Document:

ex10-2.htm

 

 

 

Exhibit 10.2

 

 

 

 

 

 

 

 

 

  

  

  

Exhibit 10.2

 

 

MDU RESOURCES GROUP, INC.

LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

 

ANNUAL INCENTIVE AWARD AGREEMENT

 

 

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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”) has  granted to you (the “Participant”) an opportunity to receive an annual incentive award for calendar year 2010 (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:

 

	
$[  ] (the “Target Award”)

 

	
Performance Measures:

 

	
Described in Annex B

 

	
Performance Period:

 

	
January 1, 20[ ] through December 31, 20[ ] (the "Performance Period")

 

 

THE AWARD IS SUBJECT TO FORFEITURE AS PROVIDED HEREIN.

 

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 provision 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:

	
____________________________________

	  	  	  
	  	  	
Thomas Everist

	  	  	
Chairman of the

	  	  	
Compensation Committee

 

 

	
Agreed:

	  
	  	  
	  	  
	  	  
	_______________________________  
	  	  
	
Participant

	  
	  	  
	
Attachments:

	
Annex A

	  	
Annex B

  

  

  

ANNEX A

 

TO

 

MDU RESOURCES GROUP, INC.

LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

 

ANNUAL INCENTIVE AWARD AGREEMENT

 

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

 

1.     Nature of Award.  The Award represents the opportunity to receive an annual incentive award if the Performance Measures are achieved during the Performance Period.

 

2.     Determination of Annual Incentive Award Earned.  The amount of the annual incentive award earned, if any, pursuant to this Award Agreement shall range from zero to 200% of the Target Award based upon achievement of the Performance Measures, with such percentage determined by the Committee in accordance with Annex B hereto.

 

3.     Payment.  Payment of any annual incentive award earned pursuant to this Agreement shall be made in cash in a lump sum.  Unless the Participant has elected to defer receipt of the annual incentive award in accordance with an applicable deferral arrangement, payment will be made as soon as practicable (but not later than the next March 10th) following the Committee's certification of the achievement of the Performance Measures and determination of the Participant's annual incentive payment pursuant to Section 2 hereof.

 

4.     Termination of Employment.  Notwithstanding anything contained herein to the contrary, except as the Committee may otherwise determine, in order to be eligible to receive an annual incentive award under this Award Agreement, the Participant must remain in the employ of the Company through the Performance Period.

 

5.     Unusual or Nonrecurring Events.  Unless otherwise determined by the Committee, the Performance Measure targets shall be adjusted to take into account unusual or nonrecurring events affecting the Company, a Subsidiary or a division or business unit, or the financial statements thereof, or changes in applicable laws, regulations or accounting principles to the extent such unusual or nonrecurring events or changes in applicable laws, regulations or accounting principles otherwise

 

  

  

  

would result in dilution or enlargement of the annual incentive award intended to be provided hereunder; provided, however, that such adjustment shall be made in a manner that will not cause the Award to fail to qualify as performance-based compensation for purposes of Section 162(m)(4)(C) of the Code.

 

6.     Tax Withholding.  The Committee shall have the power and the right to deduct or withhold from any annual incentive award earned pursuant to this Award Agreement an amount sufficient to satisfy any Federal, state and local taxes (including the Participant's FICA obligations) required by law to be withheld.

 

7.     Ratification of Actions.  By accepting the Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated his 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.     Definitions. Capitalized terms not otherwise defined herein or in the Award Agreement shall have the meanings given them in the Plan.

 

9.     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.

 

10.    No Rights to Continued Employment.  This Award Agreement is not a contract of employment.  Nothing in the Plan or in this 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 - Business Units

 

TO

 

MDU RESOURCES GROUP, INC.

LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

 

ANNUAL INCENTIVE AWARD AGREEMENT

 

The Committee may use negative discretion and adjust any annual incentive award payment downward, using any subjective or objective measures as it shall determine, including but not limited to the 20% limitation described in the following sentence.  The 20% limitation means that no more than 20% of after-tax earnings that are in excess of planned earnings at the business unit level for operating company executives and at the MDU Resources Group level for corporate executives will be paid in annual incentives to executives.  The application of this limitation or any other reduction, and the methodology used in determining any such reduction, is in the sole discretion of the Committee.

 

[Attach Business Unit [2010] Approved Performance Measures]

  

  

  

ANNEX B – MDU Resources Group, Inc.

 

TO

 

MDU RESOURCES GROUP, INC.

LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

 

ANNUAL INCENTIVE AWARD AGREEMENT

 

Determination of Annual Incentive Award Earned and Performance Measures.

 

The amount of the annual incentive award earned, if any, for the Performance Period shall be determined in accordance with the following formula:

 

Annual Incentive Award Earned = Payout Percentage X Target Award

 

The Payout Percentage is determined based on the annual incentive award payments made to the president and chief executive officers of the four business units – Knife River Corporation, MDU Construction Services Group, Inc., WBI Holdings, Inc. and Combined Utility Group (collectively, the "Business Units") – and will be calculated as follows.  Each business unit president and chief financial officer's annual incentive award payment, expressed as a percentage of his annual target award, will be multiplied by that business unit's percentage share of average invested capital for 2010.  These four products will be added together, and the sum will be multiplied by the Participant's Target Award.

 

The Committee may use negative discretion and adjust any annual incentive award payment downward, using any subjective or objective measures as it shall determine, including but not limited to the 20% limitation described in the following sentence.  The 20% limitation means that no more than 20% of after-tax earnings that are in excess of planned earnings at the business unit level for operating company executives and at the MDU Resources Group level for corporate executives will be paid in annual incentives to executives.  The application of this limitation or any other reduction, and the methodology used in determining any such reduction, is in the sole discretion of the Committee.

  

  

  

Performance Measures

 

The Performance Measures for the Business Units are as follows: [Attach [2010] Approved Performance Measures for Knife River Corporation, MDU Construction Services Group, Inc., WBI Holdings, Inc. and Combined Utility Group]ex10-3.htm

 

 

 

 

 

 

 

 

 

Exhibit 10.3

 

 

 

 

 

 

 

  

  

  

Exhibit 10.3

 

MDU Resources Group, Inc.

2010 Performance Share Award Opportunity Chart

 

 

	  	  	
Threshold

	
Target

	
Maximum

	
Name

	
Title

	
Shares

 

(#)

	
Dividend

Equivalents

($)

	
Shares

 

(#)

	
Dividend

Equivalents

($)

	
Shares

 

(#)

	
Dividend

Equivalents

($)

	
Terry D. Hildestad

	
President and Chief Executive Officer

MDU Resources Group, Inc.

	
4,771

	
9,017

	
47,709

	
90,170

	
95,418

	
180,340

	
Vernon A. Raile1

	
Executive Vice President, Treasurer and Chief Financial Officer

MDU Resources Group, Inc.

	
–

	
–

	
–

	
–

	
–

	
–

	
Doran N. Schwartz

	
Vice President and Chief Financial Officer

MDU Resources Group, Inc.

	
827

	
1,563

	
8,269

	
15,628

	
16,538

	
31,257

	
John G. Harp

	
President and Chief Executive Officer

MDU Construction Services Group, Inc.

	
1,718

	
3,247

	
17,175

	
32,461

	
34,350

	
64,922

	
William E. Schneider

	
President and Chief Executive Officer

Knife River Corporation

	
1,708

	
3,228

	
17,076

	
32,274

	
34,152

	
64,547

	
Steven L. Bietz

	
President and Chief Executive Officer

WBI Holdings, Inc.

	
1,336

	
2,525

	
13,358

	
25,247

	
26,716

	
50,493

 

 

(1)         Mr. Raile received no award due to his retirement on February 16, 2010.

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