MDU RESOURCES GROUP INC - Proxy Solicitation & Information Statement 2011

DEF 14A 1 mdu110469s1_def14a.htm DEFINITIVE PROXY STATEMENT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )

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MDU Resources Group, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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| 1200 West
Century Avenue |
| --- |
| President and |
| Chief Executive Officer |
| Mailing
Address: |
| P.O. Box
5650 |
| Bismarck,
ND 58506-5650 |
| (701)
530-1000 |

| March
11, 2011 |
| --- |
| To Our Stockholders: |
| Please join us for the 2011
Annual Meeting of Stockholders. The meeting will be held on Tuesday, April
26, 2011, at 11:00 a.m., Central Daylight Saving Time, at 909 Airport Road,
Bismarck, North Dakota. |
| The formal matters are
described in the accompanying Notice of Annual Meeting of Stockholders and
Proxy Statement. We also will have a brief report on current matters of
interest. Lunch will be served following the meeting. |
| We were pleased with the
stockholder response for the 2010 Annual Meeting at which 88.30 percent of
the common stock was represented in person or by proxy. We hope for an even
greater representation at the 2011 meeting. |
| You may vote your shares by
telephone, by the Internet, or by returning the enclosed proxy card. Representation
of your shares at the meeting is very important. We urge you to submit your
proxy promptly. |
| Brokers
may not vote your shares on four of the five matters to be presented if you
have not given your broker specific instructions as to how to vote. Please be
sure to give specific voting instructions to your broker so that your vote
can be counted. |
| All stockholders who find
it convenient to do so are cordially invited and urged to attend the meeting
in person. Registered stockholders will receive a request for admission
ticket(s) with their proxy card that can be completed and returned to us
postage-free. Stockholders whose shares are held in the name of a bank or
broker will not receive a request for admission ticket(s). They should,
instead, (1) call (701) 530-1000 to request an admission ticket(s), (2) bring
a statement from their bank or broker showing proof of stock ownership as of
February 25, 2011 to the annual meeting, and (3) present their admission
ticket(s) and photo identification, such as a drivers license. Directions to
the meeting will be included with your admission ticket. |
| I hope you will find it
possible to attend the meeting. |

Sincerely yours,
●
Terry D. Hildestad

MDU Resources Group, Inc. Proxy Statement

Proxy Statement

MDU RESOURCES GROUP, INC. 1200 West Century Avenue

Mailing Address: P.O. Box 5650 Bismarck, North Dakota 58506-5650 (701) 530-1000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 26, 2011

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 26, 2011

The 2011 Notice of Annual Meeting and Proxy Statement and 2010 Annual Report to Stockholders are available at www.mdu.com/proxymaterials.

March 11, 2011

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, on Tuesday, April 26, 2011, at 11:00 a.m., Central Daylight Saving Time, for the following purposes:

| (1) | Election of ten directors
nominated by the board of directors for one-year terms; |
| --- | --- |
| (2) | Approval of the material
terms of the performance goals under the MDU Resources Group, Inc. Long-Term
Performance-Based Incentive Plan for purposes of Internal Revenue Code
Section 162(m); |
| (3) | Ratification of the
appointment of Deloitte & Touche LLP as the companys independent
auditors for 2011; |
| (4) | Advisory vote to approve
the compensation paid to the companys named executive officers; |
| (5) | Advisory vote on frequency
of vote to approve the compensation paid to the companys named executive
officers; and |
| (6) | Transaction of any other
business that may properly come before the meeting or any adjournment or
adjournments thereof. |

The board of directors has set the close of business on February 25, 2011 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. Registered stockholders will receive a request for admission ticket(s) with their proxy card that can be completed and returned to us postage-free. Stockholders whose shares are held in the name of a bank or broker will not receive a request for admission ticket(s). They should, instead, (1) call (701) 530-1000 to request an admission ticket(s), (2) bring a statement from their bank or broker showing proof of stock ownership as of February 25, 2011 to the annual meeting, and (3) present their admission ticket(s) and photo identification, such as a drivers license. Directions to the meeting will be included with your admission ticket. We look forward to seeing you.

| By order of the Board of
Directors, |
| --- |
| ● |
| Paul K. Sandness Secretary |

MDU Resources Group, Inc. Proxy Statement

Proxy Statement

	Page
Notice of Annual Meeting of Stockholders
Proxy Statement	1
Voting Information	1
Item 1. Election of Directors	3
Director Nominees	3
Item 2. Approval of the Material Terms of the
Performance Goals under the MDU Resources Group, Inc. Long-Term
Performance-Based Incentive Plan for Purposes of Internal Revenue Code
Section 162(m)	9
Item 3. Ratification of Independent
Auditors	17
Accounting and Auditing Matters	18
Item 4. Advisory Vote to Approve the
Compensation Paid to the Companys Named Executive Officers	19
Item 5. Advisory Vote on Frequency of Vote
to Approve the Compensation Paid to the Companys Named Executive Officers	19
Executive Compensation	21
Compensation Discussion and Analysis	21
Compensation Committee Report	34
Summary Compensation Table for 2010	35
Grants of Plan-Based Awards in 2010	37
Outstanding Equity Awards at Fiscal Year-End 2010	40
Option Exercises and Stock Vested during 2010	40
Pension Benefits for 2010	41
Nonqualified Deferred Compensation for 2010	44
Potential Payments upon Termination or Change of
Control	45
Director Compensation for 2010	54
Information Concerning Executive Officers	57
Security Ownership	58
Related Person Transaction Disclosure	59
Corporate Governance	59
Section 16(a) Beneficial Ownership Reporting
Compliance	65
Other Business	65
Shared Address Stockholders	66
2012 Annual Meeting of Stockholders	66
Exhibit A MDU Resources Group, Inc.
Long-Term Performance-Based Incentive Plan	A-1
Exhibit B List of Companies that
Participated in the Compensation Surveys and Companies Included in the
Equilar Information	B-1

MDU Resources Group, Inc. Proxy Statement

Proxy Statement

P ROXY STATEMENT

The board of directors of MDU Resources Group, Inc. is furnishing this proxy statement beginning March 11, 2011 to solicit your proxy for use at our annual meeting of stockholders on April 26, 2011.

We will pay the cost of soliciting your proxy and reimburse brokers and others for forwarding proxy material to you. Georgeson Inc. additionally will solicit proxies for approximately $8,000 plus out-of-pocket expenses.

The Securities and Exchange Commissions e-proxy rules allow companies to post their proxy materials on the Internet and provide only a Notice of Internet Availability of Proxy Materials to stockholders as an alternative to mailing full sets of proxy materials except upon request. For 2011, we have elected to use the Securities and Exchange Commissions full set delivery option, which means that while we are posting our proxy materials online, we are also mailing a full set of our proxy materials to our stockholders. We believe that mailing a full set of proxy materials will help ensure that a majority of outstanding shares of our common stock are present in person or represented by proxy at our meeting. We also hope to help maximize stockholder participation. Therefore, even if you previously consented to receiving your proxy materials electronically, you will receive a full set of proxy materials in the mail for this years annual meeting. However, we will continue to evaluate the option of providing only a Notice of Internet Availability of Proxy Materials to some or all of our stockholders in the future.

V OTING INFORMATION

Who may vote? You may vote if you owned shares of our common stock at the close of business on February 25, 2011. You may vote each share that you owned on that date on each matter presented at the meeting. As of February 25, 2011, we had 188,793,564 shares of common stock outstanding entitled to one vote per share.

What am I voting on? You are voting on:

| | election of ten directors
nominated by the board of directors for one-year terms |
| --- | --- |
| | approval of the material
terms of the performance goals under the MDU Resources Group, Inc. Long-Term
Performance-Based Incentive Plan for purposes of Internal Revenue Code
Section 162(m) |
| | ratification of the
appointment of Deloitte & Touche LLP as the companys independent
auditors for 2011 |
| | advisory vote to approve
the compensation paid to the companys named executive officers |
| | advisory vote on frequency
of vote to approve the compensation paid to the companys named executive
officers and |
| | any other business that is
properly brought before the meeting. |

What vote is required to pass an item of business? A majority of our outstanding shares of common stock entitled to vote must be present in person or represented by proxy to hold the meeting.

If you hold shares through an account with a bank or broker, the bank or broker may vote your shares on some matters even if you do not provide voting instructions. Brokerage firms have the authority under the New York Stock Exchange rules to vote shares on certain matters when their customers do not provide voting instructions. However, on other matters, when the brokerage firm has not received voting instructions from its customers, the brokerage firm cannot vote the shares on that matter and a broker non-vote occurs. This means that brokers may not vote your shares on items 1, 2, 4, and 5 if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted.

MDU Resources Group, Inc. Proxy Statement 1

Proxy Statement

Item 1 Election of Directors

A majority of votes cast is required to elect a director in an uncontested election. A majority of votes cast means the number of votes cast for a directors election must exceed the number of votes cast against the directors election. Abstentions and broker non-votes do not count as votes cast for or against the directors election. In a contested election, which is an election in which the number of nominees for director exceeds the number of directors to be elected, directors will be elected by a plurality of the votes cast. If a nominee becomes unavailable for any reason or if a vacancy should occur before the election, which we do not anticipate, the proxies will vote your shares in their discretion for another person nominated by the board.

Our policy on majority voting for directors and our corporate governance guidelines require any nominee for re-election as a director to tender to the board, prior to nomination, his or her irrevocable resignation from the board that will be effective, in an uncontested election of directors only, upon

| | receipt of a greater number
of votes against than votes for election at our annual meeting of
stockholders and |
| --- | --- |
| | acceptance of such resignation
by the board of directors. |

Following certification of the stockholder vote, the nominating and governance committee will promptly recommend to the board whether or not to accept the tendered resignation. The board will act on the nominating and governance committees recommendation no later than 90 days following the date of the annual meeting.

Item 2 Approval of the Material Terms of the Performance Goals under the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan for Purposes of Internal Revenue Code Section 162(m)

For purposes of Internal Revenue Code Section 162(m), approval requires a majority of votes cast to be in favor of approval. Abstentions will not count as votes cast for purposes of Internal Revenue Code approval. Approval for purposes of Delaware law requires the affirmative vote of a majority of the outstanding shares of our common stock present in person or represented by proxy at the meeting and entitled to vote on the item. Under the Delaware voting standard, abstentions will count as votes against the item. Broker non-votes are not counted as voting power present and, therefore, are not counted in the vote for purposes of Internal Revenue Code approval or under the Delaware voting standard.

Item 3 Ratification of the Appointment of Deloitte & Touche LLP as the Companys Independent Auditors for 2011

Approval of Item 3 requires the affirmative vote of a majority of our common stock present in person or represented by proxy at the meeting and entitled to vote on the proposal. Abstentions will count as votes against the proposal.

Item 4 Advisory Vote to Approve the Compensation Paid to the Companys Named Executive Officers

Approval of Item 4 requires the affirmative vote of a majority of our common stock present in person or represented by proxy at the meeting and entitled to vote on the item. Abstentions will count as votes against the item. Broker non-votes are not counted as voting power present and, therefore, are not counted in the vote.

Item 5 Advisory Vote on Frequency of Vote to Approve the Compensation Paid to the Companys Named Executive Officers

Under Delaware law, the frequency of every year, every two years, or every three years that receives the affirmative vote of a majority of our common stock present in person or represented by proxy at the meeting and entitled to vote on the proposal will be the frequency for the advisory vote on executive compensation that has been recommended by our stockholders. Abstentions will count as votes against any frequency. Broker non-votes are not counted as voting power present and, therefore, are not counted in the vote.

Unless you specify otherwise when you submit your proxy, the proxies will vote your shares of common stock for all directors nominated by the board of directors, for items 2, 3, and 4 and for 1 year in item 5.

How do I vote? There are three ways to vote by proxy:

| | by calling the toll free
telephone number on the enclosed proxy card |
| --- | --- |
| | by using the Internet as
described on the enclosed proxy card or |
| | by returning the enclosed
proxy card in the envelope provided. |

You may be able to vote by telephone or the Internet if your shares are held in the name of a bank or broker. Follow their instructions.

2 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Can I revoke my proxy? Yes. You can revoke your proxy by:

| | filing written revocation
with the corporate secretary before the meeting |
| --- | --- |
| | filing a proxy bearing a
later date with the corporate secretary before the meeting or |
| | revoking your
proxy at the meeting and voting in person. |

I TEM 1. ELECTION OF DIRECTORS

All nominees for director are nominated to serve one-year terms, until the annual meeting of stockholders in 2012 and until their respective successors are elected and qualified, or until their earlier resignation, removal from office, or death.

We have provided information below about our nominees, all of whom are incumbent directors, including their ages, years of service as directors, business experience, and service on other boards of directors, including any other directorships held during the past five years. We have also included information about each nominees specific experience, qualifications, attributes, or skills that led the board to conclude that he or she should serve as a director of MDU Resources Group, Inc. at the time we file our proxy statement, in light of our business and structure. Unless we specifically note below, no corporation or organization referred to below is a subsidiary or other affiliate of ours.

D irector Nominees

●	Director Since 1995
Age 61	Compensation Committee
Mr. Everist has served as
president and chairman of The Everist Company, Sioux Falls, South Dakota, an
aggregate, concrete, and asphalt production company, since April 15, 2002. He
has been a managing member of South Maryland Creek Ranch, LLC, a land
development company, since June 2006, and president of SMCR, Inc., an
investment company, since June 2006. He was previously president and chairman
of L.G. Everist, Inc., Sioux Falls, South Dakota, an aggregate production
company, from 1987 to April 15, 2002. He held a number of positions in the
aggregate and construction industries prior to assuming his current position
with The Everist Company. He is a director of Showplace Wood Products, Sioux
Falls, South Dakota, a custom cabinets manufacturer, and has been a director
of Raven Industries, Inc., Sioux Falls, South Dakota, a general manufacturer
of electronics, flow controls, and engineered films since 1996, and its
chairman of the board since April 1, 2009. Mr. Everist has been a director of
Genetics Squared, Inc. (Everist Geonomics, Inc.), Ann Arbor, Michigan, which
provides solutions for personalized medicines, since May 2002, and has been a
director of Angiologix Inc., Mountain View, California, a medical diagnostic
device company, since July 2010.
Mr. Everist attended
Stanford University where he received a bachelors degree in mechanical
engineering and a masters degree in construction management. He is active in
the Sioux Falls community and currently serves as a director on the Sanford
Health Foundation, a non-profit charitable health services organization. From
July 2001 to June 2006, he served on the South Dakota Investment Council, the
state agency responsible for prudently investing state funds.
The board concluded that
Mr. Everist should serve as a director of MDU Resources Group, Inc., in light
of our business and structure, at the time we file our proxy statement for
the following reasons. A significant portion of MDU Resources Group, Inc.s
earnings is derived from its construction services and aggregate mining
businesses. Mr. Everist has considerable business experience in this area,
with more than 37 years in the aggregate and construction materials industry.
He has also demonstrated success in his business and leadership skills,
serving as president and chairman of his companies for over 23 years. We
value other public company board service. Mr. Everist has experience serving
as a director and now chairman of another public company, which enhances his
contributions to our board. His leadership skills and experience with his own
companies and on other boards enable him to be an effective board member and
compensation committee chairman. Mr. Everist is our longest serving board
member, providing 16 years of board experience as well as extensive knowledge
of our business.

MDU Resources Group, Inc. Proxy Statement 3

Proxy Statement

●	Karen B. Fagg	Director Since 2005
	Age 57	Nominating and Governance
Committee Compensation Committee
	Ms. Fagg has served as vice
president of DOWL LLC, d/b/a DOWL HKM, an engineering and design firm, since
April 2008. Ms. Fagg was president from April 1, 1995 through March 2008, and
chairman and majority owner from June 2000 through March 2008 of HKM
Engineering, Inc., Billings, Montana, an engineering and physical science
services firm. HKM Engineering, Inc. merged with DOWL LLC on April 1, 2008.
Ms. Fagg was employed with MSE, Inc., Butte, Montana, an energy research and
development company, from 1976 through 1988 and from 1993 to April 1995. She
served as vice president of operations and corporate development director.
From 1989 through 1992, Ms. Fagg served a four-year term as director of the
Montana Department of Natural Resources and Conservation, Helena, Montana,
the state agency charged with promoting stewardship of Montanas water, soil,
energy, and rangeland resources; regulating oil and gas exploration and
production; and administering several grant and loan programs.
	Ms. Fagg has a bachelors
degree in mathematics from Carroll College in Helena, Montana. She served on
the board for St. Vincents Healthcare from October 2003 until October 2009,
including a term as board chair and on the board of Deaconess Billings Clinic
Health System from 1994 to 2002. She is a member of the Board of Trustees of
Carroll College, chairman of the board of advisors of the Charles M. Bair
Family Trust, and a member of the board of directors of the Billings Chamber
of Commerce. She is also a member of the Montana State University Engineering
Advisory Council, whose responsibilities include evaluating the mission and
goals of the College of Engineering and assisting in the development and
implementation of the colleges strategic plan. From 2002 through 2006, she
served on the Montana Board of Investments, the state agency responsible for
prudently investing state funds. From 2001 to 2005, she served on the board
of Montana State Universitys Advanced Technology Park. From 1998 to 2007,
she served on the ZooMontana Board and as vice chair from 2005 to 2006.
	The board concluded that
Ms. Fagg should serve as a director of MDU Resources Group, Inc., in light of
our business and structure, at the time we file our proxy statement for the
following reasons. Construction and engineering, energy, and the responsible
development of natural resources are all important aspects of our business.
Ms. Fagg has business experience in all these areas, including 16 years of
construction and engineering experience at DOWL HKM and its predecessor, HKM
Engineering, Inc., where she has served as vice president, president, and
chairman. Ms. Fagg has also had 14 years of experience in energy research and
development at MSE, Inc., where she served as vice president of operations
and corporate development director, and four years focusing on stewardship of
natural resources as director of the Montana Department of Natural Resources
and Conservation. In addition to her industry experience, Ms. Fagg brings to
our board 13 years of business leadership and management experience as
president and chairman of her own company, as well as knowledge and
experience acquired through her service on a number of Montana state and
community boards.
●	Terry D. Hildestad	Director Since 2006
	Age 61	President and Chief
Executive Officer
	Mr. Hildestad was elected
president and chief executive officer and a director of the company effective
August 17, 2006. He had served as president and chief operating officer from
May 1, 2005 until August 17, 2006. Prior to that, he served as president and
chief executive officer of our subsidiary, Knife River Corporation, from 1993
until May 1, 2005. He began his career with the company in 1974 at Knife
River Corporation, where he served in several operating positions before
becoming its president. He additionally serves as an executive officer and as
chairman of the companys principal subsidiaries and of the managing
committees of Montana-Dakota Utilities Co. and Great Plains Natural Gas Co.
	Mr. Hildestad has a
bachelors degree from Dickinson State University and has completed the
Advanced Management Program at Harvard School of Business. Mr. Hildestad is a
member of the U.S. Bancorp Western North Dakota Advisory Board of Directors.
	The board concluded that
Mr. Hildestad should serve as a director of MDU Resources Group, Inc., in
light of our business and structure, at the time we file our proxy statement
for the following reasons. As chief executive officer of MDU Resources Group,
Inc., Mr. Hildestad is the only officer of the company to sit on our board,
consistent with our past practice. With over 36 years of significant,
hands-on experience at our company, Mr. Hildestad has a deep knowledge and
understanding of MDU Resources Group, Inc., its operating companies and its
lines of business. Mr. Hildestad has demonstrated his leadership abilities
and his commitment to our company since he was elected president and chief
executive officer and a director in 2006 and prior to that time through his
long service as chief operating officer of the company and as president and
chief executive officer at Knife River Corporation, our construction
materials and contracting subsidiary. The board also believes that Mr.
Hildestads leadership abilities, integrity, values, and good judgment make
him well-suited to serve on our board, particularly in this challenging
economic environment.

4 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

●	A. Bart Holaday	Director Since 2008
	Age 68	Audit Committee Nominating and Governance Committee
	Mr. Holaday headed the
Private Markets Group of UBS Asset Management and its predecessor entities
for 15 years prior to his retirement in 2001, during which time he managed
more than $19 billion in investments. Prior to that he was vice president and
principal of the InnoVen Venture Capital Group, a venture capital investment
firm. He was founder and president of Tenax Oil and Gas Corporation, an
onshore Gulf Coast exploration and production company, from 1980 through
1982. He has four years of senior management experience with Gulf Oil
Corporation, a global energy and petrochemical company, and eight years of
senior management experience with the federal government, including the
Department of Defense, Department of the Interior, and the Federal Energy
Administration. He is currently the president and owner of Dakota Renewable
Energy Fund, LLC, which invests in small companies in North Dakota. He is a
member of the investment advisory board of Commons Capital LLC, a venture
capital firm; a member of the board of directors of Adams Street Partners,
LLC, a private equity investment firm; Alerus Financial, a financial services
company; Jamestown College; the United States Air Force Academy Endowment
(chairman); the Falcon Foundation (director and former vice president), which
provides scholarships to Air Force Academy applicants; the Center for
Innovation Foundation at the University of North Dakota (chairman and
trustee) and the University of North Dakota Foundation; and is chairman and
CEO of the Dakota Foundation. He is a past member of the board of directors
of the National Venture Capital Association, Walden University, and the U.S.
Securities and Exchange Commission advisory committee on the regulation of
capital markets.
	Mr. Holaday has a
bachelors degree in engineering sciences from the U.S. Air Force Academy. He
was a Rhodes Scholar, earning a bachelors degree and a masters degree in
politics, philosophy, and economics from Oxford University. He also earned a
law degree from George Washington Law School and is a Chartered Financial
Analyst. In 2005, he was awarded an honorary Doctor of Letters from the
University of North Dakota.
	The board concluded that
Mr. Holaday should serve as a director of MDU Resources Group, Inc., in light
of our business and structure, at the time we file our proxy statement for
the following reasons. MDU Resources Group, Inc. has significant operations
in the natural gas and oil industry where Mr. Holaday has knowledge and
experience. He founded and served as president of Tenax Oil and Gas
Corporation. He has four years experience in senior management with Gulf Oil
Corporation and 15 years of experience managing private equity investments,
including investments in oil and gas, as the head of the Private Markets
Group of UBS Asset Management and its predecessor organizations. This
business experience demonstrates his leadership skills and success in the oil
and gas industry. Mr. Holaday brings to the board his extensive finance and
investment experience as well as his business development skills acquired
through his work at UBS Asset Management, Tenax Oil and Gas Corporation, Gulf
Oil Corporation, and several private equity investment firms. This will
enhance the knowledge of the board and provide useful insights to management
in connection not only with our natural gas and oil business, but with all of
our businesses.
●	Dennis W. Johnson	Director Since 2001
	Age 61	Audit Committee
	Mr. Johnson is chairman,
chief executive officer and president of TMI Corporation, and chairman and
chief executive officer of TMI Systems Design Corporation, TMI Transport
Corporation, and TMI Storage Systems Corporation, all of Dickinson, North
Dakota, manufacturers of casework and architectural woodwork. He has been
employed at TMI since 1974 serving as president or chief executive officer
since 1982 and has been the majority stockholder since 1985. Mr. Johnson is
serving his tenth year as president of the Dickinson City Commission. He
previously was a director of the Federal Reserve Bank of Minneapolis. He is a
past member and chairman of the Theodore Roosevelt Medora Foundation.
	Mr. Johnson has a bachelor
of science degree in electrical and electronics engineering, as well as a
master of science degree in industrial engineering from North Dakota State
University. He has served on numerous industry, state, and community boards,
including the North Dakota Workforce Development Council (chairperson), the
Decorative Laminate Products Association, the North Dakota Technology Corporation,
St. Joseph Hospital Life Care Foundation, St. John Evangelical Lutheran
Church, Dickinson State University Foundation, the executive operations
committee of the University of Mary Harold Schafer Leadership Center, the
Dickinson United Way, and the business advisory council of the Steffes
Corporation, a metal manufacturing and engineering firm. He also served on
North Dakota Governor Sinners Education Action Commission, the North Dakota
Job Service Advisory Council, the North Dakota State University Presidents
Advisory Council, North Dakota Governor Schafers Transition Team, and
chaired North Dakota Governor Hoevens Transition Team.

MDU Resources Group, Inc. Proxy Statement 5

Proxy Statement

| | He has received numerous awards
including the 1991 Regional Small Business Person of the Year Award and the
Greater North Dakotan Award. | |
| --- | --- | --- |
| | The board concluded that Mr.
Johnson should serve as a director of MDU Resources Group, Inc., in light of
our business and structure, at the time we file our proxy statement for the
following reasons. Mr. Johnson has over 28 years of experience in business
management, manufacturing, and finance, and has demonstrated his success in
these areas, through his positions as chairman, president, and chief executive
officer of TMI, as well as through his prior service as a director of the
Federal Reserve Bank of Minneapolis. His finance experience and leadership
skills enable him to make valuable contributions to our audit committee, which
he has chaired for seven years. As a result of his service on a number of state
and local organizations in North Dakota, Mr. Johnson has significant knowledge
of local, state, and regional issues involving North Dakota, a state where we
have significant operations and assets. | |
| ● | Thomas C. Knudson | Director Since 2008 |
| | Age 64 | Compensation Committee |
| | Mr. Knudson has been
president of Tom Knudson Interests, LLC, since its formation on January 14,
2004. Tom Knudson Interests, LLC, provides consulting services in energy,
sustainable development, and leadership. Mr. Knudson began employment with
Conoco Oil Company (Conoco) in May 1975 and retired in 2004 from Conocos
successor, ConocoPhillips, as senior vice president of human resources and
government affairs and communications. Mr. Knudson served as a member of
ConocoPhillips management committee. His diverse career at Conoco and
ConocoPhillips included engineering, operations, business development, and
commercial assignments. He was the founding chairman of the Business Council
for Sustainable Development in both the United States and the United Kingdom.
He has been a director of Bristow Group Inc. since June 2004 and its chairman
of the board of directors since August 2006, and was a director of Natco Group
Inc. from April 2005 to November 2009 and Williams Partners LP from November
2005 to September 2007. Bristow Group Inc. is a leading provider of
helicopter services to the offshore oil industry. Natco Group Inc. is a
leading manufacturer of oil and gas processing equipment. Williams Partners
LP owns natural gas gathering, transportation, processing, and treating
assets, and also has natural gas liquids fractionating and storage assets. | |
| | Mr. Knudson has a
bachelors degree in aerospace engineering from the U.S. Naval Academy and a
masters degree in aerospace engineering from the U.S. Naval Postgraduate
School. He served as a naval aviator, flying combat missions in Vietnam, and
was a lieutenant commander in 1974 when he was honorably discharged. Mr. Knudson
has served on the boards of a number of petroleum industry associations,
Covenant House Texas, The Houston Museum of Natural Science, and Alpha
USA/Houston. He has served as an adjunct professor at the Jones Graduate
School of Management at Rice University. | |
| | The board concluded that
Mr. Knudson should serve as a director of MDU Resources Group, Inc., in light
of our business and structure, at the time we file our proxy statement for
the following reasons. A significant portion of our earnings is derived from
natural gas and oil production and the transportation, storage, and gathering
of natural gas. Mr. Knudson has extensive knowledge and experience in this
industry as a result of his prior employment with Conoco and ConocoPhillips,
as well as through his service on the boards of Natco Group Inc. and Williams
Partners LP. Mr. Knudson has a broad background in engineering, operations,
and business development, as well as service on the management committee at
Conoco and ConocoPhillips, which bring additional experience and perspective
to our board. His service as senior vice president of human resources at
ConocoPhillips makes him an excellent fit for our compensation committee.
Sustainable business development is also an important aspect of our business,
and Mr. Knudson, as the founding chairman of the Business Council for
Sustainable Development, brings to our board significant experience and
knowledge in this area. Mr. Knudson also has significant knowledge of local,
state, and regional issues involving Texas, a state where we have important
operations and assets. | |

●	Director Since 2005
Age 61	Audit Committee Nominating and Governance Committee
Mr. Lewis has been the
managing general partner of Brakemaka LLLP, a private investment partnership
for managing family investments, and president of the Lewis Family Foundation
since August 2004. Mr. Lewis serves as chairman of the board of Entre Pure
Industries, Inc., a privately held company involved in the purified water and
ice business. He serves as a director of Colorado State Bank and Trust and on
the senior advisory board of TPH Partners, L.P., a private equity fund with
an energy-only focus. Mr. Lewis founded Prima Energy Corporation, a natural
gas and oil exploration and production company in 1980, and served as
chairman and chief executive officer of the company until its sale in July
2004. During his

6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| | tenure, Prima Energy was named to Forbes Magazines 200 Best Small
Companies in America list seven times and was ranked the No. 1 Colorado public
company for the decade of the 1990s in terms of market return. Mr. Lewis
represented natural gas producers on a panel that studied electric
restructuring in Colorado and has testified before Congressional committees on
industry matters. He worked in private practice as a certified public
accountant for eight years prior to founding Prima Energy. | |
| --- | --- | --- |
| | Mr. Lewis has a bachelors degree in finance and accounting from the
University of Colorado. He served as a board member on the Colorado Oil and Gas
Association from November 1999 to November 2009, including a term as its
president. In 2000, Mr. Lewis was inducted into the Ernst & Young
Entrepreneur of the Year Hall of Fame and in 2004 was inducted into the Rocky
Mountain Oil and Gas Hall of Fame. Mr. Lewis serves as the chairman of the
Development Board of Colorado Uplift, a non-profit organization whose mission
is to build long-term, life-changing relationships with urban youth. He also
serves on the Board of Trustees of Alliance for Choice in Education, which
provides scholarships to inner city youth. He has also served on the Board of
Trustees of the Metro Denver YMCA, the Advisory Council to the Leeds School of
Business at the University of Colorado, and as a director for the Partnership
for the West. | |
| | The board concluded that Mr. Lewis should serve as a director of MDU
Resources Group, Inc., in light of our business and structure, at the time we
file our proxy statement for the following reasons. MDU Resources Group, Inc.
derives a significant portion of its earnings from natural gas and oil
production, one of our business segments. Mr. Lewis has extensive business
experience, recognized excellence, and demonstrated success in this industry
through almost 25 years at his company, Prima Energy Corporation, and ten years
on the board of the Colorado Oil and Gas Association. In addition to his industry
experience, he brings investment experience to our board through his service on
the senior advisory board of TPH Partners, L.P., an energy-only private equity
fund. As a certified public accountant and a director of Colorado State Bank
and Trust, Mr. Lewis also contributes significant finance and accounting
knowledge to our board and audit committee. Mr. Lewis also brings to the board
his knowledge of local, state, and regional issues involving Colorado and the
Rocky Mountain region, where we have important operations. | |
| ● | Patricia L. Moss | Director Since
2003 |
| | Age 57 | Compensation
Committee |
| | Ms. Moss has
served as the president and chief executive officer of Cascade Bancorp, a
financial holding company in Bend, Oregon, since 1998, and as a director since
1993. She has served as the chief executive officer of Cascade Bancorps
principal subsidiary, Bank of the Cascades, since 1993, serving also as
president from 1993 to 2003. From 1987 to 1998, Ms. Moss served as chief
operating officer, chief financial officer, and corporate secretary of
Cascade Bancorp. She also serves as a director of the Oregon Investment Fund
Advisory Council, a state-sponsored program to encourage the growth of small
businesses within Oregon. | |
| | Ms. Moss graduated
magna cum laude with a bachelor of science degree in business administration
from Linfield College in Oregon and did masters studies at Portland State
University. She received commercial banking school certification at the ABA
Commercial Banking School at the University of Oklahoma. She served as a
director of the Oregon Business Council, whose mission is to mobilize
business leaders to contribute to Oregons quality of life and economic
prosperity; the Cascades Campus Advisory Board of the Oregon State
University; the North Pacific Group, Inc., a wholesale distributor of
building materials, industrial and hardwood products, and other specialty
products; the Aquila Tax Free Trust of Oregon, a mutual fund created
especially for the benefit of Oregon residents; Clear Choice Health Plans
Inc., a multi-state insurance company; and as a director and chair of the St.
Charles Medical Center. | |
| | In August 2009,
the Federal Deposit Insurance Corporation and the Oregon Division of Finance
and Corporate Securities entered into a consent agreement with Bank of the
Cascades that requires the bank to develop and adopt a plan to maintain the
capital necessary for it to be well-capitalized, to improve its lending
policies and its allowance for loan losses, to increase its liquidity, to
retain qualified management, and to increase the participation of its board
of directors in the affairs of the bank. In October 2009, the banks parent,
Cascade Bancorp, entered into a written agreement with the Federal Reserve
Bank of San Francisco and the Oregon Division relating largely to improving
the financial condition of Cascade Bancorp and the Bank of the Cascades.
Cascade Bancorp completed a sale of common stock in January 2011 to private
investors that raised sufficient capital to meet the agreement requirements. | |
| | The board
concluded that Ms. Moss should serve as a director of MDU Resources Group,
Inc., in light of our business and structure, at the time we file our proxy
statement for the following reasons. A significant portion of MDU Resources
Group, Inc.s utility, construction services, and contracting operations are
located in the Pacific Northwest. Ms. Moss has first-hand business experience
and knowledge of the Pacific Northwest economy and local, state, and regional
issues through her position as president, chief executive officer, and a
director at Cascade Bancorp and her positions at Bank of the Cascades, where
she has over 29 years of experience. Ms. Moss provides to our board her
experience in finance and banking, as well as her experience in business
development through her work at Cascade | |

MDU Resources Group, Inc. Proxy Statement 7

Proxy Statement

| ● | Bancorp and on the Oregon Investment Advisory Council and the Oregon
Business Council. This business experience demonstrates her leadership
abilities and success in the finance and banking industry. Ms. Moss is also
certified as a Senior Professional in Human Resources, which makes her
well-suited for our compensation committee. In deciding that Ms. Moss should be
renominated as a director, the board was mindful of the consent agreement with
Bank of the Cascades, but concluded that Ms. Moss brought the many skills and
experiences discussed above to our board and had proved herself to be a
dedicated and hard-working director. — Harry J. Pearce | Director Since
1997 |
| --- | --- | --- |
| | Age 68 | Chairman of the
Board |
| | Mr. Pearce was
elected chairman of the board of the company on August 17, 2006. Prior to
that, he served as lead director effective February 15, 2001 and was vice
chairman of the board from November 16, 2000 until February 15, 2001. Mr.
Pearce has been a director of Marriott International, Inc., a major hotel
chain, since 1995. He was a director of Nortel Networks Corporation, a global
telecommunications company, from January 11, 2005 to August 10, 2009, serving
as chairman of the board from June 29, 2005. He retired on December 19, 2003,
as chairman of Hughes Electronics Corporation, a General Motors Corporation
subsidiary and provider of digital television entertainment, broadband
satellite network, and global video and data broadcasting. He had served as
chairman since June 1, 2001. Mr.
Pearce was vice chairman and a director of General Motors Corporation, one of
the worlds largest automakers, from January 1, 1996 to May 31, 2001, and was
general counsel from 1987 to 1994. He served on the Presidents Council on
Sustainable Development and co-chaired the Presidents Commission on the
United States Postal Service. Prior to joining General Motors, he was a
senior partner in the Pearce & Durick law firm in Bismarck, North Dakota.
Mr. Pearce is a director of the United States Air Force Academy Endowment,
and a member of the Advisory Board of the University of Michigan Cancer
Center. He is a Fellow of the American College of Trial Lawyers and a member
of the International Society of Barristers. He also serves on the Board of
Trustees of Northwestern University. He has served as a chairman or director
on the boards of numerous nonprofit organizations, including as chairman of
the board of Visitors of the U.S. Air Force Academy, chairman of the National
Defense University Foundation, and chairman of the Marrow Foundation. He
currently serves as a director of the National Bone Marrow Transplant Link
and New York Marrow Foundation. Mr. Pearce received a bachelors degree in
engineering sciences from the U.S. Air Force Academy and his law degree from
Northwestern Universitys School of Law. | |
| | The board
concluded that Mr. Pearce should serve as a director of MDU Resources Group,
Inc., in light of our business and structure, at the time we file our proxy
statement for the following reasons. MDU Resources Group, Inc. values public
company leadership and the experience directors gain through such leadership.
Mr. Pearce is recognized nationally, as well as in the State of North Dakota,
as a business leader and for his business acumen. He has multinational
business management experience and proven leadership skills through his
position as vice chairman at General Motors Corporation, as well as through
his extensive service on the boards of large public companies, including
Marriott International Inc.; Hughes Electronics Corporation, where he was
chairman; and Nortel Networks Corporation, where he also was chairman. He
also brings to our board his long experience as a practicing attorney. In
addition, Mr. Pearce is focused on corporate governance issues and is the
founding chair of the Chairmens Forum, an organization comprised of
non-executive chairmen of publicly-traded companies. Participants in the
Chairmens Forum discuss ways to enhance the accountability of corporations
to owners and promote a deeper understanding of independent board leadership
and effective practices of board chairmanship. The board also believes that
Mr. Pearces values and commitment to excellence make him well-suited to
serve as chairman of our board. | |
| ● | John K. Wilson | Director Since
2003 |
| | Age 56 | Audit Committee |
| | Mr. Wilson was
president of Durham Resources, LLC, a privately held financial management
company, in Omaha, Nebraska, from 1994 to December 31, 2008. He previously
was president of Great Plains Energy Corp., a public utility holding company
and an affiliate of Durham Resources, LLC, from 1994 to July 1, 2000. He was
vice president of Great Plains Natural Gas Co., an affiliate company of
Durham Resources, LLC, until July 1, 2000. The company bought Great Plains
Energy Corp. and Great Plains Natural Gas Co. on July 1, 2000. Mr. Wilson
also served as president of the Durham Foundation and was a director of
Bridges Investment Fund, a mutual fund, and the Greater Omaha Chamber of
Commerce. He is presently a director of HDR, Inc., an international
architecture and engineering firm, Tetrad Corporation, a privately held
investment company, both based in Omaha, and serves on the advisory board of
Duncan Aviation, an aircraft service provider, headquartered in Lincoln,
Nebraska. He currently serves as deputy executive director of the Robert B.
Daugherty Charitable Foundation, Omaha, Nebraska, and formerly served on the
advisory board of US Bank NA Omaha. | |

8 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| Mr. Wilson is a certified public accountant. He received his bachelors
degree in business administration, cum laude, from the University of Nebraska
Omaha. During his career, he was an audit manager at Peat, Marwick, Mitchell
(now known as KPMG), controller for Great Plains Natural Gas Co., and chief
financial officer and treasurer for all Durham Resources entities. |
| --- |
| The board concluded that Mr. Wilson should serve as a director of MDU
Resources Group, Inc., in light of our business and structure, at the time we
file our proxy statement for the following reasons. Mr. Wilson has an extensive
background in finance and accounting, as well as extensive experience with
mergers and acquisitions, through his education and work experience at a major
accounting firm and his later positions as controller and vice president of
Great Plains Natural Gas Co.; president of Great Plains Energy Corp.; and
president, chief financial officer, and treasurer for Durham Resources, LLC and
all Durham Resources entities. The electric and natural gas utility business
was our core business when our company was founded in 1924. That business now
operates through four utilities: Montana-Dakota Utilities Co., Great Plains
Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain Gas
Company. Mr. Wilson is our only non-employee director with direct experience in
this area through his prior positions at Great Plains Natural Gas Co. and Great
Plains Energy Corp. In addition, Mr. Wilsons extensive finance and accounting
experience make him well-suited for our audit committee. |

The board of directors recommends a vote for each nominee.

A majority of votes cast is required to elect a director in an uncontested election. A majority of votes cast means the number of votes cast for a directors election must exceed the number of votes cast against the directors election. Abstentions and broker non-votes do not count as votes cast for or against the directors election. In a contested election, which is an election in which the number of nominees for director exceeds the number of directors to be elected and which we do not anticipate, directors will be elected by a plurality of the votes cast.

Unless you specify otherwise when you submit your proxy, the proxies will vote your shares of common stock for all directors nominated by the board of directors. If a nominee becomes unavailable for any reason or if a vacancy should occur before the election, which we do not anticipate, the proxies will vote your shares in their discretion for another person nominated by the board.

| | receipt of a
greater number of votes against than votes for election at our annual
meeting of stockholders and |
| --- | --- |
| | acceptance of such
resignation by the board of directors. |

Brokers may not vote your shares on the election of directors if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted.

I TEM 2. APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE MDU RESOURCES GROUP, INC. LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN FOR PURPOSES OF INTERNAL REVENUE CODE SECTION 162(m)

The board of directors recommends that stockholders approve the material terms of the performance goals under the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan to preserve our ability to deduct compensation associated with future performance-based incentive awards to be made under the plan.

Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1,000,000 on the amount we may deduct in any one year for compensation paid to our covered employees. A covered employee means a person specified in Section 162(m), which generally includes our chief executive officer and each of our other three most highly-compensated executive officers other than our chief financial officer.

There is, however, an exception to this limit for certain performance-based compensation, and awards made pursuant to the plan may constitute performance-based compensation not subject to the deductibility limitation of Internal Revenue Code Section 162(m). In order to continue to qualify for this exception, the stockholders must re-approve, every five years, the material terms of the performance goals of

MDU Resources Group, Inc. Proxy Statement 9

Proxy Statement

the plan under which compensation will be paid. Stockholders last approved these goals in 2006, and, therefore, the board is submitting the plans performance goals for re-approval at the 2011 annual meeting of stockholders. The board of directors has also amended the plan on November 11, 2010 and February 17, 2011, subject to approval of this item by stockholders at the annual meeting, to include the following new performance goals: safety, sustainability, capital efficiency, enterprise value, company value, asset value growth, net asset value, shareholders equity, dividends, oil and/or gas production (growth, value and costs) and oil and/or gas reserves (including proved, probable and possible reserves and growth, value and costs) and finding or development costs. Your vote for this item will constitute approval of the new performance goals and approval of the material terms of the performance goals for purposes of Internal Revenue Code Section 162(m).

The material terms of the performance goals are (i) eligibility and participation, (ii) the business criteria on which the performance goals are based, and (iii) maximum awards under the plan, which we describe further below.

Eligibility and Participation All officers and key employees of the company and our subsidiaries, including employees who are members of the board, as determined by the compensation committee, are eligible to participate in the plan. The approximate number of employees who are currently eligible to participate in the plan is 49.

Performance Goals The compensation committee establishes the performance goals, which will be based on one or more of the following measures: sales or revenues, earnings per share, shareholder return and/or value, funds from operations, operating income, gross income, net income, cash flow, return on equity, return on capital, capital efficiency, earnings before interest, operating ratios, stock price, enterprise value, company value, asset value growth, net asset value, shareholders equity, dividends, customer satisfaction, accomplishment of mergers, acquisitions, dispositions or similar extraordinary business transactions, safety, sustainability, profit returns and margins, financial return ratios, market performance, oil and/or gas production (growth, value and costs) and oil and/or gas reserves (including proved, probable and possible reserves and growth, value and costs) and finding or development costs. Performance goals may be measured solely on a corporate, subsidiary, or business unit basis, or a combination of the foregoing. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure.

Maximum Awards under the Plan Awards under the plan may be made in the form of stock, stock options, stock appreciation rights, performance units, performance shares, dividend equivalents, restricted stock, and other awards permitted under article 10 of the plan. Except as provided in the plans anti-dilution adjustment provisions, the per share exercise price of stock options and the grant price of stock appreciation rights granted under the plan will not be less than the fair market value of our common stock on the date of grant.

Subject to adjustment pursuant to the anti-dilution provisions in the plan, (i) the total number of shares with respect to which stock options or stock appreciation rights may be granted in any calendar year to any covered employee under Section 162(m) shall not exceed 2,250,000 shares, (ii) the total number of shares of restricted stock intended to qualify as performance-based compensation that may be granted in any calendar year to any covered employee shall not exceed 2,250,000 shares, (iii) the total number of performance shares or performance units that may be granted in any calendar year to any covered employee shall not exceed 2,250,000 performance shares or performance units, as the case may be, (iv) the total number of shares that are intended to qualify as performance-based compensation granted pursuant to article 10 of the plan in any calendar year to any covered employee shall not exceed 2,250,000 shares, (v) the total cash award that is intended to qualify as performance-based compensation that may be paid pursuant to article 10 of the plan in any calendar year to any covered employee shall not exceed $6,000,000, and (vi) the aggregate number of dividend equivalents that are intended to qualify as performance-based compensation that a covered employee may receive in any calendar year shall not exceed $6,000,000.

The other material features of the plan are described below, and the complete text of the plan is attached to this proxy statement as Exhibit A.

Purpose of the Plan The purpose of the plan is to promote the success and enhance the value of the company by linking the personal interests of officers and key employees to those of our stockholders and customers. The plan is further intended to provide flexibility in our ability to motivate, attract, and retain the services of participants upon whose judgment, interest, and special effort the successful conduct of our operations largely depends.

10 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Effective Date and Duration The plan was approved by the board of directors on February 7, 1997, and became effective upon approval by stockholders at the annual meeting on April 22, 1997. The plan will remain in effect, subject to the right of the board of directors to terminate the plan at any time, until all shares subject to the plan have been issued.

Amendment and Termination The board may, at any time and from time to time, alter, amend, suspend, or terminate the plan in whole or in part, provided that no amendment will be made without stockholder approval if the amendment would (i) increase the total number of shares that may be issued under the plan, (ii) materially modify the requirements for participation in the plan, or (iii) materially increase the benefits accruing to participants under the plan. The board also is authorized to amend the plan and stock options granted under the plan to maintain qualification as incentive stock options within the meaning of Internal Revenue Code Section 422, if applicable.

Administration of the Plan The plan is administered by the compensation committee or by any other committee appointed by the board of directors. Subject to the terms of the plan, the committee has full power under the plan to determine persons to receive awards, the type of awards, and their terms. The committee may amend outstanding awards subject to restrictions stated in the plan. The committee may not amend an outstanding stock option for the sole purpose of reducing the stock options exercise price.

Shares Subject to the Plan When it originally became effective in 1997, the plan authorized the issuance of up to 1,200,000 shares of MDU Resources Group, Inc. common stock. In 2001, the stockholders approved an amendment to increase the number of shares that could be issued under the plan by 4,000,000 shares. On February 17, 2005, the Board of Directors amended the plan to reduce the number of shares that could be issued by 2,000,000 shares. As of February 17, 2011, after giving effect to stock splits and awards pursuant to the plan, 5,686,140 shares remain available for issuance under the plan, excluding 764,835 outstanding target level performance share awards granted in 2009, 2010, and 2011.

Shares underlying lapsed or forfeited restricted stock awards are not treated as having been issued under the plan. Shares withheld from a restricted stock award to satisfy tax withholding obligations are counted as shares issued under the plan. Shares that are potentially deliverable under an award that expires or is canceled, forfeited, settled in cash, or otherwise settled without the delivery of shares are not treated as having been issued under the plan. Shares that are withheld to satisfy the exercise price of a stock option or tax withholding obligations related to a stock option, stock appreciation right, or other award under which the shares withheld have not yet been issued are not treated as having been issued under the plan.

Shares issued under the plan may be authorized but unissued shares of common stock, treasury stock, or shares purchased on the open market. The last reported sale price of a share of our common stock on the New York Stock Exchange on February 17, 2011 was $21.42.

In the event of any equity restructuring such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend, the committee will cause an equitable adjustment to be made (i) in the number and kind of shares that may be delivered under the plan, (ii) in the individual limitations set forth in the plan, and (iii) with respect to outstanding awards, in the number and kind of shares subject to outstanding awards, the stock option exercise price, base value, or other price of shares subject to outstanding awards, any performance goals relating to shares, the market price of shares, or per-share results, and other terms and conditions of outstanding awards, in the case of (i), (ii), and (iii) to prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation, or liquidation, the committee may, in its sole discretion, cause an equitable adjustment as described in the foregoing sentence to be made, to prevent dilution or enlargement of rights. The number of shares subject to any award will always be rounded down to a whole number when adjustments are made pursuant to these provisions of the plan. Adjustments made by the committee pursuant to these provisions are final, binding, and conclusive.

Types of Awards under the Plan Following is a general description of the types of awards that the compensation committee may make under the plan. The compensation committee will determine the terms and conditions of awards on a grant-by-grant basis, subject to limitations contained in the plan.

Stock Options. The committee may grant incentive stock options and nonqualified stock options. Except as provided in the plans anti-dilution adjustment provisions, the exercise price for each such award shall be not less than the average of the high and low sale prices of our common stock on the date of grant. Stock options shall expire at such times and shall have such other terms and conditions as the committee may determine at the time of grant, provided, however, that no incentive stock option shall be exercisable later than the tenth anniversary of its date of grant. Dividend equivalents may also be granted.

MDU Resources Group, Inc. Proxy Statement 11

Proxy Statement

The stock option exercise price is payable in cash, in shares of our common stock having a fair market value equal to the exercise price, by share withholding, cashless exercise or any combination of the foregoing.

Stock Appreciation Rights. The committee may grant stock appreciation rights with such terms and conditions as the committee may determine. Stock appreciation rights may be in the form of freestanding stock appreciation rights or tandem stock appreciation rights. Except as provided in the plans anti-dilution adjustment provisions, the base value of a freestanding stock appreciation right shall be equal to the average of the high and low sale prices of a share of our common stock on the date of grant. The base value of a tandem stock appreciation right shall be equal to the stock option exercise price of the related stock option.

Freestanding stock appreciation rights may be exercised upon such terms and conditions as are imposed by the committee and as set forth in the stock appreciation right award agreement. A tandem stock appreciation right may be exercised only with respect to the shares of our common stock for which its related stock option is exercisable.

Upon exercise of a stock appreciation right, a participant will receive the product of the excess of the fair market value of a share of our common stock on the date of exercise over the base value multiplied by the number of shares with respect to which the stock appreciation right is exercised, subject to satisfaction of applicable tax withholding. Payment due to the participant upon exercise may be made in cash, in shares of our common stock having a fair market value equal to such cash amount, or in a combination of cash and shares, as determined by the Committee.

Restricted Stock. Restricted stock may be granted in such amounts and subject to such terms and conditions as determined by the committee, including time-based or performance-based vesting restrictions. The committee may establish performance goals, as described above, for restricted stock.

Participants holding restricted stock may exercise full voting rights with respect to those shares during the restricted period and, subject to the committees right to determine otherwise at the time of grant, will receive regular cash dividends. All other distributions paid with respect to the restricted stock will be credited subject to the same restrictions on transferability and forfeitability as the shares of restricted stock with respect to which they were paid.

Performance Units and Performance Shares. Performance units and performance shares may be granted in the amounts and subject to such terms and conditions as determined by the committee. The committee will set performance goals, which, depending on the extent to which they are met during the performance periods established by the committee, will determine the number and/or value of performance units/shares that will be paid out to participants. Dividend equivalents may also be granted.

Participants will receive payment of the value of performance units/shares earned after the end of the performance period. Payment of performance units/shares will be made in cash and/or shares of common stock which have an aggregate fair market value equal to the value of the earned performance units/shares at the end of the applicable performance period, in such combination as the committee determines. Shares may be granted subject to any restrictions deemed appropriate by the committee.

Other Awards. The committee may make other awards which may include, without limitation, the grant of shares of common stock based upon attainment of performance goals established by the committee as described above, the payment of shares in lieu of cash, the payment of cash based on attainment of performance goals, and the payment of shares in lieu of cash under our other incentive or bonus programs.

Minimum Vesting Requirements Under the plan, the minimum vesting period for full value awards, which are awards other than stock options and stock appreciation rights, that have no performance-based vesting characteristics is three years. Vesting may occur ratably each month, quarter, or anniversary of the grant date. The minimum vesting period for full value awards with performance-based vesting characteristics is one year. The committee does not have discretion to accelerate vesting of full value awards except in the event of a change in control of the company or similar transaction, or the death, disability, or termination of employment of a participant. The committee may grant a de minimis number of full value awards that have a shorter vesting period. For this purpose, de minimis means 331,279 shares, which was five percent of the total number of shares reserved for issuance under the plan.

Termination of Employment Each award agreement will set forth the participants rights with respect to each award following termination of employment.

12 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Transferability Except as otherwise determined by the committee and set forth in the award agreement and subject to the provisions of the plan, awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and a participants rights shall be exercisable only by the participant or the participants legal representative during his or her lifetime.

Change in Control Upon a change in control, as defined below,

| | any and all stock
options and stock appreciation rights granted under the plan will become
immediately exercisable |
| --- | --- |
| | any restriction
periods and restrictions imposed on restricted stock or awards granted
pursuant to article 10 of the plan, if not performance-based, will be deemed
to have expired, and such restricted stock or awards will become immediately
vested in full and |
| | the target payout
opportunity attainable under all outstanding awards of performance units,
performance shares, and other awards granted pursuant to article 10 of the
plan, if performance-based, will be deemed to have been fully earned for the
entire performance period(s) as of the effective date of the change in
control and will be paid out promptly in shares or cash pursuant to the terms
of the award agreement, or in the absence of such designation, as the
committee shall determine. |
| The plan defines
change in control as the earliest to occur of: | |
| | the acquisition by
an individual, entity, or group of 20% or more of our outstanding common
stock |
| | a change in a
majority of our board of directors since April 22, 1997 without the approval
of a majority of the board members as of April 22, 1997, or whose election
was approved by such board members |
| | consummation of a
merger or similar transaction or sale of all or substantially all of our
assets, unless our stockholders immediately prior to the transaction
beneficially own more than 60% of the outstanding common stock and voting power
of the resulting corporation in substantially the same proportions as before
the merger, no person owns 20% or more of the resulting corporations
outstanding common stock or voting power except for any such ownership that
existed before the merger and at least a majority of the board of the
resulting corporation is comprised of our directors or |
| | stockholder
approval of our liquidation or dissolution. |

Accounting Restatements The plan provides that if our audited financial statements are restated, the committee may, in accordance with our Guidelines for Repayment of Incentives Due to Accounting Restatements , take such actions as it deems appropriate in its sole discretion with respect to outstanding awards if the terms of such awards are directly impacted by the restatement. To the extent payment of vested, earned, or exercised awards was made within the three-year period prior to the restatement, the committee may, without limitation on its ability to take other action,

| | secure repayment
of awards |
| --- | --- |
| | grant additional
awards |
| | rescind vesting of
outstanding awards and |
| | cause the
forfeiture of outstanding awards. |

The committee may take different actions with respect to different awards and different participants, but is not obligated to take any action.

Section 409A To the extent applicable, it is intended that the plan and any awards made under the plan comply with the requirements of Internal Revenue Code Section 409A. Any provision that would cause the plan or any award to fail to satisfy Section 409A will have no force or effect until amended to comply with Section 409A, which amendment may be retroactive to the extent permitted by Section 409A.

Award Information It is not possible at this time to determine awards that will be made in the future pursuant to the plan.

MDU Resources Group, Inc. Proxy Statement 13

Proxy Statement

Stock Option Awards under MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan The following table lists all stock options granted to the individuals and groups indicated below since the adoption of the plan in 1997, whether exercised, lapsed, or forfeited and sets forth the title and number of securities underlying stock option awards, the exercise prices, and expiration dates.

| Name and Position — Terry D.
Hildestad President and CEO | Common | 74,520 | Exercise Price per Share ($) — $ 13.2178 | 2/15/11 |
| --- | --- | --- | --- | --- |
| Vernon A.
Raile Executive Vice President, Treasurer and CFO | Common | 46,800 | $ 13.2178 | 2/15/11 |
| Doran N.
Schwartz Vice President and CFO | | | | |
| John G.
Harp President and CEO, MDU Construction Services Group, Inc. | Common | 36,000 | $ 13.2178 | 4/30/01 |
| Steven L.
Bietz President and CEO, WBI Holdings, Inc. | Common | 16,875 | $ 13.2178 | 2/15/11 |
| David L.
Goodin President and CEO, Combined Utility Group | Common | 75,937 | $ 13.2178 | 2/15/11 |
| All current executive officers | Common | 65,205 | $ 13.2178 | 2/15/11 |
| as a group | Common | 7,762 | $ 16.1956 | 2/15/11 |
| All current
directors, who are not executive officers, as a group | | | | |
| Each nominee for election as a director | | | | |
| Thomas
Everist | | | | |
| Karen B.
Fagg | | | | |
| Terry D.
Hildestad* | | | | |
| A. Bart
Holaday | | | | |
| Dennis W.
Johnson | | | | |
| Thomas C.
Knudson | | | | |
| Richard H.
Lewis | | | | |
| Patricia L.
Moss | | | | |
| Harry J. Pearce | | | | |
| John K.
Wilson | | | | |
| Each associate of such persons | | | | |
| Each other
person who received 5% of such stock options | | | | |
| All employees, including all | Common | 369,604 | $ 13.2178 | 2/15/11 |
| current officers who | Common | 34,918 | $ 16.1956 | 2/15/11 |
| are not executive officers, | Common | 15,030 | $ 12.2778 | 2/15/11 |
| as a group | Common | 48,035 | $ 13.0889 | 2/15/11 |
| | Common | 19,506 | $ 11.5289 | 2/15/11 |
| * Mr. Hildestads stock options
are shown above | | | | |

Federal Income Tax Consequences The following description is a summary of material U.S. federal income tax consequences relating to stock options granted under the plan, based on applicable U.S. federal income tax laws. The description may be affected by future legislation, Internal Revenue Service rulings and regulations, or court decisions. The portions of the following description relating to our reporting and withholding obligations and ability to take a federal income tax deduction are based on the assumption that the optionholder provided services to MDU Resources Group, Inc.

The following description does not address all of the potential tax consequences of the optionholders participation in the plan, such as potential state or local taxes that may apply. The optionholder is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the optionholder in connection with the optionholders participation in the plan, including any taxes and penalties that may arise under Section 409A of the Internal Revenue Code, and neither we nor any of our affiliates have any obligation to indemnify or otherwise hold the optionholder or any beneficiary harmless from any or all of such taxes or penalties.

14 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Consequences to the Optionholder Award . There are no federal income tax consequences to the optionholder solely by reason of the award of incentive stock options or nonqualified stock options under the plan.

Exercise. The exercise of an incentive stock option is not a taxable event for regular federal income tax purposes if certain requirements are satisfied, including the requirement that the optionholder generally must exercise the incentive stock option no later than three months following the termination of the optionholders employment with the company, or one year following a termination due to disability, and that the optionholder holds the shares acquired upon exercise of the stock option for the requisite period described below. However, such exercise may give rise to alternative minimum tax liability as discussed below.

Upon the exercise of a nonqualified stock option, the optionholder will recognize ordinary income in an amount equal to the excess of the fair market value of the shares of our common stock at the time of exercise over the total stock option exercise price. The ordinary income recognized in connection with the exercise of a nonqualified stock option will be subject to income and employment tax withholding.

The optionholders tax basis in the shares acquired upon exercise of a stock option will be the option exercise price plus, in the case of a nonqualified stock option, the amount of ordinary income, if any, the optionholder recognized upon exercise of the stock option.

Disposition of Shares Acquired upon Exercise of Incentive Stock Options. The shares of common stock received pursuant to the exercise of an incentive stock option are subject to holding period rules that affect the federal income tax consequences of selling these shares. To satisfy the holding period rules applicable to shares acquired upon the exercise of an incentive stock option, unless an exception applies, you must not dispose of such shares within two years after the stock option is granted or within one year after exercise of the stock option.

| | Qualifying
Disposition. If an optionholders disposition of shares of our common stock
acquired upon exercise of an incentive stock option satisfies the holding
period rules, at the time of disposition the optionholder will recognize
long-term capital gain or loss equal to the difference between the amount
realized upon such disposition and the optionholders basis in the shares.
The optionholders basis in the shares will generally equal the stock option
exercise price. |
| --- | --- |
| | Disqualifying
Disposition. If the optionholders disposition of shares of our common stock
acquired upon the exercise of an incentive stock option does not satisfy the
holding period rules, at the time of disposition the optionholder will
recognize ordinary income equal to the lesser of (i) the excess of the
shares fair market value on the date of exercise over the total stock option
exercise price or (ii) the optionholders actual gain, i.e., the excess, if
any, of the amount realized on the disposition over the total stock option
exercise. If the total amount realized in the disposition of the shares
exceeds the fair market value of the shares on the date of exercise, the
optionholder will recognize a capital gain in the amount of such excess. If
the optionholder incurs a loss on the disposition, i.e., if the total amount
realized is less than the total stock option exercise price, the loss will be
a capital loss. |

Other Disposition. If an optionholder disposes of shares acquired upon exercise of a nonqualified stock option in a taxable transaction, the optionholder will recognize capital gain or loss in an amount equal to the difference between the optionholders basis, as discussed above, in the shares sold and the total amount realized upon disposition. Any such capital gain or loss, and any capital gain or loss recognized on a disqualifying disposition of shares acquired upon exercise of incentive stock options as discussed above, will be short-term or long-term depending on whether the optionholder held the shares of our common stock for more than one year from the date of exercise.

Alternative Minimum Tax. The spread between the fair market value of shares of our common stock at the time of exercise of an incentive stock option and the total option exercise price is included in alternative minimum taxable income and thus may trigger alternative minimum tax.

Consequences to the Company There are no federal income tax consequences to the company upon award of incentive stock options or nonqualified stock options or the exercise of an incentive stock option, unless the exercise results in a disqualifying disposition.

We will be entitled to a federal income tax deduction in the amount of the ordinary income recognized by the optionholder upon exercise of a nonqualified stock option. To the extent the optionholder recognizes ordinary income by reason of a disqualifying disposition of the stock acquired upon exercise of an incentive stock option, we will be entitled to a corresponding deduction in the year in which the disposition occurs.

MDU Resources Group, Inc. Proxy Statement 15

Proxy Statement

We will be required to report to the Internal Revenue Service any ordinary income recognized by any optionholder by reason of the exercise of a nonqualified stock option or by reason of a disqualifying disposition of the stock acquired upon exercise of an incentive stock option. We will be required to withhold income and employment taxes and pay our share of employment taxes with respect to ordinary income the optionholder recognized upon the exercise of nonqualified stock options.

Equity Compensation Plan Information

The following table includes information as of December 31, 2010, with respect to our equity compensation plans:


	(a)		Number of securities
	Number of securities	(b)	remaining available for
	to be issued upon	Weighted average	future issuance under
	exercise of	exercise price of	equity compensation plans
	outstanding options,	outstanding options,	(excluding securities
Plan Category	warrants and rights	warrants and rights	reflected in column (a))
Equity
compensation plans approved by stockholders (1)	882,142	(2)	$20.09	6,365,397	(3)(4)
Equity
compensation plans not approved by stockholders (5)	228,527		13.22	2,375,474	(6)
Total	1,110,669		$18.68	8,740,871

| (1) | Consists of the Non-Employee
Director Long-Term Incentive Compensation Plan, the Long-Term
Performance-Based Incentive Plan, and the Non-Employee Director Stock
Compensation Plan. |
| --- | --- |
| (2) | Includes 669,685 performance
shares. |
| (3) | In addition to being available
for future issuance upon exercise of stock options, 357,757 shares under the
Non-Employee Director Long-Term Incentive Compensation Plan may instead be
issued in connection with stock appreciation rights, restricted stock,
performance units, performance shares, or other equity-based awards, and
5,686,140 shares under the Long-Term Performance-Based Incentive Plan may
instead be issued in connection with stock appreciation rights, restricted
stock, performance units, performance shares, or other equity-based awards. |
| (4) | This amount also includes 321,500
shares available for issuance under the Non-Employee Director Stock
Compensation Plan. Under this plan, in addition to a cash retainer,
nonemployee directors are awarded 4,050 shares annually. A non-employee
director may acquire additional shares under the plan in lieu of receiving
the cash portion of the directors retainer or fees. |
| (5) | Consists of the 1998 Option Award
Program and the Group Genius Innovation Plan. |
| (6) | In addition to being available
for future issuance upon exercise of stock options, 219,050 shares under the
Group Genius Innovation Plan may instead be issued in connection with stock
appreciation rights, restricted stock, restricted stock units, performance
units, performance stock, or other equity-based awards. |

The following equity compensation plans have not been approved by our stockholders.

The 1998 Option Award Program

The 1998 Option Award Program is a broad-based plan adopted by the board of directors, effective February 12, 1998. The plan permits the grant of nonqualified stock options to employees of the company and our subsidiaries. The maximum number of shares that may be issued under the plan is 3,795,330. Shares granted may be authorized but unissued shares, treasury shares, or shares purchased on the open market. Option exercise prices are equal to the market value of our shares on the date of the option grant. Optionees receive dividend equivalents on their options, with any credited dividends paid in cash to the optionee if the stock option vests, or forfeited if the stock option is forfeited. Vested stock options remain exercisable for one year following termination of employment due to death or disability and for three months following termination of employment for any other reason.

Unvested stock options are forfeited upon termination of employment. Subject to the terms and conditions of the plan, the plans administrative committee determines the number of shares subject to options granted to each participant and the other terms and conditions pertaining to such options, including vesting provisions. All options become immediately exercisable in the event of a change in control of the company.

In 2001, 450 options (adjusted for the three-for-two stock splits in October 2003 and July 2006) were granted to each of approximately 5,900 employees. No officers received grants. These stock options vested on February 13, 2004. As of December 31, 2010, options covering 228,527 shares of common stock were outstanding under the plan and 2,156,424 shares remained available for future grant. Options covering 1,410,379 shares had been exercised.

16 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The Group Genius Innovation Plan

The Group Genius Innovation Plan was adopted by the board of directors, effective May 17, 2001, to encourage employees to share ideas for new business directions for the company and to reward them when the idea becomes profitable. Employees of the company and our subsidiaries who are selected by the plans administrative committee are eligible to participate in the plan. Officers and directors are not eligible to participate. The plan permits the granting of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance stock, and other awards. The maximum number of shares that may be issued under the plan is 223,150. Shares granted under the plan may be authorized but unissued shares, treasury shares, or shares purchased on the open market. Restricted stockholders have voting rights and, unless determined otherwise by the plans administrative committee, receive dividends paid on the restricted stock. Dividend equivalents payable in cash may be granted with respect to options and performance shares. The plans administrative committee determines the number of shares or units subject to awards, and the other terms and conditions of the awards, including vesting provisions and the effect of employment termination. Upon a change in control of the company, all options and stock appreciation rights become immediately vested and exercisable, all restricted stock becomes immediately vested, all restricted stock units become immediately vested and are paid out in cash, and target payout opportunities under all performance units, performance stock, and other awards are deemed to be fully earned, with awards denominated in stock paid out in shares and awards denominated in units paid out in cash. As of December 31, 2010, 4,100 shares of stock had been granted to 73 employees.

The board of directors believes that it is in the best interests of the company and our stockholders to receive the full income tax deduction for performance-based compensation paid under the plan. The board is therefore asking the stockholders to approve, for purposes of Section 162(m), the material terms of the performance goals as set forth above. The plan will remain in effect if the stockholders do not approve the material terms of the performance goals, and failure to obtain stockholder approval will not affect the rights of participants under the plan or under any outstanding award agreements.

The board of directors recommends a vote for this proposal.

For purposes of Internal Revenue Code Section 162(m), approval requires a majority of the votes cast to be in favor of approval. Abstentions will not count as votes cast for purposes of Internal Revenue Code approval. Approval for purposes of Delaware law requires the affirmative vote of a majority of the outstanding shares of our common stock present in person or represented by proxy at the meeting and entitled to vote on the item. Under the Delaware voting standard, abstentions will count as votes against the item. Broker non-votes will not count as voting power present and, therefore, are not counted in the vote for purposes of Internal Revenue Code approval or under the Delaware voting standard.

I TEM 3. RATIFICATION OF INDEPENDENT AUDITORS

The audit committee at its February 2011 meeting appointed Deloitte & Touche LLP as our independent auditors for fiscal year 2011. The board of directors concurred with the audit committees decision. Deloitte & Touche LLP has served as our independent auditors since fiscal year 2002.

Although your ratification vote will not affect the appointment or retention of Deloitte & Touche LLP for 2011, the audit committee will consider your vote in determining its appointment of our independent auditors for the next fiscal year. The audit committee, in appointing our independent auditors, reserves the right, in its sole discretion, to change an appointment at any time during a fiscal year if it determines that such a change would be in our best interests.

A representative of Deloitte & Touche LLP will be present at the annual meeting and will be available to respond to appropriate questions. We do not anticipate 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 chooses.

The board of directors recommends a vote for the ratification of Deloitte & Touche LLP as our independent auditors for 2011.

Ratification of the appointment of Deloitte & Touche LLP as our independent auditors for 2011 requires the affirmative vote of a majority of our common stock present in person or represented by proxy at the meeting and entitled to vote on the proposal. Abstentions will count as votes against this proposal.

MDU Resources Group, Inc. Proxy Statement 17

Proxy Statement

In connection with the audit of our financial statements for 2011, the parties have drafted an agreement for audit committee approval that contains provisions for alternative dispute resolution. The agreement provides that disputes arising out of our engagement of Deloitte & Touche LLP are resolved through mediation or arbitration, commonly referred to as alternative dispute resolution procedures. The alternative dispute resolution provision does not have a waiver of rights to pursue punitive damages or other forms of relief not based on actual damages. The alternative dispute resolution provisions do not apply to claims by third parties, such as our stockholders or creditors.

A CCOUNTING AND AUDITING MATTERS

Fees

The following table summarizes the aggregate fees that our independent auditors, Deloitte & Touche LLP, billed or are expected to bill us for professional services rendered for 2010 and 2009:

| Audit
Fees(a) | $2,230,200 | $2,366,154 |
| --- | --- | --- |
| Audit-Related
Fees(b) | 26,400 | 52,292 |
| Tax Fees(c) | 9,800 | 17,600 |
| All Other
Fees(d) | 15,493 | 130,016 |
| Total
Fees(e) | $2,281,893 | $2,566,062 |
| Ratio of
Tax and All Other Fees to Audit and Audit-Related Fees | 1.12 % | 6.10 % |

| * | The 2009 amounts were adjusted
from amounts shown in the 2010 proxy statement to reflect actual amounts. |
| --- | --- |
| (a) | Audit fees for 2009 and 2010
consisted of services rendered for the audit of our annual financial
statements, reviews of quarterly financial statements, statutory and
regulatory audits, compliance with loan covenants, reviews of financial
statements for MDU Construction Services Group, Inc. and subsidiaries, agreed upon
procedures associated with the annual submission of financial assurance to
the North Dakota Department of Health, comfort letters to underwriters (2009
only), and work related to the filing of Form S-8 with the Securities and
Exchange Commission (2009 only). |
| (b) | Audit-related fees for 2010 and
2009 are associated with the audit of the Intermountain Gas Companys benefit
plans and accounting research assistance. |
| (c) | Tax fees for 2010 include
services associated with Section 199 tax credits. Tax fees for 2009 include
support services associated with the Cascade Natural Gas Corporation IRS
audit. |
| (d) | All other fees for 2010 consist
of training provided by Deloitte & Touche LLP on the topic of utility
taxes. All other fees for 2009 are for services provided by Deloitte FAS, LLP
in connection with the review of accounting practices and procedures at one
of the companys operating locations. |
| (e) | Total fees reported above include
out-of-pocket expenses related to the services provided of $260,000 for 2010
and $240,062 for 2009. |

Pre-Approval Policy

The audit committee pre-approved all services Deloitte & Touche LLP performed in 2010 in accordance with the pre-approval policy and procedures the audit committee adopted at its August 12, 2003 meeting. This policy is designed to achieve the continued independence of Deloitte & Touche LLP and to assist in our compliance with Sections 201 and 202 of the Sarbanes-Oxley Act of 2002 and related rules of the Securities and Exchange Commission.

The policy defines the permitted services in each of the audit, audit-related, tax, and all other services categories, as well as prohibited services. The pre-approval policy requires management to submit annually for approval to the audit committee a service plan describing the scope of work and anticipated cost associated with each category of service. At each regular audit committee meeting, management reports on services performed by Deloitte & Touche LLP and the fees paid or accrued through the end of the quarter preceding the meeting. Management may submit requests for additional permitted services before the next scheduled audit committee meeting to the designated member of the audit committee, Dennis W. Johnson, for approval. The designated member updates the audit committee at the next regularly scheduled meeting regarding any services that he approved during the interim period. At each regular audit committee meeting, management may submit to the audit committee for approval a supplement to the service plan containing any request for additional permitted services.

In addition, prior to approving any request for audit-related, tax, or all other services of more than $50,000, Deloitte & Touche LLP will provide a statement setting forth the reasons why rendering of the proposed services does not compromise Deloitte & Touche LLPs independence. This description and statement by Deloitte & Touche LLP may be incorporated into the service plan or as an exhibit thereto or may be delivered in a separate written statement.

18 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

I TEM 4. ADVISORY VOTE TO APPROVE THE COMPENSATION PAID TO THE COMPANYS NAMED EXECUTIVE OFFICERS

In accordance with recently-adopted Section 14A of the Securities Exchange Act of 1934 and Rule 14a-21(a), we are asking our stockholders to approve, in a separate advisory vote, the compensation of our named executive officers as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K. As discussed in the compensation discussion and analysis, our compensation committee and board of directors believe that our current executive compensation program directly links compensation of our named executive officers to our financial performance and aligns the interests of our named executive officers with those of our stockholders. Our compensation committee and board of directors also believe that our executive compensation program provides our named executive officers with a balanced compensation package that includes an appropriate base salary along with competitive annual and long-term incentive compensation targets. These incentive programs are designed to reward our named executive officers on both an annual and long-term basis if they attain specified goals.

Our overall compensation program and philosophy is built on a foundation of these guiding principles:

	we pay for performance
	we determine performance based on
financial criteria that are important to stockholder value earnings per
share, return on invested capital, and total stockholder return relative to
our peers
	we review competitive
compensation data for each named executive officer position and incorporate
internal equity in the final determination of target compensation levels and
	through our PEER4 Analysis, we
compare our pay-for-performance results with the pay-for-performance results
of our peers.

We are asking our stockholders to indicate their approval of our named executive officer compensation as disclosed in this proxy statement, including the compensation discussion and analysis, the executive compensation tables, and narrative discussion. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers for 2010. Accordingly, the following resolution is submitted for stockholder vote at the 2011 annual meeting:

RESOLVED, that the compensation paid to the companys named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.

As this is an advisory vote, the results will not be binding on the company, the board of directors, or the compensation committee and will not require us to take any action. The final decision on the compensation of our named executive officers remains with our compensation committee and our board of directors, although our board and compensation committee will consider the outcome of this vote when making future compensation decisions. We will provide our stockholders with the opportunity to vote on our named executive officer compensation at our annual meetings at least once every three calendar years.

The board of directors recommends a vote for the approval, on an advisory basis, of the compensation paid to our named executive officers, as disclosed in this proxy statement.

Approval of the compensation paid to our named executive officers requires the affirmative vote of a majority of our common stock present in person or represented by proxy at the meeting and entitled to vote on the proposal. Abstentions will count as votes against this proposal. Broker non-votes are not counted as voting power present and, therefore, are not counted in the vote.

I TEM 5. ADVISORY VOTE ON FREQUENCY OF VOTE TO APPROVE THE COMPENSATION PAID TO THE COMPANYS NAMED EXECUTIVE OFFICERS

In accordance with recently-adopted Section 14A of the Securities Exchange Act of 1934 and Rule 14a-21(b), we are asking our stockholders to indicate whether future advisory votes to approve the compensation paid to our named executive officers should be held every year, every two years, or every three years.

Our board of directors has determined that our stockholders should have the opportunity to vote on the compensation of our named executive officers every year. The board of directors believes that giving our stockholders the right to cast an advisory vote every year on the compensation of our named executive officers is a good corporate governance practice and is in the best interests of our stockholders. Annual advisory votes provide the highest level of accountability and direct communication with our stockholders.

MDU Resources Group, Inc. Proxy Statement 19

Proxy Statement

By voting on this Item 5, stockholders are not approving or disapproving the board of directors recommendation, but rather are indicating whether they prefer an advisory vote on named executive officer compensation be held every year, every two years, or every three years. Stockholders may also abstain from voting.

As this is an advisory vote, the results will not be binding on the board of directors or the company, and the board of directors may decide that it is in the best interests of our stockholders and the company to hold an advisory vote on executive compensation more or less frequently than the option selected by our stockholders. We will provide our stockholders with the opportunity to vote on the frequency of advisory votes on our named executive officer compensation at our annual meetings at least once every six calendar years.

Under rules adopted by the Securities and Exchange Commission, if a majority of the votes cast approves a particular frequency and we adopt a policy that is consistent with that frequency, we may exclude from our proxy statements in the future any stockholder proposals providing for an advisory vote or seeking future advisory votes on the compensation paid to our named executive officers or relating to the frequency of such votes, including those drafted as requests to amend our governing documents. A majority of the votes cast means that the number of votes cast for one frequency must exceed the aggregate number of votes cast for the other two frequencies. Abstentions and broker non-votes do not count as votes cast.

The board of directors recommends that an advisory vote on compensation paid to our named executive officers be held every year.

20 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

E XECUTIVE COMPENSATION

C ompensation Discussion and Analysis

The following compensation discussion and analysis may contain statements regarding corporate performance targets and goals. These targets and goals are disclosed in the limited context of our compensation programs and should not be understood to be statements of managements expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.

Introduction

In this compensation discussion and analysis, we discuss our compensation objectives, our decisions, and the reasons for our decisions relating to 2010 compensation for our named executive officers.

For 2010, our named executive officers were Terry D. Hildestad, Vernon A. Raile, Doran N. Schwartz, John G. Harp, Steven L. Bietz, and David L. Goodin. Mr. Goodin, president and chief executive officer of Montana-Dakota Utilities, Co., Great Plains Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain Gas Company, which we refer to as the combined utility group, is a named executive officer for the first time. Mr. Raile retired as executive vice president, treasurer and chief financial officer on February 16, 2010, and Mr. Schwartz was promoted to vice president and chief financial officer effective February 17, 2010.

Overview of 2010 Compensation

The compensation committee and the board of directors believe our 2010 compensation program for our named executive officers directly links their compensation to our financial performance and aligns their interests with those of our stockholders. Our compensation committee and the board of directors also believe that our 2010 compensation program provides our named executive officers with a balanced compensation package that includes an appropriate base salary along with competitive annual and long-term incentive compensation targets. These incentives are designed to reward our named executive officers on both an annual and long-term basis if they attain specified goals.

Our overall compensation program and philosophy is built on a foundation of these guiding principles:

| | we pay for performance, with
55.9% to 71.4% of our named executive officers 2010 total target direct
compensation in the form of incentives |
| --- | --- |
| | we determine performance based on
financial criteria that are important to stockholder value earnings per
share, return on invested capital, and total stockholder return relative to
our peers |
| | we review competitive
compensation data for each named executive officer and incorporate internal
equity in the final determination of target compensation levels and |
| | through our PEER4 Analysis, we
compare our pay-for-performance results with the pay-for-performance results
of our peers over five-year periods. |

The compensation committee regularly reviews our compensation policies and practices to ensure our compensation program is structured to pay for performance.

The compensation committee took the following actions with respect to 2010 compensation for our named executive officers:

| | froze 2010 base salaries at their
2009 levels, except for one promotion and one modest merit-based increase |
| --- | --- |
| | did not increase the percentages
of base salary used to establish target incentive awards, except for one
promotion |
| | linked more closely our corporate
executives 2010 annual incentive awards to the achievement of our business
units performance goals |
| | capped payment with respect to
the return on invested capital portion of the 2010 annual incentive awards at
three out of four of our business units at 100 percent of the target
incentive award, unless return on invested capital equaled or exceeded the
business units weighted average cost of capital |
| | provided for reductions in any
performance shares earned pursuant to awards granted in 2010 or thereafter,
if our total stockholder return for the performance period is negative, and |
| | granted no SISP increases. |

MDU Resources Group, Inc. Proxy Statement 21

Proxy Statement

The compensation committee also:

| | terminated the change of control
employment agreement between the company and Terry D. Hildestad, our
president and chief executive officer, effective June 15, 2010, upon Mr.
Hildestads request |
| --- | --- |
| | notified each of our other
executive officers with change of control employment agreements that their
agreements would not be extended beyond their current expiration dates |
| | imposed mandatory stock holding
requirements for a portion of shares earned pursuant to long-term incentive
awards granted in 2011 or thereafter and |
| | amended our stock ownership
policy to clarify that our executive officers are required, rather than
expected, to acquire and hold company stock equal to or greater in value than
a multiple of their base salaries. |

We believe that our 2010 compensation program has been effective at motivating and rewarding our named executive officers in the achievement of positive results. Our earnings per share of $1.27 for 2010 demonstrates the value of our diversified business strategy. Despite lower natural gas prices and a challenging economic environment, we maintained a strong balance sheet and generated significant cash flows from operations, as well as from successful property sales.

Objectives of our Compensation Program

We structure our compensation program to help retain and reward the executive officers who we believe are critical to our long-term success. We have a written executive compensation policy for our Section 16 officers, including all our named executive officers. Our policy has the following stated objectives:

| | recruit, motivate, reward, and
retain the high performing executive talent required to create superior
long-term total stockholder return in comparison to our peer group |
| --- | --- |
| | reward executives for short-term
performance, as well as the growth in enterprise value over the long-term |
| | provide a competitive package
relative to industry-specific and general industry comparisons and internal
equity, as appropriate |
| | ensure effective utilization and
development of talent by working in concert with other management processes
for example, performance appraisal, succession planning, and management
development and |
| | help ensure that compensation
programs do not encourage or reward excessive or imprudent risk taking. |

We pay/grant:

| | base salaries in order to provide
executive officers with sufficient, regularly-paid income and attract,
recruit, and retain executives with the knowledge, skills, and abilities necessary
to successfully execute their job duties and responsibilities |
| --- | --- |
| | annual incentives in order to be
competitive from a total remuneration standpoint and ensure focus on annual
financial and operating results and |
| | long-term incentives in order to
be competitive from a total remuneration standpoint and ensure focus on
stockholder return. |

If earned, incentive compensation, which consists of annual cash incentive awards and three-year performance share awards under our Long-Term Performance-Based Incentive Plan, makes up the greatest portion of our named executive officers total compensation. The compensation committee believes incentive compensation that comprised approximately 55.9% to 71.4% of total target compensation for the named executive officers for 2010 is appropriate because:

| | our named executive officers are
in positions to drive, and therefore bear high levels of responsibility for,
our corporate performance |
| --- | --- |
| | incentive compensation is more
variable than base salary and dependent upon our performance |
| | variable compensation helps
ensure focus on the goals that are aligned with our overall strategy and |
| | the interests of our named
executive officers will be aligned with those of our stockholders by making a
majority of the named executive officers target compensation contingent upon
results that are beneficial to stockholders. |

22 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The following table shows the allocation of total target compensation for 2010 among the individual components of base salary, annual incentive, and long-term incentive:

	% of Total — Target	% of Total Target Compensation
	Compensation	Allocated to Incentives
	Allocated to			Annual +
Name	Base Salary (%)	Annual (%)	Long-Term (%)	Long-Term (%)
Terry D.
Hildestad	28.6	28.6	42.8	71.4
Vernon A.
Raile(1)
Doran N.
Schwartz	44.1	21.8	34.1	55.9
John G.
Harp	39.2	25.5	35.3	60.8
Steven L.
Bietz	39.2	25.5	35.3	60.8
David L.
Goodin	39.2	25.5	35.3	60.8

(1) Mr. Raile retired February 16, 2010 and received no incentive awards for 2010.

In order to reward long-term growth, as well as short-term results, the compensation committee establishes incentive targets that emphasize long-term compensation as much as or more than short-term compensation for our named executive officers. The annual incentive targets for 2010 range from 45% to 100% of base salary and the long-term incentive targets range from 50% to 150% of base salary, depending on the named executive officers salary grade. Generally, our approach is to allocate a higher percentage of total target compensation to the long-term incentive than to the short-term incentive for our higher level executives, since they are in a better position to influence our long-term performance.

Additionally, the long-term incentive, if earned, is paid in company common stock. These awards, combined with our stock ownership policy, promote ownership of our stock by the named executive officers. The compensation committee believes that, as stockholders, the named executive officers will be motivated to consistently deliver financial results that build wealth for all stockholders over the long-term.

Role of Management

Our executive compensation policy provides for an assessment of the competitive pay levels for base salary and incentive compensation for each Section 16 officer position to be conducted at least every two years by an independent consulting firm. In 2008, the compensation committee retained Towers Watson (formerly Towers Perrin), a nationally recognized consulting firm, to perform this assessment and to assist the compensation committee in establishing competitive compensation targets for our Section 16 officers for 2009.

In May 2009, the compensation committee decided not to retain a compensation consultant for assistance with 2010 compensation. Instead, the compensation committee directed the vice president-human resources and the human resources department to prepare the competitive assessment on Section 16 officer positions for 2010. The assessment included identifying any material changes to the positions analyzed, updating competitive compensation information, gathering and analyzing relevant general and industry-specific survey data, and updating the base salary structure. The human resources department assessed competitive pay levels for base salary, total annual cash, which is base salary plus annual incentives, and total direct compensation, which is the sum of total annual cash and the expected value of long-term incentives. It compared our positions to like positions contained in general industry compensation surveys, industry-specific compensation surveys and, for our chief executive officer and chief financial officer, those positions in our performance graph peer group. Except for the Watson Wyatt Top Management Compensation Survey, the human resources department used the same surveys to construct the 2010 competitive assessment that were used to construct the 2009 competitive assessment. For the Watson Wyatt Top Management Compensation Survey, the human resources department used the 2008/2009 publication which contained more recent data than the 2007/2008 publication that was used to construct the 2009 competitive assessment. The human resources department also aged the data from the date of the surveys by 4% annualized to estimate 2010 competitive targets. To augment the analysis, Equilar was used to provide information on what public companies disclosed for comparable positions in their SEC filings. The compensation surveys and databases used by the human resources department were:

MDU Resources Group, Inc. Proxy Statement 23

Proxy Statement

	Number of	Median	Publicly-		Median
	Companies	Number of	Traded		Revenue
	Participating	Employees	Companies		(000s)
Survey*	(#)	(#)	(#)(1)		($)
Towers
Perrins 2008 General Industry Executive Compensation Database	973	20,000		582		5,804,000
Towers
Perrins 2008 Energy Industry Executive Compensation Database	103	3,315		67		3,284,000
Effective Compensation,
Inc.s 2008 Oil & Gas Compensation Survey	119	140		69		247,000
Mercers
2008 Total Compensation Survey for the Energy Sector	262	Not reported		188		1,057,254
Watson
Wyatts 2008/2009 Top Management Compensation Survey	2,206		(2)		(2)		(2)

| (1) | For the Towers Perrin 2008
General Industry Executive Compensation Data, the number listed in the table
is the number of companies reporting market capitalization. For the Towers
Perrin 2008 Energy Industry Executive Compensation Database, the number
listed in the table is the number of companies reporting three-year
stockholder return. |
| --- | --- |
| (2) | The 2,206 organizations
participating in Watson Wyatts 2008/2009 Top Management Compensation Survey
included 297 organizations with 2,000 to 4,999 employees; 157 organizations
with 5,000 to 9,999 employees; 152 organizations with 10,000 to 19,999
employees; and 173 organizations with 20,000 or more employees. Watson Wyatt
did not provide a revenue breakdown or the number of publicly-traded
companies participating in its survey. |
| * | The information in the table is
based solely upon information provided by the publishers of the surveys and
is not deemed filed or a part of this compensation discussion and analysis for
certification purposes. For a list of companies that participated in the
compensation surveys and databases and companies included in the Equilar
information, see Exhibit B. |

Our revenues for 2008, 2009, and 2010 were approximately $5.0 billion, $4.2 billion, and $3.9 billion, respectively.

In addition to the above compensation surveys, for the chief executive officer and chief financial officer comparisons, the human resources department used information for these positions at the following companies, which comprised our performance graph peer group in July of 2009:

	Alliant Energy Corporation		OGE Energy Corp.
	Berry Petroleum Company		ONEOK, Inc.
	Black Hills Corporation		Quanta Services, Inc.
	Comstock Resources, Inc.		Questar Corporation
	Dycom Industries, Inc.		SCANA Corporation
	EMCOR Group, Inc.		Southwest Gas Corporation
	Encore Acquisition Company		St. Mary Land & Exploration
Company
	EQT Corporation (formerly
Equitable Resources, Inc.)		Swift Energy Company
	Granite Construction Inc.		U.S. Concrete, Inc.
	Martin Marietta Materials, Inc.		Vectren Corporation
	National Fuel Gas Co.		Vulcan Materials Company
	Northwest Natural Gas Company		Whiting Petroleum Corporation
	NSTAR

The chief executive officer played an important role in recommending 2010 compensation to the committee for the other named executive officers. The chief executive officer assessed the performance of the named executive officers and reviewed the relative value of the named executive officers positions and their salary grade classifications. He then reviewed the competitive assessment prepared by the human resources department and worked with the human resources department to prepare 2010 compensation recommendations for the compensation committee, other than for himself. The chief executive officer attended compensation committee meetings; however, he was not present during discussions regarding his compensation.

Decisions for 2010

The compensation committee, in conjunction with the board of directors, determined all compensation for each named executive officer for 2010 and set overall and individual compensation targets for the three components of compensation base salary, annual incentive, and long-term incentive. The compensation committee made recommendations to the board of directors regarding compensation of all Section 16 officers, and the board of directors then approved the recommendations.

The compensation committee reviewed the competitive assessment and established 2010 salary grades at its August 2009 meeting. At the November 2009 meeting, it established individual base salaries, target annual incentive award levels, and target long-term incentive award levels for 2010. At the February and March 2010 meetings of the compensation committee and the board of directors, annual and long-term incentive awards were determined, along with the payouts based on performance from the recently completed performance period for prior annual and long-term awards. The compensation committee determined Mr. Schwartzs compensation in connection with his promotion at the March 2010 meeting. The February and March 2010 meetings occurred after the release of earnings for the prior year.

24 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Salary Grades for 2010

The compensation committee determines the named executive officers base salaries and annual and long-term incentive targets by reference to salary grades. Each salary grade has a minimum, midpoint, and maximum annual salary level with the midpoint targeted at approximately the 50th percentile of the competitive assessment data for positions in the salary grade. The compensation committee may adjust the salary grades away from the 50th percentile in order to balance the external market data with internal equity. The salary grades also have annual and long-term incentive target levels, which are expressed as a percentage of the individuals actual base salary. We generally place named executive officers into a salary grade based on historical classification of their positions; however, the compensation committee, at its August meeting, reviews each classification and may place a position into a different salary grade if it determines that the targeted competitive compensation for the position changes significantly or the executives responsibilities and/or performance warrants a different salary grade. The committee also considers, upon recommendation from the chief executive officer, a positions relative value.

Our named executive officers salary grade classifications are listed below along with the 2010 base salary ranges associated with each classification:

			2010 Base Salary (000s) — Minimum	Midpoint	Maximum
Position	Grade	Name	($)	($)	($)
President
and CEO	K	Terry D. Hildestad	620	775	930
Executive
Vice President, Treasurer and CFO	J	Vernon A. Raile	312	390	468
Vice
President and CFO	I	Doran N. Schwartz	260	325	390
President
and CEO, MDU Construction Services Group, Inc.	J	John G. Harp	312	390	468
President
and CEO, combined utility group	J	David L. Goodin	312	390	468
President
and CEO, WBI Holdings, Inc.	J	Steven L. Bietz	312	390	468

The executive vice president, treasurer and chief financial officer and the president and chief executive officers of MDU Construction Services Group, Inc., the combined utility group, and WBI Holdings, Inc. were assigned to salary grade J and were unchanged for 2010. The committee believes that from an internal equity standpoint, these positions should carry the same salary grade. When Mr. Raile, who served as our executive vice president, treasurer and chief financial officer, retired in February 2010, Mr. Schwartz was elected vice president and chief financial officer, with another officer being elected treasurer. Mr. Schwartzs position was assigned salary grade I, rather than salary grade J because of the creation of a separate treasurer position. After reviewing the competitive analysis, the compensation committee made no changes in the base salary ranges associated with each named executive officers salary grade classification. The compensation committee did not reconsider the relative value of the named executive officers positions, except in the case of Mr. Schwartz, because of its decision to freeze base salaries and incentive target percentages.

The compensation committee determines where, within each salary grade, an individuals base salary should be. The compensation committee believes that having a range of possible salaries within each salary grade gives the committee the flexibility to assign different salaries to individual executives within a salary grade to reflect one or more of the following:

| | executives performance on
financial goals and on non-financial goals, including the results of the
performance assessment program |
| --- | --- |
| | executives experience, tenure,
and future potential |
| | positions relative value compared
to other positions within the company |
| | relationship of the salary to the
competitive salary market value |
| | internal equity with other
executives and |
| | economic environment of
the corporation or executives business unit. |

Our performance assessment program rates performance of our executive officers, except for our chief executive officer, in the following areas, which help determine actual salaries within the range of salaries associated with the executives salary grade:

	visionary leadership		leadership
	strategic thinking		mentoring
	leading with integrity		relationship building
	managing customer focus		conflict resolution
	financial responsibility		organizational savvy
	achievement focus		safety
	judgment		Great Place to Work®
	planning and organization

MDU Resources Group, Inc. Proxy Statement 25

Proxy Statement

An executives overall performance in our performance assessment program is rated on a scale of one to five, with five as the highest rating denoting distinguished performance. An overall performance above 3.75 is considered commendable performance.

The chief executive officer assessed each named executive officers performance under the performance assessment program, and the compensation committee, as well as the full board of directors, assessed the chief executive officers performance.

The board of directors rates our chief executive officers performance in the following areas:

	leadership		succession planning
	integrity and values		human resources
	strategic planning		external relations
	financial results		board relations
	communications

Our chief executive officers performance was rated on a scale of one to five, with five as the highest rating denoting performance well above expectations.

Base Salaries of the Named Executive Officers for 2010

In recognition of the challenging economic environment and our efforts to control costs, the compensation committee determined at its August 2009 meeting that there would be no base salary increases for 2010, except when an officer was promoted or where the performance of an officer, whose salary was at the low end of his or her salary grade, warranted an increase. As a result, 2010 base salaries for the named executive officers were frozen at their 2009 levels, except for Mr. Schwartz and Mr. Goodin.

Doran N. Schwartz

Mr. Schwartz was elected vice president and chief financial officer effective February 17, 2010. Mr. Schwartzs base salary was set at $260,000, the minimum for salary grade I, effective with his election. This represented a 29.1% increase over his 2009 salary of $201,400. The committee set his 2010 salary at this level to recognize the increased levels of responsibility he assumed in his new position.

David L. Goodin

Mr. Goodin has served as president and chief executive officer of Montana-Dakota Utilities Co., Great Plains Natural Gas Co., and Cascade Natural Gas Corporation since June 6, 2008, and as president and chief executive officer of Intermountain Gas Company since October 1, 2008. Upon recommendation of the chief executive officer, for 2010, his base salary was set at $322,000, representing an increase of 3.2% over his 2009 base salary of $312,100. The committee selected a 3.2% increase for Mr. Goodin to recognize the successful integration of the Cascade Natural Gas Corporation and Intermountain Gas Company acquisitions and because a 3.2% increase was consistent with salary increases across the combined utility group employees. Mr. Goodins salary increase made his salary equal to 83% of the midpoint of the salary grade for his position.

The following table shows each named executive officers base salary for 2009 and 2010 and the percentage change:

	Base Salary — for 2009	Base Salary — for 2010
	(000s)	(000s)	% Change
Name	($)	($)	(%)
Terry D.
Hildestad	750.0	750.0	0.0
Vernon A.
Raile	450.0	450.0	0.0
Doran N.
Schwartz(1)	201.4	260.0	29.1
John G.
Harp	450.0	450.0	0.0
Steven L.
Bietz	350.0	350.0	0.0
David L.
Goodin	312.0	322.0	3.2

(1) Elected vice president and chief financial officer effective February 17, 2010. Salary shown is not prorated.

2010 Annual Incentives

What the Performance Measures Are and Why We Chose Them

The compensation committee develops and reviews financial and other corporate performance measures to help ensure that compensation to the executives reflects the success of their respective business unit and/or the corporation, as well as the value provided to our stockholders. For Messrs. Harp, Goodin, and Bietz, the performance measures for annual incentive awards are their respective business units annual return on invested capital results compared to target and their respective business units allocated earnings per share results compared to target.

26 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

For the named executive officers working at MDU Resources Group, Inc., who were Messrs. Hildestad and Schwartz, prior to 2010, the compensation committee used corporate-wide return on invested capital and earnings per share, both compared to a target, as performance measures. However, effective for 2010, the compensation committee discontinued this approach and based 2010 annual incentives for MDU Resources Group, Inc. executives on the weighted average of the incentive payments made to the four business unit president and chief executive officers. The sum of these individual products determined the payment percentage of the MDU Resources Group, Inc. officers. The compensation committees rationale for this approach was to provide greater alignment between the MDU Resources Group, Inc. executives and the business unit executives annual incentive payments and performance. The new methodology requires that all business unit executives receive a maximum annual incentive payment before the MDU Resources Group, Inc. executives receive a maximum annual incentive payment.

The compensation committee believes earnings per share and return on invested capital are very good measurements in assessing a business units performance from a financial standpoint. Earnings per share is a generally accepted accounting principle measurement and is a key driver of stockholder return over the long-term. Return on invested capital measures how efficiently and effectively management deploys its capital. Sustained returns on invested capital in excess of a business units cost of capital create value for our stockholders.

Allocated earnings per share for a business unit is calculated by dividing that business units earnings by the business units portion of the total company weighted average shares outstanding. Return on invested capital for a business unit is calculated by dividing the business units earnings, without regard to after tax interest expense and preferred stock dividends, by the business units average capitalization for the calendar year.

The compensation committee determines the weighting of the performance measures each year based upon recommendations from the chief executive officer. The compensation committee weighted the 2010 performance measures for return on invested capital compared to targeted results and allocated earnings per share compared to targeted results each at 50%. The compensation committee believes both measures are equally important in driving stockholder value in the short term and long term.

We establish our incentive plan performance targets in connection with our annual financial planning process, where we assess the economic environment, competitive outlook, industry trends, and company specific conditions to set projections of results. The compensation committee evaluates the projected results and uses this evaluation to establish the incentive plan performance targets based upon recommendation of the chief executive officer. The compensation committee also considers annual improvement in the return on invested capital measure in establishing targets to help ensure that return on invested capital will equal or exceed the weighted average cost of capital over time. The weighted average cost of capital is a composite cost of the individual sources of funds including equity and debt used to finance a companys assets. It is calculated by averaging the cost of debt plus the cost of equity by the proportion each represents in our capital structure. For 2010, the compensation committee chose to use the return on invested capital target approved by the board in the 2010 business plan. Furthermore, except for the combined utility group, the compensation committee imposed an additional requirement for the 2010 return on invested capital portion of the annual incentives. Results above the 2010 return on invested capital target would not generate additional annual incentive compensation for business unit executives, unless 2010 return on invested capital results met or exceeded a business units weighted average cost of capital. In that case, the business unit president and chief executive officer would earn 200% of the annual incentive target attributable to the return on invested capital portion of the annual incentive.

What the Named Executive Officers Incentive Targets Are and Why We Chose Them

Targets

The compensation committee established the named executive officers annual incentive targets as a percentage of each officers actual 2010 base salary. Mr. Raile did not receive a 2010 annual incentive award due to his retirement.

Mr. Hildestads target annual incentive was 100% of his base salary. Messrs. Harp, Goodin, and Bietzs target annual incentives were 65% of their base salaries. These incentive targets were derived in part from the competitive assessment and in part by the compensation committees desire, based on internal equity, to have a uniform annual incentive target for the business unit president and chief executive officer positions. Mr. Schwartzs annual incentive target was increased from 45% to 50% of base salary effective with his promotion. His new salary grade I has a target annual incentive of 50% of base salary. The target percentage for the other named executive officers remained unchanged from 2008 and 2009 levels.

MDU Resources Group, Inc. Proxy Statement 27

Proxy Statement

Terry L. Hildestad and Doran N. Schwartz As discussed above, Messrs. Hildestad and Schwartz were awarded 2010 incentives based on the weighted average of the payments made to the four business unit president and chief executive officers, with each payment weighted by the business units average invested capital for 2010. The award opportunities and results for the four business units are discussed below.

As a result of the awards earned by the presidents and chief executive officers of the four business units, weighted for each business units average invested capital, Messrs. Hildestad and Schwartz earned 101.7% of their target awards, resulting in a payment of $762,750 for Mr. Hildestad and $127,053 for Mr. Schwartz.

John G. Harp The 2010 award opportunity available to Mr. Harp ranged from no payment if the results were below the 85% level to a 200% payout if:

| | the 2010 allocated earnings per
share for MDU Construction Services Group, Inc. were at or above the 115%
level and |
| --- | --- |
| | the 2010 return on invested
capital was at least equal to MDU Construction Services Group, Inc.s 2010
weighted average cost of capital. |

We set Mr. Harps 2010 earnings per share and return on invested capital target levels below his 2009 target levels and below the 2009 actual levels to reflect significant continued weakness in the overall construction market. MDU Construction Services Group, Inc.s 2010 earnings per share and return on invested capital exceeded their respective 2010 targets, but Mr. Harps payment with respect to the return on invested capital component was limited to the target amount of $146,250 because MDU Construction Services Group, Inc.s return on invested capital was less than its weighted average cost of capital, resulting in an overall payment of $438,750.

Steven L. Bietz The 2010 award opportunity available to Mr. Bietz ranged from no payment if the results were below the 85% level to a 200% payout if:

| | the 2010 allocated earnings per
share for WBI Holdings, Inc. were at or above the 115% level |
| --- | --- |
| | the 2010 return on invested
capital was at least equal to WBI Holdings, Inc.s 2010 weighted average cost
of capital and |
| | the five safety goals were met. |

We set Mr. Bietzs 2010 earnings per share and return on invested capital target levels above his 2009 target levels due largely to higher anticipated oil prices. The 2010 return on invested capital target was also higher than the 2009 actual results due to reduced invested capital for 2010. However, the 2010 allocated earnings per share target was lower than 2009 actual results due to higher anticipated lease operating expenses and higher depreciation, depletion, and amortization expenses. WBI Holdings, Inc.s 2010 earnings per share and return on invested capital exceeded their respective 2010 targets. However, payment with respect to the return on invested capital component was limited to the target amount of $113,750 because WBI Holdings, Inc.s 2010 return on invested capital was less than its weighted average cost of capital.

Mr. Bietz also had five individual goals relating to WBI Holdings, Inc.s safety results with each goal that was not met reducing his annual incentive award by 1%. The five individual goals were:

| | each established local safety
committee will conduct 8 meetings per year, preferably 2 per quarter |
| --- | --- |
| | each established local safety
committee must conduct 4 site assessments per year, preferably 1 per quarter |
| | report vehicle accidents and
personal injuries by the end of the next business day |
| | achieve the targeted vehicle
accident incident rate of 2.5 or less and |
| | achieve the targeted personal
injury incident rate of 2.0 or less. |

Two of the five 2010 safety goals were not met. The 2010 actual vehicle accident incident rate was 2.69 and the 2010 actual personal injury incident rate was 3.11. This reduced his annual incentive payment by $5,005 or 2.0%. As a result, Mr. Bietz received $245,245 as a 2010 incentive payment.

David L. Goodin The 2010 award opportunity available to Mr. Goodin ranged from no payment if the allocated earnings per share and return on invested capital results were below the 85% level to a 200% payout if results were at or above the 115% level.

28 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

We set Mr. Goodins 2010 targets for allocated earnings per share and return on invested capital targets higher than his 2009 targets and higher than 2009 actual results to reflect higher projected 2010 earnings. For 2010, the combined utility groups 2010 earnings per share and return on invested capital exceeded their respective 2010 targets. As a result, Mr. Goodin received $320,438 as a 2010 incentive payment.

Knife River Corporation For Knife River Corporation, the 2010 award opportunity for its president and chief executive officer ranged from no payment if the results were below the 85% level to a 200% payout if:

| | the 2010 allocated earnings per
share for Knife River Corporation were at or above the 115% level and |
| --- | --- |
| | the 2010 return on invested
capital was at least equal to Knife River Corporations 2010 weighted average
cost of capital. |

For the president and chief executive officer of Knife River Corporation, we set the 2010 allocated earnings per share and return on invested capital target levels below the 2009 target levels and below the 2009 actual results. The 2010 target levels reflect a continued downturn in construction activity and a continued shift towards public sector projects, which generally carry lower profit margins. Knife River Corporations 2010 results for allocated earnings per share and return on invested capital were 81.48% and 85.22% of their respective targets. These results equated to a payment of 13% of the president and chief executive officer of Knife River Corporations 2010 incentive target.

The following table shows the changes in our performance targets and achievements for both 2009 and 2010:

Name	2009 Incentive Plan Performance Targets — EPS ($)	ROIC (%)	2009 Incentive Plan Results — EPS ($)	ROIC (%)	2010 Incentive Plan Performance Targets — EPS ($)	ROIC (%)	2010 Incentive Plan Results — EPS ($)	ROIC (%)
Terry D.
Hildestad	1.09	5.7	1.30	6.6	See table below		See table below
Doran N.
Schwartz					See table below		See table below
John G.
Harp(1)	3.17	10.2	3.21	10.4	2.22	6.7	3.46	9.0
Steven L.
Bietz(2)	1.69	5.6	2.22	7.1	2.02	8.4	2.08	8.6
David L.
Goodin(3)					1.07	6.1	1.17	6.5
Knife River
Corporation
President
& CEO(4)	0.52	4.3	0.68	5.3	0.54	4.6	0.44	3.9

| (1) | Based on allocated earnings per
share and return on invested capital for MDU Construction Services Group,
Inc. |
| --- | --- |
| (2) | Based on allocated earnings per
share and return on invested capital for WBI Holdings, Inc. |
| (3) | Based on allocated earnings per
share and return on invested capital for the combined utility group. |
| (4) | Based on allocated earnings per
share and return on invested capital for Knife River Corporation. |

The table below lists each named executive officers 2010 base salary, annual incentive target percentage, incentive plan performance targets, incentive plan results, and the annual incentive earned.

Name			2010 Incentive Plan Performance Targets — EPS ($)	ROIC (%)	2010 Incentive Plan Results — EPS ($)	ROIC (%)	2010 Annual Incentive Earned (% of Target) — EPS ($)	ROIC (%)
Terry D.
Hildestad	750.0	100	See table below		See table below		See table below		762.75
Doran N.
Schwartz(1)	25.9	45	See table below		See table below		See table below		127.05
	226.5	50
John G.
Harp(2)	450.0	65	2.22	6.7	3.46	9.0	200.0	100.0	438.75
Steven L.
Bietz(3)	350.0	65	2.02	8.4	2.08	8.6	120.0	100.0	245.25
David L.
Goodin(4)	322.0	65	1.07	6.1	1.17	6.5	162.3	143.7	320.44

| (1) | Reflects the impact of Mr.
Schwartzs promotion. |
| --- | --- |
| (2) | Based on allocated earnings per
share and return on invested capital for MDU Construction Services Group,
Inc. |
| (3) | Based on allocated earnings per
share and return on invested capital for WBI Holdings, Inc. Also in 2010, WBI
Holdings, Inc. met three of five safety goals; therefore, Mr. Bietzs 2010
annual incentive earned reflects a reduction of 2% or $5,005. |
| (4) | Based on allocated earnings per
share and return on invested capital for the combined utility group. |

MDU Resources Group, Inc. Proxy Statement 29

Proxy Statement

Messrs. Hildestads and Schwartzs 2010 annual incentives were paid at 101.7% of target based on the following:

| President and Chief Executive
Officer of: | Column A 2010 Payment as a Percentage of Annual Incentive Target | Column B Percentage of Average Invested Capital | Column A x Column B |
| --- | --- | --- | --- |
| MDU
Construction Services Group, Inc. | 150.0 % | 5.6 % | 8.4 % |
| Combined
Utility Group | 153.1 % | 35.0 % | 53.6 % |
| WBI
Holdings, Inc. | 107.8 % | 33.8 % | 36.4 % |
| Knife River Corporation | 13.0 % | 25.6 % | 3.3 % |
| Total | | | 101.7 % |

Deferral of Annual Incentive Compensation We provide executives the opportunity to defer receipt of earned annual incentives. If an executive chooses to defer his or her annual incentive, we will credit the deferral with interest at a rate determined by the compensation committee. For 2010, the committee chose to use the average of (i) the number that results from adding the daily Moodys U.S. Long-Term Corporate Bond Yield Average for A rated companies as of the last day of each month for the 12-month period ending October 31 and dividing by 12 and (ii) the number that results from adding the daily Moodys U.S. Long-Term Corporate Bond Yield Average for BBB rated companies as of the last day of each month for the 12-month period ending October 31 and dividing by 12. The compensation committees reasons for using this approach recognized:

| | incentive deferrals are a low-cost
source of capital for the company, and |
| --- | --- |
| | incentive deferrals are unsecured
obligations and, therefore, carry a higher risk to the executives. |

2010 Long-Term Incentives

Awards Granted in 2010 under the Long-Term Performance-Based Incentive Plan We use the Long-Term Performance-Based Incentive Plan, which is an omnibus plan and has been approved by our stockholders, for long-term incentive compensation. We discontinued the use of stock options in 2003 and now use performance shares as the only form of long-term incentive compensation.

The compensation committee used the performance graph peer group as the comparator group to determine relative stockholder return and potential payments under the Long-Term Performance-Based Incentive Plan for its 2010-2012 performance share award cycle. The companies comprising our performance graph peer group at the time of grant were the same companies listed above under the heading Role of Management.

The performance measure is our total stockholder return over a three-year measurement period as compared to the total stockholder returns of the companies in our performance graph peer group over the same three-year period. For the awards granted in 2010, the compensation committee revised the award agreement to 1) reduce payment amounts by at least 50% if our stockholder return over the three-year measurement period is negative, and 2) increase the payment amount for relative total stockholder return results above the 50th percentile, assuming our total stockholder return is positive. This is set forth in the Long-Term Incentive Payout Percentages chart below.

The compensation committee selected the relative stockholder return performance measure because it believes executive pay under a long-term, capital accumulation program such as this should mirror our long-term performance in stockholder return as compared to other public companies in our industries. Payments are made in company stock; dividend equivalents are paid in cash.

Total stockholder return is the percentage change in the value of an investment in the common stock of a company, from the closing price 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.

As with the annual incentive target, we determined the long-term incentive target for a given position by reference to the salary grade. We derived these incentive targets in part from the competitive assessment and in part by the compensation committees judgment on the impact each position has on our total stockholder return. The compensation committee also believed consistency across positions in the same salary grades and keeping the chief executive officers long-term incentive target below a level indicated by the competitive assessment were important from an internal equity standpoint. The 2010 long-term incentive targets for each named executive were unchanged from 2009 except for Mr. Schwartz, whose long-term incentive target increased from 50% of base salary to 75% of base salary upon his appointment to vice president and chief financial officer. The 75% long-term incentive target for Mr. Schwartz corresponds to the long-term incentive target for salary grade I.

30 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

On March 5, 2010, the board of directors, upon recommendation of the compensation committee, made performance share grants to the named executive officers, except for Mr. Raile. The compensation committee determined the target number of performance shares granted to each named executive officer by multiplying the named executive officers 2010 base salary by his or her long-term incentive target and then dividing this product by the average of the closing prices of our stock from January 4, 2010 through January 22, 2010, as shown in the following table:

| Name — Terry D.
Hildestad | 750,000 | | 150 | | 1,125,000 | 23.58 | 47,709 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Vernon A.
Raile | | | | | | | |
| Doran N.
Schwartz | 260,000 | (1) | 75 | (1) | 195,000 | 23.58 | 8,269 |
| John G.
Harp | 450,000 | | 90 | | 405,000 | 23.58 | 17,175 |
| Steven L.
Bietz | 350,000 | | 90 | | 315,000 | 23.58 | 13,358 |
| David L.
Goodin | 322,000 | | 90 | | 289,800 | 23.58 | 12,290 |

(1) Base Salary and Long-Term Incentive Target percentage reflect February 17, 2010 promotion.

Assuming our three-year (2010 2012) total stockholder return is not negative, from 0% to 200% of the target grant will be paid out in February 2013 depending on our total stockholder return compared to the total three-year stockholder returns of companies in our performance graph peer group. The payout percentage will be a function of our rank against our performance graph peer group as follows:

Long-Term Incentive Payout Percentages

The Companys Percentile Rank	Payout Percentage of March 5, 2010 Grant
90th or higher	200 %
70th	150 %
50th	100 %
40th	10 %
Less than 40th	0 %

Payouts for percentile ranks falling between the intervals will be interpolated. We also will pay dividend equivalents in cash on the number of shares actually earned for the performance period. The dividend equivalents will be paid in 2013 at the same time as the performance awards are paid.

Awards Paid on February 11, 2010 under the Long-Term Performance-Based Incentive Plan

Performance Shares We granted performance shares to our named executive officers under the Long-Term Performance-Based Incentive Plan on February 15, 2007 for the 2007 through 2009 performance period. Our total stockholder return for the 2007 through 2009 performance period was (0.87)%, which corresponded to a percentile rank of 50% against our performance graph peer group. The percentile rank of 50% corresponded to a payout percentage of 100%, meaning 100% of the target shares originally granted plus dividend equivalents were paid to the named executive officers. The table below lists the shares granted on February 15, 2007, the shares paid on February 11, 2010, based on the payout percentage and the dividend equivalents earned.

| Name — Terry D.
Hildestad | 33,091 | 100 | 33,091 | 58,985 |
| --- | --- | --- | --- | --- |
| Vernon A.
Raile | 12,564 | 100 | 12,564 | 22,395 |
| Doran N.
Schwartz | 3,463 | 100 | 3,463 | 6,173 |
| John G.
Harp | 10,181 | 100 | 10,181 | 18,148 |
| Steven L.
Bietz | 10,354 | 100 | 10,354 | 18,456 |
| David L.
Goodin | 4,279 | 100 | 4,279 | 7,627 |

MDU Resources Group, Inc. Proxy Statement 31

Proxy Statement

Accelerated Restricted Stock We granted shares of restricted stock to some of our named executive officers in 2001, which would automatically vest on February 15, 2010. Vesting of some or all of the shares could accelerate if total stockholder return equaled or exceeded the 50th percentile of the performance graph peer group during three-year performance cycles: 2001-2003, 2004-2006 and 2007-2009. Some shares accelerated vesting with respect to the 2001-2003 and 2004-2006 performance cycles but not for the 2007-2009 performance cycle. The remaining shares vested automatically on February 15, 2010. The named executive officers shares that vested on February 15, 2010 are: Mr. Hildestad 3,712 shares; Mr. Raile 1,114 shares; Mr. Bietz 558 shares; and Mr. Goodin 1,485 shares.

PEER4 Analysis: Comparison of Pay for Performance Ratios Each year we compare our named executive officers pay for performance ratios to the pay for performance ratios of the named executive officers in the performance graph peer group. This analysis compares the relationship between our compensation levels and our average annual total stockholder return to the peer group over a five-year period. All data used in the analysis, including the valuation of long-term incentives and calculation of stockholder return, were compiled by Equilar, Inc., an independent service provider, which is based on each companys annual filings for its data collection.

This analysis consisted of dividing what we paid our named executive officers for the years 2005 through 2009 by our average annual total stockholder return for the same five-year period to yield our pay ratio. Our pay ratio was then compared to the pay ratio of the companies in the performance graph peer group, which was calculated by dividing total direct compensation for all the proxy group executives by the sum of each companys average annual total stockholder return for the same five-year period. The results are shown in the following chart:

5 Year Total Direct Compensation to 5 Year Total Stockholder Return*

| Dollars of
Total Direct Compensation (1) per Point of Total Stockholder Return | 6,117,468 | 8,077,747 |
| --- | --- | --- |

| (1) | Total direct compensation is the
sum of annual base salaries, annual incentives, the value of long-term
incentives at grant (as valued by Equilar, Inc.) and all other compensation as
reported in the proxy statements. For 2006, 2007, 2008, and 2009, total
direct compensation also includes the values reported in the change in
pension values and nonqualified deferred compensation earnings column in the
summary compensation table. |
| --- | --- |
| * | The chart is not deemed filed or
a part of this compensation discussion and analysis for certification
purposes. |

The results of the analysis showed that we paid our named executive officers less than what the performance graph peer group companies paid their named executive officers for comparable levels of stockholder return over the five-year period. Specifically, as indicated in the chart, the data shows that we paid our named executive officers approximately $2,000,000 less per point of stockholder return than our performance graph peer group. We have been conducting our PEER4 Analysis since 2004.

Post-Termination Compensation and Benefits Pension Plans Effective in 2006, we no longer offer defined benefit pension plans to new non-bargaining unit employees. The defined benefit plans available to employees hired before 2006 were amended to cease benefit accruals as of December 31, 2009. The frozen benefit provided through our qualified defined benefit pension plans is determined by years of service and base salary. Effective 2010, for those employees who were participants in defined benefit pension plans and for executives and other non-bargaining unit employees hired after 2006, the company offers increased company contributions to our 401(k) plan. These retirement contributions are based on the participants age as of December 31, 2009. The retirement contribution is 11.5% for each of the named executive officers, except Mr. Schwartz who is eligible for 10.5%. To the extent the contributions into the 401(k) plan exceed the Internal Revenue Code Section 415 limit, a cash payment was made to the named executive officers. The maximum amount distributed in the form of cash was $5,475.

Supplemental Income Security Plan

Benefits Offered We offer certain key managers and executives, including all of our named executive officers, benefits under our nonqualified retirement plan, which we refer to as the Supplemental Income Security Plan or SISP. The SISP has a ten-year vesting schedule and was amended to add an additional vesting requirement for benefit level increases occurring on or after January 1, 2010. The SISP provides participants with additional retirement income and death benefits.

32 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

We believe the SISP is critical in retaining the talent necessary to drive long-term stockholder value. In addition, we believe that the ten-year vesting provision of the SISP, augmented by an additional three years of vesting for benefit level increases occurring on or after January 1, 2010, helps promote retention of key executive officers.

Benefit Levels The chief executive officer recommends benefit level increases to the compensation committee for participants except himself. The chief executive officer considers, among other things, the participants salary in relation to the salary ranges that correspond with the SISP benefit levels, the participants performance, the performance of the applicable business unit or the company, and the cost associated with the benefit level increase.

The chief executive officer did not recommend a 2010 SISP benefit level increase for any of the named executive officers, and the committee chose not to grant a 2010 SISP benefit level increase to the chief executive officer. The primary reasons for no benefit level increases were cost containment and the absence of salary increases. The following table reflects our named executive officers SISP levels as of December 31, 2010:

Name	December 31, 2010 Annual SISP Benefits — Survivor ($)	Retirements ($)
Terry D.
Hildestad	1,025,040	512,520
Doran N.
Schwartz	175,200	87,600
John G.
Harp	548,400	274,200
Steven L.
Bietz	386,640	193,320
David L.
Goodin	291,480	145,740

Clawback In November 2005, we implemented a guideline for repayment of incentives due to accounting restatements, commonly referred to as a clawback policy, whereby the compensation committee may seek repayment of annual and long-term incentives paid to executives if accounting restatements occur within three years after the payment of incentives under the annual and long-term plans. Under our clawback policy, the compensation committee may require executives to forfeit awards and may rescind vesting, or the acceleration of vesting, of an award.

Impact of Tax and Accounting Treatment The compensation committee may consider the impact of tax and/or accounting treatment in determining compensation. Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount of compensation paid to certain officers that we may deduct as a business expense in any tax year unless, among other things, the compensation qualifies as performance-based compensation, as that term is used in Section 162(m). Generally, long-term incentive compensation and annual incentive awards for our chief executive officer and those executive officers whose overall compensation is likely to exceed $1 million are structured to be deductible for purposes of Section 162(m) of the Internal Revenue Code, but we may pay compensation to an executive officer that is not deductible. All annual or long-term incentive compensation paid to our named executive officers for 2010 satisfied the requirements for deductibility.

Section 409A of the Internal Revenue Code imposes additional income taxes on executive officers for certain types of deferred compensation if the deferral does not comply with Section 409A. We have amended our compensation plans and arrangements affected by Section 409A with the objective of not triggering any additional income taxes under Section 409A.

Section 4999 of the Internal Revenue Code imposes an excise tax on payments to executives and others of amounts that are considered to be related to a change of control if they exceed levels specified in Section 280G of the Internal Revenue Code. The potential impact of the Section 4999 excise tax is addressed with the modified tax payment provisions in the change of control employment agreements, which are described later in the proxy statement under the heading Potential Payments upon Termination or Change of Control. We do not consider the potential impact of Section 4999 or 280G when designing our compensation programs.

The compensation committee also considers the accounting and cash flow implications of various forms of executive compensation. In our financial statements, we record salaries and annual incentive compensation as expenses in the amount paid, or to be paid, to the named executive officers. For our equity awards, accounting rules also require that we record an expense in our financial statements. We calculate the accounting expense of equity awards to employees in accordance with Financial Accounting Standards Board generally accepted accounting principles for stock-based compensation.

MDU Resources Group, Inc. Proxy Statement 33

Proxy Statement

Stock Ownership Requirements We instituted stock ownership guidelines on May 5, 1993, which we revised in November 2010 to provide that executives who participate in our Long-Term Performance-Based Incentive Plan are required, rather than expected, to own our common stock within five years equal to a multiple of their base salaries. Stock owned through our 401(k) plan and stock owned by a spouse are considered in ownership calculations. Unvested performance shares and other unvested equity awards are not considered in ownership calculations. The level of stock ownership compared to the requirements is determined based on the closing sale price of the stock on the last trading day of the year and base salary at December 31 of each year. Each February, the compensation committee receives a report on the status of stock holdings by executives. The Committee may, in its sole discretion, grant an extension of time to meet the ownership requirements or take such other action as it deems appropriate to enable the executive to achieve compliance with the policy. The table shows the named executive officers holdings as of December 31, 2010:

Name	Assigned Guideline Multiple of Base Salary	Actual Holdings as a Multiple of Base Salary	Number of Years at Guideline Multiple (#)
Terry D.
Hildestad	4X	5.79	5.67
Doran N.
Schwartz	3X	1.15	0.87	(1)
John G.
Harp	3X	3.83	6.25
Steven L.
Bietz	3X	3.90	8.33
David L.
Goodin	3X	1.98	2.83	(2)

| (1) | Participant must meet ownership
requirement by January 1, 2015. |
| --- | --- |
| (2) | Participant must meet ownership
requirement by January 1, 2014. |

Policy Regarding Hedging Stock Ownership Our executive compensation policy prohibits Section 16 officers from hedging their ownership of company common stock. Executives may not enter into transactions that allow the executive to benefit from devaluation of our stock or otherwise own stock technically but without the full benefits and risks of such ownership.

C ompensation Committee Report

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Reg. S-K, Item 402(b), with management. Based on the review and discussions referred to in the preceding sentence, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in our proxy statement on Schedule 14A.

Thomas Everist, Chairman Karen B. Fagg Thomas C. Knudson Patricia L. Moss

34 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

S ummary Compensation Table for 2010

| Name and Principal Position (a) — Terry D.
Hildestad | 2010 | 750,000 | | 830,137 | | 762,750 | | 480,532 | | 37,499 | (3) | 2,860,918 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| President
and CEO | 2009 | 750,000 | | 1,117,861 | | 1,500,000 | | 825,319 | | 9,824 | | 4,203,004 |
| | 2008 | 700,000 | | 1,200,485 | | 310,800 | | 898,941 | | 9,476 | | 3,119,702 |
| Vernon A.
Raile(4) | 2010 | 57,945 | | | | | | 86,663 | | 14,465 | (3) | 159,073 |
| Executive
Vice President, | 2009 | 450,000 | | 402,417 | | 585,000 | | 695,177 | | 8,124 | | 2,140,718 |
| Treasurer
and CFO | 2008 | 400,000 | | 411,575 | | 115,440 | | 498,210 | | 7,176 | | 1,432,401 |
| Doran N.
Schwartz | 2010 | 252,454 | | 143,881 | | 127,053 | | 71,302 | | 33,549 | (3) | 628,239 |
| Vice
President and CFO | 2009 | | | | | | | | | | | |
| | 2008 | | | | | | | | | | | |
| John G.
Harp | 2010 | 450,000 | | 298,845 | | 438,750 | | 307,935 (7 | ) | 48,545 | (3) | 1,544,075 |
| President
and CEO of | 2009 | 450,000 | | 402,417 | | 392,500 (5 | ) | 761,670 (7 | ) | 23,272 | (8) | 2,029,859 |
| MDU
Construction | 2008 | 400,000 | | 411,575 | | 720,000 (6 | ) | 338,774 (7 | ) | 23,230 | (8) | 1,893,579 |
| Services
Group, Inc. | | | | | | | | | | | | |
| Steven L. Bietz | 2010 | 350,000 | | 232,429 | | 245,245 | | 302,863 | | 36,218 | (3) | 1,166,755 |
| President
and CEO of | 2009 | 350,000 | | 312,987 | | 450,450 | | 475,985 | | 8,084 | | 1,597,506 |
| WBI
Holdings, Inc. | 2008 | | | | | | | | | | | |
| David L.
Goodin | 2010 | 322,000 | | 213,846 | | 320,438 | | 240,494 | | 39,127 | (3) | 1,135,905 |
| President
and CEO of | 2009 | | | | | | | | | | | |
| Combined
Utility Group | 2008 | | | | | | | | | | | |

| (1) | Amounts in this column represent
the aggregate grant date fair value of the performance share awards
calculated in accordance with Financial Accounting Standards Board generally
accepted accounting principles for stock-based compensation. This column was
prepared assuming none of the awards will be forfeited. The amounts were
calculated using a Monte Carlo simulation, as described in Note 13 of our
audited financial statements in our Annual Report on Form 10-K for the year
ended December 31, 2010. |
| --- | --- |
| (2) | Amounts shown represent the
change in the actuarial present value for years ended December 31, 2008,
2009, and 2010 for the named executive officers accumulated benefits under
the pension plan, excess SISP, and SISP and, for Mr. Harp, the additional
retirement benefit, collectively referred to as the accumulated pension
change, plus above market earnings on deferred annual incentives, if any.
The amounts shown are based on accumulated pension change and above market
earnings as of December 31, 2008, 2009, and 2010, as follows: |

Name	Accumulated Pension Change — 12/31/2008 ($)	12/31/2009 ($)	12/31/2010 ($)	Above Market Earnings — 12/31/2008 ($)	12/31/2009 ($)	12/31/2010 ($)
Terry D. Hildestad	883,351	806,554	462,186	15,590	18,765	18,346
Vernon A. Raile	469,755	661,243	54,221	28,455	33,934	32,442
Doran N. Schwartz			71,302
John G. Harp	331,558	743,334	294,023
Additional Retirement (7)	7,216	18,336	13,912
Steven L. Bietz		475,985	302,863
David L. Goodin			240,494

MDU Resources Group, Inc. Proxy Statement 35

Proxy Statement

(3)

Terry D. Hildestad	32,500	3,025	174	1,800			37,499
Vernon A. Raile	14,436		29				14,465
Doran N. Schwartz	32,500	575	174	300			33,549
John G. Harp	32,500	3,025	174		12,100	746	48,545
Steven L. Bietz	35,444		174	600			36,218
David L. Goodin	32,500	5,475	852	300			39,127

| (a) | Represents company contributions
to 401(k) plan, which include matching contributions, contributions made in
lieu of pension plan accruals after pension plans were frozen at December 31,
2009 and, in the case of Mr. Goodin, a profit-sharing contribution. |
| --- | --- |
| (b) | Represents additional payment
when company contributions to 401(k) plan in lieu of pension plan accruals
were limited by Internal Revenue Code Section 415. |

| (4) | Retired effective February 16,
2010. |
| --- | --- |
| (5) | Includes one-time incentive
payment of $100,000 in addition to his annual incentive compensation. |
| (6) | Includes one-time incentive
payment of $200,000 in addition to his annual incentive compensation. |
| (7) | In addition to the change in the
actuarial present value of Mr. Harps accumulated benefit under the pension
plan, excess SISP, and SISP, this amount also includes the following amounts
attributable to Mr. Harps additional retirement benefit: |

	2008	2009	2010
Change in present value of additional years of service for
pension plan	$ 3,570	$ 13,077	$ 12,240
Change in present value of additional years of service for
excess SISP	3,646	5,259	1,672
Change in present value of additional years of service for
SISP

| | Mr. Harps additional retirement
benefit is described in the narrative that follows the Pension Benefits for
2010 table. The additional retirement benefit provides Mr. Harp with
additional retirement benefits equal to the additional benefit he would earn
under the pension plan, excess SISP, and the SISP if he had three additional
years of service. The pension and excess SISP were frozen as of December 31,
2009. The amounts in the table above reflect the change in present value of
this additional benefit in 2008, 2009, and 2010. The additional retirement
benefit was determined by calculating the actuarial present values of the
accumulated benefits under the pension plan, excess SISP, and SISP, with and
without the three additional years of service, using the same assumptions
used to determine the amounts disclosed in the Pension Benefits for 2010
table. Because Mr. Harp would be fully vested in his SISP benefit if he
retired at age 65, the assumed retirement age of these calculations, the
additional years of service provided by the additional retirement agreement
would not increase that benefit. If Mr. Harp retires before becoming 100%
vested in his SISP benefit, his SISP benefit would be less than the amount
shown in the Pension Benefits for 2010 table, but the payments he would
receive under the additional retirement benefit arrangement would increase,
as would the amounts reflected in the table above and in the Summary
Compensation Table. |
| --- | --- |
| (8) | Includes company contributions to
Mr. Harps 401(k) of a company match and retirement contribution, a matching
contribution to a charity, payment of a life insurance premium, an additional
premium for Mr. Harps long-term disability insurance, and Mr. Harps office
and automobile allowance. |

36 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

G rants of Plan-Based Awards in 2010

								Grant Date Fair Value of Stock and Option Awards ($) (l)
		Estimated Future Payouts Under Non-Equity Incentive Plan Awards			Estimated Future Payouts Under Equity Incentive Plan Awards
Name (a)	Grant Date (b)	Threshold ($) (c)	Target ($) (d)	Maximum ($) (e)	Threshold (#) (f)	Target (#) (g)	Maximum (#) (h)
Terry D. Hildestad	3/5/10(1)	187,500	750,000	1,500,000
	3/5/10(2)				4,771	47,709	95,418	830,137
Vernon A. Raile

Doran N. Schwartz	3/5/10(3)	31,233	124,930	249,860
	3/5/10(2)				827	8,269	16,538	143,881
John G. Harp	3/5/10(1)	73,125	292,500	585,000
	3/5/10(2)				1,718	17,175	34,350	298,845
Steven L. Bietz	3/5/10(1)	56,875	227,500	455,000
	3/5/10(2)				1,336	13,358	26,716	232,429
David L. Goodin	3/5/10(1)	52,325	209,300	418,600
	3/5/10(2)				1,229	12,290	24,580	213,846

| (1) | Annual incentive for 2010 granted
pursuant to the MDU Resources Group, Inc. Long-Term Performance-Based
Incentive Plan. |
| --- | --- |
| (2) | Performance shares for the 2010-2012
performance period granted pursuant to the MDU Resources Group, Inc.
Long-Term Performance-Based Incentive Plan. |
| (3) | Annual incentive for 2010 granted
pursuant to the MDU Resources Group, Inc. Executive Incentive Compensation
Plan. |

Narrative Discussion Relating to the Summary Compensation Table and Grants of Plan-Based Awards Table

Incentive Awards

Annual Incentive

On March 5, 2010, the compensation committee recommended the 2010 annual incentive award opportunities for our named executive officers, and the board approved these opportunities at its meeting on March 5, 2010. These award opportunities are reflected in the Grants of Plan-Based Awards table at grant on March 5, 2010 in columns (c), (d), and (e) and in the Summary Compensation Table as earned with respect to 2010 in column (g).

Executive officers may receive a payment of annual cash incentive awards based upon achievement of annual performance measures with a threshold, target, and maximum level. A target incentive award is established based on a percent of the executives base salary. Actual payment may range from zero to 200% of the target based upon achievement of goals.

In order to be eligible to receive a payment of an annual incentive award under the Long-Term Performance-Based Incentive Plan, Messrs. Hildestad, Harp, Bietz, and Goodin must have remained employed by the company through December 31, 2010, unless the compensation committee determines otherwise. The committee has full discretion to determine the extent to which goals have been achieved, the payment level, whether any final payment will be made, and whether to adjust awards downward based upon individual performance. Unless the compensation committee determines otherwise, performance measure targets shall be adjusted to take into account unusual or nonrecurring events affecting the company, subsidiary, division, or business unit, or any of their financial statements, or changes in applicable laws, regulations or accounting principles to the extent such unusual or nonrecurring events or changes in applicable laws, regulations or accounting principles otherwise would result in dilution or enlargement of the annual incentive award intended to be provided. Such adjustments are made in a manner that will not cause the award to fail to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code.

With respect to annual incentive awards granted pursuant to the MDU Resources Group, Inc. Executive Incentive Compensation Plan, which includes Mr. Schwartz, participants who retire at age 65 during the year remain eligible to receive an award. Subject to the compensation committees discretion, executives who terminate employment for other reasons are not eligible for an award. The compensation committee has full discretion to determine the extent to which goals have been achieved, the payment level, and whether any final payment will be made. Once performance goals are approved by the committee for executive incentive compensation plan awards, the committee generally does not modify the goals. However, if major unforeseen changes in economic and environmental

MDU Resources Group, Inc. Proxy Statement 37

Proxy Statement

conditions or other significant factors beyond the control of management substantially affected managements ability to achieve the specified performance goals, the committee, in consultation with the chief executive officer, may modify the performance goals. Such goal modifications will only be considered in years of unusually adverse or favorable external conditions.

Messrs. Harps, Bietzs, and Goodins performance goals for 2010 are budgeted earnings per share achieved and budgeted return on invested capital achieved, each weighted 50%. The goals are measured at the business unit level, as allocated, for Mr. Harp, Mr. Bietz, and Mr. Goodin. In addition to these performance goals, Mr. Bietz also has five individual performance goals relating to WBI Holdings, Inc.s safety results, and each goal that is not met will reduce his annual incentive award payment by 1%.

For Messrs. Harp and Bietz, achievement of budgeted earnings per share and return on invested capital would result in payment of 100% of the target amount. Their 2010 award opportunities ranged from no payment if the allocated earnings per share and return on invested capital were below the 85% level to a 200% payout for achievement of 115% of budgeted earnings per share and a return on invested capital equal to or greater than the business units weighted average cost of capital would result in payment of 200% of the target amount.

The 2010 award opportunity available to Mr. Goodin ranged from no payment if the allocated earnings per share and return on invested capital results were below the 85% level to a 200% payout if results were at or above the 115% level.

Annual incentive award payments for Messrs. Hildestad and Schwartz were determined based on the annual incentive award payments made to the president and chief executive officers of the four business units MDU Construction Services Group, Inc., combined utility group, WBI Holdings, Inc., and Knife River Corporation and were calculated as follows: each business unit president and chief executive officers annual incentive award payment, expressed as a percentage of his annual target award, was multiplied by that business units percentage share of average invested capital for 2010. These four products were added together, and the sum was multiplied by the Messrs. Hildestads and Schwartzs 2010 target incentive. Messrs. Hildestads and Schwartzs 2010 annual incentives were paid at 101.7% of target based on the following:

| President and Chief Executive
Officer of: — MDU Construction Services Group, Inc. | 150.0% | 5.6% | 8.4% |
| --- | --- | --- | --- |
| Combined Utility Group | 153.1% | 35.0% | 53.6% |
| WBI Holdings, Inc. | 107.8% | 33.8% | 36.4% |
| Knife River Corporation | 13.0% | 25.6% | 3.3% |
| Total | | | 101.7% |

The award opportunities available to Messrs. Harp and Bietz were:

2010 return on invested capital results as a % of 2010 target	Corresponding payment of annual incentive target based on return on invested capital	2010 earnings per share results as a % of 2010 target	Corresponding payment of annual incentive target based on earnings per share
Less than 85%	0%	Less than 85%	0%
85%	25%	85%	25%
90%	50%	90%	50%
95%	75%	95%	75%
100%	100%	100%	100%
103%	100%	103%	120%
106%	100%	106%	140%
109%	100%	109%	160%
112%	100%	112%	180%
Up to weighted		115%	200%
average cost of
capital	100%
Weighted average
cost of capital or
higher	200%

38 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The award opportunity available to Mr. Goodin was:

2010 return on invested capital results as a % of 2010 target	Corresponding payment of annual incentive target based on return on invested capital	2010 earnings per share results as a % of 2010 target	Corresponding payment of annual incentive target based on earnings per share
Less than 85%	0 %	Less than 85%	0 %
85 %	25 %	85 %	25 %
90 %	50 %	90 %	50 %
95 %	75 %	95 %	75 %
100 %	100 %	100 %	100 %
103 %	120 %	103 %	120 %
106 %	140 %	106 %	140 %
109 %	160 %	109 %	160 %
112 %	180 %	112 %	180 %
115 %	200 %	115 %	200 %

For discussion of the specific incentive plan performance targets and results, please see the Compensation Discussion and Analysis.

Long-Term Incentive On March 5, 2010, the compensation committee recommended long-term incentive grants to the named executive officers in the form of performance shares, and the board approved these grants at its meeting on March 5, 2010. These grants are reflected in columns (f), (g), (h), and (i) of the Grants of Plan-Based Awards table and in column (e) of the Summary Compensation Table.

If the companys 2010-2012 total shareholder return is positive, from 0% to 200% of the target grant will be paid out in February 2013, depending on our 2010-2012 total stockholder return compared to the total three-year stockholder returns of companies in our performance graph peer group. The payout percentage is determined as follows:

The Companys Percentile Rank	Payout Percentage of March 5, 2010 Grant
90th or higher	200 %
70th	150 %
50th	100 %
40th	10 %
Less than 40th	0 %

If the companys 20102012 total shareholder return is negative, the committee will reduce the shares otherwise earned by at least 50%.

Company Contributions to 401(k) Plan and Cash Payments to Named Executive Officers In 2010, the company made additional contributions to the 401(k) plan and cash payments to the named executive officers to make up for pension benefits that did not accrue under the plans as a result of amendments that froze the pension plans effective December 31, 2009. The cash payments were made because the Internal Revenue Code limited the amount of additional contributions that could be made under the 401(k) plan.

Salary and Bonus in Proportion to Total Compensation The following table shows the proportion of salary to total compensation. We paid no bonuses to our named executive officers in 2010.

| Name — Terry D.
Hildestad | 750,000 | 2,860,918 | 26.2 |
| --- | --- | --- | --- |
| Vernon A.
Raile | 57,945 | 159,073 | 36.4 |
| Doran N.
Schwartz | 252,454 | 628,239 | 40.2 |
| John G. Harp | 450,000 | 1,544,075 | 29.1 |
| Steven L.
Bietz | 350,000 | 1,166,755 | 30.0 |
| David L.
Goodin | 322,000 | 1,135,905 | 28.3 |

MDU Resources Group, Inc. Proxy Statement 39

Proxy Statement

O utstanding Equity Awards at Fiscal Year-End 2010

Name (a)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)(1)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)(2)
Terry D. Hildestad	14,162	287,064
Vernon A. Raile	2,108	42,729
Doran N. Schwartz	1,672	33,891
John G. Harp	5,032	101,999
Steven L. Bietz	3,920	79,458
David L. Goodin	3,215	65,168

(1) Below is a breakdown by year of the plan awards:

Named Executive Officer	Award	Shares	End of Performance Period
Terry D. Hildestad	2008	3,909	12/31/10
	2009	5,482	12/31/11
	2010	4,771	12/31/12
Vernon A. Raile	2008	1,340	12/31/10
	2009	768	12/31/11
	2010
Doran N. Schwartz	2008	354	12/31/10
	2009	491	12/31/11
	2010	827	12/31/12
John G. Harp	2008	1,340	12/31/10
	2009	1,974	12/31/11
	2010	1,718	12/31/12
Steven L. Bietz	2008	1,049	12/31/10
	2009	1,535	12/31/11
	2010	1,336	12/31/12
David L. Goodin	2008	618	12/31/10
	2009	1,368	12/31/11
	2010	1,229	12/31/12

| | Shares for the 2008 award are
shown at the threshold level (10%) based on results for the 2008-2010
performance cycle below threshold. Shares for the 2009 award are shown at the threshold level
(10%) based on results for the first two years of the 2009-2011 performance
cycle below threshold. Shares for the 2010 award are shown at the threshold
level (10%) based on results for the first year of the 2010-2012 performance
cycle below threshold. |
| --- | --- |
| (2) | Value based on the number of
performance shares reflected in column (i) multiplied by $20.27, the year-end
closing price for 2010. |

O ption Exercises and Stock Vested during 2010

Name (a)	Option Awards — Number of Shares Acquired on Exercise (#) (b)(1)	Value Realized on Exercise ($) (c)	Stock Awards — Number of Shares Acquired on Vesting (#) (d)(1,2)	Value Realized on Vesting ($) (e)(3)
Terry D. Hildestad			36,803	793,972
Vernon A. Raile			13,678	295,606
Doran N. Schwartz			3,463	75,398
John G. Harp			10,181	221,666
Steven L. Bietz			10,912	236,480
David L. Goodin	10,000	74,901	5,764	122,567

| (1) | Adjusted for the 3-for-2 stock
split effective July 26, 2006. |
| --- | --- |
| (2) | Reflects performance shares for
the 2007-2009 performance period that vested on February 11, 2010 and
restricted stock granted in 2001 that vested automatically on February 15,
2010. |
| (3) | Reflects the value of performance
shares based on our closing stock price of $19.99 on February 11, 2010, and
the dividend equivalents that were paid on the vested shares; as well as the
value of restricted shares based on our closing stock price of $19.80 on
February 12, 2010 as February 15, 2010 was a holiday. |

40 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

P ension Benefits for 2010

Name (a)	Plan Name (b)	Number of Years Credited Service (#) (c)	Present Value of Accumulated Benefit ($) (d)	Payments During Last Fiscal Year ($) (e)
Terry D. Hildestad	MDU Pension Plan	35	1,471,844
	SISP I(1)(3)	10	1,674,919
	SISP II(2)(3)	10	2,765,541
	SISP Excess(4)	35	706,848
Vernon A. Raile	MDU Pension Plan	30	1,088,131	74,301
	SISP I(1)(3)	10	891,431	73,000
	SISP II(2)(3)	10	1,898,870	157,016
Doran N. Schwartz	MDU Pension Plan	4	54,721
	SISP II(2)(3)	3	279,585
John G. Harp	MDU Pension Plan	5	202,141
	SISP II(2)(3)	5	2,045,166
	SISP Excess(4)	5	36,989
	Harp Additional Retirement Benefit	3	134,049
Steven L. Bietz	WBI Pension Plan	28	799,534
	SISP I(1)(3)	10	544,926
	SISP II(2)(3)	10	523,700
	SISP Excess(4)	28	81,672
David L. Goodin	MDU Pension Plan	26	624,022
	SISP I(1)(3)	10	142,762
	SISP II(2)(3)	10	550,778
	SISP Excess(4)	26	24,546

(1)	Grandfathered under Section 409A.
(2)	Not grandfathered under Section
409A.
(3)	Years of credited service only
affects vesting under SISP I and SISP II. The number of years of credited
service in the table reflects the years of vesting service completed in SISP
I and SISP II as of December 31, 2010, rather than years of service with the
company, which we disclosed in prior proxy statements. Ten years of vesting
service is required of the named executive officers as of December 31, 2010,
to obtain the full benefit under these plans. The present value of
accumulated benefits was calculated by assuming the named executive officer
would have ten years of vesting service on the assumed benefit commencement
date; therefore, no reduction was made to reflect actual vesting levels.
(4)	The number of years of credited
service under the SISP excess reflects the years of credited benefit service
in the appropriate pension plan as of December 31, 2009 when the pension
plans were frozen, rather than reflecting the years of participation in the
SISP excess which we disclosed in prior proxy statements. This is due to the
fact that the SISP excess provides a benefit in excess of benefits payable
under the pension plans.

The amounts shown for the pension plan and SISP excess represent the actuarial present values of the executives accumulated benefits accrued as of December 31, 2010, calculated using a 5.12%, 5.20%, and 5.34% discount rate for the SISP excess, MDU pension plan, and WBI pension plan, respectively, the RP-2000 Combined Healthy Mortality Table Projected to 2010 for post-retirement mortality, and no recognition of future salary increases or pre-retirement mortality. The assumed retirement ages for these benefits was age 60 for Messrs. Schwartz, Harp, Bietz, and Goodin. This is the earliest age at which the executives could begin receiving unreduced benefits. Retirement on December 31, 2010, was assumed for Mr. Hildestad, who was age 61 on that date. Mr. Railes benefits reflect his actual retirement commencement date of February 16, 2010. The amounts shown for the SISP I and SISP II were determined using a 5.12% discount rate and assume benefits commenced at age 65. The assumptions used to calculate Mr. Harps additional retirement benefit are described below.

| Pension Plans |
| --- |
| Messrs. Hildestad, Raile,
Schwartz, Harp, and Goodin participate in the MDU Resources Group, Inc.
Pension Plan for Non-Bargaining Unit Employees, which we refer to as the MDU
pension plan. Mr. Bietz participates in the Williston Basin Interstate
Pipeline Company Pension Plan, which we refer to as the WBI pension plan.
Pension benefits under the pension plans are based on the participants
average annual salary over the 60 consecutive month period in which the
participant received the highest annual salary during the participants final
10 years of service. For this purpose, only a participants salary is
considered; incentives and other forms of compensation are not included.
Benefits are determined by multiplying (1) the participants years of
credited service by (2) the sum of (a) the average annual salary up to the
social security integration level times 1.1% and (b) the average annual
salary over the social security integration level times 1.45%. The maximum
years of service recognized when determining benefits under the pension plans
is 35. Pension plan benefits are not reduced for social security benefits. |

MDU Resources Group, Inc. Proxy Statement 41

Proxy Statement

Each of the pension plans was amended to cease benefit accruals as of December 31, 2009, meaning the normal retirement benefit will not change. The years of credited service reflect the years as of December 31, 2009 and have not changed.

To receive unreduced retirement benefits under the pension plans, participants must either remain employed until age 60 or elect to defer commencement of benefits until age 60. Mr. Hildestad was eligible for unreduced retirement benefits under the MDU pension plan on December 31, 2010. Participants whose employment terminates between the ages of 55 and 60, with 5 years of service under the pension plans are eligible for early retirement benefits. Early retirement benefits are determined by reducing the normal retirement benefit by 0.25% per month for each month before age 60 in the pension plans. If a participants employment terminates before age 55, the same reduction applies for each month the termination occurs before age 62, with the reduction capped at 21%. Mr. Harp is currently eligible for early retirement benefits.

Benefits for single participants under the pension plans are paid as straight life annuities and benefits for married participants are paid as actuarially reduced annuities with a survivor benefit for spouses, unless participants choose otherwise. Participants hired before January 1, 2004, who terminate employment before age 55 may elect to receive their benefits in a lump sum. Messrs. Bietz and Goodin would have been eligible for a lump sum if they had retired on December 31, 2010.

The Internal Revenue Code limits the amounts that may be paid under the pension plans and the amount of compensation that may be recognized when determining benefits. In 2009 when the pension plans were frozen, the maximum annual benefit payable under the pension plans was $195,000 and the maximum amount of compensation that could be recognized when determining benefits was $245,000.

| Supplemental
Income Security Plan | |
| --- | --- |
| We also offer key managers and
executives, including all of our named executive officers, benefits under our
nonqualified retirement plan, which we refer to as the Supplemental Income
Security Plan or SISP. Benefits under the SISP consist of: | |
| | a supplemental retirement benefit
intended to augment the retirement income provided under the pension plans
we refer to this benefit as the regular SISP benefit |
| | an excess retirement benefit
relating to Internal Revenue Code limitations on retirement benefits provided
under the pension plans we refer to this benefit as the SISP excess
benefit, and |
| | death benefits we refer to
these benefits as the SISP death benefit. |
| Effective January 1, 2010, we
amended the SISP to: | |
| | reduce by 20% the regular SISP
and death benefit levels in the benefit schedule used to determine regular
SISP and death benefits for new participants and participants whose benefit
levels increase on or after January 1, 2010 |
| | impose an additional vesting
period applicable to any increased regular SISP benefit and SISP death
benefit occurring on or after January 1, 2010 |
| | eliminate the SISP excess benefit
for new participants and current participants who were not already eligible
for the SISP excess benefit, and |
| | freeze SISP excess benefit
accruals. |
| SISP benefits are forfeited if
the participants employment is terminated for cause. | |

| Regular SISP
Benefits and Death Benefits |
| --- |
| Regular SISP benefits and death
benefits are determined by reference to one of two schedules attached to the
SISP - the original schedule or the amended schedule. Our compensation
committee, after receiving recommendations from our chief executive officer,
determines the level at which participants are placed in the schedules. A
participants placement is generally, but not always, determined by reference
to the participants annual base salary. Benefit levels in the amended
schedule, which became effective on January 1, 2010, are 20% lower than the
benefit levels in the original schedule. The amended schedule applies to new
participants and participants who receive a benefit level increase on or
after January 1, 2010. |

Participants can elect to receive (1) the regular SISP benefit only, (2) the SISP death benefit only, or (3) a combination of both. Regardless of the participants election, if the participant dies before the regular SISP benefit would commence, only the SISP death benefit is provided. If the participant elects to receive both a regular SISP benefit and a SISP death benefit, each of the benefits is reduced proportionately.

42 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The regular SISP benefits reflected in the table above are based on the assumption that the participant elects to receive only the regular SISP benefit. The present values of the SISP death benefits that would be provided if the named executive officers had died on December 31, 2010, prior to the commencement of regular SISP benefits, are reflected in the table that appears in the section entitled Potential Payments upon Termination or Change of Control.

Regular SISP benefits that were vested as of December 31, 2004 and were thereby grandfathered under Section 409A of the Internal Revenue Code remain subject to SISP provisions then in effect, which we refer to as SISP I benefits. Regular SISP benefits that are subject to Section 409A of the Internal Revenue Code, which we refer to as SISP II benefits, are governed by amended provisions intended to comply with Section 409A. Participants generally have more discretion with respect to the distributions of their SISP I benefits.

The time and manner in which the regular SISP benefits are paid depend on a variety of factors, including the time and form of benefit elected by the participant and whether the benefits are SISP I or SISP II benefits. Unless the participant elects otherwise, the SISP I benefits are paid over 180 months, with benefits commencing when the participant attains age 65 or, if later, when the participant retires. The SISP II benefits commence when the participant attains age 65 or, if later, when the participant retires, subject to a six-month delay if the participant is subject to the provisions of Section 409A of the Internal Revenue Code that require delayed commencement of these types of retirement benefits. The SISP II benefits are paid over 180 months or, if commencement of payments is delayed for six months, 173 months. If the commencement of benefits is delayed for six months, the first payment includes the payments that would have been paid during the six-month period plus interest equal to one-half of the annual prime interest rate on the participants last date of employment. If the participant dies after the regular SISP benefits have begun but before receipt of all of the regular SISP benefits, the remaining payments are made to the participants designated beneficiary.

Rather than receiving their regular SISP I benefits in equal monthly installments over 15 years commencing at age 65, participants can elect a different form and time of commencement of their SISP I benefits. Participants can elect to defer commencement of the regular SISP I benefits. If this is elected, the participant retains the right to receive a monthly SISP death benefit if death occurs prior to the commencement of the regular SISP I benefit.

Participants also can elect to receive their SISP I benefits in one of three actuarially equivalent forms a life annuity, 100% joint and survivor annuity, or a joint and two-thirds joint and survivor annuity, provided that the cost of providing these actuarial equivalent forms of benefits does not exceed the cost of providing the normal form of benefit. Neither the election to receive an actuarial equivalent benefit nor the administrators right to pay the regular SISP benefit in the form of an actuarially equivalent lump sum are available with respect to SISP II benefits.

To promote retention, the regular SISP benefits are subject to the following ten-year vesting schedule:

| | 0% vesting for less than 3 years
of participation |
| --- | --- |
| | 20% vesting for 3 years of
participation |
| | 40% vesting for 4 years of
participation, and |
| | an additional 10% vesting for each
additional year of participation up to 100% vesting for 10 years of
participation. |

There is an additional vesting requirement on benefit level increases for the regular SISP benefit granted on or after January 1, 2010. The requirement applies only to the increased benefit level. The increased benefit vests after the later of three additional years of participation in the SISP or the end of the regular vesting schedule described above. The additional three-year vesting requirement for benefit level increases is pro-rated for participants who are officers, attain age 65, and, pursuant to the companys bylaws, are required to retire prior to the end of the additional vesting period as follows:

| | 33% of the increase vests for
participants required to retire at least one year but less than two years
after the increase is granted, and |
| --- | --- |
| | 66% of the increase vests for
participants required to retire at least two years but less than three years
after the increase is granted. |

The benefit level increases of participants who attain age 65 and are required to retire pursuant to the companys bylaws will be further reduced to the extent the participants are not fully vested in their regular SISP benefit under the 10-year vesting schedule described above. The additional vesting period associated with a benefit level increase may be waived by the compensation committee.

SISP death benefits become fully vested if the participant dies while actively employed. Otherwise, the SISP death benefits are subject to the same vesting schedules as the regular SISP benefits.

The SISP also provides that if a participant becomes totally disabled, the participant will continue to receive credit for up to two additional years under the SISP as long as the participant is totally disabled during such time. Since the named executive officers other than

MDU Resources Group, Inc. Proxy Statement 43

Proxy Statement

Messrs. Harp and Schwartz are fully vested in their SISP benefits, this would not result in any incremental benefit for the named executive officers other than Messrs. Harp and Schwartz. The present value of these two additional years of service for Messrs. Harp and Schwartz are reflected in the table in Potential Payments upon Termination or Change of Control below.

| SISP Excess
Benefits |
| --- |
| SISP excess benefits are equal to
the difference between (1) the monthly retirement benefits that would have
been payable to the participant under the pension plans absent the
limitations under the Internal Revenue Code and (2) the actual benefits
payable to the participant under the pension plans. Participants are only
eligible for the SISP excess benefits if (1) the participant is fully vested
under the pension plan, (2) the participants employment terminates prior to
age 65, and (3) benefits under the pension plan are reduced due to
limitations under the Internal Revenue Code on plan compensation. Effective
January 1, 2005, participants who were not then vested in the SISP excess
benefits were also required to remain actively employed by the company until
age 60. In 2009, the plan was amended to limit eligibility for the SISP
excess benefit to current SISP participants (1) who are already vested in the
SISP excess benefit or (2) who will become vested in the SISP excess benefits
if they remain employed with the company until age 60. The plan was further
amended to freeze the SISP excess benefits to a maximum of the benefit level
payable based on the participants years of service and compensation level as
of December 31, 2009. Messrs. Hildestad and Bietz would be entitled to the SISP
excess benefit if they were to terminate employment prior to age 65. Messrs.
Goodin and Harp must remain employed until age 60 to become entitled to their
SISP excess benefit. Mr. Raile was not eligible for this benefit due to his
retirement upon attainment of age 65. Mr. Schwartz is not eligible for this
benefit. |

Benefits generally commence six months after the participants employment terminates and continue to age 65 or until the death of the participant, if prior to age 65. If a participant who dies prior to age 65 elected a joint and survivor benefit, the survivors SISP excess benefit is paid until the date the participant would have attained age 65.

| Mr. Harps
Additional Retirement Benefit |
| --- |
| To encourage Mr. Harp to remain
with the company, on November 16, 2006, upon recommendation of our chief
executive officer and the compensation committee, our board of directors
approved an additional retirement benefit for Mr. Harp. The benefit provides
for Mr. Harp to receive payments that represent the equivalent of an
additional three years of service under the pension plan, SISP excess, and
SISP II. The additional three years of service recognize Mr. Harps previous
employment with a subsidiary of the company. To calculate payments Mr. Harp
could receive due to his additional retirement benefit, we applied the
additional years of service to each of the retirement arrangements and
assumed he remained employed until age 60, for purposes of calculating the
additional benefit under the pension plan and SISP excess, and age 65, for
purposes of calculating the additional benefit under the SISP II. Since the
pension plan and SISP excess were frozen as of December 31, 2009, no
additional accruals will be recognized. Because we calculate the amounts
shown in the table based on an assumption that the named executive officers
are 100% vested in their SISP benefits, the additional years of service
provided by the agreement would not increase his SISP II benefit reflected in
the table. Consequently, the additional retirement benefit amount shown in
the table does not include any additional benefit attributable to the SISP
II. If Mr. Harp were to retire before achieving 10 years of service and
becoming fully vested in his SISP II benefit, the additional years of service
provided by the additional retirement benefit would increase his vesting
percentage under the SISP II and, therefore, would increase his benefits
under the SISP II. For a description of the payments that could be provided
under the additional retirement benefit if Mr. Harps employment were to be
terminated on December 31, 2010, refer to the table and related notes in
Potential Payment upon Termination or Change of Control below. |

N onqualified Deferred Compensation for 2010

Name (a) — Terry D. Hildestad	59,628	895,559
Vernon A. Raile	107,777	1,618,568
Doran N. Schwartz
John G. Harp
Steven L. Bietz
David L. Goodin

Participants in the executive incentive compensation plans may elect to defer up to 100% of their annual incentive awards. Deferred amounts accrue interest at a rate determined annually by the compensation committee. The interest rate in effect for 2010 was 6.91% or the Moodys Rate, which was defined by reference to the U.S. Long-Term Corporate Bond Yield Average for A rated companies. Effective January 1, 2010, Moodys Rate is the average of (i) the number that results from adding the daily Moodys U.S. Long-Term Corporate Bond Yield Average for A rated companies as of the last day of each month for the 12-month period ending October 31 and

44 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

dividing by 12 and (ii) the number that results from adding the daily Moodys U.S. Long-Term Corporate Bond Yield Average for BBB rated companies as of the last day of each month for the 12-month period ending October 31 and dividing by 12. The deferred amount will be paid in accordance with the participants election, following termination of employment or beginning in the fifth year following the year the award was granted. The amounts will be paid in accordance with the participants election in a lump sum or in monthly installments not to exceed 120 months. In the event of a change of control, all amounts become immediately payable.

A change of control is defined as

| | an acquisition during a 12-month
period of 30% or more of the total voting power of our stock |
| --- | --- |
| | an acquisition of our stock that,
together with stock already held by the acquirer, constitutes more than 50%
of the total fair market value or total voting power of our stock |
| | replacement of a majority of the
members of our board of directors during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of
our board of directors or |
| | acquisition of our assets having
a gross fair market value at least equal to 40% of the total gross fair
market value of all of our assets. |

| P otential
Payments upon Termination or Change of Control |
| --- |
| The following tables show the
payments and benefits our named executive officers would receive in
connection with a variety of employment termination scenarios and upon a
change of control. For the named executive officers other than Mr. Raile, the
information assumes the terminations and the change of control occurred on
December 31, 2010. For Mr. Raile, the information relates to his actual
retirement on February 16, 2010 and assumes that a change of control occurred
on December 31, 2010. All of the payments and benefits described below would
be provided by the company or its subsidiaries. |

The tables exclude compensation and benefits provided under plans or arrangements that do not discriminate in favor of the named executive officers and that are generally available to all salaried employees, such as benefits under our qualified defined benefit pension plan, accrued vacation pay, continuation of health care benefits, and life insurance benefits. The tables also do not include the named executive officers benefits under our nonqualified deferred compensation plans, which are reported in the Nonqualified Deferred Compensation for 2010 table. See the Pension Benefits for 2010 table and the Nonqualified Deferred Compensation for 2010 table, and accompanying narratives, for a description of the named executive officers accumulated benefits under our qualified defined benefit pension plans and our nonqualified deferred compensation plans.

We provide disability benefits to some of our salaried employees equal to 60% of their base salary, subject to a cap on the amount of base salary taken into account when calculating benefits. For officers, the limit on base salary is $200,000. For other salaried employees, the limit is $100,000. For all salaried employees, disability payments continue until age 65 if disability occurs at or before age 60 and for 5 years if disability occurs between the ages of 60 and 65. Disability benefits are reduced for amounts paid as retirement benefits. The amounts in the tables reflect the present value of the disability benefits attributable to the additional $100,000 of base salary recognized for executives under our disability program, subject to the 60% limitation, after reduction for amounts that would be paid as retirement benefits. As the tables reflect, with the exception of Messrs. Schwartz, Harp, and Goodin, the reduction for amounts paid as retirement benefits would eliminate disability benefits assuming a termination of employment on December 31, 2010.

Upon a change of control, share-based awards granted under our Long-Term Performance-Based Incentive Plan vest and non-share-based awards are paid in cash. All performance share awards and the annual incentives for Messrs. Hildestad, Harp, Bietz, and Goodin, which were awarded under the Long-Term Performance-Based Incentive Plan, would vest at their target levels. For this purpose, the term change of control is defined as:

| | the acquisition by an individual,
entity, or group of 20% or more of our outstanding common stock |
| --- | --- |
| | a change in a majority of our
board of directors since April 22, 1997 without the approval of a majority of
the board members as of April 22, 1997 or whose election was approved by such
board members |
| | consummation of a merger or
similar transaction or sale of all or substantially all of our assets, unless
our stockholders immediately prior to the transaction beneficially own more
than 60% of the outstanding common stock and voting power of the resulting
corporation in substantially the same proportions as before the merger, no
person owns 20% or more of the resulting corporations outstanding common
stock or voting power except for any such ownership that existed before the
merger and at least a majority of the board of the resulting corporation is
comprised of our directors or |
| | stockholder approval of our
liquidation or dissolution. |

MDU Resources Group, Inc. Proxy Statement 45

Proxy Statement

Performance shares are forfeited if termination of employment occurs during the first year of the performance period. If a termination of employment occurs for a reason other than cause, performance share awards granted prior to 2009 are prorated as follows:

| | if the termination of employment
occurs during the second year of the performance period, the executive
receives a prorated portion of any performance shares earned based on the
number of months employed during the performance period and |
| --- | --- |
| | if the termination of employment
occurs during the third year of the performance period, the executive
receives the full amount of any performance shares earned. |

Beginning with performance share awards granted in 2009, these awards will be forfeited if the participants employment terminates for any reason before the participant has reached age 55 and completed 10 years of service. Performance shares and related dividend equivalents for those participants whose employment is terminated other than for cause after the participant has reached age 55 and completed 10 years of service will be prorated as described above.

Accordingly, if a December 31, 2010 termination other than for cause without a change of control is assumed, the named executive officers 2010-2012 performance share awards would be forfeited, any amounts earned under the 2009-2011 performance share awards for Mr. Hildestad would be reduced by one-third and such awards for Messrs. Schwartz, Harp, Bietz, and Goodin would be forfeited, and any amounts earned under the 2008-2010 performance share awards would not be reduced. The number of performance shares earned following a termination depends on actual performance through the full performance period. As actual performance for the 2008-2010 performance share awards has been determined, the amounts for these awards in the event of a termination without a change of control were based on actual performance, which resulted in vesting of 0% of the target award. For the 2009-2011 performance share awards, because we do not know what actual performance through the entire performance period will be, we have assumed target performance will be achieved and, therefore, show two-thirds of the target award. No amounts are shown for the 2010-2012 performance share awards because such awards would be forfeited. Although vesting would only occur after completion of the performance period, the amounts shown in the tables were not reduced to reflect the present value of the performance shares that could vest. Dividend equivalents attributable to earned performance shares would also be paid. Dividend equivalents accrued through December 31, 2010 are included in the amounts shown.

The value of the vesting of performance shares shown in the tables was determined by multiplying the number of performance shares that would vest due to termination or a change of control by the closing price of our stock on December 31, 2010.

Except for Mr. Hildestad, we also have change of control employment agreements with our named executive officers and other executives, which provide certain protections to the executives in the event there is a change of control of the company. Mr. Hildestad requested that his change of control employment agreement be terminated in June 2010. The compensation committee notified other executives with change of control employment agreements that their agreements would not be extended beyond their current expiration dates.

For these purposes, we define change of control as:

| | the acquisition by an individual,
entity, or group of 20% or more of our outstanding common stock |
| --- | --- |
| | a change in a majority of our
board of directors since the date of the agreement without the approval of a
majority of the board members as of the date of the agreement or whose election
was approved by such board members |
| | consummation of a merger of
similar transaction or sale of all or substantially all of our assets, unless
our stockholders immediately prior to the transaction beneficially own more
than 60% of the outstanding common stock and voting power of the resulting
corporation in substantially the same proportions as before the merger, no
person owns 20% or more of the resulting corporations outstanding common
stock or voting power except for any such ownership that existed before the
merger and at least a majority of the board of the resulting corporation is
comprised of our directors or |
| | stockholder approval of our
liquidation or dissolution. |

If a change of control occurs, the agreements provide for a three-year employment period from the date of the change of control, during which the named executive officer is entitled to receive:

| | a base salary of not less than
twelve times the highest monthly salary paid within the preceding twelve
months |
| --- | --- |
| | annual incentive opportunity of
not less than the highest annual incentive paid in any of the three years
before the change of control |
| | participation in our incentive, savings,
retirement, and welfare benefit plans |
| | reasonable vehicle allowance, home
office allowance, and subsidized annual physical examinations and |
| | office and support staff,
vacation, and expense reimbursement consistent with such benefits as they
were provided before the change of control. |

46 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Assuming a change of control occurred on December 31, 2010, the guaranteed minimum level of base salary provided over the three-year employment period would not result in an increase in any of the named executive officers base salaries. The minimum annual incentive opportunities Messrs. Schwartz, Harp, Bietz, and Goodin would be eligible to earn over the three-year employment period would be $780,000, $1,350,000, $1,050,000, and $966,000, respectively. The agreements also provide that severance payments and benefits will be provided:

| | if we terminate the named
executive officers employment during the employment period, other than for
cause or disability, or |
| --- | --- |
| | the named executive officer
resigns for good reason. |

Cause means the named executive officers willful and continued failure to substantially perform his duties or willfully engaging in illegal conduct or gross misconduct materially injurious to the company. Good reason includes:

| | a material diminution of the
named executive officers authority, duties, or responsibilities |
| --- | --- |
| | a material change in the named
executive officers work location and |
| | our material breach of the
agreement. |

In such event, the named executive officer would receive:

| | accrued but unpaid base salary
and accrued but unused vacation |
| --- | --- |
| | a lump sum payment equal to three
times his (a) annual salary using the higher of the then current annual
salary or twelve times the highest monthly salary paid within the twelve
months before the change of control and (b) annual incentive using the
highest annual incentive paid in any of the three years before the change of
control or, if higher, the annual incentive for the most recently completed
fiscal year |
| | a pro-rated annual incentive for
the year of termination |
| | an amount equal to the actuarial
equivalent of the additional benefit the named executive officer would
receive under the SISP and any other supplemental or excess retirement plan
if employment continued for an additional three years |
| | outplacement benefits and |
| | a payment equal to any federal
excise tax on excess parachute payments if the total parachute payments
exceed 110% of the safe harbor amount for that tax. If this 110% threshold is
not exceeded, the named executive officers payments and benefits would be
reduced to avoid the tax. The named executive officers are not reimbursed for
any taxes imposed on this tax reimbursement payment. |

This description of severance payments and benefits reflects the terms of the agreements as in effect on December 31, 2010.

The compensation committee may also consider providing severance benefits on a case-by-case basis for employment terminations not related to a change of control. The compensation committee adopted a checklist of factors in February 2005 to consider when determining whether any such severance benefits should be paid. The tables do not reflect any such severance benefits, as these benefits are made in the discretion of the committee on a case-by-case basis and it is not possible to estimate the severance benefits, if any, that would be paid.

MDU Resources Group, Inc. Proxy Statement 47

Proxy Statement

Terry D. Hildestad

Executive Benefits and Payments Upon Termination or Change of Control
Compensation:
Short-term
Incentive(1)					750,000	750,000
2008-2010
Performance Shares					864,986	864,986
2009-2011
Performance Shares	786,809	786,809	786,809	786,809	1,180,224	1,180,224
2010-2012
Performance Shares					997,357	997,357
Benefits and Perquisites:
Regular
SISP(2)	4,440,460	4,440,460		4,440,460	4,440,460
Excess
SISP(3)	706,848	706,848		706,848	706,848
SISP Death
Benefits(4)			10,762,627
Total	5,934,117	5,934,117	11,549,436	5,934,117	8,939,875	3,792,567

| (1) | Represents the target 2010 annual
incentive, which would be deemed earned upon change of control under the
Long-Term Performance-Based Incentive Plan. |
| --- | --- |
| (2) | Represents the present value of
Mr. Hildestads vested regular SISP benefit as of December 31, 2010, which
was $42,710 per month for 15 years, commencing at age 65. Present value was
determined using a 5.12% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2010 table. |
| (3) | Represents the present value of
all excess SISP benefits Mr. Hildestad would be entitled to upon termination
of employment under the SISP. Present value was determined using a 5.12%
discount rate. The terms of the excess SISP benefit are described following
the Pension Benefits for 2010 table. |
| (4) | Represents the present value of
180 monthly payments of $85,420 per month, which would be paid as a SISP
death benefit under the SISP. Present value was determined using a 5.12%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2010 table. |

48 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Vernon A. Raile

Executive Benefits and Payments Upon Termination or Change of Control(1)
Compensation:
Base Salary
Short-term
Incentive
2008-2010
Performance Shares		296,553
2009-2011
Performance Shares	165,224	165,224
2010-2012
Performance Shares
Total	165,224	461,777

(1) Mr. Raile retired on February 16, 2010. The information in this table relates to his actual retirement on February 16, 2010 and assumes that a change of control occurred on December 31, 2010. His termination qualified as normal retirement under our qualified pension plan and our SISP. The amount shown for the 2009-2011 Performance Shares is the target award, prorated based on the number of months Mr. Raile worked during the performance period. Mr. Raile also had an accumulated benefit under our nonqualified deferred compensation plan. These plans and Mr. Railes benefits under them are described in the Pension Benefits for 2010 table and the Nonqualified Deferred Compensation for 2010 table and accompanying narratives.

MDU Resources Group, Inc. Proxy Statement 49

Proxy Statement

Doran N. Schwartz

Executive Benefits and Payments Upon Termination or Change of Control
Compensation:
Base Salary				780,000
Short-term
Incentive(1)				725,040
2008-2010
Performance Shares				78,243	78,243
2009-2011
Performance Shares				105,635	105,635
2010-2012
Performance Shares				172,863	172,863
Benefits and Perquisites:
Regular
SISP		110,271	(2)	137,839	(3)
SISP Death
Benefits(4)	1,839,550
Disability
Benefits(5)		781,632
Outplacement
Services				50,000
280G Tax(6)				362,763
Total	1,839,550	891,903		2,412,383	356,741

50 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

John G. Harp

Executive Benefits and Payments Upon Termination or Change of Control
Compensation:
Base Salary							1,350,000
Short-term
Incentive							2,880,000	(1)	292,500	(2)
2008-2010
Performance Shares							296,553		296,553
2009-2011
Performance Shares							424,867		424,867
2010-2012
Performance Shares							359,043		359,043
Benefits and Perquisites:
Incremental
Pension(3)	119,420		119,420		119,420		119,420
Regular
SISP	1,636,132	(4)	1,636,132	(4 )	2,045,166	(5)	2,045,166	(6 )
SISP Death
Benefits(7)				5,758,043
Disability
Benefits(8)					202,911
Outplacement
Services							50,000
280G Tax(9)							968,473
Total	1,755,552		1,755,552	5,758,043	2,367,497		8,493,522		1,372,963

| (1) | Includes the prorated annual
incentive for the year of termination, which is the full annual incentive
since we assume termination occurred on December 31, 2010, and the additional
severance payment of three times the annual incentive. For each of these, we
used the higher of (1) the annual incentive earned in 2010 or (2) the highest
annual incentive paid in 2008, 2009, and 2010. |
| --- | --- |
| (2) | Represents the target 2010 annual
incentive, which would be deemed earned upon change of control under the
Long-Term Performance-Based Incentive Plan. |
| (3) | Represents the equivalent of three
additional years of service that would be provided under the Harp additional
retirement benefit described following the Pension Benefits for 2010 table.
Present value was determined using a 5.20% discount rate. |
| (4) | Represents the present value of
Mr. Harps vested regular SISP benefit as of December 31, 2010, which was
$18,280 per month for 15 years, commencing at age 65. Present value was
determined using a 5.12% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2010 table. Also includes
the additional benefit attributable to three additional years of service that
would be provided under the retirement benefit agreement described following
the Pension Benefits for 2010 table. |
| (5) | Represents the present value of
Mr. Harps vested SISP benefit described in footnote 4, adjusted to reflect
the increase in the present value of his regular SISP benefit that would
result from an additional two years of vesting under the SISP. Present value
was determined using a 5.12% discount rate. |
| (6) | Represents the present value of
Mr. Harps vested SISP benefit described in footnote 4, adjusted to reflect
the increase in the present value of his regular SISP benefit that would
result if he continued employment for an additional three years. Present
value was determined using a 5.12% discount rate. |
| (7) | Represents the present value of
180 monthly payments of $45,700 per month, which would be paid as a SISP
death benefit under the SISP. Present value was determined using a 5.12%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2010 table. |
| (8) | Represents the present value of
the disability benefit after reduction for amounts that would be paid as
retirement benefits. Present value was determined using a 5.20% discount
rate. |
| (9) | Determined applying the Internal
Revenue Code Section 4999 excise tax of 20% only if 110% threshold is
exceeded. |

MDU Resources Group, Inc. Proxy Statement 51

Proxy Statement

Steven L. Bietz

Executive Benefits and Payments Upon Termination or Change of Control
Compensation:
Base Salary							1,050,000
Short-term
Incentive							1,801,800	(1)	227,500	(2)
2008-2010
Performance Shares							232,140		232,140
2009-2011
Performance Shares							330,447		330,447
2010-2012
Performance Shares							279,249		279,249
Benefits and Perquisites:
Regular
SISP(3)	1,068,626		1,068,626		1,068,626		1,068,626
Excess SISP	158,394	(4)	158,394	(4 )	158,394	(4)	274,347	(5 )
SISP Death
Benefits(6)				4,059,609
Outplacement
Services							50,000
280G Tax(7)							646,371
Total	1,227,020		1,227,020	4,059,609	1,227,020		5,732,980		1,069,336

| (1) | Includes the prorated annual
incentive for the year of termination, which is the full annual incentive
since we assume termination occurred on December 31, 2010, and the additional
severance payment of three times the annual incentive. For each of these, we
used the higher of (1) the annual incentive earned in 2010 or (2) the highest
annual incentive paid in 2008, 2009, and 2010. |
| --- | --- |
| (2) | Represents the target 2010 annual
incentive, which would be deemed earned upon change of control under the
Long-Term Performance-Based Incentive Plan. |
| (3) | Represents the present value of
Mr. Bietzs vested regular SISP benefit as of December 31, 2010, which was
$16,110 per month for 15 years, commencing at age 65. Present value was
determined using a 5.12% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2010 table. The three
additional years of vesting credit assumed for purposes of calculating the
additional SISP benefit under Mr. Bietzs change of control agreement would
not increase the actuarial present value of his SISP amount. |
| (4) | Represents the present value of
all excess SISP benefits Mr. Bietz would be entitled to upon termination of
employment under the SISP. Present value was determined using a 5.12%
discount rate. The terms of the excess SISP benefit are described following
the Pension Benefits for 2010 table. |
| (5) | Represents the present value of
all excess SISP benefits Mr. Bietz would be entitled to, calculated with the
assumption of three additional years of employment, as provided under Mr.
Bietzs change of control agreement. Present value was determined using a
5.12% discount rate. The terms of the excess SISP benefit are described
following the Pension Benefits for 2010 table. |
| (6) | Represents the present value of
180 monthly payments of $32,220 per month, which would be paid as a SISP
death benefit under the SISP. Present value was determined using a 5.12%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2010 table. |
| (7) | Determined applying the Internal
Revenue Code Section 4999 excise tax of 20% only if 110% threshold is
exceeded. |

52 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

David L. Goodin

Executive Benefits and Payments Upon Termination or Change of Control
Compensation:
Base Salary					966,000
Short-term
Incentive					1,281,752	(1)	209,300	(2)
2008-2010
Performance Shares					136,748		136,748
2009-2011
Performance Shares					294,582		294,582
2010-2012
Performance Shares					256,922		256,922
Benefits and Perquisites:
Regular
SISP(3)	693,540	693,540		693,540	693,540
SISP Death
Benefits(4)			3,060,457
Disability
Benefits(5)				239,891
Outplacement
Services					50,000
280G Tax(6)					502,299
Total	693,540	693,540	3,060,457	933,431	4,181,843		897,552

MDU Resources Group, Inc. Proxy Statement 53

Proxy Statement

D irector Compensation for 2010

Name (a) — Thomas Everist	60,000		79,064	174		139,238
Karen B. Fagg	60,000	(4)	79,064	174		139,238
A. Bart Holaday	55,000	(5)	79,064	174		134,238
Dennis W. Johnson	65,000		79,064	174		144,238
Thomas C. Knudson	55,000		79,064	174		134,238
Richard H. Lewis	55,000		79,064	174		134,238
Patricia L. Moss	55,000	(6)	79,064	174		134,238
Harry J. Pearce	130,000		79,064	174		209,238
Sister Thomas Welder(7)	18,333			425,187	(8)	443,520
John K. Wilson	55,000	(9)	79,064	174		134,238

| (1) | This column reflects the grant
date fair value of MDU Resources Group, Inc. common stock awarded to our
non-employee directors measured in accordance with Financial Accounting
Standards Board generally accepted accounting principles for stock-based
compensation. The grant date fair value is based on the purchase price of MDU
Resources Group, Inc. common stock on the grant date on May 17, 2010, which
was $19.522. |
| --- | --- |
| (2) | Group life insurance premium. |
| (3) | Mr. Everist had 13,500 stock
options outstanding as of December 31, 2010. |
| (4) | Includes $11,999 that Ms. Fagg
received in our common stock in lieu of cash. |
| (5) | Includes $14,994 that Mr. Holaday
received in our common stock in lieu of cash. |
| (6) | Includes $54,990 that Ms. Moss
received in our common stock in lieu of cash. |
| (7) | Retired effective April 27, 2010. |
| (8) | Comprised of a group life
insurance premium of $58, payments of $14,302 made during 2010 from Sister
Thomas Welders deferred compensation and the value of Sister Thomas Welders
deferred compensation at December 31, 2010, which is payable over five years
in monthly installments. |
| (9) | Includes $54,990 that Mr. Wilson
received in our common stock in lieu of cash. |

The following table shows the cash and stock retainers payable to our non-employee directors.

Base Retainer	55,000
Additional Retainers:
Non-Executive Chairman	75,000
Lead Director, if any	33,000
Audit Committee Chairman	10,000
Compensation Committee Chairman	5,000
Nominating and Governance Committee Chairman	5,000
Annual Stock Grant:	4,050 shares

There are no meeting fees.

In addition to liability insurance, we maintain group life insurance in the amount of $100,000 on each non-employee director for the benefit of each directors beneficiaries during the time each director serves on the board. The annual cost per director is $174.

Directors may defer all or any portion of the annual cash retainer and any other cash compensation paid for service as a director pursuant to the Deferred Compensation Plan for Directors. Deferred amounts are held as phantom stock with dividend accruals and are paid out in cash over a five-year period after the director leaves the board.

Directors are reimbursed for all reasonable travel expenses including spousal expenses in connection with attendance at meetings of the board and its committees. All amounts together with any other perquisites were below the disclosure threshold for 2010.

Our post-retirement income plan for directors was terminated in May 2001 for current and future directors. The net present value of each directors benefit was calculated and converted into phantom stock. Payment is deferred pursuant to the Deferred Compensation Plan for Directors and will be made in cash over a five-year period after the directors retirement from the board.

54 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The board revised our stock ownership policy for directors in November 2010. Each director is required, rather than expected, to own our common stock equal in value to five times the directors base retainer. Shares acquired through purchases on the open market and participation in our director stock plans will be considered in ownership calculations as will ownership of our common stock by a spouse. A director is allowed five years commencing January 1 of the year following the year of that directors initial election to the board to meet the requirements. The level of common stock ownership is monitored with an annual report made to the compensation committee of the board. For stock ownership, please see Security Ownership.

In our Director Compensation Policy, we prohibit our directors from hedging their ownership of company common stock. Directors may not enter into transactions that allow the director to benefit from devaluation of our stock or otherwise own stock technically but without the full benefits and risks of such ownership.

Narrative Disclosure of our Compensation Policies and Practices as They Relate to Risk Management

Senior management has conducted an assessment of the risks arising from our compensation policies and practices for all employees and concluded that none of these risks is reasonably likely to have a material adverse effect on the company. After review and discussion with senior management, the compensation committee concurred with this assessment.

As part of its assessment of the risks arising from our compensation policies and practices for all employees, senior management identified the principal areas of risk faced by the company that may be affected by our compensation policies and practices for all employees, including any risks resulting from our operating businesses compensation policies and practices. In assessing the risks arising from our compensation policies and practices, senior management identified the following practices as factors that serve to mitigate any risks arising from our compensation plans and programs:

Business management and governance practices

| | hedging on oil and gas production
to reduce commodity price volatility |
| --- | --- |
| | board of director oversight on
capital expenditure and operating plans that promotes careful consideration
of financial assumptions |
| | limitation on business
acquisitions without board of director approval |
| | employee integrity training
programs and anonymous reporting systems |
| | quarterly risk assessment reports
at audit committee meetings and |
| | prohibition on hedging of company
stock by Section 16 officers and directors. |
| Compensation practices | |
| | active compensation committee
review of executive compensation, including comparison of executive
compensation to total shareholder return ratio to the ratio for the
performance graph peer group (PEER4 Analysis) |
| | the initial determination of a
positions salary grade to be at or near the 50th percentile of base salaries
paid to similar positions at peer group companies and/or relevant industry
companies |
| | consideration of peer group
and/or relevant industry practices to establish appropriate compensation
target amounts |
| | a balanced compensation mix of
fixed salary and annual or long-term incentives tied to our financial
performance |
| | use of interpolation for annual
and long-term incentive awards to avoid payout cliffs |
| | negative discretion to adjust any
annual or long-term incentive award downward |
| | use of caps on annual incentive
awards and stock granted under long-term incentive awards (200% of target) |
| | discretionary clawbacks on
incentive payments in the event of a financial restatement |
| | use of performance shares, rather
than stock options or stock appreciation rights, as equity component of
incentive compensation |
| | use of performance shares with a
relative, rather than an absolute, total stockholder return performance goal
and mandatory reduction in award if total stockholder return is negative |
| | use of three-year performance
periods to discourage short-term risk-taking |

MDU Resources Group, Inc. Proxy Statement 55

Proxy Statement

| | substantive incentive goals
measured by return on invested capital and earnings per share criteria, which
encourage balanced performance and are important to stockholders |
| --- | --- |
| | use of financial performance
metrics that are readily monitored and reviewed |
| | regular review of the
appropriateness of the companies in the performance graph peer group |
| | stock ownership requirements for
executives participating in the MDU Resources Group, Inc. Long-Term
Performance-Based Incentive Plan and for the board of directors |
| | mandatory holding periods for 50%
of any net after-tax shares earned under long-term incentive awards granted
in 2011 and thereafter and |
| | use of independent consultants in
establishing pay targets at least biennially. |

56 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

I NFORMATION CONCERNING EXECUTIVE OFFICERS

At the first annual meeting of the board after the annual meeting of stockholders, our board of directors elects our executive officers, who serve until their successors are chosen and qualify. A majority of our board of directors may remove any executive officer at any time. Information concerning our executive officers, including their ages, present corporate positions, and business experience, is as follows:

| Name | Age | Present Corporate Position and
Business Experience |
| --- | --- | --- |
| Terry D. Hildestad | 61 | President and Chief Executive Officer. For information
about Mr. Hildestad, see Election of Directors. |
| Steven L. Bietz | 52 | Mr. Bietz was elected president and chief executive
officer of WBI Holdings, Inc. effective March 4, 2006; president effective
January 2, 2006; executive vice president and chief operating officer
effective September 1, 2002; vice president-administration and chief
accounting officer effective November 3, 1999; vice president-administration
effective February 1997; and controller effective January 1994. |
| William R. Connors | 49 | Mr. Connors was elected vice presidentrenewable resources
of MDU Resources Group, Inc., effective September 1, 2008. Prior to that, he
was vice president-business development of Cascade Natural Gas Corporation
effective November 2007; vice president-origination, contracts &
regulatory of Centennial Energy Resources, LLC, effective January 2007; vice
president-origination, contracts & regulatory of Centennial Power, Inc.,
effective July 2005; and, was first employed as vice president-contracts
& regulatory of Centennial Power, Inc., effective July 2004. Prior to that
Mr. Connors was of counsel to Miller Nash, LLP, a law firm in Seattle,
Washington. |
| Mark A. Del Vecchio | 51 | Mr. Del Vecchio was elected vice presidenthuman resources
on October 1, 2007. From November 3, 2003 to October 1, 2007, Mr. Del Vecchio
was director of executive programs and compensation. From April 1996 to
October 31, 2003, Mr. Del Vecchio was vice president and member of The Carter
Group, LLC, an executive search and management consulting company. |
| David L. Goodin | 49 | Mr. Goodin was elected president and chief executive
officer of Montana-Dakota Utilities Co., Great Plains Natural Gas Co., and Cascade
Natural Gas Corporation effective June 6, 2008, and president and chief
executive officer of Intermountain Gas Company effective October 1, 2008.
Prior to that, he was president of Montana-Dakota Utilities Co. and Great
Plains Natural Gas Co. effective March 1, 2008; president of Cascade Natural
Gas Corporation effective July 2, 2007; executive vice president-operations
and acquisitions of Montana-Dakota Utilities Co. effective January 2007;
vice president-operations effective January 2000; electric systems manager
effective April 1999; electric systems supervisor effective August 1993;
division electric superintendent effective February 1989; and division
electrical engineer effective May 1983. |
| John G. Harp | 58 | Mr. Harp was elected president and chief executive officer
of Utility Services Inc., which is now MDU Construction Services Group, Inc.,
effective September 29, 2004. From May 2004 to September 29, 2004, Mr. Harp
was vice president of Ledcor Technical Services Inc., a provider of fiber
optic cable maintenance services. From April 2001 to May 2004, he was
president of JODE CORP., a broadband maintenance company. Mr. Harp sold JODE
CORP. to Ledcor Construction in May 2004. Prior to that, he was president of
Harp Line Constructors Co. and Harp Engineering, Inc. from July 1998, when
they were bought by Utility Services Inc., to April 2001. |
| Nicole A. Kivisto | 37 | Ms. Kivisto was elected vice president, controller and
chief accounting officer effective February 17, 2010. Prior to that she was
controller effective December 1, 2005; a financial analyst IV in the
Corporate Planning Department effective May 2003; a financial and investor
relations analyst in the Investor Relations Department effective May 2000;
and a financial analyst in the Corporate Accounting Department effective July
1995. |
| Douglass A. Mahowald | 61 | Mr. Mahowald was elected treasurer and assistant secretary
effective February 17, 2010. Prior to that he was the assistant treasurer and
assistant secretary effective August 1992; treasury services manager
effective November 1982; and budget statistician effective February 1982. |
| Cynthia J. Norland | 56 | Ms. Norland was elected vice presidentadministration
effective July 16, 2007. Prior to that she was the assistant vice presidentadministration
effective January 17, 2007; associate general counsel in the Legal Department
effective March 6, 2004; and senior attorney in the Legal Department
effective June 1, 1995. |
| Paul K. Sandness | 56 | Mr. Sandness was elected general counsel and secretary of
the company, its divisions and major subsidiaries effective April 6, 2004. He
also was elected a director of the companys principal subsidiaries and was
appointed to the Managing Committees of Montana-Dakota Utilities Co. and Great Plains
Natural Gas Co. Prior to that he served as a senior attorney effective 1987
and as an assistant secretary of several subsidiary companies. |
| William E. Schneider | 62 | Mr. Schneider was elected president and chief executive
officer of Knife River Corporation effective May 1, 2005; and senior vice
president-construction materials effective from September 15, 1999 to April
30, 2005. |

MDU Resources Group, Inc. Proxy Statement 57

Proxy Statement

| Doran N. Schwartz | 41 | Mr. Schwartz was elected vice president and chief
financial officer effective February 17, 2010. Prior to that, he was vice
president and chief accounting officer effective March 1, 2006; and assistant
vice president-special projects effective September 6, 2005. He was director
of membership rewards for American Express, a financial services company,
from November 2004 to August 1, 2005; audit manager for Deloitte &
Touche, an audit and professional services company, from June 2002 to
November 2004; and audit manager/senior for Arthur Andersen, an audit and
professional services company, from December 1997 to June 2002. |
| --- | --- | --- |
| John P. Stumpf | 51 | Mr. Stumpf was elected vice presidentstrategic planning effective
December 1, 2006. Mr. Stumpf was vice presidentcorporate development for
Knife River Corporation from July 1, 2002 to November 30, 2006, and director
of corporate development of Knife River Corporation from January 14, 2002 to
June 30, 2002. Prior to that, he was special projects manager for Knife River
Corporation from May 1, 2000 to January 13, 2002. |

S ECURITY OWNERSHIP

The table below sets forth the number of shares of our capital stock that each director and each nominee for director, each named executive officer, and all directors and executive officers as a group owned beneficially as of December 31, 2010.


		Owned Include:
		Shares
		Individuals				Deferred
		Have Rights				Director Fees
	Common Shares	to Acquire		Shares Held By		Held as
	Beneficially	Within 60		Family	Percent	Phantom
Name	Owned(1)	Days(2)		Members(3)	of Class	Stock(4)
Steven L.
Bietz	67,347	(5)			*
Thomas
Everist	1,874,673	(6)	13,500		1.0	27,502
Karen B.
Fagg	24,736				*
David L.
Goodin	31,531	(5)		8,603	*
John G.
Harp	85,025	(5)			*
Terry D.
Hildestad	214,073				*
A. Bart
Holaday	28,831				*
Dennis W.
Johnson	73,574	(7)		4,560	*
Thomas C.
Knudson	13,550				*
Richard H.
Lewis	20,250				*	13,273
Patricia L.
Moss	49,007				*
Harry J.
Pearce	207,100				*	45,218
Vernon A.
Raile	89,582	(5)		2,000	*
Doran N.
Schwartz	14,736	(5)			*
John K.
Wilson	74,309				*
All
directors and executive officers as a group (23 in number)	3,127,161		13,950	19,932	1.7	85,993

| * | Less than one percent of the
class. |
| --- | --- |
| (1) | Beneficial ownership means the
sole or shared power to vote, or to direct the voting of, a security, or
investment power with respect to a security. |
| (2) | Indicates shares of our stock
that executive officers and directors have the right to acquire within 60
days pursuant to stock options. These shares are included in the Common
Shares Beneficially Owned column. |
| (3) | These shares are included in the
Common Shares Beneficially Owned column. |
| (4) | These shares are not included in
the Common Shares Beneficially Owned column. Directors may defer all or a
portion of their cash compensation pursuant to the Deferred Compensation Plan
for Directors. Deferred amounts are held as phantom stock with dividend
accruals and are paid out in cash over a five-year period after the director
leaves the board. |
| (5) | Includes full shares allocated to
the officers account in our 401(k) retirement plan. |
| (6) | Includes 1,820,000 shares of
common stock acquired through the sale of Connolly-Pacific to us. |
| (7) | Mr. Johnson disclaims all
beneficial ownership of the 4,560 shares owned by his wife. |

58 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The table below sets forth information with respect to any person we know to be the beneficial owner of more than five percent of any class of our voting securities.

Title of Class	Name and Address — of Beneficial Owner	Amount and Nature — of Beneficial Ownership		Percent — of Class
Common Stock	New York Life Trust Company 51 Madison Avenue New York, NY 10010	10,092,631	(1)	5.36 %
Common Stock	BlackRock, Inc. 40 East 52nd Street New York, NY 10022	10,729,371	(2)	5.70 %

| (1) | In a Schedule 13G/A, Amendment
No. 11, filed on February 11, 2011, New York Life Trust Company indicates
that it holds these shares as directed trustee of our 401(k) plan and has
sole voting and dispositive power with respect to all shares. |
| --- | --- |
| (2) | In a Schedule 13G/A, Amendment
No. 1, filed on February 2, 2011, BlackRock, Inc. reports sole voting and
dispositive power with respect to all shares as the parent holding company or
control person of BlackRock Japan Co. Ltd., BlackRock Advisors (UK) Limited,
BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors,
BlackRock Asset Management Canada Limited, BlackRock Asset Management
Australia Limited, BlackRock Advisors, LLC, BlackRock Financial Management,
Inc., BlackRock Investment Management, LLC, BlackRock Investment Management
(Australia) Limited, BlackRock (Netherlands) B.V., BlackRock Fund Managers
Limited, BlackRock Asset Management Ireland Limited, BlackRock International
Limited, and BlackRock Investment Management (UK) Limited. |

R ELATED PERSON TRANSACTION DISCLOSURE

The board of directors has adopted a policy for the review of related person transactions. This policy is contained in our corporate governance guidelines, which are posted on our website at www.mdu.com.

The audit committee reviews related person transactions in which we are or will be a participant to determine if they are in the best interests of our stockholders and the company. Financial transactions, arrangements, relationships, or any series of similar transactions, arrangements, or relationships in which a related person had or will have a material interest and that exceed $120,000 are subject to the committees review.

Related persons are directors, director nominees, executive officers, holders of 5% or more of our voting stock, and their immediate family members. Immediate family members are spouses, parents, stepparents, mothers-in-law, fathers-in-law, siblings, brothers-in-law, sisters-in-law, children, stepchildren, daughters-in-law, sons-in-law, and any person, other than a tenant or domestic employee, who shares the household of a director, director nominee, executive officer, or holder of 5% or more of our voting stock.

After its review, the committee makes a determination or a recommendation to the board and officers of the company with respect to the related person transaction. Upon receipt of the committees recommendation, the board of directors or officers, as the case may be, take such action as they deem appropriate in light of their responsibilities under applicable laws and regulations.

The audit committee and the board of directors reviewed two leases between an indirect subsidiary of the company and a Nevada limited liability company, MOJO Montana, LLC (MOJO). John G. Harp, who is President and Chief Executive Officer of MDU Construction Services Group, Inc., and his brother, Michael D. Harp, are managing members of MOJO. The properties described in these two leases are located in Kalispell and Billings, Montana, and have been leased since 1998. In May 2010, the audit committee determined that renewing these leases was in the companys best interests after it reviewed 2010 third party appraisals for the properties and considered the consumer price index and our operating companies knowledge of local property markets. The audit committee recommended and the board approved three-year leases for these properties that provide for our indirect subsidiary to pay a combined monthly rent of $9,508 to MOJO.

C ORPORATE GOVERNANCE

Director Independence

The board of directors has adopted guidelines on director independence that are included in our corporate governance guidelines, which are available for review on our corporate website at http://www.mdu.com/Documents/Governance/2010_11_CorpGov.pdf. The board of directors has determined that Thomas Everist, Karen B. Fagg, A. Bart Holaday, Dennis W. Johnson, Thomas C. Knudson, Richard H. Lewis, Patricia L. Moss, Harry J. Pearce, and John K. Wilson:

| | have no material relationship
with us and |
| --- | --- |
| | are independent in accordance
with our director independence guidelines and the New York Stock Exchange
listing standards. |

MDU Resources Group, Inc. Proxy Statement 59

Proxy Statement

The board of directors determined that prior to her retirement on April 27, 2010, Sister Thomas Welder had no material relationship with us and was independent in accordance with our director independence guidelines and the New York Stock Exchange listing standards.

In determining director independence for 2010, the board of directors considered the following transactions or relationships:

| | Mr. Everists ownership of
approximately 1.85 million shares of our common stock |
| --- | --- |
| | charitable contributions to St.
Vincent Healthcare in the amount of $50,000 Ms. Fagg was a director on the
Foundation for St. Vincent Healthcare; charitable contributions in the amount
of $13,825 to the Montana State University Ms. Fagg serves as a member of
the Montana State Universitys Engineering Advisory Council |
| | charitable contributions in the
amount of $16,150 to the University of North Dakota Foundation Mr. Holaday
serves as the Chairman of the Board and as a Trustee for the University of North
Dakota Center for Innovation Foundation and also serves as a director for the
University of North Dakota Foundation; charitable contributions in the amount
of $1,250 to Jamestown College Mr. Holaday serves as a director for
Jamestown College |
| | charitable contributions to the
City of Dickinson in the amount of $20,000 Mr. Johnson is president of the
City of Dickinson board of commissioners |
| | charitable contributions to
Colorado UpLift in the amount of $25,000 Mr. Lewis is chairman of Colorado
UpLifts Development Board; charitable contributions in the amount of $10,000
to the Alliance for Choice in Education Mr. Lewis serves as a director on
the Alliance board |
| | charitable contributions in the
amount of $15,000 to the St. Charles Foundation Ms. Moss served as chairman
and as a director on the St. Charles Medical Center and |
| | payment of our employees tuition
and education-related expenses and charitable contributions in the amount of
$86,644 to the University of Mary Sister Welder was the president of the
University of Mary; charitable contributions to Missouri Slope Areawide
United Way in the amount of $20,500 Sister Welder serves as a director of
the Missouri Slope Areawide United Way. |

Director Resignation Upon Change of Job Responsibility Our corporate governance guidelines require a director to tender his or her resignation after a material change in job responsibility. In 2010, no directors submitted resignations under this requirement.

Code of Conduct We have a code of conduct and ethics, which we refer to as the Leading With Integrity Guide, which applies to all employees, directors, and officers.

We intend to satisfy our disclosure obligations regarding:

| | amendments to, or waivers of, any
provision of the code of conduct that applies to our principal executive
officer, principal financial officer, and principal accounting officer and
that relates to any element of the code of ethics definition in Regulation
S-K, Item 406(b) and |
| --- | --- |
| | waivers of the code of conduct for
our directors or executive officers, as required by New York Stock Exchange
listing standards |

by posting such information on our website at http://www.mdu.com/Documents/Governance/IntegrityGuide.pdf.

Board Leadership Structure and Boards Role in Risk Oversight The board separated the positions of chairman of the board and chief executive officer in 2006 and elected Harry J. Pearce, a non-employee independent director, as our chairman, and Terry D. Hildestad as our president and chief executive officer. Separating these positions allows our chief executive officer to focus on the full-time job of running our business, while allowing the chairman of the board to lead the board in its fundamental role of providing advice to and independent oversight of management. The board believes this structure recognizes the time, effort, and energy that the chief executive officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our chairman, particularly as the boards oversight responsibilities continue to grow and demand more time and attention. The fundamental role of the board of directors is to provide oversight of the management of the company in good faith and in the best interests of the company and its stockholders. Having an independent chairman is a means to ensure the chief executive officer is accountable for managing the company in close alignment with the interests of stockholders. An independent chairman avoids the conflicts of interest that arise when the chairman and chief executive positions are combined and more effectively manages relationships between the board and the chief executive officer. An independent chairman is in a better position to encourage frank and lively discussions and to assure that the company has adequately assessed all appropriate business risks before

60 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

adopting its final business plans and strategies. While our bylaws and corporate governance guidelines do not require that our chairman and chief executive officer positions be separate, the board continues to believe that having separate positions and having an independent outside director serve as chairman is the appropriate leadership structure for the company and demonstrates our commitment to good corporate governance.

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including economic risks, environmental and regulatory risks, and others, such as the impact of competition and weather conditions. Management is responsible for the day-to-day management of risks the company faces, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

The board believes that establishing the right tone at the top and that full and open communication between management and the board of directors are essential for effective risk management and oversight. Our chairman meets regularly with our president and chief executive officer and other senior officers to discuss strategy and risks facing the company. Senior management attends the quarterly board meetings and is available to address any questions or concerns raised by the board on risk management-related and any other matters. Each quarter, the board of directors receives presentations from senior management on strategic matters involving our operations. The board holds strategic planning sessions with senior management to discuss strategies, key challenges, and risks and opportunities for the company.

While the board is ultimately responsible for risk oversight at our company, our three board committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. The audit committee assists the board in fulfilling its oversight responsibilities with respect to risk assessment and management in a general manner and specifically in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements, and, in accordance with New York Stock Exchange requirements, discusses policies with respect to risk assessment and risk management and their adequacy and effectiveness. Risk assessment reports are regularly provided by management to the audit committee. This opens the opportunity for discussions about areas where the company may have material risk exposure, steps taken to manage those exposures, and the companys risk tolerance in relation to company strategy. The audit committee reports regularly to the board of directors on the companys management of risks in the audit committees areas of responsibility. The compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The nominating and governance committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance.

Board Meetings and Committees During 2010, the board of directors held six meetings. Each incumbent director attended at least 75% of the combined total meetings of the board and the committees on which the director served during 2010. Director attendance at our annual meeting of stockholders is left to the discretion of each director. Two directors attended our 2010 annual meeting of stockholders.

Harry J. Pearce was elected non-employee chairman of the board on August 17, 2006. Mr. Pearce served as lead director from February 15, 2001 to August 17, 2006. He presides at the executive session of the non-employee directors held in connection with each regularly scheduled quarterly board of directors meeting. The non-employee directors also meet in executive session with the chief executive officer at each regularly scheduled quarterly board of directors meeting. All of our non-employee directors are independent directors.

The board has a standing audit committee, compensation committee, and nominating and governance committee. These committees are composed entirely of independent directors.

The audit, compensation, and nominating and governance committees have charters, which are available for review on our website at http://www.mdu.com/Governance/Pages/BoardChartersandCommittees.aspx. Our corporate governance guidelines are available at http://www.mdu.com/Documents/Governance/2010_11_CorpGov.pdf, and our Leading With Integrity Guide is also on our website at http://www.mdu.com/Documents/Governance/IntegrityGuide.pdf.

Nominating and Governance Committee The nominating and governance committee met four times during 2010. The committee members were Karen B. Fagg, chairman, Richard H. Lewis, A. Bart Holaday, who joined the committee effective February 11, 2010, and Sister Thomas Welder, until she retired from the board on April 27, 2010.

MDU Resources Group, Inc. Proxy Statement 61

Proxy Statement

The nominating and governance committee provides recommendations to the board with respect to:

	board organization, membership, and function
	committee structure and
membership
	succession planning for our
executive management and directors and
	corporate governance guidelines applicable
to us.

The nominating and governance committee assists the board in overseeing the management of risks in the committees areas of responsibility.

The committee identifies individuals qualified to become directors and recommends to the board the nominees for director for the next annual meeting of stockholders. The committee also identifies and recommends to the board individuals qualified to become our principal officers and the nominees for membership on each board committee. The committee oversees the evaluation of the board and management.

In identifying nominees for director, the committee consults with board members, our management, consultants, and other individuals likely to possess an understanding of our business and knowledge concerning suitable director candidates.

Our corporate governance guidelines include our policy on consideration of director candidates recommended to us. We will consider candidates that our stockholders recommend. Stockholders may submit director candidate recommendations to the nominating and governance committee chairman in care of the secretary at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650. Please include the following information:

| | the candidates name, age,
business address, residence address, and telephone number |
| --- | --- |
| | the candidates principal
occupation |
| | the class and number of shares of
our stock owned by the candidate |
| | a description of the candidates
qualifications to be a director |
| | whether the candidate would be an
independent director and |
| | any other information you believe
is relevant with respect to the recommendation. |

These guidelines provide information to stockholders who wish to recommend candidates for director for consideration by the nominating and governance committee. Stockholders who wish to actually nominate persons for election to our board at an annual meeting of stockholders must follow the procedures set forth in section 2.08 of our bylaws. You may obtain a copy of the bylaws by writing to the secretary of MDU Resources Group, Inc. at the address above. Our bylaws are also available on our website at http://www.mdu.com/Documents/Governance/2010_11_Bylaws.pdf. See also the section entitled 2012 Annual Meeting of Stockholders later in the proxy statement.

There are no differences in the manner by which the committee evaluates director candidates recommended by stockholders and those recommended by other sources.

In evaluating director candidates, the committee considers an individuals:

| | background, character, and
experience |
| --- | --- |
| | skills and experience which
complement the skills and experience of current board members |
| | success in the individuals
chosen field of endeavor |
| | skill in the areas of accounting
and financial management, banking, general management, human resources,
marketing, operations, public affairs, law, and operations abroad |
| | background in publicly traded
companies |
| | geographic area of residence |
| | diversity of business and
professional experience, skills, gender and ethnic background, as appropriate
in light of the current composition and needs of the board |
| | independence, including
affiliations or relationships with other groups, organizations, or entities
and |

62 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

prior and future compliance with applicable law and all applicable corporate governance, code of conduct and ethics, conflict of interest, corporate opportunities, confidentiality, stock ownership and trading policies, and our other policies and guidelines.

As indicated above, when identifying nominees to serve as director, the nominating and governance committee will consider candidates with diverse business and professional experience, skills, gender, and ethnic background, as appropriate, in light of the current composition and needs of the board. The nominating and governance committee assesses the effectiveness of this policy annually in connection with the nomination of directors for election at the annual meeting of stockholders. The composition of the current board reflects diversity in business and professional experience, skills, and gender.

The committee generally will hire an outside firm to perform a background check on potential nominees.

Audit Committee The audit committee is a separately-designated standing committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.

The audit committee met eight times during 2010. The audit committee members are Dennis W. Johnson, chairman, A. Bart Holaday, Richard H. Lewis, and John K. Wilson. The board of directors has determined that Messrs. Johnson, Holaday, Lewis, and Wilson are audit committee financial experts as defined by Securities and Exchange Commission regulations and Messrs. Johnson, Holaday, Lewis, and Wilson meet the independence standard for audit committee members under our director independence guidelines and the New York Stock Exchange listing standards, including the Securities and Exchange Commissions audit committee member independence requirements.

The audit committee assists the board of directors in fulfilling its oversight responsibilities to the stockholders and serves as a communication link among the board, management, the independent auditors, and the internal auditors. The audit committee:

	assists the boards oversight of
	o	the integrity of our financial
statements and system of internal controls
	o	our compliance with legal and
regulatory requirements
	o	the independent auditors
qualifications and independence
	o	the performance of our internal
audit function and independent auditors and
	o	risk management in the audit
committees areas of responsibility and
	arranges for the preparation of
and approves the report that Securities and Exchange Commission rules require
we include in our annual proxy statement.

Audit Committee Report

| In connection with our financial
statements for the year ended December 31, 2010, the audit committee has (1)
reviewed and discussed the audited financial statements with management; (2)
discussed with the independent auditors the matters required to be discussed
by the statement on Auditing Standards No. 61, as amended, (AICPA, Professional Standards , Vol. 1, AU
section 380), as adopted by the Public Company Accounting Oversight Board in
Rule 3200T; (3) received the written disclosures and the letter from the
independent accountant required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent accountants
communications with the audit committee concerning independence, and has
discussed with the independent accountant the independent accountants
independence. |
| --- |
| Based on the review and
discussions referred to in items (1) through (3) of the above paragraph, the
audit committee recommended to the board of directors that the audited
financial statements be included in our Annual Report on Form 10-K for the
year ended December 31, 2010 for filing with the Securities and Exchange
Commission. |
| Dennis W.
Johnson, Chairman A. Bart Holaday Richard H. Lewis John K. Wilson |

MDU Resources Group, Inc. Proxy Statement 63

Proxy Statement

Compensation Committee The compensation committee met six times during 2010. The compensation committee members are Thomas Everist, chairman, Karen B. Fagg, Thomas C. Knudson, and Patricia L. Moss.

The compensation committees responsibilities, as set forth in its charter, include:

| | review and recommend changes to
the board regarding our executive compensation policies for directors and
executives |
| --- | --- |
| | evaluate the chief executive
officers performance and, either as a committee or together with other
independent directors as directed by the board, determine his or her
compensation |
| | recommend to the board the
compensation of our other Section 16 officers and directors |
| | establish goals, make awards,
review performance and determine, or recommend to the board, awards earned
under our annual and long-term incentive compensation plans |
| | review and discuss with
management the compensation discussion and analysis and based upon such
review and discussion, determine whether to recommend to the board that the
Compensation Discussion and Analysis be included in our proxy statement
and/or our Annual Report on Form 10-K |
| | arrange for the preparation of
and approve the compensation committee report to be included in our proxy
statement and/or Annual Report on Form 10-K and |
| | assist the board in overseeing
the management of risk in the committees areas of responsibility. |

The compensation committee and the board of directors have sole and direct responsibility for determining compensation for our Section 16 officers and directors. The compensation committee makes recommendations to the board regarding compensation of all Section 16 officers, and the board then approves the recommendations. The compensation committee and the board may not delegate their authority. They may, however, use recommendations from outside consultants, the chief executive officer, and the human resources department. The chief executive officer, the vice president-human resources, and general counsel regularly attend compensation committee meetings. The committee meets in executive session as needed.

We discuss our processes and procedures for consideration and determination of compensation of our Section 16 officers in the Compensation Discussion and Analysis. We also discuss in the Compensation Discussion and Analysis the role of our executive officers in determining or recommending compensation for our Section 16 officers.

As discussed in the Compensation Discussion and Analysis, the vice president-human resources and the human resources department prepared the 2010 competitive assessment of compensation for our Section 16 officer positions. The vice president-human resources and the human resources department also worked with the chief executive officer to:

| | recommend salary grades, base
salaries and annual and long-term incentive targets for our executive
officers |
| --- | --- |
| | review recommended base salary
grades, salary increases, and annual and long-term incentive targets
submitted by executive officers for officers reporting to them for
reasonableness and alignment with company or business unit objectives and |
| | design and update annual and
long-term incentive programs. |

During 2010, the compensation committee directed Towers Watson to work with the vice president-human resources on the executive officer and chief executive officer compensation reviews with respect to 2011 compensation.

The compensation committee has sole authority to retain, discharge, and approve fees and other terms and conditions for retention of compensation consultants to assist in consideration of the compensation of the chief executive officer, the other Section 16 officers, and the board of directors. The compensation committee charter requires the committees pre-approval of the engagement of the committees compensation consultants by the company for any other purpose.

In an engagement letter dated April 8, 2010, and signed by the chairman of the compensation committee, the compensation committee retained Towers Watson for assistance with 2011 compensation for the Section 16 officers and the chief executive officer. The compensation committee asked Towers Watson to prepare executive compensation reviews for the Section 16 officers and for the chief executive officer similar to those prepared in prior years.

64 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| In its review for the Section 16
officers, excluding the chief executive officer, Towers Watson was asked to | |
| --- | --- |
| | match the Section 16 officer
positions to survey data to generate 2011 market estimates for base salaries
and short-term and long-term incentives |
| | address general trends in
executive compensation |
| | compare base salaries and
short-term and long-term incentives, by position, to market estimates and
recommend salary grade changes as appropriate |
| | construct a recommended 2011
salary grade structure |
| | verify the competitiveness of
short-term and long-term incentive targets associated with salary grades and
recommend modifications as appropriate and |
| | address pay equity as it relates
to our chief executive compensation compared to our other executives. |
| In the chief executive officer
review, Towers Watson was asked to use survey data and data from the
companys performance graph peer group to | |
| | develop competitive estimates for
base salary and target short-term and long-term incentives |
| | recommend changes in base salary
and incentive targets based on the competitive data and |
| | address general trends in chief
executive officer compensation. |

The compensation committee authorized the company to participate in compensation and employee benefits surveys sponsored by Towers Watson.

The board of directors determines compensation for our non-employee directors based upon recommendations from the compensation committee. The compensation committee did not retain an outside consultant for the 2010 compensation review for the board of directors. At its May 2010 meeting, the committee reviewed the analysis of competitive data and recent trends in director compensation prepared by the human resources department and the vice president-human resources. The companys analysis was based on proxy data from our performance graph peer group companies compiled by Equilar and on data from the National Association of Corporate Directors 2009/2010 Director Compensation Report. The committee compared these data to our directors compensation and each of its components. After review and discussion of the market data, which indicated that aggregate director compensation was below the median of the National Association of Corporate Directors 2009/2010 Director Compensation Report companies and above the median 52nd percentile of the peer group companies, the compensation committee recommended, and the board approved, that no changes be made to director compensation for 2010.

Stockholder Communications Stockholders and other interested parties who wish to contact the board of directors or an individual director, including our non-employee chairman or non-employee directors as a group, should address a communication in care of the secretary at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650. The secretary will forward all communications.

S ECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16 of the Securities Exchange Act of 1934, as amended, requires that officers, directors, and holders of more than 10% of our common stock file reports of their trading in our equity securities with the Securities and Exchange Commission. Based solely on a review of Forms 3, 4, and 5 and any amendments to these forms furnished to us during and with respect to 2010 or written representations that no Forms 5 were required, we believe that all such reports were timely filed.

O THER BUSINESS

Neither the board of directors nor management intends to bring before the meeting any business other than the matters referred to in the notice of annual meeting and this proxy statement. In addition, other than as described in the following sentences, we have not been informed that any other matter will be presented to the meeting by others. One stockholder proposal was submitted for inclusion in the proxy statement, which we have omitted because it was withdrawn. If this stockholder complies with our advance notice bylaw provisions and properly presents the proposal at the annual meeting, it is the intention of the persons named in the proxy to vote against this proposal. If any other matter requiring a vote of the stockholders should arise, the persons named in the enclosed proxy will vote in accordance with their best judgment.

MDU Resources Group, Inc. Proxy Statement 65

Proxy Statement

S HARED ADDRESS STOCKHOLDERS In accordance with a notice sent to eligible stockholders who share a single address, we are sending only one annual report to stockholders and one proxy statement to that address unless we received instructions to the contrary from any stockholder at that address. This practice, known as householding, is designed to reduce our printing and postage costs. However, if a stockholder of record wishes to receive a separate annual report to stockholders and proxy statement in the future, he or she may contact the office of the treasurer at MDU Resources Group, Inc., P.O. Box 5650, Bismarck, ND 58506-5650, Telephone Number: (701) 530-1000. Eligible stockholders of record who receive multiple copies of our annual report to stockholders and proxy statement can request householding by contacting us in the same manner. Stockholders who own shares through a bank, broker, or other nominee can request householding by contacting the nominee.

We hereby undertake to deliver promptly, upon written or oral request, a separate copy of the annual report to stockholders and proxy statement to a stockholder at a shared address to which a single copy of the document was delivered.

2 012 ANNUAL MEETING OF STOCKHOLDERS Director Nominations: Our bylaws provide that director nominations may be made only by (i) the board at any meeting of stockholders or (ii) at an annual meeting by a stockholder entitled to vote for the election of directors and who has complied with the procedures established by the bylaws. For a nomination to be properly brought before an annual meeting by a stockholder, the stockholder intending to make the nomination must have given timely and proper notice of the nomination in writing to the corporate secretary in accordance with and containing all information and the completed questionnaire provided for in the bylaws. To be timely, such notice must be delivered to or mailed to the corporate secretary and received at our principal executive offices not later than 90 days prior to the first anniversary of the preceding years annual meeting of stockholders. For purposes of our annual meeting of stockholders expected to be held April 24, 2012, any stockholder who wishes to submit a nomination must submit the required notice to the corporate secretary on or before January 27, 2012.

Other Meeting Business: Our bylaws also provide that no business may be brought before an annual meeting except (i) as specified in the meeting notice given by or at the direction of the board, (ii) as otherwise properly brought before the meeting by or at the direction of the board or (iii) properly brought before the meeting by a stockholder entitled to vote who has complied with the procedures established by the bylaws. For business to be properly brought before an annual meeting by a stockholder (other than nomination of a person for election as a director which is described above) the stockholder must have given timely and proper notice of such business in writing to the corporate secretary, in accordance with, and containing all information provided for in the bylaws and such business must be a proper matter for stockholder action under the General Corporation Law of Delaware. To be timely, such notice must be delivered or mailed to the corporate secretary and received at our principal offices not later than the close of business 90 days prior to the first anniversary of the preceding years annual meeting of stockholders. For purposes of our annual meeting expected to be held April 24, 2012, any stockholder who wishes to bring business before the meeting (other than nomination of a person for election as a director which is described above) must submit the required notice to the corporate secretary on or before January 27, 2012.

Discretionary Voting: Rule 14a-4 of the Securities and Exchange Commissions proxy rules allows us to use discretionary voting authority to vote on matters coming before an annual stockholders meeting if we do not have notice of the matter at least 45 days before the anniversary date on which we first mailed our proxy materials for the prior years annual stockholders meeting or the date specified by an advance notice provision in our bylaws. Our bylaws contain an advance notice provision that we have described above. For our annual meeting of stockholders expected to be held on April 24, 2012, stockholders must submit such written notice to the corporate secretary on or before January 27, 2012.

Stockholder Proposals: The requirements we describe above are separate from and in addition to the Securities and Exchange Commissions requirements that a stockholder must meet to have a stockholder proposal included in our proxy statement under Rule 14a-8 of the Exchange Act. For purposes of our annual meeting of stockholders expected to be held on April 24, 2012, any stockholder who wishes to submit a proposal for inclusion in our proxy materials must submit such proposal to the corporate secretary on or before November 12, 2011.

Bylaw Copies: You may obtain a copy of the full text of the bylaw provisions discussed above by writing to the corporate secretary. Our bylaws are also available on our website at: http://www.mdu.com/Documents/Governance/2010_11_Bylaws.pdf.

66 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

We will make available to our stockholders to whom we furnish this proxy statement a copy of our Annual Report on Form 10-K, excluding exhibits, for the year ended December 31, 2010, which is required to be filed with the Securities and Exchange Commission. You may obtain a copy, without charge, upon written or oral request to the Office of the Treasurer of MDU Resources Group, Inc., 1200 West Century Avenue, Mailing Address: P.O. Box 5650, Bismarck, ND 58506-5650, Telephone Number: (701) 530-1000. You may also access our Annual Report on Form 10-K through our website at www.mdu.com.

| By order of the Board of
Directors, |
| --- |
| ● |
| Paul K. Sandness |
| Secretary |
| March 11, 2011 |

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68 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

E XHIBIT A

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

| Article 1.
Establishment, Purpose and Duration | |
| --- | --- |
| 1.1 | Establishment
of the Plan. MDU Resources Group, Inc., a Delaware corporation
(hereinafter referred to as the Company), hereby establishes an incentive
compensation plan to be known as the MDU Resources Group, Inc. Long-Term
Performance-Based Incentive Plan (hereinafter referred to as the Plan), as
set forth in this document. The Plan permits the grant of Nonqualified Stock
Options (NQSO), Incentive Stock Options (ISO), Stock Appreciation Rights
(SAR), Restricted Stock, Performance Units, Performance Shares and other
awards. |
| | The Plan first became effective
when approved by the stockholders at the annual meeting on April 22, 1997.
The Plan, as amended, will become effective on April 25, 2006 if it is
approved by the stockholders at the 2006 annual meeting. The Plan shall
remain in effect as provided in Section 1.3 herein. |
| 1.2 | Purpose of the
Plan. The purpose of the Plan is to promote the success
and enhance the value of the Company by linking the personal interests of
Participants to those of Company stockholders and customers. |
| | The Plan is further intended to
provide flexibility to the Company in its ability to motivate, attract and
retain the services of Participants upon whose judgment, interest and special
effort the successful conduct of its operations is largely dependent. |
| 1.3 | Duration of the
Plan. The Plan shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article 15 herein, until all Shares subject to it shall have been purchased
or acquired according to the Plans provisions. |
| Article 2.
Definitions | |
| Whenever used in the Plan, the
following terms shall have the meanings set forth below and, when such
meaning is intended, the initial letter of the word is capitalized: | |
| 2.1 | Award means,
individually or collectively, a grant under the Plan of NQSOs, ISOs, SARs,
Restricted Stock, Performance Units, Performance Shares or any other type of
award permitted under Article 10 of the Plan. |
| 2.2 | Award
Agreement means an agreement entered into by each Participant
and the Company, setting forth the terms and provisions applicable to an
Award granted to a Participant under the Plan. |
| 2.3 | Base Value of an SAR
shall have the meaning set forth in Section 7.1 herein. |
| 2.4 | Board or Board of Directors means the Board of Directors of the
Company. |
| 2.5 | A Change in Control shall
mean: |

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) (a Person) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the Outstanding Company Common Stock) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2.5; or

MDU Resources Group, Inc. Proxy Statement A-1

Proxy Statement

| (b) | Individuals who, as of April 22,
1997, which is the effective date of the Plan, constitute the Board (the
Incumbent Board) cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Companys shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or |
| --- | --- |
| (c) | Consummation of a reorganization,
merger or consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a Business Combination), in each case,
unless, following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Companys assets
either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or |
| (d) | Approval by the shareholders of
the Company of a complete liquidation or dissolution of the Company. |

| For avoidance of doubt, unless
otherwise determined by the Board, the sale of a subsidiary, operating entity
or business unit of the Company shall not constitute a Change in Control for
purposes of this Agreement. | |
| --- | --- |
| 2.6 | Code means the
Internal Revenue Code of 1986, as amended from time to time. |
| 2.7 | Committee means the
Committee, as specified in Article 3, appointed by the Board to administer
the Plan with respect to Awards. |
| 2.8 | Company means MDU
Resources Group, Inc., a Delaware corporation, or any successor thereto as
provided in Article 18 herein. |
| 2.9 | Covered
Employee means any Participant who would be considered a
Covered Employee for purposes of Section 162(m) of the Code. |
| 2.10 | Director means any
individual who is a member of the Board of Directors of the Company. |
| 2.11 | Disability means
permanent and total disability as defined under Section 22(e)(3) of the
Code. |
| 2.12 | Dividend
Equivalent means, with respect to Shares subject to an Award, a
right to be paid an amount equal to dividends declared on an equal number of
outstanding Shares. |
| 2.13 | Eligible
Employee means an Employee who is eligible to participate in
the Plan, as set forth in Section 5.1 herein. |
| 2.14 | Employee means any
full-time or regularly-scheduled part-time employee of the Company or of the
Companys Subsidiaries, who is not covered by any collective bargaining
agreement to which the Company or any of its Subsidiaries is a party.
Directors who are not otherwise employed by the Company shall not be
considered Employees for purposes of the Plan. For purposes of the Plan,
transfer of employment of a Participant between the Company and any one of
its Subsidiaries (or between Subsidiaries) shall not be deemed a termination
of employment. |

A-2 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| 2.15 | Exchange Act means the
Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto. |
| --- | --- |
| 2.16 | Exercise
Period means the period during which an SAR or Option is
exercisable, as set forth in the related Award Agreement. |
| 2.17 | Fair Market
Value shall mean the average of the high and low sale
prices as reported in the consolidated transaction reporting system or, if
there is no such sale on the relevant date, then on the last previous day on
which a sale was reported. |
| 2.18 | Freestanding
SAR means an SAR that is granted independently of any Option. |
| 2.19 | Full Value
Award means an Award pursuant to which Shares may be
issued, other than an Option or an SAR. |
| 2.20 | Incentive
Stock Option or ISO means
an option to purchase Shares, granted under Article 6 herein, which is
designated as an Incentive Stock Option and satisfies the requirements of
Section 422 of the Code. |
| 2.21 | Nonqualified
Stock Option or NQSO means
an option to purchase Shares, granted under Article 6 herein, which is not
intended to be an Incentive Stock Option under Section 422 of the Code. |
| 2.22 | Option means an
Incentive Stock Option or a Nonqualified Stock Option. |
| 2.23 | Option Price means the
price at which a Share may be purchased by a Participant pursuant to an
Option, as determined by the Committee and set forth in the Option Award
Agreement. |
| 2.24 | Participant means an
Employee of the Company who has outstanding an Award granted under the Plan. |
| 2.25 | Performance
Goals means the performance goals established by the
Committee, which shall be based on one or more of the following measures:
sales or revenues, earnings per share, shareholder return and/or value, funds
from operations, operating income, gross income, net income, cash flow,
return on equity, return on capital, capital efficiency, earnings before
interest, operating ratios, stock price, enterprise value, company value,
asset value growth, net asset value, shareholders equity, dividends,
customer satisfaction, accomplishment of mergers, acquisitions, dispositions
or similar extraordinary business transactions, safety, sustainability,
profit returns and margins, financial return ratios, market performance, oil
and/or gas production (growth, value and costs) and oil and/or gas reserves
(including proved, probable and possible reserves and growth, value and
costs) and finding or development costs. Performance goals may be measured
solely on a corporate, subsidiary or business unit basis, or a combination
thereof. Performance goals may reflect absolute entity performance or a
relative comparison of entity performance to the performance of a peer group
of entities or other external measure. |
| 2.26 | Performance
Unit means an Award granted to an Employee, as described
in Article 9 herein. |
| 2.27 | Performance
Share means an Award granted to an Employee, as described
in Article 9 herein. |
| 2.28 | Period of
Restriction means the period during which the transfer of
Restricted Stock is limited in some way, as provided in Article 8 herein. |
| 2.29 | Person shall
have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act, as used in Sections 13(d) and 14(d) thereof, including usage in the
definition of a group in Section 13(d) thereof. |
| 2.30 | Qualified
Restricted Stock means an Award of Restricted Stock designated as
Qualified Restricted Stock by the Committee at the time of grant and intended
to qualify for the exemption from the limitation on deductibility imposed by
Section 162(m) of the Code that is set forth in Section 162(m)(4)(C). |
| 2.31 | Restricted
Stock means an Award of Shares granted to a Participant
pursuant to Article 8 herein. |
| 2.32 | Shares means the
shares of common stock of the Company. |
| 2.33 | Stock
Appreciation Right or SAR means a right, granted alone or in
connection with a related Option, designated as an SAR, to receive a payment
on the day the right is exercised, pursuant to the terms of Article 7 herein.
Each SAR shall be denominated in terms of one Share. |

MDU Resources Group, Inc. Proxy Statement A-3

Proxy Statement

| 2.34 | Subsidiary means any
corporation that is a subsidiary corporation of the Company as that term is
defined in Section 424(f) of the Code. |
| --- | --- |
| 2.35 | Tandem SAR means an
SAR that is granted in connection with a related Option, the exercise of
which shall require forfeiture of the right to purchase a Share under the
related Option (and when a Share is purchased under the Option, the Tandem
SAR shall be similarly canceled). |
| Article 3.
Administration | |
| 3.1 | The Committee. The Plan
shall be administered by the Compensation Committee of the Board, or by any
other Committee appointed by the Board. The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the
Board of Directors. |
| 3.2 | Authority of
the Committee. The Committee shall have full power except as
limited by law, the Articles of Incorporation and the Bylaws of the Company, subject
to such other restricting limitations or directions as may be imposed by the
Board and subject to the provisions herein, to determine the size and types
of Awards; to determine the terms and conditions of such Awards in a manner
consistent with the Plan; to construe and interpret the Plan and any
agreement or instrument entered into under the Plan; to establish, amend or
waive rules and regulations for the Plans administration; and (subject to
the provisions of Article 15 herein) to amend the terms and conditions of any
outstanding Award. Further, the Committee shall make all other determinations
which may be necessary or advisable for the administration of the Plan. As
permitted by law, the Committee may delegate its authorities as identified
hereunder. |
| 3.3 | Restrictions on
Share Transferability . The Committee may impose
such restrictions on any Shares acquired pursuant to Awards under the Plan as
it may deem advisable, including, without limitation, restrictions to comply
with applicable Federal securities laws, with the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded and
with any blue sky or state securities laws applicable to such Shares. |
| 3.4 | Approval. The Board
or the Committee shall approve all Awards made under the Plan and all
elections made by Participants, prior to their effective date, to the extent
necessary to comply with Rule 16b-3 under the Exchange Act. |
| 3.5 | Decisions
Binding. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders or resolutions
of the Board shall be final, conclusive and binding on all persons, including
the Company, its stockholders, Employees, Participants and their estates and
beneficiaries. |
| 3.6 | Costs. The
Company shall pay all costs of administration of the Plan. |
| Article 4.
Shares Subject to the Plan | |
| 4.1 | Number of
Shares. Subject to Section 4.2 herein, the maximum number of
Shares that may be issued pursuant to Awards under the Plan shall be
9,242,806. Shares underlying lapsed or forfeited Awards of Restricted Stock
shall not be treated as having been issued pursuant to an Award under the
Plan. Shares withheld from an Award of Restricted Stock to satisfy tax
withholding obligations shall be counted as Shares issued pursuant to an
Award under the Plan. Shares that are potentially deliverable under an Award
that expires or is canceled, forfeited, settled in cash or otherwise settled
without the delivery of Shares shall not be treated as having been issued
under the Plan. Shares that are withheld to satisfy the Option Price or tax
withholding obligations related to an Option, SAR or other Award pursuant to
which the Shares withheld have not yet been issued shall not be deemed to be
Shares issued under the Plan. |
| | Shares issued pursuant to the
Plan may be (i) authorized but unissued Shares of Common Stock, (ii) treasury
shares, or (iii) shares purchased on the open market. |
| 4.2 | Adjustments in
Authorized Shares. In the event of any equity restructuring such as a
stock dividend, stock split, spinoff, rights offering or recapitalization
through a large, nonrecurring cash dividend, the Committee shall cause an
equitable adjustment to be made (i) in the number and kind of Shares that may
be delivered under the Plan, (ii) in the individual limitations set forth in
Section 4.3 and (iii) with respect to outstanding Awards, in the number and
kind of Shares subject to outstanding Awards, the Option Price, Base Value or
other price of Shares subject to outstanding Awards, any Performance Goals
relating to Shares, the market price of Shares, or per-Share results, and
other terms and conditions of outstanding Awards, in the case of (i), (ii)
and (iii) to prevent dilution |

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Proxy Statement

| | or enlargement of rights. In the
event of any other change in corporate capitalization, such as a merger,
consolidation or liquidation, the Committee may, in its sole discretion,
cause an equitable adjustment as described in the foregoing sentence to be
made to prevent dilution or enlargement of rights. The number of Shares
subject to any Award shall always be rounded down to a whole number when
adjustments are made pursuant to this Section 4.2. Adjustments made by the
Committee pursuant to this Section 4.2 shall be final, binding and
conclusive. |
| --- | --- |
| 4.3 | Individual
Limitations. Subject to Section 4.2 herein, (i) the total number
of Shares with respect to which Options or SARs may be granted in any calendar
year to any Covered Employee shall not exceed 2,250,000 Shares; (ii) the
total number of shares of Qualified Restricted Stock that may be granted in
any calendar year to any Covered Employee shall not exceed 2,250,000 Shares;
(iii) the total number of Performance Shares or Performance Units that may be
granted in any calendar year to any Covered Employee shall not exceed
2,250,000 Performance Shares or Performance Units, as the case may be; (iv)
the total number of Shares that are intended to qualify for deduction under
Section 162(m) of the Code granted pursuant to Article 10 herein in any
calendar year to any Covered Employee shall not exceed 2,250,000 Shares; (v)
the total cash Award that is intended to qualify for deduction under Section
162(m) of the Code that may be paid pursuant to Article 10 herein in any
calendar year to any Covered Employee shall not exceed $6,000,000; and (vi)
the aggregate number of Dividend Equivalents that are intended to qualify for
deduction under Section 162(m) of the Code that a Covered Employee may
receive in any calendar year shall not exceed $6,000,000. |
| Article 5.
Eligibility and Participation | |
| 5.1 | Eligibility. Persons
eligible to participate in the Plan include all officers and key employees of
the Company and its Subsidiaries, as determined by the Committee, including
Employees who are members of the Board, but excluding Directors who are not
Employees. |
| 5.2 | Actual
Participation. Subject to the provisions of the Plan, the Committee
may, from time to time, select from all eligible Employees those to whom
Awards shall be granted and shall determine the nature and amount of each
Award. |
| Article 6.
Stock Options | |
| 6.1 | Grant of
Options. Subject to the terms and conditions of the Plan,
Options may be granted to an Eligible Employee at any time and from time to
time, as shall be determined by the Committee. |
| | The Committee shall have complete
discretion in determining the number of Shares subject to Options granted to
each Participant (subject to Article 4 herein) and, consistent with the
provisions of the Plan, in determining the terms and conditions pertaining to
such Options. The Committee may grant ISOs, NQSOs, or a combination thereof. |
| 6.2 | Option Award
Agreement. Each Option grant shall be evidenced by an Option
Award Agreement that shall specify the Option Price, the term of the Option,
the number of Shares to which the Option pertains, the Exercise Period and
such other provisions as the Committee shall determine, including but not
limited to any rights to Dividend Equivalents. The Option Award Agreement
shall also specify whether the Option is intended to be an ISO or an NQSO. |
| | The Option Price for each Share
purchasable under any Incentive Stock Option granted hereunder shall be not
less than one hundred percent (100%) of the Fair Market Value per Share at
the date the Option is granted; and provided, further, that in the case of an
Incentive Stock Option granted to a person who, at the time such Incentive
Stock Option is granted, owns shares of stock of the Company or of any
Subsidiary which possess more than ten percent (10%) of the total combined
voting power of all classes of shares of stock of the Company or of any
Subsidiary, the Option Price for each Share shall be not less than one hundred
ten percent (110%) of the Fair Market Value per Share at the date the Option
is granted. The Option Price will be subject to adjustment in accordance with
the provisions of Section 4.2 of the Plan. |
| | No Incentive Stock Option by its
terms shall be exercisable after the expiration of ten (10) years from the
date of grant of the Option; provided, however, in the case of an Incentive
Stock Option granted to a person who, at the time such Option is granted,
owns shares of stock of the Company or of any Subsidiary possessing more than
ten percent (10%) of the total combined voting power of all classes of shares
of stock of the Company or of any Subsidiary, such Option shall not be
exercisable after the expiration of five (5) years from the date such Option
is granted. |
| 6.3 | Exercise of and
Payment for Options. Options granted under the
Plan shall be exercisable at such times and be subject to such restrictions
and conditions as the Committee shall in each instance approve. |

MDU Resources Group, Inc. Proxy Statement A-5

Proxy Statement

| | A Participant may exercise an
Option at any time during the Exercise Period. Options shall be exercised by
the delivery of a written notice of exercise to the Company or its designee,
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by provisions for full payment for the Shares. |
| --- | --- |
| | The Option Price upon exercise of
any Option shall be payable either: (a) in cash or its equivalent, (b) by
tendering previously acquired Shares having an aggregate Fair Market Value at
the time of exercise equal to the total Option Price (provided that Shares
which are tendered must have been held by the Participant for at least six
(6) months prior to their tender to satisfy the Option Price), (c) by share
withholding, (d) by cashless exercise or (e) by a combination of (a),(b),(c),
and/or (d). |
| | As soon as practicable after
receipt of a written notification of exercise of an Option, provisions for
full payment therefor and satisfaction or provision for satisfaction of any
tax withholding or other obligations, the Company shall (i) deliver to the
Participant, in the Participants name or the name of the Participants
designee, a Share certificate or certificates in an appropriate aggregate
amount based upon the number of Shares purchased under the Option, or (ii)
cause to be issued in the Participants name or the name of the Participants
designee, in book-entry form, an appropriate number of Shares based upon the
number of Shares purchased under the Option. |
| 6.4 | Termination of
Employment. Each Option Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the Option
following termination of the Participants employment with the Company and
its Subsidiaries. Such provisions shall be determined in the sole discretion
of the Committee (subject to applicable law), shall be included in the Option
Award Agreement entered into with Participants, need not be uniform among all
Options granted pursuant to the Plan or among Participants and may reflect
distinctions based on the reasons for termination of employment. If the
employment of a Participant by the Company or by any Subsidiary is terminated
for any reason other than death, any Incentive Stock Option granted to such
Participant may not be exercised later than three (3) months (one (1) year in
the case of termination due to Disability) after the date of such termination
of employment. |
| 6.5 | Transferability
of Options. Except as otherwise determined by the Committee and
set forth in the Option Award Agreement, no Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution,
and all Incentive Stock Options granted to a Participant under the Plan shall
be exercisable during his or her lifetime only by such Participant. |
| Article 7.
Stock Appreciation Rights | |
| 7.1 | Grant of SARs. Subject
to the terms and conditions of the Plan, an SAR may be granted to an Eligible
Employee at any time and from time to time as shall be determined by the
Committee. The Committee may grant Freestanding SARs, Tandem SARs or any
combination of these forms of SAR. |
| | The Committee shall have complete
discretion in determining the number of SARs granted to each Participant
(subject to Article 4 herein) and, consistent with the provisions of the
Plan, in determining the terms and conditions pertaining to such SARs. |
| | The Base Value of a Freestanding
SAR shall equal the Fair Market Value of a Share on the date of grant of the
SAR. The Base Value of Tandem SARs shall equal the Option Price of the
related Option. |
| 7.2 | SAR Award
Agreement. Each SAR grant shall be evidenced by an SAR Award
Agreement that shall specify the number of SARs granted, the Base Value, the
term of the SAR, the Exercise Period and such other provisions as the
Committee shall determine. |
| 7.3 | Exercise and
Payment of SARs. Tandem SARs may be exercised for all or part of the
Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is
then exercisable. |
| | Notwithstanding any other
provision of the Plan to the contrary, with respect to a Tandem SAR granted
in connection with an ISO: (i) the Tandem SAR will expire no later than the
expiration of the underlying ISO; (ii) the value of the payout with respect
to the Tandem SAR may be for no more than one hundred percent (100%) of the
difference between the Option Price of the underlying ISO and the Fair Market
Value of the Shares subject to the underlying ISO at the time the Tandem SAR
is exercised; and (iii) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Option Price of the
ISO. |

A-6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| | Freestanding SARs may be
exercised upon whatever terms and conditions the Committee, in its sole
discretion, imposes upon them. | |
| --- | --- | --- |
| | A Participant may exercise an SAR
at any time during the Exercise Period. SARs shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of SARs being exercised. Upon exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount equal to the
product of: | |
| | (a) | the excess of (i) the Fair Market
Value of a Share on the date of exercise over (ii) the Base Value multiplied
by |
| | (b) | the number of Shares with respect
to which the SAR is exercised. |
| | At the sole discretion of the
Committee, the payment to the Participant upon SAR exercise may be in cash,
in Shares of equivalent value, or in some combination thereof. | |
| 7.4 | Termination of
Employment. Each SAR Award Agreement shall set forth the extent
to which the Participant shall have the right to exercise the SAR following
termination of the Participants employment with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the SAR Award Agreement entered into with
Participants, need not be uniform among all SARs granted pursuant to the Plan
or among Participants and may reflect distinctions based on the reasons for
termination of employment. | |
| 7.5 | Transferability
of SARs. Except as otherwise determined by the Committee and
set forth in the SAR Award Agreement, no SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution, and all SARs
granted to a Participant under the Plan shall be exercisable during his or
her lifetime only by such Participant or his or her legal representative. | |
| Article 8.
Restricted Stock | | |
| 8.1 | Grant of
Restricted Stock. Subject to the terms and conditions of the Plan,
Restricted Stock may be granted to Eligible Employees at any time and from
time to time, as shall be determined by the Committee. | |
| | The Committee shall have complete
discretion in determining the number of shares of Restricted Stock granted to
each Participant (subject to Article 4 herein) and, consistent with the
provisions of the Plan, in determining the terms and conditions pertaining to
such Restricted Stock. | |
| | In addition, the Committee may,
prior to or at the time of grant, designate an Award of Restricted Stock as
Qualified Restricted Stock, in which event it will condition the grant or
vesting, as applicable, of such Qualified Restricted Stock upon the
attainment of the Performance Goals selected by the Committee. | |
| 8.2 | Restricted
Stock Award Agreement. Each Restricted Stock
grant shall be evidenced by a Restricted Stock Award Agreement that shall
specify the Period or Periods of Restriction, the number of Restricted Stock
Shares granted and such other provisions as the Committee shall determine. | |
| 8.3 | Transferability. Restricted Stock granted hereunder may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction established by the Committee
and specified in the Restricted Stock Award Agreement. All rights with
respect to the Restricted Stock granted to a Participant under the Plan shall
be available during his or her lifetime only to such Participant or his or
her legal representative. | |
| 8.4 | Certificate
Legend. Each certificate representing Restricted Stock
granted pursuant to the Plan may bear a legend substantially as follows: | |
| | The sale or other transfer of
the shares of stock represented by this certificate, whether voluntary,
involuntary or by operation of law, is subject to certain restrictions on
transfer as set forth in MDU Resources Group, Inc. Long-Term
Performance-Based Incentive Plan and in a Restricted Stock Award Agreement. A
copy of such Plan and such Agreement may be obtained from MDU Resources Group, Inc. | |
| | The Company shall have the right
to retain the certificates representing Restricted Stock in the Companys
possession until such time as all restrictions applicable to such Shares have
been satisfied. | |

MDU Resources Group, Inc. Proxy Statement A-7

Proxy Statement

| 8.5 | Removal of
Restrictions. Restricted Stock shall become freely transferable by
the Participant after the last day of the Period of Restriction applicable
thereto. Once Restricted Stock is released from the restrictions, the
Participant shall be entitled to have the legend referred to in Section 8.4
removed from his or her stock certificate. |
| --- | --- |
| 8.6 | Voting Rights. During
the Period of Restriction, Participants holding Restricted Stock may exercise
full voting rights with respect to those Shares. |
| 8.7 | Dividends and
Other Distributions. Subject to the Committees
right to determine otherwise at the time of grant, during the Period of
Restriction, Participants holding Restricted Stock shall receive all regular
cash dividends paid with respect to all Shares while they are so held. All
other distributions paid with respect to such Restricted Stock shall be
credited to Participants subject to the same restrictions on transferability
and forfeitability as the Restricted Stock with respect to which they were
paid and shall be paid to the Participant within forty-five (45) days
following the full vesting of the Restricted Stock with respect to which such
distributions were made. |
| 8.8 | Termination of
Employment. Each Restricted Stock Award Agreement shall set
forth the extent to which the Participant shall have the right to receive
unvested Restricted Stock following termination of the Participants
employment with the Company and its Subsidiaries. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Restricted Stock Award Agreement entered into with Participants, need not be
uniform among all grants of Restricted Stock or among Participants and may
reflect distinctions based on the reasons for termination of employment. |
| Article 9.
Performance Units and Performance Shares | |
| 9.1 | Grant of
Performance Units and Performance Shares. Subject to the terms and
conditions of the Plan, Performance Units and/or Performance Shares may be
granted to an Eligible Employee at any time and from time to time, as shall
be determined by the Committee. |
| | The Committee shall have complete
discretion in determining the number of Performance Units and/or Performance
Shares granted to each Participant (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and
conditions pertaining to such Awards. |
| 9.2 | Performance
Unit/Performance Share Award Agreement. Each grant of Performance
Units and/or Performance Shares shall be evidenced by a Performance Unit
and/or Performance Share Award Agreement that shall specify the number of
Performance Units and/or Performance Shares granted, the initial value (if
applicable), the Performance Period, the Performance Goals and such other
provisions as the Committee shall determine, including but not limited to any
rights to Dividend Equivalents. |
| 9.3 | Value of
Performance Units/Performance Shares. Each Performance Unit
shall have an initial value that is established by the Committee at the time
of grant. The value of a Performance Share shall be equal to the Fair Market
Value of a Share. The Committee shall set Performance Goals in its discretion
which, depending on the extent to which they are met, will determine the
number and/or value of Performance Units/Performance Shares that will be paid
out to the Participants. The time period during which the Performance Goals
must be met shall be called a Performance Period. |
| 9.4 | Earning of
Performance Units/Performance Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Performance
Shares shall be entitled to receive a payout with respect to the Performance
Units/Performance Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the
corresponding Performance Goals have been achieved. |
| 9.5 | Form and Timing
of Payment of Performance Units/Performance Shares. Payment
of earned Performance Units/Performance Shares shall be made following the
close of the applicable Performance Period. The Committee, in its sole
discretion, may pay earned Performance Units/Performance Shares in cash or in
Shares (or in a combination thereof), which have an aggregate Fair Market
Value equal to the value of the earned Performance Units/Performance Shares
at the close of the applicable Performance Period. Such Shares may be granted
subject to any restrictions deemed appropriate by the Committee. |
| 9.6 | Termination of
Employment. Each Performance Unit/Performance Share Award
Agreement shall set forth the extent to which the Participant shall have the
right to receive a Performance Unit/Performance Share payment following
termination of the Participants employment with the Company and its
Subsidiaries during a Performance Period. Such provisions shall be determined
in the sole discretion of the Committee, shall be included in the Award
Agreement entered into with Participants, need not be uniform among all
grants of Performance Units/Performance Shares or among Participants and may
reflect distinctions based on reasons for termination of employment. |

A-8 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

9.7 Transferability. Except as otherwise determined by the Committee and set forth in the Performance Unit/Performance Share Award Agreement, Performance Units/Performance Shares may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and a Participants rights with respect to Performance Units/Performance Shares granted under the Plan shall be available during the Participants lifetime only to such Participant or the Participants legal representative.

Article 10. Other Awards

The Committee shall have the right to grant other Awards which may include, without limitation, the grant of Shares based on attainment of Performance Goals established by the Committee, the payment of Shares in lieu of cash, the payment of cash based on attainment of Performance Goals established by the Committee, and the payment of Shares in lieu of cash under other Company incentive or bonus programs. Payment under or settlement of any such Awards shall be made in such manner and at such times as the Committee may determine.

Article 11. Beneficiary Designation

Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participants lifetime. In the absence of any such designation, benefits remaining unpaid at the Participants death shall be paid to the Participants estate.

The spouse of a married Participant domiciled in a community property jurisdiction shall join in any designation of beneficiary or beneficiaries other than the spouse.

Article 12. Deferrals

The Committee may permit a Participant to defer the Participants receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under the Plan. If any such deferral election is permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals.

Article 13. Rights of Employees

| 13.1 | Employment. Nothing
in the Plan shall interfere with or limit in any way the right of the Company
to terminate any Participants employment at any time, for any reason or no
reason in the Companys sole discretion, nor confer upon any Participant any
right to continue in the employ of the Company. |
| --- | --- |
| 13.2 | Participation. No
Employee shall have the right to be selected to receive an Award under the
Plan, or, having been so selected, to be selected to receive a future Award. |

Article 14. Change in Control

The terms of this Article 14 shall immediately become operative, without further action or consent by any person or entity, upon a Change in Control, and once operative shall supersede and take control over any other provisions of this Plan.

Upon a Change in Control

| (a) | Any and all Options and SARs
granted hereunder shall become immediately exercisable; |
| --- | --- |
| (b) | Any restriction periods and
restrictions imposed on Restricted Stock, Qualified Restricted Stock or
Awards granted pursuant to Article 10 (if not performance-based) shall be
deemed to have expired and such Restricted Stock, Qualified Restricted Stock
or Awards shall become immediately vested in full; and |
| (c) | The target payout opportunity
attainable under all outstanding Awards of Performance Units, Performance
Shares and Awards granted pursuant to Article 10 (if performance-based) shall
be deemed to have been fully earned for the entire Performance Period(s) as
of the effective date of the Change in Control, and shall be paid out
promptly in Shares or cash pursuant to the terms of the Award Agreement, or
in the absence of such designation, as the Committee shall determine. |

MDU Resources Group, Inc. Proxy Statement A-9

Proxy Statement

Article 15. Amendment, Modification and Termination

| 15.1 | Amendment,
Modification and Termination. The Board may, at any time
and from time to time, alter, amend, suspend or terminate the Plan, in whole
or in part, provided that no amendment shall be made which shall increase the
total number of Shares that may be issued under the Plan, materially modify
the requirements for participation in the Plan, or materially increase the
benefits accruing to Participants under the Plan, in each case unless such
amendment is approved by the stockholders. The Board of Directors of the
Company is also authorized to amend the Plan and the Options granted
hereunder to maintain qualification as incentive stock options within the
meaning of Section 422 of the Code, if applicable. |
| --- | --- |
| 15.2 | Awards
Previously Granted. No termination, amendment
or modification of the Plan shall adversely affect in any material way any
Award previously granted under the Plan, without the written consent of the
Participant holding such Award, unless such termination, modification or
amendment is required by applicable law and except as otherwise provided
herein. |

Article 16. Withholding

| 16.1 | Tax
Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy Federal, state and local taxes (including the
Participants FICA obligation) required by law to be withheld with respect to
an Award made under the Plan. |
| --- | --- |
| 16.2 | Share
Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising out of or as a result of Awards
granted hereunder, Participants may elect to satisfy the withholding
requirement, in whole or in part, by tendering previously-owned Shares or by
having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the statutory total tax which could be
imposed on the transaction. All elections shall be irrevocable, made in
writing and signed by the Participant. |

Article 17. Minimum Vesting

Notwithstanding any other provision of the Plan to the contrary, (a) the minimum vesting period for Full Value Awards with no performance-based vesting characteristics must be at least three years (vesting may occur ratably each month, quarter or anniversary of the grant date over such vesting period); (b) the minimum vesting period for Full Value Awards with performance-based vesting characteristics must be at least one year; and (c) the Committee shall not have discretion to accelerate vesting of Full Value Awards except in the event of a Change in Control or similar transaction, or the death, disability, or termination of employment of a Participant; provided, however, that the Committee may grant a de minimis number of Full Value Awards that do not comply with the foregoing minimum vesting standards. For this purpose de minimis means 331,279 Shares available for issuance as Full Value Awards under the Plan, subject to adjustment under Section 4.2 herein.

Article 18. Successors

All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company.

Article 19. Legal Construction

| 19.1 | Gender and
Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular and the singular shall include the plural. |
| --- | --- |
| 19.2 | Severability. In the
event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included. |
| 19.3 | Requirements of
Law. The granting of Awards and the issuance of Shares under
the Plan shall be subject to all applicable laws, rules and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required. |
| 19.4 | Governing Law. To the
extent not preempted by Federal law, the Plan, and all agreements hereunder,
shall be construed in accordance with, and governed by, the laws of the State
of Delaware. |

A-10 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Article 20. Accounting Restatements

This Article 20 shall apply to Awards granted to all Participants in the Plan. Notwithstanding anything in the Plan or in any Award Agreement to the contrary, if the Companys audited financial statements are restated, the Committee may, in accordance with the Companys Guidelines for Repayment of Incentives Due to Accounting Restatements , take such actions as it deems appropriate (in its sole discretion) with respect to

| (a) | Awards then outstanding
(including Awards that have vested or otherwise been earned but with respect
to which payment of cash or distribution of Shares, as the case may be, has
not been made or deferred and also including unvested or unpaid Dividend
Equivalents attributable to such outstanding Awards) (Outstanding Awards)
and |
| --- | --- |
| (b) | vested, earned and/or exercised
Awards and any cash or Shares received with respect to Awards (including,
without limitation, dividends and Dividend Equivalents), in each case to the
extent payment of cash or distribution of Shares, as the case may be, was
received or deferred within the 3 year period preceding the restatement
(Prior Awards), provided such Prior Awards were not vested, earned, exercised
or paid prior to the date the Plan was amended to add this Article 20, if the
terms of any such Outstanding Awards or Prior Awards or the benefits received
by a Participant with respect to any such Outstanding Awards or Prior Awards
(including, without limitation, dividends or Dividend Equivalents credited or
distributed to a Participant and/or consideration received upon the sale of
Shares that were acquired pursuant to the vesting, settlement or exercise of
a Prior Award) are, or would have been, directly impacted by the restatement,
including, without limitation, (i) securing (or causing to be secured)
repayment of all or a portion of any amounts paid, distributed or deferred
(including, without limitation, dividends or Dividend Equivalents and/or consideration
received upon the sale of Shares that were acquired pursuant to the vesting,
settlement or exercise of a Prior Award), (ii) granting additional Awards or
making (or causing to be made) additional payments or distributions (or
crediting additional deferrals) with respect to Prior Awards, (iii)
rescinding vesting (including accelerated vesting) of Outstanding Awards
and/or (iv) causing the forfeiture of Outstanding Awards. The Committee may,
in its sole discretion, take different actions pursuant to this Article 20
with respect to different Awards, different Participants (or beneficiaries)
and/or different classes of Awards or Participants (or beneficiaries). The
Committee has no obligation to take any action permitted by this Article 20.
The Committee may consider any factors it chooses in taking (or determining
whether to take) any action permitted by this Article 20, including, without
limitation, the following: |

| (A) | The reason for the restatement of
the financial statements; |
| --- | --- |
| (B) | The amount of time between the
initial publication and subsequent restatement of the financial statements;
and |
| (C) | The Participants current
employment status, and the viability of successfully obtaining repayment. |

If the Committee requires repayment of all or part of a Prior Award, the amount of repayment shall be determined by the Committee based on the circumstances giving rise to the restatement. The Committee shall determine whether repayment shall be effected (i) by seeking repayment from the Participant, (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be provided to the Participant under any compensatory plan, program or arrangement maintained by the Company or any of its affiliates, (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the Companys otherwise applicable compensation practices, or (iv) by any combination of the foregoing. Additionally, by accepting an Award under the Plan, Participants acknowledge and agree that the Committee may take any actions permitted by this Article 20 with respect to Outstanding Awards to the extent repayment is to be made pursuant to another plan, program or arrangement maintained by the Company or any of its affiliates.

Article 21. Code Section 409A Compliance

To the extent applicable, it is intended that this Plan and any Awards granted hereunder comply with the requirements of Section 409A of the Code and any related regulations or other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service (Section 409A). Any provision that would cause the Plan or any Award granted hereunder to fail to satisfy Section 409A shall have no force or effect until amended to comply with Section 409A, which amendment may be retroactive to the extent permitted by Section 409A.

MDU Resources Group, Inc. Proxy Statement A-11

Proxy Statement

(This page has been left blank intentionally.)

A-12 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| EXHIBIT B — Towers Perrins
2008 General | Applied Materials | CA |
| --- | --- | --- |
| Industry
Executive | ARAMARK | Cablevision Systems |
| Compensation
Database | Arbys Restaurant Group | California Independent System
Operator |
| | Archer Daniels Midland | Calpine |
| | Arclin USA | Cameron International |
| 3M | Areva NP | Campbell Soup |
| 7-Eleven | Armstrong World Industries | Capital Blue Cross |
| A&P | Arrow Electronics | Capital One Financial |
| A.H. Belo | Arysta LifeScience North America | Capitol Broadcasting WRAL |
| A.T. Cross | Ashmore Energy International | Cardinal Health |
| AAA Northern California, Utah
& Nevada | Associated Banc-Corp | Cargill |
| AAA of Science | AstraZeneca | Carlson Companies |
| AARP | AT&T | Carpenter Technology |
| Abbott Laboratories | Austria Microsystems | CashNetUSA |
| ABC | Auto Club Group | Catalent Pharma Solutions |
| Abercrombie & Fitch | Automatic Data Processing | Caterpillar |
| Accenture | Avaya | Catholic Healthcare West |
| ACH Food | Avis Budget Group | CB Richard Ellis Group |
| adidas America | Avista | Cedar Rapids TV KCRG |
| Advance Publications | Avon | Celgene |
| Advanced Medical Optics | AXA Equitable | CenterPoint Energy |
| Advanced Micro Devices | B&W Y-12 | Centex |
| Aegon USA | BAE Systems | Century Aluminum |
| Aerojet | Ball | Cephalon |
| Aetna | Banco do Brasil | Ceridian |
| AFLAC | Bank of America | CH2M Hill |
| Agilent Technologies | Bank of the West | Chanel |
| AGL Resources | Barr Pharmaceuticals | Cheniere Energy |
| Agrium U.S. | Barrick Gold of North America | Chesapeake |
| AIG | Baxter International | Chevron |
| Air Products and Chemicals | Bayer | Chicago Mercantile Exchange |
| Alcatel-Lucent | Bayer CropScience | Chiquita Brands |
| Alcoa | BB&T | Choice Hotels International |
| Alexander & Baldwin | bebe stores | Chrysler |
| Allbritton Communications KATV | Beckman Coulter | CHS |
| Allegheny Energy | BELCO Holdings | CIGNA |
| Allergan | Belo | Cisco Systems |
| Allete | BG US Services | CIT Group |
| Alliant Energy | BIC | CITGO Petroleum |
| Alliant Techsystems | Big Lots | Citizens Bank |
| Allianz | Biogen Idec | City Public Service |
| Allstate | Bio-Rad Laboratories | Cleco |
| ALM | Black Hills | CMS Energy |
| Alstom Power | Blockbuster | CAN |
| Altria Group | Blue Cross Blue Shield of
Florida | COACH |
| Amazon.com | Blue Shield of California | Cobank |
| Ameren | Blyth | Coca-Cola |
| American Airlines | Bob Evans Farms | Colgate-Palmolive |
| American Crystal Sugar | Boehringer Ingelheim | Colorado Springs Utilities |
| American Electric Power | Boeing | Columbia Sportswear |
| American Family Insurance | Bombardier Transportation | Columbian Financial Group |
| American Transmission | Booz Allen Hamilton | Comerica |
| American United Life | Boston Scientific | Commerce Insurance |
| American Water Works | Bovis Lend Lease | Compass Bancshares |
| Ameriprise Financial | Boy Scouts of America | Connell |
| Ameritrade | BP | ConocoPhillips |
| Ameron | Bracco Diagnostics | Consolidated Edison |
| AMETEK | Brady | Constellation Energy |
| Amgen | Bremer Financial | Continental Automotive Systems |
| Anadarko Petroleum | Bristol-Myers Squibb | Convergys |
| Anchor Danly | Building Materials Holding | Corning |
| Ann Taylor Stores | Bunge | Corporate Executive Board |
| APL | Burger King | Corporate Express US |
| Applera | Burlington Northern Santa Fe | Covidien |
| Appleton Papers | Bush Brothers | Cox Enterprises |

MDU Resources Group, Inc. Proxy Statement B-1

Proxy Statement

Crown Castle	Fannie Mae	Harris Enterprises
CSX	FANUC Robotics America	Harry Winston
Cubic	Farmers Group	Hartford Financial Services
Cullen/Frost Bankers	Federal Home Loan Bank of	Hasbro
CUNA Mutual	San Francisco	Hawaiian Electric
Curtiss-Wright	Federal Reserve Bank of
Cleveland	Hayes Lemmerz
Cushman & Wakefield	Federal Reserve Bank of Dallas	HBO
CVS Caremark	Federal Reserve Bank of
Philadelphia	HCA Healthcare
Daiichi Sankyo	Federal Reserve Bank of San
Francisco	Health Care Services
Daimler Trucks North America	Federal Reserve Bank of St.
Louis	Health Net
Dannon	Federal-Mogul	Healthways
Day & Zimmerman	Ferrellgas	Henry Schein
DCP Midstream	Ferrero USA	Hercules
De Lage Landen Financial
Services	Fidelity Investments	Herman Miller
Dean Foods	Fifth Third Bancorp	Hershey
Delphi	FINRA	Hertz
Deluxe	Firemans Fund Insurance	Hess
DENSO	First Horizon National	Hewlett-Packard
Dentsply	FirstEnergy	Hexion Specialty Chemicals
Devon Energy	Fiserv	HNI
Diageo North American	Fleetwood Enterprises	HNTB
Direct Energy	Flint Group USA	Hoffmann-La Roche
Discovery Communications	Fluor	Hologic
Dispatch Broadcast Group WBNS	Ford	Honeywell
Dominion Resources	Forest Laboratories	Hormel Foods
Donaldson	Fortune Brands	Hospira
Dow Chemical	Forum Communications WDAY	Hot Topic
Dow Jones	Fox Networks Group	Houghton Mifflin
Duke Energy	FPL Group	HSBC North America
DuPont	Freddie Mac	Hubbard Broadcasting
Dynegy	Freedom Communications	Humana
E.ON U.S.	Freeport-McMoRan Copper &
Gold	Hunt Consolidated
E.W. Scripps	G&K Services	Huntington Bancshares
Eastman Chemical	Gannett	Hyatt Hotels
Eastman Kodak	Gap	IAC/InterActive
Eaton	Gates	IBM
eBay	GATX	IDACORP
Ecolab	GE Healthcare	Idearc Media
EDS	Genentech	IDEX
Eisai	General Atomics	IKON Office Solutions
El Paso Corporation	General Dynamics	IMS Health
Electric Power Research
Institute	General Mills	Independence Blue Cross
Eli Lilly	General Motors	IndyMac
Elsevier Science	Genworth Financial	ING
Embarq	Genzyme	Integrys Energy Group
EMC	GEO Group	Intel
EMCOR Group	Getty Images	International Flavors &
Fragrances
Emerson	GlaxoSmithKline	International Game Technology
Enbridge Energy	Global Crossing	International Paper
Endo Pharmaceuticals	Goodrich	Interstate Bakeries
Energen	Gortons	Invensys Controls
Energy Future Holdings	Great-West Life Annuity	Invitrogen
Energy Northwest	Greif	ION Geophysical
Entergy	GS1	Iron Mountain
EPCO	GTECH	Irvine Company
Equifax	Guaranty Bank	Irving Oil
Equity Office Properties	Guardian Life	Irwin Financial
Erie Insurance	Guideposts	Itochu International
Ernst & Young	GXS	J. Crew
ESRI	H.B. Fuller	J.C. Penney Company
Essilor of America	Hanesbrands	J.M. Smucker
Evening Post Publishing KOAA	Hannaford	J.R. Simplot
Evergreen Packaging	Harland Clarke	Jack in the Box
Exelon	Harley-Davidson	Jacobs Engineering
Exterran	Harman International Industries	JEA
ExxonMobil	Harris	JM Family
Fairchild Controls	Harris Bank	John Hancock

B-2 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Johns-Manville	Medco Health Solutions	OneBeacon Insurance
Johnson & Johnson	Media General	Open Text
Johnson Controls	Medtronic	Optos North America
Joint Commission	Mellon Financial	Oshkosh Truck
Jostens	Merck	Otter Tail
Kaiser Foundation Health Plan	Mercury Insurance	Owens Corning
Kaman Industrial Technologies	MessageLabs	Owens-Illinois
KCTS Television	Metavante Technologies	Pacific Gas & Electric
Kellogg	MetLife	Pacific Life
Kennametal	MetroPCS Communications	PacifiCorp
Kerzner International	MGE Energy	Panasonic of North America
KeyCorp	Micron Technology	Parker Hannifin
Kimberly-Clark	Microsoft	Parsons
Kindred Healthcare	Millennium Pharmaceuticals	Pearson Education
King Pharmaceuticals	Millipore	Peoples Bank
Kiplinger	Mirant Corporation	Pepco Holdings
KLA-Tencor	MOL America	PepsiAmericas
Knight	Molson Coors Brewing	PepsiCo
Koch Industries	Monaco Coach	PerkinElmer
Kohler	MoneyGram International	PetSmart
Kohls	Monsanto	Pfizer
Kroger	Morgan Murphy Stations WISC	Phillips-Van Heusen
L.L. Bean	Motorola	Phoenix Companies
L-3 Communications	Mountain America	Pinnacle West Capital
Lafarge North America	Mueller Water Products	Pitney Bowes
Land OLakes	Munich Re America	PJM Interconnection
Leggett and Platt	Nalco	Plexus
Lenovo	Nash-Finch	Plymouth Rock Assurance
Level 3 Communications	National CineMedia	PMC-Sierra
Levi Strauss	National Geographic Society	PMI Group
LexisNexis	National Renewable Energy
Laboratory	PNC Financial Services
Lexmark International	National Semiconductor	PNM Resources
LG Electronics USA	National Starch & Chemical	PolyOne
Liberty Mutual	Nationwide	Popular
Limited	Navistar International	Portland General Electric
Lincoln Financial	NCCI Holdings	Potash
Lockheed Martin	NCR	PPG Industries
Loews	Neoris USA	PPL
Logitech	Nestle USA	Praxair
LOMA	New York Life	Principal Financial
Longs Drug Stores	New York Power Authority	Pro-Build Holdings
Lord	New York Times	Progress Energy
Lorillard Tobacco	Nicor	Progressive
Lower Colorado River Authority	NIKE	Providence Health System
Luck Stone	Nokia	Prudential Financial
M&T Bank	Noranda Aluminum	Public Service Enterprise Group
Magellan Midstream Partners	Norfolk Southern	Puget Energy
Makino	Nortel Networks	Pulte Homes
Marathon Oil	Northeast Utilities	Purdue Pharma
Marriott International	Northrop Grumman	QUALCOMM
Marsh	NorthWestern Energy	Quebecor World US
Marshall & Ilsley	Northwestern Mutual	Quintiles
Martin Marietta Materials	Novartis Consumer Health	Qwest Communications
Mary Kay	Novartis Pharmaceuticals	R.R. Donnelley
Masco	Novo Nordisk Pharmaceuticals	Ralcorp Holdings
Massachusetts Mutual	Novus Print Media Network	Raleys Superstores
MasterCard	NRG Energy	Rayonier
Mattel	NSTAR	RBC Dain Rauscher
Mazda North American Operations	NW Natural	Readers Digest
McClatchy	NXP Semi-Conductor	Reed Business Information
McDermott	Nycomed US	Reed Elsevier
McDonalds	Nypro	Reed Exhibitions
McGraw-Hill	Oak Ridge National Laboratory	Regions Financial
McKesson	Occidental Petroleum	Reliant Resources
MDS Pharma Services	OGE Energy	Revlon
MDU Resources	Omaha Public Power	Reynolds American
MeadWestvaco	Omnova Solutions	RF Micro Devices

MDU Resources Group, Inc. Proxy Statement B-3

Proxy Statement

RGA Reinsurance Group of America	Staples	Uni-Select USA
Rich Products	Starbucks	UniSource Energy
Rio Tinto	Starwood Hotels & Resorts	Unisys
Robert Bosch	State Farm Insurance	United Airlines
Roche Diagnostics	State Street	United Rentals
Roche Palo Alto	Steelcase	United States Cellular
Rockwell Automation	Sterling Bancshares	United Technologies
Rockwell Collins	Stewart & Stevenson	United Water Resources
Rohm and Haas	STP Nuclear Operating	UnitedHealth
Rolls-Royce North American	SUEZ Energy North America	Unitil
Ryder System	Sun Life Financial	Universal Studios Orlando
S.C. Johnson	Sunbeam Television WHDH	University of Texas M.D.
Anderson
Safety-Kleen Systems	SunGard Data Systems	Cancer Center
SAIC	Sunoco	Univision Communications
Salt River Project	SunTrust Bank	Unum Group
Sanofi Pasteur	SuperValu Stores	USAA
Sanofi-Aventis	SVB Financial	USG
Sara Lee	Swift Newspapers	Valero Energy
Sarkes Tarzian KTVN	Sybron Dental Specialties	Vanguard
Sarkes Tarzian WRCB	Syngenta Crop Protection	Verizon
SAS Institute	Synovus	Viacom
SCA Americas	Takeda Pharmaceutical	Virgin Mobile USA
SCANA	Targa Resources	Visa USA
Schering-Plough	Target	Visiting Nurse Service
Schlumberger	Taubman Centers	Vistar
Schneider Electric	TD Banknorth	Visteon
Scholastic	TeleTech Holdings	Volvo Group North America
Schreiber Foods	Tellabs	Voyager Learning Company
Schurz KYTV	Temple-Inland	Vulcan
Schurz WAGT	Tenet Healthcare	Vulcan Materials
Schwans	Tennessee Valley Authority	Wachovia
Scotts Miracle-Gro	Teradata	Wackenhut Services
Seagate Technology	Terex	Walt Disney
Sealed Air	Terra Industries	Warnaco
Securian Financial Group	Tesoro	Washington Mutual
Securitas Security Services USA	Texas Instruments	Washington Savannah River
Sempra Energy	Textron	Waste Management
SENCORP	Thomas & Betts	Webster Bank
Sensata Technologies	Thomson Reuters Markets Division	Wellcare Health Plans
SES Global	Americas	Wellpoint
Shaw Industries	Thrivent Financial for Lutherans	Wells Fargo
Shell Oil	TIAA-CREF	Wendys International
Sherwin-Williams	Time Warner	Westar Energy
Shire Pharmaceuticals	Time Warner Cable	Western Digital
Siemens	Timex	Westinghouse Electric
Sigma-Aldrich	T-Mobile	Whirlpool
Sinclair Broadcast Group	Toro	Whole Foods Market
Sirius Satellite Radio	Trane	Williams Companies
SLM	Trans Union	Wisconsin Energy
Smith & Nephew	TransCanada	Wm. Wrigley Jr.
Smiths Detection	Travelers	Wolters Kluwer US
Smurfit-Stone Container	Travelport	Wray Edwin KTBS
Sodexho	Tribune	Wyeth
Solvay Pharmaceuticals	Tupperware	Wyndham Worldwide
Sonoco Products	Twin Cities Public Television
TPT	Xcel Energy
Sony Corporation of America	Tyco Electronics	Xerox
Sony Ericsson Mobile
Communications	U.S. Bancorp	Yahoo!
South Financial Group	U.S. Foodservice	Young Broadcasting KRON
Southern Company Services	UCB	Yum! Brands
Sovereign Bancorp	UIL Holdings	Zale
Spectra Energy	Ulticom	Zimmer Holdings
Spirit AeroSystems	Underwriters Laboratories	Zurich North America
Springs Global US	Unifi
Sprint Nextel	Unilever United States
Stanford University	Union Bank of California
Stantec	Union Pacific

B-4 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| Towers Perrins
2008 Energy | PNM Resources | Denbury Resources Inc. |
| --- | --- | --- |
| Industry
Executive | PPL | Devon Energy |
| Compensation
Database | PacifiCorp | Dominion Exploration &
Production |
| | Pacific Gas & Electric | Duncan Oil Properties,
Inc./Walter |
| | Pepco Holdings | Duncan, Inc. |
| AGL Resources | Pinnacle West Capital | Ellora Energy |
| Allegheny Energy | Portland General Electric | EnCana Oil & Gas (USA) Inc. |
| Allete | Progress Energy | Encore Acquisitions Company |
| Alliant Energy | Public Service Enterprise Group | Energen Resources |
| Ameren | Puget Energy | Energy Partners, Ltd. |
| American Electric Power | Reliant Resources | Eni Operating Co. Inc. |
| American Transmission | SCANA | Equitable Resources, Inc-
Equitable |
| Areva NP | STP Nuclear Operating | Supply |
| Ashmore Energy International | SUEZ Energy North America | Fasken Oil and Ranch, Ltd. |
| Avista | Salt River Project | Fidelity Exploration &
Production |
| BG US Services | Seminole Energy Services | Company |
| Black Hills | Sempra Energy | FIML Natural Resources |
| CMS Energy | Southern Company Services | Forest Oil Corporation |
| California Independent System
Operator | Southern Union Company | Fortuna Energy, Inc. |
| Calpine | Spectra Energy | GMT Exploration |
| CenterPoint Energy | Targa Resources | GMX Resources Inc. |
| Cheniere Energy | Tennessee Valley Authority | Goodrich Petroleum Corporation |
| City Public Service | TransCanada | Great Western Drilling Company |
| Cleco | UIL Holdings | Harvest Natural Resources, Inc. |
| Colorado Springs Utilities | UniSource Energy | Headington Oil Company, L.P. |
| Consolidated Edison | Unitil | Henry Petroleum LP |
| Constellation Energy | Westar Energy | Hilcorp Energy Company |
| DCP Midstream | Williams Companies | Hunt Oil Company |
| Dominion Resources | Wisconsin Energy | Hunt Petroleum Corporation |
| Duke Energy | Wolf Creek Nuclear | J. M. Huber Corporation Energy
Sector |
| Dynegy | Xcel Energy | Kinder Morgan CO2 Company, L.P. |
| E.ON U.S. | | Lake Ronel Oil Company |
| EPCO | | Leed Petroleum LLC (formerly
Darcy |
| Edison International | Effective
Compensation, Inc.s | Energy) |
| El Paso Corporation | 2008 Oil &
Gas Compensation | Linn Energy, LLC |
| Electric Power Research Institute | Survey | Mariner Energy, Inc. |
| Enbridge Energy | | Maritech Resources |
| Energen | Aera Energy Services Company | McElvain Oil and Gas Properties,
Inc. |
| Energy Future Holdings | Alta Mesa Holdings | McMoran Oil and Gas Company |
| Energy Northwest | Altex Energy Corporation | Medco Energi US LLC |
| Entergy | Approach Resources Inc. | Mewbourne Oil Company |
| Exelon | Aramco Services Company | Mustang Fuel Corporation |
| FPL Group | Ascent Operating, LP | Nearburg Producing Company |
| FirstEnergy | Aspect Energy, LLC | Newfield Exploration Company |
| Hawaiian Electric | BEPCO, L.P. | Nexen Petroleum U.S.A. Inc. |
| IDACORP | Berry Petroleum Company | Noble Energy, Inc. |
| Integrys Energy Group | Bill Barrett Corporation | Panhandle Oil and Gas Inc. |
| JEA | BreitBurn Energy Partners LP | Penn Virginia Oil & Gas |
| Knight | Brigham Exploration Company | Petro-Canada Resources (USA) Inc |
| Lower Colorado River Authority | Browning Oil Company, Inc. | Petrohawk Energy Corporation |
| MDU Resources | BTA Oil Producers, LLC | Petro-Hunt, LLC |
| MGE Energy | Cabot Oil & Gas Corporation | Petroleum Development
Corporation |
| Mirant Corporation | Cano Petroleum, Inc. | PetroQuest Energy LLC |
| NRG Energy | CDX Gas, LLC | Petsec Energy Inc. |
| NSTAR | Ceja Corporation | Pioneer Natural Resources USA,
Inc. |
| NW Natural | Chaparral Energy, Inc. | Plains Exploration &
Production Company |
| New York Power Authority | Chesapeake Energy Corporation | Quantum Resources Management,
LLC |
| Nicor | Cimarex Energy Co. | Questar Market Resources Group |
| NorthWestern Energy | Cohort Energy Company | Quicksilver Resources Inc. |
| Northeast Utilities | Comstock Resources, Inc. | Range Resources Corporation |
| OGE Energy | Continental Resources, Inc. | Read and Stevens, Inc. |
| Omaha Public Power | Crimson Exploration, Inc. | Repsol Services Company |
| Otter Tail | Dart Oil & Gas | Rex Energy Operating Corp. |
| PJM Interconnection | Delta Petroleum Corporation | Rosetta Resources Inc. |

MDU Resources Group, Inc. Proxy Statement B-5

Proxy Statement

| Samson | Baker Hughes, Inc. Hughes
Christensen | Duke Energy US Franchised
Electric |
| --- | --- | --- |
| SandRidge Energy, Inc. | Baker Hughes, Inc. Production
Quest | and Gas |
| Seneca Resources Corporation | Basic Energy Services | Duquesne Light Holdings, Inc. |
| Sheridan Production Company | Black Stone Minerals Company,
LLP | Dynegy, Inc. |
| Sinclair Oil and Gas Company | Boart Longyear | DynMcDermott Petroleum
Operations |
| Southwestern Energy Production | Brigham Exploration Company | E.ON U.S. |
| Company | Cameron International | Edge Petroleum Corporation |
| St. Mary Land & Exploration
Company | Cameron International
Compression | Edison Mission Energy |
| Stone Energy Corporation | Systems | El Paso Corporation |
| Summit Petroleum LLC | Cameron International Drilling
and | El Paso Corporation
Exploration and |
| Swift Energy Operating, LLC | Production Systems | Production |
| T-C Oil Company | Cameron International Valves
& | El Paso Corporation Pipeline
Group |
| Tema Oil and Gas Company | Measurement | Enbridge Energy Partners, LP |
| Texas Petroleum Investment
Company | Carrizo Oil & Gas, Inc. | EnCana Oil & Gas (USA) Inc. |
| Thums Long Beach Company | CCS Income Trust Energy
Services | Energen Corporation Energen
Resources |
| TOTAL E&P USA, INC. | CDX Gas, LLC | Corporation |
| Triad Energy Corporation | CenterPoint Energy | Energy Future Holdings
Luminant |
| TXCO Resources, Inc. | CGGVeritas | Energy Future Holdings
Luminant |
| Ultra Petroleum Corp. | Chesapeake Energy Corporation | Energy |
| Vanco Energy Company | Chesapeake Energy Corporation
CEMI | Energy Future Holdings
Corporation |
| Vantage Energy L.L.C. | Chesapeake Energy Corporation | Energy Future Holdings
Corporation |
| Venoco, Inc. | Chesapeake App | Oncor |
| Vernon E. Faulconer, Inc. | Chesapeake Energy Corporation | Energy Partners, Ltd. |
| Wagner & Brown, Ltd. | Compass | EnergySouth, Inc. |
| Ward Petroleum Corporation | Chesapeake Energy Corporation | EnergySouth, Inc. Bay Gas
Storage |
| Western Production Company | Diamond Y | EnergySouth, Inc. EnergySouth |
| Weyerhaeuser Company | Chesapeake Energy Corporation
Great | Midstream, Inc |
| Whiting Petroleum Corporation | Plains | EnergySouth, Inc. Mobile Gas
Service, |
| Williams | Chesapeake Energy Corporation
Hodges | Corporation |
| Woodside Energy (USA) Inc | Chesapeake Energy Corporation
Midcon | Enerplus Resources Fund
Enerplus |
| Wynn-Crosby | Chesapeake Energy Corporation
Nomac | Resources (USA) Corporation |
| XTO Energy, Inc. | Chesapeake Energy Corporation
Yost | EnerVest Management Partners,
Ltd. |
| Yuma Exploration and Production | Chief Oil & Gas, LLC | Eni US Operating Company, Inc. |
| Company, Inc. | CHS Inc. Energy | ENSCO International, Inc. |
| | Cimarex Energy Company | ENSCO International, Inc.
North & |
| | Cinco Natural Resources
Corporation | South America Business Unit |
| Mercers 2008
Total | Citation Oil & Gas Corp. | Ensign United States Drilling,
Inc. |
| Compensation
Survey for the | CITGO Petroleum Corporation | Ensign United States Drilling,
Inc. |
| Energy Sector | Cleco Corporation | California |
| | COG Operating, LLC | Ensign United States Drilling,
Inc. |
| Abraxas Petroleum Corporation | Colonial Group, Inc. | Ensign Well Services, Inc. |
| Aera Energy Services Company | Conectiv Energy | Entegra Power Services, LLC |
| AGL Resources | Constellation Energy Group, Inc.
| EOG Resources, Inc |
| AGL Resources Sequent Energy | Constellation Energy Resources | Explorer Pipeline Company |
| Management | Core Laboratories | Exterran |
| Alliance Pipeline, Inc. | CPS Energy | Fasken Oil and Ranch, Ltd. |
| Alliance Pipeline, Inc. Aux
Sable Liquid | Crosstex Energy Services | Forest Oil Corporation |
| Products | DCP Midstream, LLC | Fortuna Energy Inc. |
| Ameren Corporation | Det Norske Veritas US | FX Energy, Inc. |
| American Transmission Company | Devon Energy | FX Energy, Inc. FX Drilling |
| Anadarko Petroleum Corporation | Diamond Offshore Drilling, Inc. | Company, Inc. |
| Apache Corporation | Dominion Resources, Inc. | GE Oil & Gas CONMEC LLC |
| Arch Coal, Inc | Dominion Resources, Inc.
Dominion | GE Oil & Gas Operations LLC |
| Aspect Energy, LLC | Energy | Geokinetics |
| Aspect Energy, LLC Aspect
Abundant | Dominion Resources, Inc.
Dominion | GeoMet, Inc. |
| Shale LP | Generation | Global Industries |
| Aspect Energy, LLC HHE | Dominion Resources, Inc.
Dominion | Halliburton Company |
| Associated Electric Cooperative,
Inc. | Virginia Power | Hallwood Petroleum, LLC |
| Baker Hughes, Inc. | Dresser-Rand Company | Helmerich & Payne, Inc. |
| Baker Hughes, Inc. Baker Atlas | Dresser-Rand Company
Dresser-Rand | Hess Corporation |
| Baker Hughes, Inc. Baker
Hughes | Product Services | HighMount E&P |
| Business Support Services | Dresser-Rand Company Field
Operations | Holly Corporation |
| Baker Hughes, Inc. Baker
Hughes | Dresser-Rand Company NAO | Hunt Oil Company |
| Drilling Fluids | Dresser-Rand Company New
Equipment | Information Handling Services
(IHS) |
| Baker Hughes, Inc. Baker
Hughes Inteq | Company | ION Geophysical Corporation |
| Baker Hughes, Inc. Baker Oil
Tools | Duke Energy | Jacksonville Electric Authority |
| Baker Hughes, Inc. Baker
Petrolite | Duke Energy Commercial Power | KCPL |
| Baker Hughes, Inc. Centrilift | | |

B-6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| Kinder Morgan, Inc. | Parallel Petroleum Corporation | The Williams Companies, Inc.
Williams |
| --- | --- | --- |
| Lario Oil & Gas Company | Parker Drilling Company | Gas Pipeline (WGP) |
| Legacy Reserves, LP | Pepco Holdings, Inc. | Thums Long Beach Company |
| Mack Energy Co. | Petro-Canada Petro-Canada | TransCanada |
| Maersk, Inc. Maersk Oil
America | Resources (USA) | TransCanada Gas Transmission |
| Maersk, Inc. Moller Supply
Company | Petron Resources | Northwest (GTN) |
| Magellan Midstream Holdings, LP | PII North America, Inc. | TransCanada Northern Border
Pipeline |
| Magellan Midstream Holdings, LP
| Pioneer Natural Resources | TransCanada US Pipeline
Central |
| Pipeline Operations | PJM Interconnection | Transocean |
| Magellan Midstream Holdings, LP
| Plains Exploration &
Production Company | TXCO Resources, Inc. |
| Terminal Services | PPL Corporation | TXCO Resources, Inc. Output |
| Magellan Midstream Holdings, LP
| Pride International | Acquisition Corp. |
| Transportation | Questar Market Resources | TXCO Resources, Inc. Texas Tar |
| MCN Energy Enterprises | Quicksilver Resources Inc. | Sands, Inc. |
| MCX Exploration(USA), Ltd. | R. Lacy, Inc. | TXCO Resources, Inc. TXCO
Drilling |
| MDU Resources Group, Inc. | R. Lacy, Inc. Lacy Operations,
Ltd | Corp. |
| MDU Resources Group, Inc.
Montana | Regency Gas Services | TXU Corporation TXU Energy
Retail |
| Dakota Utilities | Renaissance Alaska, LLC | Ultra Petroleum Corp. |
| MDU Resources Group, Inc. WBI | Resolute Natural Resources
Company | Unit Corporation |
| Holdings, Inc. | RKI Exploration &
Production, LLC | Unit Corporation Superior
Pipeline |
| Mestena Operating, Ltd. | Rosewood Resources, Inc. | Company, LLC |
| Mirant Corp | Rosewood Resources, Inc.
Advanced | Unit Corporation Unit Drilling
Company |
| MitEnergy Upstream LLC | Drilling Technologies | Unit Corporation Unit Petroleum |
| Murphy Oil Corporation | Rowan Companies, Inc. | Company |
| NATCO Group, Inc. | SAIC | Vanco Energy Company |
| NATCO Group, Inc. BTO | SCANA Corporation | Venoco, Inc. |
| NATCO Group, Inc. S&T | SCANA Corporation Carolina Gas | Verado Energy, Inc. |
| Nexen, Inc. Nexen Petroleum
USA, Inc. | Transmission | Washington Gas |
| Nippon Oil Exploration USA Ltd | SCANA Corporation PSNC Energy | Weatherford |
| NiSource Inc. Bay State Gas
Company | (Public Service Company of North | Wells Fargo & Company
Wholesale |
| NiSource Inc. Columbia Gas of
Ohio | Carolina, Inc.) | Banking |
| NiSource Inc. Columbia Gas of | SCANA Corporation SCE&G
(South | Woodside Energy (USA) Inc. |
| Pennsylvania | Carolina Electric and Gas Company) | Xcel Energy, Inc. |
| NiSource Inc. Columbia Gas of
Virginia | Schlumberger Oilfield Services | XTO Energy, Inc. |
| NiSource Inc. NiSource
Corporate | Seneca Resources Corporation | |
| Services Co | Seneca Resources Corporation | Watson Wyatts
2008/2009 Top |
| NiSource Inc. Northern Indiana
Fuel & | Bakersfield | Management
Compensation |
| Light | Seneca Resources Corporation | Survey |
| NiSource Inc. Northern Indiana
Public | Williamsville | |
| Service Co | Shaw Bredero Shaw LLC | |
| NiSource Inc. Northern
Utilities, Inc | Shaw Shaw Pipe Protection LLP | 3M Company |
| NiSource Inc. Transmission
Corp | Southern Company | A N Ansay & Associates |
| Noble
Corporation | Southern Company Georgia Power | A O Smith Corporation |
| Noble Corporation Noble
Drilling | Southern Company Gulf Power | AAA |
| Services, Inc. | Company | AAF McQuay International |
| Noble Energy, Inc. | Southern Company Mississippi
Power | ABB, Inc. |
| North Coast Energy, Inc. | Company | Abbott Laboratories |
| Nustar Energy LP | Southern Company SouthernLINC | Abercrombie & Fitch Company |
| Oceaneering International, Inc. | Southern Union Company | Accor North America |
| Oceaneering International, Inc.
| Southern Union Company
Missouri | ACI Worldwide |
| Americas | Gas Energy | Acme Industries |
| Oceaneering International, Inc.
Multiflex | Southern Union Company New | ACT Teleconferencing |
| Oceaneering International, Inc.
OIE | England Gas | The Actors Fund of America |
| OGE Energy Corp | Southern Union Company
Panhandle | Acuity |
| OGE Energy Corp Enogex | Energy | ACUMED LLC |
| ONEOK, Inc. | Southern Union Gas Services | ADC Telecommunications |
| ONEOK, Inc. Kansas Gas Service | Southern Ute Tribe dba Red
Willow | A-dec, Inc. |
| Division | Production Co | Adobe Systems Incorporated |
| ONEOK, Inc. Oklahoma Natural
Gas | Southwest Gas Corporation | ADTRAN Incorporated |
| Division | Southwestern Energy Company | Advance Auto Parts, Inc. |
| ONEOK, Inc. ONEOK Partners | Sprague Energy Corp | Advanced Measurement Technology,
Inc. |
| ONEOK, Inc. Texas Gas Services | Superior Natural Gas Corporation | Advanced Micro Devices, Inc. |
| Division | Tellus Operating Group, LLC | Adventist Health Systems |
| Osage Resources, LLC | The Williams Companies, Inc. | Aegon USA |
| Osage Resources, LLC D & B | The Williams Companies, Inc.
E&P | Aeronix, Inc. |
| Drilling, LLC | The Williams Companies, Inc. | AET |
| PacifiCorp | Midstream | Aetna, Inc. |

MDU Resources Group, Inc. Proxy Statement B-7

Proxy Statement

| Affiliated Computer Services,
Inc. | AmTrust Bank | BB&T Corporation |
| --- | --- | --- |
| Affinity Plus Federal Credit
Union | Anadarko Petroleum Corporation | BDO Seidman, LLP |
| AFLAC Incorporated | Analog Devices, Inc. | Bechtel Systems &
Infrastructure, Inc. |
| AGC Houston | Andersen Corporation | Beckman Coulter, Inc. |
| AGCO Corporation | Anheuser-Busch Companies, Inc. | Belk, Inc. |
| AgFirst | Anixter International Inc. | Bemis Company, Inc. |
| Agilent Technologies, Inc. | AnnTaylor Stores Corporation | Bemis Manufacturing Company |
| AGL Resources, Inc. | The Antioch Company | Benchmark Electronics, Inc. |
| AgriBank | Aon Corporation | Bendix |
| Ahlstrom Windsor Locks LLC | Apache Corporation | The Bergquist Company |
| AIG | Apartment Investment and
Management | Berwick Offray LLC |
| Airlines Reporting Corporation | Apollo Group | Best Buy Co., Inc. |
| AK Steel Holding Corporation | Apple, Inc. | Big Lots, Inc. |
| Akamai Technologies, Inc. | Applied Materials, Inc. | Biogen Idec, Inc. |
| Albemarle Corporation | ARAMARK Corporation | Bioscrip, Inc. |
| Alcoa, Inc. | Arch Capital Group, Ltd. | BJs Wholesale Club, Inc. |
| Aleris International, Inc. | Arch Coal, Inc. | The Black & Decker
Corporation |
| Alfa Laval, Inc. | Archer Daniels Midland Company | Black & Veatch, Inc. |
| Allegheny County Sanitary
Authority | Archstone-Smith | BlackRock, Inc. |
| Allegheny Energy, Inc. | The Arizona Republic | Blaze Recycling & Metals LLC |
| Allegheny Technologies
Incorporated | Arkansas Foundation for Medical
Care | Blockbuster Entertainment |
| Allergan, Inc. | Arrow Electronics, Inc. | Blue Cross & Blue Shield of
Arizona |
| Alliance Laundry Systems | Asbury Automotive Group, Inc. | Blue Cross & Blue Shield of
Louisiana |
| Alliant Energy | Ascension Parish School Board | Blue Cross & Blue Shield of
South |
| Allied Building Products
Corporation | ASCO Value | Carolina |
| Allied Waste Industries, Inc. | ASRC Federal Holding Company | Blue Cross of Northeastern
Pennsylvania |
| The Allstate Corporation | Asset Marketing Service, Inc. | BlueLinx Holdings, Inc. |
| ALON USA Energy, Inc. | Associated Industries of
Massachusetts | Board of Governors of the
Federal |
| ALSAC St. Judes Children
Research | Assurant Health | Reserve System |
| Hospital | Assurant, Inc. | Bob Evans Farms |
| ALTERA Corporation | Asurion Corporation | The Boeing Company |
| Altria Group, Inc. | Aurora Healthcare | Borders Group, Inc. |
| Amalgamated Bank of New York | The Auto Club Group | BorgWarner, Inc. |
| Amazon.com, Inc. | Autodesk, Inc. | Boston Market Corporation |
| Ambac Financial Group, Inc. | Autoliv North America, Inc. | Boston Properties, Inc. |
| Ameren Corporation | Automatic Data Processing | Boston Scientific Corporation |
| American Axle &
Manufacturing | Automobile Club of Southern
California | Boyd Gaming Corporate |
| Holdings, Inc. | AutoNation, Inc. | Brady Corporation |
| American Cancer Society, Inc. | Avalonbay Communities, Inc. | The Brinks Company |
| American Capital Strategies | Aveda Corporation | Bristol Myers Squibb Company |
| American Casino &
Entertainment | Avery Dennison Corporation | Broadcom Corporation |
| Properties | Aviall, Inc. | Broadlane, Inc. |
| American Dehydrated Foods, Inc. | Avis Budget Car Rental Group | Brown Shoe Company, Inc. |
| American Electric Power Company,
Inc. | Avista Corporation | Brownells, Inc. |
| American Enterprise | Avon Products, Inc. | Brown-Forman Corporation |
| American Express Company | Axis Capital Holdings | Brunswick Corporation |
| American Family Insurance | B Braun Medical, Inc. | Bryant University |
| American Financial Group | B/E Aerospace, Inc. | BSH Home Appliances Corporation |
| American Greetings Corporation | Babson College | Buffets, Inc. |
| American Home Mortgage
Investment | Baker Hughes Incorporated | Builders FirstSource, Inc. |
| Company | Ball Corporation | Builders Insurance Group |
| American Medical Association | Bank of America Corporation | Building Materials Holding
Corporation |
| American Standard Companies,
Inc. | The Bank
of New York Mellon Corporation | Bunge, Ltd. |
| American Superconductor | BankAtlantic | Burlington Northern Sante Fe
Corporation |
| American Tower Corporation | Bankers Bank | C H Robinson Worldwide, Inc. |
| American University | Banner Engineering Corporation | C R Bard, Inc. |
| American Water | Baptist Health | Cabelas Incorporated |
| AMERIGROUP Corporation | Baptist Health System | Cablevision |
| AmeriPride Services, Inc. | Barilla America, Inc. | Caelum Research Corporation |
| Ameriprise Financial, Inc. | Barloworld Handling | Calibre Systems |
| AmerisourceBergen Corporation | Barnes & Noble, Inc. | California Casualty Management
Company |
| Ameristar Casinos | Barr Pharmaceuticals, Inc. | California Dental Association |
| Ames True Temper | Basler Electric Company | California Water Service Company |
| Amgen, Inc. | Baxter International, Inc. | Camcraft |
| Amphenol Corporation | Baylake Bank | Cameron International
Corporation |
| AMR Corporation | Baylor College of Medicine | Canyon Ranch |
| Amtrak | Baylor Health Care System | Capital One Financial
Corporation |

B-8 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Capital Southwest Corporation	CMS Energy Corporation	Cytec Industries, Inc.
CareFirst BlueCross BlueShield	The CNA Corporation	Dal-Tile, Inc.
Carleton Life Support Systems	CNA Financial Corporation	Danaher Corporation
Carlisle Companies, Inc.	CNL Financial Group	Davis Langdon
Carlson Companies, Inc.	Cobb County School District	DaVita, Inc.
Carlson Systems Corporation	Coca Cola Bottling Company
Consolidated	Dawn Food Products
CarMax, Inc.	The Coca-Cola Company	Day & Zimmermann, Inc.
Carnival Corporation	Coca-Cola Enterprises, Inc.	Dean Foods Company
Carpenter Technology Corporation	Cognizant Technology Solutions	The Decurion Corporation
Casino Arizona	Colgate-Palmolive Company	Deere & Company
Caterpillar, Inc.	Colonial Bank	Deere & Company Canada
CB Richard Ellis	Colonial Williamsburg Foundation	Dekalb Regional Healthcare
Systems
CBS Corporation	Colorado Springs Utilities	Del Monte Foods Company
CDM	Colsa Corporation	Delek US Holdings, Inc.
CDW Corporation	Comau, Inc.	Delphi Corporation
CEC Entertainment, Inc.	Comcast Corporation	Delta Air Lines, Inc.
Celanese Americas Corporation	Comerica Incorporated	Deluxe Corporation
Celgard, Inc.	Commerce Bancorp, Inc.	Denso Manufacturing Michigan,
Inc.
Celgene Corporation	CommScope, Inc.	Deseret Book Company
Cell Therapeutics, Inc.	The Community College of
Baltimore	Developers Diversified Realty
Celtic Insurance	County	Devon Energy Corporation
CEMEX, Inc.	Community Health Network	DeVry University
Centene Corporation	Community Health Systems	Dicks Sporting Goods
Center for Creative Leadership	Compressor Controls Corporation	Dickstein Shapiro LLP
CenterPoint Energy, Inc.	Computer Task Group	Diebold Incorporated
Century Tel, Inc.	ConnectiCare, Inc.	Dillards, Inc.
Certegy, Inc.	ConocoPhillips	The DIRECTV Group, Inc.
CGI Technologies and Solutions,
Inc.	Conseco Services LLC	Discover Financial Service
Charter Communications, Inc.	CONSOL Energy, Inc.	Doherty Employer Services
Chemtreat, Inc.	Consolidated Edison, Inc.	Dole Fresh Vegetables
Chemtura Corporation	Constellation Energy Group, Inc.	Dollar General Corporation
Chesapeake Energy Corporation	Continental Airlines, Inc.	Dominion Resources, Inc.
Chevron Corporation	Convergys Corporation	Donaldson Company, Inc.
Chicago Bridge & Iron
Company	Con-way, Inc.	Dover Corporation
Chicago Transit Authority	Cook Communications Ministries	The Dow Chemical Company
Childrens Healthcare Atlanta	Cooper Industries, Ltd.	DPI West
Chiquita Brands International,
Inc.	Cooper Tire & Rubber Company	DST Systems, Inc.
Choice Hotels International	CooperVision, Inc.	DTE Energy
Christian City	Copper and Brass Sales	Duke Energy Corporation
CHS, Inc.	Core Laboratories	Duke Realty Corporation
The Chubb Corporation	Core-Mark Holding Company, Inc.	Duke University & Health
System
Chumash Casino	Corinthian Colleges	Dynamex
Church of Jesus Christ of
Latter-Day Saints	Cornell University	Dynegy, Inc.
Ciena Corporation	Corning Incorporated	E.I. du Pont de Nemours &
Company
CIGNA Corporation	Correctional Medical Services	Eastman Chemical Company
Cincinnati Financial Corporation	Corrections Corporation of
America	Eastman Kodak Company
CIT Group, Inc.	Country Insurance &
Financial	Eaton Corporation
The Citadel	The Country Vintner	eBay, Inc.
Citigroup, Inc.	Countrywide Financial
Corporation	Echostar Communications
Corporation
Citi-North America Operations
&	County of Spotsylvania	Ecolab, Inc.
Technology	Coventry Health Care, Inc.	Edison International
Citizens Communications	Convidien, Ltd.	Education Sales Management
Citrix Systems, Inc.	Cox Enterprises, Inc.	Edward Jones & Company
City and County of Denver	Cox Target Media	Edwards Lifesciences
City of Charlotte	CPS Energy	EG&G Defense Materials
City of Garland	Cracker Barrel Old Country Store,
Inc.	EG&G Services
City of Houston	Crane Company	El Paso Corporation
City of Philadelphia	Crate and Barrel	Electrolux Homecare of N.A.
City of Rochester	Crosstex Energy, Inc.	Electronic Data Systems
Corporation
City of Waterloo	Crown Castle International
Corporation	Eli Lilly & Company
Clarian Health Partners	Crown Holdings, Inc.	Embarq Corporation
Clear Channel Communications,
Inc.	CSX	EMC Corporation
Clear Channel Outdoor Holdings	CTS Corporation	EMCOR Group, Inc.
Cleco Corporation	Culligan International Company	Emerson Climate
Technologies/Copeland
Clopay Corporation	Cummins, Inc.	Emerson Electric
ClubCorp, Inc.	Cummins-Allison Corporation	Enbridge Energy Partners, L.P.
CME Group, Inc.	CVS Caremark	Energy East Corporation

MDU Resources Group, Inc. Proxy Statement B-9

Proxy Statement

| Energy Enterprise Solutions,
Inc. | Flowserve Corporation | Graphic Packaging Holding
Company |
| --- | --- | --- |
| EnergySouth, Inc. | Fluor Corporation | Great American Insurance / Great |
| EnPro Industries, Inc. | FMC Corporation | American Financial |
| ENSCO International Incorporated | FMC Technologies, Inc. | Great Clips, Inc. |
| Entergy Corporation | Foot Locker, Inc. | Great Plains Energy Incorporated |
| Entertainment Publications | Ford Motor Company | Group 1 Automotive, Inc. |
| EOG Resources, Inc. | Fort Worth Independent School
District | Growmark, Inc. |
| EON US LLC | Fortune Brands | Grubb & Ellis Company |
| Episcopal Retirement Homes | Foseco Metallurgical, Inc. | GuideStone Financial Resources |
| Equifax, Inc. | Fossil, Inc. | Guitar Center, Inc. |
| Equity Bank, SSB | Foster Poultry Farms | Gulfstream Aerospace Corporation |
| Equity Residential | Foster Wheeler, Ltd. | Habitat for Humanity
International |
| Erie Insurance Group | Fox Chase Cancer Center | Halliburton Company |
| ESCO Corporation | Franklin International | Hamot Medical Center |
| ESCO Technologies | Frazee Industries | Hannaford Bros. Company |
| Esterline Technologies
Corporation | Freedom Communications, Inc. | Hapag-Lloyd (America), Inc. |
| Etnyre International, Ltd. | The Freeman Companies | Harley Davidson Motor Company |
| Everest Re Group, Ltd. | Freeport-McMoRan Copper &
Gold, Inc. | Harleysville Insurance Company |
| Evraz Oregon Steel Mills | Fremont Bank | Harrahs Entertainment, Inc. |
| Exel, Inc. | Fremont Group | Harris County Hospital District |
| Exelon Corporation | Friendly Ice Cream Corporation | Harris Teeter, Inc. |
| Exempla Health Care, Inc. | Frontier Oil Corporation | Harsco Corporation |
| Exide Technologies | Funeral Directors Life Insurance
Company | Hartford Financial Services |
| Expedia, Inc. | Furniture Brands International,
Inc. | Harvard Vanguard Medical
Association |
| Express Scripts, Inc. | G&K Services | Harvey Industries |
| Extendicare Health Services | G. Loomis, Inc. | Hasbro, Inc. |
| Exxon Mobil Corporation | Galamba Companies, Inc. | Hastings Mutual Insurance
Company |
| Fabcon, Inc. | The Gannett Company | Haynes International, Inc. |
| Fabri-Kal Corporation | The Gap, Inc. | HCC Insurance Holdings, Inc. |
| Fairfax County Public Schools | Garden Fresh Restaurant
Corporation | HCP, Inc. |
| Farm Credit Council Services | Gas Technology Institute | HD Supply |
| The Farmers Bank | Gateway, Inc. | Health Management Associates,
Inc. |
| Farmland Foods, Inc. | Gaylord Entertainment | Health Net |
| FCI USA, Inc. | Geisinger Health System | Health Partners |
| Federal Express Corporation | Genentech, Inc. | HealthNow New York |
| Federal National Mortgage | General Cable Corporation | Heat Transfer Research, Inc. |
| Federal Reserve Bank of Atlanta | General Dynamics Corporation | H-E-B |
| Federal Reserve Bank of Boston | General Dynamics Information
Technology | Helmerich & Payne, Inc. |
| Federal Reserve Bank of Chicago | General Electric Company | Hendrick Medical Center |
| Federal Reserve Bank of
Cleveland | General Growth Properties, Inc. | Hendrickson International |
| Federal Reserve Bank of Dallas | General Motors Corporation | Henry Schein, Inc. |
| Federal Reserve Bank of Kansas
City | General Nutrition, Inc. | Hercules Incorporated |
| Federal Reserve Bank of
Minneapolis | Gentiva Health Services | Herman & Kittle Properties |
| Federal Reserve Bank of Philadelphia | Genuine Parts Company | Herman Miller, Inc. |
| Federal Reserve Bank of St.
Louis | Genworth Financial, Inc. | The Hershey Company |
| Federal-Mogul Corporation | Genzyme Corporation | Hess Corporation |
| Federated Department Stores | Georg Fisher Signet LLC | Hewlett-Packard Company |
| FedEx Kinkos | Georgia Gulf Corporation | Hexion Specialty Chemicals |
| Fender Musical Instruments | Georgia Institute of Technology | Highlights for Children, Inc. |
| Ferguson Enterprises | Georgia System Operations
Corporation | Highmark, Inc. |
| Fermi National Accelerator
Laboratory | Gerdau Ameristeel | Hill Phoenix |
| FerrellGas, Inc. | Gibraltar Steel Corporation | Hilti, Inc. |
| Ferro Corporation | Gilead Sciences, Inc. | Hilton Hotels Corporation |
| Fidelity National Financial,
Inc. | GITI | Hines Interests |
| Fifth Third Bancorp | Glatfelter Company | Hirsch Pipe & Supply Co.,
Inc. |
| The Finish Line, Inc. | Global Industries Offshore LLC | Hitachi |
| First American Corporation | Gold Eagle Company | HNI Corporation |
| First Citizens Bank | Goldman Sachs Group, Inc. | Holden Industries, Inc. |
| First Data Corporation | Goodrich Corporation | Holly Corporation |
| First Horizon National
Corporation | The Goodyear Tire & Rubber
Company | The Home Depot, Inc. |
| First Interstate BancSystem | Google Inc. | Home State Bank |
| FirstEnergy Corporation | Government Employees Health | Honeywell International, Inc. |
| Fiserv, Inc. | Association, Inc. | Horry Telephone Cooperative |
| Fleetwood Group | Graco, Inc. | Hospira, Inc. |
| Flexible Steel Lacing Company | Grande Cheese Company | Host Hotels & Resorts, Inc. |
| Flint Group North America | Grange Mutual Insurance
Companies | Hovnanian Enterprises, Inc. |
| Florida Power & Light
Company | Granite Construction, Inc. | Howard Hughes Medical Institute |

B-10 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

HSBC North America	Jarden Corporation	Lieberman Research Worldwide
Hubbell Incorporated	Jefferson Science Associates	LifeMasters Supported SelfCare,
Inc.
Hudson City Bancorp, Inc.	Jefferson Wells International	LifePoint Hospitals, Inc.
Hu-Friedy Manufacturing Co.,
Inc.	Jensen Precast	Limbach Facility Services LLC
Humana, Inc.	Jet Blue Airways	Limited Brands
Hunter Douglas, Inc.	JM Family Enterprises	Lincoln National Corporation
Hunter Industries	John Crane, Inc.	Linens & Things
Huntington Bancshares
Incorporated	John Wiley & Sons, Inc.	Lithia Motors, Inc.
Huntsman Corporation	Johnson & Johnson	Little Lady Foods
Huron Consulting Group	Johnson Financial Group	Live Nation, Inc.
Hutchinson Technology, Inc.	Jones Apparel Group, Inc.	Liz Claiborne, Inc.
Hyatt Hotels Corporation	Jones Lange LaSalle	Lockheed Martin Corporation
Hydro Automotive Structures	Jostens, Inc.	Loews Corporation
Hyundai Motor America	JPMorgan Chase & Company	The Longaberger Company
IDEARC, Inc.	JSJ Corporation	Longs Drug Stores Corporation
IDEX Corporation	Judicial Council of California	Los Angeles Unified School
District
IDEXX Laboratories, Inc.	Juniper Networks, Inc.	Louisiana-Pacific Corporation
Illinois Tool Works, Inc.	J-W Operating Company	Lowes Companies, Inc.
IMS Health, Inc.	Kansas Farm Bureau	Lower Colorado River Authority
Indiana State Personnel
Department	Katun Corporation	Lozier Corporation
Indianapolis Power & Light
Company	KB Home	LRAA
IndyMac Bancorp, Inc.	KBR, Inc.	LSI Corporation
Information Management Service	Kele, Inc.	Lubrizol Corporation
Information Resources	Kellogg Company	Luther Midelfort-Mayo Health
System
Ingersoll Rand Co., Ltd.	Kelly Services, Inc.	Lutron Electronics
Ingram Book Group	Kenexa	Luxottica Retail
Ingram Industries, Inc.	Kettering University	Lyondell Chemical Company
Ingram Micro, Inc.	Kewaunee Scientific Corporation	M&T Bank Corporation
INOVA Health Systems	KeyCorp	Macys, Inc.
Insight Enterprises, Inc.	Keystone Automotive Industries	Magellan Health Services
In-Sink-Erator	Keystone Foods Corporation	Malco Products, Inc.
Institute for Business and Home
Safety	Keywell LLC	Manitowoc Company, Inc.
Insurance Auto Auctions	Kimberly Clark Corporation	MANN+HUMMEL USA, Inc.
Integrys Energy Group, Inc.	Kimco Realty Corporation	Mannington Mills, Inc.
Intel Corporation	Kindred Healthcare	Manpower International, Inc.
INTELSAT	Kinetico, Inc.	ManTech International
IntercontinentalExchange, Inc.	King Pharmaceuticals, Inc.	Marathon Oil Corporation
International Business Machines	Kings Super Markets, Inc.	Maricopa County Office of
Management &
Corporation	Kingston Technology	Budget
International Dairy Queen, Inc.	Kohls Corporation	Maricopa Integrated Health
System
International Flavors &
Fragrances, Inc.	Kraft Foods, Inc.	Maritz, Inc.
International Game Technology	The Kroger Company	The Mark Travel Corporation
International Paper Company	Kruger International	Markel Corporation
Interpublic Group of Companies,
Inc.	Kum & Go LC	Marriott International, Inc.
Interstate Bakeries	Kyocera America, Inc.	Mars North America
Intertape Polymer Group	L L Bean, Inc.	Marsh & McLennan Companies,
Inc.
IREX Corporation	L-3 Communications Holdings,
Inc.	Marshfield Clinic
Iron Mountain Group, Inc.	Lab Volt Systems	MARTA
The Irvine Company	Laboratory Corporation of
America	Martin Marietta Materials, Inc.
ISS Facility Services, USA	Holdings	Martins Point Health Care
Isuzu Motors America, Inc.	Lance, Inc.	Mark Kay, Inc.
Ithaca College	LandAmerica Financial Group,
Inc.	Maryland Department of
Transportation
Itochu International, Inc.	Landstar System, Inc.	Masco Corporation
ITT Corporation	Lansing Board of Water &
Light	Massey Energy Company
ITT Educational Services, Inc.	Lantech.com	Mattel, Inc.
ITT Industries AES	Lear Corporation	Mayo Clinic
J B Hunt Transport Services,
Inc.	Legal & General America	MBIA, Inc.
J C Penney Company, Inc.	Leggett & Platt, Inc.	McDermott Incorporated
J J Keller & Associates,
Inc.	Lehman Brothers Holdings, Inc.	McDonalds Corporation
The J M Smucker Company	Lennox International, Inc.	MCG Health, Inc.
J R Simplot Company	Leo Burnett Company, Inc.	The McGraw-Hill Companies, Inc.
Jackson County Bank	Leucadia National Corporation	McKesson Medical-Surgical
Jackson Hewitt Tax Services,
Inc.	Lexmark International, Inc.	MDU Resources Group, Inc.
The Jackson Laboratory	LG Electronics USA, Inc.	MeadWestvaco Corporation
Jacobs Technology, Inc.	LGE MobileComm USA	Mecklenburg County
James Hardie Building Products	Liberty Diversified Industries	MedAire, Inc.
Janus Capital Group, Inc.	Liberty Media Corporation	Medco Health Solutions, Inc.

MDU Resources Group, Inc. Proxy Statement B-11

Proxy Statement

Media General, Inc.	National City Corporation	Orbital Science Corporation
Medical Mutual of Ohio	National Futures Association	Oregon State Lottery
Meijer, Inc.	National Oilwell Varco	OSG Tap & Die, Inc.
MEMC Electronic Materials	National Safety Council	Oshkosh Corporation
Mercer University	National Security Technologies
LLC	Owens & Minor, Inc.
Merck & Co., Inc.	Nationwide Insurance Company	Owens-Illinois, Inc.
Mercury General Corporation	Natures Sunshine Products, Inc.	Oxford Industries
Mercury Insurance Group	Navistar International
Corporation	Oxford Instruments Measurement
Systems
Merit Medical Systems	Navy Exchange Service Command	PACCAR, Inc.
Meritage Homes Corporation	NCCI Holdings, Inc.	Packaging Corporation of America
MeritCare Health System	NCMIC	Pactive Corporation
Merrill Corporation	NCR Corporation	Pall Corporation
Metaldyne	Nebraska Public Power District	Panasonic Automotive Systems
Company
Metavante	Nelnet, Inc.	of America
Methodist Hospital System	New Hanover Regional Medical
Center	Panduit Corporation
MetroPCS Communications, Inc.	The New York Times Company	Pantry, Inc.
Metropolitan Life Insurance
Company	Newell Rubbermaid, Inc.	Papa Johns International
Metropolitan Transit Authority	Newmont Mining Corporation	PASCO Scientific
MFS Investment Management	NICOR, Inc.	Paychex
MGIC Investment Corporation	The Nielsen Company	Payless Shoesource, Inc.
MGM Mirage	NII Holdings, Inc.	Peabody Energy Corporation
Miami Childrens Hospital	NiSource, Inc.	Pearson Education
Michael Baker Corporation	NJM Insurance Group	Pegasus Solutions, Inc.
Michigan Farm Bureau Family of	Noble Corporation	Penn State Hershey Medical Center
Companies	Noble Energy, Inc.	Penske Automotive Group, Inc.
Micro Dynamics	Norcal Waste Systems, Inc.	Pentair, Inc.
Microflex Corporation	The Nordam Group	Pentax USA, Inc.
MidAmerican Energy Company	Nordson Corporation	Pepco Holdings
Midwest Airlines	Nordstrom	Pepsi Bottling Group, Inc.
Midwest Research Institute	Norfolk Southern Corporation	PepsiAmericas, Inc.
Mike Albert Leasing, Inc.	Northeast Utilities System	PepsiCo, Inc.
Millipore Corporation	Northern Trust Corporation	Performance Food Group
Millward Brown North America	Northrop Grumman Corporation	Perini Corporation
Milwaukee Electric Tool
Corporation	Northwest Airlines, Inc.	Perkinelmer, Inc.
Mine Safety Appliances Company	Northwestern Mutual Life
Insurance	Perot Systems Corporation
Mirant	Novell, Inc.	Perrigo Company
Mission Foods	Novellus Systems, Inc.	Peter Kiewit Sons, Inc.
Missouri Department of
Conservation	NRG Energy, Inc.	PetSmart, Inc.
Missouri Department of
Transportation	NRUCFC	Pfizer, Inc.
Mitsubishi International
Corporation	NSTAR	PG&E Corporation
Mitsui & Company USA, Inc.	Nucor Corporation	PGT Industries
MMS Consultants, Inc.	Nutri Systems, Inc.	Pharmavite LLC
Mohawk Industries	NVIDIA Corporation	PHH Arval
Mohegan Sun Casino	NVR, Inc.	PHI, Inc.
Molex, Inc.	NYSE Euronext	Phillips Plastics Corporation
Molina Healthcare, Inc.	OReilly Automotive, Inc.	Phoenix Companies, Inc.
Molson Coors	Oakland County Road Commission	Piantedosi Baking Company
Moneris Solutions US	Occidental Petroleum Corporation	Pilot Corporation America
Moneygram International, Inc.	Office Depot, Inc.	Pinnacle West Capital
Corporation
Monster Worldwide, Inc.	OfficeMax	Pitney Bowes
Moodys Corporation	OGE Energy Corporation	Plexus Corporation
Morgan Stanley	Ohio Public Employees Retirement
System	Plum Creek Timber Co., Inc.
Motorola, Inc.	Ohio State University	PM Company
MPSI Systems, Inc.	Ohio State University Medical
Center	PNC Financial Services Group
MSKCC	Oil-Dri Corporation of America	PNM Resources, Inc.
MTA Long Island Bus	Old Dominion Electric
Cooperative	Polaris Industries, Inc.
MTD Products, Inc.	Old Republic International
Corporation	PolyOne Corporation
MTS Systems Corporation	Olin Corporation	Popular, Inc.
Mueller Industries, Inc.	OM Group, Inc.	The Port Authority of NY &
NJ
Murphy Oil Corporation	Omnicare, Inc.	Port of Portland
Mutual of Enumclaw Insurance
Company	Onmicom Group, Inc.	PPG Industries, Inc.
Mutual of Omaha	One America Financial Partners,
Inc.	PPL Corporation
Mylan, Inc.	One Beacon Insurance Group	Pratt Corporation
Nabors Industries, Ltd.	ONEOK, Inc.	Praxair, Inc.
Nalco Holding Company	Opus Corporation	Preformed Line Products Company
Nash-Finch Company	Orange County Government	Premier, Inc.
National Academies	Orange County Public Schools	Prestolite Wire Corporation

B-12 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Pride International, Inc.	Rohm and Haas Company	Southeastern Freight Lines
Prime Therapeutics	Rollins, Inc.	Southern Copper Corporation
Prince William Health System	Roper Industries	Southern Poverty Law Center
Principal Financial Group	Ross Stores, Inc.	Southwest Airlines Company
Priority Health	Rotary International	Southwest Gas Corporation
The Professional Golfers
Association	Rowan Companies, Inc.	Space Dynamics Laboratory
of America	Royal Bank of Canada	Space Telescope Science
Institute
Progress Energy, Inc.	Royal Caribbean Cruise Line	Sparrow Health System
The Progressive Corporation	RR Donnelley & Sons Company	Spectrum Health
Project Management Institute	RSM McGladrey	Spheris
ProLogis	Rush Enterprises, Inc.	Spirit AeroSystems Holdings
Providence Health Center	Rutgers University	Springs Global US, Inc.
Prudential Financial, Inc.	Ryder System, Inc.	Springs Window Fashions Division
PSS World Medical	Ryland Group, Inc.	St. Joseph Health System
Public Service Enterprise Group,
Inc.	S&C Electric Company	St. Louis County Government
Public Storage	SAC Federal Credit Union	St. Marys at Amsterdam
Public Utility District #1 of
Chelan County	Safilo USA	Stampin Up!
Publix Super Markets, Inc.	SAGE Publications	Standard Pacific Homes
Puget Energy, Inc.	Sakura Finetek USA, Inc.	Staples, Inc.
Pulte Homes, Inc.	Sally Beauty Company	Starwood Hotels & Resorts
Worldwide
QBE Regional Insurance	Salt River Project	State Corporation Commission
QTI Human Resources	Samuel Roberts Noble Foundation	State Employee Credit Union
QUALCOMM, Inc.	San Antonio Water System	State of Ohio Human Resources
Qualex, Inc.	San Manuel Band of Mission
Indians	Department
Quality Ingredients Corporation	Sanofi Pasteur	State of Oregon
Quanta Services, Inc.	Sargent Fletcher, Inc.	State Personnel Administration
Quest Diagnostics Incorporated	Sauer-Danfoss, Inc.	Stephan Company
Questar Corporation	SCANA Corporation	Sterilite Corporation
Qwest Communications
International, Inc.	ScenPro, Inc.	STERIS
R L I Insurance Company	SCF of Arizona	Sterling Bank
R L Polk & Company	Schaumburg Township District
Library	Stewart & Stevenson
Rackspace	Schlumberger, Ltd.	Strategic Resources, Inc.
Radio Shack Corporation	Schneider Electric	Strattec Security Corporation
Range Resources Corporation	Schneider National, Inc.	Stream
Raytheon Company	Schwan Food Company	Stryker Corporation
RCN	Seaboard Corporation	Subaru of Indiana Automotive,
Inc.
REA Magnet Wire Company, Inc.	Sealed Air Corporation	Sulzer Pumps US, Inc.
Recon Optical, Inc.	Sealy, Inc.	Sundt Companies
Recycled Paper Greetings, Inc.	Sears Holdings Corporation	Superior Industries
International, Inc.
Red Wing Shoe Company	Seco Tools, Inc.	SuperValue
Redcats USA	Securitas Security Services USA	SureWest Communications Company
Regal Entertainment Group	Self Regional Healthcare	Syar Industries, Inc.
The Regence Group	SEMCO Energy	Sybron Dental Specialties
Regency Centers Corporation	Sensient Technologies
Corporation	Sykes Enterprises
Regions Financial Corporation	Sentara Healthcare	SYNNEX Corporation
Reinsurance Group of America	Sentry Group	Synovate
Reliance Steel & Aluminum
Company	Sentry Insurance	Synthes
Reliant Energy	The ServiceMaster Company	Syracuse Research Corporation
Renaissance Learning, Inc.	Seventh Generation	T. Rowe Price Group, Inc.
Rent-A-Center, Inc.	Shands HealthCare	Tastefully Simple
Republic Services, Inc.	Sharp Electronics Corporation	TD Banknorth
Resurgent Capital Services	Simmons Bedding Company	Tech Data Corporation
Rewards Network	Simon Property Group, Inc.	Tecolote Research, Inc.
Rexel, Inc.	Simpson Housing LLLP	TelAlaska, Inc.
Reynolds American, Inc.	Sitel	Tele-Consultants, Inc.
Rice University	SJE-Rhombus	Teleflex
RiceTec, Inc.	Skyline Displays, Inc.	Tenet Healthcare Corporation
Rich Products Corporation	SkyWest, Inc.	Tesoro Corporation
Richco	Smead Manufacturing Corporation	Texas County & District
Retirement System
Ricoh Electronics, Inc.	SMSC Gaming Enterprise	Texas Industries, Inc.
Rimage Corporation	Smurfit-Stone Container
Corporation	Texas Mutual Insurance Company
Rite Hite Corporation	The Solae Company	Thrifty White Stores
Robert Bosch Corporation	Solo Cup Company	Time Warner, Inc.
Robert Bosch Tool Corporation	Solvere	TIMET
Robert Half International, Inc.	South Jersey Gas Company	Title Resource Group
Roche Diagnostics	Southco, Inc.	TJX Companies, Inc.
Rockwood Holdings, Inc.	Southeast Corporate Federal
Credit Union	The Topps Company, Inc.

MDU Resources Group, Inc. Proxy Statement B-13

Proxy Statement

The Toro Company	USAA	Westfield Group
Trane	USG Corporation	Westlake Chemical Corporation
Transocean Offshore, Inc.	UST, Inc.	Weston Solutions Inc
Travel Guard - AIG	Utah Retirement Systems	Weyerhaeuser Company
Travis County	Utah Transit Authority	Wheaton Franciscan Healthcare
Treasure Island Resort &
Casino	Utica National Insurance	Whirlpool Corporation
Tribune Company	V S E Corporation	White Mountains Insurance Group,
Ltd.
Tri-Met	Vail Resorts, Inc.	Whole Foods Market, Inc.
Trinity Health	Valero Energy Corporation	Wilbur Smith Associates
Triwest Healthcare Alliance	The Valspar Corporation	The Wilder Foundation
TRMI, Inc.	Van Andel Institute	Willamette Falls Hospital
Tupperware Corporation	Vangent, Inc.	Williams Companies
Turner Broadcasting System, Inc.	Vectren Corporation	Williams-Sonoma, Inc.
Tyco Electronics	Velcro Group Corporation	WilmerHale
UAL Corporation	Venetian Resort-Hotel-Casino	Windstream Communications
Ulticom, Inc.	Ventura Foods, LLC	Winn-Dixie Stores, Inc.
UMDNJ-University of Medicine
&	Venturedyne, Ltd.	Wisconsin Energy Corporation
Dentistry	Verisign, Inc.	Wisconsin Physicians Service
Insurance
Underwriters Laboratories, Inc.	Verizon Communications, Inc.	Corporation
Unified Grocers	Vernay Laboratories, Inc.	Wm. Wrigley Jr. Company
Union Pacific Corporation	Vesuvius USA	WMS
Union Tank Car Company	VF Corporation	World Access
UnionBanCal Corporation	Viacom, Inc.	World Fuel Services Corporation
Unisys Corporation	Viant Health Payment Solutions	World Vision United States
United Rentals	Viasystems Group, Inc.	World Wildlife Fund
United States Steel Corporation	Viejas Enterprise	Wyeth
United Stationers, Inc.	Virgin Media, Inc.	Wyle Laboratories
United Technologies Corporation	Virginia Farm Bureau Insurance
Service	Wyndham Worldwide
UnitedHealth Group, Inc.	Visiting Nurse Service of New
York	Xcel Energy, Inc.
Unitrin, Inc.	Visteon Corporation	Xerox Corporation
Univar USA, Inc.	Vonage Holding Corporation	XL Capital, Ltd.
Universal Forest Products, Inc.	Vornado Realty Trust	XTO Energy, Inc.
Universal Instruments
Corporation	Vulcan Materials Company	Yamaha Corporation of America
Universal Orlando	W C Bradley Company	Yankee Candle Company
University Health System
Consortium	W R Berkley Corporation	Yokogawa
University of Akron	W R Grace & Company	YRC Worldwide, Inc.
University of Alabama at
Birmingham	W W Grainger, Inc.	YSI
University of Alaska	Wachovia Corporation	Yum! Brands, Inc.
University of California at
Berkeley	Wackenhut Services, Inc.	Zale Corporation
University of Chicago	Wake County Government	Zeon Chemicals L.P.
University of Georgia	Walgreen Company	Zimmer, Inc.
University of Houston	Wal-Mart Stores, Inc.	Zions Bancorporation
University of Kansas Hospital	Walt Disney Company	Zurich North America
University of Louisville	Walter Industries, Inc.
University of Michigan	Washington Mutual, Inc.
University of Minnesota	The Washington Post Company	Companies
Surveyed
University of Missouri	Washington Savannah River
Company	Using Equilar
University of Nebraska	Washington University in St.
Louis
University of Pennsylvania	Waste Management, Inc.
University of Rochester	Waters Corporation	Alleghany Corp
University of St. Thomas	Watlow Electric	ALLETE Inc
University of Texas at Austin	Watson Pharmaceuticals, Inc.	Alliance One International Inc
University of Texas M D Anderson
Cancer	Wayne Memorial Hospital	Alliant Energy Corp
Center	Weatherford International	Allis Chalmers Energy Inc
University of Texas Southwestern
Medical	Weis Markets, Inc.	Amcol International Corp
Center	Wellcare Health Plans	Ameren Corp
University of Virginia	Wellmark BlueCross BlueShield	Anixter International Inc
University of Wisconsin Hospital
& Clinics	WellPoint, Inc.	Apache Corp
University of Wisconsin Medical	Wells Fargo & Company	Arch Chemicals Inc
Foundation	Wells Dairy, Inc.	Arch Coal Inc
University Physicians, Inc.	Wendys International	Argan Inc
Unum Group	Werner Enterprises, Inc.	Asbury Automotive Group Inc
UPS	WESCO International, Inc.	ATC Technology Corp
URS Corporation	West Virginia University
Hospitals	ATP Oil & Gas Corp
US Airways Group, Inc.	Western Refining, Inc.	Autoliv Inc
US Bancorp	Western Textile Companies	Avista Corporation
US Cellular Corporation	The Western Union Company	Basic Energy Services Inc

B-14 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Bemis Co Inc	Haynes International Inc	Pride International Inc
Berry Petroleum Co	Healthways Inc	Primus Telecommunications Group
Inc
BJ Services Co	Hecla Mining Co	Progress Software Corp
Black Hills Corp	Helix Energy Solutions Group Inc	Public Service Enterprise Group
Inc
Cabot Corp	Helmerich & Payne Inc	Quanta Services Inc
Cabot Oil & Gas Corp	Hercules Inc	Quest Resource Corp
Cal Dive International Inc	Hercules Offshore Inc	Questar Corporation
Caraustar Industries Inc	Hillenbrand Inc	Rackspace Hosting Inc
CB Richard Ellis Group Inc	Horizon Offshore Inc	Range Resources Corp
CH Energy Group Inc	Houston Exploration Co	Readers Digest Association Inc
Chart Industries Inc	Hovnanian Enterprises Inc	RealNetworks Inc
Chicago Bridge & Iron Co	Imation Corp	Regal Beloit Corp
Cimarex Energy Co	Integrys Energy Group Inc	Regency Energy Partners LP
Citadel Broadcasting Corp	Jarden Corp	Rex Energy Corp
Citizens Republic Bancorp Inc	Kaydon Corp	Robbins & Myers Inc
CMS Energy Corp	KB Home	Rowan Companies Inc
CNX Gas Corp	KBR Inc	Rural Cellular Corp
Columbus McKinnon Corp	Kelly Services Inc	Sanderson Farms Inc
Comfort Systems USA Inc	Key Energy Services Inc	Sandridge Energy Inc
Commercial Vehicle Group Inc	KLA Tencor Corp	SCANA Corporation
Compass Minerals International
Inc	Kraton Polymers LLC	Seitel Inc
Complete Production Services Inc	Layne Christensen Co	Sempra Energy
Comstock Resources Inc	Leap Wireless International Inc	South Financial Group Inc
Comsys IT Partners Inc	Lexmark International Inc	Southwest Gas Corporation
Concho Resources Inc	Libbey Inc	Southwestern Energy Co
Consolidated Edison Inc	Linn Energy LLC	SRA International Inc
Core Laboratories	Mariner Energy Inc	St Mary Land & Exploration
Company
Crosstex Energy LP	MarkWest Energy Partners LP	Standex International Corp
Crown Castle International Corp	MarkWest Hydrocarbon Inc	Stanley Works
Delta Petroleum Corp	Martin Marietta Materials Inc	Stanley Inc
Deluxe Corp	Matrix Service Co	Sterling Constructions Co Inc
Denburgy Resources Inc	McMoRan Exploration Co	Strategic Hotels & Resorts
Inc
Diamond Offshore Drilling Inc	Meadow Valley Corp	Suburban Propane Partners LP
Donaldson Co Inc	Nabors Industries Ltd	Superior Energy Services Inc
DPL Inc	National Fuel Gas Co	Superior Well Services Inc
Duke Energy Corp	NETGEAR Inc	Swift Energy Company
Dycom Industries Inc	New York Community Bancorp Inc	SXC Health Solutions Inc
Edge Petroleum Corp	Newfield Exploration Co	Teck Cominco Ltd
EMCOR Group Inc	Nexen Inc	Texas Industries Inc
Encore Acquisition Co	NiSource Inc	Thomas & Betts Corp
EnPro Industries Inc	Noble Corp	Toro Co
Ensco International Inc	Noble Energy Inc	Transmeridian Exploration Inc
EOG Resources Inc	Northeast Utilities	Trimble Navigation Ltd
EQT Corp	NorthWestern Corp	TW Telecom Inc
Exco Resources Inc	Northwestern Natural Gas Company	US Concrete Inc
Exelon Corp	NSTAR	UGI Corp
F5 Networks Inc	NV Energy Inc	Unit Corp
Fluor Corp	Oceaneering International Inc	Unitil Corp
Forest Oil Corp	OGE Energy Corp	USEC Inc
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MDU Resources Group, Inc. Proxy Statement B-15

Proxy Statement

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B-16 MDU Resources Group, Inc. Proxy Statement

●
P.O. Box 64945
St. Paul, MN 55164-0945	COMPANY #
Address Change? Mark box, sign, and indicate changes below: o
Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
●	INTERNET – www.eproxy.com/mdu
	Use the Internet to vote your proxy until 12:00 p.m. (CDT) on Monday, April 25, 2011.
●	TELEPHONE – 1-800-560-1965
	Use a touch-tone telephone to vote your proxy until 12:00 p.m. (CDT) on Monday, April 25, 2011.
●	MAIL – Mark, sign and date your proxy card and return it in the postage-paid envelope provided, or return it to MDU Resources Group, Inc., c/o Shareowner Services, P.O. Box 64873, St. Paul, MN 55164-0873.

If you vote by Telephone or Internet, please do not mail your Proxy Card.

The Board of Directors Recommends a Vote “FOR” all nominees and “FOR” Items 2, 3 and 4.

1.	Election of directors:	FOR	AGAINST	ABSTAIN			FOR	AGAINST	ABSTAIN
01.	Thomas Everist	o	o	o	06.	Thomas C. Knudson	o	o	o
02.	Karen B. Fagg	o	o	o	07.	Richard H. Lewis	o	o	o

Please fold here – Do not separate

03.	Terry D. Hildestad	o	o	o	08.	Patricia L. Moss	o	o	o
04.	A. Bart Holaday	o	o	o	09.	Harry J. Pearce	o	o	o
05.	Dennis W. Johnson	o	o	o	10.	John K. Wilson	o	o	o

	Approval of the material terms of the performance goals under the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan for purposes of Internal Revenue Code Section 162(m).			o	For	o	Against	o	Abstain
3.	Ratification of Deloitte & Touche LLP as the company’s independent auditors for 2011.			o	For	o	Against	o	Abstain
4.	Advisory vote to approve the compensation paid to the company’s named executive officers.			o	For	o	Against	o	Abstain
The Board of Directors Recommends a Vote “FOR 1 YEAR” in Item 5.
5.	Advisory vote on frequency of vote to approve the compensation paid to the company’s named executive officers.	o	1 Year	o	2 Years	o	3 Years	o	Abstain

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR ALL NOMINEES, FOR ITEMS 2, 3 AND 4, AND FOR 1 YEAR IN ITEM 5.

Date _______
Signature(s) in Box
Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy.

MDU RESOURCES GROUP, INC.

ANNUAL MEETING OF STOCKHOLDERS

Tuesday, April 26, 2011 11:00 a.m. Central Daylight Saving Time

909 Airport Road Bismarck, ND

●
1200 West Century Avenue	proxy
Mailing Address:
P.O. Box 5650
Bismarck, ND 58506-5650
(701) 530-1000

This proxy is solicited on behalf of the Board of Directors for the Annual Meeting of Stockholders on April 26, 2011.

This proxy will also be used to provide voting instructions to New York Life Trust Company, as Trustee of the MDU Resources Group, Inc. 401(k) Retirement Plan, for any shares of Company common stock held in the plan.

The undersigned hereby appoints Harry J. Pearce and Paul K. Sandness and each of them, proxies, with full power of substitution, to vote all Common Stock of the undersigned at the Annual Meeting of Stockholders to be held at 11:00 a.m., Central Daylight Saving Time, April 26, 2011, at 909 Airport Road, Bismarck, ND, and at any adjournment(s) 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. Your vote is important! Ensure that your shares are represented at the meeting. Either (1) submit your proxy by touch-tone telephone, (2) submit your proxy by Internet or (3) mark, date, sign and return this proxy card in the envelope provided (no postage is necessary if mailed in the United States). If no directions are given, the proxies will vote in accordance with the Directors’ recommendation on all matters listed on this proxy, and at their discretion on any other matters that may properly come before the meeting.

See reverse for voting instructions.

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MDU RESOURCES GROUP INC Proxy Solicitation & Information Statement 2011

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MDU RESOURCES GROUP INC — Proxy Solicitation & Information Statement 2011

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MDU RESOURCES GROUP INC Proxy Solicitation & Information Statement 2011