MDU RESOURCES GROUP, INC.
1997 EXECUTIVE LONG-TERM INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT
February 12, 2004
In accordance with the terms of the MDU Resources
Group, Inc. 1997 Executive Long-Term 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: ________ Performance Shares
(the "Target Award")
Performance Period: January 1, 2004 through
December 31, 2006 (the
"Performance Period")
Date of Grant: February 12, 2004
Dividend Equivalents: Yes
THESE PERFORMANCE SHARES ARE SUBJECT TO FORFEITURE AS
PROVIDED HEREIN.
Further terms and conditions of the Award are set forth
in Annexes A and B hereto, which are integral parts of this
Award Agreement.
All terms, provisions and conditions applicable to the
Award set forth in the Plan and not set forth in this Award
Agreement are hereby incorporated herein by reference. To
the extent any provision hereof is inconsistent with a
provision of the Plan, the 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: /s/ XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
Chairman of the Board,
President and Chief
Executive Officer
Agreed:
___________________
Participant
Attachments: Annex A
Annex B
ANNEX A
TO
MDU RESOURCES GROUP, INC.
1997 EXECUTIVE LONG-TERM 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)
100th 200%
75th 150%
50th 100%
40th 10%
less than 40th 0%
If the Company achieves a Percentile Ranking between the
40th and 50th percentiles, the Payout Percentage shall be
equal to 10%, plus 9% for each Percentile Rank whole
percentage above the 40th percentile. If the Company
achieves a Percentile Ranking between the 50th and 100th
percentiles, the Payout Percentage shall be equal to 100%,
plus 2% for each Percentile Rank whole percentage above the
50th percentile.
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 27 companies, its Percentile
Rank would be 93. The calculation is: (27 - 3 + 1)/27 x 100
= 93.
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 would
be deleted from the Peer Group. Percentile Rank would be
calculated without regard to the return of the deleted
company.
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.
3. Issuance of Shares. 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 following the close of the Performance Period.
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.
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 for any reason other than "Cause" (as
defined below) (1) during the first year of the Performance
Period, all Performance Shares (and related Dividend
Equivalents) shall be forfeited; (2) 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
(3) 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.
(b) If the Participant's employment is terminated
for "Cause" (as defined below) during the Performance
Period, all Performance Shares (and related Dividend
Equivalents) shall be forfeited.
(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.
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, Xxxxxxxxx Building, 000 Xxxx
Xxxxxx Xxxxxx, X.X. 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.
ANNEX B
TO
MDU RESOURCES GROUP, INC.
1997 EXECUTIVE LONG-TERM INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT
PEER GROUP COMPANIES
Allegheny Energy, Inc.
ALLETE, Inc.
Alliant Energy Corporation
Black Hills Corporation
Xxxxxxxx Resources, Inc.
Equitable Resources, Inc.
Florida Rock Industries, Inc.
Xxxxxx PLC ADR
KeySpan Corporation
Xxxxxx Xxxxxx, Inc.
Xxxxxx Xxxxxxxx Materials, Inc.
Newfield Exploration Company
NICOR, Inc.
OGE Energy Corp.
ONEOK, Inc.
Peoples Energy Corporation
Pogo Producing Company
Quanta Services, Inc.
Questar Corporation
SCANA Corporation
Stone Energy Corporation
TECO Energy, Inc.
UGI Corporation
Vectren Corporation
Vulcan Materials Company
XTO Energy, Inc.
