MDU RESOURCES GROUP, INC. LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN PERFORMANCE SHARE AWARD AGREEMENT
MDU
RESOURCES GROUP, INC.
LONG-TERM
PERFORMANCE-BASED INCENTIVE PLAN
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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:
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Target
Award:
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Performance Shares (the "Target Award")
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Performance
Period:
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through
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(the "Performance Period")
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Date
of Grant:
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Dividend
Equivalents:
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Yes
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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:
Xxxxx
X. Xxxxxxxxx
President
and
Chief
Executive Officer
Agreed:
___________________
Participant
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:
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Percentile
Rank
|
Payout
Percentage
(%
of Target Award)
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100th
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200%
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75th
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150%
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50th
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100%
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40th
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10%
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less
than 40th
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0%
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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:
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Percentile
Rank = (n - r + 1)/n x 100
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Where:
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n
=
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total
number of companies in the Peer Group, including the
Company
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r
=
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the
numeric rank of the Company's TSR relative to the Peer Group, where
the
highest return in the group is ranked number
1
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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, 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 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
Alliant
Energy Corporation
Xxxxx
Petroleum Company – CL A
Black
Hills Corporation
Xxxxxxxx
Resources, Inc.
Dycom
Industries, Inc.
EMCOR
Group Inc.
Encore
Acquisition Company
Equitable
Resources, Inc.
Granite
Construction Incorporated
Xxxxxx
Xxxxxxxx Materials, Inc.
National
Fuel Gas Company
Northwest
Natural Gas Company
NSTAR
OGE
Energy Corp.
ONEOK,
Inc.
Quanta
Services, Inc.
Questar
Corporation
SCANA
Corporation
Southwest
Gas Corporation
St.
Xxxx
Xxxx & Exploration Company
Swift
Energy Company
US
Concrete, Inc.
Vectren
Corporation
Vulcan
Materials Company
Xxxxxxx
Petroleum Corporation
