UNITED STATES SCHEDULE 14A INFORMATIONProxy Statement Pursuant to Section 14(a) of the Securities |
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
o | Preliminary Proxy Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
x | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Material Pursuant to § 240.14a-12 |
MDU Resources Group, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
x | No fee required |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
1) | Title of each class of securities to which transaction applies: |
2) | Aggregate number of securities to which transaction applies: |
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
4) | Proposed maximum aggregate value of transaction: |
5) | Total fee paid: |
o | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) | Amount Previously Paid: |
2) | Form, Schedule or Registration Statement No.: |
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4) | Date Filed: |
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| 1200 W. Century Ave. | |
David L. Goodin |
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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 two of the three matters to be presented if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted. | ||
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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 25, | ||
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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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| David L. Goodin |
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MDU Resources Group, Inc.Proxy Statement |
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Proxy Statement |
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MDU |
1200 West Century Avenue |
Mailing Address: |
Bismarck, North Dakota 58506-5650 |
TO BE HELD APRIL 22, 2014 |
Important Notice Regarding the Availability of Proxy Materials for the |
The 2014 Notice of Annual Meeting and Proxy Statement and 2013 Annual |
Mailing Address:P.O. Box 5650
March 12, 2014
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, 58506-5650(701) 530-1000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERSTO BE HELD APRIL 23, 2013
Important Notice Regardingon Tuesday, April 22, 2014, at 11:00 a.m., Central Daylight Saving Time, for the Availability of Proxy Materials for theStockholder Meeting to Be Held on April 23, 2013
The 2013 Notice of Annual Meeting and Proxy Statement and 2012 Annual Reportto Stockholders are available at www.mdu.com/proxymaterials.following purposes:
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| Election of eleven directors nominated by the board of directors for one-year terms; |
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(2) | Ratification of the appointment of Deloitte & Touche LLP as the company’s independent | |
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(3) | Approval, on a non-binding advisory basis, of the compensation of the company’s named executive officers; and | |
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(4) | Transaction of any other business that may properly come before the meeting or any adjournment(s) thereof. | |
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The board of directors has set the close of business on February 25, 2014, as the record date for the determination of common stockholders who will be entitled to notice of, and to vote at, the meeting and any adjournment(s) thereof.
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, 2013,2014, to the annual meeting, and (3) present their admission ticket(s )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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Proxy Statement |
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The board of directors of MDU Resources Group, Inc. is furnishing this proxy statement beginning March 13, 2013,12, 2014, to solicit your proxy for use at our annual meeting of stockholders on April 23, 2013,22, 2014, and any adjournment(s) thereof. We are soliciting proxies principally by mail, but directors, officers, and employees of MDU Resources Group, Inc. or its subsidiaries may solicit proxies personally, by telephone, or by electronic media, without compensation other than their regular compensation. Okapi Partners LLC additionally will solicit proxies for approximately $7,000$7,500 plus out-of-pocket expenses. We will pay the cost of soliciting your proxy and reimburse brokers and others for forwarding proxy material to you.
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 2013,2014, 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, 2013.2014. You may vote each share that you owned on that date on each matter presented at the meeting and any adjournment(s) thereof. As of February 25, 2013,2014, we had 188,830,529189,789,192 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 |
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• | ratification of the appointment of Deloitte & Touche LLP as the company’s independent |
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• | approval, on a non-binding advisory basis, of the compensation of the company’s named executive officers and |
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• | any other business that is properly brought before the meeting or any adjournment(s) thereof. |
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 and 3 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 |
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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, directors will be elected by a plurality of the votes cast. 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 contained in our corporate governance guidelines requires 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, upon:
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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.
Item 2 – Ratification of the Appointment of Deloitte & Touche LLP as the Company’s Independent AuditorsRegistered Public Accounting Firm for 20132014
Approval of Item 2 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” the proposal.
Item 3 – Approval, on a Non-Binding Advisory Basis, of the Compensation of the Company’s Named Executive Officers
Approval of Item 3 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 item. Abstentions will count as votes “against” the item. Broker non-votes are not counted as voting power present and, therefore, are not counted in the vote.
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 and 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.
You may also vote in person at the meeting. However, if you are the beneficial owner of the shares, you must obtain a legal proxy from the holder of record of the shares, usually your bank or broker, and present it at the meeting. A legal proxy identifies you, states the number of shares you own, and gives you the right to vote those shares. Without a legal proxy we cannot identify you as the beneficial owner of the shares or know how many shares you have to vote.
Can I revoke my proxy? Yes.
If you are a stockholder of record, 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. |
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Proxy Statement |
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The board expresses its thanks to Terry D. Hildestad, who retired on January 3, 2013. He had served as president and chief executive officer of the company and as a director since August 17, 2006. He had served as president and chief operating officer from May 1, 2005 until August 17, 2006. He began his career with the company in 1974 at Knife River Corporation, where he served in several operating positions before becoming its chief executive officer in 1993 through April 2005.
The board also expresses its thanks to Richard H. LewisThomas C. Knudson for his service on the board the audit committee, and the nominating and governancecompensation committee. Mr. Lewis also served on the compensation committee during his tenure. Mr. LewisKnudson is not standing for reelectionre-election as a director after serving on the board since 2005.2008.
All nominees for director are nominated to serve one-year terms until the annual meeting of stockholders in 20142015 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 MDU Resources Group, Inc.
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Thomas Everist | Director Since 1995 | |||
Age | Compensation Committee | |||
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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 served as a director and chairman of the board of Everist Genomics, Inc., Ann Arbor, Michigan, which provides solutions for personalized medicines since 2002. He served as Everist Genomics’ chief executive officer from August 2012 to December 2012. He was 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. He has been a director of Bell, Inc., Sioux Falls, South Dakota, a manufacturer of folding cartons and packages, since April 2011. | ||||
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| 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, and as a member of the Council of Advisors for Searching for Solutions Institute, a non-profit public foundation that provides leaders with resources to address critical social issues. From July 2001 to June 2006, he served on the South Dakota Investment Council, the state agency responsible for prudently investing state funds. | |||
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| 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 |
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Karen B. Fagg | Director Since 2005 | |||
Age | Nominating and Governance Committee | |||
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Ms. Fagg served as vice president of DOWL LLC, d/b/a DOWL HKM, an engineering and design firm, from April 2008 until her retirement on December 31, 2011. Ms. Fagg was president from April 1, 1995 through | ||||
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| Ms. Fagg has a bachelor’s degree in mathematics from Carroll College in Helena, Montana. In 2013, she served on a three-person selection committee appointed by the Attorney General to identify trustees for the Montana Healthcare Foundation Board. She also became a board member of the Montana Justice Foundation, whose mission is to achieve equal access to justice for all Montanans through effective funding and leadership, and of the First Interstate BancSystem Foundation, which has a strong commitment to community. She has been a board member of the Billings Chamber of Commerce since July 2009 and its board chair since July 2013, as well as a member of the Billings Catholic School Board since December 2011. She served on the board for St. Vincent’s Healthcare from October 2003 until October 2009, including a term as board chair, on the board of Deaconess Billings Clinic Health System from 1994 to 2002, as a member of the Board of Trustees of Carroll College from 2005 through 2010, and on the board of advisors of the Charles M. Bair Family Trust from 2008 to July 2011, including a term as board chair. | |||
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| The board concluded that Ms. Fagg 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. 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 17 years of construction and engineering experience at DOWL HKM and its predecessor, HKM Engineering, Inc., where she served as vice president, president, and chairman. Ms. Fagg |
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David L. Goodin | Director Since January 4, 2013 | |||
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Mr. Goodin was elected president and chief executive officer and a director of the company effective January 4, 2013. Prior to that, he served as chief executive officer and president of Intermountain Gas Company effective October 2008, chief executive officer of Cascade Natural Gas Corporation, Montana-Dakota Utilities Co., and Great Plains Natural Gas Co. effective June 2008, president of Montana-Dakota Utilities Co. and Great Plains Natural Gas Co. effective March 2008, and president of Cascade Natural Gas Corporation effective July 2007. He began his career with the company in 1983 at Montana-Dakota Utilities Co., where he served as a division electrical engineer effective May 1983, division electric superintendent effective February 1989, electric systems supervisor effective August 1993, electric systems manager effective April 1999, vice president-operations effective January 2000, and executive vice president-operations and acquisitions effective January 2007. 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. |
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4 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
| Mr. Goodin has a bachelor of science degree in electrical and electronics engineering from North Dakota State University, a masters in business administration from the University of North Dakota, and has completed the Advanced Management Program at Harvard School of Business. Mr. Goodin is a registered professional engineer in North Dakota. He is a member of the U.S. Bancorp Western North Dakota Advisory Board. Mr. Goodin is involved in numerous civic organizations, including serving on the board of directors of Sanford Bismarck, the Missouri Valley YMCA, and as trustee for the Bismarck State College Foundation. He is a past board member of several industry associations, including the American Gas Association, the Edison Electric Institute, the North Central Electric Association, the Midwest ENERGY Association, and the North Dakota Lignite Council. Mr. Goodin received the University of Mary Entrepreneurship Award in 2009. |
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| The board concluded that Mr. Goodin 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. Goodin is one of only two officers of the company to sit on our board. With over | ||
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Mark A. Hellerstein | Director Since 2013 | ||
Age 61 | Audit Committee | ||
Mr. Hellerstein was chief executive officer of St. Mary Land & Exploration Company (now SM Energy Company), an energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids, from 1995 until February 2007; he was president from 1992 until June 1996 and executive vice president and chief financial officer from 1991 until 1992. He was first elected to the board of St. Mary in 1992 and served as chairman of the board from 2002 until May 2009. Prior to joining St. Mary, from 1980 to 1991 Mr. Hellerstein’s career included positions as chief financial officer of CoCa Mines Inc., which mined and extracted minerals from lands previously held by the public through the Bureau of Land Management; American Golf Corporation, which manages golf courses in the United States; and, Worldwide Energy Corporation, an oil and gas acquisition, exploration, development, and production company with operations in the United States and Canada. Mr. Hellerstein served on the board of directors of Transocean Inc., a leading provider of offshore drilling services for oil and gas wells, from December 2006 to November 2007. | |||
Mr. Hellerstein’s leadership has been recognized with induction into the Rocky Mountain Oil and Gas Hall of Fame, and Ernst & Young named Mr. Hellerstein both Rocky Mountain and National Entrepreneur of the Year in 2005 and 2006, respectively. He graduated number one in his class with a bachelor’s degree in accounting from the University of Colorado. Mr. Hellerstein is a certified public accountant (CPA), on inactive status. He received the Elijah Watts Sells Gold Medal award for achieving the highest score in the United States on the November 1974 CPA exam out of 38,000 participants. Mr. Hellerstein has served on the board for Community Resources, Inc. since September 2013, which is a non-profit organization that brings programs into the Denver Public Schools to enhance education. He served as a board director on the Denver Children’s Advocacy Center (Center) from August 2006 until December 2011, including as chairman the last three years, and continues to participate in and fund the Center’s Safe from the Start Program. The Center’s mission is to provide a continuum of care for traumatized children and their families. | |||
The board concluded that Mr. Hellerstein 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 oil and natural gas production, one of the company’s growth centers. Mr. Hellerstein has extensive business experience, recognized excellence, and demonstrated success and leadership in this industry as a result of his 17 years of senior management experience and service as board chairman of St. Mary. His skills and experience enable him to contribute independent insight into the company’s business and operations and the economic environment and long-term strategic issues the company faces. As a certified public accountant, on inactive status, with extensive financial experience as a result of his employment as chief financial officer with several companies, including public companies, Mr. Hellerstein contributes significant finance and accounting knowledge to our board and audit committee. His financial expertise assists the board in its oversight of the company’s financial reporting and financial risk management functions. Mr. Hellerstein also brings to the board his knowledge of local, state, and regional issues involving the Rocky Mountain region where we have important operations. |
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Proxy Statement |
A. Bart Holaday | Director Since 2008 | |||
Age | Audit Committee | |||
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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 firm, Alerus Financial, a financial services company, Jamestown College, the United States Air Force Academy Endowment (former chairman), the Falcon Foundation (director and former vice president), which provides scholarships to Air Force Academy applicants, the Center for Innovation Foundation at the University of North Dakota (trustee and former chairman), and | ||||
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| 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. | |||
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| 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 16 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 and guidance to management in connection not only with our natural gas and oil business, but with all of our businesses. |
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Dennis W. Johnson | Director Since 2001 | ||
Age | Audit Committee | ||
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Mr. Johnson is chairman, chief executive officer, and president of TMI Corporation, and chairman and chief executive officer of TMI Systems Design Corporation, TMI Transport Corporation, and TMI Storage Systems Corporation, all of Dickinson, North Dakota, manufacturers of casework and architectural woodwork. He has been employed at TMI since 1974 serving as president or chief executive officer since 1982. Mr. Johnson is serving his | |||
Mr. Johnson has a bachelor of science degree in electrical and electronics engineering, as well as a master of science degree in industrial engineering from North Dakota State University. He has served on numerous industry, state, and community boards, including the North Dakota Workforce Development Council (chairperson), the Decorative Laminate Products Association, the North Dakota Technology Corporation, St. Joseph Hospital Life Care Foundation, St. John Evangelical Lutheran Church, Dickinson State University Foundation, |
6 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
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. | ||||
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| 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 |
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Age 71 | Nominating and Governance Committee | |||
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Mr. McCracken served as chief executive officer of CA, Inc., one of the world’s largest information technology management software companies, from January 2010 until January 7, 2013, after which he served as executive adviser to the new chief executive officer until March 31, 2013, and after that as a consultant to the company until December 31, 2013. Mr. McCracken was a director of CA, Inc. from May 2005 until January 7, 2013, serving as non-executive chairman of the board from June 2007 to September 2009, interim executive chairman from September 2009 to January 2010, and executive chairman from January 2010 to May 2010. He is president of Executive Consulting Group, LLC, a general business consulting firm, since 2002. During his 36-year career with International Business Machines Corporation, a manufacturer of information processing products and a technology, software, and networking systems manufacturer and developer, Mr. McCracken held a number of executive positions, including general manager of IBM printing systems division from 1998 to 2001, general manager of marketing, sales, and distribution for IBM PC Company from 1994 to 1998, and president of IBM’s EMEA and Asia Pacific PC Company from 1993 to 1994. From 1995 to 2001, he served on IBM’s Chairman’s Worldwide Management Council, a group of the top 30 executives at IBM. Mr. McCracken was a director of IKON Office Solutions, Inc., a provider of document management systems and services, from 2003 to 2008, where he served on its audit committee, compensation committee, and strategy committee at various points in time during his tenure as a director. | ||||
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MDU Resources Group, Inc. | 7 |
Proxy Statement |
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Patricia L. Moss | Director Since 2003 | |||
Age | Compensation Committee | |||
| Nominating and Governance Committee | |||
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Ms. Moss served as the president and chief executive officer of Cascade Bancorp, a financial holding company in Bend, Oregon, from 1998 to January 3, 2012. She served as the chief executive officer of Cascade Bancorp’s principal subsidiary, Bank of the Cascades, from 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. Ms. 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, co-chairs the Oregon Growth Board, a state agency created to | ||||
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| 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. | |||
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| The board concluded that Ms. Moss should serve as a director of MDU Resources Group, Inc., in light of our business and structure, at the time we file our proxy statement for the following reasons. A significant portion of MDU Resources Group, Inc.’s utility, construction services, and contracting operations are located in the Pacific Northwest. Ms. Moss has first-hand business experience and knowledge of the Pacific Northwest economy and local, state, and regional issues through her executive positions at Cascade Bancorp and Bank of the Cascades, where she gained over 30 years of experience. Ms. Moss provides to our board her experience in finance and banking, as well as her experience in business development through her work at Cascade Bancorp and on the Oregon Investment Advisory Council, the Oregon Business Council, and the Oregon Growth Board. 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. |
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Harry J. Pearce | Director Since 1997 | |||
Age | Chairman of the Board | |||
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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 and serves on the excellence, finance, and compensation committees 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 |
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8 | MDU Resources Group, Inc.Proxy Statement |
Proxy Statement |
| 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. |
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J. Kent Wells | Director Since January 4, 2013 | |||
Age | Vice Chairman of the Corporation | |||
| President and Chief Executive Officer | |||
| of Fidelity Exploration & Production Company | |||
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Mr. Wells was elected vice chairman of the | ||||
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| The board concluded that Mr. Wells should serve as 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. One of the company’s strategic objectives is to achieve product diversity in the midstream segment of the oil and gas industry. Mr. Wells brings to our board significant experience and knowledge of the oil and gas business, including the midstream segment. He has |
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more than | |||
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John K. Wilson | Director Since 2003 | ||
Age | Audit Committee | ||
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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 executive director of the Robert B. Daugherty |
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MDU Resources Group, Inc. Proxy Statement | 9 |
Proxy Statement |
| Mr. Wilson is a certified public 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. | ||
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| 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., 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. |
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 contained in our corporate governance guidelines requires 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, upon:
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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. |
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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.
ITEM 2. RATIFICATION OF INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM
The audit committee at its February 20132014 meeting appointed Deloitte & Touche LLP as our independent auditorsregistered public accounting firm for fiscal year 2013.2014. The board of directors concurred with the audit committee’s decision. Deloitte & Touche LLP has served as our independent auditorsregistered public accounting firm since fiscal year 2002.
Although your ratification vote will not affect the appointment or retention of Deloitte & Touche LLP for 2013,2014, the audit committee will consider your vote in determining its appointment of our independent auditorsregistered public accounting firm for the next fiscal year. The audit committee, in appointing our independent auditors,registered public accounting firm, reserves the right, in its sole discretion, to change an appointment at any time during a fiscal year if it determines that such a change would be in our best interests.
A representative of Deloitte & Touche LLP will be present at the annual meeting and will be available to respond to appropriate questions. We do not anticipate that the representative will make a prepared statement at the meeting; however, he or she will be free to do so if he or she chooses.
The board of directors recommends a vote “for” the ratification of
Deloitte & Touche LLP as our independent auditorsregistered public accounting firm for 2013.2014.
10 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
Ratification of the appointment of Deloitte & Touche LLP as our independent auditorsregistered public accounting firm for 20132014 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.
ACCOUNTING AND AUDITING MATTERSAccounting and Auditing Matters
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| 2012 |
| 2011 | * |
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Audit Fees (a) |
| $ | 2,400,000 |
| $ | 2,456,046 |
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Audit-Related Fees(b) |
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| 63,110 |
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| 216,410 |
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Tax Fees(c) |
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| 23,566 |
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| 0 |
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All Other Fees(d) |
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| 0 |
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| 0 |
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Total Fees(e) |
| $ | 2,486,676 |
| $ | 2,672,456 |
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Ratio of Tax and All Other Fees to Audit and Audit-Related Fees |
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| 0.96 | % |
| 0.00 | % |
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* | The 2011 amounts were adjusted from amounts shown in the 2012 proxy statement to reflect actual amounts. | ||||||||
(a) | Audit fees for 2012 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, Inc. 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 2012 and 2011 are associated with accounting research assistance, workpaper review requested by the Idaho Public Utilities Commission (2012 only), the compliance audit for the U.S. Department of Energy (2012 only), and accounting consultation in connection with due diligence (2011 only). | ||||||||
(c) | Tax fees for 2012 relate to the review of permanent tax benefits associated with Medicare Part D subsidies. There were no tax fees for 2011. | ||||||||
(d) | There were no all other fees for 2012 and 2011. | ||||||||
(e) | Total fees reported above include out-of-pocket expenses related to the services provided of $332,210 for 2012 and $305,346 for 2011. | ||||||||
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| 2013 |
| 2012 | * |
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Audit Fees (a) (e) |
| $ | 2,760,620 |
| $ | 2,510,138 |
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Audit-Related Fees (b) |
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| 33,800 |
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| 63,110 |
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Tax Fees (c) (e) |
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| 66,049 |
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| 23,745 |
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All Other Fees (d) |
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| 1,374,455 |
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| 0 |
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Total Fees (f) |
| $ | 4,234,924 |
| $ | 2,596,993 |
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Ratio of Tax and All Other Fees to Audit and Audit-Related Fees |
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| 51.55 | % |
| 0.92 | % |
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* | The 2012 amounts were adjusted from amounts shown in the 2013 proxy statement to reflect actual amounts. | ||||||||
(a) | Audit fees for 2013 and 2012 consist 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 letter work relating to the offering of common stock (2013 only), and work related to responding to a comment letter from the Securities and Exchange Commission (2013 only). | ||||||||
(b) | Audit-related fees for 2013 and 2012 are associated with accounting research assistance, technical accounting consultation regarding variable interest entities, guarantees, and financing agreements (2013 only), workpaper review requested by the Idaho Public Utilities Commission (2012 only), and the compliance audit for the U.S. Department of Energy (2012 only). | ||||||||
(c) | Tax fees for 2013 relate to consulting services for federal income tax pollution control associated with the Big Stone power plant. Tax fees for 2012 relate to the review of permanent tax benefits associated with Medicare Part D subsidies. | ||||||||
(d) | All other fees for 2013 relate to assistance in an internal investigation. There were no fees in this category for 2012. | ||||||||
(e) | Audit fees for 2013 include $30,000 associated with a financial statement audit, and tax fees for 2013 include $50,000 associated with tax services, in each case for Dakota Prairie Refining, LLC. These fees are paid by Dakota Prairie Refining, LLC, but are included in this table because Dakota Prairie Refining, LLC, is considered a variable interest entity with respect to MDU Resources and consolidated in its financial statements. | ||||||||
(f) | Total fees reported above include out-of-pocket expenses related to the services provided of $385,216 for 2013 and $353,627 for 2012. | ||||||||
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The policy defines the permitted services in each of the audit, audit-related, tax, and all other services categories, as well as prohibited services. The pre-approval policy requires management to submit annually for approval to the audit committee a service plan describing the scope of work and anticipated cost associated with each category of service. At each regular audit committee meeting, management reports on services performed by Deloitte & Touche LLP and the fees paid or accrued through the end of the quarter preceding the meeting. Management may submit requests for additional permitted services before the next scheduled audit committee meeting to the designated member of the audit committee, Dennis W. Johnson, for approval. The designated member updates the audit committee at the next regularly scheduled meeting regarding any services that he approved during the interim period. At each regular audit committee meeting, management may submit to the audit committee for approval a supplement to the service plan containing any request for additional permitted services.
In addition, prior to approving any request for audit-related, tax, or all other services of more than $50,000, Deloitte & Touche LLP will provide a statement setting forth the reasons why rendering of the proposed services does not compromise Deloitte & Touche LLP’s independence. This description and statement by Deloitte & Touche LLP may be incorporated into the service plan or as an exhibit thereto or may be delivered in a separate written statement.
MDU Resources Group, Inc. Proxy Statement | 11 |
Proxy Statement |
ITEM 3. APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
In accordance with 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 discussionCompensation Discussion and analysis,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.
Our overall compensation program and philosophy is built on a foundation of these guiding principles:
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• | we pay for performance, with over 50% of our |
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• | we assess the relationship between our named executive officers’ pay and performance on key financial metrics – revenue, profit, return on invested capital, and stockholder return – in comparison to our performance graph peer group |
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• | we review competitive compensation data for our named executive officers, to the extent available, and incorporate internal equity in the final determination of target compensation levels |
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• | we determine annual performance incentives based on financial criteria that are important to stockholder value, including earnings, earnings per share and return on invested capital and |
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• | we determine long-term performance incentives based on total stockholder return relative to our performance graph peer group. |
We are asking our stockholders to indicate their approval of our named executive officer compensation as disclosed in this proxy statement, including the compensation discussionCompensation Discussion and analysis,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 2012.2013. Accordingly, the following resolution is submitted for stockholder vote at the 20132014 annual meeting:
“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.APPROVED.”
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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. As 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 every annual meeting 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 the 2017 annual meeting of stockholders.
The board of directors recommends a vote “for” the approval, on a non-binding advisory basis, of
the compensation of our named executive officers, as disclosed in this proxy statement.
Approval of the compensation of 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.
12 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
Compensation Discussion and Analysis
The following compensation discussionCompensation Discussion and analysisAnalysis 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.
Executive Summary
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 20122013
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Name |
| Executive |
| Registrant |
| Earnings in |
| Aggregate |
| Aggregate |
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| Executive |
| Registrant |
| Aggregate |
| Aggregate |
| Aggregate |
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(a) |
| (b) |
| (c) |
| (d) |
| (e) |
| (f) |
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David L. Goodin |
| — |
| — |
| 6 |
| 1,526 |
| — |
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Terry D. Hildestad |
| — |
| — |
| 53,105 |
| — |
| 1,001,633 |
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| — |
| — |
| 46,850 |
| — |
| 1,048,483 |
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Doran N. Schwartz |
| — |
| — |
| — |
| — |
| — |
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| — |
| — |
| — |
| — |
| — |
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Steven L. Bietz |
| — |
| — |
| — |
| — |
| — |
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J. Kent Wells |
| — |
| — |
| — |
| — |
| — |
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| — |
| — |
| — |
| — |
| — |
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William E. Schneider |
| — |
| — |
| 87,334 |
| — |
| 1,647,225 | (1) | |||||||||||||||||||||
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Jeffrey S. Thiede |
| — |
| 33,000 |
| 5,751 |
| — |
| 38,751 | (1) | |||||||||||||||||||||
Paul K. Sandness |
| — |
| — |
| — |
| — |
| — |
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(1) | Includes |
Deferral of Annual Incentive Compensation
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 20122013 was 5.46%4.58% or the “Moody’s Rate,” which is the average of (i) the number that results from adding the daily Moody’s U.S. Long-Term Corporate Bond Yield Average for “A” rated companies as of the last day of each month for the 12-month period ending October 31 and dividing by 12 and (ii) the number that results from adding the daily Moody’s U.S. Long-Term Corporate Bond Yield Average for “BBB” rated companies as of the last day of each month for the 12-month period ending October 31 and dividing by 12. The 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.
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A change of control is defined as:
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• | an acquisition during a 12-month period of 30% or more of the total voting power of our stock |
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• | an acquisition of our stock that, together with stock already held by the acquirer, constitutes more than 50% of the total fair market value or total voting power of our stock |
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• | replacement of a majority of the members of our board of directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of our board of directors or |
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• | acquisition of our assets having a gross fair market value at least equal to 40% of the total gross fair market value of all of our assets. |
MDU Resources Group, Inc. Proxy Statement | 39 |
Proxy Statement |
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 (for employees hired before 2006), accrued vacation pay, continuation of health care benefits, and life insurance benefits. The tables alsoinclude amounts under the Nonqualified Defined Contribution Plan, but do not include the named executive officers’ benefits under our nonqualified deferred compensation plans, which are reported in the Nonqualified Deferred Compensation for 2012 table.annual incentive compensation. See the Pension Benefits for 20122013 table and the Nonqualified Deferred Compensation for 20122013 table, and accompanying narratives, for a description of the named executive officers’ accumulated benefits under our qualified defined benefit pension plans, the Nonqualified Defined Contribution Plan, and our nonqualifiedtheir deferred compensation plans.annual incentive compensation.
The calculation of the present value of excess SISP benefits our named executive officers would be entitled to upon termination of employment under the SISP was computed based on calculations assuming an age rounded to the nearest whole year of age. Actual payments may differ. The terms of the excess SISP benefit are described following the Pension Benefits for 20122013 table.
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, the reduction for amounts paid as retirement benefits would eliminate disability benefits assuming a termination of employment on December 31, 20122013 for Messrs. Hildestad, Bietz, and Schneider.Mr. Sandness.
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. Goodin, Hildestad, Schwartz, Bietz, Wells, and SchneiderSandness and the annual incentives for Messrs. Hildestad, Bietz,Goodin and Wells, and Schneider, which were awarded under the Long-Term Performance-Based Incentive Plan, would vest at their target levels. For this purpose, the term “change of control” is defined as:
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• | the acquisition by an individual, entity, or group of 20% or more of our outstanding common stock |
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• | 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 |
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• | 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 |
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• | stockholder approval of our liquidation or dissolution. |
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Performance share awards will be forfeited if the participant’s employment terminates for any reason before the participant has reached age 55 and completed 10 years of service. Performance shares and related dividend equivalents for those participants whose employment is terminated other than for cause after the participant has reached age 55 and completed 10 years of service will be prorated as follows:
|
|
• | 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. |
40 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
As of December 31, 2012,2013, Messrs. Goodin, Schwartz, Bietz, and Wells had not satisfied this requirement. Accordingly, if a December 31, 20122013 termination other than for cause without a change of control is assumed, the named executive officers’ 2012-20142013-2015 performance share awards would be forfeited,forfeited; any amounts earned under the 2012-2014 performance share award for Mr. Sandness would be reduced by one-third and such awards for Messrs. Goodin, Schwartz, and Wells would be forfeited; and any amounts earned under the 2011-2013 performance share awards for Messrs. Hildestad and Schneider would be reduced by one-third and such award for Messrs. Schwartz and Bietz would be forfeited, and any amounts earned under the 2010-2012 performance share awards for Messrs. Hildestad and SchneiderMr. Sandness would not be reduced and the awardawards for Messrs. SchwartzGoodin and BietzSchwartz would be forfeited. Mr. Wells had no 2011-2013 performance share awards, and Mr. Thiede had no 2013-2015, 2012-2014, or 2010-20122011-2013 performance share awards. The number of performance shares earned following a termination depends on actual performance through the full performance period. As actual performance for the 2010-20122011-2013 performance share awards has been determined, the amounts for these awards in the event of a termination without a change of control were based on actual performance, which resulted in vesting of 0%193% of the target award. For the 2011-20132012-2014 performance share awards, because we do not know what actual performance through the entire performance period will be, we have assumed target performance will be achieved and, therefore, show two-thirds of the target award. No amounts are shown for the 2012-20142013-2015 performance share awards because such awards would be forfeited. Although vesting would only occur after completion of the performance period, the amounts shown in the tables were not reduced to reflect the present value of the performance shares that could vest. Dividend equivalents attributable to earned performance shares would also be paid. Dividend equivalents accrued through December 31, 2012,2013, are included in the amounts shown.
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, 2012.2013.
The compensation committee may consider providing severance benefits on a case-by-case basis for employment terminations. 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 | 41 |
Proxy Statement
|
|
Terry D. Hildestad
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
David L. Goodin |
| |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Executive Benefits and |
| Voluntary |
| Not for |
| For Cause | Death |
| Disability |
| Change of |
| Change of |
|
| Voluntary |
| Not for |
| For Cause |
| Death |
| Disability |
| Change of |
| Change of | ||||||
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Short-term Incentive(1) |
|
|
|
|
|
|
|
|
| 750,000 |
| 750,000 |
|
| 937,500 |
| 937,500 | |||||||||||||||||
2010-2012 Performance Shares |
|
|
|
|
|
|
|
|
| 1,107,087 |
| 1,107,087 |
| |||||||||||||||||||||
2011-2013 Performance Shares |
| 816,176 |
| 816,176 |
|
| 816,176 |
| 816,176 |
| 1,224,265 |
| 1,224,265 |
|
| 494,749 |
| 494,749 | ||||||||||||||||
2012-2014 Performance Shares |
|
|
|
|
|
|
|
|
| 1,144,577 |
| 1,144,577 |
|
| 513,465 |
| 513,465 | |||||||||||||||||
2013-2015 Performance Shares |
| 1,336,911 |
| 1,336,911 | ||||||||||||||||||||||||||||||
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Regular SISP(2) |
| 5,709,419 |
| 5,709,419 |
|
|
| 5,709,419 |
| 5,709,419 |
|
|
|
| 930,586 |
| 930,586 |
| 987,517 |
| 930,586 |
| ||||||||||||
Excess SISP(3) |
| 378,944 |
| 378,944 |
|
|
| 378,944 |
| 378,944 |
|
|
| |||||||||||||||||||||
SISP Death Benefits(4) |
|
|
|
|
|
| 12,024,426 |
|
|
|
|
|
|
| ||||||||||||||||||||
SISP Death Benefits(3) |
|
| 6,118,589 |
| ||||||||||||||||||||||||||||||
Disability Benefits(4) |
|
| 107,847 |
| ||||||||||||||||||||||||||||||
Total |
| 6,904,539 |
| 6,904,539 |
|
| 12,840,602 |
| 6,904,539 |
| 10,314,292 |
| 4,225,929 |
|
| 930,586 |
| 930,586 |
| 6,118,589 |
| 1,095,364 |
| 4,213,211 |
| 3,282,625 |
|
|
(1) | Represents the target |
(2) | Represents the present value of Mr. |
(3) |
|
| Represents the present value of 180 monthly payments of |
(4) | 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 4.48% discount rate. |
Terry D. Hildestad
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
| Voluntary |
| Not for |
| For Cause |
| Death |
| Disability |
| Change of |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
2011-2013 Performance Shares |
| 3,410,244 |
|
|
|
|
|
|
|
|
| 1,766,966 |
2012-2014 Performance Shares |
| 602,011 |
|
|
|
|
|
|
|
|
| 602,011 |
2013-2015 Performance Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
| 4,012,255 |
|
|
|
|
|
|
|
|
| 2,368,977 |
(1) | Mr. Hildestad retired on January 3, 2013. The information in this table relates to his actual retirement on January 3, 2013, and assumes that a change of control occurred on December 31, 2013. The amount shown for the 2011-2013 Performance Shares is based on actual performance, resulting in payment of 193% of the target award. The amount shown for the 2012-2014 Performance Shares is the target award, prorated based on the number of months Mr. Hildestad worked during the performance period. His termination qualified as normal retirement under our qualified pension plan and our SISP. Mr. Hildestad also had an accumulated benefit under our Nonqualified Deferred Compensation Plan. These plans and Mr. Hildestad’s benefits under them are described in the Pension Benefits for 2013 table and the Nonqualified Deferred Compensation for 2013 table and accompanying narratives. |
|
| ||
42 | MDU Resources Group, Inc.Proxy Statement |
|
Proxy Statement
|
|
Doran N. Schwartz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Doran N. Schwartz |
|
| ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Executive Benefits and |
| Voluntary |
| Not for |
| For Cause | Death |
| Disability |
| Change of |
| Change of |
|
| Voluntary |
| Not for |
| For Cause |
| Death |
| Disability |
| Change of |
| Change of | ||||||
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
2010-2012 Performance Shares |
|
|
|
|
|
|
|
|
| 191,882 |
| 191,882 |
| |||||||||||||||||||||
2011-2013 Performance Shares |
|
|
|
|
|
|
|
|
| 222,811 |
| 222,811 |
|
|
| 321,580 |
| 321,580 | ||||||||||||||||
2012-2014 Performance Shares |
|
|
|
|
|
|
|
|
| 228,902 |
| 228,902 |
|
|
| 333,404 |
| 333,404 | ||||||||||||||||
2013-2015 Performance Shares |
|
| 368,972 |
| 368,972 | |||||||||||||||||||||||||||||
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Regular SISP |
| 244,273 | (1) |
| 244,273 | (1) |
|
|
| 341,982 | (2) |
| 244,273 | (1) |
|
|
|
| 240,266 | (1) | 240,266 | (1) |
| 320,355 | (2) | 240,266 | (1) |
| ||||||
SISP Death Benefits(3) |
|
|
|
|
|
| 2,055,217 |
|
|
|
|
|
|
|
|
| 2,580,217 |
| ||||||||||||||||
Disability Benefits(4) |
|
|
|
|
|
|
| 855,522 |
|
|
|
|
|
|
| 761,399 |
| |||||||||||||||||
Total |
| 244,273 |
| 244,273 |
|
| 2,055,217 |
| 1,197,504 |
| 887,868 |
| 643,595 |
|
| 240,266 |
| 240,266 |
| 2,580,217 |
| 1,081,754 |
| 1,264,222 |
| 1,023,956 |
|
|
(1) | Represents the present value of Mr. Schwartz’s vested regular SISP benefit as of December 31, |
(2) | Represents the present value of Mr. Schwartz’s vested SISP benefit described in footnote 1, 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 |
(3) | Represents the present value of 180 monthly payments of |
(4) | 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Kent Wells |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
| Voluntary |
| Not for |
| For Cause |
| Death |
| Disability |
| Change of |
| Change of |
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive(1) |
|
|
|
|
|
|
|
|
|
|
| 712,500 |
| 712,500 |
2012-2014 Performance Shares |
|
|
|
|
|
|
|
|
|
|
| 1,630,059 |
| 1,630,059 |
2013-2015 Performance Shares |
|
|
|
|
|
|
|
|
|
|
| 1,625,709 |
| 1,625,709 |
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability Benefits (2) |
|
|
|
|
|
|
|
|
| 399,567 |
|
|
|
|
Total |
|
|
|
|
|
|
|
| 399,567 |
| 3,968,268 |
| 3,968,268 |
(1) | Represents the target 2013 annual incentive, which would be deemed earned upon change of control under the Long-Term Performance-Based Incentive Plan. |
(2) | Represents the present value of the disability benefit. Present value was determined using the 4.32% discount rate applied for purposes of the SISP calculations. Though Mr. Wells is not a participant in the SISP, this rate is considered reasonable for purposes of this calculation as it would be applied if Mr. Wells were to become a SISP participant. |
|
| |
| ||
MDU Resources Group, Inc. Proxy Statement | 43 |
|
Proxy Statement |
|
Steven L. BietzJeffrey S. Thiede
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
| Voluntary |
| Not for |
| For Cause | Death |
| Disability |
| Change of |
| Change of |
| ||||||
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 234,325 |
|
| 234,325 |
|
2010-2012 Performance Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 309,972 |
|
| 309,972 |
|
2011-2013 Performance Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 353,063 |
|
| 353,063 |
|
2012-2014 Performance Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 330,084 |
|
| 330,084 |
|
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular SISP(2) |
|
| 1,556,929 |
|
| 1,556,929 |
|
|
|
|
|
| 1,556,929 |
|
| 1,556,929 |
|
|
|
|
Excess SISP(3) |
|
| 180,597 |
|
| 180,597 |
|
|
|
|
|
| 180,597 |
|
| 180,597 |
|
|
|
|
SISP Death Benefits(4) |
|
|
|
|
|
|
|
|
| 4,535,554 |
|
|
|
|
|
|
|
|
|
|
Total |
|
| 1,737,526 |
|
| 1,737,526 |
|
|
| 4,535,554 |
|
| 1,737,526 |
|
| 2,964,970 |
|
| 1,227,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Executive Benefits and |
| Voluntary Termination |
| Not for |
| For Cause |
| Death |
| Disability |
| Change of |
| Change of |
| ||||||||
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Nonqualified Defined Contribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Plan Death Benefit(1) |
|
|
|
|
|
|
|
|
|
|
| 38,751 |
|
|
|
|
|
|
|
|
|
| |
Disability Benefits(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 598,158 |
|
|
|
|
|
|
| |
Total |
|
|
|
|
|
|
|
|
|
|
| 38,751 |
|
| 598,158 |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
(1) | Represents the | ||||||||||||||||||||||
|
| ||||||||||||||||||||||
|
| ||||||||||||||||||||||
|
|
|
|
|
J. Kent Wells
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
| Voluntary |
| Not for |
| For Cause |
| Death |
| Disability |
| Change of |
| Change of |
| |||||||
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 687,500 |
|
| 687,500 |
|
2012-2014 Performance Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,119,133 |
|
| 1,119,133 |
|
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disability Benefits (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 452,506 |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 452,506 |
|
| 1,806,633 |
|
| 1,806,633 |
|
|
| ||||||||||||||||||||||
|
| ||||||||||||||||||||||
(2) | Represents the present value of the disability benefit. Present value was determined using the 4.32% discount rate applied for purposes of the SISP calculations. Though Mr. Thiede is not a |
Paul K. Sandness
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Executive Benefits and |
| Voluntary Termination |
| Not for |
| For Cause |
| Death |
| Disability |
| Change of |
| Change of |
| ||||||||
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
2011-2013 Performance Shares |
|
| 759,356 |
|
| 759,356 |
|
|
|
|
| 759,356 |
|
| 759,356 |
|
| 393,441 |
|
| 393,441 |
| |
2012-2014 Performance Shares |
|
| 247,476 |
|
| 247,476 |
|
|
|
|
| 247,476 |
|
| 247,476 |
|
| 371,198 |
|
| 371,198 |
| |
2013-2015 Performance Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 416,965 |
|
| 416,965 |
| |
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Regular SISP(1) |
|
| 1,437,027 |
|
| 1,437,027 |
|
|
|
|
|
|
|
| 1,437,027 |
|
| 1,437,027 |
|
|
|
| |
Excess SISP(2) |
|
| 150,947 |
|
| 150,947 |
|
|
|
|
|
|
|
| 150,947 |
|
| 150,947 |
|
|
|
| |
SISP Death Benefits(3) |
|
|
|
|
|
|
|
|
|
|
| 3,630,256 |
|
|
|
|
|
|
|
|
|
| |
Total |
|
| 2,594,806 |
|
| 2,594,806 |
|
|
|
|
| 4,637,088 |
|
| 2,594,806 |
|
| 2,769,578 |
|
| 1,181,604 |
| |
(1) | Represents the present value of Mr. Sandness’ vested regular SISP benefit as of December 31, 2013, which was $13,670 per month for 15 years, commencing at age 65. Present value was determined using a 4.32% discount rate. The terms of the regular SISP benefit are described following the Pension Benefits for 2013 table. | ||||||||||||||||||||||
|
| ||||||||||||||||||||||
(2) | The present value of all excess SISP benefits Mr. Sandness would be entitled to upon termination of employment under the SISP was computed based on calculations of ages rounded to the nearest whole age. Actual payments may differ. The terms of the excess SISP benefit are described following the Pension Benefits for 2013 table. | ||||||||||||||||||||||
|
| ||||||||||||||||||||||
(3) | Represents the present value of 180 monthly payments of $27,340 per month, which would be paid as a SISP death benefit under the SISP. Present value was determined using a 4.32% discount rate. The terms of the SISP death benefit are described following the Pension Benefits for 2013 table. | ||||||||||||||||||||||
|
|
| |
| |
44 | MDU Resources Group, Inc. Proxy Statement |
|
Proxy Statement |
|
William E. SchneiderDirector Compensation for 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and |
| Voluntary |
| Not for |
| For Cause |
| Death |
| Disability |
| Change of |
| Change of |
| |||||||
Compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 290,810 |
|
| 290,810 |
|
2010-2012 Performance Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 396,249 |
|
| 396,249 |
|
2011-2013 Performance Shares |
|
| 292,124 |
|
| 292,124 |
|
|
|
|
| 292,124 |
|
| 292,124 |
|
| 438,174 |
|
| 438,174 |
|
2012-2014 Performance Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 409,657 |
|
| 409,657 |
|
Benefits and Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regular SISP(2) |
|
| 3,161,624 |
|
| 3,161,624 |
|
|
|
|
|
|
|
| 3,161,624 |
|
| 3,161,624 |
|
|
|
|
SISP Death Benefits(3) |
|
|
|
|
|
|
|
|
|
|
| 6,433,110 |
|
|
|
|
|
|
|
|
|
|
Total |
|
| 3,453,748 |
|
| 3,453,748 |
|
|
|
|
| 6,725,234 |
|
| 3,453,748 |
|
| 4,696,514 |
|
| 1,534,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Name |
| Fees |
| Stock |
| Option |
| Non-Equity |
| Change in |
| All Other |
| Total |
| |||||||||
Thomas Everist |
|
| 65,000 |
|
| 110,000 | (2) |
| — |
|
| — |
|
| — |
|
| 156 |
|
| 175,156 |
| ||
Karen B. Fagg |
|
| 65,000 |
|
| 110,000 | (2) |
| — |
|
| — |
|
| — |
|
| 656 |
|
| 175,656 |
| ||
Mark A. Hellerstein (3) |
|
| 22,917 |
|
| 45,833 | (4) |
| — |
|
| — |
|
| — |
|
| 65 |
|
| 68,815 |
| ||
A. Bart Holaday |
|
| 55,000 | (5) |
| 110,000 | (2) |
| — |
|
| — |
|
| — |
|
| 156 |
|
| 165,156 |
| ||
Dennis W. Johnson |
|
| 70,000 |
|
| 110,000 | (2) |
| — |
|
| — |
|
| — |
|
| 156 |
|
| 180,156 |
| ||
Thomas C. Knudson |
|
| 55,000 |
|
| 110,000 | (2) |
| — |
|
| — |
|
| — |
|
| 156 |
|
| 165,156 |
| ||
Richard H. Lewis (6) |
|
| 18,333 |
|
| 36,667 | (4) |
| — |
|
| — |
|
| — |
|
| 481,572 | (7) |
| 536,572 |
| ||
William E. McCracken (3) |
|
| 22,917 |
|
| 45,833 | (4) |
| — |
|
| — |
|
| — |
|
| 65 |
|
| 68,815 |
| ||
Patricia L. Moss |
|
| 55,000 |
|
| 110,000 | (2) |
| — |
|
| — |
|
| — |
|
| 156 |
|
| 165,156 |
| ||
Harry J. Pearce |
|
| 138,750 |
|
| 110,000 | (2) |
| — |
|
| — |
|
| — |
|
| 156 |
|
| 248,906 |
| ||
John K. Wilson |
|
| 55,000 | (8) |
| 110,000 | (2) |
| — |
|
| — |
|
| — |
|
| 156 |
|
| 165,156 |
|
|
| |||||||||||||||||||||
(1) |
| |||||||||||||||||||||
| ||||||||||||||||||||||
(2) |
| |||||||||||||||||||||
|
|
|
|
|
Director Compensation for 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
| Fees |
| Stock |
| Option |
| Non-Equity |
| Change in |
| All Other |
| Total |
| |||||||
Thomas Everist |
|
| 65,000 |
|
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 174 |
|
| 175,174 |
|
Karen B. Fagg |
|
| 65,000 |
|
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 174 |
|
| 175,174 |
|
A. Bart Holaday |
|
| 55,000 | (3) |
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 174 |
|
| 165,174 |
|
Dennis W. Johnson |
|
| 70,000 |
|
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 174 |
|
| 180,174 |
|
Thomas C. Knudson |
|
| 55,000 |
|
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 674 |
|
| 165,674 |
|
Richard H. Lewis |
|
| 55,000 |
|
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 174 |
|
| 165,174 |
|
Patricia L. Moss |
|
| 55,000 | (4) |
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 174 |
|
| 165,174 |
|
Harry J. Pearce |
|
| 130,000 |
|
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 174 |
|
| 240,174 |
|
John K. Wilson |
|
| 55,000 | (5) |
| 110,000 |
|
| — |
|
| — |
|
| — |
|
| 174 |
|
| 165,174 |
|
|
| |||||||||||||||||||||
|
| |||||||||||||||||||||
(3) | Elected a Director effective August 1, 2013. | |||||||||||||||||||||
(4) | Reflects the aggregate grant date fair value of MDU Resources Group, Inc. stock purchased for our non-employee directors measured in accordance with Financial Accounting Standards Board generally accepted accounting principles for stock-based compensation in FASB Accounting Standards Codification Topic 718. The grant date fair value is based on the purchase price of our common stock on the grant date on November 20, 2013, which was $30.528. The stock payment is pro-rated for directors who do not serve the entire calendar year. There were 1,501 shares purchased for Messrs. Hellerstein and McCracken with $10.80 in cash paid to each for the fractional shares, and for Mr. Lewis there were 1,201 shares purchased with $2.54 in cash paid to Mr. Lewis for the fractional share. | |||||||||||||||||||||
(5) | Includes | |||||||||||||||||||||
| ||||||||||||||||||||||
(6) | Mr. Lewis served on the board until April 23, 2013. | |||||||||||||||||||||
(7) | Comprised of a group life insurance premium of $52, payments of $18,961 during 2013 from Mr. Lewis’ deferred compensation and the value of Mr. Lewis’ deferred compensation at December 31, 2013, which is payable over five years in monthly installments. | |||||||||||||||||||||
(8) | Includes | |||||||||||||||||||||
|
|
The following table shows the cash and stock retainers payable to our non-employee directors.
|
| |||
| ||||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
|
|
|
|
|
| |
Base Retainer |
| $ | 55,000 |
| |
Additional Retainers: |
|
|
|
| |
Non-Executive Chairman(1) |
|
| 90,000 |
| |
Lead Director, if any |
|
| 33,000 |
| |
Audit Committee Chairman |
|
| 15,000 |
| |
Compensation Committee Chairman |
|
| 10,000 |
| |
Nominating and Governance Committee Chairman |
|
| 10,000 |
| |
Annual Stock Grant(2) |
|
| 110,000 |
|
|
|
(1) | Increased from $75,000 to $90,000 effective June 1, 2013. |
(2) | The annual stock grant is 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.$156.
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.
MDU Resources Group, Inc. Proxy Statement | 45 |
Proxy Statement |
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 2012.2013.
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.
|
|
|
Our director stock ownership policy contained in our corporate governance guidelines requires each director to own our common stock equal in value to five times the director’s annual cash 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.”
Narrative Disclosure of our Compensation Policies and Practices
as They Relate to Risk Management
The human resources department has conducted an assessment of the risks arising from our compensation policies and practices for all employees and concluded that none of these risks is reasonably likely to have a material adverse effect on the company. Based on the human resources department’s assessment and taking into account information received from the risk identification process, senior management and our management policy committee concluded that risks arising from our compensation policies and practices for all employees are not reasonably likely to have a material adverse effect on the company. After review and discussion with senior management, the compensation committee concurred with this assessment.
As part of its assessment of the risks arising from our compensation policies and practices for all employees, the human resources department 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, the human resources department identified the following practices designed to prevent excessive risk taking:
Business management and governance practices
|
|
• | risk management is a specific performance competency |
|
|
• | board oversight on capital expenditure and operating plans that promotes careful consideration of financial assumptions |
|
|
• | limitation on business acquisitions without board approval |
|
|
• | employee integrity training programs and anonymous reporting systems |
|
|
• | quarterly risk assessment and internal control reports at audit committee meetings and |
|
|
• | prohibitions on holding company stock in an account that is subject to a margin call, pledging company stock as collateral for a loan, and hedging of company stock by Section 16 officers and directors. |
Compensation practices
|
|
• | active compensation committee review of executive compensation, including |
|
|
• | 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 the company’s 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 payment downward |
|
|
• | use of caps on annual incentive awards and long-term incentive stock grant awards |
|
|
• | discretionary clawbacks on incentive payments in the event of a financial restatement |
46 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
|
|
• | 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 |
|
|
|
|
|
• | substantive incentive goals measured primarily by return on invested capital, earnings, 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 the board |
| |
• | 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 | 47 |
|
Proxy Statement |
INFORMATION CONCERNING EXECUTIVE OFFICERS
At the first annual meeting of the board after the annual meeting of stockholders, our board of directors elects our executive officers, who serve until their successors are chosen and qualify. A majority of our board of directors may remove any executive officer at any time. Information concerning our executive officers, including their ages, present corporate positions, and business experience, is as follows:
|
|
| ||
Name | Age | Present Corporate Position and Business Experience | ||
David L. Goodin |
| 52 | Mr. Goodin was elected | |
|
|
| ||
David C. Barney | 58 | Mr. Barney was elected president and chief executive officer of Knife River Corporation effective April 30, 2013; president effective January 1, 2012; and president of its western area operations effective October 2008. Prior to that, he was manager of its Northern California region effective July 2005 and became president of Concrete, Inc. in 1996. He joined Concrete, Inc. in 1986 and held numerous positions of increasing responsibility before it was acquired by Knife River in September 1993. | ||
|
| |||
Steven L. Bietz |
| 55 | 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 |
| 52 | Mr. Connors was elected vice | |
|
|
| ||
Mark A. Del Vecchio |
| 54 | Mr. Del Vecchio was elected vice | |
|
|
| ||
Dennis L. Haider | ||||
|
| 61 | Mr. | |
|
|
| ||
|
|
| ||
Douglass A. Mahowald |
| 64 | 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. | |
|
|
| ||
K. Frank Morehouse |
| 55 | Mr. Morehouse was elected president and chief executive officer of Montana-Dakota Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain Gas Company effective January 4, 2013. Prior to that, he was executive vice president and general manager of Cascade Natural Gas Corporation effective April 1, 2009, and Intermountain Gas Company effective October 1, 2008; vice president-operations of Montana-Dakota Utilities Co. and Great Plains Natural Gas Co. effective January 29, 2007; | |
|
|
| ||
Cynthia J. Norland |
| 59 | Ms. Norland was elected vice | |
|
|
| ||
Nathan W. Ring | 38 | Mr. Ring was elected vice president, controller and chief accounting officer effective January 3, 2014. Prior to that, he was treasurer and controller for MDU Construction Services Group, Inc. since late April 2013, was its treasurer from September 2012 through late April 2013 and was its controller from June 2012 until September 2012. Prior to that, he served as assistant controller of D S S Company, a subsidiary of Knife River Corporation, a subsidiary of the Company, from March 2009 to June 2012 and as controller of another Knife River Corporation subsidiary, Hap Taylor & Sons, Inc. doing business as Norm’s Utility Contractor, Inc., from March 2007 to March 2009. He joined MDU Resources Group, Inc. in 2001 as a tax analyst. |
48 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
|
| |||
Paul K. Sandness |
| 59 | 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. |
|
|
|
|
|
| ||
|
|
| ||
Doran N. Schwartz |
| 44 | 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 |
| 54 | Mr. Stumpf was elected vice | |
|
|
| ||
Jeffrey S. Thiede | 52 | Mr. Thiede was elected president and chief executive officer of MDU Construction Services Group, Inc. effective April 30, 2013, and president effective January 1, 2012. Prior to that, he was president of Capital Electric Construction Company, Inc. effective July 2006, and president of Oregon Electric Construction, Inc. effective October 2004. Prior to joining the company, Mr. Thiede was a project director for DPR Construction and worked in the field as an inside wireman. | ||
|
| |||
J. Kent Wells |
| 57 | Mr. Wells was elected vice chairman of the |
The table below sets forth the number of shares of our capital stock that each director and each nominee for director, each named executive officer, and all directors and executive officers as a group owned beneficially as of December 31, 2012.2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
| Common Shares |
| Shares Held By |
| Percent |
| Deferred |
|
| Common Shares |
| Shares Held By |
| Percent |
| Deferred |
| |||||
Steven L. Bietz |
| 69,392 | (4) |
|
|
| * |
|
|
| |||||||||||||
Thomas Everist |
| 1,885,590 | (5) |
|
|
| 1.0 |
| 29,243 |
|
| 1,139,193 | (4) |
|
|
| * |
| 29,998 |
| |||
Karen B. Fagg |
| 37,481 |
|
|
| * |
|
|
|
| 42,081 |
|
|
| * |
|
|
| |||||
David L. Goodin |
| 43,477 | (5)(6) |
| 8,317 |
| * |
|
|
| |||||||||||||
Mark A. Hellerstein |
| 1,501 |
|
|
| * |
|
|
| ||||||||||||||
Terry D. Hildestad |
| 214,073 |
|
|
| * |
|
|
|
| 10,249 |
|
|
| * |
|
|
| |||||
A. Bart Holaday |
| 41,200 |
|
|
| * |
|
|
|
| 46,646 |
|
|
| * |
|
|
| |||||
Dennis W. Johnson |
| 88,583 | (6) |
| 4,560 |
| * |
|
|
|
| 84,470 | (7) |
| 4,560 |
| * |
|
|
| |||
Thomas C. Knudson |
| 24,467 |
|
|
| * |
|
|
|
| 28,070 |
|
|
| * |
|
|
| |||||
Richard H. Lewis |
| 28,167 |
|
|
| * |
| 18,185 |
| ||||||||||||||
William E. McCracken |
| 1,501 |
|
|
| * |
|
|
| ||||||||||||||
Patricia L. Moss |
| 63,225 |
|
|
| * |
|
|
|
| 66,328 |
|
|
| * |
|
|
| |||||
Harry J. Pearce |
| 218,017 |
|
|
| * |
| 48,081 |
|
| 221,620 |
|
|
| * |
| 49,323 |
| |||||
William E. Schneider |
| 104,555 | (7) |
| 800 |
| * |
|
|
| |||||||||||||
Paul K. Sandness |
| 53,996 | (5) |
|
|
| * |
|
|
| |||||||||||||
Doran N. Schwartz |
| 24,763 | (4) (8) |
| 1,300 |
| * |
|
|
|
| 28,712 | (5)(8) |
| 1,300 |
| * |
|
|
| |||
Jeffrey S. Thiede |
| 1,941 | (5) |
|
|
| * |
|
|
| |||||||||||||
J. Kent Wells |
| 27,743 |
|
|
| * |
|
|
|
| 27,743 |
|
|
| * |
|
|
| |||||
John K. Wilson |
| 90,549 |
|
|
| * |
|
|
|
| 95,995 |
|
|
| * |
|
|
| |||||
All directors and executive officers as a group (23 in number) |
| 3,222,078 |
| 20,228 |
| 1.7 |
| 95,509 |
| ||||||||||||||
All directors and executive officers as a group (26 in number) |
| 2,155,227 |
| 20,584 |
| 1.1 |
| 79,321 |
|
|
| |
* | 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) | These shares are included in the “Common Shares Beneficially Owned” column. | |
(3) | 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. | |
(4) | Includes 1,070,000 shares of common stock acquired through the sale of Connolly-Pacific to us. | |
(5) | Includes full shares allocated to the officer’s account in our 401(k) retirement plan. | |
|
| |
| Mr. Johnson disclaims all beneficial ownership of the 4,560 | |
|
| |
(8) | The total includes 1,300 shares owned by Mr. Schwartz’s wife. |
|
| ||
|
| 49 |
|
Proxy Statement |
We prohibit our directors and executive officers from hedging their ownership of company common stock. They may not enter into transactions that allow them to benefit from devaluation of our stock or otherwise own stock technically but without the full benefits and risks of such ownership.
Directors, executive officers, and related persons are prohibited from holding our common stock in a margin account, with certain exceptions, or pledging company securities as collateral for a loan. Company common stock may be held in a margin brokerage account only if the stock is explicitly excluded from any margin, pledge, or security provisions of the customer agreement. Company common stock may be held in a cash account, which is a brokerage account that does not allow any extension of credit on securities. “Related person” means an executive officer’s or director’s spouse, minor child, and any person (other than a tenant or domestic employee) sharing the household of a director or executive officer, as well as any entities over which a director or executive officer exercises control.
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.
|
|
|
|
|
|
|
|
|
Title of Class |
| Name and Address |
| Amount and Nature |
| Percent |
| |
Common Stock |
| BlackRock, Inc. |
| 13,303,128 | (1) | 7.00 | % | |
|
|
|
|
|
|
|
| |
Common Stock |
| State Street Corporation |
| 9,956,410 | (2) | 5.30 | % | |
|
|
|
|
|
|
|
| |
Common Stock |
| The Vanguard Group |
| 11,949,283 | (3) | 6.32 | % | |
(1) | In a Schedule 13G/A, Amendment No. 4, filed on January 30, 2014, BlackRock, Inc. reports sole voting power with respect to 12,183,613 shares and sole dispositive power with respect to 13,303,128 shares as the parent holding company or control person of BlackRock Capital Management, BlackRock Financial Management, Inc., BlackRock Japan Co. Ltd., BlackRock Advisors (UK) Limited, BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Asset Management Canada Limited, BlackRock Advisors, LLC, BlackRock Investment Management, LLC, BlackRock Investment Management (Australia) Limited, BlackRock Life Limited, BlackRock (Netherlands) B.V., BlackRock Fund Managers Ltd, BlackRock Asset Management Ireland Limited, BlackRock International Limited, BlackRock Investment Management (UK) Limited, BlackRock (Luxembourg) S.A., BlackRock Asset Management North Asia Limited and BlackRock Fund Management Ireland Limited. | |||||||
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(2) | In a Schedule 13G, filed on February 3, 2014, State Street Corporation reports shared voting and dispositive power with respect to all shares as the parent holding company or control person of State Street Global Advisors France S.A., State Street Bank and Trust Company, SSGA Funds Management, Inc., State Street Global Advisors Limited, State Street Global Advisors Ltd, State Street Global Advisors, Australia Limited, State Street Global Advisors Japan Co., Ltd., State Street Global Advisors, Asia Limited and SSARIS Advisors LLC. | |||||||
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(3) | In a Schedule 13G/A, Amendment No. 1, filed on February 11, 2014, The Vanguard Group reports sole dispositive power with respect to 11,805,392 shares, shared dispositive power with respect to 143,891 shares and sole voting power with respect to 172,291 shares. These shares include 106,291 shares beneficially owned by Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., as a result of its serving as investment manager of collective trust accounts, and 103,600 shares beneficially owned by Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., as a result of its serving as investment manager of Australian investment offerings. |
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Title of Class |
| Name and Address |
| Amount and Nature |
| Percent of |
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Common Stock |
| BlackRock, Inc. |
| 11,808,063 | (1) | 6.25 | % |
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Common Stock |
| T. Rowe Price Associates, Inc. |
| 11,315,091 | (2) | 5.90 | % |
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Common Stock |
| State Street Corporation |
| 9,760,389 | (3) | 5.20 | % |
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Common Stock |
| The Vanguard Group |
| 10,319,105 | (4) | 5.46 | % |
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Proxy Statement |
RELATED PERSON TRANSACTION DISCLOSURE
The board of directors has adopted a policy for the review of related person transactions. This policy is contained in our corporate governance guidelines, which are posted on our website at www.mdu.com.
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 iswas chief executive officer of MDU Construction Services Group, Inc. and Knife River Corporation until his retirement in late April 2013, and his brother, Michael D. Harp, are managing members of MOJO. TheMOJO Montana, LLC, a Nevada limited liability company (MOJO), which has leased properties described in these two leases are located in Kalispell and Billings, Montana, and have been leasedto an indirect subsidiary of the company since 1998. In May 2010, the audit committee determined that renewing these leases was in the company’s best interests after it reviewed 2010 third party appraisals for the properties and considered the consumer price index and our operating companies’ knowledge of local property markets. The audit committee recommended and the board approved three-year leases, which expired June 30, 2013, for these properties that provide for our indirect subsidiary to pay a combined monthly rent of $9,508 to MOJO. TheIn May 2013, after Mr. Harp had retired, the leases expirewere amended to extend the term for two additional years, for a combined monthly rent of $8,823, with the option to renew the leases for one additional year, expiring June 30, 2013.2016. Rent for the additional year is to be renegotiated based upon fair market value as determined by the parties.
Director Independence |
The board of directors has adopted guidelines on director independence that are included in our corporate governance guidelines, which are available for review on our corporate website at http://www.mdu.com/proxystatement/corporate-governance. The board of directors has determined that current directors Thomas Everist, Karen B. Fagg, Mark A. Hellerstein, A. Bart Holaday, Dennis W. Johnson, Thomas C. Knudson (not standing for re-election), William E. McCracken, Patricia L. Moss, Harry J. Pearce, and John K. Wilson: |
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• | have no material relationship with us and |
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• | are independent in accordance with our director independence guidelines and the New York Stock Exchange listing standards. |
The board of directors previously determined that Richard H. Lewis, who did not stand for re-election at the 2013 annual meeting, had no material relationship with us and was independent in accordance with our director independence guidelines and the New York Stock Exchange listing standards during the time he was a director.
In determining director independence, the board of directors reviewed and considered information about any transactions, relationships, and arrangements between the independent directors and their immediate family members and affiliated entities on the one hand, and the company and its affiliates on the other, and in particular the following transactions, relationships, and arrangements:
In determining director independence for 2012, the board of directors considered the following transactions or relationships:
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Mr. Everist’s ownership of approximately 1.87 million shares in 2011 and approximately 1.89 million shares in 2012 of our common stock. In December 2011, we entered into a two-year contract with WebFilings, LLC, which offers a cloud-based solution for meeting SEC reporting requirements. The contract provides for a quarterly subscription fee of approximately $13,000 to use WebFilings’ software and for additional fees to be determined based on the number of users and additional services requested. The additional fees for 2011 were $4,500, for 2012 were $5,000, and we expect them to be approximately $3,100 for 2013. Mr. Everist is a limited partner and owns less than 1% of WebFilings, LLC. The MDU Resources Foundation (Foundation) made charitable contributions to Medcenter One Foundation, which is now known as Sanford Health following a merger effective July 2, 2012, in the amount of $500 in 2011 and $1,250 in 2012. Mr. Everist is a member of the board of directors of the Sanford Health Foundation and his wife, Barbara Everist, is vice chairman of the board of trustees of Sanford Health.
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MDU Resources Group, Inc. Proxy Statement | 51 |
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Proxy Statement |
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Director Resignation upon Change of Job ResponsibilityOur corporate governance guidelines require a director to tender his or her resignation after a material change in job responsibility. In 2012, no directors submitted resignations under this requirement.
Code of ConductWe have a code of conduct and ethics, which we refer to as the Leading With Integrity Guide, which applies to all employees, directors, and officers.
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• | Ownership by directors of company stock:Ownership by Mr. Everist, directly or indirectly, of approximately 1.14 million shares of company stock, which represents less than 1% of our outstanding common stock, at December 31, 2013, and approximately 1.89 million shares, which was 1% of our outstanding common stock, at December 31, 2012. |
Director Resignation upon Change of Job Responsibility |
Our corporate governance guidelines require a director to tender his or her resignation after a material change in job responsibility. In 2013, no directors submitted resignations under this requirement. |
Code of Conduct |
We have a code of conduct and ethics, which we refer to as the Leading With Integrity Guide, which applies to all employees, directors, and officers. |
We intend to satisfy our disclosure obligations regarding:
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• | 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 |
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• | 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/ |
Board Leadership Structure and Board’s Role in Risk Oversight |
The board separated the positions of chairman of the board and chief executive officer in 2006 and elected Harry J. Pearce, a non-employee independent director, as our chairman. Separating these positions allows our chief executive officer to focus on the full-time job of running our business, while allowing the chairman of the board to lead the board in its fundamental role of providing advice to and independent oversight of management. The board believes this structure recognizes the time, effort, and energy that the chief executive officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our chairman, particularly as the board’s oversight responsibilities continue to grow and demand more time and attention. The fundamental role of the board of directors is to provide oversight of the management of the company in good faith and in the best interests of the company and its stockholders. Having an independent chairman is a means to ensure the chief executive officer is accountable for managing the company in close alignment with the interests of stockholders. An independent chairman avoids the conflicts of interest that arise when the chairman and chief executive positions are combined and more effectively manages relationships between the board and the chief executive officer. An independent chairman is in a better position to encourage frank and lively discussions and to assure that the company has adequately assessed all appropriate business risks before adopting its final business plans and strategies. In August 2012, we amended our bylaws and corporate governance guidelines to require that our chairman be independent. The board believes 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. |
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 cyber attacks or acts of terrorism. Management is responsible for the day-to-day management of risks the company faces, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The board believes that establishing the right “tone at the top” and that full and open communication between management and the board of directors are essential for effective risk management and oversight. Our chairman meets regularly with our president and chief executive officer and other senior officers to discuss strategy and risks facing the company. Senior management attends the quarterly board meetings and is available to address any questions or concerns raised by the board on risk management-related and any other
52 | MDU Resources Group, Inc. Proxy Statement |
Proxy Statement |
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
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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.committee or the full board. 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 committee’s areas of responsibility. The compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The nominating and governance committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance.
Board Meetings and Committees |
During 2013, the board of directors held eight meetings. Each director attended at least 75% of the combined total meetings of the board and the committees on which the director served during 2013. Director attendance at our annual meeting of stockholders is left to the discretion of each director. Three directors attended our 2013 annual meeting of stockholders. |
Harry J. Pearce was elected non-employee chairman of the board on August 17, 2006. Mr. Pearce served as lead director from February 15, 2001 to August 17, 2006. He presides at the executive session of the non-employee directors held in connection with each regularly scheduled quarterly board of directors meeting. The non-employee directors also meet in executive session with the chief executive officer at each regularly scheduled quarterly board of directors meeting. All of our non-employee directors are independent directors.
The board has a standing audit committee, compensation committee, and nominating and governance committee. These committees are composed entirely of independent directors.
The audit, compensation, and nominating and governance committees have charters, which are available for review on our website at http://www.mdu.com/Governance/Pages/BoardChartersandCommittees.aspx.proxystatement/board-charters. Our corporate governance guidelines are available at http://www.mdu.com/Documents/Governance/CorporateGovernance.pdf,proxystatement/corporate-governance, and our Leading With Integrity Guide is also on our website at http://www.mdu.com/Documents/Governance/IntegrityGuide.pdf.
Nominating and Governance CommitteeThe nominating and governance committee met four times during 2012. The committee members were Karen B. Fagg, chairman, Richard H. Lewis, A. Bart Holaday, and Patricia L. Moss.proxystatement/integrity-guide.
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Nominating and Governance Committee |
The nominating and governance committee met four times during 2013. The committee members are Karen B. Fagg, chairman, A. Bart Holaday, William E. McCracken, and Patricia L. Moss. Richard H. Lewis served on the committee until the 2013 annual meeting, when he did not stand for re-election. William E. McCracken joined the committee effective August 1, 2013. |
The nominating and governance committee provides recommendations to the board with respect to:
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• | succession planning for our executive management and directors and |
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• | corporate governance guidelines applicable to us. |
The nominating and governance committee assists the board in overseeing the management of risks in the committee’s areas of responsibility.
The committee identifies individuals qualified to become directors and recommends to the board the nominees for director for the next annual meeting of stockholders. The committee also identifies and recommends to the board individuals qualified to become our principal officers and the nominees for membership on each board committee. The committee oversees the evaluation of the board and management.
MDU Resources Group, Inc. Proxy Statement | 53 |
Proxy Statement |
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.
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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:
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• | the candidate’s name, age, business address, residence address, and telephone number |
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• | the candidate’s principal occupation |
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• | the class and number of shares of our stock owned by the candidate |
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• | a description of the candidate’s qualifications to be a director |
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• | whether the candidate would be an independent director and |
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• | 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/Governance/Pages/CorporateGovernanceGuidelines.aspx.proxystatement/corporate-bylaws. See also the section entitled “2014“2015 Annual Meeting of Stockholders” later in the proxy statement.
There are no differences in the manner by which the committee evaluates director candidates recommended by stockholders and those recommended by other sources.
In evaluating director candidates, the committee considers an individual’s:
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. The committee generally will hire an outside firm to perform a background check on potential nominees. Since our 2013 annual meeting, Messrs. Hellerstein and McCracken were recommended to the nominating and governance committee and elected to the board effective August 1, 2013. Mr. Pearce, a non-employee director and our chairman of the board of directors, recommended Mr. McCracken, and Mr. Robert L. Nance, a former non-employee director and stockholder, recommended Mr. Hellerstein. The committee did not retain a search firm to identify or evaluate any nominee, and no fees were paid.
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
In connection with our financial statements for the year ended December 31, 2013, the audit committee has (1) reviewed and discussed the audited financial statements with management; (2) discussed with the independent registered public accounting firm (the “Auditors”) the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16, Communications with Audit Committees; (3) received the written disclosures and the letter from the Auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the Auditors’ communications with the audit committee concerning independence, and has discussed with the Auditors their independence. 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, 2013, for filing with the Securities and Exchange Commission. Dennis W. Johnson, Chairman
The compensation committee’s responsibilities, as
The compensation We
As discussed in the Compensation Discussion and Analysis, Mr. Goodin recommended compensation for Mr. Thiede for the remainder of 2013 in connection with his promotion.
The compensation committee has sole Annually the compensation committee conducts an assessment of any potential conflicts of interest raised by the work of any compensation consultant to determine if any conflict exists and how such conflict should be addressed. The compensation committee The In an engagement letter dated March 14, 2013, and signed by the chairman of the compensation committee,
At its May The human resources department augmented Towers Watson’s report by showing a three-year history (2011, 2012, and 2013) of the non-executive chairman of the Based on the competitive data, management recommended to the compensation committee MDU Resources Group, Inc. Proxy Statement 57 Proxy Statement Stockholder Communications Stockholders and other interested parties who wish to contact the board of directors or an individual director, including our non-employee chairman or non-employee directors as a group, should address a communication in care of the secretary at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650. The secretary will forward all communications. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE CONDUCT OF MEETING; ADJOURNMENT The chairman of the board has broad responsibility and authority to conduct the annual meeting in an orderly and timely manner. In addition, our bylaws provide that the meeting may be adjourned from time to time by the chairman of the meeting regardless of whether a quorum is present. Neither the board of directors nor management intends to bring before the meeting any business other than the matters referred to in the notice of annual meeting and this proxy statement. We have not been informed that any other matter will be presented at the meeting by others. However, if any other matters are properly brought before the annual meeting, or any adjournment(s) thereof, your proxies include discretionary authority for the persons named in the enclosed proxy to vote or act on such matters in their discretion. In accordance with a notice sent to eligible stockholders who share a single address, we are sending only one annual report to stockholders and one proxy statement to that address unless we received instructions to the contrary from any stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, if a stockholder of record wishes to receive a separate annual report to stockholders and proxy statement in the future, he or she may contact the office of the treasurer at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650, Telephone Number: (701) 530-1000. Eligible stockholders of record who receive multiple copies of our annual report to stockholders and proxy statement can request householding by contacting us in the same manner. Stockholders who own shares through a bank, broker, or other nominee can request householding by contacting the nominee. We hereby undertake to deliver promptly, upon written or oral request, a separate copy of the annual report to stockholders and proxy statement to a stockholder at a shared address to which a single copy of the document was delivered. Director Nominations:Our bylaws
Other Meeting Business:Our bylaws also Discretionary Voting:
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 We will make available to our stockholders to whom we furnish this proxy statementa copy of our Annual Report on Form 10-K, excluding exhibits, for the year ended December 31,
MDU RESOURCES GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April
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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