Document:

Director Compensation Policy

     

    

      

      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, common stock and meeting fees.
        Each
        Director is also eligible for awards under the 1997 Non-Employee Director
        Long-Term Incentive Plan.

      

      Annual
        Retainers and Stock Compensation

      

      The
        Board
        service annual cash retainer shall be $30,000. The Lead Director, if any,
        shall
        receive an additional $33,000 of compensation. This is in addition to the
        annual
        Director cash retainer of $30,000. The non-executive Chairman of the Board,
        if
        any, shall receive an additional $100,000 of compensation, consisting of
        50 percent cash and 50 percent equity compensation. This is in addition to
        the annual Director cash compensation of $30,000. The annual retainers for
        service as Chairman of the Compensation, and Nominating and Governance
        Committees shall be $5,000. The annual retainer for service as Chairman of
        the
        Audit Committee shall be $10,000. Such retainers shall be paid in monthly
        installments.

      

      The
        Amended and Restated Deferred Compensation Plan for Directors adopted on
        February 13, 1992, and effective January 1, 1992, as amended, permits a Director
        to defer all or any portion of the annual cash retainer, as well as meeting
        fees
        and any other cash compensation paid for service as a Director. 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.

      

      Each
        Director shall receive 4,050 shares of Common Stock on or about the 15th
        business day following the annual meeting of stockholders, pursuant to the
        Non-Employee Director Stock Compensation Plan, effective April 25, 1995,
        as
        amended, or the 1997 Non-Employee Director Long-Term Incentive Plan. A Director
        may decline a stock payment for any plan year, in writing in advance of the
        plan
        year to which stock payment relates. No cash compensation shall be paid in
        lieu
        thereof. By written election a Director may reduce the cash portion of the
        annual retainer and have that amount applied to the purchase of additional
        shares. 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. 

      

      Board
        and Committee Meeting Fees

      

      The
        fee
        for each Board meeting attended shall be $1,500 and for each meeting attended
        of
        each Committee of which the Director is a member, and for attendance at the
        Strategic Planning meeting, shall be $1,500, payable only to Directors who
        are
        not full-time employees of the Company.

      

      Travel
        Expense Reimbursement

      

      All
        Directors will be reimbursed for reasonable travel expenses 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. 

      

      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 these protections: 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 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).

      

      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.

      

      
        	 	
                1.

              	
                General
                  liability and automobile liability
                  insurance:

              

      

      

      
        	 	 	
                The
                  Directors are afforded coverage under the general liability and
                  automobile
                  liability insurance of the Company. The policy limit is $100 million
                  in
                  excess of self-insured retentions of $500,000 per occurrence for
                  general
                  liability and for automobile liability; or $1 million per occurrence/
                  $2 million aggregate for general liability and $1 million per
                  occurrence for automobile liability, where we are carrying primary
                  layer
                  insurance coverage.

              

      

      

      	 	
            

      
        	 	 2.	
                
                  Fiduciary
                    and employee benefit liability
                    insurance:

                

              

      
        	 	 	
                The
                  Directors are afforded coverage under the fiduciary and crime liability
                  insurance of the Company. The fiduciary policy has a limit of $25
                  million
                  and the crime policy has a limit of $10 million.
                  

              

      

      

      
        	 	
                3.

              	
                Aircraft
                  liability insurance:

              

      

      

      
        	 	 	
                The
                  Company's existing aircraft liability insurance policy extends
                  coverage
                  while a non-owned* aircraft is used by a Director in traveling
                  to and from
                  Director or Board committee meetings. This insurance coverage constitutes
                  excess liability coverage in the amount of $200
                  million.

              

      

      

      
        	 	 	
                *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 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.Non-Employee Director Stock Compensation Plan

    

    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.

    

    "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, $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 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 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
      4,050
      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
      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

    

    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 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
      and
      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

    

    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 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.

    

    E. Governing
      Law

    

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}]]