Document:

Wdesk | MDU-6.30.2013Q2 Ex 10a

MDU RESOURCES GROUP, INC.

DIRECTOR 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
	90,000
	

	*

	 
	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, 2013.
	 
	 

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 crime 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.

*Non-owned aircraft is defined as:  1) any aircraft registered under a “standard” 

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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.
	Business travel accident 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 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.  The beneficiary of the insurance will be the beneficiary recorded on a beneficiary designation 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 

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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.

Policy Regarding Margin Accounts and Pledging of Company Stock
Effective December 21, 2012, Directors and related persons are prohibited from holding company common stock in a margin account or pledging company securities as collateral for a loan, with certain exceptions.  Company common stock may be held in a margin brokerage account only if the stock is explicitly excluded from any margin, pledge or security provisions of the customer agreement.  Company common stock may be held in a cash account, which is a brokerage account that does not allow any extension of credit on securities.  “Related person” means a director’s spouse, minor child and any person (other than a tenant or domestic employee) sharing the household of a director, as well as any entities over which a director exercises control.

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.

5Wdesk | MDU-6.30.2013Q2 Ex 10b

MDU Resources Group, Inc. Section 16 Officers and Directors 
with Indemnification Agreements Chart 

Section 16 Officers 

	
			
	Name
	Title
	Date of Agreement

	David L. Goodin
	President and Chief Executive Officer, MDU Resources Group, Inc.
	August 12, 2010

	J. Kent Wells
	Vice Chairman, MDU Resources Group, Inc.; President and Chief Executive Officer, Fidelity Exploration & Production Company
	May 2, 2011

	Dennis L. Haider
	Executive Vice President – Business Development, MDU Resources Group, Inc.
	June 1, 2013

	William R. Connors
	Vice President – Renewable Resources, MDU Resources Group, Inc.
	August 12, 2010

	Mark A. Del Vecchio
	Vice President - Human Resources, MDU Resources Group, Inc.
	August 12, 2010

	Nicole A. Kivisto
	Vice President, Controller and Chief Accounting Officer, MDU Resources Group, Inc.
	August 12, 2010

	Cynthia J. Norland
	Vice President - Administration, MDU Resources Group, Inc.
	August 12, 2010

	Doran N. Schwartz
	Vice President and Chief Financial Officer, MDU Resources Group, Inc.
	August 12, 2010

	John P. Stumpf
	Vice President – Strategic Planning, MDU Resources Group, Inc.
	August 12, 2010

	Douglass A. Mahowald
	Treasurer and Assistant Secretary, MDU Resources Group, Inc.
	August 12, 2010

	Paul K. Sandness
	General Counsel and Secretary, MDU Resources Group, Inc.
	August 12, 2010

	David C. Barney
	President and Chief Executive Officer, Knife River Corporation
	May 16, 2013

	Steven L. Bietz
	President and Chief Executive Officer, WBI Holdings, Inc.
	August 12, 2010

	K. Frank Morehouse
	President and Chief Executive Officer, Montana-Dakota Utilities Co. Division; President and Chief Executive Officer, Great Plains Natural Gas Co. Division
	January 4, 2013

	Jeffrey S. Thiede
	President and Chief Executive Officer, MDU Construction Services Group, Inc.
	May 16, 2013

	William E. Schneider
	Executive Vice President – Bakken Development, MDU Resources Group, Inc. until June 18, 2013
	August 12, 2010

	John G. Harp
	Chief Executive Officer, MDU Construction Services Group, Inc.; Chief Executive Officer, Knife River Corporation until April 29, 2013
	August 12, 2010

  
 

Directors 

	
			
	Name
	Title
	Date of Agreement

	Harry J. Pearce
	Chairman of the Board of Directors
	August 12, 2010

	Thomas Everist
	Director
	August 12, 2010

	Karen B. Fagg
	Director
	August 12, 2010

	David L. Goodin
	Director
	August 12, 2010

	A. Bart Holaday
	Director
	August 12, 2010

	Dennis W. Johnson
	Director
	August 12, 2010

	Thomas C. Knudson
	Director
	August 12, 2010

	Richard H. Lewis
	Director until April 23, 2013
	August 12, 2010

	Patricia L. Moss
	Director
	August 12, 2010

	J. Kent Wells
	Director
	May 2, 2011

	John K. Wilson
	Director
	August 12, 2010

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