stockholders with the opportunity to vote on our named executive officer compensation at ourevery annual meetingsmeeting until the next required vote on the frequency of stockholder votes on named executive officer compensation. The next required vote on frequency will occur at least once every three calendar years.the 2017 annual meeting of stockholders.of the compensation paid toof our named executive officers, as disclosed in this proxy statement.paid toof 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 OFFICERSIn 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.1911By 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 voteon compensation paid to our named executive officers be held every year.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.20MDU Resources Group, Inc.Proxy StatementProxy StatementIntroduction2011 Named Executive OfficersIn this compensation discussion and analysis, we discuss our compensation objectives, our decisions, and the reasons for our decisions relating to 2010 compensation for our named executive officers.2010,2011, our named executive officers were Terry D. Hildestad, Vernon A. Raile, Doran N. Schwartz, J. Kent Wells, John G. Harp, Steven L. Bietz, and David L. Goodin.William E. Schneider. Mr. Goodin,Hildestad is our president and chief executive officer, and Mr. Schwartz is our vice president and chief financial officer. Mr. Wells, president and chief executive officer of Montana-Dakota Utilities, Co.Fidelity Exploration & Production Company, a direct wholly-owned subsidiary of WBI Holdings, Inc., Great Plains Natural Gas Co., Cascade Natural Gas Corporation,was hired in May 2011 and Intermountain Gas Company, which we refer to as the combined utility group, is a named executive officer for the first time. Mr. Raile retiredHarp was president and chief executive officer of MDU Construction Services Group, Inc. during 2011 and, effective January 1, 2012, became chief executive officer of Knife River Corporation as well as MDU Construction Services Group, Inc. Mr. Schneider was president and chief executive officer of Knife River Corporation during 2011 and, effective January 1, 2012, became MDU Resources Group, Inc. executive vice president treasurerof Bakken development.officer on February 16,results for 2011 and 2010 were:Mr. Schwartznatural gas and construction services segments was promoted to vice presidentstrong, performance in the pipeline and chief financial officer effective February 17,energy services, exploration and production, and construction materials segments was lower than in 2010.Overview We believe that the compensation of 2010 CompensationThe compensation committee and the board of directors believe our 2010 compensation program for our named executive officers directly links theirfor 2011 reflects these results.financialnamed executives. Total compensation paid is the sum of base salary, annual incentive award paid, and the value realized upon the vesting of long-term incentive awards of performance shares and aligns their interests with those of our stockholders. Ourrestricted stock. While the compensation committee andbelieves that total compensation as reported in the board of directors also believe that our 2010Summary Compensation Table is important, it does not show the actual value in the compensation program providespaid to our named executive officers, with a balancedwhich the compensation packagecommittee believes is important to show stockholders. The three major differences are that includes an appropriate base salary along with competitive annualthe total compensation reported in the Summary Compensation Table shows:long-term incentive compensation targets. These incentives are designed to reward ourSchneider, the four 2011 named executive officers on both anwho were also employed by the company in 2010. Three of the four named executive officer’s total compensation paid decreased in 2011 and, as a group, their total compensation paid decreased $821,353, or 17.3% when compared to 2010.
Executive
Officer
($)
Incentive
Awards
Paid
($)
Realized
upon
Vesting of
Performance
Shares
($)
Realized
upon
Vesting of
Restricted
Stock
($)(3)
Compensation
Paid
($)(4)
from Summary
Compensation Table
and long-term basis if they attain specified goals.
• | In 2007, annual total stockholder return was 9.9% and Mr. Hildestad’s total compensation paid increased by 65% and his total compensation as reported in the summary compensation table increased by 30%. |
• | In 2008, annual total stockholder return was (20.1)% and Mr. Hildestad’s total compensation paid decreased by 48% and his total compensation as reported in the summary compensation table decreased by 23%. |
• | In 2009, annual total stockholder return was 12.9% and Mr. Hildestad’s total compensation paid increased by 58% and his total compensation as reported in the summary compensation table increased by 35%. |
• | In 2010, annual total stockholder return was (11.3)% and Mr. Hildestad’s total compensation paid decreased by 13% and his total compensation as reported in the summary compensation table decreased by 32%. |
• | In 2011, annual total stockholder return was 9.1% and Mr. Hildestad’s total compensation paid decreased by 26% and his total compensation as reported in the summary compensation table increased by 25%. |
Overview of 2011 Compensation for our Named Executive Officers |
Our 2011 compensation program for our named executive officers was designed to link their compensation to our financial performance and align their interests with those of our stockholders. Mr. Wells’ compensation was established to induce him to join the company while, at the same time, basing his incentive payments on the attainment of financial results. We discuss Mr. Wells’ compensation in a separate section below, and the following discussion of our named executive officers’ compensation excludes Mr. Wells. |
Our overall compensation program and philosophy is built on a foundation of these guiding principles: |
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• | 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 |
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• | we review competitive compensation data for each named executive officer and incorporate internal equity in the final determination of target compensation levels and |
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• | through our |
14 | MDU Resources Group, Inc.Proxy Statement |
The compensation committee regularly reviews our compensation policies and practices to ensure our compensation program is structured to pay for performance.
Proxy Statement |
The compensation committee took the following actions with respect to 20102011 compensation for our named executive officers:
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• | provided for mandatory reductions in any performance shares earned pursuant to awards granted in |
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• | in 2011 the compensation committee did not approve payment of any performance shares or dividend equivalents granted |
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The compensation committee also:
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• | imposed mandatory stock holding requirements |
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J. Kent Wells |
We hired Mr. Wells as the president and chief executive officer of Fidelity Exploration & Production Company, effective May 2, 2011. Mr. Hildestad, with assistance from our vice president-human resources, negotiated Mr. Wells’ compensation in connection with his hiring; his compensation is set forth in a letter agreement, which was approved by the compensation committee and the board of directors at their regular February 2011 meetings. The compensation committee approved Mr. Wells’ compensation after considering his extensive experience in leading the oil and gas industry and his demonstrated track record of substantially increasing reserves and production while reducing finding costs. |
Mr. Wells’ letter agreement provides for the following: |
• | a base salary of $550,000, prorated for his eight months of employment during 2011. We discuss how Mr. Wells’ base salary was determined in the Base Salaries of the Named Executive Officers for 2011 section below. | |
• | a cash recruitment payment of $550,000 to induce Mr. Wells to join the company and to offset the forfeiture of restricted stock | |
• | a target annual incentive award opportunity of 100% of base salary prorated to | |
o | Fidelity Exploration & Production Company and WBI Holdings, Inc.’s 2011 earnings per share were at or above 115% of the performance targets approved by the compensation committee | |
o | Fidelity Exploration & Production Company and WBI Holdings, Inc.’s 2011 returns on invested capital were both at least equal to their respective weighted average costs of capital | |
o | Fidelity Exploration & Production Company achieved its production goal and | |
o | WBI Holdings, Inc. achieved its five safety goals. | |
We discuss this incentive award in the 2011 Annual Incentives section below. | ||
• | to offset other compensation Mr. Wells would have received if he had stayed with his former employer, an additional 2011 incentive award opportunity to earn $1.85 million, payable one-half in cash and one-half in our common stock, if Fidelity Exploration & Production Company’s 2011 cash flow from operations exceeded $132.0 million. We discuss this incentive award in the 2011 Annual Incentives section below. | |
• | commencing in 2012, a target long-term incentive opportunity of 200% of base salary and | |
• | relocation benefits consisting of: | |
o | reasonable expenses for two home finding trips for Mr. Wells and his spouse | |
o | monthly reimbursements of up to $3,000 for 6 months for temporary living expenses | |
MDU Resources Group, Inc.Proxy Statement | 15 |
Proxy Statement |
o | reasonable expenses incurred during the actual move from the Houston area to Denver | ||
o | reimbursement of actual and reasonable costs of moving household goods and personal effects | ||
o | a relocation allowance equal to one month’s salary | ||
o | reimbursement of the following home sale expenses: | ||
• | reasonable attorney’s fees | ||
• | federal, state and local transfer taxes | ||
• | search fees and title insurance | ||
• | brokerage commission of a licensed real estate broker | ||
• | mortgage prepayment penalties | ||
• | recording fees | ||
• | any other fees or expenses approved in advance in writing by the company | ||
o | a bonus of 3% of the sales price of Mr. Wells’ Houston area home up to a maximum of $15,000 | ||
o | reimbursement of the following costs to acquire a new home if Mr. Wells purchases a new home within 18 months from his hire date: | ||
• | title search and title insurance | ||
• | mortgage service charges and mortgage taxes | ||
• | bank applications and processing and appraisal fees | ||
• | recording and notary fees | ||
• | state and local transfer taxes | ||
• | termite inspection | ||
• | land survey | ||
• | attorney’s fees up to a maximum of 1% of the new mortgage amount | ||
• | origination fees or points up to a maximum of 2% of the new mortgage amount and | ||
• | any other fees or expenses approved in writing by the company and | ||
o | spousal career assistance. | ||
Mr. Wells received $66,031 in relocation benefits for 2011 consisting of $18,000 in temporary living expenses, $2,198 in actual move and related expenses, and $45,833 in relocation allowance. We anticipate Mr. Wells completing his relocation to the Denver area during 2012. | |||
Mr. Wells must repay the relocation benefits he received if he resigns from the company within one year from when his household goods and personal effects are moved to the Denver area. | |||
Objectives of our Compensation Program | |||
We structure our compensation program to help retain and reward the executive officers who we believe are | |||
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.
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• | 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 | ||
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• | reward executives for short-term performance, as well as the growth in enterprise value over the long-term | ||
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• | provide a competitive package relative to industry-specific and general industry comparisons and internal equity, as appropriate | ||
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• | ensure effective utilization and development of talent by working in concert with other management processes – for example, performance appraisal, succession planning, and management development and | ||
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• | help ensure that compensation programs do not encourage or reward excessive or imprudent risk taking. | ||
16 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
We pay/grant:
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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 55.6% to 71.4% of total target compensation for the named executive officers, except for Mr. Wells, for 2011 is appropriate because:
The following table shows the allocation of total target compensation for
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 our named executive officers. Additionally, the long-term incentive, if earned, is paid in company common stock. These awards, combined with our stock ownership 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.
The assessment included identifying any material changes to the positions analyzed and their scopes of responsibility, summarizing current incumbent compensation information, updating competitive compensation information, gathering and analyzing relevant general and industry-specific survey data, validating position matches and survey data with our management, assessing pay relationships for our chief executive officer as compared to our chief financial officer and the business unit presidents and chief executive officers, and updating the base salary structure.
In billions of dollars our revenues for 2009, 2010, and 2011 were approximately $4.2, $3.9, and $4.0, respectively. Since there were no specific data sources dedicated to the construction services or construction material industries, Towers Watson considered data from a subset of companies in the Towers Perrin 2009 Compensation Databank General Industry Executive Database and five public companies. The companies from the general industry survey, along with key financial data, were:
Revenues for
The following companies
The other companies reviewed for this assessment are listed in Exhibit B. At the request of Mr. Hildestad, the human resources department conducted a competitive assessment in January 2011 to determine the compensation level necessary to recruit a qualified individual to lead Fidelity Exploration & Production Company. Mr. Hildestad, with the assistance of our vice president–human resources, negotiated Mr. Wells’ compensation in connection with his hiring. The January 2011 competitive assessment is discussed in the Base Salaries of the Named Executive Officers for 2011 section below. The chief executive officer played an important role in recommending
The compensation committee reviewed the competitive assessment and established
Our named executive officers’ salary grade classifications are listed below along with the
The At its August 2010 meeting, the compensation committee
Internal Equity Assessment*
The compensation committee determines where,
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:
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 other 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:
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.
Revenue ranged from $250 million to $850 million with median revenue of $591 million at the 36 companies surveyed. These companies are listed on Exhibit C. The competitive assessment measured base salary, target annual cash compensation, which was base salary plus annual discretionary bonus plus target annual non-equity incentive plan compensation, and target total direct compensation, which was target annual cash compensation plus the target value of long term incentives plus the change in pension and non-qualified deferred compensation plus all other compensation as reported in a company’s proxy statement. The results of the
Mr.
The following table shows each named executive officer’s base salary for
What the Performance Measures Are and Why We Chose Them The compensation committee develops and reviews financial and other corporate performance measures to help ensure that compensation to the executives reflects the success of their respective business unit and/or the corporation, as well as the value provided to our stockholders. For Messrs. Wells, Harp,
For the named executive officers working at MDU Resources Group, Inc. The compensation committee believes earnings per share and return on invested capital are very good measurements in assessing a 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 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 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 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 based upon recommendation of the chief executive officer. The compensation committee also considers annual
the board in the What the Named Executive Officers’ Incentive Targets Are and Why We Chose Them Targets The compensation committee established the named executive officers’ annual incentive targets as a percentage of each officer’s actual
Terry As discussed above, Messrs. Hildestad and Schwartz were awarded As a result of the awards earned by the John G. Harp – MDU Construction Services Group, Inc. The
We set Mr. Harp’s William E. Schneider – Knife River Corporation The
We set the 2011 allocated earnings per share and return on invested capital target levels below the 2010 target levels and the 2010 actual results. The 2011 target levels reflected a greater share of business coming from public sector projects, which generally carry lower profit margins. Also, 2011 target levels were lower than 2010 target levels due in part to the absence of earnings gains on the sales of property and equipment. Knife River Corporation’s 2011 results for allocated earnings per share and return on invested capital were 115.0% and 109.4% of their respective targets. Mr. Schneider’s payment with respect to the return on invested capital component was limited to the target amount of $145,405 because Knife River Corporation’s return on invested capital was less than its weighted average cost of capital, resulting in an overall payment of $436,215, or 150% of Mr. Schneider’s 2011 target annual incentive. WBI Holdings, Inc. For WBI Holdings, Inc., the 2011 award opportunity for its president and chief executive officer ranged from no payment if the results were below the 85% level to a 200% payout if:
We set The president and chief executive officer of
For the Combined Utility Group, the 2011 award opportunity We set the 2011 targets for allocated earnings per share and return on invested capital targets higher than the 2010 targets but lower than 2010 actual results to reflect a deferred income tax credit in 2010 that did not recur in 2011. For 2011, the Combined Utility Group’s 2011 earnings per share and return on invested capital exceeded their respective 2011 targets. As a result, the president and chief executive officer of the Combined Utility Group was paid 136.7% of the 2011 target annual incentive. J. Kent Wells In connection with his hire, the compensation committee granted Mr. Wells an annual incentive opportunity pursuant to the WBI Holdings, Inc. Executive Incentive Compensation Plan. Mr. Wells’ annual incentive target was set at 100% of his base salary. The committee’s rationale was the 100% annual incentive target would drive a target annual cash compensation of $1.1 million, which approximated the target annual cash compensation paid to chief executive officers listed in the competitive assessment. For 2011, the committee guaranteed a minimum payment of 100% of target, prorated to reflect his May 2, 2011 hire date.
The 2011 incentive award opportunity was based on the financial goals for both Fidelity Exploration & Production Company and WBI Holdings, Inc., weighted 75% for the results of Fidelity Exploration & Production Company and 25% for the results of WBI Holdings, Inc. The incentive award could be reduced by up to 10% if Fidelity Exploration & Production Company did not meet its production goal and by up to 5% if WBI Holdings, Inc. did not satisfy its safety goals. Mr. Wells could achieve a maximum of 200% of the annual incentive target if:
Financial Goals and Results Fidelity Exploration & Production Company’s earnings per share and return on invested capital exceeded their respective targets, but Mr. Wells’ payment with respect to the return on invested capital component was limited to the target amount because its return on invested capital was less than its weighted average cost of capital. WBI Holdings, Inc.’s 2011 results are discussed earlier under 2011 Annual Incentives – WBI Holdings, Inc. The weighted financial results for Fidelity Exploration & Production Company and WBI Holdings, Inc. resulted in an achievement of 126.1% of the incentive target. This resulted in a potential payment to Mr. Wells of $462,390, which was subject to reduction if Fidelity Exploration & Production Company’s production goal was not met and/or WBI Holdings, Inc. failed to achieve one or more of its five 2011 safety goals. Fidelity Exploration & Production Company Production and WBI Holdings, Inc. Safety Goals and Results
Fidelity Exploration & Production Company’s 2011 actual production was 66.6 Bcfe, which equates to an achievement percentage of 80.5%. The five WBI Holdings, Inc. safety goals were:
Even though Fidelity Exploration & Production Company’s personal injury rate was 0.0, WBI Holdings, Inc. did not meet one of its safety goals due to a 2011 personal injury incident rate above 2.0. Achieving four of the five safety goals equates to an achievement percentage of 80.0%. The production and safety goal results reduced Mr. Wells’ potential award of $462,390 by 2.9% to $448,981. Of the $448,981 payment, $366,685 is the target amount guaranteed in Mr. Wells’ letter agreement and is reported in the Bonus column of the Summary Compensation Table; the additional $82,296 was reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
The following table shows the changes in our performance targets and achievements for both
The table below lists each named executive officer’s
Messrs. Hildestad’s and Schwartz’s 2011 annual incentives were paid at 127.3% of target based on the following:
J. Kent Wells’ Additional 2011 Annual Incentive
Deferral of Annual Incentive Compensation
The companies comprising our performance graph peer group
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. The compensation committee selected the 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. No dividend equivalents are paid on unvested performance shares. 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 assessment 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 assessment were important from an internal equity standpoint. The The compensation committee has historically set Mr.
On
Assuming our three-year Long-Term Incentive Payout Percentages
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
The named executive officers must retain 50% of the net after-tax shares that are earned pursuant to this long-term incentive award until the earlier of (i) the end of the two-year period commencing on the date any shares earned under the
5 Year Total Compensation to
The results of the analysis showed that we paid our named executive officers Post-Termination Compensation and Benefits Supplemental Income Security Plan
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 Levels The chief executive officer did not recommend a
Clawback Impact of Tax and Accounting Treatment 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 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 Financial Accounting Standards Board generally accepted accounting principles for stock-based compensation.
Stock Ownership Requirements
The compensation committee may consider the policy and the executive’s stock ownership in determining compensation. The committee, however, did not do so with respect to 2011 compensation. Policy Regarding Hedging Stock Ownership 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
Proxy Statement
(3)
Grants of Plan-Based Awards in 2011
Narrative Discussion Relating to the Summary Compensation Table Incentive Awards Annual Incentive Other than the arrangements negotiated for Mr. Wells for 2011, 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 0% to 200% of the target based upon achievement of 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, Harp, and Schneider must have remained employed by the company through December 31, 2011, 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 otherwise determined and established in writing by the compensation committee within 90 days of the beginning of the performance period, the performance goals may not be adjusted if the adjustment would increase the annual incentive award payment. The compensation committee may use negative discretion and adjust any annual incentive award payment downward, using
With respect to annual incentive awards granted pursuant to the MDU Resources Group, Inc. Executive Incentive Compensation Plan, which includes Mr. Schwartz, and the annual incentive awards granted pursuant to the WBI Holdings, Inc. Executive Incentive Compensation Plan, which includes Mr. Wells, 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
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. Messrs. Harp’s For Messrs. Harp and For Mr. Wells, the committee guaranteed a minimum payment of 100% of target, prorated to reflect his May 2, 2011 hire date. The
Annual incentive award payments for Messrs. Hildestad and Schwartz were determined based on the annual incentive award payments made to the president and chief executive officers of the four business units – MDU Construction Services Group, Inc.,
The award opportunities available to Messrs. Harp and
The award opportunities available to Mr. Wells with respect to the financial results component of his award were: Fidelity Exploration & Production Company – weighted 75%
WBI Holdings, Inc. – weighted 25%
For discussion of the specific incentive plan performance targets and results, please see the Compensation Discussion and Analysis.
If the company’s
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 If the company’s
Outstanding Equity Awards at Fiscal Year-End
The amounts shown for the pension plan and SISP excess represent the actuarial present values of the executives’ accumulated benefits accrued as of December 31,
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 in the table reflect the named executive officers’ years of credited service as of December 31,
To receive unreduced retirement benefits under the MDU pension Benefits for single participants under the pension plans are paid as straight life annuities and benefits for married participants are paid as actuarially reduced annuities with a survivor benefit for spouses, unless participants choose otherwise. The Internal Revenue Code limits the amounts that may be paid under the pension plans and 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.
SISP benefits are forfeited if the participant’s employment is terminated for cause.
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.
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 had died on December 31, Regular SISP benefits that were vested as of December 31, 2004, and were thereby grandfathered under Section 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 Section 409A of the Internal Revenue Code, which we refer to as SISP II benefits, are governed by amended provisions intended to comply with Section 409A. Participants generally have more discretion with respect to the distributions of their SISP I benefits.
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 Section 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 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. 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
There 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 vesting requirement for benefit level increases is pro-rated for participants who are officers, attain age 65, and, pursuant to the company’s bylaws, are required to retire prior to the end of the additional vesting period as follows:
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 Messrs. Schwartz and Harp are fully vested in their SISP benefits, this would not result in any incremental benefit for the named executive officers other than Messrs. Schwartz and Harp. The present value of these two additional years of service for Messrs. Schwartz and Harp are reflected in the table in “Potential Payments upon Termination or Change of Control” below. SISP Excess Benefits
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 benefit is paid until the date the participant would have attained age 65.
Nonqualified Deferred Compensation for
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
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
Potential Payments upon Termination or Change of Control The tables exclude 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, which are reported in the Nonqualified Deferred Compensation for 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. As the tables reflect, with the exception of Messrs. Schwartz According to the terms of Mr. Wells’ letter agreement, we agreed to pay Mr. Wells a guaranteed minimum payment of 100% of target of his annual incentive award under the WBI Holdings, Inc. Executive Incentive Compensation Plan, prorated to reflect his May 2, 2011 hire date. In addition, if Mr. Wells’ employment had ended before January 2, 2012, due to a change of control, as defined in Section 409A of the Internal Revenue Code of 1986, as amended, we agreed to pay Mr. Wells’ additional annual incentive of $1.85 million in full if the performance goal was met. 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 performance share awards for Messrs. Hildestad, Schwartz, Harp, and Schneider and the annual incentives for Messrs. Hildestad, Harp, • 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. MDU Resources Group, Inc.Proxy Statement 45 Proxy Statement Performance • if the termination of employment occurs during the first year of the performance period, the shares are forfeited • 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. December 31, 2011. Accordingly, if a December 31, The value of the vesting of performance shares shown in the tables was determined by multiplying the number of performance shares that would vest due to termination or a change of control by the closing price of our stock on December 31, Except for For these purposes, we define “change of control” as: • 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 the date of the agreement without the approval of a majority of the board members as of the date of the agreement or whose election was approved by such board members • consummation of a merger of 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. 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 47 Proxy Statement Terry D. Hildestad Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Change of Change of Executive Benefits and Not for Control Control Payments Upon Voluntary Cause For Cause (With (Without Termination or Termination Termination Termination Death Disability Termination) Termination) Change of Control ($) ($) ($) ($) ($) ($) ($) Compensation: Short-term Incentive(1) �� 750,000 750,000 750,000 750,000 2008-2010 Performance Shares 864,986 864,986 2009-2011 Performance Shares 786,809 786,809 786,809 786,809 1,180,224 1,180,224 1,281,374 1,281,374 2010-2012 Performance Shares 997,357 997,357 723,587 723,587 723,587 723,587 1,085,380 1,085,380 2011-2013 Performance Shares 1,199,584 1,199,584 Benefits and Perquisites: Regular SISP(2) 4,440,460 4,440,460 4,440,460 4,440,460 5,242,870 5,242,870 5,242,870 5,242,870 Excess SISP(3) 706,848 706,848 706,848 706,848 552,948 552,948 552,948 552,948 SISP Death Benefits(4) 10,762,627 11,586,607 Total 5,934,117 5,934,117 11,549,436 5,934,117 8,939,875 3,792,567 6,519,405 6,519,405 12,310,194 6,519,405 10,112,156 4,316,338 (1) Represents the target (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 48 MDU Resources Group, Inc.Proxy Statement 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 Proxy Statement Doran N. Schwartz 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 780,000 819,000 Short-term Incentive(1) 725,040 725,040 2008-2010 Performance Shares 78,243 78,243 2009-2011 Performance Shares 105,635 105,635 114,689 114,689 2010-2012 Performance Shares 172,863 172,863 188,120 188,120 2011-2013 Performance Shares 218,319 218,319 Benefits and Perquisites: �� Regular SISP 110,271 (2) 137,839 (3) 160,738 (2) 160,738 (2) 241,107 (3) 281,292 (4) SISP Death Benefits 1,839,550 1,980,385 Disability Benefits 781,632 842,408 Outplacement Services 50,000 50,000 280G Tax 362,763 417,848 Total 1,839,550 891,903 2,412,383 356,741 160,738 160,738 1,980,385 1,083,515 2,814,308 521,128 (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 (3) Represents the present value of Mr. Schwartz’s vested SISP benefit described in footnote 2, 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 Represents the payment that would be made under Mr. Schwartz’s change of control agreement based on the increase in the actuarial present value of his regular SISP benefit that would result if he continued employment for an additional three years. 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 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 Determined applying the Internal Revenue Code Section 4999 excise tax of 20% only if 110% threshold is exceeded. MDU Resources Group, Inc.Proxy Statement 49 Proxy Statement John G. Harp 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 1,350,000 1,350,000 Short-term Incentive 2,880,000 (1) 292,500 (2) 1,755,000 (1) 292,500 (2) 2008-2010 Performance Shares 296,553 296,553 2009-2011 Performance Shares 424,867 424,867 461,280 461,280 2010-2012 Performance Shares 359,043 359,043 260,488 260,488 260,488 260,488 390,731 390,731 2011-2013 Performance Shares 431,840 431,840 Benefits and Perquisites: Incremental Pension(3) 119,420 119,420 119,420 119,420 136,432 136,432 136,432 136,432 Regular SISP 1,636,132 (4) 1,636,132 (4) 2,045,166 (5) 2,045,166 (6) 2,215,163 (4) 2,215,163 (4) 2,461,292 (5) 2,461,292 (6) SISP Death Benefits(7) 5,758,043 6,198,875 Disability Benefits(8) 202,911 178,455 Outplacement Services 50,000 50,000 280G Tax(9) 968,473 718,845 Total 1,755,552 1,755,552 5,758,043 2,367,497 8,493,522 1,372,963 2,612,083 2,612,083 6,459,363 3,036,667 7,755,420 1,576,351 (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 target (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 (4) Represents the present value of Mr. Harp’s vested regular SISP benefit as of December 31, (5) 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 from an additional two years of vesting under the SISP. Present value was determined using a (6) 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 (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 (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 (9) Determined applying the Internal Revenue Code Section 4999 excise tax of 20% only if 110% threshold is exceeded. 50 MDU Resources Group, Inc.Proxy Statement Proxy Statement J. Kent Wells Executive Benefits and Voluntary Not for For Cause Death Disability Change of Change of Compensation: Short-term Incentive(1) 366,685 366,685 366,685 366,685 366,685 366,685 366,685 Additional 2011 Annual Incentive 1,850,000 (2) 1,850,000 (2) 1,850,000 (2) 1,850,000 (2) 1,850,000 (3) 1,850,000 (4) Total 366,685 2,216,685 2,216,685 2,216,685 2,216,685 2,216,685 2,216,685 (1) Represents the guaranteed minimum annual incentive payment of 100% of target for 2011, prorated to reflect Mr. Wells’ May 2, 2011 hire date. (2) Mr. Wells was eligible to receive payment of his 2011 additional annual incentive if he did not resign from Fidelity Exploration & Production Company before January 2, 2012, and the goal was met. (3) Mr. Wells would receive payment of his 2011 additional annual incentive if Fidelity Exploration & Production Company’s cash flow from operations for 2011 exceeded $132.0 million and his employment ended for any reason before January 2, 2012, due to a change in control of MDU Resources Group, Inc. (4) Represents the 2011 additional annual incentive, which would be deemed earned upon a change of control under the Long-Term Performance-Based Incentive Plan. MDU Resources Group, Inc.Proxy Statement 51 Proxy Statement Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 1,050,000 Short-term Incentive 1,801,800 (1) 227,500 (2) 2008-2010 Performance Shares 232,140 232,140 2009-2011 Performance Shares 330,447 330,447 2010-2012 Performance Shares 279,249 279,249 Benefits and Perquisites: 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 280G Tax(7) 646,371 Total 1,227,020 1,227,020 4,059,609 1,227,020 5,732,980 1,069,336 William E. Schneider Executive Benefits and Voluntary Not for For Cause Death Disability Not for Change of Compensation: Base Salary 1,342,200 Short-term Incentive 2,326,480 (1) 290,810 (2) 2009-2011 Performance Shares 458,615 458,615 2010-2012 Performance Shares 258,986 258,986 258,986 258,986 388,479 388,479 2011-2013 Performance Shares 429,341 429,341 Benefits and Perquisites: Regular SISP(3) 2,919,232 2,919,232 2,919,232 2,919,232 Excess SISP 46,259 (4) 46,259 (4) 46,259 (4) 46,259 (5) SISP Death Benefits(6) 6,198,875 Outplacement Services 50,000 280G Tax(7) 784,127 Total 3,224,477 3,224,477 6,457,861 3,224,477 8,744,733 1,567,245 (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 target (3) Represents the present value of Mr. (4) Represents the present value of all excess SISP benefits Mr. (5) Represents the present value of all excess SISP benefits Mr. (6) Represents the present value of 180 monthly payments of (7) Determined applying the Internal Revenue Code Section 4999 excise tax of 20% only if 110% threshold is exceeded. 52 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 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 Name Fees Stock Option Non-Equity Change in All Other Total Fees Stock Option Non-Equity Change in All Other Total Thomas Everist 60,000 79,064 — (3) — — 174 139,238 62,917 110,000 — (3) — — 174 173,091 Karen B. Fagg 60,000 (4) 79,064 — — — 174 139,238 62,917 110,000 — — — 174 173,091 A. Bart Holaday 55,000 (5) 79,064 — — — 174 134,238 55,000 (4) 110,000 — — — 174 165,174 Dennis W. Johnson 65,000 79,064 — — — 174 144,238 67,917 110,000 — — — 174 178,091 Thomas C. Knudson 55,000 79,064 — — — 174 134,238 55,000 110,000 — — — 674 165,674 Richard H. Lewis 55,000 79,064 — — — 174 134,238 55,000 110,000 — — — 174 165,174 Patricia L. Moss 55,000 (6) 79,064 — — — 174 134,238 55,000 (5) 110,000 — — — 174 165,174 Harry J. Pearce 130,000 79,064 — — — 174 209,238 130,000 110,000 — — — 174 240,174 Sister Thomas Welder(7) 18,333 — — — — 425,187 (8) 443,520 John K. Wilson 55,000 (9) 79,064 — — — 174 134,238 55,000 (6) 110,000 — — — 174 165,174 (1) This column reflects the aggregate grant date fair value of 5,450 shares of MDU Resources Group, Inc. (2) Group life insurance (3) Mr. Everist had (4) Includes (5) Includes (6) Includes Effective June 1, 2011, the board approved changes to the MDU Resources Group, Inc. Directors’ Compensation Policy. The following table shows the cash and stock retainers payable to our non-employee directors. Effective Prior to Base Retainer $ 55,000 $55,000 $55,000 Additional Retainers: Non-Executive Chairman 75,000 75,000 75,000 Lead Director, if any 33,000 33,000 33,000 Audit Committee Chairman 10,000 15,000 10,000 Compensation Committee Chairman 5,000 10,000 5,000 Nominating and Governance Committee Chairman 5,000 10,000 5,000 Annual Stock Grant: 4,050 shares Annual Stock Grant(1) 110,000 4,050 shares (1) Effective for 2011, the annual stock grant was changed from a fixed number of shares to a grant of shares equal in value to $110,000. 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 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. 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. MDU Resources Group, Inc.Proxy Statement 53 Proxy Statement The board revised our stock ownership policy for directors in November 2010. Each director is required, rather than expected, to own our common stock equal in value to five times the director’s base retainer. 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 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.” 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. Narrative Disclosure of our Compensation Policies and Practices As part of its assessment of the risks arising from our compensation policies and practices for all employees, senior management identified the principal areas of risk faced by the company that may be affected by our compensation policies and practices for all employees, including any risks resulting from our operating businesses’ compensation policies and practices. In assessing the risks arising from our compensation policies and practices, senior management identified the following practices as factors that serve to mitigate any risks arising from our compensation plans and programs: 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 • 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 54 MDU Resources Group, Inc.Proxy Statement 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. MDU Resources Group, Inc.Proxy Statement 55 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 chief executive officer of Knife River Corporation effective January 1, 2012, and will continue to serve as chief executive officer of MDU Construction Services Group, Inc. He 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 executive vice president–Bakken Development effective January 1, 2012. Prior to that, he was 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. 56 MDU Resources Group, Inc.Proxy Statement 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. J. Kent Wells 55 Mr. Wells was elected president and chief executive officer of Fidelity Exploration & Production Company effective May 2, 2011. Prior to that he was senior vice president of exploration and production for BP America, Inc. from June 2007 until October 2010, when he was named BP America Inc.’s group senior vice president for global deepwater response until March 31, 2011. He also served as general manager of Abu Dhabi Company for Onshore Oil Operations from February 2005 until June 2007; vice-president, Gulf of Mexico shelf, for BP America, Inc. from 2002 to 2005; vice-president, Rockies, for BP America, Inc. from 2000 to 2002; general manager of Crescendo Resources LP from 1997 to 2000; manager, Hugoton, for Amoco Production Company, Inc. from 1993 to 1996; manager, operations, for Amoco Production Company, Inc. in 1993; and resource manager for Amoco Production Company, Inc. in 1988 to 1993. 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 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) Thomas Everist 1,880,123 (5) 6,750 1.0 28,350 Karen B. Fagg 30,997 * John G. Harp 85,719 (6) * Terry D. Hildestad 214,073 * A. Bart Holaday 35,012 * Dennis W. Johnson 81,019 (7) 4,560 * Thomas C. Knudson 19,000 * Richard H. Lewis 25,700 * 16,275 Patricia L. Moss 56,687 * Harry J. Pearce 212,550 * 46,614 William E. Schneider 116,219 (8) 800 * Doran N. Schwartz 18,735 (6) * J. Kent Wells — (9) * John K. Wilson 82,439 * All directors and executive officers as a group (23 in number) 3,124,888 6,750 18,006 1.7 91,239 * 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 (6) Includes full shares allocated to the officer’s account in our 401(k) retirement plan. (7) Mr. Johnson disclaims all beneficial ownership of the 4,560 shares owned by his wife. (8) Mr. Schneider disclaims all beneficial ownership of the 800 shares owned by his wife. (9) As of February 22, 2012, Mr. Wells owns 25,743 shares of our common stock. MDU Resources Group, Inc.Proxy Statement 57 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 Name and Address Amount and Nature Percent Title of Class of Beneficial Owner of Beneficial Ownership of Class of Beneficial Owner of Beneficial Ownership of Class Common Stock New York Life Trust Company 10,092,631 (1) 5.36 % New York Life Trust Company 51 Madison Avenue New York, NY 10010 9,676,893 (1) 5.13 % Common Stock BlackRock, Inc. 10,729,371 (2) 5.70 % BlackRock, Inc. 40 East 52nd Street New York, NY 10022 10,780,367 (2) 5.71 % Common Stock T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 11,783,757 (3) 6.20 % (1) In a Schedule 13G/A, Amendment No. (2) In a Schedule 13G/A, Amendment No. (3) In a Schedule 13G, filed on February 14, 2012, T. Rowe Price Associates, Inc. reports sole voting power with respect to 2,372,940 shares and sole dispositive power with respect to 11,783,757 shares. These securities are owned by individual and institutional investors to which T. Rowe Price serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, T. Rowe Price is deemed to be a beneficial owner of such securities; however, T. Rowe Price expressly disclaims that it is, in fact, the beneficial owner of such securities. 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 the household of a director, director nominee, executive officer, or holder of 5% or more of our voting stock. 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, take such action as they deem appropriate in light of their responsibilities under applicable laws and regulations. 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, LLC (MOJO). John G. Harp, who Director Independence • have no material relationship with us and • are independent in accordance with our director independence guidelines and the New York Stock Exchange listing standards. 58 MDU Resources Group, Inc.Proxy Statement Proxy Statement In determining director independence for • Mr. Everist’s ownership of approximately • charitable contributions • charitable contributions in the amount of • charitable contributions to the City of Dickinson in the amount of $20,000 in 2010 and in 2011 – Mr. Johnson is president of the City of Dickinson board of commissioners • charitable contributions to Colorado UpLift in the amount of $25,000 Director Resignation 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 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 continues to believe that having separate positions and having an independent outside director serve as chairman is the appropriate leadership structure for the company and demonstrates our commitment to good corporate governance. MDU Resources Group, Inc.Proxy Statement 59 Proxy Statement 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, weather conditions, limitations on our ability to pay dividends, increased pension plan obligations, and 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 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 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/ Nominating and Governance Committee 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. 60 MDU Resources Group, Inc.Proxy Statement Proxy Statement 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. 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/ 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 • 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. As 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 assesses 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. MDU Resources Group, Inc.Proxy Statement 61 Proxy Statement The committee generally will hire an outside firm to perform a background check on potential nominees. Audit Committee The audit committee met eight times during 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 • arranges for the preparation of and approves the report that Securities and Exchange Commission rules require we include in our annual proxy statement. Audit Committee Report 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 A. Bart Holaday Richard H. Lewis John K. Wilson 62 MDU Resources Group, Inc.Proxy Statement Proxy Statement Compensation Committee 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 Compensation Discussion and Analysis be included in our proxy statement and/or our Annual Report on Form 10-K • 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 vice president-human resources, and general counsel regularly attend compensation committee meetings. The committee meets in executive session as needed. The committee’s practice has been to retain a compensation consultant every other year to conduct a competitive analysis on executive compensation. The committee did not retain a compensation consultant in 2011 to prepare a competitive assessment for 2012 compensation. 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 in determining or recommending compensation for our Section 16 officers. During 2011, the vice president-human resources and the human resources department prepared the • 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 • 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. MDU Resources Group, Inc.Proxy Statement 63 Proxy Statement In an engagement letter dated In its review of board of director compensation, • • The results of the Towers Watson analysis showed the company’s level of total direct compensation, which is annual board retainer plus equity, was below the medians of both peer groups at the 28th percentile of its current performance graph peer group and at the 23rd percentile of its former performance graph peer group. Additional retainers for the audit, compensation, and nominating and governance committee chairs were well below the medians of both of the performance graph peer groups. In terms of the level of non-executive chairman compensation, the company’s level of total direct compensation was well below the medians compared to the companies in our performance graph peer groups that had a non-executive chairman. The company’s non-executive chairman was at the 31st percentile when compared to companies with a non-executive chairman in the current peer group and at the 17th percentile when compared to the companies with non-executive chairmen in the former peer group. After review and discussion of Towers Watson’s report, the board determined to increase the committee chairmen’s retainers by $5,000 and to change the annual stock grant from a fixed number of shares to a grant of shares equal in value to $110,000. No changes were made to the compensation of the company’s non-executive chairman. The compensation committee also authorized the company to participate in compensation and employee benefits surveys sponsored by Towers Stockholder Communications SHARED ADDRESS STOCKHOLDERS 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. 64 MDU Resources Group, Inc.Proxy Statement Proxy Statement 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 executive 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 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 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 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/ 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, By order of the Board of Directors, Paul K. Sandness Secretary March 9, 2012 MDU Resources Group, Inc.Proxy Statement Proxy Statement (This page has been left blank intentionally.) MDU Resources Group, Inc. Proxy Statement Towers Perrin’s Auto Club Group Automatic Data Processing Avis Budget Group Avista Avon Products AXA Equitable B&W Y-12 BAE Systems Ball Bank of America Barrick Gold of North America Battelle Memorial Institute Colgate-Palmolive Accenture Baxter International Bayer Bayer CropScience BB&T Beckman Coulter Belo AEI Services Benjamin Moore Compass Bancshares Aerojet Best Buy CompuCom Systems BG US Services Big Lots Biogen Idec Bio-Rad Laboratories Blockbuster Blue Cross Blue Shield of Florida Blue Shield of California Blyth Bob Evans Farms Boehringer Ingelheim Boeing Booz Allen Hamilton Boston Scientific Bovis Lend Lease BP Brady Bremer Financial Bright Business Media CSX American Chemical Society Bristol-Myers Squibb Bush Brothers American Express CA Daiichi Sankyo American Family Insurance Cablevision Systems Daimler Trucks North America American United Life CACI International Dana American Water Works Cadbury North America Dannon AMERIGROUP Calgon Carbon DCP Midstream Ameriprise Financial California Independent System Operator Dean Foods Ameritrade Callaway Golf Deere & Company Ameron Calpine Delta Airlines AMETEK Cameron International Deluxe Amgen Capital One Financial Denny’s Amway Capitol Broadcasting – WRAL Dentsply Anadarko Petroleum Cardinal Health Devon Energy APL Cargill Diageo North America Apollo Group Carlson Companies DIRECTV Applied Materials Carmeuse Lime & Stone Dominion Resources ARAMARK Carpenter Technology Donaldson Areva NP Catalent Pharma Solutions Dow Chemical Armstrong World Industries Caterpillar Dow Jones Arrow Electronics Catholic Healthcare West DPL ArvinMeritor CDI Dr Pepper Snapple Arysta LifeScience North America Cedar Rapids TV – KCRG Duke Energy Ascend Media Celestica DuPont Associated Banc-Corp Celgene Dynegy AstraZeneca CenterPoint Energy E*Trade AT&T Century Aluminum E.ON U.S. ATC Management Cephaon E.W. Scripps Atmos Energy CH2M Hill Eastman Chemical Atos Origin Chevron Eastman Kodak Aurora Healthcare Chicago Mercantile Exchange Eaton MDU Resources Group, Inc.Proxy Statement Proxy Statement eBay Ecolab Genentech General Atomics Eisai General Dynamics International Flavors & Fragrances El Paso Corporation General Electric Power Research Institute General Mills Eli Lilly General Motors GenTek Invensys Process Systems Embraer Genworth Financial Genzyme GEO Group Getty Images Gilead Sciences J.C. Penney Company Enbridge Energy GlaxoSmithKline Endo Pharmaceuticals Goodrich Energen Goodyear Tire & Rubber Jack in the Box Energy Future Holdings Google Jacobs Engineering Energy Northwest Gorton’s Great-West Life Annuity Greif GS1 US GTECH Guardian Life Erie Insurance Guideposts Ernst & Young GXS ESRI H.B. Fuller Evening Post Publishing – KOAA Hanesbrands Kansas City Southern Evergreen Packaging Hannaford Harland Clarke Harley-Davidson Harman International Industries Harris Enterprises Fairchild Controls Fannie Mae Hartford Financial Services KeyCorp FANUC Robotics America Hawaiian Electric Kimberly-Clark Farm Progress Companies Hayes Lemmerz Kimco Realty Federal Home Loan Bank of Pittsburgh HBO Kindred Healthcare Federal Home Loan Bank of San Francisco HCA Healthcare Kinross Gold Federal Reserve Bank of Cleveland Health Care Services Kiplinger Federal Reserve Bank of Dallas Health Net KLA-Tencor Federal Reserve Bank of New York Healthways Knight Federal Reserve Bank of Philadelphia Hearst Koch Industries Federal Reserve Bank of San Francisco Hearst-Argyle Television Kohler Federal Reserve Bank of St. Louis Henkel of America Kohl’s Ferderal-Mogul Henry Ford Health Systems KPMG Ferrellgas Herman Miller L.L. Bean Fidelity Investments Hershey L-3 Communications Fifth Third Bancorp Hertz Lafarge North America Fireman’s Fund Insurance Hess Land O’Lakes First American Hexion Specialty Chemicals Leggett and Platt First Data Hitachi Data Systems Lenovo First Horizon National HNI Level 3 Communications First Solar HNTB Lexmark International FirstEnergy Hoffmann-La Roche Liberty Mutual Fiserv Honeywell Life Technologies Fluor Horizon Lines Life Touch FMA Communications Hormel Foods Limited Ford Hospira Lincoln Financial Forest Laboratories Houghton Mifflin Lockheed Martin Fortune Brands Hovnanian Enterprises Loews Forum Communications – WDAY HSBC North America LOMA FPL Group Hubbard Broadcasting Lorillard Tobacco Franklin Resources Humana Lower Colorado River Authority Freddie Mac Hunt Consolidated M&T Bank Freedom Communications Huntington Bancshares Magellan Midstream Partners Freeport-McMoRan Copper & Gold Hyatt Hotels Marathon Oil Frontier Airlines IBM Marriott International G&K Services IDACORP Marshall & Ilsley GAF Materials Idearc Media Martin Marietta Materials Gannett IDEXX Laboratories Mary Kay Gap IKON Office Solutions Masco Garland Power & Light IMS Health Massachusetts Mutual Garmin ING Mattel GATX Ingersoll-Rand Matthews International MDU Resources Group, Inc.Proxy Statement Proxy Statement Oshkosh Truck McDermott Otter Tail McDonald’s Owens Corning McKesson Owens-Illinois MDU Resources Pacific Gas & Electric MeadWestvaco Pacific Life Panasonic of North America Sanofi-Aventis Sara Lee Media Tec Publishing Parametric Technology Sarkes Tarzian – KTVN MedImmune Parker Hannifin Sarkes Tarzian – WRCB Parsons SAS Institute Meister Media Worldwide Pearson Education Savannah River Nuclear Solutions Merck & Co People’s Bank SCA Americas Meredith Pepco Holdings SCANA Metavante Technologies PepsiCo Schering-Plough MetLife Perot Systems Schlumberger MetroPCS Communications PetSmart Schneider Electric MGE Energy Pfizer School Specialty Microsoft Schreiber Foods Midwest Independent Transmission System Phillips-Van Heusen Schurz – KYTV Operator Phoenix Companies Schurz – WDBJ Millennium Pharmaceuticals Schwan’s Millipore Mine Safety Appliances Mirant Sealed Air Molson Coors Brewing MoneyGram International Morgan Murphy Stations – WISC Plexus PMI Group Sensata Technologies PNC Financial Services Shell Oil Munich Reinsurance America PNM Resources Sherwin-Williams National Renewable Energy Laboratory Nationwide Navistar International PolyOne Portland General Electric Sirius XM Radio Potash SLM NCCI Holdings Smurfit-Stone Container NCR Sodexo USA Neoris USA Sonoco Products Nestle USA Sony Corporation of America New York Life South Financial Group New York Power Authority Southern Company Services New York Times Prudential Financial Newmont Mining Public Service Enterprise Group Southwest Power Pool Puget Energy Sovereign Bancorp Nicor Pulte Homes Spectra Energey NIKE Purdue Pharma Sprint Nextel Nokia QUALCOMM SPX Noranda Aluminum Quest Diagnostics Stanford University Norfolk Southern Northeast Utilities Northern Trust Starbucks NorthWestern Energy Starwood Hotels & Resorts Northwestern Mutual State Farm Insurance Novartis Rayonier State Street Novartis Consumer Health Novell Sterling Bancshares Novo Nordisk Pharmaceuticals NRG Energy Reed Business Information String Letter Publishing Reed Exhibitions Summit Business Media NuStar Energy Regal-Beloit Sun Life Financial NV Energy Regency Energy Partners LP Sun Microsystems NW Natural Regions Financial Sundt Construction NXP Semi-Conductor Reliant Energy Sunoco Nycomed US Occidental Petroleum Target Office Depot RGA Reinsurance Group of America Taubman Centers OGE Energy Taunton Press Oglethorpe Power Robb Report Taylor-Wharton International Omaha Public Power TD Banknorth Omnova Solutions TECO Energy OneBeacon Insurance Rockwell Collins TeleTech Holdings Orange Business Services Rolls-Royce North America Tellabs MDU Resources Group, Inc.Proxy Statement Proxy Statement Temple-Inland Garland Power & Light Tenet Healthcare Teradata Hawaiian Electric Terex IDACORP Terra Industries Integrys Energy Group Tesoro Textron Knight Thomas & Betts Thomas Publishing Thrivent Financial for Lutherans MGE Energy TIAA-CREF Midwest Independent Transmission Time Winn-Dixie Stores System Operator Time Warner Mirant Time Warner Cable Wolters Kluwer US New York Power Authority Nicor Toro Wray Edwin – KTBS TransCanada Wyeth TransUnion Wyndham Worldwide NRG Energy Xcel Energy NSTAR Tribune Xerox NV Energy TUI Travel Yahoo! NW Natural Tupperware Young Broadcasting – KFLY OGE Energy Twin Cities Public Television – TPT Oglethorpe Power Tyco Electronics Omaha Public Power U.S. Bancorp Zurich North America UC4 Software Pepco Holdings Pinnacle West Capital Unilever United States PJM Interconnection Union Bank of California PNM Resources Union Pacific Compensation Database Portland General Electric UniSource Energy PPL Unisys AEI Services Progress Energy United Airlines AGL Resources Public Service Enterprise Group United Rentals Allegheny Energy Puget Energy United States Cellular Allete Regency Energy Partners LP United States Enrichment Alliant Energy Reliant Energy United States Steel Ameren Salt River Project United Technologies American Electric Power SCANA United Water Areva NP Sempra Energy UnitedHealth ATC Management Southern Company Services Unitil Atmos Energy Southern Union Company Univar Avista Southwest Power Pool Universal Studios Orlando BG US Services Spectra Energy University of Texas – M.D. Anderson Black Hills Power and Light STP Nuclear Operating Cancer Center California Independent System Operator TECO Energy Unum Group Calpine Tennessee Valley Authority US Airways CenterPoint Energy TransCanada USAA Cleco UIL Holdings USG CMS Energy UniSource Energy Valero Energy Colorado Springs Utilities Unitil Verizon Consolidated Edison Westar Energy Vertex Pharmaceuticals Constellation Energy Westinghouse Electric VF CPS Energy Williams Companies Viacom DCP Midstream Wisconsin Energy Viad Dominion Resources Wolf Creek Nuclear Virgin Mobile USA DPL Xcel Energy Visa USA Duke Energy Visiting Nurse Service Dynegy Visteon E.ON U.S. Effective Compensation, Inc.’s Volvo Group North America Edison International 2009 Oil & Gas Compensation Vulcan El Paso Corporation Survey Vulcan Materials Electric Power Research Institute VWR International Enbridge Energy Aera Energy Services Company W.R. Grace Energen Altex Energy Corporation W.W. Grainger Energy Future Holdings ANKOR Energy LLC Wachovia Energy Northwest Antero Resources Corporation Walt Disney Entergy Approach Resources Inc. Warnaco EPCO Aramco Services Company Waste Management ERCOT Aspect Energy, LLC Watson Pharmaceuticals Exelon Atlas Energy Resources L.L.C.F Webster Bank FirstEnergy Berry Petroleum Company Wellcare Health Plans FPL Group Bill Barrett Corporation Wellpoint MDU Resources Group, Inc.Proxy Statement Proxy Statement Eastern Division Brigham Exploration Company Quicksilver Resources Inc. BreitBurn Energy Partners LP – Browning Oil Company, Inc. Range Resources Corporation Orcutt Facility Cabot Oil & Gas Corporation Read and Stevens, Inc. BreitBurn Energy Partners LP – West Cano Petroleum, Inc. Rex Energy Operating Corp. Pico Facility Ceja Corporation Rosetta Resources Inc. BreitBurn Energy Partners LP – Chaparral Energy, Inc. Samson Western Div – California Operations Chesapeake Energy Corporation Seneca Resources Corporation BreitBurn Energy Partners LP – Cimarex Energy Co. Sinclair Oil and Gas Company Western Div – Florida Operations Cohort Energy Company Southwestern Energy Production Company BreitBurn Energy Partners LP – Comstock Resources, Inc. St. Mary Land & Exploration Company Western Div – Wyoming Operations Concho Resources, Inc. Stone Energy Corporation BreitBurn Energy Partners LP – Continental Resources, Inc. Swift Energy Operating, LLC Western Division Core Minerals Operating Co., Inc. T-C Oil Company Bridwell Oil Company Crimson Exploration, Inc. Tema Oil and Gas Company Brigham Exploration Company Dart Oil & Gas Texas Petroleum Investment Company Brookfield Asset Management, Inc. – Denbury Resources Inc. Thums Long Beach Company Brookfield Renewable Power Devon Energy TOTAL E&P USA, INC. Bunge Ltd. – BG US Services Dominion Exploration & Production Triad Energy Corporation Duncan Oil Properties, Inc./ Vanco Energy Company Cameron International Corporation – Eagle Rock Energy G&P, LLC Vantage Energy L.L.C Aftermarket Ellora Energy Cameron International Corporation – EnCana Oil & Gas (USA) Inc. Vernon E. Faulconer, Inc. Encore Acquisitions Company Western Production Company Compression Systems Energy Partners, Ltd. Weyerhaeuser Company Cameron International Corporation – Eni Operating Co. Inc. Whiting Petroleum Corporation EOG Resources Inc. EQT Production Company Fasken Oil and Ranch, Ltd. XTO Energy, Inc. Fidelity Exploration & Production Company FIML Natural Resources Company, Forest Oil Corporation Abraxas Petroleum Corporation Cameron International Corporation – Headington Oil Company, L.P. Aera Energy, Petreco Process Systems Henry Resources LLC AGL Resources, Inc. Cameron International Corporation – Hilcorp Energy Company Aker Solutions Process Valves J. M. Huber Corporation – Energy Sector Alliance Pipeline, Inc. Cameron International Corporation – Kinder Morgan CO2 Company, L.P. Alyeska Pipeline Service Company Reciprocating Lake Ronel Oil Company Ameren Corporation Cameron International Corporation – Leed Petroleum LLC Anadarko Petroleum Corporation Subsea Systems Linn Energy, Inc. Apache Corporation Cameron International Corporation – Mariner Energy, Inc. Arch Coal, Inc. Surface Systems McElvain Oil and Gas Properties, Inc. Aspect Energy, LLC Valves & Measurement Medco Petroleum Management LLC Shale LP CenterPoint Energy, Inc. Mewbourne Oil Company Chesapeake Energy Corporation Chesapeake App Nexen Petroleum U.S.A. Inc. Chesapeake Midstream Partners Noble Energy, Inc. Baker Hughes, Inc. – Baker Drilling Fluids Chesapeake Energy Corporation – Compass Oasis Petroleum LLC Baker Hughes, Inc. – Baker Oil Tools Chesapeake Energy Corporation – Panhandle Oil and Gas Inc. Baker Hughes, Inc. – Baker Petrolite Diamond Y Penn Virginia Oil & Gas Petro-Canada Resources (USA) Inc Baker Hughes, Inc. – Hughes Christensen Great Plains PETROFLOW Energy, Ltd. Baker Hughes, Inc. – Inteq Chesapeake Energy Corporation – Petroglyph Energy, Inc. Baker Hughes, Inc. – Production Quest Hodges Petrohawk Energy Corporation Chesapeake Energy Corporation – Petro-Hunt, LLC BHP Billiton, Ltd. – BHP Billiton Petroleum Midcon Petroleum Development Corporation (Americas), Inc. Chesapeake Energy Corporation – PetroQuest Energy LLC Boardwalk Pipeline Partners LP Nomac Phoenix Exploration Company BP plc – BP North America Exploration Chief Oil & Gas, LLC Pioneer Natural Resources USA, Inc. & Production CHS, Inc. – Energy MDU Resources Group, Inc.Proxy Statement Proxy Statement Cimarex Energy Company Oceaneering International, Inc. Cinco Natural Resources Corporation Oceaneering International, Inc. – Americas Citation Oil & Gas Fasken Oil and Ranch, Ltd. CITGO Petroleum Corporation Forest Oil Corporation Oceaneering International, Inc. – Fortuna Energy, Inc. Oceaneering Intervention Engineering Concho Resources, Inc. – FX Energy, Inc. OGE Energy Corp COG Operating, LLC FX Energy, Inc – FX Drilling Company, Inc. Oglethorpe Power Corporation Colonial Pipeline Company Genesis Energy, LLC ONEOK, Inc. Conectiv Energy Global Industries, Ltd. ONEOK, Inc. – Kansas Gas Service Division Constellation Energy Partners, LLC Great River Energy ONEOK, Inc. – Oklahoma Natural Core Laboratories N.V. Halliburton Company Gas Division CPS Energy Helmerich & Payne, Inc. ONEOK, Inc. – ONEOK Energy Services DCP Midstream, LLC ONEOK, Inc. – ONEOK Partners HighMount Exploration & Production, LLC ONEOK, Inc. – Texas Gas Service Divison (USA), Inc Hilcorp Energy Company PacifiCorp Devon Energy Corporation Diamond Offshore Drilling, Inc. Company Parker Drilling Company Dominion Resources, Inc. Pason Systems USA Corporation Dominion Resources, Inc. – Holly Corporation – Holly Asphalt Company Pepco Holdings, Inc. Dominion Energy Holly Corporation – Holly Logistic Services Petro-Canada USA, Inc. Dominion Resources, Inc. – Holly Corporation – Holly Refining and Petroleum Development Corporation Dominion Generation Marketing Woods Cross Pioneer Natural Resources Company Dominion Resources, Inc. – Dominion Virginia Power Plains All American Pipeline LP Dresser-Rand Jacksonville Electric Authority Precision Drilling Oilfield Services Lario Oil & Gas Company Pride International, Inc. Dresser-Rand Group, Inc. – Product Services Legacy Reserves LP ProLiance Energy, LLC DTE Energy Company Linn Energy, LLC Puget Sound Energy DynMcDermott Petroleum Operations Maersk, Inc. – Moller Supply Services Questar Corporation Edison Mission Energy Magellan Midstream Holdings LP Questar Corporation – Questar Edison Mission Energy – Magellan Midstream Holdings LP – Market Resources Edison Mission M&T Transportation Quicksilver Resources, Inc. Edison Mission Energy – Magellan Midstream Holdings LP – R. Lacy, Inc. – R. Lacy Services, Ltd. Edison Mission O&M Transportation and Terminals RAM Energy Resources, Inc. Edison Mission Energy – MarkWest Energy Partners LP Range Resources Corporation EME Homer City Generation MarkWest Energy Partners LP – Regency Gas Services Edison Mission Energy – Gulf Coast Business Unit Resolute Natural Resources Company Midwest Generation EME MarkWest Energy Partners LP – RKI Exploration & Production, LLC Edison Mission Energy – Northeast Business Unit Rosewood Resources, Inc. Midwest Generation, LLC MarkWest Energy Partners LP – Rosewood Resources, Inc. – El Paso Corporation Southwest Business Unit Rosewood Services Company El Paso Corporation – Exploration McMoRan Exploration Company Rowan Companies, Inc. & Production MCX Exploration (USA), Ltd. SAIC, Inc. El Paso Corporation – Pipeline Group MDU Resources Group, Inc. SCANA Corporation EnCana Oil & Gas (USA), Inc. MDU Resources Group, Inc. – SCANA Corporation – Carolina Gas Energy Future Holdings Corporation WBI Holdings, Inc. Transmission Corporation (CGTC) Energy Future Holdings Corporation – Medco Petroleum Management SCANA Corporation – PSNC Energy Luminant Mestena Operating, Ltd. SCANA Corporation – SCE&G (South Carolina Energy Future Holdings Corporation – Mirant Corporation Electric and Gas Company) Luminant Energy Company, LLC MitEnergy Upstream, LLC SCANA Corporation – SEMI (SCANA Energy Future Holdings Corporation – Murphy Oil Corporation Energy Marketing, Inc.) Oncor Electric Delivery Company, LLC NATCO Group, Inc. Schlumberger Limited – Schlumberger Energy Future Holdings Corporation – Nexen, Inc. – Nexen Petroleum USA, Inc. Oilfield Services TXU Energy Retail Company, LLC Nippon Oil Exploration USA, Ltd. Seneca Resources Corporation Enerplus Resources Fund – Enerplus NiSource, Inc. Smith International, Inc. Resources (USA) Corporation NiSource, Inc. – Bay State Gas Company Smith International, Inc. – MI Swaco EnerVest Management Partners, Ltd. NiSource, Inc. – Columbia Gas of Kentucky Southern Company Eni SpA – Eni US Operating Company, Inc. NiSource, Inc. – Columbia Gas of Ohio Southern Company – Alabama ENSCO International, Inc. NiSource, Inc. – Columbia Gas of Power Company ENSCO International, Inc. – Pennsylvania Southern Company – Georgia Power Deepwater Business Unit NiSource, Inc. – Columbia Gas of Virginia Southern Company – Gulf Power Company ENSCO International, Inc. – NiSource, Inc. – Energy USA Southern Union Company North & South America Business Unit NiSource, Inc. – NIE Southern Union Company – Missouri Entegra Power Services, LLC NiSource, Inc. – NiSource Energy Tech Inc Gas Energy EOG Resources, Inc. NiSource, Inc. – NiSource Gas Trans Southern Union Company – New E. ON AG – E. ON U.S. & Storage England Gas EXCO Resources, Inc. NiSource, Inc. – Transmission Corp Southern Union Company – Panhandle EXCO Resources, Inc. – EXCO Appalachia Noble Corporation Energy EXCO Resources, Inc. – EXCO East TX/LA Noble Corporation – Noble Drilling Services, Southern Union Company – Southern EXCO Resources, Inc. – EXCO Mid-Continent Inc. Union Gas Services EXCO Resources, Inc. – EXCO Midstream Noble Energy, Inc. Southwest Gas Corporation EXCO Resources, Inc. – Occidental Petroleum Corporation – Southwestern Energy Company EXCO Permian/Rockies Thums Long Beach Company Sprague Energy Corporation MDU Resources Group, Inc.Proxy Statement Proxy Statement The Tellus Operating Group, LLC Arkansas Best Corporation Tesco Corporation Albemarle Corporation Armstrong World Industries, Inc. The Williams Companies, Inc. Arrow Electronics, Inc. The Williams Companies, Inc. – E&P ArvinMeritor, Inc. The Williams Companies, Inc. – Midstream Alfa Laval, Inc. Asbury Automotive Group, Inc. The Williams Companies, Inc. – Williams Gas Allegheny County Sanitary Authority ASCAP Pipeline (WGP) Allegheny Energy, Inc. Ascent Media Group TransCanada Allegheny Technologies Incorporated Ashland, Inc. TransCanada – Gas Transmission Northwest Allergan, Inc. Asset Marketing Service, Inc. (GTN) Allete Assurant Health TransCanada – Northern Border Pipeline Alliance Data Systems Corporation Assurant, Inc. TransCanada – US Pipeline Central Alliance Residential Company Asurion Corporation Transocean, Inc. Alliant Energy Corporation AT&T, Inc. Ultra Petroleum Corporation The Allstate Corporation Atmos Energy Corporation Unit Corporation Alpha Innotech Corporation Aurora Healthcare Unit Corporation – Superior Pipeline Alpha Natural Resources, Inc. The Auto Club Group Company ALSAC St. Jude Autodesk, Inc. Unit Corporation – Unit Drilling Company Altria Group, Inc. Autoliv North America, Inc. Unit Corporation – Unit Petroleum Company Altru Health System Automobile Club of Southern California Venoco, Inc. Amazon.com, Inc. AutoNation, Inc. Verado Energy, Inc. Amcore Bank AutoZone, Inc. Washington Gas Light Company Ameren Corporation Aveda Corporation Weatherford International, Ltd. American Airlines Avery Dennison Corporation Weatherford International, Ltd. – US Region American Axle & Manufacturing Avis Budget Group Western Production Company Holdings, Inc. Avista Corporation Xcel Energy, Inc. American Cancer Society, Inc. Avon Products, Inc. XTO Energy, Inc. American Commercial Lines, Inc. Axsys American Dehydrated Foods, Inc. B Braun Medical, Inc. American Eagle Outfitters Babcock & Wilcox Company Watson Wyatt’s (Towers Watson) American Electric Power Company, Inc. Babson College 2009/2010 Top Management American Enterprise Baker Hughes Incorporated Compensation Survey American Express Company Baldor Electric Company American Family Insurance Ball Corporation 3M Company American Financial Group Bank of America Corporation A. O. Smith Corporation American Greetings Corporation The Bank of New York Mellon Corporation A. Schulman, Inc. American Red Cross Baptist Health AAA American Water Baptist Health System ABB, Inc. Americas Styrenics Barloworld Handling Abbott Laboratories AMERIGROUP Corporation Barnes & Noble, Inc. Abercrombie & Fitch Company AmeriPride Services, Inc. Basler Electric Company ABM Industries, Inc. Ameriprise Financial, Inc. Baxa Corporation Accor North America AmerisourceBergen Corporation Baxter International, Inc. Activision Blizzard, Inc. Ameristar Casinos Baylor College of Medicine The Actors Fund of America Ames True Temper Baylor Health Care System Actuant Corporation AMETEK, Inc. BB&T Corporation Acuity AMETEK, Inc./Advanced Measurement BE Aerospace, Inc. Acuity Brands, Inc. Technology, Inc. Beacon Roofing Supply, Inc. ACUMED LLC Beazer Homes USA, Inc. Administaff, Inc. Amphenol Corporation Bechtel Systems & Infrastructure, Inc. Adobe Systems Incorporated AMR Corporation Beckman Coulter, Inc. ADTRAN Incorporated Amtrak Becton, Dickinson and Company Advance Auto Parts Anadarko Petroleum Corporation Behr America, Inc. Advanced Micro Devices, Inc. Analog Devices, Inc. Belden, Inc. Adventist Health System Anchor Bank North America Belk, Inc. AECOM Technology Corporation Andersen Corporation Bemis Company, Inc. Aegon USA The Andersons, Inc. Bemis Manufacturing Company Aeropostale, Inc. ANH Refractories Company Benchmark Electronics, Inc. The AES Corporation Anixter International, Inc. Berkshire Hathaway, Inc. Aetna, Inc. AnnTaylor Stores Corporation Berwick Offray LLC Affiliated Computer Services, Inc. The Antioch Company Best Buy Co., Inc. Affinia Group, Inc. Aon Corporation Big Lots, Inc. Affinity Plus Federal Credit Union APAC Customer Services Biodynamic Research Corporation AFLAC Incorporated Apache Corporation Biogen Idec, Inc. AGCO Corporation Apollo Group Biomet AgFirst Apple, Inc. Bio-Rad Laboratories, Inc. Agilent Technologies, Inc. Applied Materials, Inc. BJ Services Company AGL Resources, Inc. AptarGroup, Inc. BJ’s Wholesale Club AgriBank, FCB ARAMARK Corporation The Black & Decker Corporation Air Products & Chemicals, Inc. Arch Coal, Inc. BlackRock, Inc. Airlines Reporting Corporation Archstone Blockbuster, Inc. AirTran Holdings, Inc. Areva NP, Inc. Blue Cross & Blue Shield of Nebraska AK Steel Holding Corporation ARINC, Inc. Blue Cross & Blue Shield of South Carolina MDU Resources Group, Inc.Proxy Statement Proxy Statement Celanese Corporation Constellation Energy Group, Inc. Blue Cross Blue Shield of Louisiana Celgene Corporation Continental Airlines, Inc. Blue Cross of Idaho Health Service, Inc. Convergys Corporation BlueLinx Holdings, Inc. Centene Corporation Board of Governors of the Federal Century Aluminum Company Reserve System Core Laboratories Bob Evans Farms Cenveo, Inc. Core-Mark Holding Company, Inc. Cephalon, Inc. Corn Products International, Inc. Boise Cascade Holdings LLC CF Industries Holdings, Inc. Cornell University Boise, Inc. The Charles Schwab Corporation The Bon-Ton Stores, Inc. Chemtreat, Inc. Correctional Medical Services Borders Group, Inc. Chenega Corporation Corrections Corporation of America BorgWarner, Inc. Chesapeake Energy Corporation Costco Wholesale Corporation Bosch Packaging Services Chevron Corporation Country Insurance & Financial Boston Scientific Corporation Chicago Transit Authority The Country Vintner Boy Scouts of America Chico’s FAS, Inc. Covance, Inc. Boyd Gaming Corporate Children’s Healthcare Atlanta Coventry Health Care, Inc. Boys & Girls Clubs of America Children’s Home Society Cox Enterprises, Inc. Bradley Corporation Chiquita Brands International, Inc. Cox Target Media Valpak Brady Corporation Choice Hotels International CPS Energy Briggs & Stratton Corporation CHS, Inc. Cracker Barrel Old Country Store, Inc. Brightpoint, Inc. The Chubb Corporation Crane Company The Brink’s Company Chumash Employee Resource Center Cree, Inc. Bristol Myers Squibb Company Church & Dwight Co., Inc. Croda, Inc. Broadcom Corporation Church of Jesus Christ of Latter-Day Saints Crosstex Energy, Inc. Broadridge Financial Solutions, Inc. CIGNA Corporation Crown Castle International Corporation Brookdale Senior Living, Inc. Cimarex Energy Company Crown Cork & Seal Brown Shoe Company, Inc. Cincinnati Financial Corporation CSX Corporation Brownells, Inc. Cinemark Holdings, Inc. Cummins, Inc. Brunswick Corporation CIT Group, Inc. CUNA Mutual Group Bryant University Citationshares Curtiss-Wright Corporation BSSI Citigroup, Inc. CVR Energy, Inc. Buckeye GP Holdings LP City of Austin CVS Caremark Bucyrus International, Inc. City of Charlotte Cypress Semiconductor Corporation Buffets, Inc. City of Columbus Cytec Industries, Inc. Building Materials Holding Corporation City of Garland D & E Communications, Inc. Burger King Holdings, Inc. City of Houston D.R. Horton, Inc. Burlington Northern Santa Fe Corporation City of Philadelphia Daimler Financial Services C.H. Robinson Worldwide, Inc. Clarian Health Partners Dakota Electric Association C.R. Bard, Inc. Cleco Corporation Dallas County Cabela’s Incorporated Cliffs Natural Resources, Inc. Dal-Tile, Inc. Cablevision Systems Corporation The Dana Holding Corporation ClubCorp, Inc. Danaher Corporation CACI International, Inc. CME Group, Inc. Caelum Research Corporation DaVita, Inc. CNL Financial Group Dean Foods California Casualty Management Company Coca-Cola Bottling Company Consolidated Deckers Outdoor Corporation California Institute of The Coca-Cola Enterprises, Inc. Calpine Corporation Cognizant Technology Solutions Corporation Dekalb Regional Healthcare Systems Calumet Specialty Products Partners LP Colgate-Palmolive Company Del Monte Fresh Produce Company Cameron International Corporation Collective Brands, Inc. The Colman Group, Inc. Campbell Soup Company Colonial Bank Delta Air Lines, Inc. Canyon Ranch Colorado Springs Utilities Denso International America Capital One Financial Corporation Colsa Corporation Denso Manufacturing Michigan, Inc. Career Education Corporation Columbia Sportswear Company DENTSPLY International, Inc. Career Service Authority City and County Columbus Foods LLC DePaul University of Denver Comcast Corporation Devon Energy Corporation CareFirst BlueCross BlueShield Comerica Incorporated DeVry University Carle Clinic Association Commercial Metals Company DFW International Airport Carlisle Companies, Inc. Dick’s Sporting Goods Community Health Network Dickstein Shapiro LLP CarMax Community Health Systems Diebold Incorporated Carpenter Technology Corporation Casino Arizona Complete Production Services, Inc. The DIRECTV Group, Inc. Catalyst Health Solutions, Inc. Computer Sciences Corporation Discover Financial Services Caterpillar, Inc. Computer Task Group Discovery Communications, Inc. CB Richards Ellis ConocoPhillips DISH Network Corporation CBS Corporation Conseco, Inc. Doherty Employer Services CC Media Holdings, Inc. Consolidated Edison, Inc. MDU Resources Group, Inc.Proxy Statement Proxy Statement Dominion Resources, Inc. Family Dollar Stores, Inc. Genuine Parts Company Donaldson Company, Inc. Farmland Foods, Inc. Genworth Financial, Inc. Dover Corporation Fastenal Company Genzyme Corporation The Dow Chemical Company FCI USA, Inc. Georg Fischer Signet LLC Dr. Pepper Snapple Group, Inc. Federal Home Loan Bank of Atlanta Georgia Gulf Corporation Dresser-Rand Group, Inc. Federal Reserve Bank of Atlanta Georgia Institute of Technology DSC Logistics Federal Reserve Bank of Boston Georgia System Operations Corporation DST Systems, Inc. Federal Reserve Bank of Cleveland Gerdau Ameristeel DTE Energy Federal Reserve Bank of Dallas Gilead Sciences, Inc. Duane Reade Holdings, Inc. Federal Reserve Bank of Kansas City Global Partners LP Duke Energy Corporation Federal Reserve Bank of Minneapolis Godiva, Inc. Duke Realty Corporation Federal Reserve Bank of Philadelphia Gold Eagle Company Duke University & Health System Federal Reserve Bank of San Francisco Goldman Sachs Group, Inc. The Dun & Bradstreet Corporation Federal Reserve Bank of St. Louis Goodrich Corporation DuPont FedEx Express The Goodyear Tire & Rubber Company Dynegy, Inc. FedEx Ground Google, Inc. DynMcDermott FedEx Office Government Employees Health E J Brooks Company Fender Musical Instruments Association, Inc. E*TRADE Financial Corporation Ferguson Enterprises Graco, Inc. The E.W. Scripps Company Fermi National Accelerator Laboratory Graham Packaging Eagle Rock Energy Partners LP FerrellGas, Inc. Grande Cheese Company Early Warning Services Ferro Corporation Grange Mutual Insurance Companies Eastman Chemical Company Fidelity National Financial, Inc. Granite Construction, Inc. Eastman Kodak Company Fidelity National Information Services Graybar Electric Company, Inc. Eaton Corporation Fifth Third Bancorp Great Plains Energy Incorporated eBay The First American Corporation Greatwide Truckload Management Ecolab, Inc. First American Corporation Greif, Inc. Edison International First Bank Greyhound Lines, Inc. Edison Mission Energy First Citizens Bank Group 1 Automotive, Inc. Education Management Corporation First Data Corporation GuideStone Financial Resources Edward Jones & Company First Horizon National Corporation Gulfstream Aerospace Corporation Edwards Lifesciences First Interstate BancSystem H Lee Moffitt Cancer Center & EG&G – Defense Materials First Place Bank Research Institute EG&G Services First Priority Halliburton Company El Paso Corporation First Solar, Inc. Hanesbrands, Inc. Element K FirstEnergy Corporation Hannaford Bros. Company Eli Lilly & Company Fiserv, Inc. The Hanover Insurance Group, Inc. Elizabeth Arden, Inc. Fleetwood Group Hapag-Lloyd (America), Inc. EMC Corporation Flexcon Company, Inc. Harley Davidson Motor Company EMCOR Group, Inc. Flexible Steel Lacing Company Harman International Industries, Inc. Emerson Climate Technologies/Copeland Florida’s Blood Centers, Inc. Harrah’s Entertainment Emerson Electric Flowers Foods, Inc. Harris County Hospital District Enbridge Energy Partners LP Flowserve Corporation Harsco Corporation Energizer Holdings, Inc. Fluor Corporation Hartford Financial Services Energy Future Holdings Corporation FMC Corporation Harvard Vanguard Medical Association Energy Transfer Equity LP FMC Technologies, Inc. Harvey Industries Ensco International Incorporated Foot Locker, Inc. Hasbro, Inc. Entergy Corporation Ford Motor Company Hastings Mutual Insurance Company Enterprise GP Holdings LP Forth Worth Independent School District Hawaiian Electric Industries, Inc. Entertainment Publications Fortune Brands Haynes International, Inc. EOG Resources, Inc. Foseco Metallurgical, Inc. Hazelden Foundation EON US LLC Fox Chase Cancer Center HCA, Inc. Equifax, Inc. FPL Group, Inc. HCC Insurance Holdings, Inc. Equity Residential Franklin Resources, Inc. HD Supply Erie Insurance Group Franklin W Olin College Engineering Health Management Associates, Inc. ESCO Corporation Freeman Companies Health Net ESCO Technologies Freeport-McMoRan Copper & Gold, Inc. Health Partners The Estee Lauder Companies, Inc. Freescale Semiconductor, Inc. HealthNow New York Esterline Technologies Corporation Fremont Group HealthSouth Corporation Etnyre International, Ltd. Froedtert & Community Health HealthSpring, Inc. Europ Assistance USA Frontier Communications Corporation HealthTrans Evraz Oregon Steel Mills Frontier Oil Corporation H-E-B Exel, Inc. Furniture Brands International, Inc. Helix Energy Solutions Group, Inc. Exelon Corporation G&K Services Helmerich & Payne, Inc. Exempla Health Care, Inc. G. Loomis, Inc. Hendrick Medical Center Exide Technologies Gannett Co., Inc. Hendrickson International Expedia, Inc. The Gap, Inc. Henry Ford Health System Expeditors International of Washington Gardner Denver, Inc. Henry Schein, Inc. Experian Garmin International Herman Miller, Inc. Express Scripts, Inc. Gaylord Entertainment The Hershey Company Extendicare Health Services General Cable Corporation The Hertz Corporation Exterran Holdings, Inc. General Dynamics Corporation Hess Corporation Exxon Mobil Corporation General Dynamics Information Technology Hewitt Associates, Inc. FAIR Plan Insurance Placement Facility General Growth Properties, Inc. Hewlett-Packard Company of Pennsylvania General Motors Corporation Hexion Specialty Chemicals, Inc. MDU Resources Group, Inc.Proxy Statement A-9 Proxy Statement Highlights for Children, Inc. ITT Industries Advanced Engineering Level 3 Communications, Inc. Highmark, Inc. & Sciences Levi Strauss & Company HighMount Exploration & Production LLC ITT Systems Division Lexmark International, Inc. Hill Phoenix J J Keller & Associates, Inc. LG Electronics USA, Inc. Hill-Rom Holdings, Inc. J R Simplot Company Liberty Global, Inc. Hilti, Inc. J.B. Hunt Transport Services, Inc. Liberty Media Corporation (Interactive) Hilton Hotels Corporation (Promus Hotels) J.C. Penney Company, Inc. LifeMasters Supported SelfCare, Inc. Hines Interests Jabil LifePoint Hospitals, Inc. Hitachi Jack in the Box, Inc. Lighthouse Computer Services HNI Corporation Jacobs Engineering Group, Inc. Limited Brands HNTB Corporation Jacobs Technology, Inc. Lincoln Electric Holdings, Inc. Holden Industries, Inc. Jarden Consumer Solutions Lincoln National Corporation Holly Corporation Jarden Corporation Lithia Motors, Inc. The Home Depot, Inc. Jefferson Science Associates Little Lady Foods Home Shopping Network Jefferson Wells International Liz Claiborne, Inc. Honeywell International, Inc. Jet Blue Airways LKQ Corporation Hormel Foods Corporation JM Family Enterprises Lockheed Martin Corporation Hospira, Inc. Jo-Ann Stores, Inc. Lockton Companies Host Hotels & Resorts, Inc. John Crane, Inc. Loews Corporation Hovnanian Enterprises, Inc. John Wiley & Sons, Inc. Lowe’s Companies, Inc. Hub Group, Inc. Johns Hopkins Medical Services Lower Colorado River Authority Hubbard Feeds, Inc. Johnson & Johnson Lozier Corporation Hubbell Incorporated Johnson Controls, Inc. LSG Sky Chefs Hudson City Bancorp, Inc. Johnson Financial Group LSI Corporation Humana, Inc. JohnsonDiversey, Inc. Lubrizol Corporation Hunter Douglas, Inc. Jones Apparel Group, Inc. Luck Stone Corporation Hunter Industries Jones Lang LaSalle Luther Midelfort-Mayo Health System Huntington Bancshares Incorporated Joy Global, Inc. Lutron Electronics Huntsman Corporation JPMorgan Chase & Co. Luxottica Retail Huron Consulting Group Judicial Council of California M&T Bank Corporation Hutchinson Technology, Inc. Juniper Networks, Inc. Macy’s, Inc. Hyatt Hotels Corporation Kalsec, Inc. Maersk, Inc. Hyundai Motor America Kansas City Southern Magellan Health Services IAC/InterActiveCorp Kansas Farm Bureau Mahr Federal, Inc. Iasis Healthcare Corporation KAR Holdings, Inc. Malco Products, Inc. IBA USA, Inc. KB Home Manitowoc Company, Inc. Icahn Enterprises LP KBR, Inc. Mannington Mills, Inc. IDT Corporation Keihin Indiana Precision Technology Manpower International, Inc. Illinois Tool Works, Inc. Kellogg Company Manpower, Inc. Imation Corporation Kelly Services, Inc. ManTech International Corporation Imerys Kewaunee Scientific Corporation Marathon Oil Corporation IMS Health, Inc. Key Energy Services, Inc. Maricopa County Office of Management Indianapolis Power & Light Company KeyCorp & Budget Inergy Holdings LP Keystone Automotive Industries Maricopa Integrated Health System Information Management Service Keystone Foods Corporation The Mark Travel Corporation Ingersoll Rand Kimberly-Clark Corporation Markel Corporation Ingles Markets, Incorporated Kindred Healthcare, Inc. Market Planning Solutions, Inc. Ingram Industries, Inc. Kinetic Concepts, Inc. Marriott International, Inc. Ingram Micro, Inc. Kingston Technology Mars North America Inmar, Inc. KLA-Tencor Corporation Marsh & McLennan Companies, Inc. Inolex Chemical Company Knight, Inc. Marshall & Ilsley Corporation INOVA Health Systems Kohl’s Corporation Marshfield Clinic In-Sink-Erator Kraft Foods, Inc. MARTA Institute of Nuclear Power Operations The Kroger Company Martin Marietta Materials, Inc. Integrys Energy Group, Inc. Kruger International Mary Kay, Inc. Intel Corporation Kyocera America, Inc. Masco Corporation Interactive Brokers Group, Inc. L L Bean, Inc. Massey Energy Company International Assets Holding Corporation L-3 Communications Holdings, Inc. MasterCard Incorporated International Business Machines Corporation Lab Volt Systems Mattel, Inc. International Flavors & Fragrances, Inc. Laboratory Corporation of America Holdings Maui Jim, Inc. International Game Technology The Laclede Group, Inc. Maxim Integrated Products, Inc. International Paper Company Lake Federal Bank Mayo Clinic Interpublic Group of Companies, Inc. Lam Research Corporation The McClatchy Company Intertape Polymer Group Lancaster General Hospital McCormick & Company, Incorporated Intuit, Inc. Land O’Lakes, Inc. McDonald’s Corporation Invacare Corporation Landstar System, Inc. MCG Health, Inc. Invensys Controls Lansing Board of Water & Light The McGraw-Hill Companies, Inc. Iron Mountain Incorporated Las Vegas Sands Corporation McKesson Medical-Surgical The Irvine Company La-Z-Boy Chair Company MD Anderson Cancer Center Isuzu Motors America, Inc. Leap Wireless International, Inc. MDU Resources Group, Inc. Ithaca College Lear Corporation MeadWestvaco Corporation Itochu International, Inc. Leggett & Platt, Inc. Medco Health Solutions, Inc. Itron, Inc. Lender Processing Services, Inc. Media General, Inc. ITT Corporation Lennar Corporation Meeting Consultants, Inc. Lennox International, Inc. MEMC Electronic Materials, Inc. A-10 MDU Resources Group, Inc.Proxy Statement Proxy Statement Mercantile Commerce Bank NCI Building Systems, Inc. Packaging Corporation of America Mercer University NCMIC Group, Inc. Pactiv Corporation Merck & Co., Inc. NCR Corporation Pall Corporation Mercury General Corporation Nebraska Public Power District The Pampered Chef Merit Medical Systems NetApp, Inc. Panduit Corporation MeritCare Health System New Hanover Regional Medical Center Panera LLC Merrill Corporation New Jersey Resources Corporation The Pantry, Inc. Metals USA, Inc. New York Hotel Trades Council Papa John’s International Metavante The New York Times Company Patterson Companies, Inc. The Methodist Health Care Corporation Newell Rubbermaid, Inc. Patterson-UTI Energy, Inc. MetroPCS Communications, Inc. Newfield Exploration Company Paychex Metropolitan Life Insurance Company Newmont Mining Corporation PBS Metropolitan Transit Authority NewPage Holding Corporation PC Connection, Inc. Mettler-Toledo International, Inc. Nicor Gas Peabody Energy Corporation MFS Investment Management Nicor, Inc. Penn National Gaming, Inc. MGIC Investment Corporation NII Holdings, Inc. Penn State Hershey Medical Center Miami Children’s Hospital NiSource, Inc. Penske Automotive Group, Inc. Michael Baker Corporation Nissan North America Pentair, Inc. Michael Foods, Inc. Nissin Foods (USA) Co., Inc. The Pep Boys – Manny, Moe & Jack Michaels Stores, Inc. NJM Insurance Group Pepco Holdings, Inc. Micron Technology, Inc. Noble Energy, Inc. The Pepsi Bottling Group, Inc. MidAmerican Energy Company Norcal Waste Systems, Inc. PepsiAmericas, Inc. Midwest Research Institute Nordson Corporation PepsiCo, Inc. Mike Albert Leasing, Inc. Nordstrom Perini Corporation Millennium Inorganic Chemicals Nordstrom, Inc. PerkinElmer, Inc. MillerCoors Norfolk Southern Corporation Perot System Minco Products, Inc. North American Hoganas Perrigo Company Mine Safety Appliances Company North Texas Tollway Authority PetSmart, Inc. Miniature Precision Components, Inc. Northeast Utilities System Pfizer, Inc. Minntech Corporation Northern Trust Corporation PG&E Corporation Mirant Corporation Northrop Grumman Corporation PGT Industries Missouri Department of Conservation Northwestern Mutual Life Insurance Phacil, Inc. Missouri Department of Transportation Norton Health Care Pharmavite LLC Mitsubishi International Corporation NRUCFC PharMerica Corporation Mitsui & Company USA, Inc. NSK Corporation PHH Arval MMS Consultants, Inc. NSTAR PHH Corporation Mohawk Industries NTK Holdings, Inc. PHI, Inc. Mohegan Sun Casino Nucor Corporation Philip Morris International, Inc. Molex, Inc. NuStar Energy LP Phillips-Van Heusen Corporation Molina Healthcare, Inc. NV Energy, Inc. The Phoenix Companies, Inc. Molson Coors Brewing Company NVIDIA Corporation Piedmont Natural Gas Company, Inc. Moneris Solutions Corporation NVR, Inc. Pinnacle West Capital Corporation Monsanto Company NYSE Euronext Pioneer Electronics (USA), Inc. Moody’s Corporation O’Reilly Automotive, Inc. Pioneer Natural Resources Moog, Inc. Occidental Petroleum Corporation Pitney Bowes Morgan Stanley Oceaneering International Plains All American Pipeline LP Motorola, Inc. Office Depot, Inc. Plains Exploration & Production Company MPS Group, Inc. OfficeMax The Planet Internet Services MSC Industrial Direct OGE Energy Corporation Plexus Corporation MTA Long Island Bus Ohio Public Employees Retirement System Plymouth Tube MTD Products, Inc. Ohio State University PM Company MTS System Corporation Ohio State University Medical Center The PNC Financial Services Group, Inc. Mueller Industries, Inc. Oil States International, Inc. PNM Resources, Inc. Mueller Water Products, Inc. Oil-Dri Corporation of America Polaris Industries, Inc. Murphy Oil Corporation Old Dominion Electric Cooperative PolyOne Corporation Mutual of Enumclaw Insurance Company Old Republic International Corporation Pool Corporation Mutual of Omaha Olin Corporation Popular, Inc. Mylan, Inc. OM Group, Inc. Port of Portland NACCO Industries, Inc. Omnicare, Inc. Portland General Electric Company Nalco Company Omnicom Group, Inc. PPG Industries, Inc. NASDAQ OMX Group, Inc. ON Semiconductor Corporation PPL Corporation Nash-Finch Company Oncology Nursing Society Praxair, Inc. National Academies Oncor Electric Delivery Preformed Line Products Company National Fuel Gas Company ONEOK, Inc. Premera Blue Cross National Futures Association Orbital Science Corporation Premier, Inc. National Interstate Insurance Company Oregon State Lottery Price Chopper/Golub Corporation National Radio Astronomy Observatory Oriental Trading Company priceline.com Incorporated National Safety Council OSG Tap & Die, Inc. Pride International, Inc. National Tobacco Company Oshkosh Corporation Prince William Health System National-Oilwell Varco, Inc. Owens & Minor, Inc. Principal Financial Group, Inc. Nature’s Sunshine Products, Inc. Owens Corning Pro Staff Navistar International Corporation Owens-Illinois, Inc. Probuild Holdings, Inc. Navy Exchange Service Command Oxford Industries Progress Energy, Inc. NBTY, Inc. PACCAR, Inc. The Progressive Corporation NCCI Holdings, Inc. Pacer International, Inc. Project Management Institute MDU Resources Group, Inc.Proxy Statement A-11 Proxy Statement ProLogis Safeway, Inc. Southern Union Company Protective Life Corporation Safilo USA Southwest Airlines Company Prudential Financial, Inc. Sage Software Southwest Gas Corporation Psychiatric Solutions, Inc. SAIC, Inc. Southwestern Energy Company Public Service Enterprise Group, Inc. Saint Vincent Catholic Medical Centers Sovereign Bank Public Storage Saks Incorporated Space Telescope Science Institute Public Utility District #1 of Chelan County Sakura Finetek USA, Inc. Sparrow Health System Publix Super Markets, Inc. Salk Institute Spectra Energy Corporation Puget Energy, Inc. Sally Beauty Company Spectrum Brands, Inc. Pulte Homes, Inc. Salt River Project Spectrum Health – Downtown QBE Regional Insurance Samuel Roberts Noble Foundation Spherion Corporation Qdoba Restaurant Corporation San Antonio Water System Springs Global US, Inc. QTI Human Resources San Manuel Band of Mission Indians Springs Window Fashions Division Qualcomm, Inc. Sanderson Farms, Inc. Sprint Nextel Corporation Quality Bicycle Products SanDisk Corporation SPX Corporation Quanta Services, Inc. Sandoz, Inc. SRA International, Inc. Quest Diagnostics, Inc. Sanmina-SCI Corporation St. Cloud Hospital Questar Corporation Sargent Fletcher, Inc. St. Jude Medical, Inc. Quiksilver, Inc. SAS Institute, Inc. St. Louis County Government Quorum Health Resources Sauer-Danfoss, Inc. St. Mary’s at Amsterdam Qwest Communications International, Inc. Savannah River Nuclear Solutions LLC Stamats Communications, Inc. R H Donnelly SavaSeniorCare Administrative Services Stampin’ Up! R L I Insurance Company SCANA Corporation StanCorp Financial Group, Inc. R L Polk & Company ScanSource, Inc. Standard Aero Limited Rackspace Schaumburg Township District Library Standard Motor Products, Inc. Radian Group, Inc. Schering-Plough Corporation Standard Pacific Homes Radio One Schneider Electric The Stanley Works Radio Shack Corporation Schnitzer Steel Industries, Inc. Staples, Inc. Ralcorp Holdings, Inc. Schreiber Foods, Inc. Starbucks Corporation The Raymond Corporation Schwan Food Company Starwood Hotels & Resorts Worldwide, Inc. Raymond James Financial, Inc. Scottrade, Inc. State Corporation Commission Raytheon Company The Scotts Miracle-Gro Company State Employee Credit Union Reading Hospital & Medical Center Seaboard Corporation State of Minnesota Realogy Corporation Sealed Air Corporation State Personnel Administration Regal Entertainment Group Sealy, Inc. State Street Corporation Regal-Beloit Corporation Sears Holdings Corporation Stater Bros. Holdings, Inc. The Regence Group Seco Tools, Inc. Steel Dynamics, Inc. Regency Centers Corporation Securitas Security Services USA Steelcase, Inc. Regions Financial Corporation Securus Technologies, Inc. Stepan Company Reliance Steel & Aluminum Self Regional Healthcare Stericycle, Inc. Reliant Energy SEMCO Energy Sterilite Corporation Remington Arms Company, Inc. Sempra Energy STERIS Remy International, Inc. Senco Products, Inc. Sterling Bank Renaissance Learning, Inc. Sentara Healthcare Stinger Ghaffarian Technologies Rent-A-Center, Inc. Sentry Group Stonyfield Farm, Inc. Republic Services, Inc. Serco, Inc. Storck USA LP Rewards Network Service Corporation International Structural Associates, Inc. Rexel, Inc. The ServiceMaster Company Stryker Corporation Reynolds American, Inc. Seventh Generation Subuaru of Indiana Automotive, Inc. RiceTec, Inc. Shands HealthCare Sulzer Pumps US, Inc. Rich Products Corporation Sharp Electronics Corporation Sun Healthcare Group, Inc. Richco The Shaw Group, Inc. Sundt Companies Ricoh Electronics, Inc. Sherwin-Williams Company SunGard Data Systems, Inc. Rite-Hite Corporation Sigma Aldrich Sunoco, Inc. Rite Aid Corporation Silgan Holdings, Inc. Sunrise Senior Living, Inc. Robert Half International, Inc. Simon Property Group, Inc. SunTrust Banks, Inc. Roche Diagnostics Simpson Housing LLLP Superior Energy Services, Inc. Rock-Tenn Company Sirius Computer Solutions, Ltd. SUPERVALU, Inc. Rockwell Automation SJE-Rhombus SureWest Communications Company Rockwell Collins, Inc. SkyWest, Inc. Susser Holdings Corporation Rockwood Holdings, Inc. SLM Corporation Sykes Enterprises Rollins, Inc. Smith International, Inc. SYNNEX Corporation Roper Industries SMSC Gaming Enterprise Synovate Roper Industries, Inc. Smurfit-Stone Container Corporation Synovus Financial Corporation Ross Stores, Inc. Snap-on Incorporated Synthes Roundy’s, Inc. Solo Cup Company SYSCO Corporation Rowan Companies, Inc. Solutia, Inc. Systemax, Inc. RR Donnelley & Sons Company Somerset Medical Center T. Rowe Price Group, Inc. RSC Holdings, Inc. Sonic Automotive, Inc. Targa Resources, Inc. Ruddick Corporation Sonoco Products Company Target Corporation Rutgers University South Jersey Gas Company Tastefully Simple Ryder System, Inc. Southeastern Freight Lines The Taubman Company The Ryland Group, Inc. The Southern Company Taylor Corporation S&C Electric Company Southern Farm Bureau Life Insurance TD Ameritrade Holding Corporation SAC Federal Credit Union Southern Poverty Law Center TDS Telecom Corporation A-12 MDU Resources Group, Inc.Proxy Statement Proxy Statement Tech Data Corporation Universal Health Services, Inc. Wake County Government TECO Energy, Inc. Universal Orlando Waldrop, Inc. Tecolote Research, Inc. University Health System Walgreen Company Tele-Consultants, Inc. University of Akron Wal-Mart Stores, Inc. Teledyne Technologies Incorporated University of Alabama at Birmingham The Walt Disney Company Teleflex University of California at Berkeley The Warnaco Group, Inc. Telephone & Data Systems, Inc. University of Chicago Warner Music Group Corporation Teletech University of Georgia The Washington Post Company Tellabs, Inc. University of Kansas Hospital Washington University in St. Louis Temple-Inland, Inc. University of Louisville Waste Management, Inc. Tenet Healthcare Corporation University of Michigan Watson Pharmaceuticals, Inc. Tenneco, Inc. University of Minnesota Wayne Memorial Hospital Teradata Corporation University of Nebraska-Lincoln Weir Slurry Group Terex Corporation University of Notre Dame Weis Markets, Inc. Tesoro Corporation University of Rochester Wellcare Health Plans Texas County & District Retirement System University of St. Thomas Wellmark BlueCross BlueShield Texas Industries, Inc. University of Texas at Austin WellPoint, Inc. Texas Instruments Incorporated University of Texas Southwestern Medical Wells Fargo & Company Textron, Inc. Center Wells’ Dairy, Inc. Thermo Fisher Scientific, Inc. University of Virginia Wendy’s/Arby’s Group, Inc. Thomas & Betts Corporation University of Wisconsin Medical Foundation Werner Company Thomas Jefferson University Hospital University Physicians, Inc. Werner Enterprises, Inc. Thomson, Inc. Univision Communications, Inc. WESCO International, Inc. Thor Industries, Inc. Unum Group West Bend Mutual Insurance Company Tiffany & Company UPS West Penn Allegheny Health System Time Warner Cable Urban Outfitters, Inc. West Virginia University Hospitals Time Warner, Inc. URS Corporation Westar Energy, Inc. TIMET US Airways Group, Inc. Western Refining, Inc. The Timken Company US Foodservices Western Southern Financial Group TJX Companies, Inc. US Steel Corporation Western Textile Companies Toll Brothers, Inc. USAA Western Union Company Torchmark Corporation USG Corporation Westlake Chemical Corporation The Toro Company Utah Retirement Systems Weston Solutions, Inc. Total Mechanical, Inc. Utah Transit Authority Weyerhaeuser Company Toys “R” Us, Inc. Utica National Insurance WGL Holdings, Inc. Tractor Supply Company V S E Corporation Wheaton Franciscan Healthcare TransUnion Vail Resorts, Inc. Whirlpool Corporation Travel Guard – AIG Valassis Communications, Inc. Whole Foods Market, Inc. TravelCenters of America LLC Valero Energy Corporation The Wilder Foundation The Travelers Companies, Inc. VALHI, Inc. William Rainey Harper College Travis County Valmont Industries, Inc. Williams Companies, Inc. Treasure Island Resort & Casino Van Andel Institute Williams-Sonoma Tredegar Industries, Inc. Vangent, Inc. Wilmer Hale Tribune Company Varian Medical Systems, Inc. Windstream Communications Tri-Met Vectren Corporation Winn-Dixie Stores, Inc. Trinity Consultants, Inc. Venetian Resort-Hotel-Casino Winpak Portion Packaging, Ltd. Trinity Industries, Inc. Ventura Foods LLC Wisconsin Energy Corporation Triwest Healthcare Alliance Venturedyne, Ltd. WMS True Value Company Verde Realty World Fuel Services Corporation TRW Automotive Holdings Corporation Verizon Communications, Inc. World Vision International TSYS Verso Paper Corporation World Vision United States Tufts Health Plan Vesuvius USA Worley Parsons Tupperware Corporation VF Corporation The Wornick Company Turner Broadcasting System, Inc. Via Christi Regional Medical Center Worthington Industries Tyco Electronics Viacom, Inc. Wyle Laboratories Tyson Foods, Inc. Viad Corporation Wyndham Worldwide Corporation U.S. Bancorp Viant Health Payment Solutions Wynn Resorts, Limited UAL Corporation Viasystems Group, Inc. Xcel Energy, Inc. UGI Corporation Viejas Enterprise Xerox Corporation UMB Bank NA Virgin Media, Inc. XTO Energy, Inc. UMDNJ-University of Medicine & Dentistry Visa, Inc. Yahoo!, Inc. Underwriters Laboratories, Inc. Vishay Intertechnology Yale University Unified Grocers, Inc. Visteon Corporation Yamaha Motor Corporation USA Union Pacific Corporation Volt Information Sciences, Inc. Yankee Candle Company Unisys Corporation Volvo Group North America YKK Corporation of America United HealthCare Group Vornado Realty Trust YRC Worldwide, Inc. United Natural Foods, Inc. Vought Aircraft Industries, Inc. YSI United Refining Company Vulcan Materials Company Yum! Brands, Inc. United Rentals, Inc. VWR International Zale Corporation United Stationers, Inc. W C Bradley Company Zappos.com United Technologies Corporation W R Grace & Company Zebra Technologies Corporation UnitedHealth Group, Inc. W W Grainger, Inc. Zimmer Holdings, Inc. Unitrin, Inc. W.R. Berkley Corporation Zions Bancorporation Universal American Corporation WABCO Holdings, Inc. Zurich North America Universal Forest Products, Inc. Wackenhut Services, Inc. MDU Resources Group, Inc.Proxy Statement A-13 Proxy Statement (This page has been left blank intentionally.) A-14 MDU Resources Group, Inc.Proxy Statement Proxy Statement EXHIBIT B MDU Resources Group, Inc. – Chief Executive Officer Competitive Analysis Measuring Long-Term Incentive Compensation and Supplemental Income Security Plan Benefits CVR Energy Inc. Delek US Holdings, Inc. Dynegy Inc. Mirant Corp. New Jersey Resources Corp. Nicor Inc. Noble Corp. Noble Energy Inc. Northeast Utilities Nustar Energy L.P. NV Energy, Inc. NVR Inc. Oil States International, Inc. Owens Corning Patriot Coal Corp. Pinnacle West Capital Corp. Puget Energy Inc. Pulte Homes Inc. RPM International Inc. Southern Union Co. Southwestern Energy Co. Spectra Energy Corp. Sunoco Logistics Partners L.P. Transalta Corp. UGI Corp. USG Corp. Valspar Corp. Watsco Inc. WGL Holdings Inc. Wisconsin Energy MDU Resources Group, Inc.Proxy Statement Proxy Statement (This page has been left blank intentionally.) MDU Resources Group, Inc.Proxy Statement Proxy Statement EXHIBIT C Companies Surveyed using Equilar, Inc. – Fidelity Exploration & Production Company – Chief Executive Officer Competitive Analysis Measuring Base Salary, Target Annual Cash Compensation, and Target Total Direct Compensation ATP Oil & Gas Corp Atwood Oceanics Inc Berry Petroleum Co Bill Barrett Corp Clayton Williams Energy Inc CNX Gas Corp Comstock Resources Inc Concho Resources Inc Continental Resources Inc Eagle Rock Energy Partners L P Encore Acquisition Co Energy XXI (Bermuda) Ltd Exco Resources Inc Forest Oil Corp Geokinetics Inc Global Geophysical Services Inc Gran Tierra Energy, Inc. Hercules Offshore, Inc. Ion Geophysical Corp Linn Energy, LLC Markwest Energy Partners L P McMoran Exploration Co Parker Drilling Co Patterson Uti Energy Inc Penn Virginia Corp Pioneer Drilling Co Quicksilver Resources Inc Rosetta Resources Inc Sandridge Energy Inc St Mary Land & Exploration Co Stone Energy Corp Swift Energy Co Ultra Petroleum Corp Unit Corp W&T Offshore Inc. C-1 Proxy Statement (This page has been left blank intentionally.) C-2 MDU Resources Group, Inc.Proxy Statement ANNUAL MEETING OF STOCKHOLDERS Tuesday, April 24, 2012 11:00 a.m. Central Daylight Saving Time 909 Airport Road Bismarck, ND This proxy is solicited on behalf of the Board of Directors for the 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 See reverse for voting instructions. 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 and 3. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTEDFOR ALL NOMINEES ANDFOR ITEMS 2 AND 3. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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