MDU RESOURCES GROUP, INC. LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN PERFORMANCE SHARE AWARD AGREEMENT
MDU
RESOURCES GROUP, INC.
LONG-TERM
PERFORMANCE-BASED INCENTIVE PLAN
[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:
|
[ ]
through
[ ]
(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 ARTICLE 19 OF THE PLAN. ADDITIONALLY, BY SIGNING THIS AWARD
AGREEMENT YOU ARE ACKNOWLEDGING AND AGREEING THAT ANY PERFORMANCE SHARE AWARD
GRANTED TO YOU IN 2005 AND ANY AMOUNTS PAID OR PAYABLE OR DISTRIBUTED OR
DISTRIBUTABLE PURSUANT TO ANY SUCH PRIOR 2005 AWARD SHALL ALSO BE SUBJECT TO
FORFEITURE, RECAPTURE OR OTHER ACTION IN THE EVENT OF AN ACCOUNTING RESTATEMENT,
AS PROVIDED IN ARTICLE 19 OF 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:
/s/
Xxxxxx X. Xxxxx
Xxxxxx
X.
Xxxxx
Chairman
of the Board and
Chief
Executive Officer
Agreed:
___________________
Participant
Attachments: Annex
A
Annex
B
ANNEX
A
TO
MDU
RESOURCES GROUP, INC.
LONG-TERM
PERFORMANCE-BASED INCENTIVE PLAN
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 26 companies, its Percentile Rank would be 92. The calculation
is:
(26 - 3 + 1)/26 x 100 = 92.
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.
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 (but no later than the next
March 15) 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, 0000 Xxxx
Xxxxxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxx, Xxxxx Xxxxxx 00000; 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.
LONG-TERM
PERFORMANCE-BASED INCENTIVE PLAN
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.
