ex10_1.htm


     

     

     

    Exhibit 10.1

     

     

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
10.1

    


    MDU
RESOURCES GROUP, INC.

    LONG-TERM
PERFORMANCE-BASED INCENTIVE PLAN

    


    PERFORMANCE
SHARE AWARD AGREEMENT

    


    


                                                                                             
{    }

    


    


    In accordance with the terms of the MDU
Resources Group, Inc. Long-Term Performance-Based Incentive Plan (the "Plan"),
pursuant to action of the Compensation Committee of the Board of Directors of
MDU Resources Group, Inc. (the "Committee"), MDU Resources Group, Inc. (the
"Company") hereby grants to you (the "Participant") Performance Shares (the
"Award"), subject to the terms and conditions set forth in this Award Agreement
(including Annexes A and B hereto and all documents incorporated herein by
reference), as set forth below:

    


    
      	
                             
      Target Award:

               

            	
              {    }Performance
      Shares (the "Target Award")

               

            
	
                               Performance
      Period:

               

            	
              {    }
      through

              {    }
      (the "Performance Period")

               

            
	
                              Date
      of Grant:

               

            	
              {    }

            
	
                              Dividend
      Equivalents:

            	
              Yes

            


    

    


    THESE
PERFORMANCE SHARES ARE SUBJECT TO FORFEITURE AS PROVIDED HEREIN.  THIS
AWARD AND AMOUNTS RECEIVED IN CONNECTION WITH THIS AWARD ARE ALSO SUBJECT TO
FORFEITURE, RECAPTURE OR OTHER ACTION IN THE EVENT OF AN ACCOUNTING RESTATEMENT,
AS PROVIDED IN ARTICLE 19 OF THE PLAN.  

    


    Further terms and conditions of the
Award are set forth in Annexes A and B hereto, which are integral parts of this
Award Agreement.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    All terms, provisions and conditions
applicable to the Award set forth in the Plan and not set forth in this Award
Agreement are hereby incorporated herein by reference.  To the extent
any provision hereof is inconsistent with a provision of the Plan; the
provisions of the Plan will govern.  The Participant hereby
acknowledges receipt of a copy of this Award Agreement, including Annexes A and
B hereto, and a copy of the Plan and agrees to be bound by all the terms and
provisions hereof and thereof.

     

    
    

     

    
      	 	 MDU RESOURCES
      GROUP, INC.
	 	
               

               

              By:    _________________________________

            
	 	
                       
      Terry
      D. Hildestad

                        President
      and

                       
      Chief
      Executive Officer

            


    

     

     

    


    Agreed:

    


    


    ___________________

    Participant

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    ANNEX A

    


    TO

    


    MDU
RESOURCES GROUP, INC.

    LONG-TERM
PERFORMANCE-BASED INCENTIVE PLAN

    


    PERFORMANCE
SHARE AWARD AGREEMENT

    


    It is
understood and agreed that the Award of Performance Shares evidenced by the
Award Agreement to which this is annexed is subject to the following additional
terms and conditions.

    


    1.           Nature of
Award.  The Target Award represents the opportunity to receive
shares of Company common stock, $1.00 par value ("Shares") and Dividend
Equivalents on such Shares.  The number of Shares that may be earned
under this Award shall be determined pursuant to Section 2
hereof.  The amount of Dividend Equivalents that may be earned under
this Award shall be determined pursuant to Section 4 hereof.  Except
for Dividend Equivalents, which are paid in cash, Awards will be paid in
Shares.

    


    2.           Determination of Number of
Shares Earned.

    


    The number of Shares earned, if any,
for the Performance Period shall be determined in accordance with the following
formula:

    


    #
of Shares = Payout Percentage X Target Award

    


    The
"Payout Percentage" is based on the Company's total shareholder return ("TSR")
relative to that of the Peer Group listed on Annex B (the "Percentile Rank") for
the Performance Period, determined in accordance with the following
table:

    


    
      	
              Percentile
      Rank

            	
              Payout
      Percentage

              (%
      of Target Award)

            
	
              100th

            	
              200%

            
	
              75th

            	
              150%

            
	
              50th

            	
              100%

            
	
              40th

            	
              10%

            
	
              less
      than 40th

            	
              0%

            


    

    


    If the
Company achieves a Percentile Ranking between the 40th and 50th percentiles, the
Payout Percentage shall be equal to 10%, plus 9% for each Percentile Rank whole
percentage above the 40th percentile.  If the Company achieves a
Percentile Ranking between the 50th and 100th percentiles, the Payout Percentage
shall be equal to 100%, plus 2% for each Percentile Rank whole percentage above
the 50th percentile.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    The
Percentile Rank of a given company's TSR is defined as the percentage of the
Peer Group companies' returns falling at or below the given company's
TSR.  The formula for calculating the Percentile Rank
follows:

    


    
      	
               
      

            	
              Percentile
      Rank = (n - r + 1)/n x 100

            


    

     

    
      	
               
      

            	
              Where:

            


    

     

    
      	
               
      

            	
              n
      =

            	
              total
      number of companies in the Peer Group, including the
    Company

            


    

     

    
      	
               
      

            	
              r
      =

            	
              the
      numeric rank of the Company's TSR relative to the Peer Group, where the
      highest return in the group is ranked number
1

            


    

     

    To
illustrate, if the Company's TSR is the third highest in the Peer Group
comprised of 26 companies, its Percentile Rank would be 92.  The
calculation is: (26 - 3 + 1)/26 x 100 = 92.

     

    The
Percentile Rank shall be rounded to the nearest whole percentage.

     

    If the
common stock of a company in the Peer Group ceases to be traded during the
Performance Period, the company will be deleted from the Peer
Group.  Percentile Rank will be calculated without regard to the
return of the deleted company.

     

    Total
shareholder return is the percentage change in the value of an investment in the
common stock of a company from the initial investment made on the last trading
day in the calendar year preceding the beginning of the performance period
through the last trading day in the final year of the performance
period.  It is assumed that dividends are reinvested in additional
shares of common stock at the frequency paid.

     

    All
Performance Shares that are not earned for the Performance Period shall be
forfeited.

    


    3.           Issuance of Shares.
Subject to any restrictions on distributions of Shares under the Plan, and
subject to Section 6 of this Annex A, the Shares earned under the Award, if any,
shall be issued to the Participant as soon as practicable (but no later than the
next March 10) following the close of the Performance Period.

    


    4.           Dividend Equivalents.
Dividend Equivalents shall be earned with respect to any Shares issued to the
Participant pursuant to this Award.  The amount of Dividend
Equivalents earned shall be equal to the total dividends declared on a Share
between the Date of Grant of this Award and the last day of the Performance
Period, multiplied by the number of Shares issued to the Participant pursuant to
the Award Agreement.  Any Dividend Equivalents earned shall be paid in
cash to the Participant when the Shares to which they relate are issued or as
soon as practicable thereafter, but no later than the next March 10 following
the close of the Performance Period.  If the Award is forfeited or if
no Shares are issued, no Dividend Equivalents shall be paid.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    5.           Termination of
Employment.

    


    (a)           If
the Participant's employment with the Company is terminated (1) for "Cause" (as
defined below) at any time or (2) for any reason other than "Cause" (as defined
below) before the Participant, as of the effective date of termination, has
reached age 55 and completed 10 "Years of Service" (as defined below), all
Performance Shares (and related Dividend Equivalents) shall be
forfeited.

    


    (b)           If
the Participant's employment with the Company is terminated for any reason other
than "Cause" (as defined below) after the Participant, as of the effective date
of termination, has reached age 55 and completed 10 Years of Service (as defined
below) (1) during the first year of the Performance Period, all Performance
Shares (and related Dividend Equivalents) shall be forfeited; (2) during the
second year of the Performance Period, determination of the Company's Percentile
Rank for the Performance Period will be made by the Committee at the end of the
Performance Period, and Shares (and related Dividend Equivalents) earned, if
any, will be paid based on the Payout Percentage, prorated for the number of
full months elapsed from and including the month in which the Performance Period
began to and including the month in which the termination of employment occurs;
and (3) during the third year of the Performance Period, determination of the
Company's Percentile Rank for the Performance Period will be made by the
Committee at the end of the Performance Period, and Shares (and related Dividend
Equivalents) earned, if any, will be paid based on the Payout Percentage without
prorating.

    


    (c)           For
purposes of the Award Agreement, the term "Cause" shall mean the Participant's
fraud or dishonesty that has resulted or is likely to result in material
economic damage to the Company or a Subsidiary, or the Participant's willful
nonfeasance if such nonfeasance is not cured within ten days of written notice
from the Company or a Subsidiary, as determined in good faith by a vote of at
least two-thirds of the non-employee directors of the Company at a meeting of
the Board at which the Participant is provided an opportunity to be
heard.  For purposes of the Award Agreement, the term "Years of
Service" shall mean the years a Participant is employed by the Company and/or a
Subsidiary.

    


    6.           Tax Withholding.
Pursuant to Article 16 of the Plan, the Committee shall have the power and the
right to deduct or withhold, or require the Participant to remit to the Company,
an amount sufficient to satisfy any Federal, state and local taxes (including
the Participant's FICA obligations) required by law to be withheld with respect
to the Award.  The Committee may condition the delivery of Shares upon
the Participant's satisfaction of such withholding obligations.  The
Participant may elect to satisfy all or part of such withholding requirement by
tendering previously-owned Shares or by having the Company withhold Shares
having a Fair Market Value equal to the minimum statutory withholding that could
be imposed on the transaction (based on minimum statutory withholding rates for
Federal, state, and local tax purposes, as applicable, including payroll taxes,
that are applicable to such supplemental taxable income).  Such
election shall be irrevocable, made in writing, signed by the Participant, and
shall be


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    subject
to any restrictions or limitations that the Committee, in its sole discretion,
deems appropriate.

    


    7.           Ratification of
Actions. By accepting the Award or other benefit under the Plan, the
Participant and each person claiming under or through him or her shall be
conclusively deemed to have indicated the Participant's acceptance and
ratification of, and consent to, any action taken under the Plan or the Award by
the Company, its Board of Directors, or the Committee.

    


    8.           Notices. Any notice
hereunder to the Company shall be addressed to its office, 1200 West Century
Avenue, P.O. Box 5650, Bismarck, North Dakota 58506; Attention: Corporate
Secretary, and any notice hereunder to the Participant shall be addressed to him
or her at the address specified on the Award Agreement, subject to the right of
either party to designate at any time hereafter in writing some other
address.

    


    9.           Definitions.
Capitalized terms not otherwise defined herein or in the Award Agreement shall
have the meanings given them in the Plan.

    


    10.           Governing Law and
Severability. To the extent not preempted by Federal law, the Award
Agreement will be governed by and construed in accordance with the laws of the
State of Delaware, without regard to conflicts of law provisions.  In
the event any provision of the Award Agreement shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of the Award Agreement, and the Award Agreement shall be construed and
enforced as if the illegal or invalid provision had not been
included.

     

    11.           No Rights to Continued
Employment.  The Award Agreement is not a contract of
employment.  Nothing in the Plan or in the Award Agreement shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate the Participant's employment at any time, for any reason or no reason,
or confer upon the Participant the right to continue in the employ of the
Company or a Subsidiary.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ANNEX B

    


    TO

    


    MDU
RESOURCES GROUP, INC.

    LONG-TERM
PERFORMANCE-BASED INCENTIVE PLAN

    


    PERFORMANCE
SHARE AWARD AGREEMENT

    


    PEER GROUP
COMPANIES

    


    Alliant
Energy Corporation

    Berry
Petroleum Company – CL A

    Black
Hills Corporation

    Comstock
Resources, Inc.

    Dycom
Industries, Inc.

    EMCOR
Group Inc.

    Encore
Acquisition Company

    Equitable
Resources, Inc.

    Granite
Construction Incorporated

    Martin
Marietta Materials, Inc.

    National
Fuel Gas Company

    Northwest
Natural Gas Company

    NSTAR

    OGE
Energy Corp.

    ONEOK,
Inc.

    Quanta
Services, Inc.

    Questar
Corporation

    SCANA
Corporation

    Southwest
Gas Corporation

    St. Mary
Land & Exploration Company

    Swift
Energy Company

    US
Concrete, Inc.

    Vectren
Corporation

    Vulcan
Materials Company

    Whiting
Petroleum Corporation