Document:

exhibit10a.htm

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 and shall include, for purposes of this Plan, meeting fees, cash retainers and any other cash compensation payable to Non-Employee Directors by the Company for services as a Director.

"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, $1.00 par value, of the Company.

"Company" means MDU Resources Group, Inc., a Delaware corporation, and any successor corporation.

"Effective Date" means April 25, 1995.

"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 has been and 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 699,897 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.

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

  

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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 of the Company who is a Non-Employee Director at any time during the Plan Year shall receive on or about the Wednesday following the Board's regularly-scheduled November meeting a Stock Payment with a value of $110,000 as a portion of the Annual Retainer payable to such director for the Plan Year in which such date occurs.  The Stock Payment shall be equal to the number of whole shares of Common Stock determined (i) if the shares are original issue or treasury stock, by dividing $110,000 by the closing price of the Common Stock on the New York Stock Exchange on the grant date and (ii) if the shares are purchased on the open market, by dividing $110,000 by the weighted average price paid to purchase shares for the Non-Employee Directors for that Stock Payment, excluding any related brokerage commissions or other service fees.  Any fractional shares shall be paid in cash.  The Stock Payment shall be prorated for any Non-Employee Director who does not serve the entire Plan Year by multiplying $110,000 by a fraction, the numerator of which is the number of actual or expected months (with a partial month counted as a full month) of service on the Board during the Plan Year and the denominator of which is

  

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twelve.  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.

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 on or before the last business day of the year prior to the year in which the election is to be effective.  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; provided, however, that no fractional shares shall be purchased.  Stock to be delivered to Participants pursuant to this election shall be delivered in December of each year.  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.  All shares of Common Stock received pursuant to an election under this Article VI must be held by a Participant for six months after receipt thereof.

VII.        Adjustment For Changes in Capitalization

              In the event of any equity restructuring, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through a large, nonrecurring cash dividend, the Committee shall cause an equitable adjustment to be made in the maximum number of shares and/or the kind of shares of Common Stock that may be delivered under the Plan to prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation or liquidation, the Committee may, in its sole discretion, cause an equitable adjustment as described in the foregoing sentence to be made to prevent dilution or enlargement of rights.

  

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Adjustments made by the Committee pursuant to this Section VII shall 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

             The Board will have the power, in its discretion, to amend, suspend or terminate the Plan at any time provided; however, that no amendment that is required by law, rule or regulation to be approved by the Company’s stockholders shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company entitled to vote thereon.

IX.         Effective Date and Duration of the Plan

              The Plan became 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

  

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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 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.

  

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              E.           Governing Law

              To the extent not preempted by Federal law, the Plan shall be governed by the laws of the State of Delaware.

  

7exhibit10b.htm

MDU RESOURCES GROUP, INC.

DIRECTORS' COMPENSATION POLICY

Each Director who is not a full-time employee of the Company shall receive compensation made up of annual cash retainers and common stock.  Each Director is also eligible for awards under the Non-Employee Director Long-Term Incentive Compensation Plan.

Director Compensation

Annual Cash Retainers

	
Base Retainer

	 	 	$55,000	 
	
Additional Retainers:

	 	 	 	 
	
Non-Executive Chairman of the Board

	 	 	75,000	 
	
Lead Director, if any

	 	 	33,000	 
	
Chairman of Audit Committee

	 	 	15,000	*
	
Chairman of Compensation Committee

	 	 	10,000	*
	
Chairman of Nominating and Governance Committee

	 	 	10,000	*

                                     

*           Effective June 1, 2011.

 

Such cash retainers shall be paid in monthly installments.

The MDU Resources Group, Inc. Deferred Compensation Plan for Directors (as amended and restated effective May 15, 2008) permits a Director to defer all or any portion of the annual cash retainers.  The amount deferred is recorded in each participant's deferred compensation account and credited with income in the manner prescribed in the Plan.  For further details, reference is made to the Plan, a copy of which is attached.

Common Stock

Each person who is a Director of the Company at any time during the calendar year shall receive a $110,000 stock payment on or about the Wednesday following the Board of Directors’ regularly-scheduled November meeting, pursuant to the Non-Employee Director Stock Compensation Plan.  The stock payment shall be equal to the number of whole shares of Common Stock determined (i) if the shares are original issue or treasury stock, by dividing $110,000 by the closing price of the Common Stock on the New York Stock Exchange on the grant date and (ii) if the shares are purchased on the open market, by dividing $110,000 by the weighted average price paid to purchase shares for the Directors for that stock payment, excluding any related brokerage commissions or other service fees.  Any fractional shares shall be paid in cash.  The stock payment shall be

  

  

  

prorated for any Director who does not serve the entire calendar year by multiplying $110,000 by a fraction, the numerator of which is the number of actual or expected months (with a partial month counted as a full month) of service on the Board during the calendar year and the denominator of which is twelve.

By written election a Director may reduce his or her annual cash retainers and have that amount applied to the purchase of additional shares pursuant to the Non-Employee Director Stock Compensation Plan.  The election must be made on a form provided by the administrative committee and returned to the committee by the last business day of the year prior to the year in which the election is to be effective.  The election remains in effect until changed or revoked.  No election may be changed or revoked for the current year, but may be changed for a subsequent year.  For further details, reference is made to the Non-Employee Director Stock Compensation Plan, a copy of which is attached.

Travel Expense Reimbursement

All Directors will be reimbursed for reasonable travel expenses incurred while serving as a Director, including spouse’s expenses, in connection with attendance at meetings of the Company’s Board of Directors and its committees.  If the travel expense is related to the reimbursement of commercial airfare, such reimbursement will not exceed full-coach rate.  If the travel expense is related to reimbursement of non-commercial airfare, such reimbursement will not exceed the rate for comparable travel by means of commercial airline at the first-class rate.  Spousal travel expenses paid by the Company are treated as taxable income to the Director.  See the paragraph below entitled "Code Section 409A" for further rules relating to travel expense reimbursements.

Directors' Liability

Article Seventeenth of the Company's Restated Certificate of Incorporation provides that no Director of the Company shall be liable to the Company or its stockholders for breach of fiduciary duty as a Director, with certain exceptions stated below.  Section 7.07 of the Company's Bylaws requires the Company to indemnify fully a Director against expenses, attorneys fees, judgments, fines and amounts paid in settlement of any suit, action or proceeding, whether civil or criminal, arising from an action of a Director by reason of the fact that the Director was a Director of MDU Resources Group, Inc.

There are exceptions to the protections under Article Seventeenth of the Company’s Restated Certificate of Incorporation:  breaches of the Directors' duty of loyalty to the Company or its stockholders, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, violation of Section 174 of the Delaware General Corporation Law (relating to unlawful declaration of dividends

  

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and unlawful purchase of the company's stock), and transactions from which the Director derived an improper personal benefit (including short-swing profits under Section 16(b) of the Securities Exchange Act of 1934).

Additional protection is provided through individual indemnification agreements with each Director.

The Company has and does maintain Directors' and Officers' liability insurance coverage with a $125 million limit.

Insurance Coverages

The Company maintains the following insurance for protection of its Directors as they carry out the business of MDU Resources Group, Inc., which shall be provided while serving as a Director:

	
  

	
1.

	
General liability and automobile liability insurance:

	
  

	
If driving a personal vehicle, the Directors are afforded automobile liability coverage excess of their own personal automobile insurance under a combination of policies with program limits to $100 million after a self-insured retention of $500,000.  If driving a vehicle owned by the Company, personal automobile insurance does not apply.

	
  

	
For general liability, coverage is provided to Directors under a combination of policies with program limits to $100 million after a self-insured retention of $500,000.

	
  

	
2.

	
Fiduciary and employee benefit liability insurance:

	
  

	
The Directors are afforded coverage under the fiduciary and crime liability insurance policies.  The fiduciary policy has a limit of $35 million and the crime policy has a limit of $10 million.

	
  

	
3.

	
Aircraft liability insurance:

	
  

	
The Company's existing aircraft liability insurance extends coverage while a hired, non-owned* aircraft is used by a Director in traveling to and from Director or Board committee meetings.  This insurance coverage is excess of any underlying policy that may exist and provides limits of $200 million.

  

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*Non-owned aircraft is defined as:  1) any aircraft registered under a “standard” airworthiness certificate issued by the FAA; 2) aircraft with a seating capacity not exceeding 40 seats; 3) aircraft that are not owned by MDU Resources Group, Inc. or any of its subsidiaries; 4) aircraft that are not partly or wholly owned by or registered in the Director’s name or the name of any Director’s household member.

	
  

	
4.

	
Travel and sojourn insurance:

	
  

	
All Directors are protected by a group insurance policy with coverage of $250,000 that provides 24-hour accident protection while traveling on Company business.

	
  

	
Coverage in all instances begins at the actual start of a business trip and ends when the Director returns to his/her home or regular place of employment.

	
  

	
The beneficiary of the insurance will be that beneficiary recorded on a beneficiary designation card provided by the Company.

	
  

	
5.

	
Group life insurance:

	
  

	
All outside Directors are protected by a non-contributory group life insurance policy with coverage of $100,000.

	
  

	
The coverage begins the day the Director is elected to the Board of Directors and terminates when the Director ceases to be an outside Director.

	
  

	
A Certificate of Insurance shall be provided to the Director and the beneficiary of the insurance will be that beneficiary recorded on a beneficiary designation card provided by the Company.

	
  

	
This protection is considered taxable compensation under current tax laws.  Consequently, the Company will provide each Director annually on Form 1099 the amount of taxable income related to this coverage.

Hedging Stock Ownership

Directors are not permitted to hedge their ownership of Company common stock.  Hedging strategies include but are not

  

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limited to zero-cost collars, equity swaps, straddles, prepaid variable forward contracts, security futures contracts, exchange funds, forward sale contracts and other financial transactions that allow the Director to benefit from devaluation of the Company's stock.  Hedging strategies may allow Directors to own stock technically but without the full benefits and risks of such ownership.  Therefore, Directors are prohibited from engaging in any such transactions.

Code Section 409A

To the extent any reimbursements or in-kind benefits provided to a Director pursuant to this policy constitute “deferred compensation” under Internal Revenue Code Section 409A, any such reimbursement or in-kind benefit shall be paid in a manner consistent with Treasury Regulation Section 1.409A-3(i)(1)(iv), including the requirements that the amount of reimbursable expenses or in-kind benefits provided during a year may not affect the expenses eligible for reimbursement or in-kind benefits provided in any other year and that any reimbursement be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.

  

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