-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, oDNOPM8tci8jkc8NhZx/F+5IZuOcosXEBSYjEDd7TKa+FG2HFiPQSPUdYl4P7keQ ptVVCjbO6W1f+5094h5rqA== 0000891554-95-000009.txt : 19950515 0000891554-95-000009.hdr.sgml : 19950515 ACCESSION NUMBER: 0000891554-95-000009 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950213 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MDU RESOURCES GROUP INC CENTRAL INDEX KEY: 0000067716 STANDARD INDUSTRIAL CLASSIFICATION: GAS & OTHER SERVICES COMBINED [4932] IRS NUMBER: 410423660 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03480 FILM NUMBER: 95509658 BUSINESS ADDRESS: STREET 1: 400 N FOURTH ST CITY: BISMARCK STATE: ND ZIP: 58501 BUSINESS PHONE: 7012227900 MAIL ADDRESS: STREET 1: 400 NORTH FOURTH ST CITY: BISMARCK STATE: ND ZIP: 58501 FORMER COMPANY: FORMER CONFORMED NAME: MONTANA DAKOTA UTILITIES CO DATE OF NAME CHANGE: 19850429 DEF 14A 1 DEFINITIVE NOTICE AND PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 [ ] Confidential, for Use of the Commission Only MDU Resources Group, Inc. (Name of Registrant as Specified In Its Charter) ............................................................................. (Name of Person(s) Filing Proxy Statement if other than Registrant) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: .............................................................. 2) Aggregate number of securities to which transaction applies: .............................................................. 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:(1) 4) Proposed maximum aggregate value of transaction: .............................................................. 5) Total Fee Paid: .............................................................. (1) Set forth the amount on which the filing fee is calculated and state how it was determined. [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or Schedule and the date of its filing. (1) Amount Previously Paid: .............................................................. (2) Form, Schedule or Registration Statement No.: .............................................................. (3) Filing Party: .............................................................. (4) Date Filed: .............................................................. MDU Resources Group Inc. --------------------------------------------------------------------------- 400 North Fourth Street John A. Schuchart Bismarck, ND 58501 Chairman of the Board (701) 222-7900 March 6, 1995 To Our Stockholders: You are cordially invited to attend the Annual Meeting of Stockholders to be held on Tuesday, April 25, 1995, at 11:00 A.M., Central Daylight Time, at 909 Airport Road, Bismarck, North Dakota 58504. The other directors and officers join me in extending this invitation. The formal matters to be acted upon at the meeting are described in the accompanying Notice of Meeting and Proxy Statement. I would like to note for your special attention that the Board of Directors has recommended that the holders of Common Stock of the Company approve the Non-Employee Director Stock Compensation Plan. This is another step taken by your Company to strengthen the commonality of interest among our stockholders, management and board members. In addition to the formal issues, a brief report on current matters of interest will be presented. Luncheon will be served following the meeting. We were pleased with the response of our stockholders at the 1994 Annual Meeting at which 86.8 percent of the Common Stock was represented in person or by proxy. We hope that participation by our stockholders in the affairs of the Company will increase and that there will be an even greater representation at the 1995 meeting. If you are unable to attend the meeting but have questions or comments on the Company's operations, we would like to hear from you. Representation of your shares at the meeting is very important and we urge that, whether or not you now plan to attend the meeting, you promptly mark, date, sign and return the enclosed proxy card in the envelope provided for that purpose. If you do attend the meeting, you may, if you wish, withdraw your proxy and vote in person. I hope you will find it possible to attend the meeting. Sincerely, /s/ JOHN A. SCHUCHART JOHN A. SCHUCHART MDU RESOURCES GROUP, INC. 400 North Fourth Street Bismarck, North Dakota 58501 --------------- Notice of Annual Meeting of Stockholders to be held April 25, 1995 --------------- March 6, 1995 NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MDU Resources Group, Inc. will be held at 909 Airport Road, Bismarck, North Dakota 58504, on Tuesday, April 25, 1995, at 11:00 A.M., Central Daylight Time, for the following purposes: (1) To elect four directors to three year terms; (2) To consider and take action upon a proposal, declared advisable by the Board of Directors of the Company, to approve the Non-Employee Director Stock Compensation Plan, all as more fully described in the accompanying Proxy Statement dated March 6, 1995 and; (3) To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. The Board of Directors has fixed the close of business on February 27, 1995, as the record date for the determination of common stockholders who will be entitled to notice of and to vote at the meeting. All stockholders who find it convenient to do so are cordially invited and urged to attend the meeting in person. It is requested that you date, sign and return the accompanying proxy in the enclosed return envelope, to which no postage need be affixed if mailed in the United States. Your cooperation will be appreciated. By order of the Board of Directors, /s/ LESTER H. LOBLE, II, LESTER H. LOBLE, II, Secretary MDU RESOURCES GROUP, INC. 400 North Fourth Street Bismarck, North Dakota 58501 --------------- PROXY STATEMENT --------------- This Proxy Statement is furnished to the holders of Common Stock of MDU Resources Group, Inc. (Company) on behalf of the Board of Directors of the Company in connection with the solicitation of proxies to be used in voting at the Annual Meeting of Stockholders to be held on April 25, 1995. The proxy material was first forwarded to the holders of Common Stock on March 6, 1995. Any stockholder giving a proxy may revoke it at any time prior to its use at the meeting by filing with the Secretary either a written instrument of revocation or a duly executed proxy bearing a later date. In addition, the powers of a proxy holder are suspended if the person executing the proxy is present at the meeting and informs the Secretary in open meeting that he wishes to revoke his proxy and vote in person. Attendance at the meeting will not in and of itself revoke a proxy. The Company will bear the cost of the solicitation of proxies, including the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of shares of the Common Stock of the Company. In addition to the use of the mails, proxies may be solicited by officers and regular employees of the Company, by personal interview, by telephone or by telegraph. Banks, brokerage houses and other institutions, nominees and fiduciaries will be requested to forward the soliciting material to their principals and to obtain authorizations for the execution of proxy cards and will, upon request, be reimbursed for reasonable expenses incurred. Additional solicitation of proxies will be made in the same manner under the special engagement and direction of Georgeson & Company, Inc. at an anticipated cost to the Company of approximately $6,000 plus out-of-pocket expenses. VOTING SECURITIES OUTSTANDING Only holders of record of Common Stock at the close of business on February 27, 1995, will be entitled to vote at the meeting. On such date there were outstanding 18,984,654 shares of Common Stock. Each outstanding share of Common Stock entitles the holder to one vote. The Bylaws of the Company provide that a majority of the shares of Common Stock issued and outstanding and entitled to vote in person or by proxy shall constitute a quorum at a meeting of shareholders of the Company. Shares of Common Stock represented by a properly signed and returned proxy are considered present for purposes of determining a quorum. Under Delaware law, if a quorum is present, the nominees for election as directors who receive a plurality of the votes of shares present in person or represented by proxy and entitled to vote shall be elected as directors. "Withheld" votes are not included in the total vote cast for a nominee for purposes of determining whether a plurality was received and, therefore, have no negative effect. Approval of the Non-Employee Director Stock Compensation Plan (discussed below) requires the affirmative votes of the holders of a majority of the Common Stock present or represented and entitled to vote. Abstentions will have the effect of a "no" vote; broker non-votes will have no effect. As of February 27, 1995, no person held of record, or, to the knowledge of the management of the Company, owned beneficially, 5 percent or more of the outstanding shares of Common Stock of the Company. 1 ELECTION OF DIRECTORS At the meeting, four Directors will be elected to serve for a term of three years until 1998 and until their respective successors are elected and qualify. All of the nominees are incumbent Directors and are nominated for reelection. Unless otherwise marked on the proxy, shares of the Common Stock represented by the proxy will be voted for the four nominees named below. If any nominee becomes unavailable for any reason, or if a vacancy should occur before the election (which events are not anticipated), the shares represented by the proxy will be voted for another person in the discretion of the persons named in the proxy. Information concerning the nominees, including their ages, periods of service as directors and business experience, according to information furnished to the Company by the respective nominees, is set forth as follows:
First Year of Service Name Age as Director Business Experience ---- --- ----------- ------------------- Douglas C. Kane 45 1991 Mr. Kane joined the Company as Executive Vice President (to be elected for a term of and Chief Operating Officer in January 1991. Prior to three years expiring in 1998) that time he was President and Chief Executive Officer of Knife River Coal Mining Company from May 1990, President from September 1987 and previously had served as Senior Vice President--Operations. Mr. Kane is a Director of Alaska Basic Industries, Inc., Anchorage Sand and Gravel Company, Inc., Concrete, Inc., Fidelity Oil Co., Fidelity Oil Holdings, Inc., KRC Aggregate, Inc., KRC Holdings, Inc., Knife River Coal Mining Company, LTM, Incorporated, Rogue Aggregates, Inc., and Williston Basin Interstate Pipeline Company, all being subsidiaries of the Company. Mr. Kane is also Vice President and a Director of Centennial Energy Holdings, Inc. and a member of the Managing Committee of Montana-Dakota Utilities Co., a Division of the Company. [PICTURE] Richard L. Muus 65 1985 Mr. Muus retired in April 1989 after 35 years with the (to be elected for a term of Midwest Federal Savings Bank, Minot, North Dakota. three years expiring in 1998) At the time of his retirement Mr. Muus was the President and a Director of the bank. Mr. Muus is a member and past Director and Officer of the Minot Area Chamber of Commerce and a past Director of the Minot Area Development Corporation. He is a member of the Military Affairs and Diplomats Committee of the Chamber of Commerce. He is a member of the Board of Regents of Minot State University and also serves on the Finance Committee of St. Joseph Hospital, Minot, North Dakota. He currently serves on the Audit and Finance Committees of the Board of Directors. [PICTURE] John L. Olson 55 1985 Mr. Olson is President and the owner of Blue Rock Prod- (to be elected for a term of ucts Company and of Blue Rock Distributing Company three years expiring in 1998) located in Sidney, Montana, a beverage bottling and distributing company, respectively. Mr. Olson also is the Chairman of the Board and a Director of Admiral Beverage Corporation, Worland, Wyoming, and Ogden, Utah; he is Chairman of the Board and Director of the Foundation for Community Care, Sidney, Montana; he is trustee for Blue Rock Products Company Profit Sharing Trust, Sidney, Montana. He currently serves on the Audit and Nominating Committees of the Board of Directors. [PICTURE] 2 First Year of Service Name Age as Director Business Experience ---- --- ----------- ------------------- Joseph T. Simmons 59 1984 Mr. Simmons is professor of Accounting and Finance, (to be elected for a term of University of South Dakota, Vermillion and was Visit- three years expiring in 1998) ing Professor of Finance, University of Warsaw, Warsaw, Poland (February--July, 1994). Mr. Simmons is the Chairman and President of Simmons Financial Management, Inc. and owner of Simmons & Associates. He also serves on the Board of GRO/TECH in Rapid City, South Dakota. He currently serves on the Finance Committee of the Board of Directors. [PICTURE] Certain information concerning the remaining directors, whose terms expire either in 1996 or in 1997, including their ages, periods of service as directors and business experience, according to information furnished to the Company, is set forth as follows: Harold J. Mellen, Jr 60 1989 Mr. Mellen joined the Company in 1985 as Vice President (term expiring in 1996) --Corporate Development and was named Senior Vice President--Finance and Chief Financial Officer in May 1987, Executive Vice President and Chief Financial and Corporate Development Officer in August 1989, and President and Chief Corporate Development Officer in May 1992. Mr. Mellen became the President and Chief Executive Officer on January 1, 1995. During 1994 Mr. Mellen served all subsidiaries as a Director and/or an officer except Gwinner Propane, Inc. and Prairielands Energy Marketing, Inc. Mr. Mellen also serves as a member of the Managing Committee of Montana-Dakota Utilities Co., a Division of the Company and became Chairman on January 1, 1995. On January 1, 1995, Mr. Mellen became the Chairman of the Board of Alaska Basic Industries, Inc., Anchorage Sand and Gravel Company, Inc., Concrete, Inc., Fidelity Oil Co., Fidelity Oil Holdings, Inc., KRC Aggregate, Inc., KRC Holdings, Inc., Knife River Coal Mining Company, LTM, Incorporated, Rogue Aggregates, Inc., Williston Basin Interstate Pipeline Company and the President of Centennial Energy Holdings, Inc., and Wibaux Gas Co.; all being subsidiaries of the Company. [PICTURE] Robert L. Nance 58 1993 Mr. Nance is the majority owner and President of Nance (term expiring in 1996) Petroleum Corporation, Billings, Montana, an oil and gas exploration and production company. He is also a Director of First Interstate Bank of Commerce, Billings, Montana. He is a Director of the Deaconess Billings Clinic Health Organization, Deaconess Medical Center and Billings Clinic, all of Billings, Montana. He currently serves on the Finance Committee of the Board of Directors. [PICTURE] 3 First Year of Service Name Age as Director Business Experience ---- --- ----------- ------------------- Charles L. Scofield 70 1978 Mr. Scofield is the owner and President of The Scofield (term expiring in 1996) Broadcasting Co., Inc. which is the sole owner and licensee of KLPZ radio station, Parker, Arizona. He is the sole owner of KEYZ and KYYZ radio stations in Williston, North Dakota. He is a Director of the First National Bank & Trust Company of Williston, North Dakota, a Director of the North Dakota Automobile Club (AAA) of Fargo, North Dakota and the owner of a cattle ranch in Montana. He currently serves on the Nominating and Finance Committees of the Board of Directors. [PICTURE] Stanley F. Staples, Jr 70 1984 Mr. Staples is President of Alexander Properties, Inc., (term expiring in 1996) an investment management firm, and of Northern Chief Iron Company. Mr. Staples also serves on the Board of Directors of Wausau Paper Mills Company, M & I First American National Bank, Marathon Electric Manufacturing Corporation, Mosinee Paper Corporation, and Murray Machinery, Inc. He currently serves on the Compensation and Nominating Committees of the Board of Directors. [PICTURE] San W. Orr, Jr. 53 1978 Mr. Orr is an attorney and is in the business of (term expiring in 1997) financial and estate management. He is Chairman of the Boards and a Director of Marathon Electric Manufacturing Corporation, Mosinee Paper Corporation, and Wausau Paper Mills Company. He is a Director of Wausau Insurance Companies, Marshall & Ilsley Corporation, M & I First American National Bank, and M & I Marshall & llsley Bank. Mr. Orr also serves various civic and charitable organizations in Wisconsin including the Board of Regents of the University of Wisconsin System. He currently serves on the Audit and Compensation Committees of the Board of Directors. [PICTURE] John A. Schuchart 65 1976 Mr. Schuchart, Chairman of the Board, was named Chief (term expiring in 1997) Executive Officer in June 1980 and Chairman in May 1983. He retired as Chief Executive Officer on December 31, 1994. During 1994, Mr. Schuchart also served as the Chairman of the Board and a Director of Alaska Basic Industries, Inc., Anchorage Sand and Gravel Company, Inc., Concrete, Inc., Fidelity Oil Co., Fidelity Oil Holdings, Inc., KRC Aggregate, Inc., KRC Holdings, Inc., Knife River Coal Mining Company, LTM, Incorporated, Rogue Aggregates, Inc., Williston Basin Interstate Pipeline Company; as a Director and the President of Centennial Energy Holdings, Inc., and Wibaux Gas Co.; all being subsidiaries of the Company. Mr. Schuchart was also Chairman of the Managing Committee of Montana-Dakota Utilities Co., a Division of the Company. He resigned as a Director of all subsidiaries and from the Managing Committee on December 31, 1994. [PICTURE] 4 First Year of Service Name Age as Director Business Experience ---- --- ----------- ------------------- Homer A. Scott, Jr 60 1981 Mr. Scott is engaged in the banking and ranching business (term expiring 1997) in the states of Wyoming and Montana. He is a Director and Chairman of the Board of First Interstate BancSystem of Montana, Inc., and a Director of First Interstate Bank of Commerce, Billings, Montana. Mr. Scott is a Director and President of Sugarland Enterprises, Inc., and the managing partner of Sugarland Development Company, a commercial property development company in Sheridan, Wyoming. Mr. Scott also is a Director of Flying V Cattle Company and Padlock Ranch Company and a partner in Scott Land and Livestock. He is the owner of the Sheridan Holiday Inn, principal owner of Sports Mate, Inc., and owner of Powder Horn Ranch, a housing development and golf course in Sheridan, Wyoming. He currently serves on the Audit and Compensation Committees of the Board of Directors. [PICTURE] Sister Thomas Welder, O.S.B 54 1988 Sister Welder is the President of the University of Mary, (term expiring in 1997) Bismarck, North Dakota. She is a Director of St. Alexius Medical Center of Bismarck and Chair of its Marketing Committee. She is also a Director of the Bismarck-Mandan Development Association and is a member and past Director of the Bismarck-Mandan Area Chamber of Commerce. She is also a member of the North Dakota Vision 2000 Committee, the North Dakota State Women's Business Leadership Council, the Theodore Roosevelt Medora Founder's Society, and Consultant-Evaluator Corps for the North Central Association of Colleges and Schools. She currently serves on the Nominating and Finance Committees of the Board of Directors.
Except where expressly noted, no corporation or organization named above is a parent, subsidiary or other affiliate of the Company. During 1994, the Board of Directors had four meetings. The Board of Directors has an Audit Committee, discussed under "Accounting and Auditing Matters," a Nominating Committee, a Finance Committee and a Compensation Committee. The Nominating Committee, which met five times during 1994, recommends to the full Board of Directors nominees for directors and for executive officers. The Nominating Committee will consider nominees recommended by stockholders if the names of such nominees are submitted to the Secretary of the Company on or before November 1, 1995, for the annual meeting expected to be held on April 23, 1996 . The Compensation Committee, which met four times during 1994, sets compensation levels for executive officers and recommends to the full Board of Directors compensation for the Directors of the Company. The Finance Committee, which met three times during 1994, reviews corporate financial plans, policies, budgets, investments, acquisitions, and reviews and authorizes actions necessary to issue and sell Common Stock and debt securities of the Company. 5 EXECUTIVE COMPENSATION Shown below is information concerning the annual and long-term compensation for services in all capacities to the Company for the calendar years ending December 31, 1994, 1993, and 1992, for those persons who were, at December 31, 1994, (i) the Chief Executive Officer and (ii) the other four most highly compensated executive officers of the Company (the Named Officers). Footnotes supplement the information contained in the Tables.
SUMMARY COMPENSATION TABLE Long term Annual compensation compensation ------------------------- ------------ Awards ------------ (a) (b) (c) (d) (e) (f) Securities underlying All other Options/ compen- Name and Salary Bonus1 SARs2 sation3 principal position Year ($) ($) (#) ($) --------------- ---- ------ ------ ------- -------- John A. Schuchart 1994 385,926 98,371 0 12,278 --Chairman of the 1993 314,000 68,432 0 4,497 Board & C.E.O. 1992 296,808 33,686 28,530 4,364 Harold J. Mellen, Jr. 1994 191,779 50,577 0 10,470 --President & Chief 1993 176,995 42,328 0 4,497 Corporate Development Officer 1992 160,334 21,600 13,740 4,402 Joseph R. Maichel 1994 173,121 0 0 10,470 --President & C.E.O. of 1993 164,837 0 0 3,777 Montana-Dakota Utilities Co. 1992 156,409 8,516 13,740 4,331 Douglas C. Kane 1994 138,519 44,878 0 8,311 --Executive Vice President 1993 131,960 35,264 0 3,944 & Chief Operating Officer 1992 125,723 20,412 13,740 4,236 Martin A. White 1994 123,369 24,030 0 6,270 --Vice President-- 1993 119,352 20,700 0 920 Corporate Development 1992 115,000 11,040 6,130 0 - ---------- 1 Granted pursuant to the Management Incentive Compensation Plan. 2 No options were granted during 1993 or 1994. "SAR" is an acronym for "stock appreciation right." The Company has no plan or program which uses stock appreciation rights. 3 Totals include Company contributions to the Tax Deferred Compensation Savings Plan in the amounts of $9,000 each for Messrs. Schuchart, Mellen and Maichel, and $8,311 and $6,270 for Messrs. Kane and White, respectively; and insurance premiums in the amounts of $3,278 for Mr. Schuchart and $1,471 each for Messrs. Mellen and Maichel.
AGGREGATED OPTION/SAR(1) EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR(1) VALUES (a) (b) (c) Number of securities underlying Value of unexercised, unexercised options/SARs in-the-money options/SARs at fiscal year-end(2) at fiscal year-end (#) ($) ------------------------- --------------------------- Name Exercisable Unexercisable Exercisable Unexercisable ----- ---------- ------------ ---------- ------------ John A. Schuchart 0 0 0 0 Harold J. Mellen, Jr. 0 13,740 0 48,090 Joseph R. Maichel 0 0 0 0 Douglas C. Kane 0 13,740 0 48,090 Martin A. White 0 6,130 0 21,455 - ---------- 1 "SAR" is an acronym for "stock appreciation right." The Company has no plan or program which uses stock appreciation rights. 2 Mr. Schuchart and Mr. Maichel both retired at year end. Under the Plan they forfeited all of their options.
6
PENSION PLAN TABLE Years of Service --------------------------------------------------------------------------------- Remuneration 15 20 25 30 35 or more - ------------- --------- --------- --------- --------- --------- $125,000................ $ 77,916 $ 86,604 $ 95,304 $103,992 $112,680 150,000................ 91,992 102,492 113,004 123,504 134,004 175,000................ 106,068 118,380 130,704 143,016 155,328 200,000................ 120,144 134,280 148,404 162,528 176,664 225,000................ 134,220 150,168 166,104 182,052 197,988 250,000................ 148,308 166,056 183,816 201,564 219,324 300,000................ 176,460 197,832 219,216 240,588 261,972 400,000................ 206,844 235,476 264,108 292,740 321,360 450,000................ 217,716 249,972 282,228 314,484 346,740 500,000................ 228,600 264,480 300,360 336,228 372,108
The table covers the amounts payable under the Salaried Pension Plan and non-qualified Supplemental Income Security Plan. Pension benefits are determined by the step-rate formula which places emphasis on the highest consecutive 60 months of earnings within the final 10 years of service. Benefits for single participants under the Salaried Pension Plan are paid as straight life amounts and benefits for married participants are paid as actuarially reduced pensions with a survivorship benefit for spouses, unless participants choose otherwise. The Salaried Pension Plan also permits pre-retirement survivorship benefits upon satisfaction of certain conditions. Additionally, certain reductions are made for employees electing early retirement. The Internal Revenue Code places maximum limitations on the amount of benefits that may be paid in dollars under the Salaried Pension Plan. The Company has adopted a non-qualified Supplemental Income Security Plan (SISP) for senior management personnel. In 1994, 80 senior management personnel participated in the SISP including the Named Officers. Both plans cover salary shown in column (c) of the Summary Compensation Table and exclude bonuses and other forms of compensation. Upon retirement and attainment of age 65, participants in the SISP may elect a retirement benefit or a survivors' benefit with the benefits payable monthly for a period of 15 years. As of December 31, 1994, the Named Officers were credited with the following years of service under the plans; Mr. Schuchart: Pension, 19, SISP, 11; Mr. Maichel: Pension, 24, SISP, 11; Mr. Mellen: Pension, 9, SISP, 9; Mr. Kane: Pension, 4, SISP, 11; and Mr. White: Pension, 3, SISP, 3. The maximum years of service for benefits under the Pension Plan is 35 and under the SISP vesting begins at 3 years and is complete after 10 years. Benefit amounts under both plans are not subject to reduction for offset amounts. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Introduction Decisions on compensation for the Company's executive officers are made by the Compensation Committee of the Board of Directors. The Committee was created in 1967 and has been and is composed entirely of non-employee directors. In the late part of each calendar year, the Committee reviews and approves, with any modifications it deems appropriate, the Executive Compensation Policy for the executive officers including the Chief Executive Officer. The approved plan is implemented the following calendar year. Executive Compensation Policy The Executive Compensation Policy is designed to attract and retain qualified executive officers, to recognize above-average job performance and to provide a direct and strong link between Company performance and executive pay. The Board of Directors in 1994 adopted Stock Ownership Guidelines under which executives are required to own Company Common Stock valued from two times their annual salary to four times their annual salary (in the case of the Chief Executive Officer). Total compensation is intended to be competitive with that paid by comparable companies in the regulated electric and gas utility industry and relevant segments of the energy and mining industries. There are four components of total executive compensation: (1) Base salary; (2) Management Incentive Compensation Plan; (3) 1992 Key Employee Stock Option Plan; and (4) Restricted Stock Bonus Plan. As indicated above, the base salary component of compensation is designed to be competitive with that paid by comparable companies. An external consultant provides comparative surveys (Edison Electric Institute Executive Compensation 7 Survey, American Gas Association Top Management Survey, and Executive Compensation Services Top Management Survey). While the companies used in these surveys are not the same as the peer group of companies used in the Performance Graph, the Compensation Committee believes the Edison Electric Institute Executive Compensation Survey, American Gas Association Top Management Survey, and Executive Compensation Services Top Management Survey provide a broader base of data and are commonly used in the utility industry to set executive salaries. The consultant also uses, as appropriate, an oil and gas survey and a mining company survey for executives in those positions. The Edison Electric Institute Executive Compensation Survey is a 1994 survey prepared by Edison Electric Institute and includes 100 participants of diverse size, comprised of electric or electric/gas utility companies, utility parent companies or diversified parent companies. The American Gas Association Top Management Survey is a 1993 survey of salary for 95 natural gas companies--distribution, transmission, combination (gas and electric) and integrated. The Executive Compensation Services Top Management Survey is a 1993-94 survey of executive compensation for 1,149 companies cutting across all major industry lines. The consultant then used the 40 utility respondents from this survey--water, telephone, electric and gas--for comparison purposes. The oil and gas survey and the mining company survey are private surveys done by the consultant using companies he considers appropriate. Since these surveys are confidential, the Compensation Committee does not know the names or any characteristics of the companies used by the consultant. The external data from those surveys is used to develop a market-consensus salary for each executive position. "Market-consensus salary" refers to the average of the salaries for utility executives as shown in the referenced surveys. A range of compensation from 80%-120% is set around the market-consensus salary. It is the policy of the Compensation Committee to set 95% of the market-consensus salary as the market value for the executive positions in the Company. The Compensation Committee uses the market value of the position together with an analysis of the value of the executive position and individual evaluation to establish base salaries for executive officers within the targeted range. A premium is added to the market-consensus salary in order to set the salary of the Chief Executive Officer to reflect the diversified nature of the Company. The consultant uses the peer group of companies in the Performance Graph to determine the premium. The Compensation Committee concluded, based on the average of the utility-diversified companies in the Performance Graph, adjusted for company size, that the market-consensus salary for the Chief Executive Officer should be increased by a premium of 12%. A similar procedure was used for the other executive officers. All executive officers are eligible for awards under the Company's various incentive plans referred to above. The Compensation Committee believes that offering incentive to executive officers will enhance the long-term performance of the Company, promote cost efficiency and further overall shareholder returns. The Committee uses these plans as it deems appropriate to achieve these goals. The Compensation Committee determines awards pursuant to these plans based generally on what it believes other similar companies are doing. The Company has not formulated any policy with regard to the deductibility of qualifying compensation paid to executive officers under Section 162(m) of the Internal Revenue Code. 1994 Compensation for Executive Officers and Chief Executive Officer Compensation paid to executive officers of the Company in 1994 was comprised of base salary, cash awards under the Management Incentive Compensation Plan and awards and dividend equivalents under the 1992 Key Employee Stock Option Plan. No awards were made in 1994 under the Restricted Stock Bonus Plan. Base salary increases for executive officers during 1994 ranged from 3.3% to 5.6% and averaged 4.8%. Salary increases were a function of (1) the Compensation Committee's assessment of the individual performance of each executive and (2) the current salary of each executive compared to that paid by comparable companies as determined by the external consultant (as discussed above). A more favorable performance appraisal permitted a larger increase. If the current salary lagged that paid by comparable companies, a larger increase was permitted. The base salaries during 1994 averaged 88.7% of the market-consensus salary for the Company's executive positions. The Chief Executive Officer's base salary for 1994 reflected an increase of 5.6% over his 1993 base salary. This was 92.7% of the market-consensus salary as adjusted by the premium of 12%. The Chief Executive Officer's achievements and his 19 years with the Company were considered as well as the excellent financial performance and integration of the construction materials businesses into the Company's operations and the exceptional financial performance of the oil and gas subsidiary, including the sale of one of its investments at a substantial gain. The Compensation Committee did not give formal weighting to the criteria used in order to set salary increases for the executive officers or for the Chief Executive Officer. 8 The Management Incentive Compensation Plan is structured so that cash incentive awards reflect the attainment of specific annual levels of performance. The performance measures used reflect both the stockholder's interest (earnings) and the customers' interest (cost efficiency). Additionally, individual performance is evaluated and appropriate adjustments to target award levels may be made. Target award levels are a percentage of each participant's assigned salary grade midpoint. The percentage for the Chief Executive Officer was 35% and for the other executive officers ranged from 25% to 30%. A target incentive fund is developed at the beginning of each plan year based upon the aggregate target award levels of all participants. The size of the fund will increase or decrease based upon actual Company performance in relation to the pre-established goals. Individual awards will be greater or lesser than target amounts based upon an assessment of individual performance. Awards can range from 0% (less than 90% of budgeted earnings per share) to 150% (more than 108% of budgeted earnings per share) of the target amount. The annual corporate performance targets for 1994 were based on the degree of achievement of 103% of budgeted earnings. As a result of actual earnings exceeding threshold level of performance, and individual performance goals being met, cash awards were made under the plan for the year 1994 to four executive officers in the aggregate amount of $119,485. The Chief Executive Officer received $98,371 for the year 1994. This amount was a payout of 82.7% of the targeted award, based on the Company's actual earnings exceeding the threshold level of performance and upon individual performance. The cost efficiency performance measure in 1994 affected only one executive officer, Mr. Maichel, whose award opportunity was based 75% on cost efficiency and 25% on budgeted earnings of his division. Neither goal was met and Mr. Maichel received no award. The 1992 Key Employee Stock Option Plan is designed to motivate executives to achieve specified long-term performance goals of the Company and to encourage ownership by them of the common stock of the Company. It is intended to reinforce financial and strategic objectives, to emphasize pay for performance, and to focus executive effort on long-term sustainable value creation. This aligns the interests of the executives with those of the stockholders. The plan consists of two elements: stock option grants and dividend equivalents. The three-year performance period for options granted in 1992 under the Plan ended on December 31, 1994. The goals for the performance period were return on equity (25%), earnings per share (25%) and total relative shareholder return (50%). 100% of the options granted to the executive officers became exercisable at the end of the performance period because 110.8% of the performance goals were met. The Company reached 96.8% of its return on equity goal, 93.2% of its earnings per share goal, and 143% of its total shareholder return goal. No weighting was given to individual performance. In addition, the dividend equivalents granted on the options during 1992 through 1994 were earned at 110.8% based on the attainment of the goals as described above. No additional options were granted in 1994. The Chief Executive Officer and Mr. Maichel both retired at year-end and forfeited all of their options. The Restricted Stock Bonus Plan provides for awards of restricted stock to individuals when designated by the Compensation Committee as having demonstrated superior individual performance. The awards serve as a motivator for long-term performance and as a retention device for individuals who have demonstrated superior performance. The executive has a stake in the Company's financial performance. Again, this aligns the interest of the executives with those of the stockholders. No awards have been made under this plan to executive officers of the Company since 1988. 36.2% of the Chief Executive Officer's total compensation during 1994 was based on objective annual performance criteria (through the Management Incentive Compensation Plan) or long-term performance criteria (through the 1992 Key Employee Stock Option Plan, reflecting the acceleration of options granted in 1992 and dividend equivalents accrued on the 1992 option grants). An average of 30.6% of the total compensation of the other executive officers was based on objective annual performance criteria (through the Management Incentive Compensation Plan) or long-term performance criteria (through the 1992 Key Employee Stock Option Plan, reflecting acceleration of options granted in 1992 and dividend equivalents accrued on the 1992 option grants). The Committee believes that having 36.2% of the compensation of Chief Executive Officer and an average of 30.6% of the compensation of other executive officers at risk is sufficient to provide a direct and strong link between Company performance and executive pay. San W. Orr, Jr. Homer A. Scott, Jr. Member Chairman Stanley F. Staples, Jr., Member 9 MDU RESOURCES GROUP, INC. COMPARISON OF FIVE YEAR TOTAL SHAREHOLDER RETURN1 [PRINTED MATERIAL CONTAINS A LINE GRAPH REPRESENTED BY THE TABLE BELOW] 1989 1990 1991 1992 1993 1994 --- --- --- --- --- --- MDU 100 97 124 141 177 161 S&P 500 100 97 126 136 150 152 PEER GROUP 100 104 136 151 166 152 (1) All data is indexed to December 31, 1989, for the Company, the S&P 500, and the peer group. Total shareholder return is calculated using the December 31 price for each year. It is assumed that all dividends are reinvested in stock at the frequency paid, and the returns of each component peer issuer of the group is weighted according to the issuer's stock market capitalization at the beginning of the period. The peer issuers are Black Hills Corp., Cilcorp Inc., Equitable Resources Inc., Florida Progress Corp., Minnesota Power & Light Company, The Montana Power Company, Oneok Inc., Questar Corp., South Jersey Industries, Teco Energy Inc., UGI Corp., and Utilicorp United Inc. DIRECTORS' COMPENSATION Each Director who is not an officer of the Company receives a $13,000 annual retainer for Board Service, Audit and Compensation Committee Chairmen each receive a $2,500 annual retainer, and Finance and Nominating Committee Chairmen each receive a $1,000 annual retainer. All such Directors must defer $1,000 of the annual Board retainer which amount is credited to a deferral account quarterly. The deferral amount is divided by the market price of Company Common Stock and converted to investment units. If dividends are paid on Company Common Stock then an equivalent amount is credited for each investment unit and the resulting amount is converted to investment units and credited to such Directors' accounts. When a participating Director leaves the Board, dies or becomes disabled, then the investment units credited to that Director's account are multiplied times the market price of the Company Common Stock at that time, converted to a dollar value and paid to the Director or named beneficiary in equal monthly payments (with interest) over a five year period. Each Director may also defer all or any part of the $12,000 Board retainer paid in cash. Additionally, each Director who is not an officer of the Company receives $700 for each meeting of the Board of Directors attended and each Committee member who is not an officer of the Company receives $700 for each Committee meeting attended. The Company also has a post-retirement arrangement for Directors who are not officers of the Company which provides that after retirement from the Board, a Director is entitled to receive annual compensation in an amount equal to the sum of all annual retainers in effect at the time of retirement. Such amount will be paid to the Director or named beneficiary in equal monthly installments over a period of time equal to the period of service on the Board. The Company also has a program whereby past Directors of the Company may be chosen each year as "Director Emeritus" and each such past Director so chosen may be invited to participate as a nonvoting member of the Company's Board of 10 Directors. Each such "Director Emeritus" serves for five years and receives no compensation, other than reimbursement by the Company for reasonable travel expenses in connection with attendance at meetings of the Company's Board of Directors. NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN The Board of Directors at its meeting on February 9, 1995, adopted a Non-Employee Director Stock Compensation Plan (the "Plan"), subject to ratification by the stockholders. The complete text of the Plan is set forth in Exhibit "A" hereto. The following is a summary of the material features of the Plan and is qualified in its entirety by reference to Exhibit "A". Purpose. The purpose of the Plan is to provide ownership of MDU Resources common stock to non-employee members of the Board of Directors in order to improve the Company's ability to attract and retain highly qualified individuals to serve as directors of the Company and to strengthen the commonality of interest between directors and stockholders. Administration. The Plan is intended to be a formula plan for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Plan will be administered by a committee appointed by the Board of Directors, which will consist of at least two persons (who need not be directors) not eligible to participate in the Plan. Awards Under the Plan. The Plan provides for each non-employee director to receive a stock payment of 200 shares as a portion of the annual retainer payable to such director. The stock payment will be in addition to the cash retainer currently paid to each non-employee director. The award is made automatically on the fifteenth business day after each annual meeting of stockholders. The Plan also provides each non-employee director with the right to elect to increase the amount of common stock that will be granted by reducing the balance of the annual retainer. Shares Subject to the Plan. Shares to be issued under the Plan may be authorized but unissued shares of common stock, treasury stock or shares purchased in the open market. The maximum number of shares that may be issued under the Plan is 50,000. If any corporate transaction occurs that causes a change in MDU Resources' capitalization, the Committee shall make appropriate adjustments to the number or kind of shares subject to the Plan and the annual stock payment. Eligibility and Participation. Non-employee directors of the Company will participate in the Plan. There are currently ten non-employee directors of the Company. Amendment and Termination. Unless previously terminated by the Board, the Plan will terminate when all shares have been granted. The Board may amend, suspend or terminate the Plan at any time; provided, however, that no amendment requiring stockholder approval for the Plan to continue to comply with Rule 16b-3 under the Exchange Act will be effective unless approved by the stockholders. In addition, the number of shares to be granted may not be changed by the Board more than once every six months, or otherwise in contravention of Rule 16b-3, except as required by law.
New Plan Benefits Non-Employee Director Stock Compensation Plan Name & Position Dollar Value ($) Number of Units (Shares) --------------- -------------- ---------------------- Non-Employee Director Group $5475.00 200
The table reflects the number of shares that will be granted to each participating non-employee director on the fifteenth business day after the Annual Meeting if the Plan is approved by stockholders. The dollar value is based on the closing price of $27.375 per share on January 24, 1995. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Approval of the Plan requires the affirmative votes of the holders of a majority of the Common Stock present or represented and entitled to vote. Abstentions will have the effect of a "no" vote; broker non-votes will have no effect. 11 INFORMATION CONCERNING EXECUTIVE OFFICERS Executive officers of the Company are elected by the Board of Directors and serve until the next annual meeting of the Board. Any executive officer so elected may be removed at any time by the affirmative vote of a majority of the Board. Certain information concerning such executive officers, including their ages, present corporate positions and business experience is set forth below.
Present Corporate Position Name Age and Business Experience ----- ---- ----------------------- Harold J. Mellen, Jr.............. 60 President and Chief Executive Officer. For information about Mr. Mellen, see "Election of Directors." Cathleen M. Christopherson........ 50 Ms. Christopherson was elected Vice President-Corporate Communications effective November 1989. Prior to that she served as Assistant Vice President-Corporate Communications effective September 1989 and Division Manager of Montana-Dakota Utilities Co., a Division of the Company, from August 1984. Douglas C. Kane................... 45 Executive Vice President and Chief Operating Officer. For information about Mr. Kane, see "Election of Directors." Lester H. Loble, II............... 53 Mr. Loble was elected General Counsel and Secretary of the Company effective May 1987. Mr. Loble also serves as a Director and/or General Counsel and Secretary of all subsidiaries of the Company except Wibaux Gas Co.; Prairielands Energy Marketing, Inc.; and Gwinner Propane, Inc. Mr. Loble is also a member and the Secretary of the Managing Committee of Montana-Dakota Utilities Co., a Division of the Company. Vernon A. Raile................... 50 Mr. Raile was elected Vice President, Controller and Chief Accounting Officer effective August 1992. Prior to that he was Controller and Chief Accounting Officer from May 1989, Assistant Treasurer from December 1987, and Tax Manager from March 1980. Warren L. Robinson................ 44 Mr. Robinson was elected Vice President, Treasurer and Chief Financial Officer of the Company effective August 1992. He is also Treasurer and Assistant Secretary of Centennial Energy Holdings, Inc., Fidelity Oil Co., Fidelity Oil Holdings, Inc., Wibaux Gas Co. and Treasurer and Secretary of Prairielands Energy Marketing, Inc., all being subsidiaries of the Company. Prior to that he served as Treasurer and Assistant Secretary from December 1989, and as Manager of Corporate Development and Assistant Treasurer from May 1989 to December 1989 and Manager of Corporate Development from October 1988. Ronald D. Tipton.................. 48 Mr. Tipton was elected President and Chief Executive Officer of Montana-Dakota Utilities Co. on January 1, 1995. Prior to that time he served Williston Basin Interstate Pipeline Company in the following capacities: President and Chief Executive Officer from May 1994, President from May 1990, Executive Vice President from May 1989, Vice President--gas supply from January 1985. From January 1983 to January 1985 he was the Assistant Vice President--gas supply of Montana-Dakota Utilities Co. Martin A. White................... 53 Mr. White was elected Vice President-Corporate Development November, 1991. Prior to that he was Chairman and Chief Executive Officer of White Resources Corp., a mining company, from January 1990, and Executive Vice President and Chief Operating Officer of Consolidated TVX Mining Corporation from January 1988. Prior to that he was President and Chief Operating Officer of Entech, Inc., a subsidiary of The Montana Power Company. 12 Present Corporate Position Name Age and Business Experience ----- ---- ----------------------- Rodney J. White................... 58 Mr. White was elected Vice President-Marketing Strategy September 1992. Prior to that he was Vice President-Administration of Williston Basin Interstate Pipeline Company from August 1986 to August 1989 when he became President and a Director of Prairielands Energy Marketing, Inc., and in 1993 President and a Director of Gwinner Propane, Inc., subsidiaries of the Company. Robert E. Wood.................... 52 Mr. Wood has been Vice President-Public Affairs and Environmental Policy of the Company since August, 1991. Before that he was Vice President-Public Affairs from June 1986. For five years prior thereto he served as Manager of Legislative Affairs for the Company.
SECURITY OWNERSHIP The table below sets forth the number of shares of capital stock of the Company owned beneficially as of December 31, 1994, by each director and each nominee for director, each Named Officer and by all directors and executive officers of the Company as a group.
Amount and Nature of Beneficial Ownership Percentage of Class -------------------------- ------------------- Name Common Preferred Common Preferred ----- -------- -------- -------- -------- Douglas C. Kane......................................... 8,763(a) -- * -- Joseph R. Maichel....................................... 20,560(a) -- * -- Harold J. Mellen, Jr.................................... 15,729(a) -- * -- Richard L. Muus......................................... 3,097 -- * -- Robert L. Nance......................................... 1,900 -- * -- John L. Olson........................................... 6,000 -- * -- San W. Orr, Jr.......................................... 123,232(b) -- * -- John A. Schuchart....................................... 84,075(a)(f) -- * -- Charles L. Scofield..................................... 8,000 -- * -- Homer A. Scott, Jr...................................... 2,000(c) -- * Joseph T. Simmons....................................... 3,668 -- * -- Stanley F. Staples, Jr.................................. 84,076(d) 300(d) * * Sister Thomas Welder.................................... 12,783(e) -- * -- Martin A. White......................................... 4,217(a) -- * -- All directors and executive officers of the Company as a group (20 in number)................................ 405,164 306 2.1 * - ---------- * Less than one percent of the class. (a) Includes full shares allocated to the officer's account in the Tax Deferred Compensation Savings Plan. (b) Mr. Orr serves as a co-trustee with shared voting and investment power of various trusts and as an officer and director of the corporate trustee for various other trusts holding these shares. Mr. Orr disclaims beneficial ownership of all but 562 shares held by the trusts. (c) Shares held by Homer A. Scott, Jr. Trust. Mr. Scott is a co-trustee of the trust and shares voting and investment power with respect to these shares. (d) All except 1000 shares of Common Stock are held in the name of Judd S. Alexander Foundation, Inc. and Walter Alexander Foundation, Inc. Mr. Staples, as President of the Judd S. Alexander Foundation, Inc., and Secretary of the Walter Alexander Foundation, Inc., disclaims all beneficial ownership of the shares held by the Foundations. (e) Shares of Common Stock owned by University of Mary. Sr. Welder, as President of the University of Mary, disclaims all beneficial ownership of these shares. (f) Includes 52,489 shares owned by Mr. Schuchart's wife. Mr. Schuchart disclaims all beneficial ownership of the shares owned by his wife.
13 ACCOUNTING AND AUDITING MATTERS The Board of Directors of the Company has appointed Arthur Andersen LLP, Certified Public Accountants, as independent auditors for the year ending December 31, 1994. The appointment was made on the recommendation of the Audit Committee of the Board of Directors which is presently composed of Messrs. Richard L. Muus, John L. Olson, San W. Orr, Jr., and Homer A. Scott, Jr. (Chairman). The Audit Committee, established in 1972, meets regularly with management, internal auditors, and representatives of the Company's independent public accountants. The independent accountants have free access to the Committee and the Board of Directors. In 1994, the Committee met three times and reviewed the scope, timing and fees for the annual audit, other services provided by the independent auditors, and the results of audit examinations completed by the independent auditors, including the recommendations to improve internal controls and the follow-up reports prepared by management. The Audit Committee reports the results of its activities to the full Board of Directors. No member of the Audit Committee is or has been an employee of the Company. A representative of Arthur Andersen LLP is expected to be present at the Annual Meeting of Stockholders of the Company with the opportunity to make a statement if he desires to do so and to respond to appropriate questions. OTHER BUSINESS The management of the Company knows of no other matter to come before the meeting. However, if any matter requiring a vote of the stockholders should arise, it is the intention of the persons named in the enclosed form of proxy to vote in accordance with their best judgment. 1996 ANNUAL MEETING OF STOCKHOLDERS Any stockholder who wishes to submit a proposal for inclusion in the proxy material relating to the Company's Annual Meeting of Stockholders expected to be held on April 23, 1996, must submit such proposal to the Secretary of the Company on or before November 1, 1995. -------------- A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) FOR THE YEAR ENDED DECEMBER 31, 1994, WHICH IS REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE MADE AVAILABLE TO STOCKHOLDERS TO WHOM THIS PROXY STATEMENT IS MAILED, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE OFFICE OF THE TREASURER OF MDU RESOURCES GROUP, INC., 400 NORTH FOURTH STREET, BISMARCK, NORTH DAKOTA 58501. By order of the Board of Directors, /s/ LESTER H. LOBLE, II LESTER H. LOBLE, II Secretary March 6, 1995 14 EXHIBIT A MDU RESOURCES GROUP, INC. NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN I. Purpose The purpose of the MDU Resources Group, Inc. Non-Employee Director Stock Compensation Plan is to provide ownership of the Company's stock to non-employee members of the Board of Directors in order to improve the Company's ability to attract and retain highly qualified individuals to serve as directors of the Company and to strengthen the commonality of interest between directors and stockholders. II. Definitions When used herein, the following terms shall have the respective meanings set forth below: "Agent" means a securities broker-dealer selected by the Company and registered under the Exchange Act. "Annual Retainer" means the annual retainer payable by the Company to Non-Employee Directors (exclusive of any per meeting fees or expense reimbursements.) "Annual Meeting of Stockholders" means the annual meeting of stockholders of the Company at which directors of the Company are elected. "Board" or "Board of Directors" means the Board of Directors of the Company. "Committee" means a committee whose members meet the requirements of Section IV(A) hereof, and who are appointed from time to time by the Board to administer the Plan. "Common Stock" means the common stock, $3.33 par value, of the Company. "Company" means MDU Resources Group, Inc., a Delaware corporation, and any successor corporation. "Effective Date" means the date as of which the Plan is approved by the stockholders of the Company. "Employee" means any officer or other common law employee of the Company or of any of its business units or divisions or of any Subsidiary. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Non-Employee Director" or "Participant" means any person who is elected or appointed to the Board of Directors of the Company and who is not an Employee. "Plan" means the Company's Non-Employee Director Stock Compensation Plan, adopted by the Board on February 9, 1995, and approved by the stockholders on April 25, 1995, as it may be amended from time to time. "Plan Year" means the period commencing on the Effective Date of the Plan and ending the next following December 31 and, thereafter, the calendar year. "Stock Payment" means that portion of the Annual Retainer to be paid to Non-Employee Directors in shares of Common Stock rather than cash for services rendered as a director of the Company, as provided in Section V hereof, including that portion of the Stock Payment resulting from any election specified in Section VI hereof. "Subsidiary" means any corporation that is a "subsidiary corporation" of the Company, as that term is defined in Section 424(f) of the Internal Revenue Code of 1986, as amended. III. Shares of Common Stock Subject to the Plan Subject to Section VII below, the maximum aggregate number of shares of Common Stock that may be delivered under the Plan is 50,000 shares. The Common Stock to be delivered under the Plan will be made available from authorized but unissued shares of Common Stock, treasury stock or shares of Common Stock purchased on the open market. Shares of Common Stock purchased on the open market shall be purchased by the Agent in compliance with Rule 10b-6 and Rule 10b-18 under the Exchange Act to the extent compliance shall be required. Shares A-1 of Common Stock purchased on the open market by the Agent shall be purchased and held in such manner that such shares are not returned to the status of treasury stock or authorized but unissued shares of Common Stock. IV. Administration A. The Plan will be administered by a committee appointed by the Board, consisting of two or more persons who are not eligible to participate in the Plan. Members of the Committee need not be members of the Board. The Company shall pay all costs of administration of the Plan. B. Subject to and not inconsistent with the express provisions of the Plan, the Committee has and may exercise such powers and authority of the Board as may be necessary or appropriate for the Committee to carry out its functions under the Plan. Without limiting the generality of the foregoing, the Committee shall have full power and authority (i) to determine all questions of fact that may arise under the Plan, (ii) to interpret the Plan and to make all other determinations necessary or advisable for the administration of the Plan and (iii) to prescribe, amend and rescind rules and regulations relating to the Plan, including, without limitation, any rules which the Committee determines are necessary or appropriate to ensure that the Company and the Plan will be able to comply with all applicable provisions of any federal, state or local law. All interpretations, determinations and actions by the Committee will be final and binding upon all persons, including the Company and the Participants. V. Determination of Annual Retainer and Stock Payments A. The Board shall determine the Annual Retainer payable to all Non-Employee Directors of the Company. B. Each director who is a Non-Employee Director immediately following the date of the Company's Annual Meeting of Stockholders shall receive on the fifteenth business day following the Annual Meeting a Stock Payment of 200 shares of Common Stock as a portion of the Annual Retainer payable to such director for the Plan Year in which such date occurs. Certificates evidencing the shares of Common Stock constituting Stock Payments shall be registered in the respective names of the Participants and shall be issued to each Participant. The cash portion of the Annual Retainer shall be paid to Non-Employee Directors at such times and in such manner as may be determined by the Board of Directors. C. Any director may decline a Stock Payment for any Plan Year; provided, however, that no cash compensation shall be paid in lieu thereof. Any director who declines a Stock Payment must do so in writing prior to the performance of any services as a Non-Employee Director for the Plan Year to which such Stock Payment relates. D. No Non-Employee Director shall be required to forfeit or otherwise return any shares of Common Stock issued as a Stock Payment pursuant to the Plan (including any shares of Common Stock received as a result of an election under Section VI) notwithstanding any change in status of such Non-Employee Director which renders him ineligible to continue as a Participant in the Plan. Any person who is a Non-Employee Director immediately following the Company's Annual Meeting of Stockholders shall be entitled to receive a Stock Payment as a portion of the applicable Annual Retainer. VI. Election to Increase Amount of Stock Payment In lieu of receiving the cash portion of the Annual Retainer for any Plan Year, a Participant may make a written election to reduce the cash portion of such Annual Retainer by a specified dollar amount and have such amount applied to purchase additional shares of Common Stock of the Company. The election shall be made on a form provided by the Committee and must be returned to the Committee no later than six months prior to the applicable Annual Meeting of Stockholders of the Company. The election form shall state the amount by which the Participant desires to reduce the cash portion of the Annual Retainer, which shall be applied toward the purchase of Common Stock to be delivered on the same date that the Stock Payment is made; provided, however, that no fractional shares may be purchased. Cash in lieu of any fractional share shall be paid to the Participant. An election shall continue in effect until changed or revoked by the Participant. No Participant shall be allowed to change or revoke any election for the then current year, but may change an election for any subsequent Plan Year. VII. Adjustment For Changes in Capitalization If the outstanding shares of Common Stock of the Company are increased, decreased or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other A-2 securities are distributed with respect to such shares of Common Stock or other securities, through merger, consolidation, sale of all or substantially all of the property of the Company, reorganization or recapitalization, reclassification, stock dividend, stock split, reverse stock split, combinations of shares, rights offering, distribution of assets or other distribution with respect to such shares of Common Stock or other securities or other change in the corporate structure or shares of Common Stock, the number of shares to be granted annually, the maximum number of shares and/or the kind of shares that may be issued under the Plan shall be appropriately adjusted by the Committee. Any determination by the Committee as to any such adjustment will be final, binding and conclusive. The maximum number of shares issuable under the Plan as a result of any such adjustment shall be rounded down to the nearest whole share. VIII. Amendment and Termination of Plan A. The Board will have the power, in its discretion, to amend, suspend or terminate the Plan at any time; provided, however, that no amendment which requires stockholder approval in order for the Plan to continue to comply with Rule 16b-3 under the Exchange Act, including any successor to such Rule, shall be effective unless such amendment shall be approved by the requisite vote of the stockholders of the Company entitled to vote thereon. B. Notwithstanding the foregoing, any provision of the Plan that either states the amount and price of securities to be issued under the Plan and specifies the price and timing of such issuances, or sets forth a formula that determines the amount, price and timing of such issuances, shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. IX. Effective Date and Duration of the Plan The Plan will become effective upon the Effective Date, and shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Section VIII, until all shares subject to the Plan have been purchased or acquired according to the Plan's provisions. X. Miscellaneous Provisions A. Continuation of Directors in Same Status Nothing in the Plan or any action taken pursuant to the Plan shall be construed as creating or constituting evidence of any agreement or understanding, express or implied, that the Company will retain a Non-Employee Director as a director or in any other capacity for any period of time or at a particular retainer or other rate of compensation, as conferring upon any Participant any legal or other right to continue as a director or in any other capacity, or as limiting, interfering with or otherwise affecting the right of the Company to terminate a Participant in his capacity as a director or otherwise at any time for any reason, with or without cause, and without regard to the effect that such termination might have upon him as a Participant under the Plan. B. Compliance with Government Regulations Neither the Plan nor the Company shall be obligated to issue any shares of Common Stock pursuant to the Plan at any time unless and until all applicable requirements imposed by any federal and state securities and other laws, rules and regulations, by any regulatory agencies or by any stock exchanges upon which the Common Stock may be listed have been fully met. As a condition precedent to any issuance of shares of Common Stock and delivery of certificates evidencing such shares pursuant to the Plan, the Board or the Committee may require a Participant to take any such action and to make any such covenants, agreements and representations as the Board or the Committee, as the case may be, in its discretion deems necessary or advisable to ensure compliance with such requirements. The Company shall in no event be obligated to register the shares of Common Stock deliverable under the Plan pursuant to the Securities Act of 1933, as amended, or to qualify or register such shares under any securities laws of any state upon their issuance under the Plan or at any time thereafter, or to take any other action in order to cause the issuance and delivery of such shares under the Plan or any subsequent offer, sale or other transfer of such shares to comply with any such law, regulation or requirement. Participants are responsible for complying with all applicable federal and state securities and other laws, rules and regulations in connection with any offer, sale or other transfer of the shares of Common Stock issued under the Plan or any interest therein including, without limitation, compliance with the registration A-3 requirements of the Securities Act of 1933, as amended (unless an exemption therefrom is available), or with the provisions of Rule 144 promulgated thereunder, if applicable, or any successor provisions. Certificates for shares of Common Stock may be legended as the Committee shall deem appropriate. C. Nontransferability of Rights No Participant shall have the right to assign the right to receive any Stock Payment or any other right or interest under the Plan, contingent or otherwise, or to cause or permit any encumbrance, pledge or charge of any nature to be imposed on any such Stock Payment (prior to the issuance of stock certificates evidencing such Stock Payment) or any such right or interest. D. Severability In the event that any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of the Plan. E. Governing Law To the extent not preempted by Federal law, the Plan shall be governed by the laws of the State of North Dakota. A-4 MDU RESOURCES GROUP, INC. PROXY - -------------------------------------------------------------------------------- THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 25, 1995 The undersigned hereby appoints John A. Schuchart, Harold J. Mellen, Jr., and Lester H. Loble, II, and each of them, proxies, with full power of substitution, to vote all Common Shares of the undersigned at the Annual Meeting of Stockholders to be held at 11:00 a.m. (CDT), April 25, 1995, at 909 Airport Road, Bismarck, ND 58504, and at any adjournment thereof, upon all subjects that may properly come before the meeting, including the matters described in the proxy statement furnished herewith, subject to any directions indicated on the reverse side of this card. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR THE ELECTION OF ALL LISTED NOMINEES, IN ACCORD WITH THE DIRECTORS' RECOMMENDATIONS ON THE OTHER MATTERS LISTED ON THE REVERSE SIDE OF THIS CARD AND AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING. We are unable to respond to comments noted on this proxy. If you have comments please send in a separate letter. YOUR VOTE FOR THE ELECTION OF DIRECTORS MAY BE INDICATED ON THE REVERSE SIDE OF THIS CARD. Nominees are: Douglas C. Kane, Richard L. Muus, John L. Olson and Joseph T. Simmons. YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO 400 NORTH FOURTH STREET, BISMARCK, ND 58501, ND 58501, SO THAT YOUR SHARES CAN BE REPRESENTED AT THE MEETING. - -------------------------------------------------------------------------------- PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE: |X| DIRECTORS RECOMMEND A VOTE "FOR" ON A. AND B. BELOW To vote for all director nominees, mark the "FOR" box on item "A." To withhold voting for all nominees, mark the "WITHHELD" box. To withhold voting for a particular nominee, mark the "FOR ALL EXCEPT" box and enter name(s) of the exception(s) in the space provided; your shares will be voted for the remaining nominees.
FOR WITHHELD FOR ALL EXCEPT A. Election of All Director Nominees. Exceptions _________________________ |_| |_| |_| FOR AGAINST ABSTAIN B. Approve the Non-Employee Director Stock Compensation Plan. |_| |_| |_|
SIGN HERE AS NAME(S) APPEAR AT LEFT ____________________________________________________________ ____________________________________________________________ PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF SIGNING FOR A CORPORATION OF PARTNERSHIP OR AS AGENT, ATTORNEY OF FIDUCIARY, INDICATE THE CAPACITY IN WHICH YOU ARE SIGNING. IF YOU DO ATTEND THE MEETING AND DECIDE TO VOTE BY BALLOT, SUCH VOTE WILL SUPERSEDE THIS PROXY. DATE ________________________, 1995 -----END PRIVACY-ENHANCED MESSAGE-----