Document:

Wdesk | Exhibit

Exhibit 10.1

MDU Resources Group, Inc.
2016 Annual Incentive Award Opportunity Chart
	
						
	 
	 
	 
	 
	 
	 

	Name
	Position
	2016
Base
Salary
($)
	Threshold
($)
	Target
($)
	Maximum
($)

	David L. Goodin
	President and Chief Executive Officer of the Company
	755,000
	188,750
	755,000
	1,510,000

	Doran N. Schwartz
	Vice President and Chief Financial Officer of the Company
	380,000
	61,750
	247,000
	494,000

	David C. Barney
	President and Chief Executive Officer of construction materials and contracting segment
	406,800
	76,275
	305,100
	732,240

	Jeffrey S. Thiede
	President and Chief Executive Officer of construction services segment
	425,000
	79,688
	318,750
	765,000

	Patrick L. O'Bryan 
	President and Chief Executive Officer of E&P   segment
	450,000
	—
	—
	—

	Steven L. Bietz 
	Former President and Chief Executive Officer of pipeline and energy services segment
	—
	—
	—
	—Wdesk | Exhibit

Exhibit 10.2

MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

ANNUAL INCENTIVE AWARD AGREEMENT

[Date]

[Name and Address]

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") hereby grants to you (the "Participant") an opportunity to receive an annual incentive award for calendar year 20[**] (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 Goals:

	Described in Annex B

	Performance Period:

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

THE AWARD IS SUBJECT TO FORFEITURE AS PROVIDED HEREIN. THIS AWARD AND AMOUNTS RECEIVED IN CONNECTION WITH THIS AWARD ARE ALSO SUBJECT TO FORFEITURE, RECAPTURE OR OTHER ACTION IN THE EVENT OF AN ACCOUNTING RESTATEMENT, AS PROVIDED IN THE PLAN.
        
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 provisions 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:
	 

	 
	 
	Name
Title

Agreed:

	
		
	 

	Participant

	 

	Attachments:
	Annex A

	 
	Annex B

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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 Goals 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] [240]% of the Target Award based upon achievement of the Performance Goals, 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 Goals 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. Discretion.

(a) No Positive Discretion. Unless otherwise determined and established in writing by the Committee within 90 days of the beginning of the Performance Period, no adjustment shall be made to the Performance Goals if the adjustment would increase the annual incentive award payment. 

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(b) Negative Discretion. The Committee may use negative discretion and adjust any annual incentive award payment downward, using any subjective or objective measures as it shall determine. The application of any reduction, and the methodology used in determining any such reduction, is in the sole discretion of the Committee.

6. Tax Withholding. The Committee shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any Federal, state and local taxes (including the Participant's FICA obligations) required by law to be withheld with respect to the Award.

7. Ratification of Actions. By accepting the Award or other benefit under the Plan, the Participant and each person claiming under or through him or her shall be conclusively deemed to have indicated the Participant’s 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. Notices. Any notice hereunder to the Company shall be addressed to its office, 1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota 58506; Attention: Corporate Secretary, and any notice hereunder to the Participant shall be addressed to him or her at the address specified on the Award Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.

9. Definitions. Capitalized terms not otherwise defined herein or in the Award Agreement shall have the meanings given them in the Plan.

10. 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.

11. 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.

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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 Goals

Annual Incentive Award Earned

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 will be calculated as follows:

	
				
	 
	Column A  
Percentage of Annual  
Incentive Target Achieved (1)
	Column B  
Percentage of  
Average Invested  
Capital
	Column A x Column B

	Construction materials and contracting
	[__]% (2)
	[__]%
	[__]%

	Construction services
	[__]% (2)
	[__]%
	[__]%

	Pipeline and midstream, and refining combined
	[__]% 
	[__]%
	[__]%

	Electric and natural gas distribution
(utility)
	[__]%
	[__]%
	[__]%

	Total (Payout Percentage)
	 
	 
	[__]%

(1) Based on the award opportunity of the person who is the business segment leader.

(2) If the percent of payout for the earnings goal for these segments should exceed 200%, the payment for the earnings goal for purposes of calculating the awards earned at the MDU Resources Group level will be capped at 200%.  

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Performance Goals
The Performance Goals for [20**] for the (i) construction materials and contracting segment, (ii) construction services segment, (iii) pipeline and midstream segment and refining segment, combined, and (iv) electric and natural gas distribution (utility) segment are attached hereto.

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ANNEX B – Business Segments

TO

MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

ANNUAL INCENTIVE AWARD AGREEMENT

[Attach Business Segments [20**] Approved Performance Goals]

7Wdesk | Exhibit

Exhibit 10.3

MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

PERFORMANCE SHARE AWARD AGREEMENT

[date]

«name»
«streetaddress»
«citystzip»

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") hereby grants to you (the "Participant") Performance Shares (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:
	«shares» Performance Shares (the "Target Award")

	Performance Period:
 
	January 1, 20** through December 31, 20** 
[three years](the "Performance Period")
 

	Date of Grant:
	[**]

	Dividend Equivalents:
	Yes

THESE PERFORMANCE SHARES ARE SUBJECT TO FORFEITURE AS PROVIDED HEREIN.  THIS AWARD AND AMOUNTS RECEIVED IN CONNECTION WITH THIS AWARD ARE ALSO SUBJECT TO FORFEITURE, RECAPTURE OR OTHER ACTION IN THE EVENT OF AN ACCOUNTING RESTATEMENT, AS PROVIDED IN THE PLAN.

Further terms and conditions of the Award are set forth in Annexes A and B hereto, which are integral parts of this Award Agreement.
 
 

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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 provisions 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:
	 
	 

	 
	 
	Name
	 

	 
	 
	Title
	 

	 
	 
	 
	 

	 
	 
	 
	 

Agreed :

	
		
	 

	Participant

	 

	Attachments:
	Annex A

	 
	Annex B

2

ANNEX A

TO

MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

PERFORMANCE SHARE AWARD AGREEMENT

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

1.    Nature of Award.  The Target Award represents the opportunity to receive shares of Company common stock, $1.00 par value ("Shares") and Dividend Equivalents on such Shares.  The number of Shares that may be earned under this Award shall be determined pursuant to Section 2 hereof.  The amount of Dividend Equivalents that may be earned under this Award shall be determined pursuant to Section 4 hereof.  Except for Dividend Equivalents, which are paid in cash, Awards will be paid in Shares.

2.    Determination of Number of Shares Earned.

The number of Shares earned, if any, for the Performance Period shall be determined in accordance with the following formula:

 # of Shares = Payout Percentage X Target Award

The "Payout Percentage" is based on the Company's total shareholder return ("TSR") relative to that of the Peer Group listed on Annex B (the "Percentile Rank") for the Performance Period, determined in accordance with the following table:

	
		
	Percentile Rank
	Payout Percentage
(% of Target Award)

	75th or higher
	200%

	50th
	100%

	25th
	20%

	less than 25th
	0%

If the Company achieves a Percentile Rank between the 25th and 50th percentiles, the Payout Percentage shall be equal to 20%, plus 3.2% for each Percentile Rank whole percentage above the 25th percentile.  If the Company achieves a Percentile Ranking between the 50th and 75th percentiles, the Payout Percentage shall be equal to 100%, plus 4.0% for each Percentile Rank whole percentage above the 50th percentile. 

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If the Company’s TSR for the Performance Period is negative, the number of shares otherwise earned, if any, for the Performance Period will be reduced in accordance with the following table:

	
			
	TSR
	 
	Reduction In Award

	0% through -5%
	 
	50%

	-5.01% through -10%
	 
	60%

	-10.01% through -15%
	 
	70%

	-15.01% through -20%
	 
	80%

	-20.01% through -25%
	 
	90%

	-25.01% or below
	 
	100%

The Percentile Rank of a given company's TSR is defined as the percentage of the Peer Group companies' returns falling at or below the given company's TSR.  The formula for calculating the Percentile Rank follows:
	
	
	Percentile Rank = (n - r + 1)/n x 100

	
		
	 
	Where:

	
			
	 
	n =
	total number of companies in the Peer Group, including the Company

	
			
	 
	r =
	the numeric rank of the Company's TSR relative to the Peer Group, where the highest
return in the group is ranked number 1

 
To illustrate, if the Company's TSR is the third highest in the Peer Group comprised of 20 companies, its Percentile Rank would be 90.  The calculation is: (20 - 3 + 1)/20 x 100 = 90.
 
The Percentile Rank shall be rounded to the nearest whole percentage.

If the common stock of a company in the Peer Group ceases to be traded during the Performance Period, the company will be deleted from the Peer Group.  Percentile Rank will be calculated without regard to the return of the deleted company.

If the Company or a company in the Peer Group spins off a segment of its business, the shares of the spun-off entity will be treated as a cash dividend that is reinvested in the Company or the company in the Peer Group.

Total shareholder return is the percentage change in the value of an investment in the common stock of a company from the initial investment made on the last trading day in the calendar year preceding the beginning of the performance period through the last trading day in the final year of the performance period.  It is assumed that dividends are reinvested in additional shares of common stock at the frequency paid.

All Performance Shares that are not earned for the Performance Period shall be forfeited. 

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3.    Issuance of Shares and Mandatory Holding Period.  Subject to any restrictions on distributions of Shares under the Plan, and subject to Section 6 of this Annex A, the Shares earned under the Award, if any, shall be issued to the Participant as soon as practicable (but no later than the next March 10) following the close of the Performance Period.  The Participant shall retain 50% of the net after-tax Shares that are earned under this Award until the earlier of (i) the end of the two-year period commencing on the date any Shares earned under this Award are issued and (ii) the Participant’s termination of employment.

4.    Dividend Equivalents.  Dividend Equivalents shall be earned with respect to any Shares issued to the Participant pursuant to this Award.  The amount of Dividend Equivalents earned shall be equal to the total dividends declared on a Share between the Date of Grant of this Award and the last day of the Performance Period, multiplied by the number of Shares issued to the Participant pursuant to the Award Agreement.  Any Dividend Equivalents earned shall be paid in cash to the Participant when the Shares to which they relate are issued or as soon as practicable thereafter, but no later than the next March 10 following the close of the Performance Period.  If the Award is forfeited or if no Shares are issued, no Dividend Equivalents shall be paid.
5.    Termination of Employment.
(a)    If the Participant's employment with the Company is terminated during the Performance Period (i) for "Cause" (as defined below) at any time or (ii) for any reason other than "Cause" before the Participant, as of the effective date of termination, has reached age 55 and completed 10 "Years of Service" (as defined below), all Performance Shares (and related Dividend Equivalents) shall be forfeited.
(b)    If the Participant's employment with the Company is terminated for any reason other than "Cause" after the Participant, as of the effective date of termination, has reached age 55 and completed 10 "Years of Service" (i) during the first year of the Performance Period, all Performance Shares (and related Dividend Equivalents) shall be forfeited; (ii) during the second year of the Performance Period, determination of the Company's Percentile Rank for the Performance Period will be made by the Committee at the end of the Performance Period, and Shares (and related Dividend Equivalents) earned, if any, will be paid based on the Payout Percentage, prorated for the number of full months elapsed from and including the month in which the Performance Period began to and including the month in which the termination of employment occurs; and (iii) during the third year of the Performance Period, determination of the Company's Percentile Rank for the Performance Period will be made by the Committee at the end of the Performance Period, and Shares (and related Dividend Equivalents) earned, if any, will be paid based on the Payout Percentage without prorating.

(c)    For purposes of the Award Agreement, the term "Cause" shall mean the Participant's fraud or dishonesty that has resulted or is likely to result in material economic damage to the Company or a Subsidiary, or the Participant's willful nonfeasance if such nonfeasance is not cured within ten days of written notice from the Company or a Subsidiary, as determined in good faith by a vote of at least two-thirds of the non-employee directors of the Company at a meeting of the Board at which the Participant is provided an opportunity to be heard.  For purposes of the 

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Award Agreement, the term "Years of Service" shall mean the years a Participant is employed by the Company and/or a Subsidiary.

6.    Tax Withholding.  Pursuant to Article 16 of the Plan, the Committee shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any Federal, state and local taxes (including the Participant's FICA obligations) required by law to be withheld with respect to the Award.  The Committee may condition the delivery of Shares upon the Participant's satisfaction of such withholding obligations.  The Participant may elect to satisfy all or part of such withholding requirement by tendering previously-owned Shares or by having the Company withhold Shares having a Fair Market Value equal to the minimum statutory withholding that could be imposed on the transaction (based on minimum statutory withholding rates for Federal, state and local tax purposes, as applicable, including payroll taxes, that are applicable to such supplemental taxable income).  Such election shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

7.    Ratification of Actions.  By accepting the Award or other benefit under the Plan, the Participant and each person claiming under or through him or her shall be conclusively deemed to have indicated the Participant's 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.    Notices.  Any notice hereunder to the Company shall be addressed to its office, 1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota 58506; Attention: Corporate Secretary, and any notice hereunder to the Participant shall be addressed to him or her at the address specified on the Award Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.

9.    Definitions.  Capitalized terms not otherwise defined herein or in the Award Agreement shall have the meanings given them in the Plan.

10.    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.
 
11.    No Rights to Continued Employment.  The Award Agreement is not a contract of employment.  Nothing in the Plan or in the 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.

6

 

ANNEX B

TO

MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

PERFORMANCE SHARE AWARD AGREEMENT

PEER GROUP COMPANIES

ALLETE, Inc.
Alliant Energy Corporation
Atmos Energy Corporation
Avista Corporation
Black Hills Corporation
EMCOR Group, Inc.
Granite Construction Incorporated
IDACORP, Inc.
Integrated Electrical Services, Inc.
Martin Marietta Materials, Inc.
MYR Group Inc.
National Fuel Gas Company
Northwest Natural Gas Company
NorthWestern Corporation
Quanta Services, Inc.
Questar Corporation
Sterling Construction Company, Inc.
U.S. Concrete, Inc.
Vectren Corporation
Vulcan Materials Company

 

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