MDU RESOURCES GROUP INC - Proxy Solicitation & Information Statement 2012

DEF 14A 1 mdu120793_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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o Soliciting Material Pursuant to § 240.14a-12

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 9, 2012 |
| --- |
| To Our Stockholders: |
| Please join us for the 2012
Annual Meeting of Stockholders. The meeting will be held on Tuesday, April
24, 2012, 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 2011 Annual Meeting at which 88.07 percent of
the common stock was represented in person or by proxy. We hope for an even
greater representation at the 2012 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 two of the three 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 24, 2012, 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 24, 2012

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 24, 2012

The 2012 Notice of Annual Meeting and Proxy Statement and 2011 Annual Report to Stockholders are available at www.mdu.com/proxymaterials.

March 9, 2012

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 24, 2012, 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) | Ratification of the appointment
of Deloitte & Touche LLP as the companys independent auditors for 2012; |
| (3) | Advisory vote to approve the
compensation of the companys named executive officers; and |
| (4) | 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 24, 2012, 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 24, 2012, 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. Ratification of Independent Auditors	10
Accounting and Auditing Matters	10
Item 3. Advisory Vote to
Approve the Compensation of the Companys Named Executive Officers	11
Executive Compensation	12
Compensation Discussion and Analysis	12
Compensation Committee Report	33
Summary Compensation Table for 2011	34
Grants of Plan-Based Awards in 2011	36
Outstanding Equity Awards at Fiscal Year-End
2011	40
Pension Benefits for 2011	41
Nonqualified Deferred Compensation for 2011	44
Potential Payments upon Termination or Change
of Control	45
Director Compensation for 2011	53
Information Concerning Executive Officers	56
Security Ownership	57
Related Person Transaction Disclosure	58
Corporate Governance	58
Section 16(a) Beneficial Ownership Reporting
Compliance	64
Other Business	64
Shared Address Stockholders	64
2013 Annual Meeting of
Stockholders	65
Exhibit
A Companies that Participated in the Compensation Surveys used by Towers
Perrin (Towers Watson)	A-1
Exhibit B Companies Surveyed using
Equilar, Inc. MDU Resources Group, Inc. Chief Executive Officer
Competitive Analysis Measuring Long-Term Incentive Compensation and
Supplemental Income Security Plan Benefits	B-1
Exhibit C Companies Surveyed using
Equilar, Inc. Fidelity Exploration & Production Company Chief
Executive Officer Competitive Analysis Measuring Base Salary, Target Annual
Cash Compensation, and Target Total Direct Compensation	C-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 9, 2012, to solicit your proxy for use at our annual meeting of stockholders on April 24, 2012.

We will pay the cost of soliciting your proxy and reimburse brokers and others for forwarding proxy material to you. Okapi Partners LLC additionally will solicit proxies for approximately $7,000 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 2012, 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 24, 2012. You may vote each share that you owned on that date on each matter presented at the meeting. As of February 24, 2012, we had 188,830,529 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 |
| --- | --- |
| | ratification of the appointment
of Deloitte & Touche LLP as the companys independent auditors for 2012 |
| | advisory vote to approve the
compensation of 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 and 3 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 contained in our corporate governance guidelines requires any proposed 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 Ratification of the Appointment of Deloitte & Touche LLP as the Companys Independent Auditors for 2012

Approval of Item 2 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 3 Advisory Vote to Approve the Compensation of the Companys Named Executive Officers

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 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.

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 and for items 2 and 3.

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.

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. |

2 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| I TEM 1.
ELECTION OF DIRECTORS |
| --- |
| All nominees for director are
nominated to serve one-year terms, until the annual meeting of stockholders
in 2013 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 62	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 Everist
Genomics, Inc., Ann Arbor, Michigan, which provides solutions for
personalized medicines, since May 2002, was a director of Angiologix Inc.,
Mountain View, California, a medical diagnostic device company, from July
2010 through October 2011 when it was acquired by Everist Genomics, Inc., and
has been a director of Bell, Inc., Sioux Falls, South Dakota, a manufacturer
of folding cartons and packages, since April 2011.
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 38 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 24 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 17 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 58	Nominating and Governance
Committee
		Compensation Committee
	Ms. Fagg served as vice president
of DOWL LLC, d/b/a DOWL HKM, an engineering and design firm, from April 2008
until her retirement on December 31, 2011. 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, on the board of Deaconess Billings Clinic
Health System from 1994 to 2002, as a member of the Board of Trustees of
Carroll College from 2005 through 2010, and on the board of advisors of the
Charles M. Bair Family Trust from 2008 to July 2011, including a term as
board chair. She has been a member of the board of directors of the Billings
Chamber of Commerce since July 2009 and a member of the Billings Catholic
School Board since December 2011. 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.
	Ms. Fagg submitted a letter of
resignation to the board of directors when she retired from DOWL LLC in
accordance with our Director Resignation upon Change of Job Responsibility
policy. The board decided that Ms. Fagg should continue to serve as a
director and be renominated to 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 17 years of construction and engineering experience at DOWL HKM and
its predecessor, HKM Engineering, Inc., where she 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 62	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 37 years of significant,
hands-on experience at our company, Mr. Hildestad has a deep knowledge and
understanding of MDU Resources Group, Inc., its operating

4 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| ● | 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. — A. Bart Holaday | Director Since 2008 |
| --- | --- | --- |
| | Age 69 | 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; is a director
of Hull Investments, LLC, a private entity that combines nonprofit activities
and investments; is 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 chief executive officer of the Dakota Foundation, a nonprofit foundation
that fosters social entrepreneurship. 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 16 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 62 | 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. Mr. Johnson is serving his twelfth year as president of the
Dickinson City Commission. He served as a director of the Federal Reserve
Bank of Minneapolis from 1993 to 1998. He is a past member and chairman of
the Theodore Roosevelt Medora Foundation. | |

MDU Resources Group, Inc. Proxy Statement 5

Proxy Statement

| | 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. 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 37 years of experience in business
management, manufacturing, and finance, and has demonstrated his success in
these areas, holding positions as chairman, president, and chief executive
officer of TMI for 29 years, 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 eight 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 65 | Compensation Committee |
| | Mr. Knudson has been president of
Tom Knudson Interests since its formation on January 14, 2004. Tom Knudson
Interests 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. He has served
as an adjunct professor at the Jones Graduate School of Management at Rice
University. 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 on the National Council of
Methodist Neurological Institute since October 2011 and as a Trustee of the
Episcopal Seminary of the Southwest, Austin, Texas, since January 2012. | |
| | 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. | |

6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

●	Richard H. Lewis	Director Since 2005
	Age 62	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 also 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 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, now on inactive status, 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 a board director and 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 58	Compensation Committee
		Nominating and Governance
Committee
	Ms. Moss served as the president
and chief executive officer of Cascade Bancorp, a financial holding company
in Bend, Oregon, from 1998 to January 3, 2012. She served as the chief
executive officer of Cascade Bancorps principal subsidiary, Bank of the
Cascades, from 1993 to January 3, 2012, 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. Ms. Moss has
been a director of Cascade Bancorp since 1993 and a director of Bank of the
Cascades since 1998 and was elected vice chairman of both boards effective
January 3, 2012. Ms. Moss 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.

MDU Resources Group, Inc. Proxy Statement 7

Proxy Statement

| | 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. | |
| --- | --- | --- |
| | Ms. Moss submitted a letter of
resignation to the board of directors in connection with her retirement from
Cascade Bancorp and Bank of the Cascades in accordance with our Director
Resignation upon Change of Job Responsibility policy. The board decided that
Ms. Moss should continue to serve as a director and be renominated to 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 executive
positions at Cascade Bancorp and Bank of the Cascades, where she gained over
30 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 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 69 | 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. | |

8 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

●	Director Since 2003
Age 57	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.
Mr. Wilson is a certified public
accountant, on inactive status. 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.

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. |

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.

MDU Resources Group, Inc. Proxy Statement 9

Proxy Statement

I TEM 2. RATIFICATION OF INDEPENDENT AUDITORS

The audit committee at its February 2012 meeting appointed Deloitte & Touche LLP as our independent auditors for fiscal year 2012. 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 2012, 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 2012.

Ratification of the appointment of Deloitte & Touche LLP as our independent auditors for 2012 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.

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 2011 and 2010:

| Audit
Fees(a) | $ 2,425,700 | $ 2,250,579 |
| --- | --- | --- |
| Audit-Related
Fees(b) | 216,410 | 26,400 |
| Tax Fees(c) | 0 | 9,800 |
| All Other
Fees(d) | 0 | 17,943 |
| Total
Fees(e) | $ 2,642,110 | $ 2,304,722 |
| Ratio of
Tax and All Other Fees to Audit and Audit-Related Fees | 0.0 % | 1.2 % |
| * | The 2010 amounts were adjusted
from amounts shown in the 2011 proxy statement to reflect actual amounts. | |
| (a) | Audit fees for 2010 and 2011
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 and subsidiaries, agreed upon
procedures associated with the annual submission of financial assurance to
the North Dakota Department of Health, filing Form S-3 registration
statements (2011 only), and work related to responding to a comment letter
from the Securities and Exchange Commission (2011 only). | |
| (b) | Audit-related fees for 2011 and
2010 are associated with the audit of the Intermountain Gas Companys benefit
plans (2010 only), accounting research assistance, and accounting
consultation in connection with due diligence (2011 only). | |
| (c) | Tax fees for 2010 include
services associated with Section 199 tax credits. There were no tax fees for
2011. | |
| (d) | All other fees for 2010 consist
of training provided by Deloitte & Touche LLP on the topic of utility
taxes. There were no all other fees for 2011. | |
| (e) | Total fees reported above include
out-of-pocket expenses related to the services provided of $275,000 for 2011
and $274,329 for 2010. | |

Pre-Approval Policy

The audit committee pre-approved all services Deloitte & Touche LLP performed in 2011 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

10 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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.

I TEM 3. ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANYS NAMED EXECUTIVE OFFICERS

In accordance with 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 and
	we review competitive
compensation data for each named executive officer position and incorporate
internal equity in the final determination of target compensation levels.

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 2011. Accordingly, the following resolution is submitted for stockholder vote at the 2012 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. As the board of directors determined at its meeting in May 2011, we will provide our stockholders with the opportunity to vote on our named executive officer compensation at every annual meeting until the next required vote on the frequency of stockholder votes on named executive officer compensation. The next required vote on frequency will occur at the 2017 annual meeting of stockholders.

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

Approval of the compensation of 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.

MDU Resources Group, Inc. Proxy Statement 11

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.

2011 Named Executive Officers

For 2011, our named executive officers were Terry D. Hildestad, Doran N. Schwartz, J. Kent Wells, John G. Harp, and William E. Schneider. Mr. Hildestad is our president and chief executive officer, and Mr. Schwartz is our vice president and chief financial officer. Mr. Wells, president and chief executive officer of Fidelity Exploration & Production Company, a direct wholly-owned subsidiary of WBI Holdings, Inc., was hired in May 2011 and is a named executive officer for the first time. Mr. Harp was president and chief executive officer of MDU Construction Services Group, Inc. during 2011 and, effective January 1, 2012, became chief executive officer of Knife River Corporation as well as MDU Construction Services Group, Inc. Mr. Schneider was president and chief executive officer of Knife River Corporation during 2011 and, effective January 1, 2012, became MDU Resources Group, Inc. executive vice president of Bakken development.

Summary of Company Performance and Named Executive Officer Compensation Paid 2011 Compared to 2010

MDU Resources Group, Inc. was comprised of the following business segments in 2011:

| | electric and natural gas
distribution 1 under the leadership of David L. Goodin, the
president and chief executive officer of Montana-Dakota Utilities Co., Great
Plains Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain
Gas Company |
| --- | --- |
| | pipeline and energy services
under the leadership of Steven L. Bietz, the president and chief executive
officer of WBI Holdings, Inc., which is the parent company of WBI Pipeline
& Storage Group, Inc. and WBI Energy Services, Inc. |
| | exploration and production under
the leadership of J. Kent Wells, the president and chief executive officer of
Fidelity Exploration & Production Company, a subsidiary of WBI Holdings,
Inc. |
| | construction materials and
contracting under the leadership of William E. Schneider, the president and
chief executive officer of Knife River Corporation and |
| | construction services under the
leadership of John G. Harp, the president and chief executive officer of MDU
Construction Services Group, Inc. |

Our consolidated financial results for 2011 and 2010 were:

| Item — Consolidated
Earnings on Common Stock | $212.3 million | $240.0 million |
| --- | --- | --- |
| Earnings
per Share (diluted) | $1.12 | $1.27 |
| Return on
Invested Capital | 6.3% | 7.0% |
| Total
Stockholder Return | 9.1% | (11.3)% |

Our business segment results were as follows:

| | electric and natural gas
distribution earnings increased from $65.9 million in 2010 to $67.7 million
in 2011 |
| --- | --- |
| | pipeline and energy services
earnings decreased from $23.2 million in 2010 to $23.1 million in 2011 |
| | exploration and production
earnings decreased from $85.6 million in 2010 to $80.3 million in 2011 |
| | construction materials and
contracting earnings decreased from $29.6 million in 2010 to $26.4 million in
2011 and |
| | construction services earnings
increased from $18.0 million in 2010 to $21.6 million in 2011. |
| 1 | Natural gas distribution is a
separate business segment although we are showing it combined in this
discussion. |

12 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

While 2011 performance in our electric and natural gas and construction services segments was strong, performance in the pipeline and energy services, exploration and production, and construction materials segments was lower than in 2010. We believe that the compensation of our named executive officers for 2011 reflects these results.

In terms of remuneration, this overview focuses on the total compensation paid to our named executives. Total compensation paid is the sum of base salary, annual incentive award paid, and the value realized upon the vesting of long-term incentive awards of performance shares and restricted stock. While the compensation committee believes that total compensation as reported in the Summary Compensation Table is important, it does not show the actual value in the compensation paid to our named executive officers, which the compensation committee believes is important to show stockholders. The three major differences are that the total compensation reported in the Summary Compensation Table shows:

| | the change in
pension value, which increased in 2011 due to lower discount rates used to
calculate the values. Because the defined benefit pension plans were frozen
as of January 1, 2010, and none of our named executives received benefit
level increases in our Supplemental Income Security Plan for 2011, their
retirement benefits under these programs did not increase. |
| --- | --- |
| | a grant date fair
value assigned to performance share awards, which are potential payments
based on multiple assumptions. Performance shares are paid, if at all, three
years after grant, based upon our total stockholder return in comparison to
our peer group and |
| | all other
compensation for the named executives officers, which we excluded from total
compensation paid because the dollar amount did not change from 2010 to 2011,
except for a very small amount for Mr. Harp. |

The following table compares total compensation paid to Messrs. Hildestad, Schwartz, Harp, and Schneider, the four 2011 named executive officers who were also employed by the company in 2010. Three of the four named executive officers total compensation paid decreased in 2011 and, as a group, their total compensation paid decreased $821,353, or 17.3% when compared to 2010.

Total Compensation Paid in 2011 and 2010

Named Executive Officer — Terry D. Hildestad	2011	750,000	954,750	0	(1)		1,704,750
	2010	750,000	762,750	720,474	(2)	73,498	2,306,722
Doran N. Schwartz	2011	273,000	173,765	0	(1)		446,765
	2010	252,454	127,053	75,398	(2)		454,905
John G. Harp	2011	450,000	438,750	0	(1)		888,750
	2010	450,000	438,750	221,666	(2)		1,110,416
William E. Schneider	2011	447,400	436,215	0	(1)		883,615
	2010	447,400	37,805	329,179	(2)	58,806	873,190
						2011 Total	3,923,880
						2010 Total	4,745,233

| (1) | Performance shares granted for
the 2008-2010 performance period that did not vest and were forfeited because
performance was below threshold. |
| --- | --- |
| (2) | Performance shares paid for the
2007-2009 performance period. The value realized is based on our closing
stock price of $19.99 on February 11, 2010, and includes the dividend
equivalents paid on the vested shares. |
| (3) | Reflects the value of restricted
shares granted in 2001 that vested automatically and were paid on February
15, 2010, based on our closing stock price of $19.80 on February 12, 2010, as
February 15, 2010, was a holiday. |
| (4) | Total compensation paid is the
sum of base salary, annual incentive award paid, and the value realized upon
vesting of long-term incentive awards of performance shares and restricted
stock. |

The following table demonstrates our pay for performance policy specifically for our chief executive officer by comparing:

| | his total
compensation paid, which is the sum of base salary, annual incentive awards
paid, and the value realized upon the | |
| --- | --- | --- |
| | o | vesting of
restricted stock during 2010 |
| | o | vesting of
performance shares during 2007, 2008, 2009, and 2010 (none vested in 2011)
and |
| | o | exercise of stock
options in 2007 |
| | his total
compensation as reported in the summary compensation table and | |
| | one-year total
stockholder returns for 2007 to 2011. | |

MDU Resources Group, Inc. Proxy Statement 13

Proxy Statement

5 Year CEO Compensation and Total Stockholder Return

●	Total Compensation Paid	$3,248,707	$1,680,323	$2,647,426	$2,306,722	$1,704,750
●	Total Compensation from Summary Compensation Table	$4,023,732	$3,119,702	$4,203,004	$2,860,918	$3,566,327
●	1 Year TSR	9.9%	(20.1)%	12.9%	(11.3)%	9.1%
Total Compensation Paid = Base
Salary + Annual Bonus Paid + Performance Shares that Vested + Restricted
Stock that Vested + 2007 Stock Option Exercise

Comparing Mr. Hildestads total compensation paid and total compensation as reported in the summary compensation table against annual total stockholder return shows:

| | In 2007, annual
total stockholder return was 9.9% and Mr. Hildestads total compensation paid
increased by 65% and his total compensation as reported in the summary
compensation table increased by 30%. |
| --- | --- |
| | In 2008, annual
total stockholder return was (20.1)% and Mr. Hildestads total compensation
paid decreased by 48% and his total compensation as reported in the summary
compensation table decreased by 23%. |
| | In 2009, annual
total stockholder return was 12.9% and Mr. Hildestads total compensation
paid increased by 58% and his total compensation as reported in the summary
compensation table increased by 35%. |
| | In 2010, annual
total stockholder return was (11.3)% and Mr. Hildestads total compensation
paid decreased by 13% and his total compensation as reported in the summary
compensation table decreased by 32%. |
| | In 2011, annual
total stockholder return was 9.1% and Mr. Hildestads total compensation paid
decreased by 26% and his total compensation as reported in the summary
compensation table increased by 25%. |

| Overview of 2011 Compensation for our Named Executive
Officers |
| --- |
| Our 2011
compensation program for our named executive officers was designed to link
their compensation to our financial performance and align their interests
with those of our stockholders. Mr. Wells compensation was established to
induce him to join the company while, at the same time, basing his incentive
payments on the attainment of financial results. We discuss Mr. Wells
compensation in a separate section below, and the following discussion of our
named executive officers compensation excludes Mr. Wells. |
| Our overall
compensation program and philosophy is built on a foundation of these guiding
principles: |

| | we pay for
performance, with 55.6% to 71.4% of our named executive officers 2011 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 PEER
Analysis, we compare our pay-for-performance results with the
pay-for-performance results of our peers over five-year periods. |

14 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The compensation committee took the following actions with respect to 2011 compensation for our named executive officers:

| | froze 2011 base
salaries at their 2009 and 2010 levels for Messrs. Hildestad, Harp, and
Schneider and provided a 5% salary increase only to Mr. Schwartz |
| --- | --- |
| | maintained the
same percentages of base salary used to establish target incentive awards |
| | continued to link our corporate executives i.e., Messrs. Hildestad and
Schwartz 2011 annual incentive awards to the achievement of our business
units performance goals |
| | maintained the
limitation on the maximum payment with respect to the return on invested
capital portion of the 2011 annual incentive awards at MDU Construction
Services Group, Inc., Knife River Corporation, Fidelity Exploration &
Production Company, and WBI Holdings, Inc. at 100% of the target incentive
award, unless return on invested capital equaled or exceeded the business
units weighted average cost of capital |
| | provided for
mandatory reductions in any performance shares earned pursuant to awards
granted in 2011 if our total stockholder return for the 2011-2013 performance
period is negative |
| | in 2011 the
compensation committee did not approve payment of any performance shares or
dividend equivalents granted in 2008 for the 2008-2010 performance period due
to our negative total stockholder return for the 2008-2010 performance period
placing us in the 33rd percentile compared to our performance graph peer
group |
| | imposed mandatory
stock holding requirements on a portion of shares earned pursuant to
long-term incentive awards granted in 2011 or thereafter and |
| | granted no
increases under our SISP, which is a nonqualified retirement plan that
provides benefits to our key managers and four of our named executive
officers. |

| J.
Kent Wells |
| --- |
| We hired Mr. Wells
as the president and chief executive officer of Fidelity Exploration &
Production Company, effective May 2, 2011. Mr. Hildestad, with assistance
from our vice president-human resources, negotiated Mr. Wells compensation
in connection with his hiring; his compensation is set forth in a letter
agreement, which was approved by the compensation committee and the board of
directors at their regular February 2011 meetings. The compensation committee
approved Mr. Wells compensation after considering his extensive experience
in leading the oil and gas industry and his demonstrated track record of
substantially increasing reserves and production while reducing finding
costs. |
| Mr. Wells letter
agreement provides for the following: |

| | a base salary of
$550,000, prorated for his eight months of employment during 2011. We discuss
how Mr. Wells base salary was determined in the Base Salaries of the Named
Executive Officers for 2011 section below. | |
| --- | --- | --- |
| | a cash recruitment
payment of $550,000 to induce Mr. Wells to join the company and to offset the
forfeiture of restricted stock granted by his former employer that would
otherwise have vested in 2012 and 2013 | |
| | a target annual
incentive award opportunity of 100% of base salary prorated to reflect his
eight months of employment during 2011. Mr. Wells would receive a guaranteed
minimum payment equal to the 2011 prorated target amount and could earn up to
200% of target if: | |
| | o | Fidelity
Exploration & Production Company and WBI Holdings, Inc.s 2011 earnings
per share were at or above 115% of the performance targets approved by the
compensation committee |
| | o | Fidelity
Exploration & Production Company and WBI Holdings, Inc.s 2011 returns on
invested capital were both at least equal to their respective weighted
average costs of capital |
| | o | Fidelity
Exploration & Production Company achieved its production goal and |
| | o | WBI Holdings, Inc.
achieved its five safety goals. |
| | We discuss this
incentive award in the 2011 Annual Incentives section below. | |
| | to offset other
compensation Mr. Wells would have received if he had stayed with his former
employer, an additional 2011 incentive award opportunity to earn $1.85
million, payable one-half in cash and one-half in our common stock, if
Fidelity Exploration & Production Companys 2011 cash flow from
operations exceeded $132.0 million. We discuss this incentive award in the
2011 Annual Incentives section below. | |
| | commencing in
2012, a target long-term incentive opportunity of 200% of base salary and | |
| | relocation
benefits consisting of: | |
| | o | reasonable
expenses for two home finding trips for Mr. Wells and his spouse |
| | o | monthly
reimbursements of up to $3,000 for 6 months for temporary living expenses |

MDU Resources Group, Inc. Proxy Statement 15

Proxy Statement

| | o — o | reasonable
expenses incurred during the actual move from the Houston area to Denver — reimbursement of
actual and reasonable costs of moving household goods and personal effects | |
| --- | --- | --- | --- |
| | o | a relocation
allowance equal to one months salary | |
| | o | reimbursement of
the following home sale expenses: | |
| | | | reasonable attorneys
fees |
| | | | federal, state and
local transfer taxes |
| | | | search fees and
title insurance |
| | | | brokerage
commission of a licensed real estate broker |
| | | | mortgage
prepayment penalties |
| | | | recording fees |
| | | | any other fees or
expenses approved in advance in writing by the company |
| | o | a bonus of 3% of
the sales price of Mr. Wells Houston area home up to a maximum of $15,000 | |
| | o | reimbursement of
the following costs to acquire a new home if Mr. Wells purchases a new home
within 18 months from his hire date: | |
| | | | title search and
title insurance |
| | | | mortgage service
charges and mortgage taxes |
| | | | bank applications
and processing and appraisal fees |
| | | | recording and
notary fees |
| | | | state and local
transfer taxes |
| | | | termite inspection |
| | | | land survey |
| | | | attorneys fees up
to a maximum of 1% of the new mortgage amount |
| | | | origination fees
or points up to a maximum of 2% of the new mortgage amount and |
| | | | any other fees or
expenses approved in writing by the company and |
| | o | spousal career
assistance. | |
| Mr. Wells received
$66,031 in relocation benefits for 2011 consisting of $18,000 in temporary
living expenses, $2,198 in actual move and related expenses, and $45,833 in
relocation allowance. We anticipate Mr. Wells completing his relocation to
the Denver area during 2012. | | | |
| Mr. Wells must
repay the relocation benefits he received if he resigns from the company
within one year from when his household goods and personal effects are moved
to the Denver area. | | | |
| 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. | | |

16 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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
	opportunities to
earn annual incentive compensation in order to be competitive from a total
remuneration standpoint and ensure focus on annual financial and operating
results and
	opportunities to
earn long-term incentive compensation 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 55.6% to 71.4% of total target
compensation for the named executive officers, except for Mr. Wells, for 2011
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.

The following table shows the allocation of total target compensation for 2011 among the individual components of base salary, annual incentive, and long-term incentive:


			Annual + Long-Term (%)
Name	Annual (%)	Long-Term (%)
Terry D. Hildestad	28.6	28.6	42.8	71.4
Doran N. Schwartz	44.4	22.2	33.4	55.6
J. Kent Wells (1)	18.6	81.4	0.0	81.4
John G. Harp	39.2	25.5	35.3	60.8
William E. Schneider	39.2	25.5	35.3	60.8
(1) Mr. Wells received two annual
incentive awards in 2011, but no long-term incentive award in 2011.

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. Except for Mr. Wells, the annual incentive targets for 2011 range from 50% to 100% of base salary and the long-term incentive targets range from 75% to 150% of base salary, depending on the named executive officers salary grade. In Mr. Wells case for 2011, his incentives are made up of a target annual incentive opportunity of 100% of base salary plus an additional incentive opportunity of $1.85 million. After 2011 and pursuant to his letter agreement, Mr. Wells target annual incentive opportunity will remain at 100% of base salary and his long-term incentive target will be 200% of base salary. 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
Compensation Consultants |
| --- |
| 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 2010 for purposes of 2011 compensation, the compensation
committee retained Towers Watson, 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. |

MDU Resources Group, Inc. Proxy Statement 17

Proxy Statement

The assessment included identifying any material changes to the positions analyzed and their scopes of responsibility, summarizing current incumbent compensation information, updating competitive compensation information, gathering and analyzing relevant general and industry-specific survey data, validating position matches and survey data with our management, assessing pay relationships for our chief executive officer as compared to our chief financial officer and the business unit presidents and chief executive officers, and updating the base salary structure. Towers Watson 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. They compared our positions to like positions contained in general industry compensation surveys, industry-specific compensation surveys and, for our chief executive officer, to the chief executive officers in our performance graph peer group. Towers Watson also aged the data from the date of the surveys by 2.5% on an annualized basis to estimate 2011 competitive targets. The compensation surveys and databases used by Towers Watson were:

Survey*	Number of Companies Participating (#)	Median Number of Employees (#)(1)		Publicly- Traded Companies (#)		Number of Median Revenue (000s) ($)
Towers Perrin 2009 Compensation Databank General Industry
Executive Database	428	19,083		310		6,199,000
Towers Perrin 2009 Compensation Databank Energy Services
Executive Database	98	3,290		62		3,371,000
2009 Effective Compensation, Inc. Oil & Gas
Exploration Compensation Survey	119	451		49		Not reported
Mercers 2009 Total Compensation Survey for the Energy
Sector	276	Not reported		205		1,057,000
Watson Wyatt 2009/2010 Report on Top Management
Compensation	2,275		(2)		(2)		(2)

| (1) | For the 2009 Effective
Compensation, Inc. Oil & Gas Exploration Compensation Survey, the number
reported as the Median Number of Employees is the average number of
employees. |
| --- | --- |
| (2) | The 2,275 organizations
participating in Watson Wyatts 2009/2010 Top Management Compensation Survey
included 350 organizations with 2,000 to 4,999 employees; 327 organizations
with 5,000 to 9,999 employees; 264 organizations with 10,000 to 19,999
employees; and 330 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, see Exhibit A. |

In billions of dollars our revenues for 2009, 2010, and 2011 were approximately $4.2, $3.9, and $4.0, respectively.

Since there were no specific data sources dedicated to the construction services or construction material industries, Towers Watson considered data from a subset of companies in the Towers Perrin 2009 Compensation Databank General Industry Executive Database and five public companies. The companies from the general industry survey, along with key financial data, were:

Company Name*	Market Capitalization Fiscal Year-End ($) (millions)	Revenue ($) (millions)	Total Assets ($) (millions)
Hovnanian Enterprises	302.8	1,596.3	2,024.6
KB Home	1,193.4	1,824.9	3,436.0
Owens Corning	3,276.1	4,803.0	7,167.0
PulteGroup	3,822.7	4,084.4	10,051.2
Carpenter Technology	916.2	1,362.3	1,497.4
Century Aluminum	1,498.2	899.3	1,861.8
Crown Holdings	4,129.5	7,938.0	6,532.0
Kennametal	1,559.2	1,999.9	2,347.0
Martin Marietta Materials	4,052.6	1,702.6	3,239.3
Newmont Mining	23,338.6	7,705.0	22,299.0
Vulcan Materials	6,654.0	2,690.5	8,533.0

The information in the table is based solely upon information provided by the publisher of the general industry survey and is not deemed filed or a part of this compensation discussion and analysis for certification purposes.

18 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The five public companies Towers Watson referenced, along with key financial data, were:

Company Name* — Dycom Industries	496.5	1,106.9	693.5
Quanta Services	4,363.8	3,318.1	4,117.0
EMCOR Group	1,781.1	5,547.9	2,981.9
U.S. Concrete	34.1	534.5	389.2
Granite Construction	1,300.3	1,963.5	1,709.6

The information in the table is based solely upon information provided by Towers Watson and is not deemed filed or a part of this compensation discussion and analysis for certification purposes.

Revenues for 2009, 2010, and 2011 were approximately $819.0 million, $789.1 million and $854.0 million, respectively, for our construction services segment and were approximately $1.5 billion each year for our construction materials segment.

| Role of
Management |
| --- |
| To verify the comparability of
Mr. Hildestads target long-term incentive compensation and his Supplemental
Income Security Plan benefits, the compensation committee directed the human
resources department to prepare a report comparing the combined value of
long-term incentive compensation and nonqualified defined benefit plan
benefits of other chief executive officers. The report was prepared by
compiling data from Equilar, Inc. and presented at the compensation
committees November 2010 meeting. The report compared Mr. Hildestads target
long-term incentive compensation and the Supplemental Income Security Plan
benefits to those of the chief executive officers in our performance graph
peer group as of February 2010 and companies with revenues ranging from $2.5
billion to $6.5 billion in the construction, energy, and utility industries.
We discuss the results of this review in the 2011 Long-Term Incentives
section below. |

The following companies were in our performance graph peer group as presented at the November 2010 compensation committee meeting:

	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	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 other companies reviewed for this assessment are listed in Exhibit B.

At the request of Mr. Hildestad, the human resources department conducted a competitive assessment in January 2011 to determine the compensation level necessary to recruit a qualified individual to lead Fidelity Exploration & Production Company. Mr. Hildestad, with the assistance of our vice presidenthuman resources, negotiated Mr. Wells compensation in connection with his hiring. The January 2011 competitive assessment is discussed in the Base Salaries of the Named Executive Officers for 2011 section below.

The chief executive officer played an important role in recommending 2011 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 Towers Watson and worked with the compensation consultants and the human resources department to prepare 2011 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.

MDU Resources Group, Inc. Proxy Statement 19

Proxy Statement

| Decisions for 2011 |
| --- |
| The compensation committee, in
conjunction with the board of directors, determined all compensation for each
named executive officer for 2011 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 2011 salary grades at its August 2010 meeting. At the November 2010 meeting, it established individual base salaries, target annual incentive award levels, and target long-term incentive award levels for 2011. At their February 2011 meetings, the compensation committee and the board of directors determined annual and long-term incentive awards, along with the payouts based on performance from the recently completed performance period for prior annual and long-term awards. The February 2011 meetings occurred after the release of earnings for the prior year.

Our stockholders had their first advisory vote on our named executive officers compensation at the 2011 Annual Meeting of Stockholders, and approximately 94% of the shares present in person or represented by proxy and entitled to vote on the matter approved the named executive officers compensation. The compensation committee and the board of directors considered the results of the vote at their November 2011 meetings and did not change our executive compensation program as a result of the vote.

| Salary Grades
for 2011 |
| --- |
| 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 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 2011 base salary ranges associated with each classification:

Position	Grade	Name	2011 Base Salary (000s) — Minimum ($)	Midpoint ($)	Maximum ($)
President and CEO	K	Terry D. Hildestad	620	775	930
Vice President and CFO	I	Doran N. Schwartz	260	325	390
President and CEO, Fidelity Exploration & Production
Company	J	J. Kent Wells	312	390	468
President and CEO, MDU Construction Services Group, Inc.	J	John G. Harp	312	390	468
President and CEO, Knife River Corporation	J	William E. Schneider	312	390	468

The presidents and chief executive officers of MDU Construction Services Group, Inc. and Knife River Corporation were assigned to salary grade J and were unchanged for 2011. In connection with his hiring, the president and chief executive officer of Fidelity Exploration & Production Company was assigned to salary grade J in recognition of the importance of this business segment to the company and the elevation of this position to be a direct report to our president and chief executive officer. The committee believes that from an internal equity standpoint, these positions should carry the same salary grade. The vice president and CFO position remained in salary grade I for 2011 to maintain a one-step difference in salary grade level when compared to the president and chief executive officer positions at our business units and to reflect the separate treasurer position created in 2010. 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.

At its August 2010 meeting, the compensation committee reviewed Towers Watsons assessment of internal equity between our chief executive officer, our chief financial officer, and the presidents and chief executive officers of our business units. The assessment showed that our chief executive officers 2010 pay as a multiple of the 2010 pay of our business units presidents and chief executive officers is generally consistent with the chief executive officer pay multiples of our performance graph peer group. Additionally, our chief executive officers 2010 pay as a multiple of our chief financial officers 2010 pay is higher than the chief executive officer pay multiple of our performance graph peer group due to our chief financial officers recent promotion to the position. The table below shows pay multiples for base salary, target annual cash, which is base salary plus target annual incentives, and total target direct compensation, which is the sum of target annual cash and the expected value of target long-term incentives.

20 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Internal Equity Assessment*

Title	Company or Business Unit	2010 CEO Pay Multiple for MDU Resources Group, Inc. — Base Salary	Target Annual Cash	Total Target Direct Compensation	CEO Pay Multiple of Performance Graph Peer Group (1) — Base Salary	Target Annual Cash	Total Target Direct Compensation
President & CEO	MDU Resources Group, Inc.
Vice President & CFO	MDU Resources Group, Inc.	2.9x	3.8x	4.5x	2.0x	2.2x	2.4x
President & CEO / 2nd Highest Paid	MDU Construction Services
	Group, Inc.	1.7x	2.0x	2.3x	1.6x	1.7x	1.8x
President & CEO / 3rd Highest Paid	Knife River Corporation	1.7x	2.0x	2.3x	1.9x	2.2x	2.4x
President & CEO / 4th Highest Paid	WBI Holdings, Inc.	2.1x	2.6x	2.9x	2.2x	2.4x	3.0x
President & CEO / 5th Highest Paid	Combined Utility Group (2)	2.3x	2.8x	3.2x	2.4x	3.1x	4.1x

| (1) | Performance graph peer group
compensation data compiled by Towers Watson from most recent proxy statements
as of July 2010. |
| --- | --- |
| (2) | Combined Utility Group consists
of Montana-Dakota Utilities Co., Great Plains Natural Gas Co., Cascade
Natural Gas Corporation, and Intermountain Gas Company |
| * | The information in the table is
based solely upon information provided by Towers Watson and is not deemed
filed or a part of this compensation discussion and analysis for
certification purposes |

The compensation committee determines where, relative to the midpoint of each salary grade, an individuals base salary should be based on 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

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 other 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

MDU Resources Group, Inc. Proxy Statement 21

Proxy Statement

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 2011 |
| --- |
| In recognition of the continued
challenging economic environment and our efforts to control costs, the
compensation committee determined that, except for Mr. Schwartz, there would
be no base salary increases for 2011. The compensation committee had also
frozen 2010 base salaries at their 2009 levels for our named executive
officers, except for Mr. Schwartz who received an increase in connection with
his promotion to chief financial officer in 2010. Determination of Mr. Wells
base salary is discussed below. |
| Doran N.
Schwartz |
| Mr. Schwartz was elected vice
president and chief financial officer effective February 17, 2010. For 2011
the compensation committee awarded Mr. Schwartz a 5.0% increase, raising his
2010 salary from $260,000 to $273,000. The compensation committees rationale
for the increase was in recognition of: |

| | Mr. Schwartzs commendable job in
transitioning into his new position of chief financial officer in 2010 |
| --- | --- |
| | his
salary equaling the minimum of his salary grade |
| | his leadership in helping reduce
our 2011 corporate overhead expense budget by approximately $700,000 and |
| | his assistance in the company
achieving a return on invested capital of 7.5% for the twelve months ending
June 2010 as compared to the median return on invested capital of 6.4% for
companies in our performance graph peer group over the same time period. |
| J. Kent Wells | |
| When the board initiated a search
for a president and chief executive officer of Fidelity & Exploration
Company, Mr. Hildestad directed the human resources department to conduct a
competitive assessment to determine the remuneration necessary to recruit a
qualified individual. The competitive assessment was done in January 2011.
Using information collected from most recent public company proxy statements
by Equilar, Inc., an independent data collection firm, the human resources
departments analysis looked at 2009 compensation data for chief executive
officer positions at companies in the following Standard Industrial
Classification (SIC) codes: | |
| | 1311 Crude Petroleum and
Natural Gas |
| | 1321 Natural Gas Liquids |
| | 1381 Drilling Oil and Gas Wells
and |
| | 1382 Oil and Gas Field
Exploration Services. |

Revenue ranged from $250 million to $850 million with median revenue of $591 million at the 36 companies surveyed. These companies are listed on Exhibit C.

The competitive assessment measured base salary, target annual cash compensation, which was base salary plus annual discretionary bonus plus target annual non-equity incentive plan compensation, and target total direct compensation, which was target annual cash compensation plus the target value of long term incentives plus the change in pension and non-qualified deferred compensation plus all other compensation as reported in a companys proxy statement. The results of the competitive analysis were:

Compensation Item
Base Salary (median)	$ 559,961
Target Annual Cash Compensation (median)	$ 1,050,000
Target Total Direct Compensation (median)	$ 2,337,003

Mr. Wells base salary of $550,000 approximated the median base salary of $559,961 paid to chief executive officers in the competitive assessment. We determined that Mr. Wells base salary should be close to the median paid to chief executive officers and above the maximum for his salary grade level because we determined that level was necessary to recruit Mr. Wells for this position.

22 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The following table shows each named executive officers base salary for 2010 and 2011 and the percentage change:

Name — Terry D. Hildestad	750.0	750.0	0.0
Doran N. Schwartz (1)	260.0	273.0	5.0
J. Kent Wells (2)	n/a	550.0	n/a
John G. Harp	450.0	450.0	0.0
William E. Schneider	447.4	447.4	0.0

| (1) | Elected vice president and chief
financial officer effective February 17, 2010. Salary shown is not prorated. |
| --- | --- |
| (2) | Hired May 2, 2011, as president
and chief executive officer of Fidelity Exploration & Production Company.
Salary shown is not prorated. |

2011 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. Wells, Harp, and Schneider, 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, with Mr. Wells 2011 annual incentive weighted 75% for Fidelity Exploration & Production Company and 25% for WBI Holdings, Inc.

For the named executive officers working at MDU Resources Group, Inc. in 2011, who were Messrs. Hildestad and Schwartz, the compensation committee based 2011 annual incentives on the weighted average of the incentive payments made to the chief executive officers of MDU Construction Services Group, Inc., Knife River Corporation, WBI Holdings, Inc., and the Combined Utility Group, which consists of Montana-Dakota Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Corporation, and Intermountain Gas Company. 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. This 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 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 maintained the 2011 performance measure weightings at 50% each because 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 change 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 2011, the compensation committee chose to use the return on invested capital target approved by

MDU Resources Group, Inc. Proxy Statement 23

Proxy Statement

the board in the 2011 business plan. Furthermore, the compensation committee continued its 2010 practice and imposed an additional requirement for the 2011 return on invested capital portion of the annual incentives, except for the Combined Utility Group. Results above the 2011 return on invested capital target would not generate additional annual incentive compensation for business unit executives, unless 2011 return on invested capital results met or exceeded a business units weighted average cost of capital. In that case, the business unit chief executive officer could 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 2011 base salary.

Messrs. Hildestads, Harps, and Schneiders 2011 target annual incentive were 100%, 65%, and 65% of base salary, respectively. The compensation committee determined the 2011 annual incentive targets would remain unchanged from 2010. The compensation committees rationale for this decision was based on the competitive assessments. Specifically, the annual incentive target of 100% of base salary for Mr. Hildestad was within the 82% to 135% range of incentives for chief executive officer positions. The annual incentive targets of 65% for Messrs. Harp and Schneider were within the 43% to 71% range of incentives for business unit president and chief executive officer positions. The compensation committee believed, based on internal equity, that there should be a uniform annual incentive target for these two business unit president and chief executive officer positions. Mr. Schwartzs annual incentive target was 50% of base salary and also remained unchanged from 2010. Mr. Schwartzs annual incentive target was below the 55% target identified by Towers Watson in its competitive assessment. The committees rationale for the slightly lower annual incentive target was to reflect Mr. Schwartzs recent promotion to vice president and chief financial officer. Mr. Wells annual incentive target is discussed below.

Terry D. Hildestad and Doran N. Schwartz

As discussed above, Messrs. Hildestad and Schwartz were awarded 2011 incentives based on the weighted average of the payments made to the business unit chief executive officers, with each payment weighted by the business units average invested capital for 2011. The award opportunities and results for the four business units are discussed below.

As a result of the awards earned by the chief executive officers of the business units, Messrs. Hildestad and Schwartz earned 127.3% of their target awards, resulting in a payment of $954,750 for Mr. Hildestad and $173,765 for Mr. Schwartz.

John G. Harp MDU Construction Services Group, Inc.

The 2011 award opportunity available to Mr. Harp ranged from no payment if the results were below the 85% level to a 200% payout if:

| | the 2011 allocated
earnings per share for MDU Construction Services Group, Inc. were at or above
the 115% level and |
| --- | --- |
| | the 2011 return on
invested capital was at least equal to MDU Construction Services Group,
Inc.s 2011 weighted average cost of capital. |

We set Mr. Harps 2011 allocated earnings per share and return on invested capital target levels below his 2010 target level and below the 2010 actual level. Both 2011 target levels reflected significant uncertainty in the overall construction market and anticipated lower margins due to more competitive bids on construction projects. MDU Construction Services Group, Inc.s 2011 earnings per share and return on invested capital were 186.6% and 160.0% of their respective 2011 targets. 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, or 150% of Mr. Harps 2011 target annual incentive.

William E. Schneider Knife River Corporation

The 2011 award opportunity for Mr. Schneider ranged from no payment if the results were below the 85% level to a 200% payout if:

| | the 2011 allocated
earnings per share for Knife River Corporation were at or above the 115%
level and |
| --- | --- |
| | the 2011 return on
invested capital was at least equal to Knife River Corporations 2011
weighted average cost of capital. |

24 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

We set the 2011 allocated earnings per share and return on invested capital target levels below the 2010 target levels and the 2010 actual results. The 2011 target levels reflected a greater share of business coming from public sector projects, which generally carry lower profit margins. Also, 2011 target levels were lower than 2010 target levels due in part to the absence of earnings gains on the sales of property and equipment. Knife River Corporations 2011 results for allocated earnings per share and return on invested capital were 115.0% and 109.4% of their respective targets. Mr. Schneiders payment with respect to the return on invested capital component was limited to the target amount of $145,405 because Knife River Corporations return on invested capital was less than its weighted average cost of capital, resulting in an overall payment of $436,215, or 150% of Mr. Schneiders 2011 target annual incentive.

WBI Holdings, Inc.

For WBI Holdings, Inc., the 2011 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 2011 allocated
earnings per share for WBI Holdings, Inc. were at or above the 115% level |
| --- | --- |
| | the 2011 return on
invested capital was at least equal to WBI Holdings, Inc.s 2011 weighted
average cost of capital and |
| | the five safety
goals were met. |

We set the 2011 allocated earnings per share and return on invested capital target levels slightly below the 2010 target levels and below the 2010 actual results. The 2011 target levels were based on lower natural gas prices and higher depletion, depreciation, and amortization amounts. WBI Holdings, Inc.s 2011 results for allocated earnings per share and return on invested capital were 99.5% and 100.0% of their respective targets, resulting in a potential payment of 98.8% of the president and chief executive officer of WBI Holdings, Inc.s 2011 target annual incentive.

The president and chief executive officer of WBI Holdings, Inc. 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 |
| --- | --- |
| | each established
local safety committee must conduct 4 site assessments per year |
| | 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. |

One of the five safety goals was not met because WBI Holdings, Inc.s personal injury incident rate was 3.13. Therefore, the incentive payment was reduced from 98.8% to 97.8% of the 2011 target annual incentive.

Combined Utility Group

For the Combined Utility Group, the 2011 award opportunity for its president and chief executive officer 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.

We set the 2011 targets for allocated earnings per share and return on invested capital targets higher than the 2010 targets but lower than 2010 actual results to reflect a deferred income tax credit in 2010 that did not recur in 2011. For 2011, the Combined Utility Groups 2011 earnings per share and return on invested capital exceeded their respective 2011 targets. As a result, the president and chief executive officer of the Combined Utility Group was paid 136.7% of the 2011 target annual incentive.

J. Kent Wells

In connection with his hire, the compensation committee granted Mr. Wells an annual incentive opportunity pursuant to the WBI Holdings, Inc. Executive Incentive Compensation Plan. Mr. Wells annual incentive target was set at 100% of his base salary. The committees rationale was the 100% annual incentive target would drive a target annual cash compensation of $1.1 million, which approximated the target annual cash compensation paid to chief executive officers listed in the competitive assessment. For 2011, the committee guaranteed a minimum payment of 100% of target, prorated to reflect his May 2, 2011 hire date.

MDU Resources Group, Inc. Proxy Statement 25

Proxy Statement

The 2011 incentive award opportunity was based on the financial goals for both Fidelity Exploration & Production Company and WBI Holdings, Inc., weighted 75% for the results of Fidelity Exploration & Production Company and 25% for the results of WBI Holdings, Inc. The incentive award could be reduced by up to 10% if Fidelity Exploration & Production Company did not meet its production goal and by up to 5% if WBI Holdings, Inc. did not satisfy its safety goals. Mr. Wells could achieve a maximum of 200% of the annual incentive target if:

| | the 2011 allocated
earnings per share for Fidelity Exploration & Production Company and the
2011 allocated earnings per share for WBI Holdings, Inc., were at or above
115% of the performance target |
| --- | --- |
| | the 2011 return on
invested capital for Fidelity Exploration & Production Company and the
2011 return on invested capital for WBI Holdings, Inc. were both at least
equal to their respective weighted average costs of capital |
| | Fidelity
Exploration & Production Company achieved production of at least 69.3
billion cubic feet equivalent (Bcfe), and |
| | the five safety
goals for WBI Holdings, Inc. were met. |

Financial Goals and Results We set the 2011 earnings per share and return on invested capital targets for Fidelity Exploration & Production Company and WBI Holdings, Inc. lower than 2010 target levels and lower than 2010 actual results based on lower natural gas prices and higher depletion, depreciation, and amortization expense.

Fidelity Exploration & Production Companys earnings per share and return on invested capital exceeded their respective targets, but Mr. Wells payment with respect to the return on invested capital component was limited to the target amount because its return on invested capital was less than its weighted average cost of capital. WBI Holdings, Inc.s 2011 results are discussed earlier under 2011 Annual Incentives WBI Holdings, Inc. The weighted financial results for Fidelity Exploration & Production Company and WBI Holdings, Inc. resulted in an achievement of 126.1% of the incentive target. This resulted in a potential payment to Mr. Wells of $462,390, which was subject to reduction if Fidelity Exploration & Production Companys production goal was not met and/or WBI Holdings, Inc. failed to achieve one or more of its five 2011 safety goals.

Fidelity Exploration & Production Company Production and WBI Holdings, Inc. Safety Goals and Results

Fidelity Exploration & Production Company
2011 Production in Bcfe	Goal Achievement Percentage
Less than 62.4	0%
62.4	50%
Higher than 62.4 up to and including 69.3	Prorated from 50% to 100%
Higher than 69.3	100%

Fidelity Exploration & Production Companys 2011 actual production was 66.6 Bcfe, which equates to an achievement percentage of 80.5%.

The five WBI Holdings, Inc. safety goals were:

Even though Fidelity Exploration & Production Companys personal injury rate was 0.0, WBI Holdings, Inc. did not meet one of its safety goals due to a 2011 personal injury incident rate above 2.0. Achieving four of the five safety goals equates to an achievement percentage of 80.0%.

The production and safety goal results reduced Mr. Wells potential award of $462,390 by 2.9% to $448,981. Of the $448,981 payment, $366,685 is the target amount guaranteed in Mr. Wells letter agreement and is reported in the Bonus column of the Summary Compensation Table; the additional $82,296 was reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.

26 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The following table shows the changes in our performance targets and achievements for both 2010 and 2011:

Name	EPS ($)	ROIC (%)	EPS ($)	ROIC (%)	EPS ($)	ROIC (%)	EPS ($)	ROIC (%)
Terry D.
Hildestad	See table below		See table below		See table below		See table below
Doran N.
Schwartz	See table below		See table below		See table below		See table below
J. Kent
Wells	FEP: 2.08	7.8	FEP: 2.41	8.8	FEP: 1.99	7.1	FEP: 2.20	7.9
	WBI: 2.02	8.4	WBI: 2.08	8.6	WBI: 1.97	7.9	WBI: 1.96	7.9
John G. Harp
(1)	2.22	6.7	3.46	9.0	2.39	6.0	4.46	9.6
William E.
Schneider (2)	0.54	4.6	0.44	3.9	0.35	3.2	0.40	3.5
WBI
Holdings, Inc. President & CEO	2.02	8.4	2.08	8.6	1.97	7.9	1.96	7.9
Combined
Utility Group President & CEO	1.07	6.1	1.17	6.5	1.14	6.2	1.21	6.5

| (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 Knife River Corporation. |

The table below lists each named executive officers 2011 base salary, annual incentive target percentage, incentive plan performance targets, incentive plan results, and the annual incentive earned.

Name	2011 Base Salary — (000s) ($)	2011 Annual Incentive — Target (%)	EPS ($)	ROIC (%)	EPS ($)	ROIC (%)	EPS (%)	ROIC (%)	2011 Annual Incentive Earned — (000s) ($)
Terry D.
Hildestad	750.0	100	See table below		See table below		See table below		954.8
Doran N.
Schwartz	273.0	50	See table below		See table below		See table below		173.8
J. Kent
Wells (1)	550.0	100	FEP: 1.99	7.1	FEP: 2.20	7.9	FEP: 170.3	100	FEP: 353.5
			WBI: 1.97	7.9	WBI: 1.96	7.9	WBI: 97.5	100	WBI: 95.5
John G.
Harp (2)	450.0	65	2.39	6.0	4.46	9.6	200.0	100	438.8
William E. Schneider (3)	447.4	65	0.35	3.2	0.40	3.5	200.0	100	436.2

| (1) | Based on allocated earnings per
share and return on invested capital for Fidelity Exploration &
Production Company (weighted 75%) and WBI Holdings, Inc. (weighted
25%). Mr. Wells 2011 annual incentive earned reflects a reduction of 2.9%
due to Fidelity Exploration & Production Companys 2011 results on production
and WBI Holdings, Inc.s results on safety. |
| --- | --- |
| (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 Knife River Corporation. |

Messrs. Hildestads and Schwartzs 2011 annual incentives were paid at 127.3% of target based on the following:

Chief Executive Officer of:	Column A 2011 Payment as a Percentage of Annual Incentive Target	Column B Percentage of Average Invested Capital
MDU
Construction Services Group, Inc.	150.0 %	6.1 %	9.2 %
Knife River
Corporation	150.0 %	24.4 %	36.6 %
WBI
Holdings, Inc.	97.8 %	34.6 %	33.8 %
Combined
Utility Group	136.7 %	34.9 %	47.7 %
Total			127.3 %

J. Kent Wells Additional 2011 Annual Incentive We granted Mr. Wells a second 2011 annual incentive award pursuant to the Long-Term Performance-Based Incentive Plan, based on Fidelity Exploration & Production Companys cash flow from operations. Specifically, we granted Mr. Wells an all-or-nothing award opportunity of $1.85 million, payable one-half in cash and one-half in our common stock, if Fidelity Exploration & Production Companys 2011 cash flow from operations exceeded $132.0 million and he did not resign from the company prior to January 2, 2012. If Fidelity Exploration & Production Companys 2011 cash flow from operations exceeded $132.0 million and Mr. Wells employment was terminated prior to January 2, 2012, due to a change in control of the company, Mr. Wells would have been entitled to full payment of this incentive award. The compensation committee chose cash flow from operations as the performance measure due to the significance of consistent

MDU Resources Group, Inc. Proxy Statement 27

Proxy Statement

reinvestment in exploration and production assets. Cash flow from operations is necessary to sustain and grow a business in this industry. The compensation committee set the incentive performance level at $132.0 million, which was below the 2011 operating plan, to provide an allowance for depressed commodity prices and to yield a reasonable probability of payment, as the $1.85 million was in part to offset other compensation Mr. Wells would have received if he had stayed with his former employer. Fidelity Exploration & Production Companys actual 2011 cash flow from operations was $276.4 million, resulting in a payment of $1.85 million to Mr. Wells. The cash portion paid to Mr. Wells is reported in the Non-Equity Incentive Compensation Plan column in the Summary Compensation Table, and the grant date fair value of the stock portion of the award is reported in the Stock Awards column of the Summary Compensation Table.

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 2011, 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. |

2011 Long-Term Incentives Awards Granted in 2011 under the Long-Term Performance-Based Incentive Plan for Named Executives We use the Long-Term Performance-Based Incentive Plan, which has been approved by our stockholders, for long-term incentive compensation. We have not granted stock options since 2001, and in 2011 we amended the plan to no longer permit the grant of stock options or stock appreciation rights. We use performance shares as the primary form of long-term incentive compensation, and no stock options, stock appreciation rights, or restricted shares are outstanding.

For the named executives, other than Mr. Wells who did not receive any long-term incentive award in 2011, 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 2011-2013 performance share awards. In February 2011, the compensation committee approved changes to our performance graph peer group to:

| | remove OGE Energy Corp.
because it is an electric only utility |
| --- | --- |
| | remove NSTAR because it was
expected to be acquired by Northeast Utilities in 2011 |
| | add Atmos Energy
Corporation, a natural gas distribution business with pipeline, gas storage,
and energy marketing businesses |
| | remove ONEOK because its
asset size has grown to $13 billion |
| | add Southern Union Company,
which has natural gas transportation and storage, gathering and processing,
and gas distribution businesses |
| | add Texas Industries, Inc.
and Sterling Construction Company and |
| | replace Dycom Industries,
Inc., which has more emphasis on telecommunications, with Pike Electric,
which is a good fit with our construction services business to balance out
the business mix of our peer group. |

28 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The companies comprising our performance graph peer group in February 2011 were:

| | Alliant Energy Corporation | | Martin Marietta Materials,
Inc. | | Southwest Gas Corporation |
| --- | --- | --- | --- | --- | --- |
| | Atmos Energy | | National Fuel Gas Company | | Sterling Construction
Company |
| | Berry Petroleum Company | | Northwest Natural Gas
Company | | SM Energy Company |
| | Black Hills Corporation | | Pike Electric Corporation | | Swift Energy Company |
| | Comstock Resources, Inc. | | Quanta Services, Inc. | | Texas Industries |
| | EMCOR Group, Inc. | | Questar Corporation | | Vectren Corporation |
| | EQT Corporation | | SCANA Corporation | | Vulcan Materials Company |
| | Granite Construction
Incorporated | | Southern Union Company | | Whiting Petroleum
Corporation |

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. 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. No dividend equivalents are paid on unvested performance shares.

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 2011 long-term incentive targets as a percentage of base salary for each named executive were unchanged from 2010 because the targets were in line with the competitive assessments targets.

The compensation committee has historically set Mr. Hildestads target long-term incentive compensation below the level indicated by the competitive assessment to offset his benefit under the Supplemental Income Security Plan, our nonqualified defined benefit plan, which prior assessments have shown to be higher than competitive levels. To verify whether Mr. Hildestads target long-term incentive compensation remains lower than competitive levels and whether Mr. Hildestads Supplemental Income Security Plan benefit remains higher than competitive levels, our human resources department conducted the review discussed in the Role of Management section above. The report showed that the combined value of Mr. Hildestads target long-term incentive compensation and nonqualified defined benefit plan benefits had a percentile rank of 58.4% when compared to the performance graph peer companies and a percentile rank of 43.7% when compared to companies with revenues ranging from $2.5 billion to $6.5 billion in the construction, energy, and utility industries.

On February 17, 2011, the board of directors, upon recommendation of the compensation committee, made performance share grants to the named executive officers. The compensation committee determined the target number of performance shares granted to each named executive officer by multiplying the named executive officers 2011 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 1, 2011 through January 22, 2011, as shown in the following table:

Name — Terry D. Hildestad	750,000	150	1,125,000	20.74	54,243
Doran N. Schwartz	273,000	75	204,750	20.74	9,872
J. Kent Wells	n/a	n/a	n/a	n/a	n/a
John G. Harp	450,000	90	405,000	20.74	19,527
William E. Schneider	447,400	90	402,660	20.74	19,414

MDU Resources Group, Inc. Proxy Statement 29

Proxy Statement

Assuming our three-year (20112013) total stockholder return is positive, from 0% to 200% of the target grant will be paid out in February 2014 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 February 17, 2011 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 2014 at the same time as the performance awards are paid.

If our total stockholder return is negative, the shares and dividend equivalents otherwise earned, if any, will be reduced in accordance with the following table:

| TSR | Reduction
in Award |
| --- | --- |
| 0% through -5% | 50 % |
| -5.01% through -10% | 60 % |
| -10.01% though -15% | 70 % |
| -15.01% through -20% | 80 % |
| -20.01% through -25% | 90 % |
| -25.01% or below | 100 % |

The named executive officers must retain 50% of the net after-tax shares that are earned pursuant to this long-term incentive award until the earlier of (i) the end of the two-year period commencing on the date any shares earned under the award are issued and (ii) the executives termination of employment.

| No Payment
in February 2011 for 2008 Grants under the Long-Term Performance-Based
Incentive Plan |
| --- |
| We granted performance
shares to our named executive officers under the Long-Term Performance-Based
Incentive Plan on February 14, 2008, for the 2008 through 2010 performance
period. Our total stockholder return for the 2008 through 2010 performance
period was (19.98)%, which corresponded to a percentile rank of 33% against
our performance graph peer group and resulted in no shares or dividend
equivalents being paid to the named executive officers. |
| PEER 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 2006 through
2010 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 Compensation to 5 Year Total Stockholder Return

| Dollars of Total Direct
Compensation (1) per Point of Total Stockholder Return | 50,369 | 12,261 |
| --- | --- | --- |

| (1) | Total direct compensation
consists of the values reported in the total column of the summary
compensation table. |
| --- | --- |
| * | Based solely on information
provided by Equilar, Inc. and is not deemed filed or a part of this
compensation discussion and analysis for certification purposes. |

30 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The results of the analysis showed that we paid our named executive officers more than what the performance graph peer group companies paid their named executive officers for comparable levels of stockholder return over the five-year period. We have prepared this analysis each year since 2004, commencing with the 2000-2004 period, and in most years, the analysis showed that we paid our named executive officers less than, or approximately the same as, our performance graph peer group. However, for the 2006-2010 five-year period, our negative total stockholder return in both 2008 and 2010 resulted in a five-year average total stockholder return of 0.98%. This low average caused the ratio to spike, despite decreased total direct compensation, as calculated, for our named executive officers for the period. The compensation committee believes that the analysis continues to serve a useful purpose in its annual review of compensation despite the effect of the negative total stockholder return on the ratio for the 2006-2010 period.

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. For non-bargaining unit employees hired after 2006, the retirement contribution is 5% of plan eligible compensation. For participants hired prior to 2006, 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% and Mr. Wells who is eligible for 5%.

Supplemental Income Security Plan Benefits Offered We offer certain key managers and executives, including all of our named executive officers, except Mr. Wells, 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.

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 2011 SISP benefit level increase for any of the named executive officers, and the committee chose not to grant a 2011 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 for our named executive officers, except for Mr. Schwartz whose salary increase did not correspond to a new SISP benefit level. The following table reflects our named executive officers SISP levels as of December 31, 2011:

Name	December 31, 2011 Annual SISP Benefits — Survivor ($)	Retirement ($)
Terry D. Hildestad	1,025,040	512,520
Doran N. Schwartz	175,200	87,600
J. Kent Wells	n/a	n/a
John G. Harp	548,400	274,200
William E. Schneider	548,400	274,200

MDU Resources Group, Inc. Proxy Statement 31

Proxy Statement

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 2011 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.

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 within five years to own our common stock equal to a multiple of their base salaries. Stock owned through our 401(k) plan or by a spouse is 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, 2011:

Name — Terry D. Hildestad	4X	6.13	6.67
Doran N. Schwartz	3X	1.47	1.87	(1)
J. Kent Wells	3X	0.00	0.67	(2)
John G. Harp	3X	4.09	7.25
William E. Schneider	3X	5.57	10.00

| (1) | Participant must meet ownership
requirement by January 1, 2015. |
| --- | --- |
| (2) | As of February 22, 2012, Mr.
Wells owns 25,743 shares of our common stock. Participant must meet ownership
requirement by May 1, 2016. |

32 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The compensation committee may consider the policy and the executives stock ownership in determining compensation. The committee, however, did not do so with respect to 2011 compensation.

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

MDU Resources Group, Inc. Proxy Statement 33

Proxy Statement

S ummary Compensation Table for 2011

Name and Principal Position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)		Stock Awards ($) (e)(1)		Non-Equity Incentive Plan Compensation ($) (g)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)(2)		All Other Compensation ($) (i)		Total ($) (j)
Terry D. Hildestad	2011	750,000			1,084,318		954,750		739,760		37,499	(3)	3,566,327
President and CEO	2010	750,000			830,137		762,750		480,532		37,499		2,860,918
	2009	750,000			1,117,861		1,500,000		825,319		9,824		4,203,004
Doran N. Schwartz	2011	273,000			197,341		173,765		147,789		33,549	(3)	825,444
Vice President and CFO	2010	252,454			143,881		127,053		71,302		33,549		628,239
	2009
John G. Harp	2011	450,000			390,345		438,750		481,331	(4)	51,445	(3)	1,811,871
President and CEO of	2010	450,000			298,845		438,750		307,935		48,545	(5)	1,544,075
MDU Construction	2009	450,000			402,417		392,500	(6)	761,670		23,272	(5)	2,029,859
Services Group, Inc.
J. Kent Wells	2011	367,671	916,685	(7)	925,000	(8)	1,007,306	(9)			89,505	(3)	3,306,167
President and CEO of	2010
Fidelity Exploration &	2009
Production Company
William E. Schneider	2011	447,400			388,086		436,215		412,085		37,499	(3)	1,721,285
President and CEO of	2010	447,400			297,122		37,805		306,909		37,499		1,126,735
Knife River Corporation	2009	447,400			400,093		581,620		726,646		9,324		2,165,083

| (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 in FASB
Accounting Standards Codification Topic 718. 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, 2011. |
| --- | --- |
| (2) | Amounts shown represent the
change in the actuarial present value for years ended December 31, 2009,
2010, and 2011 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, 2009, 2010, and 2011, as follows: |

Name	12/31/2009 ($)	12/31/2010 ($)	12/31/2011 ($)	12/31/2009 ($)	12/31/2010 ($)	12/31/2011 ($)
Terry D. Hildestad	806,554	462,186	728,587	18,765	18,346	11,173
Doran N. Schwartz		71,302	147,789
John G. Harp	743,334	294,023	459,963
Additional Retirement (4)	18,336	13,912	21,368
J. Kent Wells
William E. Schneider	696,572	277,507	393,768	30,074	29,402	18,317

34 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

(3)

	401(k) ($)(a)	Life Insurance Premium ($)	Matching Charitable Contribution ($)	Office and Automobile Allowance ($)	Additional LTD Premium ($)	Relocation ($)(b)	Parking ($)	Payment In Lieu of Medical Coverage ($)	Spousal Travel ($)	Wellness Fitness ($)	Total ($)
Terry D.
Hildestad	35,525	174	1,800								37,499
Doran N.
Schwartz	33,075	174	300								33,549
John G.
Harp	35,525	174	1,800	13,200	746						51,445
J. Kent
Wells	19,600	116				66,031	2,400	700	508	150	89,505
William E.
Schneider	35,525	174	1,800								37,499

| (a) | Represents company contributions
to 401(k) plan, which include matching contributions and, except for Mr.
Wells, contributions made in lieu of pension plan accruals after pension
plans were frozen at December 31, 2009. |
| --- | --- |
| (b) | Mr. Wells 2011 relocation
benefits were: |

Temporary	Actual Move and	Relocation
Living	Related Expense	Allowance
($)	($)	($)
18,000	2,198	45,833

(4) 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:

| Change in present value of additional years of service for
pension plan | $ 13,077 | $ 12,240 | $ 19,407 |
| --- | --- | --- | --- |
| Change in present value of additional years of service for
excess SISP | 5,259 | 1,672 | 1,961 |
| Change in present value of additional years of service for
SISP | | | |

Mr. Harp’s additional retirement benefit is described in the narrative that follows the Pension Benefits for 2011 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 2009, 2010, and 2011. 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 2011 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 2011 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.

| (5) | 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. |
| --- | --- |
| (6) | Includes one-time incentive
payment of $100,000 in addition to his annual incentive compensation. |
| (7) | Includes a cash recruitment
payment of $550,000 and guaranteed target annual incentive payment of
$366,685. |
| (8) | Represents the aggregate grant
date fair value of the portion of Mr. Wells additional 2011 annual incentive
award that was to be paid in shares of our common stock calculated in
accordance with Financial Accounting Standards Board generally accepted
accounting principles for stock-based compensation in FASB Accounting
Standards Codification Topic 718. |
| (9) | Includes $82,296, the value of
Mr. Wells annual incentive earned above the guaranteed target amount and the
$925,010 cash portion of Mr. Wells additional 2011 annual incentive. |

MDU Resources Group, Inc. Proxy Statement 35

Proxy Statement

G rants of Plan-Based Awards in 2011

												Grant Date Fair Value of Stock and Option Awards ($) (l)
					Estimated Future Payouts Under Non-Equity Incentive Plan Awards			Estimated Future Payouts Under Equity Incentive Plan Awards
Name (a)	Grant Date (b)		Board Approval Date		Threshold ($) (c)	Target ($) (d)	Maximum ($) (e)	Threshold (#) (f)	Target (#) (g)		Maximum (#) (h)
Terry D.	2/17/11(1	)			187,500	750,000	1,500,000
Hildestad	2/17/11(2	)						5,424	54,243		108,486	1,084,318
Doran N.	2/17/11(1	)			34,125	136,500	273,000
Schwartz	2/17/11(2	)						987	9,872		19,744	197,341
John G.	2/17/11(1	)			73,125	292,500	585,000
Harp	2/17/11(2	)						1,953	19,527		39,054	390,345
J. Kent Wells	2/17/11(3	)				366,685	733,370
	5/02/11(4	)	2/17/11	(4)		925,000
	5/02/11(4	)	2/17/11	(4)					$925,000	(4)		925,000
William E.	2/17/11(1	)			72,703	290,810	581,620
Schneider	2/17/11(2	)						1,941	19,414		38,828	388,086

| (1) | Annual incentive for 2011 granted
pursuant to the MDU Resources Group, Inc. Long-Term Performance-Based Incentive
Plan, except for Mr. Schwartz whose award was granted pursuant to the MDU
Resources Group, Inc. Executive Incentive Compensation Plan. |
| --- | --- |
| (2) | Performance shares for the
2011-2013 performance period granted pursuant to the MDU Resources Group,
Inc. Long-Term Performance-Based Incentive Plan. |
| (3) | Annual incentive for 2011 granted
pursuant to the WBI Holdings, Inc. Executive Incentive Compensation Plan. Mr.
Wells was guaranteed a minimum payment of 100% of target. |
| (4) | Additional 2011 annual incentive granted
pursuant to the MDU Resources Group, Inc. Long-Term Performance-Based
Incentive Plan, payable one-half in cash and one-half in our common stock.
The award was approved on February 17, 2011, but the grant date for purposes
of FASB Accounting Standards Codification Topic 718 was May 2, 2011, Mr.
Wells hire date. The $925,000 shown in column (g) represents the dollar
value of the portion of Mr. Wells additional 2011 annual incentive award
that was paid in shares of our common stock determined by dividing $925,000
by the stock price on January 2, 2012, according to the terms of Mr. Wells
award. |

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

Incentive Awards

Annual Incentive On February 15, 2011, the compensation committee recommended the 2011 annual incentive award opportunities for our named executive officers and the board approved these opportunities at its meeting on February 17, 2011. These award opportunities are reflected in the Grants of Plan-Based Awards table at grant on February 17, 2011, in columns (c), (d), and (e) and in the Summary Compensation Table as earned with respect to 2011 in column (g). For Mr. Wells, the compensation committee guaranteed a minimum payment of 100% of target, prorated to reflect his May 2, 2011 hire date, which is reflected in the Grants of Plan-Based Awards table at grant on February 17, 2011, in column (d) and in the Summary Compensation Table in column (d). Mr. Wells could achieve a maximum of 200% of target, which is reflected at grant on February 17, 2011, in the Grants of Plan-Based Awards table in column (e), and the amount that he earned above target with respect to this award is reflected in the Summary Compensation Table in column (g).

Other than the arrangements negotiated for Mr. Wells for 2011, 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 0% 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, and Schneider must have remained employed by the company through December 31, 2011, 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 otherwise determined and established in writing by the compensation committee within 90 days of the beginning of the performance period, the performance goals may not be adjusted if the adjustment would increase the annual incentive award payment. The compensation committee may use negative discretion and adjust any annual incentive award payment downward, using

36 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

any subjective or objective measures as it shall determine, including but not limited to the 20% limitation described in the following sentence. The 20% limitation means that no more than 20% of after-tax earnings that are in excess of planned earnings at the business unit level for operating company executives and at the MDU Resources Group level for corporate executives will be paid in annual incentives to executives. The application of this limitation or any other reduction, and the methodology used in determining any such reduction, is in the sole discretion of the compensation committee.

With respect to annual incentive awards granted pursuant to the MDU Resources Group, Inc. Executive Incentive Compensation Plan, which includes Mr. Schwartz, and the annual incentive awards granted pursuant to the WBI Holdings, Inc. Executive Incentive Compensation Plan, which includes Mr. Wells, 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 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 and Schneiders performance goals for 2011 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 and Mr. Schneider.

For Messrs. Harp and Schneider, achievement of budgeted earnings per share and return on invested capital would result in payment of 100% of the target amount. Their 2011 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.

For Mr. Wells, the committee guaranteed a minimum payment of 100% of target, prorated to reflect his May 2, 2011 hire date. The 2011 incentive award opportunity was based on the financial goals for both Fidelity Exploration & Production Company and WBI Holdings, Inc., weighted 75% for the results of Fidelity Exploration & Production Company and 25% for the results of WBI Holdings, Inc. The incentive award could be reduced by up to 10% if Fidelity Exploration & Production Company did not meet its production goal and by up to 5% if WBI Holdings, Inc. did not satisfy its safety goals. Mr. Wells could achieve a maximum of 200% of the annual incentive target if:

| | the 2011 allocated earnings per
share for Fidelity Exploration & Production Company and the 2011
allocated earnings per share for WBI Holdings, Inc., were at or above 115% of
the performance target |
| --- | --- |
| | the 2011 return on invested
capital for Fidelity Exploration & Production Company and the 2011 return
on invested capital for WBI Holdings, Inc. were both at least equal to their
respective weighted average costs of capital |
| | Fidelity Exploration &
Production Company achieved production of at least 69.3 billion cubic feet
equivalent (Bcfe) and |
| | the five safety goals for WBI
Holdings, Inc. were met. |

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., Knife River Corporation, WBI Holdings, Inc., and Combined Utility Group 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 2011. These four products were added together, and the sum was multiplied by Messrs. Hildestads and Schwartzs 2011 target incentive. Messrs. Hildestads and Schwartzs 2011 annual incentives were paid at 127.3% of target based on the following:

| President and Chief Executive
Officer of: | Column A 2011 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 % | 6.1 % | 9.2 % |
| Knife River Corporation | 150.0 % | 24.4 % | 36.6 % |
| WBI Holdings, Inc. | 97.8 % | 34.6 % | 33.8 % |
| Combined Utility Group | 136.7 % | 34.9 % | 47.7 % |
| Total | | | 127.3 % |

MDU Resources Group, Inc. Proxy Statement 37

Proxy Statement

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

2011 return on invested capital results as a % of 2011 target	Corresponding payment of annual incentive target based on return on invested capital	2011 earnings per share results as a % of 2011 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%

The award opportunities available to Mr. Wells with respect to the financial results component of his award were:

Fidelity Exploration & Production Company weighted 75%

2011 return on invested capital results as a % of 2011 target	Corresponding payment of annual incentive target based on return on invested capital	2011 earnings per share results as a % of 2011 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%

WBI Holdings, Inc. weighted 25%

2011 return on invested capital results as a % of 2011 target	Corresponding payment of annual incentive target based on return on invested capital	2011 earnings per share results as a % of 2011 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%

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

38 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| J. Kent Wells
Additional 2011 Annual Incentive |
| --- |
| On February 15, 2011, the
compensation committee recommended the grant of a second 2011 annual incentive
award opportunity to Mr. Wells pursuant to the Long-Term Performance-Based
Incentive Plan, based on Fidelity Exploration & Production Companys cash
flow from operations. The board approved this opportunity at its meeting on
February 17, 2011. Specifically, we granted Mr. Wells an all-or-nothing award
opportunity of $1.85 million, payable one-half in cash and one-half in our
common stock, if Fidelity Exploration & Production Companys 2011 cash
flow from operations exceeded $132.0 million and he did not resign from the
company prior to January 2, 2012. If Fidelity Exploration & Production
Companys 2011 cash flow from operations exceeded $132.0 million and Mr.
Wells employment was terminated prior to January 2, 2012, due to a change in
control of the company, Mr. Wells would have been entitled to full payment of
this incentive award. |

Fidelity Exploration & Production Companys actual 2011 cash flow from operations exceeded $132.0 million, resulting in a payment of $1.85 million to Mr. Wells. The cash portion paid to Mr. Wells is reported in the Summary Compensation Table in column (g), and the grant date fair value of the stock portion of the award is reported in the Summary Compensation Table in column (e).

| J. Kent Wells
Recruitment Bonus |
| --- |
| We paid a cash recruitment bonus
of $550,000 to induce Mr. Wells to join the company, which is reflected in
the Summary Compensation Table in column (d). |

| Long-Term
Incentive |
| --- |
| On February 15, 2011, 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 February 17, 2011. 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 2011-2013 total shareholder return is positive, from 0% to 200% of the target grant will be paid out in February 2014, depending on our 2011-2013 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 February 17, 2011 Grant
90th or higher	200 %
70th	150 %
50th	100 %
40th	10 %
Less than 40th	0 %

If the companys 2011-2013 total shareholder return is negative, the number of shares otherwise earned, if any, for the performance period will be reduced in accordance with the following table:

TSR	Reduction in Award
0% through -5%	50 %
-5.01% through
-10%	60 %
-10.01% through
-15%	70 %
-15.01% through
-20%	80 %
-20.01% through
-25%	90 %
-25.01% or below	100 %

MDU Resources Group, Inc. Proxy Statement 39

Proxy Statement

| Salary and Bonus
in Proportion to Total Compensation |
| --- |
| The following table shows the
proportion of salary and bonus to total compensation. |

Name — Terry D. Hildestad	750,000		3,566,327	21.0
Doran N. Schwartz	273,000		825,444	33.1
John G. Harp	450,000		1,811,871	24.8
J. Kent Wells	367,671	916,685	3,306,167	38.8
William E. Schneider	447,400		1,721,285	26.0

O utstanding Equity Awards at Fiscal Year-End 2011

Name (a)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)(1)
Terry D. Hildestad	118,739(2	)	2,548,139
Doran N. Schwartz	21,062(2	)	451,991
John G. Harp	42,746(2	)	917,329
J. Kent Wells	43,103(3	)	925,000
William E. Schneider	42,498(2	)	912,007

| (1) | Value based on the number of
performance shares reflected in column (i) multiplied by $21.46, the year-end
closing price for 2011. |
| --- | --- |
| (2) | Below is a breakdown by year of
the plan awards: |

Named Executive Officer	Award	Shares	End of Performance Period
Terry D. Hildestad	2009	5,482	12/31/11
	2010	4,771	12/31/12
	2011	108,486	12/31/13
Doran N. Schwartz	2009	491	12/31/11
	2010	827	12/31/12
	2011	19,744	12/31/13
John G. Harp	2009	1,974	12/31/11
	2010	1,718	12/31/12
	2011	39,054	12/31/13
William E. Schneider	2009	1,962	12/31/11
	2010	1,708	12/31/12
	2011	38,828	12/31/13

| | Shares for the 2009 award are
shown at the threshold level (10%) based on results for 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 two years
of the 2010-2012 performance cycle below threshold. Shares for the 2011 award
are shown at the maximum level (200%) based on results for the first year of
the 2011-2013 performance cycle above target. |
| (3) | The number of shares for the
additional 2011 annual incentive equity award of $925,000 was determined by
using the year-end closing price for 2011 of $21.46. These shares vested
February 16, 2012. |

40 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

P ension Benefits for 2011

Name (a)	Plan Name (b)	Number of Years Credited Service (#) (c)	Present Value of Accumulated Benefit ($) (d)
Terry D. Hildestad	MDU Pension Plan	35	1,619,835
	SISP I(1)(3)	10	1,951,968
	SISP II(2)(3)	10	3,222,988
	SISP Excess(4)	35	552,948
Doran N. Schwartz	MDU Pension Plan	4	78,419
	SISP II(2)(3)	4	403,676
John G. Harp	MDU Pension Plan	5	242,675
	SISP II(2)(3)	6	2,461,293
	SISP Excess(4)	5	40,291
	Harp Additional Retirement Benefit	3	155,416
J. Kent Wells(5)
William E. Schneider	KR Pension Plan	16	786,231
	SISP I(1)(3)	10	1,372,770
	SISP II(2)(3)	10	1,621,769
	SISP Excess(4)	16	46,259

(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, 2011, rather than total years of service
with the company. Ten years of vesting service is required 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 the years of participation in the SISP excess.
We reflect years of credited benefit service in the appropriate pension plan
because the SISP excess provides a benefit that is based on benefits that
would have been payable under the pension plans absent Internal Revenue Code
limitations.
(5)	Mr. Wells is not eligible to
participate in our pension plan and does not participate in the SISP.

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, 2011, calculated using a 4.00%, 4.11%, and 4.07% discount rate for the SISP excess, MDU pension plan, and KR pension plan, respectively, the 2012 IRS Static Mortality Table 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 and Harp. This is the earliest age at which the executives could begin receiving unreduced benefits. Retirement on December 31, 2011, was assumed for Messrs. Hildestad and Schneider, who were age 62 and 63, respectively, on that date. The amounts shown for the SISP I and SISP II were determined using a 4.00% 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, Schwartz, and
Harp participate in the MDU Resources Group, Inc. Pension Plan for
Non-Bargaining Unit Employees, which we refer to as the MDU pension plan. Mr.
Schneider participates in the Knife River Corporation Salaried Employees Pension
Plan, which we refer to as the KR 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 KR pension plan uses the same formula
except that 1.2% and 1.6% are used instead of 1.1% and 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. |

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 in the table reflect the named executive officers years of credited service as of December 31, 2009.

MDU Resources Group, Inc. Proxy Statement 41

Proxy Statement

To receive unreduced retirement benefits under the MDU pension plan, participants must either remain employed until age 60 or elect to defer commencement of benefits until age 60. Under the KR pension plan, participants must remain employed until age 62 or elect to defer commencement of benefits until age 62 to receive unreduced benefits. Messrs. Hildestad and Schneider were eligible for unreduced retirement benefits under the MDU pension plan and KR pension plan, respectively, on December 31, 2011. Participants whose employment terminates between the ages of 55 and 60, with 5 years of service under the MDU pension plan 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 MDU pension plan. 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.

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 our named executive officers, except Mr. Wells, 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. |

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. None of the named executive officers have received a benefit level increase since the amended schedule became effective.

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.

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, 2011, 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.

42 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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 10-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 Messrs. Schwartz and Harp are fully vested in their SISP benefits, this would not result in any incremental benefit for the named executive officers other than Messrs. Schwartz and Harp. The present value of these two additional years of service for Messrs. Schwartz and Harp 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

MDU Resources Group, Inc. Proxy Statement 43

Proxy Statement

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 were already vested in the SISP excess benefit or (2) who would 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 Schneider would be entitled to the SISP excess benefit if they were to terminate employment prior to age 65. Mr. Harp must remain employed until age 60 to become entitled to his SISP excess benefit. Messrs. Schwartz and Wells are 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, 2011, refer to the table and related notes in Potential Payment upon Termination or Change of Control below.

N onqualified Deferred Compensation for 2011

	Executive	Registrant	Earnings in	Aggregate	Aggregate
	Contributions in	Contributions in	Aggregate	Withdrawals/	Balance at
	Last FY	Last FY	Last FY	Distributions	Last FYE
Name	($)	($)	($)	($)	($)
(a)	(b)	(c)	(d)	(e)	(f)
Terry D. Hildestad			52,968		948,527
Doran N. Schwartz
John G. Harp
J. Kent Wells
William E. Schneider	37,805		86,836		1,559,891(1	)

(1) Includes $392,000 which was reported in the Summary Compensation Table for 2006 in column (g) and $37,805 which is reported for 2010 in column (g) of the Summary Compensation Table in this proxy statement.

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 2011 was 5.76% or the Moodys Rate, which 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 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.

44 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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, the information assumes the terminations and the change of control occurred on December 31, 2011. 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 2011 table. See the Pension Benefits for 2011 table and the Nonqualified Deferred Compensation for 2011 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 and Harp, the reduction for amounts paid as retirement benefits would eliminate disability benefits assuming a termination of employment on December 31, 2011. The table for Mr. Wells does not reflect a disability benefit as he had not exhausted the eligibility waiting period of one year as of December 31, 2011.

According to the terms of Mr. Wells letter agreement, we agreed to pay Mr. Wells a guaranteed minimum payment of 100% of target of his annual incentive award under the WBI Holdings, Inc. Executive Incentive Compensation Plan, prorated to reflect his May 2, 2011 hire date. In addition, if Mr. Wells employment had ended before January 2, 2012, due to a change of control, as defined in Section 409A of the Internal Revenue Code of 1986, as amended, we agreed to pay Mr. Wells additional annual incentive of $1.85 million in full if the performance goal was met.

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 for Messrs. Hildestad, Schwartz, Harp, and Schneider and the annual incentives for Messrs. Hildestad, Harp, Wells, and Schneider, 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 share 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 follows:

| | if the termination
of employment occurs during the first year of the performance period, the
shares are forfeited |
| --- | --- |
| | 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. |

Of the named executive officers with performance share awards, only Mr. Schwartz had not satisfied this requirement as of December 31, 2011. Accordingly, if a December 31, 2011 termination other than for cause without a change of control is assumed, the named executive officers 2011-2013 performance share awards would be forfeited, any amounts earned under the 2010-2012 performance share awards for Messrs. Hildestad, Harp, and Schneider would be reduced by one-third and such award for Mr. Schwartz would be forfeited, and any amounts earned under the 2009-2011 performance share awards for Messrs. Hildestad, Harp, and Schneider would not be reduced and the award for Mr. Schwartz would be forfeited. The number of performance shares earned following a termination depends on actual performance through the full performance period. As actual performance for the 2009-2011 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 2010-2012 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 2011-2013 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, 2011, 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, 2011.

Except for Messrs. Hildestad and Wells, 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, 2011, 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, and Schneider would be eligible to earn over the three-year employment period would be $543,780, $1,316,250, and $1,744,860, 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, 2011.

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		Not for				Change of — Control	Change of — Control
Payments Upon	Voluntary	Cause	For Cause			(With	(Without
Termination or	Termination	Termination	Termination	Death	Disability	Termination)	Termination)
Change of Control	($)	($)	($)	($)	($)	($)	($)
Compensation:
Short-term
Incentive(1)						750,000	750,000
2009-2011
Performance Shares						1,281,374	1,281,374
2010-2012
Performance Shares	723,587	723,587		723,587	723,587	1,085,380	1,085,380
2011-2013
Performance Shares						1,199,584	1,199,584
Benefits and Perquisites:
Regular
SISP(2)	5,242,870	5,242,870			5,242,870	5,242,870
Excess
SISP(3)	552,948	552,948			552,948	552,948
SISP Death
Benefits(4)				11,586,607
Total	6,519,405	6,519,405		12,310,194	6,519,405	10,112,156	4,316,338

| (1) | Represents the target 2011 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, 2011, which was $42,710 per month for 15
years, commencing at age 65. Present value was determined using a 4.00%
discount rate. The terms of the regular SISP benefit are described following
the Pension Benefits for 2011 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 4.00% discount rate. The terms of
the excess SISP benefit are described following the Pension Benefits for 2011
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 4.00% discount rate. The terms of
the SISP death benefit are described following the Pension Benefits for 2011
table. |

48 MDU Resources Group, Inc. Proxy Statement

Proxy Statement
Doran N.
Schwartz

Executive Benefits and Payments Upon Termination or Change of Control	Voluntary Termination ($)		Not for Cause Termination ($)		Disability ($)		Not for Cause or Good Reason Termination Following Change of Control ($)
Compensation:
Base Salary							819,000
Short-term
Incentive(1)							725,040
2009-2011
Performance Shares							114,689	114,689
2010-2012
Performance Shares							188,120	188,120
2011-2013
Performance Shares							218,319	218,319
Benefits and Perquisites:
Regular
SISP	160,738	(2)	160,738	(2)	241,107	(3)	281,292	(4)
SISP Death
Benefits(5)				1,980,385
Disability
Benefits(6)					842,408
Outplacement
Services							50,000
280G Tax(7)							417,848
Total	160,738		160,738	1,980,385	1,083,515		2,814,308	521,128

| (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, 2011, 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 2011 or (2) the highest
annual incentive paid in 2009, 2010, and 2011. |
| --- | --- |
| (2) | Represents the present value of
Mr. Schwartzs vested regular SISP benefit as of December 31, 2011, which was
$2,920 per month for 15 years, commencing at age 65. Present value was
determined using a 4.00% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2011 table. |
| (3) | Represents the present value of
Mr. Schwartzs vested SISP benefit described in footnote 2, 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 4.00% discount rate. |
| (4) | Represents the payment
that would be made under Mr. Schwartzs change of control agreement based on
the increase in the actuarial present value of his regular SISP benefit that
would result if he continued employment for an additional three years. |
| (5) | Represents the present value of
180 monthly payments of $14,600 per month, which would be paid as a SISP
death benefit under the SISP. Present value was determined using a 4.00%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2011 table. |
| (6) | 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 4.11% discount
rate. |
| (7) | Determined applying the Internal
Revenue Code Section 4999 excise tax of 20% only if 110% threshold is
exceeded. |

MDU Resources Group, Inc. Proxy Statement 49

| Proxy
Statement |
| --- |
| John G. Harp |

Executive Benefits and Payments Upon Termination or Change of Control	Voluntary Termination ($)		Not for Cause Termination ($)		Disability ($)		Not for Cause or Good Reason Termination Following Change of Control ($)		Change of Control (Without Termination) ($)
Compensation:
Base Salary							1,350,000
Short-term
Incentive							1,755,000	(1)	292,500	(2)
2009-2011
Performance Shares							461,280		461,280
2010-2012
Performance Shares	260,488		260,488	260,488	260,488		390,731		390,731
2011-2013
Performance Shares							431,840		431,840
Benefits and Perquisites:
Incremental
Pension(3)	136,432		136,432		136,432		136,432
Regular
SISP	2,215,163	(4)	2,215,163	(4)	2,461,292	(5)	2,461,292	(6)
SISP Death
Benefits(7)				6,198,875
Disability
Benefits(8)					178,455
Outplacement
Services							50,000
280G Tax(9)							718,845
Total	2,612,083		2,612,083	6,459,363	3,036,667		7,755,420		1,576,351

| (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, 2011, 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 2011 or (2) the highest
annual incentive paid in 2009, 2010, and 2011. |
| --- | --- |
| (2) | Represents the target 2011 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
2011 table. Present value was determined using a 4.11% discount rate. |
| (4) | Represents the present value of
Mr. Harps vested regular SISP benefit as of December 31, 2011, which was
$20,565 per month for 15 years, commencing at age 65. Present value was
determined using a 4.00% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2011 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 2011 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 4.00% 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 4.00% 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 4.00%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2011 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 4.11% discount
rate. |
| (9) | Determined applying the Internal
Revenue Code Section 4999 excise tax of 20% only if 110% threshold is
exceeded. |

50 MDU Resources Group, Inc. Proxy Statement

| Proxy
Statement |
| --- |
| J. Kent Wells |

Executive Benefits and Payments Upon Termination or Change of Control	Voluntary Termination ($)	Not for Cause Termination ($)		For Cause Termination ($)		Death ($)		Disability ($)		Change of Control (With Termination) ($)		Change of Control (Without Termination) ($)
Compensation:
Short-term
Incentive(1)	366,685	366,685		366,685		366,685		366,685		366,685		366,685
Additional
2011 Annual Incentive		1,850,000	(2)	1,850,000	(2)	1,850,000	(2)	1,850,000	(2)	1,850,000	(3)	1,850,000	(4)
Total	366,685	2,216,685		2,216,685		2,216,685		2,216,685		2,216,685		2,216,685

| (1) | Represents the guaranteed minimum
annual incentive payment of 100% of target for 2011, prorated to reflect Mr.
Wells May 2, 2011 hire date. |
| --- | --- |
| (2) | Mr. Wells was eligible to receive
payment of his 2011 additional annual incentive if he did not resign from
Fidelity Exploration & Production Company before January 2, 2012, and the
goal was met. |
| (3) | Mr. Wells would receive payment
of his 2011 additional annual incentive if Fidelity Exploration &
Production Companys cash flow from operations for 2011 exceeded $132.0
million and his employment ended for any reason before January 2, 2012, due
to a change in control of MDU Resources Group, Inc. |
| (4) | Represents the 2011 additional
annual incentive, which would be deemed earned upon a change of control under
the Long-Term Performance-Based Incentive Plan. |

MDU Resources Group, Inc. Proxy Statement 51

Proxy Statement
William E.
Schneider

Executive Benefits and Payments Upon Termination or Change of Control	Voluntary Termination ($)		Not for Cause Termination ($)		Disability ($)		Not for Cause or Good Reason Termination Following Change of Control ($)		Change of Control (Without Termination) ($)
Compensation:
Base Salary							1,342,200
Short-term
Incentive							2,326,480	(1)	290,810	(2)
2009-2011
Performance Shares							458,615		458,615
2010-2012
Performance Shares	258,986		258,986	258,986	258,986		388,479		388,479
2011-2013
Performance Shares							429,341		429,341
Benefits and Perquisites:
Regular
SISP(3)	2,919,232		2,919,232		2,919,232		2,919,232
Excess SISP	46,259	(4)	46,259	(4)	46,259	(4)	46,259	(5)
SISP Death
Benefits(6)				6,198,875
Outplacement
Services							50,000
280G Tax(7)							784,127
Total	3,224,477		3,224,477	6,457,861	3,224,477		8,744,733		1,567,245

| (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, 2011, 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 2011 or (2) the highest
annual incentive paid in 2009, 2010, and 2011. |
| --- | --- |
| (2) | Represents the target 2011 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. Schneiders vested regular SISP benefit as of December 31, 2011, which
was $22,850 per month for 15 years, commencing at age 65. Present value was
determined using a 4.00% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2011 table. The three
additional years of vesting credit assumed for purposes of calculating the additional
SISP benefit under Mr. Schneiders 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. Schneider would be entitled to upon termination
of employment under the SISP. Present value was determined using a 4.00%
discount rate. The terms of the excess SISP benefit are described following
the Pension Benefits for 2011 table. |
| (5) | Represents the present value of
all excess SISP benefits Mr. Schneider would be entitled to, calculated with
the assumption of three additional years of employment, as provided under Mr. Schneiders change of control agreement. Present value was determined using a
4.00% discount rate. The terms of the excess SISP benefit are described
following the Pension Benefits for 2011 table. |
| (6) | 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 4.00%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2011 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
D irector
Compensation for 2011

Name (a)	Fees Earned or Paid in Cash ($) (b)		Stock Awards ($) (c)(1)		All Other Compensation ($) (g)(2)	Total ($) (h)
Thomas Everist	62,917		110,000	(3)	174	173,091
Karen B. Fagg	62,917		110,000		174	173,091
A. Bart Holaday	55,000	(4)	110,000		174	165,174
Dennis W. Johnson	67,917		110,000		174	178,091
Thomas C. Knudson	55,000		110,000		674	165,674
Richard H. Lewis	55,000		110,000		174	165,174
Patricia L. Moss	55,000	(5)	110,000		174	165,174
Harry J. Pearce	130,000		110,000		174	240,174
John K. Wilson	55,000	(6)	110,000		174	165,174

| (1) | This column reflects the
aggregate grant date fair value of 5,450 shares of MDU Resources Group, Inc.
stock purchased for our non-employee directors measured in accordance with
Financial Accounting Standards Board generally accepted accounting principles
for stock based compensation in FASB Accounting Standards Codification Topic 718. The grant
date fair value is based on the purchase price of our common stock on the
grant date on November 21, 2011, which was $20.181. The $14 in cash paid to
each director for the fractional shares is included in the amounts reported
in column (c) to this table. |
| --- | --- |
| (2) | Group life insurance premium of
$174 and a matching charitable contribution of $500 for Mr. Knudson. |
| (3) | Mr. Everist had 6,750 stock
options outstanding as of December 31, 2011. |
| (4) | Includes $14,997 that Mr. Holaday
received in our common stock in lieu of cash. |
| (5) | Includes $54,983 that Ms. Moss
received in our common stock in lieu of cash. |
| (6) | Includes $54,983 that Mr. Wilson
received in our common stock in lieu of cash. |
| Effective June 1, 2011, the board
approved changes to the MDU Resources Group, Inc. Directors Compensation
Policy. The following table shows the cash and stock retainers payable to our
non-employee directors. | |

Base Retainer	$55,000	$55,000
Additional Retainers:
Non-Executive
Chairman	75,000	75,000
Lead
Director, if any	33,000	33,000
Audit
Committee Chairman	15,000	10,000
Compensation
Committee Chairman	10,000	5,000
Nominating
and Governance Committee Chairman	10,000	5,000
Annual Stock Grant(1)	110,000	4,050 shares

(1) Effective for 2011, the annual stock grant was changed from a fixed number of shares to a grant of shares equal in value to $110,000.

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 2011.

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.

MDU Resources Group, Inc. Proxy Statement 53

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 stockholder return ratio to the ratio for the
performance graph peer group (PEER 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 |

54 MDU Resources Group, Inc. Proxy Statement

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. |

MDU Resources Group, Inc. Proxy Statement 55

Proxy Statement

INFORMATION 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 | 62 | President and Chief Executive Officer. For information
about Mr. Hildestad, see Election of Directors. |
| Steven L. Bietz | 53 | 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 | 50 | 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 | 52 | 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 | 50 | 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 | 59 | Mr. Harp was elected chief executive officer of Knife
River Corporation effective January 1, 2012, and will continue to serve as
chief executive officer of MDU Construction Services Group, Inc. He 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 | 38 | 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 | 62 | 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 | 57 | 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 | 57 | 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 | 63 | Mr. Schneider was elected executive vice presidentBakken
Development effective January 1, 2012. Prior to that, he was 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. |

56 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| Doran N. Schwartz | 42 | 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 | 52 | 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. |
| J. Kent Wells | 55 | Mr. Wells was elected president and chief executive
officer of Fidelity Exploration & Production Company effective May 2,
2011. Prior to that he was senior vice president of exploration and
production for BP America, Inc. from June 2007 until October 2010, when he
was named BP America Inc.s group senior vice president for global deepwater
response until March 31, 2011. He also served as general manager of Abu Dhabi
Company for Onshore Oil Operations from February 2005 until June 2007;
vice-president, Gulf of Mexico shelf, for BP America, Inc. from 2002 to 2005;
vice-president, Rockies, for BP America, Inc. from 2000 to 2002; general
manager of Crescendo Resources LP from 1997 to 2000; manager, Hugoton, for
Amoco Production Company, Inc. from 1993 to 1996; manager, operations, for
Amoco Production Company, Inc. in 1993; and resource manager for Amoco
Production Company, Inc. in 1988 to 1993. |

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, 2011.


		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)
Thomas Everist	1,880,123	(5)	6,750		1.0	28,350
Karen B. Fagg	30,997				*
John G. Harp	85,719	(6)			*
Terry D. Hildestad	214,073				*
A. Bart Holaday	35,012				*
Dennis W. Johnson	81,019	(7)		4,560	*
Thomas C. Knudson	19,000				*
Richard H. Lewis	25,700				*	16,275
Patricia L. Moss	56,687				*
Harry J. Pearce	212,550				*	46,614
William E. Schneider	116,219	(8)		800	*
Doran N. Schwartz	18,735	(6)			*
J. Kent Wells		(9)			*
John K. Wilson	82,439				*
All directors and executive officers as a group (23 in
number)	3,124,888		6,750	18,006	1.7	91,239

| * | 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 1,820,000 shares of
common stock acquired through the sale of Connolly-Pacific to us. |
| (6) | Includes full shares allocated to
the officers account in our 401(k) retirement plan. |
| (7) | Mr. Johnson disclaims all
beneficial ownership of the 4,560 shares owned by his wife. |
| (8) | Mr. Schneider disclaims all
beneficial ownership of the 800 shares owned by his wife. |
| (9) | As of February 22, 2012, Mr.
Wells owns 25,743 shares of our common stock. |

MDU Resources Group, Inc. Proxy Statement 57

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	9,676,893	(1)	5.13 %
Common Stock	BlackRock, Inc.
	40 East 52nd Street
	New York, NY 10022	10,780,367	(2)	5.71 %
Common Stock	T. Rowe Price Associates, Inc.
	100 E. Pratt Street
	Baltimore, MD 21202	11,783,757	(3)	6.20 %

| (1) | In a Schedule 13G/A, Amendment
No. 12, filed on February 14, 2012, 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. 2, filed on February 13, 2012, 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 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. |
| (3) | In a Schedule 13G, filed on
February 14, 2012, T. Rowe Price Associates, Inc. reports sole voting power
with respect to 2,372,940 shares and sole dispositive power with respect to
11,783,757 shares. These securities are owned by individual and institutional
investors to which T. Rowe Price serves as investment adviser with power to
direct investments and/or sole power to vote the securities. For purposes of
the reporting requirements of the Securities Exchange Act of 1934, T. Rowe
Price is deemed to be a beneficial owner of such securities; however, T. Rowe
Price expressly disclaims that it is, in fact, the beneficial owner of such
securities. |

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 was president and chief executive officer of MDU Construction Services Group, Inc. until January 1, 2012, at which time he became the 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.

CORPORATE 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/CorporateGovernance.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. |

58 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

In determining director independence for 2011, the board of directors considered the following transactions or relationships:

| | Mr. Everists ownership of
approximately 1.86 million shares in 2010 and approximately 1.87 million
shares in 2011 of our common stock. In December 2011, we entered into a
two-year contract with WebFilings, LLC, which offers a cloud-based solution
for meeting SEC reporting requirements. The contract provides for a quarterly
subscription fee of approximately $13,000 to use WebFilings software and for
additional fees to be determined based on the number of users and additional
services requested. Mr. Everist is a limited partner and owns less than 1% of
WebFilings, LLC. |
| --- | --- |
| | charitable contributions in the
amount of $13,500 in 2010 and $33,625 in 2011 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 $14,750 in 2010 and $2,700 in 2011 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 in 2010 and $3,750 in 2011
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 in 2010 and in 2011 Mr. Johnson
is president of the City of Dickinson board of commissioners |
| | charitable contributions to
Colorado UpLift in the amount of $25,000 in 2010 and in 2011 Mr. Lewis is a
board director and chairman of the Development Board of Colorado UpLift;
charitable contributions in the amount of $10,000 in 2010 and in 2011 to the
Alliance for Choice in Education Mr. Lewis serves on the Colorado Board of
Trustees for Alliance. |

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 2011, two directors submitted resignations under this requirement. Ms. Fagg submitted her resignation in connection with the announcement of her retirement as vice president of DOWL LLC, d/b/a DOWL HKM, effective December 31, 2011. Ms. Moss submitted her resignation in connection with her retirement from Cascade Bancorp and the Bank of the Cascades effective July 25, 2012. After considering the background, experience on the board, skills and character, and contribution to the company by both of these directors in light of the companys business and structure, the board determined the resignations should not be accepted.

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 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.

MDU Resources Group, Inc. Proxy Statement 59

Proxy Statement

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, weather conditions, limitations on our ability to pay dividends, increased pension plan obligations, and cyber attacks or acts of terrorism. 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 2011, the board of directors held four 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 2011. Director attendance at our annual meeting of stockholders is left to the discretion of each director. Three directors attended our 2011 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/CorporateGovernance.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 three times during 2011. The committee members were Karen B. Fagg, chairman, Richard H. Lewis, A. Bart Holaday, and Patricia L. Moss, who joined the committee effective May 12, 2011.

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. |

60 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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/2011-11_Bylaws.pdf. See also the section entitled 2013 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 |
| | 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.

MDU Resources Group, Inc. Proxy Statement 61

Proxy Statement

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 2011. 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, 2011, 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, 2011, for filing with the Securities and Exchange
Commission. |
| Dennis W.
Johnson, Chairman |
| A. Bart Holaday |
| Richard H. Lewis |
| John K. Wilson |

62 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Compensation Committee The compensation committee met five times during 2011. 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. The committees practice has been to retain a compensation consultant every other year to conduct a competitive analysis on executive compensation. The committee did not retain a compensation consultant in 2011 to prepare a competitive assessment for 2012 compensation.

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.

The board of directors determines compensation for our non-employee directors based upon recommendations from the compensation committee. The committees practice has been to retain a compensation consultant every other year to conduct a competitive analysis on director compensation.

During 2011, the vice president-human resources and the human resources department prepared the competitive assessment for 2012 compensation for our executive officers. 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 |
| | review and update annual and
long-term incentive programs. |

As discussed in the Compensation Discussion and Analysis, at the request of Mr. Hildestad, the human resources department conducted a competitive assessment in January 2011 to determine the compensation level necessary to recruit a qualified individual to lead Fidelity Exploration & Production Company. Mr. Hildestad, with the assistance of our vice president-human resources, negotiated Mr. Wells compensation in connection with his hiring.

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.

MDU Resources Group, Inc. Proxy Statement 63

Proxy Statement

In an engagement letter dated February 28, 2011, and signed by the chairman of the compensation committee, the compensation committee retained Towers Watson to prepare a review of competitive compensation for our non-employee directors compensation, including a separate comparison of the non-executive chairman, for review at the committees May 2011 meeting.

In its review of board of director compensation, Towers Watson was asked to:

| | analyze results and develop a
competitive director pay reference point using our former and new performance
graph peer groups and |
| --- | --- |
| | identify market trends relative
to director compensation, including whether there are any trends to pay
equity using a fixed dollar value. |

The results of the Towers Watson analysis showed the companys level of total direct compensation, which is annual board retainer plus equity, was below the medians of both peer groups at the 28th percentile of its current performance graph peer group and at the 23rd percentile of its former performance graph peer group. Additional retainers for the audit, compensation, and nominating and governance committee chairs were well below the medians of both of the performance graph peer groups. In terms of the level of non-executive chairman compensation, the companys level of total direct compensation was well below the medians compared to the companies in our performance graph peer groups that had a non-executive chairman. The companys non-executive chairman was at the 31st percentile when compared to companies with a non-executive chairman in the current peer group and at the 17th percentile when compared to the companies with non-executive chairmen in the former peer group. After review and discussion of Towers Watsons report, the board determined to increase the committee chairmens retainers by $5,000 and to change the annual stock grant from a fixed number of shares to a grant of shares equal in value to $110,000. No changes were made to the compensation of the companys non-executive chairman.

The compensation committee also authorized the company to participate in compensation and employee benefits surveys sponsored by Towers Watson during 2011.

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 2011 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. We have not been informed that any other matter will be presented at the meeting by others. However, 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.

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.

64 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

2 013 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 23, 2013, any stockholder who wishes to submit a nomination must submit the required notice to the corporate secretary on or before January 24, 2013.

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 executive 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 23, 2013, 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 24, 2013.

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 23, 2013, stockholders must submit such written notice to the corporate secretary on or before January 24, 2013.

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 23, 2013, 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 9, 2012.

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/2011-11_Bylaws.pdf.

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, 2011, 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 9, 2012 |

MDU Resources Group, Inc. Proxy Statement 65

Proxy Statement

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66 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

E XHIBIT A — Towers Perrins (Towers Watson)	Auto Club Group	Chiquita Brands
2009 General Industry Executive	Automatic Data Processing	Choice Hotels International
Compensation Database	Avery Dennison	Chrysler
	Avis Budget Group	CHS
	Avista	CIGNA
3M	Avon Products	CIT Group
7-Eleven	AXA Equitable	CITGO Petroleum
A&P	B&W Y-12	City National Bank
A.O. Smith	BAE Systems	Cleco
A. T. Cross	Ball	CNA
AAA of Science	Bank of America	Cobank
Abbott Laboratories	Barrick Gold of North America	Coca-Cola Enterprises
ABC	Battelle Memorial Institute	Colgate-Palmolive
Accenture	Baxter International	Colorado Springs Utilities
ACH Food	Bayer	Columbia Sportswear
Advance Publications	Bayer CropScience	Comcast Cable Communications
Advanced Micro Devices	BB&T	Comerica
Advanstar Communications	Beckman Coulter	Commerce Insurance
Aegon USA	Belo	CommScope
AEI Services	Benjamin Moore	Compass Bancshares
Aerojet	Best Buy	CompuCom Systems
Aeropostale	BG US Services	ConAgra Foods
AFLAC	Big Lots	Connell
Agilent Technologies	Biogen Idec	ConocoPhillips
AGL Resources	Bio-Rad Laboratories	Consolidated Edison
Agrium U.S.	Blockbuster	Constellation Energy
AIG	Blue Cross Blue Shield of Florida	Consumers Energy
Air Products and Chemicals	Blue Shield of California	Consumers Union
Alcatel-Lucent	Blyth	Continental Airlines
Alcoa	Bob Evans Farms	Continental Automotive Systems
Allegheny Energy	Boehringer Ingelheim	Continental Energy Systems
Allergan	Boeing	ConvaTec
Allete	BOK Financial	Convergys
Alliance Data Systems	Booz Allen Hamilton	Covance
Alliant Energy	Boston Scientific	Covidien
Allianz	Bovis Lend Lease	Cox Enterprises
Allstate	BP	CPS Energy
Amazon.com	Brady	Crown Castle
Ameren	Bremer Financial	CSR
American Airlines	Bright Business Media	CSX
American Chemical Society	Bristol-Myers Squibb	Cubic
American Crystal Sugar	Brown-Forman	Curtiss-Wright
American Electric Power	Bush Brothers	CVS Caremark
American Express	CA	Daiichi Sankyo
American Family Insurance	Cablevision Systems	Daimler Trucks North America
American United Life	CACI International	Dana
American Water Works	Cadbury North America	Dannon
AMERIGROUP	Calgon Carbon	DCP Midstream
Ameriprise Financial	California Independent System Operator	Dean Foods
Ameritrade	Callaway Golf	Deere & Company
Ameron	Calpine	Delta Airlines
AMETEK	Cameron International	Deluxe
Amgen	Capital One Financial	Dennys
Amway	Capitol Broadcasting WRAL	Dentsply
Anadarko Petroleum	Cardinal Health	Devon Energy
APL	Cargill	Diageo North America
Apollo Group	Carlson Companies	DIRECTV
Applied Materials	Carmeuse Lime & Stone	Dominion Resources
ARAMARK	Carpenter Technology	Donaldson
Areva NP	Catalent Pharma Solutions	Dow Chemical
Armstrong World Industries	Caterpillar	Dow Jones
Arrow Electronics	Catholic Healthcare West	DPL
ArvinMeritor	CDI	Dr Pepper Snapple
Arysta LifeScience North America	Cedar Rapids TV KCRG	Duke Energy
Ascend Media	Celestica	DuPont
Associated Banc-Corp	Celgene	Dynegy
AstraZeneca	CenterPoint Energy	E*Trade
AT&T	Century Aluminum	E.ON U.S.
ATC Management	Cephaon	E.W. Scripps
Atmos Energy	CH2M Hill	Eastman Chemical
Atos Origin	Chevron	Eastman Kodak
Aurora Healthcare	Chicago Mercantile Exchange	Eaton

MDU Resources Group, Inc. Proxy Statement A-1

Proxy Statement

eBay	Gavilon	Integrys Energy Group
Ecolab	GDF SUEZ Energy North America	Intel
Edison International	Genentech	Intercontinental Hotels
Education Management	General Atomics	International Data
Eisai	General Dynamics	International Flavors & Fragrances
El Paso Corporation	General Electric	International Game Technology
Electric Power Research Institute	General Mills	International Paper
Eli Lilly	General Motors	Invensys Controls
Embarq	GenTek	Invensys Process Systems
Embraer	Genworth Financial	Irvine Company
EMC	Genzyme	Irwin Financial
EMCOR Group	GEO Group	ISO New England
EMI Music	Getty Images	J. Crew
Emulex	Gilead Sciences	J.C. Penney Company
Enbridge Energy	GlaxoSmithKline	J.M. Smucker
Endo Pharmaceuticals	Goodrich	J.R. Simplot
Energen	Goodyear Tire & Rubber	Jack in the Box
Energy Future Holdings	Google	Jacobs Engineering
Energy Northwest	Gortons	Jarden
Entergy	Great-West Life Annuity	JetBlue
EPCO	Greif	JM Family
Equifax	GS1 US	John Hancock
Equity Office Properties	GTECH	Johns-Manville
ERCOT	Guardian Life	Johnson & Johnson
Erie Insurance	Guideposts	Johnson Controls
Ernst & Young	GXS	Kaiser Foundation Health Plan
ESRI	H.B. Fuller	Kaman Industrial Technologies
Evening Post Publishing KOAA	Hanesbrands	Kansas City Southern
Evergreen Packaging	Hannaford	KB Home
Exelon	Harland Clarke	KBR
Exterran	Harley-Davidson	KCTS Television
ExxonMobil	Harman International Industries	Kellogg
F & W Media	Harris Enterprises	Kelly Services
Fairchild Controls	Harry Winston	Kerry Ingredients & Flavours
Fannie Mae	Hartford Financial Services	KeyCorp
FANUC Robotics America	Hawaiian Electric	Kimberly-Clark
Farm Progress Companies	Hayes Lemmerz	Kimco Realty
Federal Home Loan Bank of Pittsburgh	HBO	Kindred Healthcare
Federal Home Loan Bank of San Francisco	HCA Healthcare	Kinross Gold
Federal Reserve Bank of Cleveland	Health Care Services	Kiplinger
Federal Reserve Bank of Dallas	Health Net	KLA-Tencor
Federal Reserve Bank of New York	Healthways	Knight
Federal Reserve Bank of Philadelphia	Hearst	Koch Industries
Federal Reserve Bank of San Francisco	Hearst-Argyle Television	Kohler
Federal Reserve Bank of St. Louis	Henkel of America	Kohls
Ferderal-Mogul	Henry Ford Health Systems	KPMG
Ferrellgas	Herman Miller	L.L. Bean
Fidelity Investments	Hershey	L-3 Communications
Fifth Third Bancorp	Hertz	Lafarge North America
Firemans Fund Insurance	Hess	Land OLakes
First American	Hexion Specialty Chemicals	Leggett and Platt
First Data	Hitachi Data Systems	Lenovo
First Horizon National	HNI	Level 3 Communications
First Solar	HNTB	Lexmark International
FirstEnergy	Hoffmann-La Roche	Liberty Mutual
Fiserv	Honeywell	Life Technologies
Fluor	Horizon Lines	Life Touch
FMA Communications	Hormel Foods	Limited
Ford	Hospira	Lincoln Financial
Forest Laboratories	Houghton Mifflin	Lockheed Martin
Fortune Brands	Hovnanian Enterprises	Loews
Forum Communications WDAY	HSBC North America	LOMA
FPL Group	Hubbard Broadcasting	Lorillard Tobacco
Franklin Resources	Humana	Lower Colorado River Authority
Freddie Mac	Hunt Consolidated	M&T Bank
Freedom Communications	Huntington Bancshares	Magellan Midstream Partners
Freeport-McMoRan Copper & Gold	Hyatt Hotels	Marathon Oil
Frontier Airlines	IBM	Marriott International
G&K Services	IDACORP	Marshall & Ilsley
GAF Materials	Idearc Media	Martin Marietta Materials
Gannett	IDEXX Laboratories	Mary Kay
Gap	IKON Office Solutions	Masco
Garland Power & Light	IMS Health	Massachusetts Mutual
Garmin	ING	Mattel
GATX	Ingersoll-Rand	Matthews International

A-2 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

McClatchy	Oshkosh Truck	S.C. Johnson
McDermott	Otter Tail	Safety-Kleen Systems
McDonalds	Owens Corning	SAIC
McKesson	Owens-Illinois	Salt River Project
MDU Resources	Pacific Gas & Electric	Sanmina-SCI
MeadWestvaco	Pacific Life	Sanofi Pasteur
Medco Health Solutions	Panasonic of North America	Sanofi-Aventis
Media General	Papa Johns	Sara Lee
Media Tec Publishing	Parametric Technology	Sarkes Tarzian KTVN
MedImmune	Parker Hannifin	Sarkes Tarzian WRCB
Medtronic	Parsons	SAS Institute
Meister Media Worldwide	Pearson Education	Savannah River Nuclear Solutions
Merck & Co	Peoples Bank	SCA Americas
Meredith	Pepco Holdings	SCANA
Metavante Technologies	PepsiCo	Schering-Plough
MetLife	Perot Systems	Schlumberger
MetroPCS Communications	PetSmart	Schneider Electric
MGE Energy	Pfizer	School Specialty
Microsoft	Philips Helathcare	Schreiber Foods
Midwest Independent Transmission System	Phillips-Van Heusen	Schurz KYTV
Operator	Phoenix Companies	Schurz WDBJ
Millennium Pharmaceuticals	PhRMA	Schwans
Millipore	Pinnacle West Captial	Scripps Networks Interactive
Mine Safety Appliances	Pioneer Hi-Bred International	Seagate Technology
Mirant	Pitney Bowes	Sealed Air
Molson Coors Brewing	Pittsburgh Corning	Securian Financial Group
MoneyGram International	PJM Interconnection	Securitas Security Services USA
Morgan Murphy Stations WISC	PlainsCapital	Security Benefit Group
Mosaic	Plexus	Sempra Energy
Motorola	PMI Group	Sensata Technologies
MSC Industrial Direct	PNC Financial Services	Shell Oil
Munich Reinsurance America	PNM Resources	Sherwin-Williams
National Renewable Energy Laboratory	Polaris Industries	Shire Pharmaceuticals
Nationwide	Polymer Group	Siemens
Navistar International	PolyOne	Sinclair Broadcast Group
Navy Federal Credit Union	Portland General Electric	Sirius XM Radio
NBC Universal	Potash	SLM
NCCI Holdings	PPG Industries	Smurfit-Stone Container
NCR	PPL	Sodexo USA
Neoris USA	Praxair	Sonoco Products
Nestle USA	Principal Financial	Sony Corporation of America
New York Life	Progress Energy	South Financial Group
New York Power Authority	Progressive	Southern Company Services
New York Times	Providence Health & Services	Southern Union Company
New York University	Prudential Financial	Southwest Airlines
Newmont Mining	Public Service Enterprise Group	Southwest Power Pool
NewPage	Puget Energy	Sovereign Bancorp
Nicor	Pulte Homes	Spectra Energey
NIKE	Purdue Pharma	Sprint Nextel
Nokia	QUALCOMM	SPX
Noranda Aluminum	Quest Diagnostics	Stanford University
Norfolk Southern	Quintiles	Stantec
Northeast Utilities	Qwest Communications	Staples
Northern Trust	R.H. Donnelley	Starbucks
NorthWestern Energy	R.R. Donnelley	Starwood Hotels & Resorts
Northwestern Mutual	Ralcorp Holdings	State Farm Insurance
Novartis	Rayonier	State Street
Novartis Consumer Health	Raytheon	Steelcase
Novell	RBC Dain Rauscher	Sterling Bancshares
Novo Nordisk Pharmaceuticals	Readers Digest	STP Nuclear Operating
NRG Energy	Reed Business Information	String Letter Publishing
NSTAR	Reed Exhibitions	Summit Business Media
NuStar Energy	Regal-Beloit	Sun Life Financial
NV Energy	Regency Energy Partners LP	Sun Microsystems
NW Natural	Regions Financial	Sundt Construction
NXP Semi-Conductor	Reliant Energy	Sunoco
Nycomed US	Research in Motion	SunTrust Banks
Occidental Petroleum	RF Micro Devices	Target
Office Depot	RGA Reinsurance Group of America	Taubman Centers
OGE Energy	Rio Tinto	Taunton Press
Oglethorpe Power	Robb Report	Taylor-Wharton International
Omaha Public Power	Roche Diagnostics	TD Banknorth
Omnova Solutions	Rockwell Automation	TECO Energy
OneBeacon Insurance	Rockwell Collins	TeleTech Holdings
Orange Business Services	Rolls-Royce North America	Tellabs

MDU Resources Group, Inc. Proxy Statement A-3

Proxy Statement

Temple-Inland	Wells Fargo	Garland Power & Light
Tenet Healthcare	Wendys/Arbys Group	GDF SUEZ Energy North America
Teradata	Westar Energy	Hawaiian Electric
Terex	Western Digital	IDACORP
Terra Industries	Western Union	Integrys Energy Group
Tesoro	Westinghouse Electric	ISO New England
Textron	Weyerhaeuser	Knight
Thomas & Betts	Whirlpool	Lower Colorado River Authority
Thomas Publishing	Whole Foods Market	MDU Resources
Thrivent Financial for Lutherans	Williams Companies	MGE Energy
TIAA-CREF	Williams-Sonoma	Midwest Independent Transmission
Time	Winn-Dixie Stores	System Operator
Time Warner	Wisconsin Energy	Mirant
Time Warner Cable	Wm. Wrigley Jr.	New York Independent System Operator
Timex	Wolters Kluwer US	New York Power Authority
T-Mobile USA	WPP	Nicor
Toro	Wray Edwin KTBS	Northeast Utilities
TransCanada	Wyeth Pharmaceuticals	NorthWestern Energy
TransUnion	Wyndham Worldwide	NRG Energy
Travelers	Xcel Energy	NSTAR
Tribune	Xerox	NV Energy
TUI Travel	Yahoo!	NW Natural
Tupperware	Young Broadcasting KFLY	OGE Energy
Twin Cities Public Television TPT	Young Broadcasting KRON	Oglethorpe Power
Tyco Electronics	Yum! Brands	Omaha Public Power
U.S. Bancorp	Zale	Otter Tail
U.S. Foodservice	Zurich North America	Pacific Gas & Electric
UC4 Software		Pepco Holdings
UIL Holdings		Pinnacle West Capital
Unilever United States	Towers Perrins (Towers Watson)	PJM Interconnection
Union Bank of California	2009 Energy Industry Executive	PNM Resources
Union Pacific	Compensation Database	Portland General Electric
UniSource Energy		PPL
Unisys	AEI Services	Progress Energy
United Airlines	AGL Resources	Public Service Enterprise Group
United Rentals	Allegheny Energy	Puget Energy
United States Cellular	Allete	Regency Energy Partners LP
United States Enrichment	Alliant Energy	Reliant Energy
United States Steel	Ameren	Salt River Project
United Technologies	American Electric Power	SCANA
United Water	Areva NP	Sempra Energy
UnitedHealth	ATC Management	Southern Company Services
Unitil	Atmos Energy	Southern Union Company
Univar	Avista	Southwest Power Pool
Universal Studios Orlando	BG US Services	Spectra Energy
University of Texas M.D. Anderson	Black Hills Power and Light	STP Nuclear Operating
Cancer Center	California Independent System Operator	TECO Energy
Unum Group	Calpine	Tennessee Valley Authority
US Airways	CenterPoint Energy	TransCanada
USAA	Cleco	UIL Holdings
USG	CMS Energy	UniSource Energy
Valero Energy	Colorado Springs Utilities	Unitil
Verizon	Consolidated Edison	Westar Energy
Vertex Pharmaceuticals	Constellation Energy	Westinghouse Electric
VF	CPS Energy	Williams Companies
Viacom	DCP Midstream	Wisconsin Energy
Viad	Dominion Resources	Wolf Creek Nuclear
Virgin Mobile USA	DPL	Xcel Energy
Visa USA	Duke Energy
Visiting Nurse Service	Dynegy
Visteon	E.ON U.S.	Effective Compensation, Inc.s
Volvo Group North America	Edison International	2009 Oil & Gas Compensation
Vulcan	El Paso Corporation	Survey
Vulcan Materials	Electric Power Research Institute
VWR International	Enbridge Energy	Aera Energy Services Company
W.R. Grace	Energen	Altex Energy Corporation
W.W. Grainger	Energy Future Holdings	ANKOR Energy LLC
Wachovia	Energy Northwest	Antero Resources Corporation
Walt Disney	Entergy	Approach Resources Inc.
Warnaco	EPCO	Aramco Services Company
Waste Management	ERCOT	Aspect Energy, LLC
Watson Pharmaceuticals	Exelon	Atlas Energy Resources L.L.C.F
Webster Bank	FirstEnergy	Berry Petroleum Company
Wellcare Health Plans	FPL Group	Bill Barrett Corporation
Wellpoint

A-4 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Black Hills Exploration & Production	Plains Exploration & Production Company	BreitBurn Energy Partners LP
BOPCO, L.P.	Quantum Resources Management, LLC	BreitBurn Energy Partners LP
BreitBurn Energy	Questar Market Resources Group	Eastern Division
Brigham Exploration Company	Quicksilver Resources Inc.	BreitBurn Energy Partners LP
Browning Oil Company, Inc.	Range Resources Corporation	Orcutt Facility
Cabot Oil & Gas Corporation	Read and Stevens, Inc.	BreitBurn Energy Partners LP West
Cano Petroleum, Inc.	Rex Energy Operating Corp.	Pico Facility
Ceja Corporation	Rosetta Resources Inc.	BreitBurn Energy Partners LP
Chaparral Energy, Inc.	Samson	Western Div California Operations
Chesapeake Energy Corporation	Seneca Resources Corporation	BreitBurn Energy Partners LP
Cimarex Energy Co.	Sinclair Oil and Gas Company	Western Div Florida Operations
Cohort Energy Company	Southwestern Energy Production Company	BreitBurn Energy Partners LP
Comstock Resources, Inc.	St. Mary Land & Exploration Company	Western Div Wyoming Operations
Concho Resources, Inc.	Stone Energy Corporation	BreitBurn Energy Partners LP
Continental Resources, Inc.	Swift Energy Operating, LLC	Western Division
Core Minerals Operating Co., Inc.	T-C Oil Company	Bridwell Oil Company
Crimson Exploration, Inc.	Tema Oil and Gas Company	Brigham Exploration Company
Dart Oil & Gas	Texas Petroleum Investment Company	Brookfield Asset Management, Inc.
Denbury Resources Inc.	Thums Long Beach Company	Brookfield Renewable Power
Devon Energy	TOTAL E&P USA, INC.	Bunge Ltd. BG US Services
Dominion Exploration & Production	Triad Energy Corporation	Burnett Oil Company, Inc.
Duncan Oil Properties, Inc./	Tri-Valley Corporation	California ISO
Walter Duncan, Inc.	Ultra Petroleum Corp.	Cameron International Corporation
Dynamic Offshore Resources, LLC	Vanco Energy Company	Cameron International Corporation
Eagle Rock Energy G&P, LLC	Vantage Energy L.L.C	Aftermarket
Ellora Energy	Venoco, Inc.	Cameron International Corporation
EnCana Oil & Gas (USA) Inc.	Vernon E. Faulconer, Inc.	Centrifugal
Encore Acquisitions Company	Wagner & Brown, Ltd.	Cameron International Corporation
Energen Resources	Western Production Company	Compression Systems
Energy Partners, Ltd.	Weyerhaeuser Company	Cameron International Corporation
Eni Operating Co. Inc.	Whiting Petroleum Corporation	Distributed Valves
EOG Resources Inc.	Williams	Cameron International Corporation
EQT Production Company	Woodside Energy (USA) Inc	Drilling & Production Systems
Fasken Oil and Ranch, Ltd.	XTO Energy, Inc.	Cameron International Corporation
Fidelity Exploration & Production Company	Yuma Exploration and Production	Drilling Systems
FIML Natural Resources	Company, Inc.	Cameron International Corporation
Forest Oil Corporation		Engineered Valves
Fortuna Energy, Inc.		Cameron International Corporation
GMX Resources Inc.	Mercers 2009 Total Compensation	Flow Control
Goodrich Petroleum Corporation	Survey for the Energy Sector	Cameron International Corporation
Great Western Drilling Company		Measurement Division
Harvest Natural Resources, Inc.	Abraxas Petroleum Corporation	Cameron International Corporation
Headington Oil Company, L.P.	Aera Energy, LLC	Petreco Process Systems
Henry Resources LLC	AGL Resources, Inc.	Cameron International Corporation
Hilcorp Energy Company	Aker Solutions	Process Valves
J. M. Huber Corporation Energy Sector	Alliance Pipeline, Inc.	Cameron International Corporation
Kinder Morgan CO2 Company, L.P.	Alyeska Pipeline Service Company	Reciprocating
Lake Ronel Oil Company	Ameren Corporation	Cameron International Corporation
Leed Petroleum LLC	Anadarko Petroleum Corporation	Subsea Systems
Linn Energy, Inc.	Apache Corporation	Cameron International Corporation
Mariner Energy, Inc.	Arch Coal, Inc.	Surface Systems
McElvain Oil and Gas Properties, Inc.	Aspect Energy, LLC	Cameron International Corporation
McMoran Oil and Gas Company	Aspect Energy, LLC Aspect Abundant	Valves & Measurement
Medco Petroleum Management LLC	Shale LP	CenterPoint Energy, Inc.
Merit Energy Company	Aspect Energy, LLC Hungaria	CGGVeritas
Mewbourne Oil Company	Horizon Energy	Chesapeake Energy Corporation
Mustang Fuel Corporation	Associated Electric Cooperative, Inc.	Chesapeake Energy Corporation CEMI
Nearburg Producing Company	Atlas America, Inc.	Chesapeake Energy Corporation
Newfield Exploration Company	Atlas Pipeline Mid-Continent	Chesapeake App
Nexen Petroleum U.S.A. Inc.	Baker Hughes, Inc.	Chesapeake Energy Corporation
NFR Energy LLC	Baker Hughes, Inc. Baker Atlas	Chesapeake Midstream Partners
Noble Energy, Inc.	Baker Hughes, Inc. Baker Drilling Fluids	Chesapeake Energy Corporation Compass
Oasis Petroleum LLC	Baker Hughes, Inc. Baker Oil Tools	Chesapeake Energy Corporation
Panhandle Oil and Gas Inc.	Baker Hughes, Inc. Baker Petrolite	Diamond Y
Penn Virginia Oil & Gas	Baker Hughes, Inc. Centrilift	Chesapeake Energy Corporation
Petro-Canada Resources (USA) Inc	Baker Hughes, Inc. Hughes Christensen	Great Plains
PETROFLOW Energy, Ltd.	Baker Hughes, Inc. Inteq	Chesapeake Energy Corporation
Petroglyph Energy, Inc.	Baker Hughes, Inc. Production Quest	Hodges
Petrohawk Energy Corporation	Basic Energy Services, Inc.	Chesapeake Energy Corporation
Petro-Hunt, LLC	BHP Billiton, Ltd. BHP Billiton Petroleum	Midcon
Petroleum Development Corporation	(Americas), Inc.	Chesapeake Energy Corporation
PetroQuest Energy LLC	Boardwalk Pipeline Partners LP	Nomac
Phoenix Exploration Company	BP plc BP North America Exploration	Chief Oil & Gas, LLC
Pioneer Natural Resources USA, Inc.	& Production	CHS, Inc. Energy

MDU Resources Group, Inc. Proxy Statement A-5

Proxy Statement

Cimarex Energy Company	Explorer Pipeline Company	Oceaneering International, Inc.
Cinco Natural Resources Corporation	Exterran Holdings, Inc.	Oceaneering International, Inc. Americas
Citation Oil & Gas Corporation	Fasken Oil and Ranch, Ltd.	Oceaneering International, Inc. Multiflex
CITGO Petroleum Corporation	Forest Oil Corporation	Oceaneering International, Inc.
Cleco Corporation	Fortuna Energy, Inc.	Oceaneering Intervention Engineering
Concho Resources, Inc.	FX Energy, Inc.	OGE Energy Corp
COG Operating, LLC	FX Energy, Inc FX Drilling Company, Inc.	Oglethorpe Power Corporation
Colonial Pipeline Company	Genesis Energy, LLC	ONEOK, Inc.
Conectiv Energy	Global Industries, Ltd.	ONEOK, Inc. Kansas Gas Service Division
Constellation Energy Partners, LLC	Great River Energy	ONEOK, Inc. Oklahoma Natural
Core Laboratories N.V.	Halliburton Company	Gas Division
CPS Energy	Helmerich & Payne, Inc.	ONEOK, Inc. ONEOK Energy Services
DCP Midstream, LLC	Hess Corporation Exploration & Production	ONEOK, Inc. ONEOK Partners
Det Norske Veritas AS Det Norske Veritas	HighMount Exploration & Production, LLC	ONEOK, Inc. Texas Gas Service Divison
(USA), Inc	Hilcorp Energy Company	PacifiCorp
Devon Energy Corporation	Hilcorp Energy Company Harvest Pipeline	Parallel Petroleum Corporation
Diamond Offshore Drilling, Inc.	Company	Parker Drilling Company
Dominion Resources, Inc.	Holly Corporation	Pason Systems USA Corporation
Dominion Resources, Inc.	Holly Corporation Holly Asphalt Company	Pepco Holdings, Inc.
Dominion Energy	Holly Corporation Holly Logistic Services	Petro-Canada USA, Inc.
Dominion Resources, Inc.	Holly Corporation Holly Refining and	Petroleum Development Corporation
Dominion Generation	Marketing Woods Cross	Pioneer Natural Resources Company
Dominion Resources, Inc. Dominion	Holly Corporation	PJM Interconnection
Virginia Power	Navajo Refining Company	Plains All American Pipeline LP
Dresser-Rand Group, Inc.	Hunt Consolidated Hunt Oil Company	Plains Exploration & Production Company
Dresser-Rand Group, Inc. Field Operations	Jacksonville Electric Authority	Precision Drilling Oilfield Services
Dresser-Rand Group, Inc.	Kinder Morgan, Inc.	Corporation
North America Operations	Lario Oil & Gas Company	Pride International, Inc.
Dresser-Rand Group, Inc. Product Services	Legacy Reserves LP	ProLiance Energy, LLC
DTE Energy Company	Linn Energy, LLC	Puget Sound Energy
DynMcDermott Petroleum Operations	Maersk, Inc. Moller Supply Services	Questar Corporation
Edison Mission Energy	Magellan Midstream Holdings LP	Questar Corporation Questar
Edison Mission Energy	Magellan Midstream Holdings LP	Market Resources
Edison Mission M&T	Transportation	Quicksilver Resources, Inc.
Edison Mission Energy	Magellan Midstream Holdings LP	R. Lacy, Inc. R. Lacy Services, Ltd.
Edison Mission O&M	Transportation and Terminals	RAM Energy Resources, Inc.
Edison Mission Energy	MarkWest Energy Partners LP	Range Resources Corporation
EME Homer City Generation	MarkWest Energy Partners LP	Regency Gas Services
Edison Mission Energy	Gulf Coast Business Unit	Resolute Natural Resources Company
Midwest Generation EME	MarkWest Energy Partners LP	RKI Exploration & Production, LLC
Edison Mission Energy	Northeast Business Unit	Rosewood Resources, Inc.
Midwest Generation, LLC	MarkWest Energy Partners LP	Rosewood Resources, Inc.
El Paso Corporation	Southwest Business Unit	Rosewood Services Company
El Paso Corporation Exploration	McMoRan Exploration Company	Rowan Companies, Inc.
& Production	MCX Exploration (USA), Ltd.	SAIC, Inc.
El Paso Corporation Pipeline Group	MDU Resources Group, Inc.	SCANA Corporation
EnCana Oil & Gas (USA), Inc.	MDU Resources Group, Inc.	SCANA Corporation Carolina Gas
Energy Future Holdings Corporation	WBI Holdings, Inc.	Transmission Corporation (CGTC)
Energy Future Holdings Corporation	Medco Petroleum Management	SCANA Corporation PSNC Energy
Luminant	Mestena Operating, Ltd.	SCANA Corporation SCE&G (South Carolina
Energy Future Holdings Corporation	Mirant Corporation	Electric and Gas Company)
Luminant Energy Company, LLC	MitEnergy Upstream, LLC	SCANA Corporation SEMI (SCANA
Energy Future Holdings Corporation	Murphy Oil Corporation	Energy Marketing, Inc.)
Oncor Electric Delivery Company, LLC	NATCO Group, Inc.	Schlumberger Limited Schlumberger
Energy Future Holdings Corporation	Nexen, Inc. Nexen Petroleum USA, Inc.	Oilfield Services
TXU Energy Retail Company, LLC	Nippon Oil Exploration USA, Ltd.	Seneca Resources Corporation
Enerplus Resources Fund Enerplus	NiSource, Inc.	Smith International, Inc.
Resources (USA) Corporation	NiSource, Inc. Bay State Gas Company	Smith International, Inc. MI Swaco
EnerVest Management Partners, Ltd.	NiSource, Inc. Columbia Gas of Kentucky	Southern Company
Eni SpA Eni US Operating Company, Inc.	NiSource, Inc. Columbia Gas of Ohio	Southern Company Alabama
ENSCO International, Inc.	NiSource, Inc. Columbia Gas of	Power Company
ENSCO International, Inc.	Pennsylvania	Southern Company Georgia Power
Deepwater Business Unit	NiSource, Inc. Columbia Gas of Virginia	Southern Company Gulf Power Company
ENSCO International, Inc.	NiSource, Inc. Energy USA	Southern Union Company
North & South America Business Unit	NiSource, Inc. NIE	Southern Union Company Missouri
Entegra Power Services, LLC	NiSource, Inc. NiSource Energy Tech Inc	Gas Energy
EOG Resources, Inc.	NiSource, Inc. NiSource Gas Trans	Southern Union Company New
E. ON AG E. ON U.S.	& Storage	England Gas
EXCO Resources, Inc.	NiSource, Inc. Transmission Corp	Southern Union Company Panhandle
EXCO Resources, Inc. EXCO Appalachia	Noble Corporation	Energy
EXCO Resources, Inc. EXCO East TX/LA	Noble Corporation Noble Drilling Services,	Southern Union Company Southern
EXCO Resources, Inc. EXCO Mid-Continent	Inc.	Union Gas Services
EXCO Resources, Inc. EXCO Midstream	Noble Energy, Inc.	Southwest Gas Corporation
EXCO Resources, Inc.	Occidental Petroleum Corporation	Southwestern Energy Company
EXCO Permian/Rockies	Thums Long Beach Company	Sprague Energy Corporation

A-6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

StatoilHydro	Aker Solutions	The Arizona Republic
Tellus Operating Group, LLC	Alaska Air Group, Inc.	Arkansas Best Corporation
Tesco Corporation	Albemarle Corporation	Armstrong World Industries, Inc.
The Williams Companies, Inc.	Alcoa, Inc.	Arrow Electronics, Inc.
The Williams Companies, Inc. E&P	Alexander & Baldwin, Inc.	ArvinMeritor, Inc.
The Williams Companies, Inc. Midstream	Alfa Laval, Inc.	Asbury Automotive Group, Inc.
The Williams Companies, Inc. Williams Gas	Allegheny County Sanitary Authority	ASCAP
Pipeline (WGP)	Allegheny Energy, Inc.	Ascent Media Group
TransCanada	Allegheny Technologies Incorporated	Ashland, Inc.
TransCanada Gas Transmission Northwest	Allergan, Inc.	Asset Marketing Service, Inc.
(GTN)	Allete	Assurant Health
TransCanada Northern Border Pipeline	Alliance Data Systems Corporation	Assurant, Inc.
TransCanada US Pipeline Central	Alliance Residential Company	Asurion Corporation
Transocean, Inc.	Alliant Energy Corporation	AT&T, Inc.
Ultra Petroleum Corporation	The Allstate Corporation	Atmos Energy Corporation
Unit Corporation	Alpha Innotech Corporation	Aurora Healthcare
Unit Corporation Superior Pipeline	Alpha Natural Resources, Inc.	The Auto Club Group
Company	ALSAC St. Jude	Autodesk, Inc.
Unit Corporation Unit Drilling Company	Altria Group, Inc.	Autoliv North America, Inc.
Unit Corporation Unit Petroleum Company	Altru Health System	Automobile Club of Southern California
Venoco, Inc.	Amazon.com, Inc.	AutoNation, Inc.
Verado Energy, Inc.	Amcore Bank	AutoZone, Inc.
Washington Gas Light Company	Ameren Corporation	Aveda Corporation
Weatherford International, Ltd.	American Airlines	Avery Dennison Corporation
Weatherford International, Ltd. US Region	American Axle & Manufacturing	Avis Budget Group
Western Production Company	Holdings, Inc.	Avista Corporation
Xcel Energy, Inc.	American Cancer Society, Inc.	Avon Products, Inc.
XTO Energy, Inc.	American Commercial Lines, Inc.	Axsys
	American Dehydrated Foods, Inc.	B Braun Medical, Inc.
	American Eagle Outfitters	Babcock & Wilcox Company
Watson Wyatts (Towers Watson)	American Electric Power Company, Inc.	Babson College
2009/2010 Top Management	American Enterprise	Baker Hughes Incorporated
Compensation Survey	American Express Company	Baldor Electric Company
	American Family Insurance	Ball Corporation
3M Company	American Financial Group	Bank of America Corporation
A. O. Smith Corporation	American Greetings Corporation	The Bank of New York Mellon Corporation
A. Schulman, Inc.	American Red Cross	Baptist Health
AAA	American Water	Baptist Health System
ABB, Inc.	Americas Styrenics	Barloworld Handling
Abbott Laboratories	AMERIGROUP Corporation	Barnes & Noble, Inc.
Abercrombie & Fitch Company	AmeriPride Services, Inc.	Basler Electric Company
ABM Industries, Inc.	Ameriprise Financial, Inc.	Baxa Corporation
Accor North America	AmerisourceBergen Corporation	Baxter International, Inc.
Activision Blizzard, Inc.	Ameristar Casinos	Baylor College of Medicine
The Actors Fund of America	Ames True Temper	Baylor Health Care System
Actuant Corporation	AMETEK, Inc.	BB&T Corporation
Acuity	AMETEK, Inc./Advanced Measurement	BE Aerospace, Inc.
Acuity Brands, Inc.	Technology, Inc.	Beacon Roofing Supply, Inc.
ACUMED LLC	Amgen, Inc.	BearingPoint, Inc.
Adams Resources & Energy, Inc.	Amkor Technology, Inc.	Beazer Homes USA, Inc.
Administaff, Inc.	Amphenol Corporation	Bechtel Systems & Infrastructure, Inc.
Adobe Systems Incorporated	AMR Corporation	Beckman Coulter, Inc.
ADTRAN Incorporated	Amtrak	Becton, Dickinson and Company
Advance Auto Parts	Anadarko Petroleum Corporation	Behr America, Inc.
Advanced Micro Devices, Inc.	Analog Devices, Inc.	Belden, Inc.
Adventist Health System	Anchor Bank North America	Belk, Inc.
AECOM Technology Corporation	Andersen Corporation	Bemis Company, Inc.
Aegon USA	The Andersons, Inc.	Bemis Manufacturing Company
Aeropostale, Inc.	ANH Refractories Company	Benchmark Electronics, Inc.
The AES Corporation	Anixter International, Inc.	Berkshire Hathaway, Inc.
Aetna, Inc.	AnnTaylor Stores Corporation	Berwick Offray LLC
Affiliated Computer Services, Inc.	The Antioch Company	Best Buy Co., Inc.
Affinia Group, Inc.	Aon Corporation	Big Lots, Inc.
Affinity Plus Federal Credit Union	APAC Customer Services	Biodynamic Research Corporation
AFLAC Incorporated	Apache Corporation	Biogen Idec, Inc.
AGCO Corporation	Apollo Group	Biomet
AgFirst	Apple, Inc.	Bio-Rad Laboratories, Inc.
Agilent Technologies, Inc.	Applied Materials, Inc.	BJ Services Company
AGL Resources, Inc.	AptarGroup, Inc.	BJs Wholesale Club
AgriBank, FCB	ARAMARK Corporation	The Black & Decker Corporation
Air Products & Chemicals, Inc.	Arch Coal, Inc.	BlackRock, Inc.
Airlines Reporting Corporation	Archstone	Blockbuster, Inc.
AirTran Holdings, Inc.	Areva NP, Inc.	Blue Cross & Blue Shield of Nebraska
AK Steel Holding Corporation	ARINC, Inc.	Blue Cross & Blue Shield of South Carolina

MDU Resources Group, Inc. Proxy Statement A-7

Proxy Statement

Blue Cross & Blue Shield of Tennessee	Celanese Corporation	Constellation Energy Group, Inc.
Blue Cross Blue Shield of Louisiana	Celgene Corporation	Continental Airlines, Inc.
Blue Cross of Idaho Health Service, Inc.	Cell Therapeutics, Inc.	Convenience Food Systems, Inc.
Blue Cross of Northeastern Pennsylvania	CEMEX, Inc.	Convergys Corporation
BlueLinx Holdings, Inc.	Centene Corporation	Con-way, Inc.
BMW Manufacturing Corporation	CenterPoint Energy, Inc.	Cooper Standard Automotive
Board of Governors of the Federal	Century Aluminum Company	Cooper Tire & Rubber Company
Reserve System	Century Tel, Inc.	Core Laboratories
Bob Evans Farms	Cenveo, Inc.	Core-Mark Holding Company, Inc.
The Boeing Company	Cephalon, Inc.	Corn Products International, Inc.
Boise Cascade Holdings LLC	CF Industries Holdings, Inc.	Cornell University
Boise, Inc.	The Charles Schwab Corporation	Corning Incorporated
The Bon-Ton Stores, Inc.	Chemtreat, Inc.	Correctional Medical Services
Borders Group, Inc.	Chenega Corporation	Corrections Corporation of America
BorgWarner, Inc.	Chesapeake Energy Corporation	Costco Wholesale Corporation
Bosch Packaging Services	Chevron Corporation	Country Insurance & Financial
Boston Scientific Corporation	Chicago Transit Authority	The Country Vintner
Boy Scouts of America	Chicos FAS, Inc.	Covance, Inc.
Boyd Gaming Corporate	Childrens Healthcare Atlanta	Coventry Health Care, Inc.
Boys & Girls Clubs of America	Childrens Home Society	Cox Enterprises, Inc.
Bradley Corporation	Chiquita Brands International, Inc.	Cox Target Media Valpak
Brady Corporation	Choice Hotels International	CPS Energy
Briggs & Stratton Corporation	CHS, Inc.	Cracker Barrel Old Country Store, Inc.
Brightpoint, Inc.	The Chubb Corporation	Crane Company
The Brinks Company	Chumash Employee Resource Center	Cree, Inc.
Bristol Myers Squibb Company	Church & Dwight Co., Inc.	Croda, Inc.
Broadcom Corporation	Church of Jesus Christ of Latter-Day Saints	Crosstex Energy, Inc.
Broadridge Financial Solutions, Inc.	CIGNA Corporation	Crown Castle International Corporation
Brookdale Senior Living, Inc.	Cimarex Energy Company	Crown Cork & Seal
Brown Shoe Company, Inc.	Cincinnati Financial Corporation	CSX Corporation
Brownells, Inc.	Cinemark Holdings, Inc.	Cummins, Inc.
Brunswick Corporation	CIT Group, Inc.	CUNA Mutual Group
Bryant University	Citationshares	Curtiss-Wright Corporation
BSSI	Citigroup, Inc.	CVR Energy, Inc.
Buckeye GP Holdings LP	City of Austin	CVS Caremark
Bucyrus International, Inc.	City of Charlotte	Cypress Semiconductor Corporation
Buffets, Inc.	City of Columbus	Cytec Industries, Inc.
Building Materials Holding Corporation	City of Garland	D & E Communications, Inc.
Burger King Holdings, Inc.	City of Houston	D.R. Horton, Inc.
Burlington Northern Santa Fe Corporation	City of Philadelphia	Daimler Financial Services
C.H. Robinson Worldwide, Inc.	Clarian Health Partners	Dakota Electric Association
C.R. Bard, Inc.	Cleco Corporation	Dallas County
Cabelas Incorporated	Cliffs Natural Resources, Inc.	Dal-Tile, Inc.
Cablevision Systems Corporation	The Clorox Company	Dana Holding Corporation
Cabot Corporation	ClubCorp, Inc.	Danaher Corporation
CACI International, Inc.	CME Group, Inc.	Data Center, Inc.
Caelum Research Corporation	CMS Energy Corporation	DaVita, Inc.
Calibre Systems	CNL Financial Group	Dean Foods
California Casualty Management Company	Coca-Cola Bottling Company Consolidated	Deckers Outdoor Corporation
California Institute of Technology	The Coca-Cola Company	The Decurion Corporation
California Water Service Company	Coca-Cola Enterprises, Inc.	Deere & Company
Calpine Corporation	Cognizant Technology Solutions Corporation	Dekalb Regional Healthcare Systems
Calumet Specialty Products Partners LP	Colgate-Palmolive Company	Del Monte Fresh Produce Company
Cameron International Corporation	Collective Brands, Inc.	Delorme Publishing
Camoplast, Inc.	The Colman Group, Inc.	Delphi Corporation
Campbell Soup Company	Colonial Bank	Delta Air Lines, Inc.
Canyon Ranch	Colorado Springs Utilities	Denso International America
Capital One Financial Corporation	Colsa Corporation	Denso Manufacturing Michigan, Inc.
Career Education Corporation	Columbia Sportswear Company	DENTSPLY International, Inc.
Career Service Authority City and County	Columbus Foods LLC	DePaul University
of Denver	Comcast Corporation	Devon Energy Corporation
CareFirst BlueCross BlueShield	Comerica Incorporated	DeVry University
Carle Clinic Association	Commercial Metals Company	DFW International Airport
Carlisle Companies, Inc.	CommScope, Inc.	Dicks Sporting Goods
Carlson Companies, Inc.	Community Health Network	Dickstein Shapiro LLP
CarMax	Community Health Systems	Diebold Incorporated
Carpenter Technology Corporation	The Community Preservation Corporation	Dillards, Inc.
Carter	Compass Group, North America Division	Direct Financial Solutions, Inc.
Casino Arizona	Complete Production Services, Inc.	The DIRECTV Group, Inc.
Catalyst Health Solutions, Inc.	Computer Sciences Corporation	Discover Financial Services
Caterpillar, Inc.	Computer Task Group	Discovery Communications, Inc.
CB Richards Ellis	ConocoPhillips	DISH Network Corporation
CBS Corporation	Conseco, Inc.	Doherty Employer Services
CC Media Holdings, Inc.	CONSOL Energy, Inc.	Dole Food Company, Inc.
CDM	Consolidated Edison, Inc.	Dollar General Corporation

A-8 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Dominion Resources, Inc.	Family Dollar Stores, Inc.	Genuine Parts Company
Donaldson Company, Inc.	Farmland Foods, Inc.	Genworth Financial, Inc.
Dover Corporation	Fastenal Company	Genzyme Corporation
The Dow Chemical Company	FCI USA, Inc.	Georg Fischer Signet LLC
Dr. Pepper Snapple Group, Inc.	Federal Home Loan Bank of Atlanta	Georgia Gulf Corporation
Dresser-Rand Group, Inc.	Federal Reserve Bank of Atlanta	Georgia Institute of Technology
DSC Logistics	Federal Reserve Bank of Boston	Georgia System Operations Corporation
DST Systems, Inc.	Federal Reserve Bank of Cleveland	Gerdau Ameristeel
DTE Energy	Federal Reserve Bank of Dallas	Gilead Sciences, Inc.
Duane Reade Holdings, Inc.	Federal Reserve Bank of Kansas City	Global Partners LP
Duke Energy Corporation	Federal Reserve Bank of Minneapolis	Godiva, Inc.
Duke Realty Corporation	Federal Reserve Bank of Philadelphia	Gold Eagle Company
Duke University & Health System	Federal Reserve Bank of San Francisco	Goldman Sachs Group, Inc.
The Dun & Bradstreet Corporation	Federal Reserve Bank of St. Louis	Goodrich Corporation
DuPont	FedEx Express	The Goodyear Tire & Rubber Company
Dynegy, Inc.	FedEx Ground	Google, Inc.
DynMcDermott	FedEx Office	Government Employees Health
E J Brooks Company	Fender Musical Instruments	Association, Inc.
E*TRADE Financial Corporation	Ferguson Enterprises	Graco, Inc.
The E.W. Scripps Company	Fermi National Accelerator Laboratory	Graham Packaging
Eagle Rock Energy Partners LP	FerrellGas, Inc.	Grande Cheese Company
Early Warning Services	Ferro Corporation	Grange Mutual Insurance Companies
Eastman Chemical Company	Fidelity National Financial, Inc.	Granite Construction, Inc.
Eastman Kodak Company	Fidelity National Information Services	Graybar Electric Company, Inc.
Eaton Corporation	Fifth Third Bancorp	Great Plains Energy Incorporated
eBay	The First American Corporation	Greatwide Truckload Management
Ecolab, Inc.	First American Corporation	Greif, Inc.
Edison International	First Bank	Greyhound Lines, Inc.
Edison Mission Energy	First Citizens Bank	Group 1 Automotive, Inc.
Education Management Corporation	First Data Corporation	GuideStone Financial Resources
Edward Jones & Company	First Horizon National Corporation	Gulfstream Aerospace Corporation
Edwards Lifesciences	First Interstate BancSystem	H Lee Moffitt Cancer Center &
EG&G Defense Materials	First Place Bank	Research Institute
EG&G Services	First Priority	Halliburton Company
El Paso Corporation	First Solar, Inc.	Hanesbrands, Inc.
Element K	FirstEnergy Corporation	Hannaford Bros. Company
Eli Lilly & Company	Fiserv, Inc.	The Hanover Insurance Group, Inc.
Elizabeth Arden, Inc.	Fleetwood Group	Hapag-Lloyd (America), Inc.
EMC Corporation	Flexcon Company, Inc.	Harley Davidson Motor Company
EMCOR Group, Inc.	Flexible Steel Lacing Company	Harman International Industries, Inc.
Emerson Climate Technologies/Copeland	Floridas Blood Centers, Inc.	Harrahs Entertainment
Emerson Electric	Flowers Foods, Inc.	Harris County Hospital District
Enbridge Energy Partners LP	Flowserve Corporation	Harsco Corporation
Energizer Holdings, Inc.	Fluor Corporation	Hartford Financial Services
Energy Future Holdings Corporation	FMC Corporation	Harvard Vanguard Medical Association
Energy Transfer Equity LP	FMC Technologies, Inc.	Harvey Industries
Ensco International Incorporated	Foot Locker, Inc.	Hasbro, Inc.
Entergy Corporation	Ford Motor Company	Hastings Mutual Insurance Company
Enterprise GP Holdings LP	Forth Worth Independent School District	Hawaiian Electric Industries, Inc.
Entertainment Publications	Fortune Brands	Haynes International, Inc.
EOG Resources, Inc.	Foseco Metallurgical, Inc.	Hazelden Foundation
EON US LLC	Fox Chase Cancer Center	HCA, Inc.
Equifax, Inc.	FPL Group, Inc.	HCC Insurance Holdings, Inc.
Equity Residential	Franklin Resources, Inc.	HD Supply
Erie Insurance Group	Franklin W Olin College Engineering	Health Management Associates, Inc.
ESCO Corporation	Freeman Companies	Health Net
ESCO Technologies	Freeport-McMoRan Copper & Gold, Inc.	Health Partners
The Estee Lauder Companies, Inc.	Freescale Semiconductor, Inc.	HealthNow New York
Esterline Technologies Corporation	Fremont Group	HealthSouth Corporation
Etnyre International, Ltd.	Froedtert & Community Health	HealthSpring, Inc.
Europ Assistance USA	Frontier Communications Corporation	HealthTrans
Evraz Oregon Steel Mills	Frontier Oil Corporation	H-E-B
Exel, Inc.	Furniture Brands International, Inc.	Helix Energy Solutions Group, Inc.
Exelon Corporation	G&K Services	Helmerich & Payne, Inc.
Exempla Health Care, Inc.	G. Loomis, Inc.	Hendrick Medical Center
Exide Technologies	Gannett Co., Inc.	Hendrickson International
Expedia, Inc.	The Gap, Inc.	Henry Ford Health System
Expeditors International of Washington	Gardner Denver, Inc.	Henry Schein, Inc.
Experian	Garmin International	Herman Miller, Inc.
Express Scripts, Inc.	Gaylord Entertainment	The Hershey Company
Extendicare Health Services	General Cable Corporation	The Hertz Corporation
Exterran Holdings, Inc.	General Dynamics Corporation	Hess Corporation
Exxon Mobil Corporation	General Dynamics Information Technology	Hewitt Associates, Inc.
FAIR Plan Insurance Placement Facility	General Growth Properties, Inc.	Hewlett-Packard Company
of Pennsylvania	General Motors Corporation	Hexion Specialty Chemicals, Inc.

MDU Resources Group, Inc. Proxy Statement A-9

Proxy Statement

Highlights for Children, Inc.	ITT Industries Advanced Engineering	Level 3 Communications, Inc.
Highmark, Inc.	& Sciences	Levi Strauss & Company
HighMount Exploration & Production LLC	ITT Systems Division	Lexmark International, Inc.
Hill Phoenix	J J Keller & Associates, Inc.	LG Electronics USA, Inc.
Hill-Rom Holdings, Inc.	J R Simplot Company	Liberty Global, Inc.
Hilti, Inc.	J.B. Hunt Transport Services, Inc.	Liberty Media Corporation (Interactive)
Hilton Hotels Corporation (Promus Hotels)	J.C. Penney Company, Inc.	LifeMasters Supported SelfCare, Inc.
Hines Interests	Jabil	LifePoint Hospitals, Inc.
Hitachi	Jack in the Box, Inc.	Lighthouse Computer Services
HNI Corporation	Jacobs Engineering Group, Inc.	Limited Brands
HNTB Corporation	Jacobs Technology, Inc.	Lincoln Electric Holdings, Inc.
Holden Industries, Inc.	Jarden Consumer Solutions	Lincoln National Corporation
Holly Corporation	Jarden Corporation	Lithia Motors, Inc.
The Home Depot, Inc.	Jefferson Science Associates	Little Lady Foods
Home Shopping Network	Jefferson Wells International	Liz Claiborne, Inc.
Honeywell International, Inc.	Jet Blue Airways	LKQ Corporation
Hormel Foods Corporation	JM Family Enterprises	Lockheed Martin Corporation
Hospira, Inc.	Jo-Ann Stores, Inc.	Lockton Companies
Host Hotels & Resorts, Inc.	John Crane, Inc.	Loews Corporation
Hovnanian Enterprises, Inc.	John Wiley & Sons, Inc.	Lowes Companies, Inc.
Hub Group, Inc.	Johns Hopkins Medical Services	Lower Colorado River Authority
Hubbard Feeds, Inc.	Johnson & Johnson	Lozier Corporation
Hubbell Incorporated	Johnson Controls, Inc.	LSG Sky Chefs
Hudson City Bancorp, Inc.	Johnson Financial Group	LSI Corporation
Humana, Inc.	JohnsonDiversey, Inc.	Lubrizol Corporation
Hunter Douglas, Inc.	Jones Apparel Group, Inc.	Luck Stone Corporation
Hunter Industries	Jones Lang LaSalle	Luther Midelfort-Mayo Health System
Huntington Bancshares Incorporated	Joy Global, Inc.	Lutron Electronics
Huntsman Corporation	JPMorgan Chase & Co.	Luxottica Retail
Huron Consulting Group	Judicial Council of California	M&T Bank Corporation
Hutchinson Technology, Inc.	Juniper Networks, Inc.	Macys, Inc.
Hyatt Hotels Corporation	Kalsec, Inc.	Maersk, Inc.
Hyundai Motor America	Kansas City Southern	Magellan Health Services
IAC/InterActiveCorp	Kansas Farm Bureau	Mahr Federal, Inc.
Iasis Healthcare Corporation	KAR Holdings, Inc.	Malco Products, Inc.
IBA USA, Inc.	KB Home	Manitowoc Company, Inc.
Icahn Enterprises LP	KBR, Inc.	Mannington Mills, Inc.
IDT Corporation	Keihin Indiana Precision Technology	Manpower International, Inc.
Illinois Tool Works, Inc.	Kellogg Company	Manpower, Inc.
Imation Corporation	Kelly Services, Inc.	ManTech International Corporation
Imerys	Kewaunee Scientific Corporation	Marathon Oil Corporation
IMS Health, Inc.	Key Energy Services, Inc.	Maricopa County Office of Management
Indianapolis Power & Light Company	KeyCorp	& Budget
Inergy Holdings LP	Keystone Automotive Industries	Maricopa Integrated Health System
Information Management Service	Keystone Foods Corporation	The Mark Travel Corporation
Ingersoll Rand	Kimberly-Clark Corporation	Markel Corporation
Ingles Markets, Incorporated	Kindred Healthcare, Inc.	Market Planning Solutions, Inc.
Ingram Industries, Inc.	Kinetic Concepts, Inc.	Marriott International, Inc.
Ingram Micro, Inc.	Kingston Technology	Mars North America
Inmar, Inc.	KLA-Tencor Corporation	Marsh & McLennan Companies, Inc.
Inolex Chemical Company	Knight, Inc.	Marshall & Ilsley Corporation
INOVA Health Systems	Kohls Corporation	Marshfield Clinic
In-Sink-Erator	Kraft Foods, Inc.	MARTA
Institute of Nuclear Power Operations	The Kroger Company	Martin Marietta Materials, Inc.
Integrys Energy Group, Inc.	Kruger International	Mary Kay, Inc.
Intel Corporation	Kyocera America, Inc.	Masco Corporation
Interactive Brokers Group, Inc.	L L Bean, Inc.	Massey Energy Company
International Assets Holding Corporation	L-3 Communications Holdings, Inc.	MasterCard Incorporated
International Business Machines Corporation	Lab Volt Systems	Mattel, Inc.
International Flavors & Fragrances, Inc.	Laboratory Corporation of America Holdings	Maui Jim, Inc.
International Game Technology	The Laclede Group, Inc.	Maxim Integrated Products, Inc.
International Paper Company	Lake Federal Bank	Mayo Clinic
Interpublic Group of Companies, Inc.	Lam Research Corporation	The McClatchy Company
Intertape Polymer Group	Lancaster General Hospital	McCormick & Company, Incorporated
Intuit, Inc.	Land OLakes, Inc.	McDonalds Corporation
Invacare Corporation	Landstar System, Inc.	MCG Health, Inc.
Invensys Controls	Lansing Board of Water & Light	The McGraw-Hill Companies, Inc.
Iron Mountain Incorporated	Las Vegas Sands Corporation	McKesson Medical-Surgical
The Irvine Company	La-Z-Boy Chair Company	MD Anderson Cancer Center
Isuzu Motors America, Inc.	Leap Wireless International, Inc.	MDU Resources Group, Inc.
Ithaca College	Lear Corporation	MeadWestvaco Corporation
Itochu International, Inc.	Leggett & Platt, Inc.	Medco Health Solutions, Inc.
Itron, Inc.	Lender Processing Services, Inc.	Media General, Inc.
ITT Corporation	Lennar Corporation	Meeting Consultants, Inc.
	Lennox International, Inc.	MEMC Electronic Materials, Inc.

A-10 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Mercantile Commerce Bank	NCI Building Systems, Inc.	Packaging Corporation of America
Mercer University	NCMIC Group, Inc.	Pactiv Corporation
Merck & Co., Inc.	NCR Corporation	Pall Corporation
Mercury General Corporation	Nebraska Public Power District	The Pampered Chef
Merit Medical Systems	NetApp, Inc.	Panduit Corporation
MeritCare Health System	New Hanover Regional Medical
Center	Panera LLC
Merrill Corporation	New Jersey Resources Corporation	The Pantry, Inc.
Metals USA, Inc.	New York Hotel Trades Council	Papa Johns International
Metavante	The New York Times Company	Patterson Companies, Inc.
The Methodist Health Care
Corporation	Newell Rubbermaid, Inc.	Patterson-UTI Energy, Inc.
MetroPCS Communications, Inc.	Newfield Exploration Company	Paychex
Metropolitan Life Insurance
Company	Newmont Mining Corporation	PBS
Metropolitan Transit Authority	NewPage Holding Corporation	PC Connection, Inc.
Mettler-Toledo International,
Inc.	Nicor Gas	Peabody Energy Corporation
MFS Investment Management	Nicor, Inc.	Penn National Gaming, Inc.
MGIC Investment Corporation	NII Holdings, Inc.	Penn State Hershey Medical Center
Miami Childrens Hospital	NiSource, Inc.	Penske Automotive Group, Inc.
Michael Baker Corporation	Nissan North America	Pentair, Inc.
Michael Foods, Inc.	Nissin Foods (USA) Co., Inc.	The Pep Boys Manny, Moe &
Jack
Michaels Stores, Inc.	NJM Insurance Group	Pepco Holdings, Inc.
Micron Technology, Inc.	Noble Energy, Inc.	The Pepsi Bottling Group, Inc.
MidAmerican Energy Company	Norcal Waste Systems, Inc.	PepsiAmericas, Inc.
Midwest Research Institute	Nordson Corporation	PepsiCo, Inc.
Mike Albert Leasing, Inc.	Nordstrom	Perini Corporation
Millennium Inorganic Chemicals	Nordstrom, Inc.	PerkinElmer, Inc.
MillerCoors	Norfolk Southern Corporation	Perot System
Minco Products, Inc.	North American Hoganas	Perrigo Company
Mine Safety Appliances Company	North Texas Tollway Authority	PetSmart, Inc.
Miniature Precision Components,
Inc.	Northeast Utilities System	Pfizer, Inc.
Minntech Corporation	Northern Trust Corporation	PG&E Corporation
Mirant Corporation	Northrop Grumman Corporation	PGT Industries
Missouri Department of
Conservation	Northwestern Mutual Life
Insurance	Phacil, Inc.
Missouri Department of
Transportation	Norton Health Care	Pharmavite LLC
Mitsubishi International
Corporation	NRUCFC	PharMerica Corporation
Mitsui & Company USA, Inc.	NSK Corporation	PHH Arval
MMS Consultants, Inc.	NSTAR	PHH Corporation
Mohawk Industries	NTK Holdings, Inc.	PHI, Inc.
Mohegan Sun Casino	Nucor Corporation	Philip Morris International, Inc.
Molex, Inc.	NuStar Energy LP	Phillips-Van Heusen Corporation
Molina Healthcare, Inc.	NV Energy, Inc.	The Phoenix Companies, Inc.
Molson Coors Brewing Company	NVIDIA Corporation	Piedmont Natural Gas Company,
Inc.
Moneris Solutions Corporation	NVR, Inc.	Pinnacle West Capital Corporation
Monsanto Company	NYSE Euronext	Pioneer Electronics (USA), Inc.
Moodys Corporation	OReilly Automotive, Inc.	Pioneer Natural Resources
Moog, Inc.	Occidental Petroleum Corporation	Pitney Bowes
Morgan Stanley	Oceaneering International	Plains All American Pipeline LP
Motorola, Inc.	Office Depot, Inc.	Plains Exploration &
Production Company
MPS Group, Inc.	OfficeMax	The Planet Internet Services
MSC Industrial Direct	OGE Energy Corporation	Plexus Corporation
MTA Long Island Bus	Ohio Public Employees Retirement
System	Plymouth Tube
MTD Products, Inc.	Ohio State University	PM Company
MTS System Corporation	Ohio State University Medical
Center	The PNC Financial Services Group,
Inc.
Mueller Industries, Inc.	Oil States International, Inc.	PNM Resources, Inc.
Mueller Water Products, Inc.	Oil-Dri Corporation of America	Polaris Industries, Inc.
Murphy Oil Corporation	Old Dominion Electric Cooperative	PolyOne Corporation
Mutual of Enumclaw Insurance
Company	Old Republic International
Corporation	Pool Corporation
Mutual of Omaha	Olin Corporation	Popular, Inc.
Mylan, Inc.	OM Group, Inc.	Port of Portland
NACCO Industries, Inc.	Omnicare, Inc.	Portland General Electric Company
Nalco Company	Omnicom Group, Inc.	PPG Industries, Inc.
NASDAQ OMX Group, Inc.	ON Semiconductor Corporation	PPL Corporation
Nash-Finch Company	Oncology Nursing Society	Praxair, Inc.
National Academies	Oncor Electric Delivery	Preformed Line Products Company
National Fuel Gas Company	ONEOK, Inc.	Premera Blue Cross
National Futures Association	Orbital Science Corporation	Premier, Inc.
National Interstate Insurance
Company	Oregon State Lottery	Price Chopper/Golub Corporation
National Radio Astronomy
Observatory	Oriental Trading Company	priceline.com Incorporated
National Safety Council	OSG Tap & Die, Inc.	Pride International, Inc.
National Tobacco Company	Oshkosh Corporation	Prince William Health System
National-Oilwell Varco, Inc.	Owens & Minor, Inc.	Principal Financial Group, Inc.
Natures Sunshine Products, Inc.	Owens Corning	Pro Staff
Navistar International
Corporation	Owens-Illinois, Inc.	Probuild Holdings, Inc.
Navy Exchange Service Command	Oxford Industries	Progress Energy, Inc.
NBTY, Inc.	PACCAR, Inc.	The Progressive Corporation
NCCI Holdings, Inc.	Pacer International, Inc.	Project Management Institute

MDU Resources Group, Inc. Proxy Statement A-11

Proxy Statement

ProLogis	Safeway, Inc.	Southern Union Company
Protective Life Corporation	Safilo USA	Southwest Airlines Company
Prudential Financial, Inc.	Sage Software	Southwest Gas Corporation
Psychiatric Solutions, Inc.	SAIC, Inc.	Southwestern Energy Company
Public Service Enterprise Group,
Inc.	Saint Vincent Catholic Medical
Centers	Sovereign Bank
Public Storage	Saks Incorporated	Space Telescope Science Institute
Public Utility District #1 of
Chelan County	Sakura Finetek USA, Inc.	Sparrow Health System
Publix Super Markets, Inc.	Salk Institute	Spectra Energy Corporation
Puget Energy, Inc.	Sally Beauty Company	Spectrum Brands, Inc.
Pulte Homes, Inc.	Salt River Project	Spectrum Health Downtown
QBE Regional Insurance	Samuel Roberts Noble Foundation	Spherion Corporation
Qdoba Restaurant Corporation	San Antonio Water System	Springs Global US, Inc.
QTI Human Resources	San Manuel Band of Mission
Indians	Springs Window Fashions Division
Qualcomm, Inc.	Sanderson Farms, Inc.	Sprint Nextel Corporation
Quality Bicycle Products	SanDisk Corporation	SPX Corporation
Quanta Services, Inc.	Sandoz, Inc.	SRA International, Inc.
Quest Diagnostics, Inc.	Sanmina-SCI Corporation	St. Cloud Hospital
Questar Corporation	Sargent Fletcher, Inc.	St. Jude Medical, Inc.
Quiksilver, Inc.	SAS Institute, Inc.	St. Louis County Government
Quorum Health Resources	Sauer-Danfoss, Inc.	St. Marys at Amsterdam
Qwest Communications
International, Inc.	Savannah River Nuclear Solutions
LLC	Stamats Communications, Inc.
R H Donnelly	SavaSeniorCare Administrative
Services	Stampin Up!
R L I Insurance Company	SCANA Corporation	StanCorp Financial Group, Inc.
R L Polk & Company	ScanSource, Inc.	Standard Aero Limited
Rackspace	Schaumburg Township District
Library	Standard Motor Products, Inc.
Radian Group, Inc.	Schering-Plough Corporation	Standard Pacific Homes
Radio One	Schneider Electric	The Stanley Works
Radio Shack Corporation	Schnitzer Steel Industries, Inc.	Staples, Inc.
Ralcorp Holdings, Inc.	Schreiber Foods, Inc.	Starbucks Corporation
The Raymond Corporation	Schwan Food Company	Starwood Hotels & Resorts
Worldwide, Inc.
Raymond James Financial, Inc.	Scottrade, Inc.	State Corporation Commission
Raytheon Company	The Scotts Miracle-Gro Company	State Employee Credit Union
Reading Hospital & Medical
Center	Seaboard Corporation	State of Minnesota
Realogy Corporation	Sealed Air Corporation	State Personnel Administration
Regal Entertainment Group	Sealy, Inc.	State Street Corporation
Regal-Beloit Corporation	Sears Holdings Corporation	Stater Bros. Holdings, Inc.
The Regence Group	Seco Tools, Inc.	Steel Dynamics, Inc.
Regency Centers Corporation	Securitas Security Services USA	Steelcase, Inc.
Regions Financial Corporation	Securus Technologies, Inc.	Stepan Company
Reliance Steel & Aluminum	Self Regional Healthcare	Stericycle, Inc.
Reliant Energy	SEMCO Energy	Sterilite Corporation
Remington Arms Company, Inc.	Sempra Energy	STERIS
Remy International, Inc.	Senco Products, Inc.	Sterling Bank
Renaissance Learning, Inc.	Sentara Healthcare	Stinger Ghaffarian Technologies
Rent-A-Center, Inc.	Sentry Group	Stonyfield Farm, Inc.
Republic Services, Inc.	Serco, Inc.	Storck USA LP
Rewards Network	Service Corporation International	Structural Associates, Inc.
Rexel, Inc.	The ServiceMaster Company	Stryker Corporation
Reynolds American, Inc.	Seventh Generation	Subuaru of Indiana Automotive,
Inc.
RiceTec, Inc.	Shands HealthCare	Sulzer Pumps US, Inc.
Rich Products Corporation	Sharp Electronics Corporation	Sun Healthcare Group, Inc.
Richco	The Shaw Group, Inc.	Sundt Companies
Ricoh Electronics, Inc.	Sherwin-Williams Company	SunGard Data Systems, Inc.
Rite-Hite Corporation	Sigma Aldrich	Sunoco, Inc.
Rite Aid Corporation	Silgan Holdings, Inc.	Sunrise Senior Living, Inc.
Robert Half International, Inc.	Simon Property Group, Inc.	SunTrust Banks, Inc.
Roche Diagnostics	Simpson Housing LLLP	Superior Energy Services, Inc.
Rock-Tenn Company	Sirius Computer Solutions, Ltd.	SUPERVALU, Inc.
Rockwell Automation	SJE-Rhombus	SureWest Communications Company
Rockwell Collins, Inc.	SkyWest, Inc.	Susser Holdings Corporation
Rockwood Holdings, Inc.	SLM Corporation	Sykes Enterprises
Rollins, Inc.	Smith International, Inc.	SYNNEX Corporation
Roper Industries	SMSC Gaming Enterprise	Synovate
Roper Industries, Inc.	Smurfit-Stone Container
Corporation	Synovus Financial Corporation
Ross Stores, Inc.	Snap-on Incorporated	Synthes
Roundys, Inc.	Solo Cup Company	SYSCO Corporation
Rowan Companies, Inc.	Solutia, Inc.	Systemax, Inc.
RR Donnelley & Sons Company	Somerset Medical Center	T. Rowe Price Group, Inc.
RSC Holdings, Inc.	Sonic Automotive, Inc.	Targa Resources, Inc.
Ruddick Corporation	Sonoco Products Company	Target Corporation
Rutgers University	South Jersey Gas Company	Tastefully Simple
Ryder System, Inc.	Southeastern Freight Lines	The Taubman Company
The Ryland Group, Inc.	The Southern Company	Taylor Corporation
S&C Electric Company	Southern Farm Bureau Life
Insurance	TD Ameritrade Holding Corporation
SAC Federal Credit Union	Southern Poverty Law Center	TDS Telecom Corporation

A-12 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Tech Data Corporation	Universal Health Services, Inc.	Wake County Government
TECO Energy, Inc.	Universal Orlando	Waldrop, Inc.
Tecolote Research, Inc.	University Health System	Walgreen Company
Tele-Consultants, Inc.	University of Akron	Wal-Mart Stores, Inc.
Teledyne Technologies
Incorporated	University of Alabama at
Birmingham	The Walt Disney Company
Teleflex	University of California at
Berkeley	The Warnaco Group, Inc.
Telephone & Data Systems,
Inc.	University of Chicago	Warner Music Group Corporation
Teletech	University of Georgia	The Washington Post Company
Tellabs, Inc.	University of Kansas Hospital	Washington University in St.
Louis
Temple-Inland, Inc.	University of Louisville	Waste Management, Inc.
Tenet Healthcare Corporation	University of Michigan	Watson Pharmaceuticals, Inc.
Tenneco, Inc.	University of Minnesota	Wayne Memorial Hospital
Teradata Corporation	University of Nebraska-Lincoln	Weir Slurry Group
Terex Corporation	University of Notre Dame	Weis Markets, Inc.
Tesoro Corporation	University of Rochester	Wellcare Health Plans
Texas County & District
Retirement System	University of St. Thomas	Wellmark BlueCross BlueShield
Texas Industries, Inc.	University of Texas at Austin	WellPoint, Inc.
Texas Instruments Incorporated	University of Texas Southwestern
Medical	Wells Fargo & Company
Textron, Inc.	Center	Wells Dairy, Inc.
Thermo Fisher Scientific, Inc.	University of Virginia	Wendys/Arbys Group, Inc.
Thomas & Betts Corporation	University of Wisconsin Medical
Foundation	Werner Company
Thomas Jefferson University
Hospital	University Physicians, Inc.	Werner Enterprises, Inc.
Thomson, Inc.	Univision Communications, Inc.	WESCO International, Inc.
Thor Industries, Inc.	Unum Group	West Bend Mutual Insurance
Company
Tiffany & Company	UPS	West Penn Allegheny Health System
Time Warner Cable	Urban Outfitters, Inc.	West Virginia University
Hospitals
Time Warner, Inc.	URS Corporation	Westar Energy, Inc.
TIMET	US Airways Group, Inc.	Western Refining, Inc.
The Timken Company	US Foodservices	Western Southern Financial Group
TJX Companies, Inc.	US Steel Corporation	Western Textile Companies
Toll Brothers, Inc.	USAA	Western Union Company
Torchmark Corporation	USG Corporation	Westlake Chemical Corporation
The Toro Company	Utah Retirement Systems	Weston Solutions, Inc.
Total Mechanical, Inc.	Utah Transit Authority	Weyerhaeuser Company
Toys R Us, Inc.	Utica National Insurance	WGL Holdings, Inc.
Tractor Supply Company	V S E Corporation	Wheaton Franciscan Healthcare
TransUnion	Vail Resorts, Inc.	Whirlpool Corporation
Travel Guard AIG	Valassis Communications, Inc.	Whole Foods Market, Inc.
TravelCenters of America LLC	Valero Energy Corporation	The Wilder Foundation
The Travelers Companies, Inc.	VALHI, Inc.	William Rainey Harper College
Travis County	Valmont Industries, Inc.	Williams Companies, Inc.
Treasure Island Resort &
Casino	Van Andel Institute	Williams-Sonoma
Tredegar Industries, Inc.	Vangent, Inc.	Wilmer Hale
Tribune Company	Varian Medical Systems, Inc.	Windstream Communications
Tri-Met	Vectren Corporation	Winn-Dixie Stores, Inc.
Trinity Consultants, Inc.	Venetian Resort-Hotel-Casino	Winpak Portion Packaging, Ltd.
Trinity Industries, Inc.	Ventura Foods LLC	Wisconsin Energy Corporation
Triwest Healthcare Alliance	Venturedyne, Ltd.	WMS
True Value Company	Verde Realty	World Fuel Services Corporation
TRW Automotive Holdings
Corporation	Verizon Communications, Inc.	World Vision International
TSYS	Verso Paper Corporation	World Vision United States
Tufts Health Plan	Vesuvius USA	Worley Parsons
Tupperware Corporation	VF Corporation	The Wornick Company
Turner Broadcasting System, Inc.	Via Christi Regional Medical
Center	Worthington Industries
Tyco Electronics	Viacom, Inc.	Wyle Laboratories
Tyson Foods, Inc.	Viad Corporation	Wyndham Worldwide Corporation
U.S. Bancorp	Viant Health Payment Solutions	Wynn Resorts, Limited
UAL Corporation	Viasystems Group, Inc.	Xcel Energy, Inc.
UGI Corporation	Viejas Enterprise	Xerox Corporation
UMB Bank NA	Virgin Media, Inc.	XTO Energy, Inc.
UMDNJ-University of Medicine
& Dentistry	Visa, Inc.	Yahoo!, Inc.
Underwriters Laboratories, Inc.	Vishay Intertechnology	Yale University
Unified Grocers, Inc.	Visteon Corporation	Yamaha Motor Corporation USA
Union Pacific Corporation	Volt Information Sciences, Inc.	Yankee Candle Company
Unisys Corporation	Volvo Group North America	YKK Corporation of America
United HealthCare Group	Vornado Realty Trust	YRC Worldwide, Inc.
United Natural Foods, Inc.	Vought Aircraft Industries, Inc.	YSI
United Refining Company	Vulcan Materials Company	Yum! Brands, Inc.
United Rentals, Inc.	VWR International	Zale Corporation
United Stationers, Inc.	W C Bradley Company	Zappos.com
United Technologies Corporation	W R Grace & Company	Zebra Technologies Corporation
UnitedHealth Group, Inc.	W W Grainger, Inc.	Zimmer Holdings, Inc.
Unitrin, Inc.	W.R. Berkley Corporation	Zions Bancorporation
Universal American Corporation	WABCO Holdings, Inc.	Zurich North America
Universal Forest Products, Inc.	Wackenhut Services, Inc.

MDU Resources Group, Inc. Proxy Statement A-13

Proxy Statement

(This page has been left blank intentionally.)

A-14 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

EX HIBIT B
Companies
Surveyed using Equilar, Inc.
MDU Resources
Group, Inc. Chief Executive Officer
Competitive
Analysis Measuring Long-Term Incentive
Compensation
and Supplemental Income Security Plan Benefits
AGL Resources Inc.
Allegheny Energy, Inc.
Amer. Water Works Co., Inc.
Armstrong World Ind., Inc.
Atmos Energy Corp.
BJ Services Co.
Bucyrus International Inc.
Cameron International Corp.
Centex Corp.
Chicago Bridge & Iron Co.
CMS Energy Corp.
CVR Energy Inc.
Delek US Holdings, Inc.
Diamond Offshore Drilling Inc.
Dynegy Inc.
El Paso Corp.
Energy Transfer Equity, L.P.
EOG Resources Inc.
FMC Technologies Inc.
Global Partners LP
Hawaiian Electric Ind., Inc.
Holly Corp.
Lennar Corp.
McDermott International Inc.
Mirant Corp.
Nabors Industries Ltd.
New Jersey Resources Corp.
Nexen Inc.
Nicor Inc.
Noble Corp.
Noble Energy Inc.
Northeast Utilities
Nustar Energy L.P.
NV Energy, Inc.
NVR Inc.
Oil States International, Inc.
Owens Corning
Patriot Coal Corp.
Pinnacle West Capital Corp.
Puget Energy Inc.
Pulte Homes Inc.
RPM International Inc.
Southern Union Co.
Southwestern Energy Co.
Spectra Energy Corp.
Sunoco Logistics Partners L.P.
Teco Energy Inc.
Transalta Corp.
Tutor Perini Corp.
UGI Corp.
USG Corp.
Valspar Corp.
Watsco Inc.
WGL Holdings Inc.
Wisconsin Energy Corp.

MDU Resources Group, Inc. Proxy Statement B-1

Proxy Statement

(This page has been left blank intentionally.)

B-2 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

EX HIBIT C

| Companies
Surveyed using Equilar, Inc. |
| --- |
| Fidelity
Exploration & Production Company Chief Executive Officer |
| Competitive
Analysis Measuring Base Salary, Target Annual Cash |
| Compensation,
and Target Total Direct Compensation |
| ATP Oil & Gas Corp |
| Atwood Oceanics Inc |
| Berry Petroleum Co |
| Bill Barrett Corp |
| Clayton Williams Energy Inc |
| CNX Gas Corp |
| Comstock Resources Inc |
| Concho Resources Inc |
| Continental Resources Inc |
| Eagle Rock Energy Partners L P |
| Encore Acquisition Co |
| Energy XXI (Bermuda) Ltd |
| Exco Resources Inc |
| Forest Oil Corp |
| Geokinetics Inc |
| Global Geophysical Services Inc |
| Gran Tierra Energy, Inc. |
| Hercules Offshore, Inc. |
| Ion Geophysical Corp |
| Linn Energy, LLC |
| Markwest Energy Partners L P |
| McMoran Exploration Co |
| Parker Drilling Co |
| Patterson Uti Energy Inc |
| Penn Virginia Corp |
| Pioneer Drilling Co |
| Quicksilver Resources Inc |
| Rosetta Resources Inc |
| Sandridge Energy Inc |
| St Mary Land & Exploration Co |
| Stone Energy Corp |
| Swift Energy Co |
| Ultra Petroleum Corp |
| Unit Corp Venoco, Inc. |
| W&T Offshore Inc. |

MDU Resources Group, Inc. Proxy Statement C-1

Proxy Statement

(This page has been left blank intentionally.)

C-2 MDU Resources Group, Inc. Proxy Statement

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MDU RESOURCES GROUP, INC.

ANNUAL MEETING OF STOCKHOLDERS

Tuesday, April 24, 2012

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 24, 2012.

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 24, 2012, 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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Field: /Page

●
P.O. Box 64945
St. Paul, MN 55164-0945	COMPANY #
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 23, 2012.
●	TELEPHONE – 1-800-560-1965
	Use a touch-tone telephone to vote your proxy until 12:00 p.m. (CDT) on Monday, April 23, 2012.
●	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.

Please detach here

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

1.	Election of directors:	FOR	AGAINST	ABSTAIN			FOR	AGAINST	ABSTAIN
01.	Thomas Everist	☐	☐	☐	06.	Thomas C. Knudson	☐	☐	☐
02.	Karen B. Fagg	☐	☐	☐	07.	Richard H. Lewis	☐	☐	☐
03.	Terry D. Hildestad	☐	☐	☐	08.	Patricia L. Moss	☐	☐	☐
04.	A. Bart Holaday	☐	☐	☐	09.	Harry J. Pearce	☐	☐	☐
05.	Dennis W. Johnson	☐	☐	☐	10.	John K. Wilson	☐	☐	☐

2.	Ratification of Deloitte & Touche LLP as the company’s independent auditors for 2012.	☐	For	☐	Against	☐	Abstain
3.	Advisory vote to approve the compensation of the
company’s named executive officers.	☐	For	☐	Against	☐	Abstain

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

| Address
Change? Mark box, sign, and indicate changes below: ☐ |
| --- |
| 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. |

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MDU RESOURCES GROUP INC Proxy Solicitation & Information Statement 2012

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MDU RESOURCES GROUP INC — Proxy Solicitation & Information Statement 2012

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MDU RESOURCES GROUP INC Proxy Solicitation & Information Statement 2012