Document:

mducsgeicp.htm

    
 

    MDU
CONSTRUCTION SERVICES GROUP, INC.

    

    EXECUTIVE
INCENTIVE COMPENSATION PLAN

    ____________________________________________________________

    

    I.              PURPOSE

         The
purpose of the Executive Incentive Compensation Plan (the
"Plan") is to provide an incentive for key executives of MDU Construction
Services Group, Inc. (formerly known as Utility Services, Inc.) (the "Company")
and any subsidiaries participating in the Plan (each a "Subsidiary", and
together, the "Subsidiaries") to focus their efforts on the achievement of
challenging and demanding corporate objectives.  The Plan is designed
to reward successful corporate performance calculated from January 1 to December
31 of each Plan Year, as measured against specified performance goals as well as
exceptional individual performance.  When corporate or subsidiary
performance reaches or exceeds the performance targets and individual
performance is exemplary, incentive compensation awards, in conjunction with
salaries, will provide a level of compensation which recognizes the skills and
efforts of the key executives.

    

    II.           
DEFINITIONS

    Capitalized terms not otherwise defined
herein shall have the meanings given them in the Company’s Executive Incentive
Compensation Plan Rules and Regulations.

    

    III.           BASIC PLAN
CONCEPT

    The Plan provides an opportunity to
earn annual incentive compensation based on the achievement of specified annual
performance objectives.  A target incentive award for each individual
within the Plan is established based on the position level and actual base
salary, provided, however, that the Compensation Committee of the Board of
Directors (the "Committee") of the Company in its sole discretion may, instead
of actual base salary, use the assigned salary grade market value (midpoint)
("Salary").  The target incentive award represents the amount to be
paid, subject to the achievement of the performance objective targets
established each year.  Larger incentive awards than target may be
authorized when performance exceeds targets; lesser or no amounts may be paid
when performance is below target.

    It is recognized that during a Plan
Year major unforeseen changes in economic and environmental conditions or other
significant factors beyond the control of management may substantially affect
the ability of the Plan Participants to achieve the specified performance
goals.  Therefore, in its review of corporate performance the
Committee, in consultation with the Chief Executive Officer of MDU Resources
Group, Inc., may modify the performance targets.  However, it is
contemplated that such target modifications will be necessary only in years of
unusually adverse or favorable external conditions.

    

    IV.            ADMINISTRATION

            
The Plan shall be administered by the Committee with the assistance of the
President of the Company.  The Committee shall approve annually, prior
to the beginning of each Plan Year, the list of eligible Participants, and the
target incentive award level for each position within the Plan.  The
Plan's performance targets for the year shall be approved by the Committee no
later than its regularly scheduled February meeting during that Plan
Year.  The Committee shall have final discretion to determine actual
award payment levels, method of payment, and whether or not payments shall be
made for any Plan Year.

    The Board of Directors of the Company
may, at any time and from time to time, alter, amend, supersede or terminate the
Plan in whole or in part, provided that no termination, amendment or
modification of the Plan shall adversely affect in any material way an award
that has met all requirements for payment without the written consent of the
Participant holding such award, unless such termination, modification or
amendment is required by applicable law.

    

    V.             ELIGIBILITY

            
Key executives of the Company or the Subsidiaries who are determined by the
Committee to have a key role in both the establishment and achievement of
Company and/or Subsidiary objectives shall be eligible to participate in the
Plan.

           
Nothing in the Plan shall interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant's employment at any time,
for any reason or no reason in the Company's or a Subsidiary's sole discretion,
or confer upon any Participant any right to continue in the employment of the
Company or any Subsidiary.  No executive shall have the right to be
selected to receive an award under the Plan, or, having been so selected, to be
selected to receive a future award.

    

    VI.           PLAN PERFORMANCE
MEASURES

    Performance measures shall be
established that consider shareholder and customer interests.  These
measures shall be evaluated annually based on achievement of specified
goals.

    The performance measure reflective of
shareholders' interest will be the percentage attainment of corporate goals, as
determined each year by the Committee.  This measure may be applied at
the Company level for some individuals, such as the President, whose major or
sole impact is Company-wide, or at the Subsidiary level for individuals whose
major or sole impact is on Subsidiary results.

    Individual performance will be assessed
based on the achievement of annually established individual
objectives.

    Threshold, target and maximum award
levels will be established annually for each performance measure. The Committee
will retain the right to make all interpretations as to the actual attainment of
the desired results and will determine whether any circumstances beyond the
control of management need to be considered.

    

    VII.          TARGET INCENTIVE
AWARDS

    Target
incentive awards will be expressed as a percentage of each Participant's
Salary.  These percentages shall vary by position and reflect larger
reward opportunity for positions having greater effect on the establishment and
accomplishment of the Company's or a Subsidiary's objectives.  A
schedule showing the target awards as a percentage of Salary for eligible
positions will be prepared by the Committee for each Plan Year.

    

    VIII.         INCENTIVE FUND
DETERMINATION

    The
target incentive fund is the sum of the individual target incentive awards for
all eligible Participants.  Once the incentive targets have been
determined by the Committee, a target incentive fund shall be established and
accrued ratably by the Company.  The incentive fund and accruals may
be adjusted during the year.

    After the
close of each Plan Year, the Company will prepare an analysis showing the
Company's and each Subsidiary's performance in relation to each of the
performance measures employed.  This will be provided to the Committee
for review and comparison to threshold, target and maximum performance
levels.  In addition, any recommendations of the President will be
presented at this time.  The Committee will then determine the amount
of the target incentive fund earned.

    

    IX.           INDIVIDUAL AWARD
DETERMINATION

            
Each individual Participant's award will be based first upon the level of
performance achieved by the Company and/or the Subsidiary and secondly based
upon the individual's performance.  The criteria applicable for
assessing individual performance will be approved by the Committee no later than
its regularly scheduled February meeting during the Plan Year.  The
assessment by the Committee, after consultation with the President, of
achievement relative to the established criteria, as determined by a percentage
from 0 percent to 200 percent, will be applied to the Participant's target
incentive award which has been first adjusted for Company or Subsidiary
performance.

    

    X.           PAYMENT OF
AWARDS

    Except as
provided below or as otherwise determined by the Committee, in order to receive
an award under the Plan, the Participant must remain in the employment of the
Company or the Subsidiary for the entire Service Year.  If a
Participant terminates employment with the Company pursuant to Section 5.01 of
the Company's Bylaws which provides for mandatory retirement for certain
officers on their 65th birthday (or terminates employment with a Subsidiary
pursuant to a similar Subsidiary Bylaw provision) and if the Participant's 65th
birthday occurs during the Service Year, determination of whether the
performance measures have been met will be made at the end of the Service Year,
and to the extent met, payment of the award will be made to the Participant,
prorated.  Proration of awards shall be based upon the number of full
months elapsed from and including January to and including the month in which
the Participant's 65th birthday occurs.  The prorated award shall be
paid as soon as practicable in the year following the Service Year, but in all
events between January 1 and March 10.

    A
Participant who transfers between the Company or a Subsidiary and another
company in the MDU Resources Group, Inc. system may receive a prorated award at
the discretion of the Committee.

    Payments
made under this Plan will not be considered part of compensation for pension
purposes.  Payments will be made in cash as soon as practicable in the
year following the Service Year, but in all events between January 1 and March
10.

    

    XI.           ACCOUNTING
RESTATEMENTS

    This
Section XI shall apply only to incentive awards granted to Participants in the
Plan who are employees of the Company.  Notwithstanding anything in
the Plan or the Plan's Rules and Regulations to the contrary, if the
Company's audited
financial statements are restated, the Committee may, in accordance with the
Company's Guidelines for
Repayment of Incentives Due to Accounting Restatements, take such actions
as it deems appropriate (in its sole discretion) with respect to

    (a)           unpaid
incentive awards under the Plan (including incentive awards relating to
completed Plan Years, but with respect to which payments have not yet been made)
("Outstanding Awards") and

    (b)           prior
incentive awards that were paid within the 3 year period preceding the
restatement ("Prior Awards"), provided such Prior Awards were not paid prior to
the date the Plan was amended to add this Section XI,

    if the
calculation of the amounts payable or paid under such awards are, or would have
been, directly impacted by the restatement, including, without limitation, (i)
securing (or causing to be secured) repayment of some or all payments made
pursuant to Prior Awards, (ii) making (or causing to be made) additional
payments, (iii) reducing or otherwise adjusting the amount payable pursuant to
Outstanding Awards and/or (iv) causing the forfeiture of Outstanding
Awards.  The Committee may, in its sole discretion, take different
actions pursuant to this Section XI with respect to different awards,
different Participants (or beneficiaries) and/or different classes of awards or
Participants (or beneficiaries).  The Committee has no obligation to
take any action permitted by this Section XI.  The Committee may
consider any factors it chooses in taking (or determining whether to take) any
action permitted by this Section XI, including, without limitation, the
following:

    (A)           The
reason for the restatement of the financial statements;

    (B)           The
amount of time between the initial publication and subsequent restatement of the
financial statements; and

    (C)           The
Participant's current employment status, and the viability of successfully
obtaining repayment.

    If the Committee requires repayment of
all or part of a Prior Award, the amount of repayment may be based on, among
other things, the difference between the amount paid to the individual and the
amount that the Committee determines in its sole discretion should have been
paid based on the restated results.  The Committee shall determine
whether repayment shall be effected (i) by seeking repayment from the
Participant, (ii) by reducing (subject to applicable law and the terms and
conditions of the applicable plan, program or arrangement) the amount that would
otherwise be provided to the Participant under any compensatory plan, program or
arrangement maintained by the Company or any of its affiliates, (iii) by
withholding payment of future increases in compensation (including the payment
of any discretionary bonus amount) or grants of compensatory awards that would
otherwise have been made in accordance with the Company's otherwise applicable
compensation practices, or (iv) by any combination of the
foregoing.  Additionally, by accepting an incentive award under the
Plan, Participants acknowledge and agree that the Committee may take any actions
permitted by this Section XI with respect to Outstanding Awards to the extent
repayment is to be made pursuant to another plan, program or arrangement
maintained by the Company or any of its affiliates.

     

     

    MDU
CONSTRUCTION SERVICES GROUP, INC.

    

    EXECUTIVE
INCENTIVE COMPENSATION PLAN

    

    RULES AND
REGULATIONS

    

     

           
The Compensation Committee of the Board of Directors of MDU Construction
Services Group, Inc. (formerly known as Utility Services, Inc.) (the "Company")
hereby adopts the following Rules and Regulations for the administration of the
Executive Incentive Compensation Plan (the "Plan").

    

    I.              DEFINITIONS

           
The following definitions shall be used for purposes of these
Rules and Regulations and for the purpose of administering the
Plan:

    

    
      	
               
      

            	
              1.

            	
              The
      "Committee" shall be the Compensation Committee of the Board of Directors
      of the Company.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      "Company" shall refer to MDU Construction Services Group,
    Inc.

            

    

    

    
      	
               
      

            	
              3.

            	
              "Participants"
      for any Plan Year shall be those key executives of the Company or
      Subsidiaries who have been approved by the Committee as eligible for
      participation in the Plan for such Plan
Year.

            

    

    

    
      	
               
      

            	
              4.

            	
              "Payment
      Date" shall be the date set by the Committee for payment of awards
      pursuant to Section X of the Plan.

            

    

    

    
      	
               
      

            	
              5.

            	
              The
      "Plan" shall refer to the MDU Construction Services Group, Inc. Executive
      Incentive Compensation Plan.

            

    

    

    
      	
               
      

            	
              6.

            	
              The
      "Plan Year" shall be January 1 through December
  31.

            

    

    

    
      	
               
      

            	
              7.

            	
              "Retirement"
      means the later of the day the Participant attains age 55 or the day the
      Participant ceases to be an employee of the Company, MDU Resources Group,
      Inc. or any subsidiary of MDU Resources Group,
  Inc.

            

    

    

    
      	
               
      

            	
              8.

            	
              "Service
      Year" means the Plan Year during which the services giving rise to the
      incentive award are performed.

            

    

    

    
      	
               
      

            	
              9.

            	
              "Subsidiary"
      means any subsidiary of the Company participating in the
    Plan.

            

    

    

    II.              ADMINISTRATION

    

    
      	
               
      

            	
              1.

            	
              The
      Committee shall have the full power to construe and interpret the Plan and
      to establish and to amend these Rules and Regulations for its
      administration.

            

    

    

    
      	
               
      

            	
              2.

            	
              No
      member of the Committee shall participate in a decision as to that
      member's own eligibility for, or award of, an incentive award
      payment.

            

    

    

    
      	
               
      

            	
              3.

            	
              Prior
      to the beginning of each Plan Year, the Committee shall approve a list of
      eligible key executives and notify those so approved that they are
      eligible to participate in the Plan for such Plan
  Year.

            

    

    

    
      	
               
      

            	
              4.

            	
              Prior
      to the beginning of each Plan Year, the Committee shall approve an Annual
      Operating Plan.  The Annual Operating Plan shall include the
      Plan's performance measures and target incentive award levels for each
      salary grade covered by the Plan for the following Plan
      Year.  The Committee shall set threshold, target and maximum
      award levels for performance.  These levels shall be included in
      the Annual Operating Plan.  The Plan's performance targets for
      the year shall be approved by the Committee no later than its regularly
      scheduled February meeting during the Plan Year.  The Annual
      Operating Plan, insofar as it is relevant to each individual Participant,
      shall be made available by the Committee to each Participant in the
      Plan.

            

    

    

    
      	
               
      

            	
              5.

            	
              The
      Committee shall have final discretion to determine actual award payment
      levels and whether or not payments shall be made for any Plan
      Year.  However, unless the Plan's performance objectives are met
      for the Plan Year, no award shall be made for that Plan
      Year.  Performance targets modified pursuant to Section III of
      the Plan will be deemed performance targets for purposes of determining
      whether or not these targets have been
met.

            

    

    

    III.              PLAN PERFORMANCE
MEASURES

    

    
      	
               
      

            	
              1.

            	
              The
      Committee shall establish the percentage attainment of corporate
      performance measure and the percentage attainment of individual goals
      measure.  The Committee may establish more or fewer performance
      measures as it deems necessary.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      corporate performance measure may be set by reference to earnings, return
      on invested capital or any other measure or combination of measures deemed
      appropriate by the Committee.  It may be established for the
      Company or for a Subsidiary.

            

    

    

    
      	
               
      

            	
              3.

            	
              Individual
      performance will be assessed based on the achievement of annually
      established individual objectives.

            

    

    

    
      	
               
      

            	
              4.

            	
              Plan
      performance measures may be applied at the Company level for individuals
      such as the President whose major or sole impact is Company-wide, or at
      the Subsidiary level for individuals whose major or sole impact is on
      Subsidiary results.  The Annual Operating Plan shall contain a
      list of individuals to whom the Plan performance measures will be applied
      at the Company level and a list of those individuals for whom the Plan
      performance measures will be applied at the Subsidiary
      level.  The relevant Subsidiary for each individual will be
      identified.

            

    

    

    
      	
               
      

            	
              5.

            	
              The
      Committee shall set threshold, target and maximum award levels for the
      performance measures for each Subsidiary and for the
      Company.  Those levels shall be included in the Annual Operating
      Plan.

            

    

    

    
      	
               
      

            	
              6.

            	
              The
      Committee will retain the authority to determine whether or not the actual
      attainment of these measures has been
made.

            

    

    

    IV.           TARGET INCENTIVE
AWARDS

    

    
      	
               
      

            	
              1.

            	
              Target
      incentive awards will be a percentage of each Participant's Salary, as
      defined in the Plan.

            

    

    

    
      	
               
      

            	
              2.

            	
              Target
      incentive awards shall be set by the Committee annually and will be
      included in the Annual Operating
Plan.

            

    

    

     V.           INCENTIVE FUND
DETERMINATION

    

    
      	
               
      

            	
              1.

            	
              The
      target incentive fund is the sum of the individual target incentive awards
      for all eligible Participants.

            

    

    

    
      	
               
      

            	
              2.

            	
              Once
      individual incentive targets have been determined, a target incentive fund
      shall be established and accrued ratably by the Company.  The
      incentive fund and accruals may be adjusted during the
    year.

            

    

    

    
      	
               
      

            	
              3.

            	
              As
      soon as practicable following the close of each Plan Year, the President
      will provide the Committee with an analysis showing the Company's and each
      Subsidiary's performance in relation to the performance
      measures.  The Committee will review the analysis and determine,
      in its sole discretion, the amount of the actual incentive
      fund.

            

    

    

    
      	
               
      

            	
              4.

            	
              In
      determining the actual incentive fund, the Committee may consider any
      recommendations of the President.

            

    

    

    VI.              INDIVIDUAL AWARD
DETERMINATION

    

    
      	
               
      

            	
              1.

            	
              The
      Committee shall have the sole discretion to determine each individual
      Participant's award.  The Committee's decision will be based
      first upon the level of performance achieved by the Company and/or the
      Subsidiary and secondly upon the individual's
  performance.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      Committee, after consultation with the President, shall set the award as a
      percentage from 0 percent to 200 percent of the Participant's target
      incentive award, adjusted for Company or Subsidiary
      performance.

            

    

    

    VII.              PAYMENT OF
AWARDS

    

    
      	
               
      

            	
              1.

            	
              On
      the date the Committee determines the awards to be made to individual
      Participants, it shall also establish the Payment
  Date.

            

    

    

    
      	
               
      

            	
              2.

            	
              Except
      as provided below or as the Committee otherwise determines, in order to
      receive an award under the Plan, a Participant must remain in the
      employment of the Company or the Subsidiary for the entire Service
      Year.

            

    

    

    
      	
               
      

            	
              3.

            	
              A
      Participant who transfers between the Company or a Subsidiary and another
      company in the MDU Resources Group, Inc. system may receive a prorated
      award at the discretion of the
Committee.

            

    

    

    
      	
               
      

            	
              4.

            	
              If
      a Participant terminates employment with the Company pursuant to Section
      5.01 of the Company's Bylaws, which provides for mandatory retirement for
      certain officers on their 65th birthday (or terminates
      employment with a Subsidiary pursuant to a similar Subsidiary Bylaw
      provision), and if the Participant's 65th birthday occurs during
      the Service Year, determination of whether the performance measures have
      been met will be made at the end of the Service Year, and to the extent
      met, payment of the award will be made to the Participant,
      prorated.  Proration of awards shall be based upon the number of
      full months elapsed from and including January to and including the month
      in which the Participant's 65th birthday
      occurs.

            

    

    

    
      	
               
      

            	
              5.

            	
              Payment
      of the award shall be made in cash.  Payments shall be made on
      the Payment Date.jharpaddinc.htm

     

    
 

    John
G. Harp 2008 Additional Incentive Opportunity

    

    

    Mr. Harp
has an additional incentive opportunity for 2008 based on MDU Construction
Services Group, Inc.’s (CSG) financial results.  If CSG’s actual 2008
return on invested capital (ROIC) is 200 basis points or more above its 2008
weighted average cost of capital, Mr. Harp will be paid $200,000.  If
the goal is not met, Mr. Harp will not be eligible to receive any amount under
this incentive opportunity.

    

    The
Compensation Committee of the Board of Directors of MDU Resources Group, Inc.
shall determine whether or not the goal has been met and recommend to the Board
of Directors of MDU Resources Group, Inc. (the "Board") whether or not to
approve payment of the additional incentive opportunity to Mr.
Harp.  If the Board approves payment of the additional incentive
opportunity, payment will be made in cash between January 1, 2009 and March 10,
2009.

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