SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MDU Resources Group, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
$125
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2) Form, Schedule or Registration Statement No.:
Schedule 14A Preliminary Proxy Material
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3) Filing Party:
MDU Resources Group, Inc.
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4) Date Filed:
March 4, 1996
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<PAGE>
[LOGO] MDU RESOURCES
GROUP, INC.
- --------------------------------------------------------------------------------
400 North Fourth Street John A. Schuchart
Bismarck, ND 58501 Chairman of the Board
(701) 222-7900
March 4, 1996
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held on Tuesday, April 23, 1996, at 11:00 A.M., Central Daylight Time, at 909
Airport Road, Bismarck, North Dakota 58504. The other directors and officers
join me in extending this invitation.
The formal matters to be acted upon at the meeting are described in the
accompanying Notice of Meeting and Proxy Statement. In addition to the formal
issues, a brief report on current matters of interest will be presented.
Luncheon will be served following the meeting.
We were pleased with the response of our stockholders at the 1995 Annual
Meeting at which 83.9 percent of the Common Stock was represented in person or
by proxy. We hope that participation by our stockholders in the affairs of the
Company will increase and that there will be an even greater representation at
the 1996 meeting. If you are unable to attend the meeting but have questions or
comments on the Company's operations, we would like to hear from you.
Representation of your shares at the meeting is very important and we urge
that, whether or not you now plan to attend the meeting, you promptly mark,
date, sign and return the enclosed proxy card in the envelope provided for that
purpose. If you do attend the meeting, you may, if you wish, withdraw your proxy
and vote in person.
I hope you will find it possible to attend the meeting.
Sincerely,
/s/ JOHN A. SCHUCHART
JOHN A. SCHUCHART
<PAGE>
MDU RESOURCES GROUP, INC.
400 North Fourth Street
Bismarck, North Dakota 58501
----------
Notice of Annual Meeting of Stockholders
to be held April 23, 1996
----------
March 4, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MDU
Resources Group, Inc. will be held at 909 Airport Road, Bismarck, North Dakota
58504, on Tuesday, April 23, 1996, at 11:00 A.M., Central Daylight Time, for the
following purposes:
(1) To elect three directors to three year terms;
(2) To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on February 26,
1996, as the record date for the determination of common stockholders who will
be entitled to notice of and to vote at the meeting.
All stockholders who find it convenient to do so are cordially invited and
urged to attend the meeting in person. It is requested that you date, sign and
return the accompanying proxy in the enclosed return envelope, to which no
postage need be affixed if mailed in the United States. Your cooperation will be
appreciated.
By order of the Board of Directors,
/s/ LESTER H. LOBLE, II
LESTER H. LOBLE, II,
Secretary
<PAGE>
MDU RESOURCES GROUP, INC.
400 North Fourth Street
Bismarck, North Dakota 58501
----------
PROXY STATEMENT
----------
This Proxy Statement is furnished to the holders of Common Stock of MDU
Resources Group, Inc. (Company) on behalf of the Board of Directors of the
Company in connection with the solicitation of proxies to be used in voting at
the Annual Meeting of Stockholders to be held on April 23, 1996. The proxy
material was first forwarded to the holders of Common Stock on March 4, 1996.
Any stockholder giving a proxy may revoke it at any time prior to its use
at the meeting by filing with the Secretary either a written instrument of
revocation or a duly executed proxy bearing a later date. In addition, the
powers of a proxy holder are suspended if the person executing the proxy is
present at the meeting and informs the Secretary in open meeting that he wishes
to revoke his proxy and vote in person. Attendance at the meeting will not in
and of itself revoke a proxy.
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of shares of the Common Stock of the
Company. In addition to the use of the mails, proxies may be solicited by
officers and regular employees of the Company, by personal interview, by
telephone or by telegraph. Banks, brokerage houses and other institutions,
nominees and fiduciaries will be requested to forward the soliciting material to
their principals and to obtain authorizations for the execution of proxy cards
and will, upon request, be reimbursed for reasonable expenses incurred.
Additional solicitation of proxies will be made in the same manner under the
special engagement and direction of Georgeson & Company, Inc. at an anticipated
cost to the Company of approximately $6,000 plus out-of-pocket expenses.
VOTING SECURITIES OUTSTANDING
Only holders of record of Common Stock at the close of business on February
26, 1996, will be entitled to vote at the meeting. On such date there were
outstanding 28,476,981 shares of Common Stock. Each outstanding share of Common
Stock entitles the holder to one vote.
The Bylaws of the Company provide that a majority of the shares of Common
Stock issued and outstanding and entitled to vote in person or by proxy shall
constitute a quorum at a meeting of stockholders of the Company. Shares of
Common Stock represented by a properly signed and returned proxy are considered
present for purposes of determining a quorum.
Under Delaware law, if a quorum is present, the nominees for election as
directors who receive a plurality of the votes of shares present in person or
represented by proxy and entitled to vote shall be elected as directors.
"Withheld" votes are not included in the total vote cast for a nominee for
purposes of determining whether a plurality was received and, therefore, have no
negative effect.
As of February 26, 1996, no person held of record, or, to the knowledge of
the management of the Company, owned beneficially, 5 percent or more of the
outstanding shares of Common Stock of the Company.
ELECTION OF DIRECTORS
At the meeting, three Directors will be elected to serve for a term of
three years until 1999 and until their respective successors are elected and
qualify. All of the nominees are incumbent Directors and are nominated for
reelection. Unless otherwise marked on the proxy, shares of the Common Stock
represented by the proxy will be voted for the nominees named below. If any
nominee becomes unavailable for any reason, or if a vacancy should occur before
the election (which events are not anticipated), the shares represented by the
proxy will be voted for another person in the discretion of the persons named in
1
<PAGE>
the proxy. Information concerning the nominees, including their ages, periods of
service as directors and business experience, according to information furnished
to the Company by the respective nominees, is set forth as follows:
<TABLE>
<CAPTION>
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
<S> <C> <C> <C>
Thomas Everist .......................... 45 1995 Mr. Everist is the President and Chief Executive Officer of
(to be elected for a term of three years L. G. Everist, Sioux Falls, South Dakota, an aggregate
expiring in 1999) production company. He is Vice President of Spencer
(PICTURE) Quarries, Spencer, South Dakota, a rock quarry, and
Director of Power Plant Aggregates and Midwest Fly Ash,
both of Sioux City, Iowa, which market fly ash, kiln
dust and concrete additives, and a Director of Standard
Ready Mix, of Sioux City, Iowa.
Harold J. Mellen, Jr .................... 61 1989 Mr. Mellen joined the Company in 1985 as Vice President
(to be elected for a term of three years --Corporate Development and was named Senior Vice
expiring in 1999) President--Finance and Chief Financial Officer in May
(PICTURE) 1987, Executive Vice President and Chief Financial and
Corporate Development Officer in August 1989, and
President and Chief Corporate Development Officer in
May 1992. Mr. Mellen became the President and Chief
Executive Officer on January 1, 1995. During 1995, Mr.
Mellen served as Chairman of the Board, a Director
and/or an officer of all principal subsidiaries and
Chairman of the Managing Committee of the utility
Division of the Company.
Robert L. Nance ......................... 59 1993 Mr. Nance is the majority owner and President of Nance
(to be elected for a term of three years Petroleum Corporation, Billings, Montana, an oil and
expiring in 1999) gas exploration and production company. He is also a
(PICTURE) Director of First Interstate Bank of Commerce,
Billings, Montana. He is a Director of the Deaconess
Billings Clinic Health Organization, Deaconess Medical
Center and Billings Clinic, all of Billings, Montana,
serves on the National Board of Governors of the
Independent Petroleum Association of America, and
serves on the Board and is Vice Chairman of the
Petroleum Technology Transfer Council. He currently
serves on the Finance and Nominating Committees of the
Board of Directors.
</TABLE>
2
<PAGE>
Certain information concerning the remaining directors, whose terms expire
either in 1997 or in 1998, including their ages, periods of service as directors
and business experience, according to information furnished to the Company, is
set forth as follows:
<TABLE>
<CAPTION>
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
<S> <C> <C> <C>
San W. Orr, Jr. 54 1978 Mr. Orr is an attorney and is in the business of financial
(term expiring in 1997) ................. and estate management. He is Chairman of the Boards and
(PICTURE) a Director of Marathon Electric Manufacturing
Corporation, Mosinee Paper Corporation, and Wausau
Paper Mills Company. He is a Director of Wausau
Insurance Companies, Marshall & Ilsley Corporation, M &
I First American Bank, and M & I Marshall & llsley
Bank. Mr. Orr also serves various civic and charitable
organizations in Wisconsin including the Board of
Regents of the University of Wisconsin System. He
currently serves on the Audit and Compensation
Committees of the Board of Directors.
John A. Schuchart ....................... 66 1976 Mr. Schuchart, Chairman of the Board, was named Chief
(term expiring in 1997) Executive Officer in June 1980 and Chairman in May
(PICTURE) 1983. He retired as Chief Executive Officer on December
31, 1994. Mr. Schuchart also serves as an ex officio
Director of the subsidiaries of the Company, the
Managing Committee of Montana-Dakota Utilities Co., and
the MDU Resources Foundation. Mr. Schuchart serves on
various civic and charitable organizations in Bismarck,
North Dakota, including the Board of Regents of the
University of Mary.
Homer A. Scott, Jr ...................... 61 1981 Mr. Scott is engaged in the banking and ranching business
(term expiring 1997) in the states of Wyoming and Montana. He is a Director
(PICTURE) and Chairman of the Board of First Interstate
BancSystem of Montana, Inc., a Director of First
Interstate Bank of Commerce, Montana and Chairman of
the Board and a Director of First Interstate Bank of
Commerce, Wyoming. Mr. Scott is a Director and
President of Sugarland Enterprises, Inc., and the
managing partner of Sugarland Development Company, a
commercial property development company in Sheridan,
Wyoming. He is the owner of the Sheridan Holiday Inn,
principal owner of Sports Mate, Inc., and owner of
Powder Horn Ranch, a housing development and golf
course in Sheridan, Wyoming. He currently serves on the
Audit and Compensation Committees of the Board of
Directors.
Sister Thomas Welder, O.S.B ............. 55 1988 Sister Welder is the President of the University of Mary,
(term expiring in 1997) Bismarck, North Dakota. She is a Director of St.
(PICTURE) Alexius Medical Center of Bismarck and Chair of its
Marketing Committee. She is also a Director of the
Bismarck-Mandan Development Association and is a member
and past Director of the Bismarck-Mandan Area Chamber
of Commerce. She is also a member of the North Dakota
State Women's Business Leadership Council, the Theodore
Roosevelt Medora Founder's Society, and
Consultant-Evaluator Corps for the North Central
Association of Colleges and Schools. She currently
serves on the Nominating and Finance Committees of the
Board of Directors.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
<S> <C> <C> <C>
Douglas C. Kane ......................... 46 1991 Mr. Kane joined the Company as Executive Vice President and
(term expiring in 1998) Chief Operating Officer in January 1991. Prior to that
(PICTURE) time he was President and Chief Executive Officer of
Knife River Coal Mining Company from May 1990,
President from September 1987 and previously had served
as Senior Vice President--Operations. During 1995, Mr.
Kane served as Director and/or officer of principal
subsidiaries of the Company and as a member of the
Managing Committee of the Company's utility Division.
Richard L. Muus ......................... 66 1985 Mr. Muus retired in April 1989 after 35 years with the
(term expiring in 1998) Midwest Federal Savings Bank, Minot, North Dakota. At
(PICTURE) the time of his retirement Mr. Muus was the President
and a Director of the bank. Mr. Muus is a member and
past Director and Officer of the Minot Area Chamber of
Commerce and a past Director of the Minot Area
Development Corporation. He is a member of the Military
Affairs and Diplomats Committee of the Chamber of
Commerce. He is a member of the Board of Regents of
Minot State University. He also served on the Advisory
Board and Finance Committee of St. Joseph Hospital,
Minot, North Dakota for 30 years. He currently serves
on the Audit and Finance Committees of the Board of
Directors.
John L. Olson ........................... 56 1985 Mr. Olson is President and the owner of Blue Rock Products
(term expiring in 1998) Company and of Blue Rock Distributing Company located
(PICTURE) in Sidney, Montana, a beverage bottling and
distributing company, respectively. Mr. Olson also is
the Chairman of the Board and a Director of Admiral
Beverage Corporation, Worland, Wyoming, and Ogden,
Utah; he is Chairman of the Board and Director of the
Foundation for Community Care, Sidney, Montana and a
trustee of the University of Montana Foundation; he is
trustee for Blue Rock Products Company Profit Sharing
Trust, Sidney, Montana. He currently serves on the
Audit and Compensation Committees of the Board of
Directors.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
First Year
of Service
Name Age as Director Business Experience
---- --- ----------- -------------------
<S> <C> <C> <C>
Joseph T. Simmons ....................... 60 1984 Mr. Simmons is professor of Accounting and Finance,
(term expiring in 1998) University of South Dakota, Vermillion and was Visiting
(PICTURE) Professor of Finance, University of Warsaw, Warsaw,
Poland (February--July, 1994). Mr. Simmons is the
Chairman and President of Simmons Financial Management,
Inc. and owner of Simmons & Associates. He also serves
on the Boards of GRO/TECH and RE/SPEC in Rapid City,
South Dakota and Dairilean, Inc. in Sioux Falls, South
Dakota. He currently serves on the Finance Committee of
the Board of Directors.
</TABLE>
Except where expressly noted, no corporation or organization named above is a
parent, subsidiary or other affiliate of the Company.
During 1995, the Board of Directors had four meetings. The Board of
Directors has an Audit Committee, a Nominating Committee, a Finance Committee
and a Compensation Committee. All committees are composed entirely of outside
directors. The Audit Committee, established in 1972, meets regularly with
management, internal auditors, and representatives of the Company's independent
public accountants. The independent accountants have free access to the
Committee and the Board of Directors. In 1995, the Committee met four times and
reviewed the scope, timing and fees for the annual audit, other services
provided by the independent accountants, and the results of audit examinations
completed by the independent accountants, including the recommendations to
improve internal controls and the follow-up reports prepared by management. The
Audit Committee reports the results of its activities to the full Board of
Directors. No member of the Audit Committee is or has been an employee of the
Company. The Nominating Committee, which met four times during 1995, recommends
to the full Board of Directors nominees for directors and for executive
officers. The Nominating Committee will consider nominees recommended by
stockholders if the names of such nominees are submitted to the Secretary of the
Company on or before November 4, 1996, for the annual meeting expected to be
held on April 22, 1997. The Compensation Committee, which met four times during
1995, sets compensation levels for executive officers and recommends to the full
Board of Directors compensation for the Directors of the Company. The Finance
Committee, which met three times during 1995, reviews corporate financial plans,
policies, budgets, investments, acquisitions, and reviews and authorizes actions
necessary to issue and sell Common Stock and debt securities of the Company. All
incumbent Directors attended more than 75 percent of the combined total of the
meetings of the Board and of the committees on which the Director served.
5
<PAGE>
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the calendar
years ending December 31, 1995, 1994, and 1993, for those persons who were, at
December 31, 1995, (i) the Chief Executive Officer and (ii) the other four most
highly compensated executive officers of the Company (the Named Officers).
Footnotes supplement the information contained in the Tables.
TABLE 1: SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long term
Annual compensation compensation
----------------------------- -------------------------
Awards
-------------------------
(a) (b) (c) (d) (e) (f) (g)
Securities
Restricted underlying All other
stock Options/ compen-
Name and Salary Bonus(1) award(s) SARs(3) sation(4)
principal position Year ($) ($) ($) (#) ($)
------------------ ---- ------ -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Harold J. Mellen, Jr. 1995 249,553 104,824 0 49,740 5,886
--President & C.E.O. 1994 191,779 50,577 0 0 4,500
1993 176,995 42,328 0 0 4,497
Ronald D. Tipton 1995 179,039 101,997 31,680(2) 32,955 3,975
--President & C.E.O. of 1994 -- -- -- -- --
Montana-Dakota Utilities Co. 1993 -- -- -- -- --
Douglas C. Kane 1995 181,210 58,910 0 27,952 4,500
--Executive Vice President 1994 138,519 44,878 0 0 4,156
& Chief Operating Officer 1993 131,960 35,264 0 0 3,944
Martin A. White 1995 128,312 23,514 0 8,925 3,849
--Senior Vice President-- 1994 123,369 24,030 0 0 3,135
Corporate Development 1993 119,352 20,700 0 0 920
Lester H. Loble, II 1995 119,006 26,163 0 9,900 3,041
--General Counsel & 1994 115,446 22,279 0 0 3,080
Secretary 1993 111,122 22,275 0 0 3,284
</TABLE>
- ----------
1. Granted pursuant to the Management Incentive Compensation Plan.
2. Non-preferential dividends are paid on the 1,500 shares of stock shown
above.
3. "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.
4. Totals shown are the Company contributions to the Tax Deferred Compensation
Plan, with the exception of Mr. Mellen, whose totals also include insurance
premiums in each year of $1,386.
6
<PAGE>
TABLE 2: OPTION/SAR(1) GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Grant date
Individual Grants(2) value
------------------------------------------------------------- ---------------
Number of Percent of
securities total options
underlying granted to Exercise or Grant date
options granted employees in base price Expiration present value(3)
Named Officer (#) fiscal year ($/share) date ($)
(a) (b) (c) (d) (e) (f)
------------ ------------- ----------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Harold J. Mellen, Jr.......... 49,740 16.9 18.50 02/08/05 132,806
Ronald D. Tipton.............. 32,955 11.2 18.50 02/08/05 87,990
Douglas C. Kane............... 27,952 9.5 18.50 02/08/05 74,637
Martin A. White............... 8,925 3.0 18.50 02/08/05 23,830
Lester H. Loble, II........... 9,900 3.4 18.50 02/08/05 26,433
</TABLE>
- ----------
1. "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.
2. The options granted under the 1992 Key Employee Stock Option Plan become
exercisable automatically in nine years on February 8, 2004. Vesting is
accelerated upon change in control or upon attainment of certain
performance goals, as follows: during the three year performance cycle
(1995-1997) performance goals established for the Company by the
Compensation Committee are based on return on equity (25%), earnings per
share (25%) and total relative shareholder return (50%). From 50% to 100%
of the options granted may become exercisable at the end of the three year
performance cycle if from 90% to 100% of the goals are met. Performance
goals for Montana-Dakota Utilities Co., which are applicable to Mr. Tipton,
are based on regulatory return (50%), and net income (50%), and at least
94% of the goals must be met to accelerate vesting.
Dividend Equivalents granted with the options are described in Table 4.
3. Present values were calculated using the Black-Scholes option pricing model
which has been adjusted to take dividends into account. Use of this model
should not be viewed in any way as a forecast of the future performance of
the Company's stock. The estimated present value of each stock option is
$2.67 based on the following inputs:
Stock Price (fair market value) at Grant (2/8/95)........... $18.50
Exercise Price.............................................. $18.50
Option Term................................................. 10 Years
Stock Price Volatility...................................... 15.8%
Dividend Yield.............................................. 5.8%
The model assumes: (a) a risk-free interest rate of 7.8 percent on a U.S.
Treasury Note with a maturity date of approximately 10 years; (b) Stock
Price Volatility is calculated using a one year average of stock prices for
calendar year 1994; (c) Dividend Yield is calculated using the annual
dividend rate in effect at the date of grant ($1.07 per share). The option
value was not discounted to reflect any accelerated vesting of the options
or to reflect any exercise of the options prior to the end of the 10 year
period. Notwithstanding the fact that these options are non-transferable,
no discount for lack of marketability was taken.
7
<PAGE>
TABLE 3: AGGREGATED OPTION/SAR(1) EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR(1) VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Shares Number of
acquired securities underlying Value of unexercised,
on Value unexercised options in-the-money options
exercise realized at fiscal year-end at fiscal year-end
(#) ($) (#) ($)
------- ------ --------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harold J. Mellen, Jr. ......... -- -- 20,610 49,740 85,016 68,393
Ronald D. Tipton ............. -- -- 14,685 32,955 60,576 45,313
Douglas C. Kane .............. 1,500 9,375 18,360 27,952 75,735 38,434
Martin A. White .............. 770 3,030 8,040 8,925 33,165 12,272
Lester H. Loble, II .......... 1,000 6,250 7,695 9,900 31,742 13,613
</TABLE>
- ----------
1. "SAR" is an acronym for "stock appreciation right." The Company has no plan
or program which uses stock appreciation rights.
TABLE 4: LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated future payouts
under non-stock price-based plans
-------------------------------------------
(a) (b) (c) (d) (e) (f)
Performance
Number of or other
shares, units period until
or other maturation Threshold Target Maximum
Named Officer rights (#)(1) or payout ($) ($) ($)
------------ ----------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Harold J. Mellen, Jr.......... 49,740 12/31/97 81,325 162,650 243,975
Ronald D. Tipton.............. 32,955 12/31/97 53,881 107,763 161,644
Douglas C. Kane............... 27,952 12/31/97 45,702 91,403 137,105
Martin A. White............... 8,925 12/31/97 14,592 29,185 43,777
Lester H. Loble, II........... 9,900 12/31/97 16,187 32,373 48,560
</TABLE>
- ----------
1. Dividend equivalents were granted pursuant to the 1992 Key Employee Stock
Option Plan based on the number of options granted to each Named Officer
(see Table 2). Dividend equivalents entitle the recipient to the cash
amount equal to any dividend declared by the Board of Directors on the
common stock of the Company. The table assumes the current level of
dividends. Dividend equivalents may be earned, from 0% to 150%, at the end
of the three year performance cycle (1995-1997) depending upon (1) the
level of achievement of performance goals established for the Company and
Montana-Dakota Utilities Co. by the Compensation Committee and (2)
individual performance. Vesting is accelerated upon a change in control.
See Table 2 for a description of the goals. Dividend equivalents that are
not earned are forfeited.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 or more
- ------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$125,000................ $ 77,904 $ 86,592 $ 95,280 $103,968 $112,656
150,000................ 91,980 102,480 112,980 123,480 133,980
175,000................ 106,056 118,368 130,692 143,004 155,316
200,000................ 120,132 134,256 148,392 162,516 176,640
225,000................ 134,208 150,156 166,092 182,028 197,964
250,000................ 148,296 166,044 183,792 201,540 219,288
300,000................ 176,448 197,820 219,204 240,576 261,948
400,000................ 206,832 235,464 264,084 292,716 321,336
450,000................ 217,716 249,960 282,216 314,460 346,716
500,000................ 228,588 264,456 300,336 336,216 372,084
</TABLE>
8
<PAGE>
The table covers the amounts payable under the Salaried Pension Plan and
non-qualified Supplemental Income Security Plan. Pension benefits are determined
by the step-rate formula which places emphasis on the highest consecutive 60
months of earnings within the final 10 years of service. Benefits for single
participants under the Salaried Pension Plan are paid as straight life amounts
and benefits for married participants are paid as actuarially reduced pensions
with a survivorship benefit for spouses, unless participants choose otherwise.
The Salaried Pension Plan also permits pre-retirement survivorship benefits upon
satisfaction of certain conditions. Additionally, certain reductions are made
for employees electing early retirement.
The Internal Revenue Code places maximum limitations on the amount of
benefits that may be paid under the Salaried Pension Plan. The Company has
adopted a non-qualified Supplemental Income Security Plan (SISP) for senior
management personnel. In 1995, 80 senior management personnel participated in
the SISP including the Named Officers. Both plans cover salary shown in column
(c) of the Summary Compensation Table and exclude bonuses and other forms of
compensation.
Upon retirement and attainment of age 65, participants in the SISP may
elect a retirement benefit or a survivors' benefit with the benefits payable
monthly for a period of 15 years.
As of December 31, 1995, the Named Officers were credited with the
following years of service under the plans; Mr. Mellen: Pension, 10, SISP, 10;
Mr. Tipton: Pension, 12 , SISP, 11; Mr. Kane: Pension, 5, SISP, 11; Mr. White:
Pension, 4, SISP, 4; and Mr. Loble: Pension, 8, SISP, 8. The maximum years of
service for benefits under the Pension Plan is 35 and under the SISP vesting
begins at 3 years and is complete after 10 years. Benefit amounts under both
plans are not subject to reduction for offset amounts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
Decisions on compensation for the Company's executive officers are made by
the Compensation Committee of the Board of Directors. The Committee was created
in 1967 and has been and is composed entirely of non-employee directors. In the
late part of each calendar year, the Committee reviews and approves, with any
modifications it deems appropriate, the Executive Compensation Policy for the
executive officers including the Chief Executive Officer. The approved plan is
implemented the following calendar year.
Executive Compensation Policy
The Executive Compensation Policy is designed to attract and retain
qualified executive officers, to recognize above-average job performance and to
provide a direct and strong link between Company performance and executive pay.
The Board of Directors in 1994 adopted Stock Ownership Guidelines under which
executives are required to own Company Common Stock valued from two times their
annual salary to four times their annual salary (in the case of the Chief
Executive Officer). Total compensation is intended to be competitive with that
paid by comparable companies in the regulated electric and gas utility industry
and relevant segments of the energy and mining industries. There are four
components of total executive compensation:
(1) Base salary;
(2) Management Incentive Compensation Plan;
(3) 1992 Key Employee Stock Option Plan; and
(4) Restricted Stock Bonus Plan.
As indicated above, the base salary component of compensation is designed
to be competitive with that paid by comparable companies. An external consultant
provides comparative surveys (Edison Electric Institute Executive Compensation
Survey, American Gas Association Top Management Survey, Executive Compensation
Services Top Management Report, KPMG Peat Marwick LLP Oil and Gas Compensation
Survey and PAS Inc. Executive Compensation Survey for Contractors). While the
companies used in these surveys are not the same as the peer group of companies
used in the Performance Graph, the Compensation Committee believes these surveys
provide a broader base of data and are commonly used to set executive salaries.
The Edison Electric Institute Executive Compensation Survey is a 1994 survey
prepared by Edison Electric Institute and includes nearly 100 participants of
diverse size, comprised of electric or electric/gas utility companies, utility
parent companies or diversified parent companies. The American Gas Association
Top Management Survey is a 1994 survey of salary for 95 natural gas
companies-distribution, transmission, combination (gas and electric) and
integrated. The Executive Compensation Services Top Management Report is a
1995-96 survey of executive compensation for 1,270 companies cutting across all
major industry lines. The consultant then used the 61 utility respondents from
this survey-water, telephone, electric and gas-for comparison purposes. The KPMG
9
<PAGE>
Survey includes 123 participants from the oil and gas industry and the PAS
Survey for Contractors has over 250 participants. The external data from those
surveys is used to develop a market-consensus salary for each executive
position. "Market-consensus salary" represents the market value for each
position based upon the above referenced surveys. For executive officers the
consensus reflects a 60 percent weighting of general industry data and a 40
percent weighting of utility industry data. It is the policy of the Compensation
Committee to set a targeted range of compensation from 80%-120% around the
market-consensus salary and to set 95% of the market-consensus salary as the
salary administration objective for the executive positions in the Company. The
Compensation Committee uses this objective together with an analysis of the
value of the executive position and individual evaluation to establish base
salaries for executive officers within the targeted range. A premium is added to
the market-consensus salary in order to set the salary of the Chief Executive
Officer and other executive officers to reflect the diversified nature of the
Company. The consultant uses the peer group of companies in the Performance
Graph to determine the premium.
All executive officers are eligible for awards under the Company's various
incentive plans referred to above. The Compensation Committee believes that
offering incentives to executive officers will enhance the long-term performance
of the Company, promote cost efficiency and further overall stockholder returns.
The Committee uses these plans as it deems appropriate to achieve these goals.
The Compensation Committee determines awards pursuant to these plans based
generally on what it believes other similar companies are doing.
The Company has not formulated any policy with regard to the deductibility
of qualifying compensation paid to executive officers under Section 162(m) of
the Internal Revenue Code.
1995 Compensation for Executive Officers and Chief Executive Officer
Compensation paid to executive officers of the Company in 1995 was
comprised of base salary, cash awards under the Management Incentive
Compensation Plan and stock option grants and dividend equivalents under the
1992 Key Employee Stock Option Plan. Mr. Tipton also received an award of
restricted stock.
Base salary increases for executive officers during 1995 ranged from 3% to
32.3% and averaged 11.1%. Salary increases were a function of (1) the
Compensation Committee's assessment of the individual performance of each
executive and (2) the current salary of each executive compared to that paid by
comparable companies as determined by the external consultant (as discussed
above). A more favorable performance appraisal permitted a larger increase. If
the current salary lagged that paid by comparable companies, a larger increase
was permitted. The base salaries during 1995 averaged 81.25% of the
market-consensus salary for the Company's executive positions. Mr. Mellen was
elected Chief Executive Officer effective January 1, 1995. At that time his base
salary was $240,000. Effective July 1, 1995, his base salary was increased to
$261,600. This reflected a 9% increase. His base salary is 72.9% of the
market-consensus salary as adjusted by the premium of 15% as recommended by the
consultant. The Committee also considered the Company's financial results during
the six months he had been Chief Executive Officer and the smooth transition
under his leadership. The Committee did not give formal weighting to the
criteria used in order to set salary increases for the executive officers or for
the Chief Executive Officer.
The Management Incentive Compensation Plan is structured so that cash
incentive awards reflect the attainment of specific annual levels of
performance. The performance measures used reflect both the stockholders'
interest (earnings) and the customers' interest (cost efficiency). Additionally,
individual performance is evaluated and appropriate adjustments to target award
levels may be made. Target award levels are a percentage of each participant's
assigned salary grade midpoint. The percentage for the Chief Executive Officer
was 35% and for the other executive officers ranged from 25% to 30%. A target
incentive fund is developed at the beginning of each plan year based upon the
aggregate target award levels of all participants. The size of the fund will
increase or decrease based upon actual Company performance in relation to the
pre-established goals. Individual awards will be greater or lesser than target
amounts based upon an assessment of individual performance. Awards can range
from 0% (less than 90% of budgeted earnings per share) to 150% (more than 108%
of budgeted earnings per share) of the target amount. The annual corporate
performance targets for 1995 were based on the degree of achievement of 103% of
budgeted earnings. As a result of actual earnings exceeding threshold level of
performance, and individual performance goals being met, cash awards were made
under the plan for the year 1995 to four executive officers in the aggregate
amount of $202,736. The Chief Executive Officer received $104,824 for the year
1995. This amount was a payout of 85.5% of the targeted award, based on the
Company's actual earnings exceeding the threshold level of performance and upon
individual performance. The cost efficiency performance measure in 1995 affected
10
<PAGE>
only one executive officer, Mr. Tipton, whose award opportunity was based 75% on
cost efficiency and 25% on budgeted earnings of his division. Mr. Tipton
received $101,997.
The 1992 Key Employee Stock Option Plan is to motivate executives to
achieve specified long-term performance goals of the Company and to encourage
ownership by them of the common stock of the Company. It is designed to
reinforce financial and strategic objectives, to emphasize pay for performance,
and to focus executive effort on long-term sustainable value creation. This
aligns the interests of the executives with those of the shareholders. The plan
consists of two elements: stock option grants and dividend equivalents.
Ten year options and dividend equivalents were granted under the plan in
1995 to 13 executives of the Company, including all executive officers. The
options become exercisable (at the fair market value on the date of the grant)
automatically in nine years but vesting may be accelerated if certain
performance goals are achieved. A performance cycle of three years was
established by the Committee: 1995-1997. Performance cycles for the remainder of
the nine years have not yet been set. Performance goals were also established by
the Committee based on return on equity (25 percent), earning per share (25
percent), and total relative stockholder return compared to a peer group of 12
energy diverse companies (50 percent). The companies are identified in the notes
to the graph following this report. Performance goals for Montana-Dakota
Utilities Co., which are applicable to Mr. Tipton, are based on regulatory
return (50 percent) and net income (50 percent). Individual performance is also
weighed. Dividend equivalents are accrued based on the number of options held
and are earned from 0% to 150% at the end of each performance cycle based upon
the achievement of the stated performance goals. As shown on the Tables, the
Chief Executive Officer received a grant of 49,740 options and dividend
equivalents. The number of options and dividend equivalents granted to the
executive officers was established based upon the mid-point of the 1995 salary
range for employees of that level and the length of the performance cycle. The
grants ranged from 10% for lower level executive officers to 35% for the Chief
Executive Officer. The Compensation Committee made grants under the 1992 Key
Employee Stock Option Plan of performance-accelerated options and dividend
equivalents to serve as an incentive to the executive officers to meet corporate
goals and to subject a larger percentage of executive officers' total salary
package to risk. The Compensation Committee may grant additional options and
dividend equivalents each year, as it determines.
The Restricted Stock Bonus Plan provides for awards of restricted stock to
individuals when designated by the Compensation Committee as having demonstrated
superior individual performance. The awards serve as a motivator for long-term
performance and as a retention device for individuals who have demonstrated
superior performance. The executive has a stake in the Company's financial
performance. Again, this aligns the interest of the executives with those of the
stockholders. In November, 1995, Mr. Tipton received an award of 1,500 shares.
In addition, restrictions lapsed with respect to 1,500 shares of restricted
stock previously granted to Mr. Tipton.
51.5% of the Chief Executive Officer's total compensation during 1995 was
based on objective annual performance criteria (through the Management Incentive
Compensation Plan) or long-term performance criteria (through the 1992 Key
Employee Stock Option Plan, reflecting the dividend equivalents accrued on the
1995 option grants). An average of 43% of the total compensation of the other
executive officers was based on objective annual performance criteria (through
the Management Incentive Compensation Plan) or long-term performance criteria
(through the 1992 Key Employee Stock Option Plan, reflecting the dividend
equivalents accrued on the 1995 option grants). The Committee believes that
having 51.5% of the compensation of Chief Executive Officer and an average of
43% of the compensation of other executive officers at risk is sufficient to
provide a direct and strong link between Company performance and executive pay.
San W. Orr, Jr., Chairman Homer A. Scott, Jr., Member
John L. Olson, Member Stanley F. Staples, Jr., Member
11
<PAGE>
MDU RESOURCES GROUP, INC.
COMPARISON OF FIVE YEAR TOTAL STOCKHOLDER RETURN(1)
Total Stockholder Return Index (1990 = 100)
[The following table was represented as a line graph in the printed material]
- --------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ----------------
MDU 100 128 145 182 166 193
S&P 500 100 130 140 155 157 215
PEER GROUP 100 131 145 160 146 180
- --------------------------------------------------------------------------------
(1) All data is indexed to December 31, 1990, for the Company, the S&P 500, and
the peer group. Total stockholder return is calculated using the December
31 price for each year. It is assumed that all dividends are reinvested in
stock at the frequency paid, and the returns of each component peer issuer
of the group are weighted according to the issuer's stock market
capitalization at the beginning of the period. The peer issuers are Black
Hills Corp., Cilcorp Inc., Equitable Resources Inc., Florida Progress
Corp., Minnesota Power & Light Company, The Montana Power Company, Oneok
Inc., Questar Corp., South Jersey Industries, Teco Energy Inc., UGI Corp.,
and Utilicorp United Inc.
DIRECTORS' COMPENSATION
Each Director who is not an officer of the Company receives $13,000 and 300
shares of Company common stock as an annual retainer for Board Service. Audit
and Compensation Committee Chairmen each receive a $2,500 annual retainer, and
Finance and Nominating Committee Chairmen each receive a $1,000 annual retainer.
Additionally, each Director who is not an officer of the Company receives $700
for each meeting of the Board of Directors attended and each Committee member
who is not an officer of the Company receives $700 for each Committee meeting
attended. All Directors must defer $1,000 of the annual Board cash retainer,
which amount is credited to a deferral account quarterly. The deferral amount is
divided by the market price of Company Common Stock and converted to investment
units. If dividends are paid on Company Common Stock then an equivalent amount
is credited for each investment unit and the resulting amount is converted to
investment units and credited to such Directors' accounts. When a participating
Director leaves the Board, dies or becomes disabled, then the investment units
credited to that Director's account are multiplied times the market price of the
Company Common Stock at that time, converted to a dollar value and paid to the
Director or named beneficiary in equal monthly payments (with interest) over a
five year period. Each Director may also defer all or any part of the remaining
$12,000 Board retainer paid in cash.
12
<PAGE>
The Company also has a post-retirement arrangement for Directors who are
not officers of the Company which provides that after retirement from the Board,
a Director is entitled to receive annual compensation in an amount equal to the
sum of all annual retainers in effect at the time of retirement. Such amount
will be paid to the Director or named beneficiary in equal monthly installments
over a period of time equal to the period of service on the Board.
The Company also has a program whereby past Directors of the Company may be
chosen each year as "Director Emeritus" and each such past Director so chosen
may be invited to participate as a nonvoting member of the Company's Board of
Directors. Each such "Director Emeritus" serves for five years and receives no
compensation, other than reimbursement by the Company for reasonable travel
expenses in connection with attendance at meetings of the Company's Board of
Directors.
INFORMATION CONCERNING EXECUTIVE OFFICERS
Executive officers of the Company are elected by the Board of Directors and
serve until the next annual meeting of the Board. Any executive officer so
elected may be removed at any time by the affirmative vote of a majority of the
Board. Certain information concerning such executive officers, including their
ages, present corporate positions and business experience is set forth below.
Present Corporate Position
Name Age and Business Experience
----- --- -----------------------
Harold J. Mellen, Jr........... 61 President and Chief Executive Officer.
For information about Mr. Mellen, see
"Election of Directors."
Cathleen M. Christopherson..... 51 Ms. Christopherson was elected Vice
President-Corporate Communications
effective November 1989. Prior to that
she served as Assistant Vice
President-Corporate Communications
effective September 1989 and Division
Manager of Montana-Dakota Utilities
Co., a Division of the Company, from
August 1984.
Douglas C. Kane................ 46 Executive Vice President and Chief
Operating Officer. For information
about Mr. Kane, see "Election of
Directors."
Lester H. Loble, II............ 54 Mr. Loble was elected General Counsel
and Secretary of the Company effective
May 1987. Mr. Loble also serves as a
Director and/or General Counsel and
Secretary of the principal
subsidiaries of the Company. Mr. Loble
is also a member and the Secretary of
the Managing Committee of
Montana-Dakota Utilities Co., a
Division of the Company.
Vernon A. Raile................ 51 Mr. Raile was elected Vice President,
Controller and Chief Accounting
Officer effective August 1992. Prior
to that he was Controller and Chief
Accounting Officer from May 1989,
Assistant Treasurer from December
1987, and Tax Manager from March 1980.
Warren L. Robinson............. 45 Mr. Robinson was elected Vice President,
Treasurer and Chief Financial Officer
of the Company effective August 1992.
He is also Treasurer and Assistant
Secretary, or Secretary, of
subsidiaries of the Company. Prior to
that he served as Treasurer and
Assistant Secretary from December
1989, and as Manager of Corporate
Development and Assistant Treasurer
from May 1989 to December 1989 and
Manager of Corporate Development from
October 1988.
Ronald D. Tipton............... 49 Mr. Tipton was elected President and
Chief Executive Officer of
Montana-Dakota Utilities Co. on
January 1, 1995. Prior to that time he
served Williston Basin Interstate
Pipeline Company in the following
capacities: President and Chief
Executive Officer from May 1994,
President from May 1990, Executive
Vice President from May 1989, Vice
President--Gas Supply from January
1985. From January 1983 to January
1985 he was the Assistant Vice
President--Gas Supply of
Montana-Dakota Utilities Co.
13
<PAGE>
Present Corporate Position
Name Age and Business Experience
----- --- -----------------------
Martin A. White................ 54 Mr. White was elected Senior Vice
President--Corporate Development
November 1995. Prior to that he served
as Vice President--Corporate
Development from November 1991. Prior
to that he was Chairman and Chief
Executive Officer of White Resources
Corp., a mining company, from January
1990, and Executive Vice President and
Chief Operating Officer of
Consolidated TVX Mining Corporation
from January 1988. Prior to that he
was President and Chief Operating
Officer of Entech, Inc., a subsidiary
of The Montana Power Company.
Robert E. Wood................. 53 Mr. Wood has been Vice President-Public
Affairs and Environmental Policy of
the Company since August 1991. Before
that he was Vice President-Public
Affairs from June 1986. For five years
prior thereto he served as Manager of
Legislative Affairs for the Company.
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
certain officers of the Company to file reports concerning their ownership of
Company stock. During 1995, Mr. Tipton inadvertently filed one late report on
Form 4 with respect to an award of restricted stock under the Company's
Restricted Stock Bonus Plan.
SECURITY OWNERSHIP
The table below sets forth the number of shares of capital stock of the
Company owned beneficially as of December 31, 1995, by each director and each
nominee for director, each Named Officer and by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership Percentage of Class
-------------------------- -------------------
Name Common Preferred Common Preferred
----- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Thomas Everist.......................................... -- -- -- --
Douglas C. Kane......................................... 34,959(a) -- * --
Lester H. Loble, II..................................... 17,637(a) -- * --
Harold J. Mellen, Jr.................................... 35,910(a) -- * --
Richard L. Muus......................................... 5,509 -- * --
Robert L. Nance......................................... 3,150 -- * --
John L. Olson........................................... 15,300 -- * --
San W. Orr, Jr.......................................... 171,883(b) -- * --
John A. Schuchart....................................... 127,583(c) -- * --
Charles L. Scofield..................................... 12,300 -- * --
Homer A. Scott, Jr...................................... 3,300(d) -- * --
Joseph T. Simmons....................................... 6,115 -- * --
Stanley F. Staples, Jr.................................. 125,820(e) 300 * *
Ronald D. Tipton........................................ 12,550(a) -- * --
Sister Thomas Welder.................................... 19,198(f) -- * --
Martin A. White......................................... 16,175(a) -- * --
All directors and executive officers of the Company as
a group (18 in number)................................ 688,243(a) 306 2.4 *
</TABLE>
- ----------
* Less than one percent of the class.
(a) Includes full shares allocated to the officer's account in the Tax Deferred
Compensation Savings Plan. Also includes presently exercisable stock
options in the following amounts: Mr. Kane, 18,360; Mr. Loble, 7,695; Mr.
Mellen, 20,610; Mr. Tipton, 14,685 (also included is Mr. Tipton's grant of
1,500 shares of restricted stock); Mr. White, 8,040; and all directors and
executive officers as a group: 89,390.
(b) Mr. Orr serves as a co-trustee with shared voting and investment power of
various trusts and as an officer and director of the corporate trustee for
various other trusts holding these shares. Mr. Orr disclaims beneficial
ownership of all but 1,143 shares held by the trusts.
(c) Includes shares owned by Mr. Schuchart's wife. Mr. Schuchart disclaims all
beneficial ownership of the shares owned by his wife.
(d) Shares held by Homer A. Scott, Jr. Trust. Mr. Scott is a co-trustee of the
trust and shares voting and investment power with respect to these shares.
(e) All except 1,800 shares of Common Stock are held in the name of the Judd S.
Alexander Foundation, Inc. and Walter Alexander Foundation, Inc. Mr.
Staples as the Chief Executive Officer of the Judd S. Alexander Foundation,
Inc., and the Secretary of the Walter Alexander Foundation, Inc., disclaims
all beneficial ownership of the shares held by the Foundations.
(f) Shares of Common Stock owned by University of Mary. Sr. Welder, as
President of the University of Mary, disclaims all beneficial ownership of
these shares.
14
<PAGE>
ACCOUNTING AND AUDITING MATTERS
Upon recommendation of the Audit Committee, the Board of Directors has
selected and employed the firm of Arthur Andersen LLP as the Company's
independent certified public accountants to audit its financial statements for
the fiscal year 1995. The Audit Committee is presently composed of Messrs.
Richard L. Muus, John L. Olson, San W. Orr, Jr., and Homer A. Scott, Jr.
(Chairman). This will be the tenth year in which the firm has acted in this
capacity. A representative of Arthur Andersen is expected to be present at the
Annual Meeting of Stockholders. It is not anticipated that the representative
will make a prepared statement at the meeting. However, he or she will be free
to do so if he or she so chooses as well as responding to appropriate questions.
OTHER BUSINESS
The management of the Company knows of no other matter to come before the
meeting. However, if any matter requiring a vote of the stockholders should
arise, it is the intention of the persons named in the enclosed form of proxy to
vote in accordance with their best judgment.
1997 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to submit a proposal for inclusion in the proxy
material relating to the Company's Annual Meeting of Stockholders expected to be
held on April 22, 1997, must submit such proposal to the Secretary of the
Company on or before November 4, 1996.
----------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) FOR
THE YEAR ENDED DECEMBER 31, 1995, WHICH IS REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE MADE AVAILABLE TO STOCKHOLDERS TO
WHOM THIS PROXY STATEMENT IS MAILED, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE
OFFICE OF THE TREASURER OF MDU RESOURCES GROUP, INC., 400 NORTH FOURTH STREET,
BISMARCK, NORTH DAKOTA 58501.
By order of the Board of Directors,
/s/ LESTER H. LOBLE, II
LESTER H. LOBLE, II
Secretary
March 4, 1996
15
<PAGE>
MDU RESOURCES GROUP, INC. PROXY
================================================================================
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders on April 23, 1996.
The undersigned hereby appoints John A. Schuchart, Harold J. Mellen, Jr., and
Lester H. Loble, II, and each of them, proxies, with full power of substitution,
to vote all Common Shares of the undersigned at the Annual Meeting of
Stockholders to be held at 11:00 a.m. (CDT), April 23, 1996, at 909 Airport
Road, Bismarck, ND 58504, and at any adjournment thereof, upon all subjects that
may properly come before the meeting, including the matters described in the
proxy statement furnished herewith, subject to any directions indicated on the
reverse side of this card. If no directions are given, the proxies will vote for
the election of all listed nominees, and at their discretion on any other matter
that may properly come before the meeting. We are unable to respond to comments
noted on this proxy. If you have comments please send in a separate letter.
Your vote for the election of Directors may be indicated on the reverse side of
this card. Nominees are: Thomas Everist, Harold J. Mellen, Jr. and Robert L.
Nance.
Your vote is important! Please sign and date on the reverse and return promptly
in the enclosed postage-paid envelope or otherwise to 400 North Fourth Street,
Bismarck, ND 58501, so that your shares can be represented at the meeting.
================================================================================
<PAGE>
Please mark your vote as in this example: [X]
Directors recommend a vote "FOR" on A. below
To vote for all director nominees, mark the "FOR" box on item "A." To withhold
voting for all nominees, mark the "WITHHELD" box. To withhold voting for a
particular nominee, mark the "FOR ALL EXCEPT" box and enter name(s) of the
exception(s) in the space provided; your shares will be voted for the remaining
nominees.
- --------------------------------------------------------------------------------
FOR WITHHELD FOR ALL EXCEPT
A. Election of All Director Nominees. [ ] [ ] [ ]
Exceptions__________________________
- --------------------------------------------------------------------------------
Sign here as name(s) appear at
left
------------------------------
------------------------------
Please sign this proxy and
return it promptly whether or
not you plan to attend the
meeting. If signing for a
corporation or partnership or
as agent, attorney or
fiduciary, indicate the
capacity in which you are
signing. If you do attend the
meeting and decide to vote by
ballot, such vote will
supersede this proxy.
Date ___________________, 1996
