MDU RESOURCES GROUP INC - Proxy Solicitation & Information Statement 2013

DEF 14A 1 mdu130917_def14a.htm DEFINITIVE PROXY STATEMENT

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MDU Resources Group, Inc.

(Name of Registrant as Specified In Its Charter)

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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 13, 2013

| To Our Stockholders: |
| --- |
| Please join us for the 2013
Annual Meeting of Stockholders. The meeting will be held on Tuesday, April
23, 2013, 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 2012 Annual Meeting at which 89.72 percent
of the common stock was represented in person or by proxy. We hope for an
even greater representation at the 2013 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 25, 2013, 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, |
| ● |
| David L. Goodin |

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 23, 2013

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 23, 2013

The 2013 Notice of Annual Meeting and Proxy Statement and 2012 Annual Report to Stockholders are available at www.mdu.com/proxymaterials.

	March 13, 2013
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 23, 2013, 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 2013;
(3)	Approval, on a non-binding
advisory basis, of 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(s) thereof.
The board of directors has set
the close of business on February 25, 2013, as the record date for the
determination of common stockholders who will be entitled to notice of, and to vote at, the meeting and any
adjournment(s) thereof.

All stockholders who find it convenient to do so are cordially invited and urged to attend the meeting in person. Registered stockholders will receive a request for admission ticket(s) with their proxy card that can be completed and returned to us postage-free. Stockholders whose shares are held in the name of a bank or broker will not receive a request for admission ticket(s). They should, instead, (1) call (701) 530-1000 to request an admission ticket(s), (2) bring a statement from their bank or broker showing proof of stock ownership as of February 25, 2013, 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. Approval, on a
Non-Binding Advisory Basis, of the Compensation of the Companys Named Executive Officers	11
Executive
Compensation	12
Compensation
Discussion and Analysis	12
Compensation
Committee Report	29
Summary
Compensation Table for 2012	30
Grants
of Plan-Based Awards in 2012	31
Outstanding
Equity Awards at Fiscal Year-End 2012	34
Option
Exercises and Stock Vested During 2012	35
Pension
Benefits for 2012	35
Nonqualified
Deferred Compensation for 2012	38
Potential
Payments upon Termination or Change of Control	39
Director
Compensation for 2012	46
Information
Concerning Executive Officers	49
Security
Ownership	50
Related
Person Transaction Disclosure	52
Corporate
Governance	52
Section
16(a) Beneficial Ownership Reporting Compliance	58
Conduct
of Meeting; Adjournment	58
Other
Business	59
Shared
Address Stockholders	59
2014
Annual Meeting of Stockholders	59
Exhibit A Companies that Participated in
the Compensation Surveys used by MDU Resources Group, Inc.s Human Resources
Department	A-1
Exhibit B Companies Surveyed using
Equilar, Inc. for Named Executive Officer Positions Competitive Analysis
Measuring Base Salary, Target Annual Cash Compensation, and Target Total
Direct Compensation	B-1

MDU Resources Group, Inc. Proxy Statement

Proxy Statement

P ROXY STATEMENT

The board of directors of MDU Resources Group, Inc. is furnishing this proxy statement beginning March 13, 2013, to solicit your proxy for use at our annual meeting of stockholders on April 23, 2013, and any adjournment(s) thereof. We are soliciting proxies principally by mail, but directors, officers, and employees of MDU Resources Group, Inc. or its subsidiaries may solicit proxies personally, by telephone, or by electronic media, without compensation other than their regular compensation. Okapi Partners LLC additionally will solicit proxies for approximately $7,000 plus out-of-pocket expenses. We will pay the cost of soliciting your proxy and reimburse brokers and others for forwarding proxy material to you.

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 2013, we have elected to use the Securities and Exchange Commissions full set delivery option, which means that while we are posting our proxy materials online, we are also mailing a full set of our proxy materials to our stockholders. We believe that mailing a full set of proxy materials will help ensure that a majority of outstanding shares of our common stock are present in person or represented by proxy at our meeting. We also hope to help maximize stockholder participation. Therefore, even if you previously consented to receiving your proxy materials electronically, you will receive a full set of proxy materials in the mail for this years annual meeting. However, we will continue to evaluate the option of providing only a Notice of Internet Availability of Proxy Materials to some or all of our stockholders in the future.

V OTING INFORMATION

Who may vote? You may vote if you owned shares of our common stock at the close of business on February 25, 2013. You may vote each share that you owned on that date on each matter presented at the meeting and any adjournment(s) thereof. As of February 25, 2013, 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 2013 |
| | approval,
on a non-binding advisory basis, of the compensation of the companys named
executive officers and |
| | any
other business that is properly brought before the meeting or any
adjournment(s) thereof. |

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 2013

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 Approval, on a Non-Binding Advisory Basis, of 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.

You may also vote in person at the meeting. However, if you are the beneficial owner of the shares, you must obtain a legal proxy from the holder of record of the shares, usually your bank or broker, and present it at the meeting. A legal proxy identifies you, states the number of shares you own, and gives you the right to vote those shares. Without a legal proxy we cannot identify you as the beneficial owner of the shares or know how many shares you have to vote.

Can I revoke my proxy? Yes.

If you are a stockholder of record, 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

The board expresses its thanks to Terry D. Hildestad, who retired on January 3, 2013. He had served as president and chief executive officer of the company and as a director since August 17, 2006. He had served as president and chief operating officer from May 1, 2005 until August 17, 2006. He began his career with the company in 1974 at Knife River Corporation, where he served in several operating positions before becoming its chief executive officer in 1993 through April 2005.

The board also expresses its thanks to Richard H. Lewis for his service on the board, the audit committee, and the nominating and governance committee. Mr. Lewis also served on the compensation committee during his tenure. Mr. Lewis is not standing for reelection as a director after serving on the board since 2005.

All nominees for director are nominated to serve one-year terms until the annual meeting of stockholders in 2014 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 MDU Resources Group, Inc.

D irector Nominees

| ● | Director
Since 1995 |
| --- | --- |
| Age
63 | 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
served as a director and chairman of the board of Everist Genomics, Inc., Ann
Arbor, Michigan, which provides solutions for personalized medicines since
2002. He served as Everist Genomics chief executive officer from August 2012
to December 2012. He 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. He 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, and as a member of the Council of Advisors for Searching for
Solutions Institute, a non-profit public foundation that provides leaders
with resources to address critical social issues. 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 39 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 25 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 18 years of board
experience as well as extensive knowledge of our business. | |

MDU Resources Group, Inc. Proxy Statement 3

Proxy Statement

| ● | Director
Since 2005 |
| --- | --- |
| Age
59 | 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. From 2007 until
December 31, 2011, she was a member of the Montana State University
Engineering Advisory Council, whose responsibilities include evaluating the
mission and goals of the College of Engineering and assisting in the
development and implementation of the colleges strategic plan. From 2002
through 2006, she served on the Montana Board of Investments, the state
agency responsible for prudently investing state funds. From 2001 to 2005,
she served on the board of Montana State Universitys Advanced Technology
Park. From 1998 to 2007, she served on the ZooMontana Board and as vice chair
from 2005 to 2006. | |
| The
board concluded that Ms. Fagg should serve as a director of MDU Resources
Group, Inc., in light of our business and structure, at the time we file our
proxy statement for the following reasons. Construction and engineering,
energy, and the responsible development of natural resources are all
important aspects of our business. Ms. Fagg has business experience in all
these areas, including 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. | |

| ● | Director
Since January 4, 2013 |
| --- | --- |
| Age
51 | President
and Chief Executive Officer |
| Mr.
Goodin was elected president and chief executive officer and a director of
the company effective January 4, 2013. Prior to that, he served as chief
executive officer and president of Intermountain Gas Company effective
October 2008, chief executive officer of Cascade Natural Gas Corporation,
Montana-Dakota Utilities Co., and Great Plains Natural Gas Co. effective June
2008, president of Montana-Dakota Utilities Co. and Great Plains Natural Gas
Co. effective March 2008, and president of Cascade Natural Gas Corporation
effective July 2007. He began his career with the company in 1983 at Montana-Dakota
Utilities Co., where he served as a division electrical engineer effective
May 1983, division electric superintendent effective February 1989, electric
systems supervisor effective August 1993, electric systems manager effective
April 1999, vice president-operations effective January 2000, and executive
vice president-operations and acquisitions effective January 2007. 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.
Goodin has a bachelor of science degree in electrical and electronics
engineering from North Dakota State University, a masters in business
administration from the University of North Dakota, and has completed the
Advanced Management Program at Harvard School of Business. Mr. Goodin is a
registered professional engineer in North Dakota. He is a member of the U.S.
Bancorp Western North Dakota Advisory Board. Mr. Goodin is involved in
numerous civic organizations, including serving on the board of directors of
Sanford Bismarck, the Missouri Valley YMCA, and as trustee for the Bismarck
State College Foundation. He is a past board member of several industry
associations, including the American Gas Association, the Edison Electric
Institute, the North Central Electric Association, the Midwest ENERGY
Association, and the North Dakota Lignite Council. Mr. Goodin received the
University of Mary Entrepreneurship Award in 2009. | |

4 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| The board concluded that Mr. Goodin 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. Goodin is one of only two
officers of the company to sit on our board. With over 29 years of significant,
hands-on experience at our company, Mr. Goodins long history and deep knowledge
and understanding of MDU Resources Group, Inc., its operating companies, and
its lines of business will bring continuity to the board. Mr. Goodin has
demonstrated his leadership abilities and his commitment to our company through
his long service to the company and more recently as chief executive officer
and president of the four utility companies. He demonstrated strong leadership
skills in integrating Cascade Natural Gas Corporation and Intermountain Gas
Company while meeting and exceeding profitability goals. The boards unanimous
election of Mr. Goodin to succeed Mr. Hildestad as our president and chief
executive officer was a result of our comprehensive succession planning process
led by the board of directors during which the board had the opportunity to
interact with and evaluate our executive officers. The board selected Mr.
Goodin because it became clear to the board through this process that he had
the strategic vision, operational experience, passion, and values to lead the
future growth of the company. The board believes these characteristics make him
well-suited to serve on our board, particularly in this challenging economic
environment. — A. Bart Holaday | Director
Since 2008 |
| --- | --- |
| Age
70 | 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 (former
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 (trustee and former
chairman) and the University of North Dakota Foundation; is chairman and
chief executive officer of the Dakota Foundation, a nonprofit foundation that
fosters social entrepreneurship; and is a member of the board of trustees for
The Colorado Springs Child Nursery Centers Foundation, a non-profit
organization that supports the operations of Early Connections Learning
Centers, a non-profit child care organization in Colorado, and Discover
Goodwill of southern and western Colorado, a non-profit organization
providing job training, placement, and retention programs for people
transitioning from welfare to work. 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 and guidance to management in connection not only with our
natural gas and oil business, but with all of our businesses. | |

MDU Resources Group, Inc. Proxy Statement 5

Proxy Statement

| ● | Director
Since 2001 |
| --- | --- |
| Age
63 | 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 thirteenth
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. 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 38 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 31 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 nine
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. | |

| ● | Director
Since 2008 |
| --- | --- |
| Age
66 | 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, and The
Houston Museum of Natural Science. He has served on the National Council of
Methodist Neurological Institute since October 2011, as a Trustee of the
Episcopal Seminary of the Southwest, Austin, Texas, since February 2012, and
as a board member of the National Association of Corporate Directors (NACD),
Texas Tri-Cities Chapter, since December 2012. He holds the designation of
Board Leadership Fellow from the NACD. | |

6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| 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. — Patricia L. Moss | Director
Since 2003 |
| --- | --- |
| Age
59 | 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, co-chairs
the Oregon Growth Board, a state agency created to provide recommendations to
connect businesses to sources of capital, and serves on the City of Bends
Juniper Ridge management advisory board. | |
| Ms.
Moss graduated magna cum laude with a bachelor of science degree in business
administration from Linfield College in Oregon and did masters studies at
Portland State University. She received commercial banking school
certification at the ABA Commercial Banking School at the University of
Oklahoma. She served as a director of the Oregon Business Council, whose
mission is to mobilize business leaders to contribute to Oregons quality of
life and economic prosperity; the Cascades Campus Advisory Board of the
Oregon State University; the North Pacific Group, Inc., a wholesale
distributor of building materials, industrial and hardwood products, and
other specialty products; the Aquila Tax Free Trust of Oregon, a mutual fund
created especially for the benefit of Oregon residents; Clear Choice Health
Plans Inc., a multi-state insurance company; and as a director and chair of
the St. Charles Medical Center. | |
| In
August 2009, the Federal Deposit Insurance Corporation and the Oregon
Division of Finance and Corporate Securities entered into a consent agreement
with Bank of the Cascades that requires the bank to develop and adopt a plan
to maintain the capital necessary for it to be well-capitalized, to improve
its lending policies and its allowance for loan losses, to increase its
liquidity, to retain qualified management, and to increase the participation of
its board of directors in the affairs of the bank. In October 2009, the
banks parent, Cascade Bancorp, entered into a written agreement with the
Federal Reserve Bank of San Francisco and the Oregon Division relating
largely to improving the financial condition of Cascade Bancorp and the Bank
of the Cascades. Cascade Bancorp reported in its third quarter 2012 Form 10-Q
that at December 31, 2011, Cascade Bancorp and the Bank did not meet the
written agreements leverage ratio requirement and as a result they had filed
a required update to their capital plan, which was accepted by their
regulators. On September 30, 2012, Bancorp and the Bank had met this
requirement. The order remains in place until lifted by the regulators. | |
| The
board concluded that Ms. Moss should serve as a director of MDU Resources
Group, Inc., in light of our business and structure, at the time we file our
proxy statement for the following reasons. A significant portion of MDU
Resources Group, Inc.s utility, construction services, and contracting
operations are located in the Pacific Northwest. Ms. Moss has first-hand
business experience and knowledge of the Pacific Northwest economy and local,
state, and regional issues through her 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, the Oregon Business Council,
and the Oregon Growth Board. 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. | |

MDU Resources Group, Inc. Proxy Statement 7

Proxy Statement

| ● | Director
Since 1997 |
| --- | --- |
| Age
70 | 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. Mr. Pearce received
a bachelors degree in engineering sciences from the U.S. Air Force Academy
and a juris doctor 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. | |

| ● | Director
Since January 4, 2013 |
| --- | --- |
| Age
56 | Vice
Chairman of the Corporation |
| | President
and Chief Executive Officer |
| | of
Fidelity Exploration & Production Company |
| Mr.
Wells was elected vice chairman of the company and a director effective
January 4, 2013, and continues to serve as president and chief executive
officer of Fidelity Exploration & Production Company, our natural gas and
oil production business, the position for which he was hired effective May 2,
2011. Prior to that he was senior vice president of exploration and
production for BP America, Inc. (BP) from June 2007 until October 2010, when
he was named BPs 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 from 2002 to 2005; vice president,
Rockies, for BP from 2000 to 2002; general manager of Crescendo Resources LP
from 1997 to 2000; manager, Hugoton, for Amoco Production Company, Inc.
(Amoco) from 1993 to 1996; manager, operations, for Amoco in 1993; resource
manager for Amoco from 1988 to 1993; executive assistant for Amoco from 1987
to 1988; engineering supervisor for Amoco Canada Petroleum Company (Amoco
Canada) from 1983 to 1987; and petroleum engineer for Amoco Canada from 1979
to 1983. Mr. Wells received a bachelors degree in mechanical engineering
from the Queens University, Kingston, Ontario, Canada in 1979. | |
| The
board concluded that Mr. Wells should serve as 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. One of the companys
strategic objectives is to achieve product diversity in the midstream segment
of the oil and gas industry. Mr. Wells brings to our board significant
experience and knowledge of the oil and gas business, including the midstream
segment. He has | |

8 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| more than 33 years of natural gas and oil experience,
including several years in senior leadership positions at BP, the worlds third
largest integrated oil company, and a publicly traded company. He was senior
vice president of exploration and production for BPs U.S. natural gas
operations from 2007 until October 2010 with responsibility for BPs onshore
natural gas business throughout the United States, encompassing both
exploration and production, and midstream business. His strong track record in
natural gas and oil production includes experience in shale formations similar
to the companys current development focus. He has firsthand experience in the
Rockies and Texas, where a large portion of Fidelity Exploration &
Production Companys reserves are concentrated. Mr. Wells combination of
expertise and experience, along with his success in leadership roles with a
large publicly traded company, will complement the skills of the current board
members. — John K. Wilson | Director
Since 2003 |
| --- | --- |
| Age
58 | 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 executive director
of the Robert B. Daugherty Charitable Foundation, Omaha, Nebraska, and formerly
served on the advisory board of U.S. 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.

| | 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. |

MDU Resources Group, Inc. Proxy Statement 9

Proxy Statement

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

I TEM 2. RATIFICATION OF INDEPENDENT AUDITORS

The audit committee at its February 2013 meeting appointed Deloitte & Touche LLP as our independent auditors for fiscal year 2013. 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 2013, 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 2013.

Ratification of the appointment of Deloitte & Touche LLP as our independent auditors for 2013 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 2012 and 2011:

Audit Fees (a)	$ 2,400,000	2011 — $ 2,456,046
Audit-Related
Fees(b)	63,110	216,410
Tax Fees(c)	23,566	0
All Other Fees(d)	0	0
Total Fees(e)	$ 2,486,676	$ 2,672,456
Ratio of Tax and All Other Fees to Audit and Audit-Related Fees	0.96 %	0.00 %
*	The 2011 amounts were
adjusted from amounts shown in the 2012 proxy statement to reflect actual
amounts.
(a)	Audit fees for 2012 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, Inc. 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 2012
and 2011 are associated with accounting research assistance, workpaper
review requested by the Idaho Public Utilities Commission (2012 only), the compliance audit for the
U.S. Department of Energy (2012
only), and accounting consultation in connection with due diligence (2011
only).
(c)	Tax fees for 2012 relate to
the review of permanent tax benefits associated with Medicare Part D
subsidies. There were no tax fees for 2011.
(d)	There were no all other fees
for 2012 and 2011.
(e)	Total fees reported above
include out-of-pocket expenses related to the services provided of $332,210
for 2012 and $305,346 for 2011.

10 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Pre-Approval Policy

The audit committee pre-approved all services Deloitte & Touche LLP performed in 2012 in accordance with the pre-approval policy and procedures the audit committee adopted at its August 12, 2003 meeting. This policy is designed to achieve the continued independence of Deloitte & Touche LLP and to assist in our compliance with Sections 201 and 202 of the Sarbanes-Oxley Act of 2002 and related rules of the Securities and Exchange Commission.

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

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

I TEM 3. APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF 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, with over 50% of our 2012 total target direct compensation in the form of
incentive compensation |
| --- | --- |
| | we assess the relationship
between our named executive officers pay and performance on key financial
metrics revenue, profit, return on invested capital, and stockholder return
in comparison to our performance graph peer group |
| | we review competitive
compensation data for our named executive officers, to the extent available,
and incorporate internal equity in the final determination of target
compensation levels |
| | we determine annual performance incentives based on financial criteria that are important to
stockholder value, including earnings per share and return on invested capital and |
| | we determine long-term
performance incentives based on total stockholder return relative to our
performance graph peer group. |

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 2012. Accordingly, the following resolution is submitted for stockholder vote at the 2013 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.

MDU Resources Group, Inc. Proxy Statement 11

Proxy Statement

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 a non-binding 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.

E XECUTIVE COMPENSATION

Compensati on 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.

Summary of Company Performance and Named Executive Officer Compensation 2012 Compared to 2011 Our named executive officers for 2012 were:

| | Terry D. Hildestad, our
president and chief executive officer, who retired January 3, 2013 |
| --- | --- |
| | Doran N. Schwartz, our
vice president and chief financial officer |
| | William E. Schneider, our
executive vice president of Bakken development, a role he assumed on January
1, 2012 |
| | J. Kent Wells, who led our
exploration and production segment as president and chief executive officer
of Fidelity Exploration & Production Company, a direct wholly-owned
subsidiary of WBI Holdings, Inc., and |
| | Steven L. Bietz, who led our pipeline and energy services segment as president and chief executive
officer of WBI Holdings, Inc., which is the parent company of WBI Energy,
Inc. and WBI Energy Services, Inc. |
| In addition to the
business segments above, we have the following business segments: | |
| | electric and natural gas
distribution 1 under the leadership of David L. Goodin, who was
during 2012 the president and chief executive officer of Montana-Dakota
Utilities Co., Great Plains Natural Gas Co., Cascade Natural Gas Corporation,
and Intermountain Gas Company, and who was promoted, effective January 4,
2013, to be president and chief executive officer of MDU Resources Group,
Inc., and |
| | construction services
segment and construction materials and contracting segment under the
leadership of John G. Harp, who is the chief executive officer of MDU
Construction Services Group, Inc. and Knife River Corporation. |

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

Financial Results for 2012 and 2011 Our consolidated financial results for 2012 was a loss of $1.4 million compared to 2011 earnings of $212.3 million. Adjusted earnings were $216.8 million for 2012, compared to 2011 adjusted earnings of $225.2 million. The following table compares 2012 results to 2011 results on a business segment basis. Adjusted earnings and information in the table below contain non-GAAP numbers. Please refer to the Use of Non-GAAP Financial Measures and Reconciliation of GAAP to Adjusted Earnings sections below.

Business Segment — Electric and Natural Gas Distribution	60.0		67.6
Pipeline and Energy Services	11.6		23.1
Exploration and Production	69.6		80.3
Construction Materials and Services	70.8		48.0
Other	4.8		6.2
Earnings Before Discontinued Operations,
Noncash Write-Downs of Oil and Natural Gas Properties, and Net Benefit
Related to Natural Gas Gathering Operations Litigation	216.8		225.2
Income (Loss) from Discontinued Operations, Net of Tax*	13.6		(12.9	)
Effects of Noncash Write-Downs of Oil and Natural Gas
Properties	(246.8	)
Net Benefit Related to Natural Gas Gathering Operations
Litigation	15.0
Earnings (Loss) on Common Stock	(1.4	)	212.3

Reflects a 2012 reversal of a 2011 arbitration charge of $13.0 million after tax related to a guarantee of a construction contract

Use of Non-GAAP Financial Measures As noted above, the company, in addition to presenting its earnings information in conformity with Generally Accepted Accounting Principles (GAAP), has provided non-GAAP earnings data that reflects an adjustment to exclude a fourth quarter 2012 $145.9 million after-tax noncash ceiling test write-down, a third quarter 2012 $100.9 million after-tax noncash ceiling test write-down, as well as an adjustment to exclude a second quarter 2012 reversal of an arbitration charge of $15.0 million after-tax. The company believes that these non-GAAP financial measures are useful to investors because the items excluded are not indicative of the companys continuing operating results. Also, the companys management uses these non-GAAP financial measures as indicators for planning and forecasting future periods. The presentation of this additional information is not meant to be considered a substitute for financial measures prepared in accordance with GAAP.

Reconciliation of GAAP to Adjusted Earnings

Earnings (Loss) on Common Stock	(1.4	)	212.3	(0.01	)	1.12
Discontinued Operations	(13.6	)	12.9	(0.07	)	0.07
Noncash Write-Downs of Oil and Natural Gas Properties	246.8			1.31
Net Benefit Related to Natural Gas Gathering Operations
Litigation	(15.0	)		(0.08	)
Adjusted Earnings	216.8		225.2	1.15		1.19

Total Realized Pay in 2012 and 2011 The compensation committee believes considering total realized pay is equally as important as considering total compensation as presented in the summary compensation table. Total compensation as presented in the summary compensation table contains estimated values of grants of performance shares based on multiple assumptions that may or may not come to fruition. Also, the summary compensation table shows an increase in change in pension value and above-market earnings on nonqualified deferred compensation. The pension plan was frozen as of December 31, 2009, and none of the named executives benefit levels in the Supplemental Income Security Plan, our non-qualified retirement program, increased for 2012. The primary reason for increases in the change in pension value is due to a lower discount rate used to calculate the values.

Total realized pay, on the other hand, reflects the compensation actually earned, including the value of incentive awards if the goals are met and excluding the value of incentive awards if the goals are not met. Because we have not met certain performance measures in the last several years, our named executive officers total realized pay excludes the value of incentive awards that were not earned. We define total realized pay as the sum of base salary, annual incentive award paid, the value realized upon the vesting of long-term incentive awards of performance shares, and all other compensation as reported in the summary compensation table.

MDU Resources Group, Inc. Proxy Statement 13

Proxy Statement

The following table compares total realized pay for our named executives in 2012 to 2011.

Named Executive Officer — Terry D. Hildestad	2012	750,000	518,250		0(1)	38,224	1,306,474
	2011	750,000	954,750		0(2)	37,499	1,742,249
Doran N. Schwartz	2012	300,000	103,650		0(1)	34,224	437,874
	2011	273,000	173,765		0(2)	33,549	480,314
Steven L. Bietz	2012	360,500	347,973		0(1)	37,884	746,357
	2011	360,500	229,198		0(2)	37,159	626,857
J. Kent Wells	2012	550,000	934,042	(3)	N/A	96,470	1,580,512
	2011	367,671	1,923,991	(4)	N/A	84,580	2,376,242
William E. Schneider	2012	447,400	200,950		0(1)	38,224	686,574
	2011	447,400	436,215		0(2)	37,499	921,114

| (1) | Performance shares and dividend
equivalents granted for the 2009-2011 performance period that did not vest
and were forfeited because performance was below threshold. |
| --- | --- |
| (2) | Performance shares and dividend
equivalents granted for the 2008-2010 performance period that did not vest
and were forfeited because performance was below threshold. |
| (3) | Reflects the value of the portion
of Mr. Wells additional 2011 annual incentive award that was paid in shares
of our common stock based on our closing stock price of $21.67 on the vesting
date, February 16, 2012. |
| (4) | Mr. Wells was hired as president
and chief executive officer of Fidelity Exploration & Production Company
effective May 2, 2011. Includes a cash recruitment payment of $550,000,
annual incentive payment of $448,981, and additional annual incentive payment
of $925,010. |

Our named executive officers forfeited all performance shares and dividend equivalents for the 2009-2011 performance period because our total stockholder return in comparison to our peer group was at the 25th percentile. With respect to the annual incentive awards, our 2012 results in the construction services segment, construction materials and contracting segment, and the pipeline and energy services segment were above their performance targets, and, conversely, 2012 results for the exploration and production segment and the electric and gas distribution segments were below their threshold performance goals, with 2012 consolidated earnings per share results also below threshold. Since the corporate named executives annual incentives depend on achievement of the foregoing performance goals, Messrs. Hildestads, Schwartzs, and Schneiders 2012 annual incentives were paid below the target amount.

With respect to our chief executive officer, the following table further demonstrates our pay for performance approach by comparing:

| | his total realized pay, which is
the sum of base salary, annual incentive awards paid, all other compensation,
and the value realized upon the | |
| --- | --- | --- |
| | o | vesting of restricted stock
during 2010 |
| | o | vesting of performance shares
during 2008, 2009, and 2010 (none vested in 2011 or 2012) |
| | his total compensation as
reported in the summary compensation table and | |
| | one-year total stockholder
returns for 2008 through 2012. | |

14 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

5 Year CEO Compensation and Total Stockholder Return

●	Total Realized Pay	$1,689,799	$2,657,250	$2,344,221	$1,742,249	$1,306,474
●	Total Compensation from Summary Compensation Table	$3,119,702	$4,203,004	$2,860,918	$3,566,327	$2,558,778
●	1 Year Total Stockholder Return	-20.1%	12.9%	-11.3%	9.1%	2.1%

The yearly changes in total compensation from the summary compensation table and total realized pay align very closely with the yearly changes in total stockholder return.

Overview of 2012 Compensation for our Named Executive Officers In 2012, we continued our approach of referencing market data to establish competitive pay levels for base salary, total annual cash, which is base salary plus target annual incentive, and total direct compensation, which is the sum of total annual cash plus the expected value of target long-term incentives. We discuss this competitive assessment in the Role of Management section below. To ensure compensation awarded to named executive officers was commensurate with competitive performance levels, we continued to compare:

| | total stockholder return results
to the results of our performance graph peer group to determine payouts under
our performance share program and |
| --- | --- |
| | on a historical basis, our
targeted and actual results on return on invested capital to the results of
our performance graph peer group when the compensation committee established
performance targets for annual incentives of our business segment leaders. |
| Our overall compensation program
and philosophy is built on a foundation of these guiding principles: | |
| | we pay for performance, with
55.6% to 76.5% of our named executive officers 2012 total target direct
compensation in the form of incentives |
| | we determine annual performance
incentives based on financial criteria that are important to stockholder
value, including earnings per share and return on invested capital |
| | we determine long-term
performance incentives based on total stockholder return relative to our
performance graph peer group |
| | we review competitive
compensation data for our named executive officers, to the extent available,
and incorporate internal equity in the final determination of target
compensation levels and |
| | through our PEER Analysis, we
compare our pay-for-performance results on key financial metrics revenue,
profit, return on invested capital, and stockholder return in comparison to
our performance graph peer group. |
| The compensation committee took
the following actions with respect to 2012 compensation for our named executive
officers: | |
| | granted a salary increase to Mr.
Hildestad to recognize his effective leadership during an extended period of
economic softness. Mr. Hildestad subsequently rejected the salary increase
because he felt accepting the increase would be out of place since five of
the thirteen Section 16 officers did not receive an increase for 2012 |
| | granted a salary increase to Mr.
Schwartz to bring his salary closer to his salary grade midpoint |

MDU Resources Group, Inc. Proxy Statement 15

Proxy Statement

| | tied 25% of our business segment
leaders 2012 annual incentive targets to the companys 2012 earnings per
share results in order to more closely align amounts paid to these executives
with total company results |
| --- | --- |
| | increased Mr. Wells annual
incentive target from 100% to 125% of base salary to mitigate the impact of
the added company earnings per share goal and to reflect his impact on
overall company results |
| | continued to link our corporate
executives i.e., Messrs. Hildestad, Schwartz, and Schneider 2012 annual
incentive awards to the achievement of our business segments performance
goals |
| | did not approve payment of any
performance shares or dividend equivalents granted in 2009 for the 2009-2011
performance period due to our total stockholder return for the 2009-2011
performance period placing us in the 25th percentile compared to our
performance graph peer group and |
| | granted no increases under our
Supplemental Income Security Plan, which is a nonqualified retirement plan
that provides benefits to our key managers and four of our named executive
officers. |
| In addition, our Section 16
officers who had change of control employment agreements agreed to the early
termination of their agreements, effective November 1, 2012. | |
| 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 policys stated objectives are to: | |
| | recruit, motivate, reward, and
retain 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. |
| Elements of our Compensation Program | |
| 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 76.5% of total target compensation for the
named executive officers 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. |

16 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The following table shows the allocation of total target compensation for 2012 among the individual components of base salary, annual incentive, and long-term incentive:

Name		% of Total Target Compensation Allocated to Incentives — Annual (%)	Long-Term (%)	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
Steven L. Bietz	39.2	25.5	35.3	60.8
J. Kent Wells	23.5	29.4	47.1	76.5
William E. Schneider	39.2	25.5	35.3	60.8

In order to reward long-term growth, the compensation committee generally allocates 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 retention requirements and stock ownership policy, promote ownership of our stock by the named executive officers. The compensation committee believes that, as stockholders, the named executive officers will be motivated to consistently deliver financial results that build wealth for all stockholders over the long-term.

| Role of
Management |
| --- |
| Our executive compensation policy
calls 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. Towers Watson
conducted the study in 2010 for use by the compensation committee to
determine 2011 compensation levels. In 2011, the compensation committee
requested the competitive assessment be completed internally. They directed
the vice president-human resources and the human resources department to
prepare the competitive assessment in August 2011 on Section 16 officers for
their use in establishing 2012 compensation. |

The assessment included identifying any material changes to the positions analyzed, updating competitive compensation information, gathering and analyzing relevant general and industry-specific survey data, and updating the base salary structure. The human resources department assessed competitive pay levels for base salary, total annual cash, which is base salary plus target annual incentives, and total direct compensation, which is the sum of total annual cash and the expected value of target long-term incentives. The competitive assessment compared our positions to like positions contained in general industry compensation surveys and industry-specific compensation surveys. The human resources department aged the survey data from the date of the survey by 2.5% annualized to estimate the 2012 competitive targets.

The compensation surveys are listed on the following table:

| Survey* — Towers
Watson 2010 General Industry Executive Database | 430 | 16,400 | | 312 | | 5,112,000 | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Towers
Watson 2010 U.S. CDB Energy Services Executive Database | 102 | 3,012 | | 67 | | 2,818,000 | |
| 2010
Effective Compensation, Inc. Oil & Gas Exploration Compensation Survey | 121 | 439 | | 48 | | Not Reported | |
| Mercers
2010 Total Compensation Survey for the Energy Sector | 297 | Not Reported | | 201 | | 823,000 | |
| Towers
Watson 2010/2011 Report on Top Management Compensation | 3,422 | | (2) | | (2) | | (2) |

| (1) | For the 2010 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 3,422 organizations participating in Towers Watsons
2010/2011 Top Management Compensation Survey included 394 organizations with
2,000 to 4,999 employees; 308 organizations with 5,000 to 9,999 employees;
205 organizations with 10,000 to 19,999 employees; and 87 organizations with
20,000 or more employees. Towers Watson 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 2010, 2011, and 2012 were approximately $3.9, $4.0, and $4.1, respectively.

MDU Resources Group, Inc. Proxy Statement 17

Proxy Statement

The human resources department also augmented the competitive analysis by using Equilar to provide information on what was reported by companies in our performance graph peer group and by other public companies in relevant industries, as selected by the human resources department and as determined by SIC codes and as disclosed in their SEC filings. The companies referenced via Equilar and the positions for which they were used are found in Exhibit B.

For our president and chief executive officer, the Equilar companies included all companies in our performance graph peer group and data on 68 additional chief executive officers from public companies in the energy, construction, and utility industries with revenues ranging from $1 billion to $8 billion.

For our vice president and chief financial officer, the Equilar companies included all companies in our performance graph peer group and data on 55 additional chief financial officers from public companies in the energy, construction, and utility industries with revenues ranging from $1 billion to $8 billion.

For the president and chief executive officer of our exploration and production segment, the Equilar companies included the exploration and production companies in our performance graph peer group and data on 27 additional chief executive officers from public companies in the oil and gas exploration and production industries with revenues ranging from $250 million to $850 million.

For the president and chief executive officer of the pipeline and energy services segment, the Equilar companies included the pipeline and energy services companies in our performance graph peer group and data on 13 chief executive officers from public companies in the pipeline and energy services industry with revenues of $1 billion or less.

The chief executive officer played an important role in recommending 2012 compensation to the committee for the other named executive officers. The chief executive officer assessed the performance of the named executive officers and considered the relative value of the named executive officers positions and their salary grade classifications. He then reviewed the competitive assessment prepared by the human resources department to formulate 2012 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.

| Timing of
Compensation Decisions for 2012 |
| --- |
| The compensation committee, in
conjunction with the board of directors, determined all compensation for each
named executive officer for 2012 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 2012 salary grades at its August 2011 meeting. At the November 2011 meeting, it established individual base salaries, target annual incentive award levels, and target long-term incentive award levels for 2012. At their February and March 2012 meetings, the compensation committee and the board of directors increased the target annual incentive award level for Mr. Wells and 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 and March 2012 meetings occurred after the release of earnings for the prior year.

| Stockholder
Advisory Vote (Say on Pay) |
| --- |
| Our stockholders had their second
advisory vote on our named executive officers compensation at the 2012
Annual Meeting of Stockholders. Approximately 92% of the shares present in
person or represented by proxy and entitled to vote on the matter approved
the named executive officers compensation. The 92% approval is consistent
with the results of our say on pay vote at the 2011 Annual Meeting. The
compensation committee and the board of directors considered the results of
the votes at their November 2011 and November 2012 meetings and did not
change our executive compensation program as a result of the votes. |
| Salary Grades
for 2012 |
| 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 |

18 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

compensation for the position changes significantly or the executives responsibilities and/or performance warrants a different salary grade. Individual executives may be paid below, equal to, or above the salary grade midpoint. Mr. Wells 2011 compensation was determined pursuant to his letter agreement in connection with his hiring effective May 2, 2011, and served as a basis for his 2012 compensation, rather than the business segment leaders salary grade.

The salary grades give the compensation committee flexibility to assign different salaries to individual executives within a salary grade to reflect one or more of the following:

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

No changes were made in the salary grade classifications of the named executive officers for 2012, and 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.

Our named executive officers salary grade classifications for 2012 are listed below, along with the base salary ranges associated with each classification:

Position	Grade	Name	2012 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, WBI Holdings, Inc.	J	Steven L. Bietz	312	390	468
President and CEO, Fidelity Exploration & Production
Company	J	J. Kent Wells	312	390	468
Executive Vice President Bakken Development	J	William E. Schneider	312	390	468

| Performance Assessment Program |
| --- |
| 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		risk management
	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.

MDU Resources Group, Inc. Proxy Statement 19

Proxy Statement

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		risk management

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 2012

| Terry D.
Hildestad |
| --- |
| The
compensation committee recommended a 6.67% salary increase for Mr. Hildestad
for 2012, which would have raised his salary from $750,000 to $800,000
($775,000 being the market median). The compensation committees rationale
for the increase was |

	his high performance evaluation
	his high integrity, excellent
business know how, and ability to work effectively with the management team
and the board
	his effectiveness in navigating
the company through a difficult economic environment and
	his salary had been frozen since
January 1, 2009.

Mr. Hildestad, however, did not accept his base salary increase for 2012 in order to be treated the same as other Section 16 officers who did not receive a salary increase for 2012.

| Doran N. Schwartz |
| --- |
| Mr. Schwartz was elected vice president and chief financial officer effective February 17, 2010. For 2012, the compensation
committee awarded Mr. Schwartz a 9.9% increase, raising his 2012 salary from
$273,000 to $300,000, or 92% of the midpoint of salary grade I for 2012. The
compensation committees rationale for the increase was in recognition of: |

| | his assistance in the company
achieving a return on invested capital of 6.9% for the twelve months ending
June 2011 as compared to the median return on invested capital of 6.0% for
companies in our performance graph peer group over the same time period |
| --- | --- |
| | his success at building good
working relationships with shareholders, rating agencies, and the financial
community and |
| | moving his salary closer to the
midpoint of salary grade I. |

| Steven L. Bietz |
| --- |
| Mr. Bietz received no salary increase
for 2012 because the compensation committee wanted to limit salary cost
increases. |
| J. Kent Wells |
| Mr. Wells received no salary increase for 2012 because he had just started his employment with the company in May 2011 with a salary above the
maximum for his salary grade. |
| William E.
Schneider |
| Mr. Schneider received no salary
increase for 2012 because his salary was 115% of the market value for his
position and the compensation committee wanted to limit salary cost
increases. |

20 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

2012 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 segment and/or the corporation, as well as the value provided to our stockholders. For all business segment chief executive officers, including Messrs. Wel l s and Bietz, the performance measures for annual incentive awards are

| | their respective business
segments annual return on invested capital results compared to target |
| --- | --- |
| | their respective business
segments allocated earnings per
share results compared to target and |
| | the companys consolidated
earnings per share compared to a target of $1.19. |

The compensation committee added the third performance measure, consolidated earnings per share, for the first time in 2012. The compensation committee weighted the 2012 performance measures for Messrs. Wells and Bietz at 75% for their business segment performance measures (weighted evenly) and 25% for the companys earnings per share measure to more closely tie their annual incentive amounts to total company results.

For the named executive officers working at MDU Resources Group, Inc. in 2012, who were Messrs. Hildestad, Schwartz, and Schneider, the compensation committee based 2012 annual incentives on the achievement of performance goals at the business segments: (i) the construction materials and contracting and construction services segments, (ii) the pipeline and energy services segment, (iii) the exploration and production segment, and (iv) the electric and natural gas distribution segments. The compensation committees rationale for this approach was to provide greater alignment between the MDU Resources Group, Inc. executives and business segment performance.

The compensation committee believes earnings per share and return on invested capital are very good measurements in assessing a business segments performance and the companys performance from a financial perspective. 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 measure show efficiently and effectively management deploys capital. Sustained returns on invested capital in excess of a business segments cost of capital create value for our stockholders.

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

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. In determining where to set the return on invested capital target, the compensation committee considers the business segments weighted average cost of capital. 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, or the business segments, capital structure. For 2012, the compensation committee chose to use the return on invested capital target for each business segment as approved by the board in the 2012 business plan, except for the construction services segment, which had a target higher than the 2012 business plan to incentivize efforts for that segment to achieve its weighted average cost of capital within five years. The compensation committee imposed an additional requirement for the 2012 return on invested capital portion of the annual incentives for the construction materials and contracting segment, the construction services segment, and the exploration and production segment. The additional requirement was the business segment needed to achieve its weighted average cost of capital in order to achieve 200% of the annual incentive target attributable to the return on invested capital portion of the annual incentive. However, payments with respect to 2012 return on invested capital results above the 2012 target but below the weighted average cost of capital would be interpolated, in order to motivate these executives to achieve performance levels between the return on invested capital performance targets and the weighted average cost of capital for their respective business segments.

MDU Resources Group, Inc. Proxy Statement 21

Proxy Statement

Named Executive Officers 2012 Incentive Targets and Why We Chose Them

Targets The compensation committee established the named executive officers annual incentive targets as a percentage of each officers actual 2012 base salary.

Messrs. Hildestads, Schwartzs, and Schneiders 2012 target annual incentives were 100%, 50%, and 65% of base salary, respectively. The compensation committee determined the 2012 annual incentive targets would remain unchanged from 2011 for these named executives based on the following reasons:

| | For Mr. Hildestad, the annual
incentive target of 100% of base salary was slightly above the 86% of base
salary paid to chief executive officer positions based on salary survey data
from the competitive assessment. The committee believed this difference was
too small to warrant a change in Mr. Hildestads 2012 incentive target. |
| --- | --- |
| | For Mr. Schwartz, the annual
incentive target of 50% of base salary was slightly below 57% of base salary
paid to chief financial officers
based on salary survey data from the competitive assessment. The committee
believed this difference was too small to warrant a change in Mr. Schwartzs 2012 incentive target. |
| | For Mr. Schneider, the
compensation committee determined his 2012 incentive target should remain the
same from 2011 because of the importance the company placed on his new role
of leveraging opportunities in the Bakken that would cut across all of the
companys business segments. There was no competitive data compiled on his
position. |

Mr. Bietzs 2012 target annual incentive was 65% of base salary. The compensation committee determined the 2012 annual incentive target would remain unchanged from 2011 for Mr. Bietz because the annual incentive based on salary survey data from the competitive assessment was 62% of base salary. The committee believed this difference was too small to warrant a change in Mr. Bietzs 2012 target annual incentive.

Mr. Wells 2012 incentive target was 125% of bases salary, which was increased from 100% of base salary. The committee raised Mr. Wells annual incentive target to mitigate the impact of the added company earnings per share goal and to reflect his business segments impact on overall company results. The committee recognized the significant investment that his business segment will make and the desire to incentivize and motivate Mr. Wells to generate earnings that can greatly impact overall company earnings.

Named Executive Officers 2012 Incentive Payments

Terry D. Hildestad, Doran N. Schwartz, and William E. Schneider As discussed above, Messrs. Hildestad, Schwartz, and Schneider were awarded 2012 incentives based on achievement of performance goals at the business segments. The award opportunities and results for the business segments are discussed below.

As a result of the performance goals achieved at the business segments, Messrs. Hildestad, Schwartz, and Schneider earned 69.1% of their target awards, resulting in a payment of $518,250 for Mr. Hildestad, $103,650 for Mr. Schwartz, and $200,950 for Mr. Schneider.

Pipeline and Energy Services Segment For the pipeline and energy services segment, the 2012 award opportunity was comprised of three components:

| | The pipeline and energy services
segment component represented 75% of the target award, and payout could range
from no payment if the results were below the 85% level to a 200% payout if: | |
| --- | --- | --- |
| | o | the 2012 allocated earnings per
share for the segment were at or above the 115% level and |
| | o | the 2012 return on invested
capital was at or above the 115% level. |
| | The MDU Resources Group, Inc.
earnings per share component represented 25% of the award and payout could
range from no payment if the results were below the $1.19 to a 200% payout if
the results were $1.37 or higher. | |
| | The pipeline and energy services
segment also had five individual goals relating to safety results with each
goal that was not met reducing the annual incentive award by 1%. The five
individual goals were: | |
| | o | each established local safety
committee will conduct eight
meetings per year |
| | o | each established local safety
committee must conduct four site
assessments per year |
| | o | report vehicle accidents and
personal injuries by the end of the next business day |
| | o | achieve the targeted vehicle
accident incident rate of 2.25 or less and |
| | o | achieve the targeted personal
injury incident rate of 2.0 or less. |

22 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The committee set the pipeline and energy services segments 2012 allocated earnings per share and return on invested capital below the 2011 target levels and below the 2011 actual results. The 2012 target levels were based on lower natural gas prices and, as a result, lower storage and gas transmission activity.

The committee set the MDU Resources Group, Inc. earnings per share target at $1.19 because it was equal to the 2011 result, and the committee believed tying 25% of the incentive award to delivering at least $1.19 in 2012 was appropriate.

The pipeline and energy services segments 2012 earnings per share and return on invested capital were 179.8% and 143.1% of their respective 2012 targets, equating to 200% of the target amount attributable to that component. Also, MDU Resources Group, Inc.s 2012 earnings per share results were $(.01), equating to 0% of the target amount attributable to that component.

Results at the pipeline and energy services segment (before adjustment for the five safety goals) were 150% of the 2012 target annual incentive. One of the five safety goals was not met because WBI Energys personal injury incident rate was 2.67. Therefore, the incentive results were reduced from 150% to 148.5% of the 2012 target annual incentive.

Exploration and Production Segment

For the exploration and production segment, the 2012 award opportunity was comprised of two components:

| | The exploration and production
business segment component represented 75% of the target award, and payout
could range from no payment if the results were below the 85% level to a 200%
payout if: | |
| --- | --- | --- |
| | o | the 2012 allocated earnings per
share for the segment were at or above the 115% level and |
| | o | the 2012 return on invested
capital was at least equal to the segments 2012 weighted average cost of
capital. |
| | The MDU Resources Group, Inc.
earnings per share component represented 25% of the award and payout could
range from no payment if the results were below the $1.19 target to a 200%
payout if the results were $1.37 or higher. | |

The committee set the exploration and production segments 2012 allocated earnings per share and return on invested capital target levels below the 2011 actual results. The 2012 al l ocated earnings per share target level was above the 2011 target level, and the 2012 return on invested capital target level was below the 2011 target level. The 2012 target levels were based on lower natural gas prices and higher depletion, depreciation, and amortization amounts. The committee set the MDU Resources Group, Inc. earnings per share target at $1.19 because it was equal to the 2011 result, and the committee believed tying 25% of the incentive award to delivering at least $1.19 in 2012 was appropriate.

This segments 2012 earnings per share and return on invested capital were negative equating to no payment on either component. Also, MDU Resources Group, Inc.s 2012 earnings per share results were $(.01), equating to 0% of the target amount attributable to that component.

Overall results for 2012 were 0%.

Construction Services and Construction Materials and Contracting Segments

For purposes of determining the annual incentive awards of the MDU Resources Group, Inc. executives and the chief executive officer of these segments, these segments were combined. The 2012 award opportunity was comprised of three components:

| | The construction services segment
component represented 37.5% of the target award, and payout could range from
no payment if the results were below the 85% level to a 200% payout if: | |
| --- | --- | --- |
| | o | the 2012 allocated earnings per
share for the segment were at or above the 115% level and |
| | o | the 2012 return on invested
capital was at least equal to the segments 2012 weighted average cost of
capital. |
| | The construction materials and contracting
segment component represented 37.5% of the award, and payment could range
from no payment if the results were below
the 85% level to a 200% payout if: | |
| | o | the 2012 allocated earnings per
share for the segment were at or above the 115% level and |
| | o | the 2012 return on invested
capital was at least equal to the segments 2012 weighted average cost of
capital. |
| | The MDU Resources Group, Inc.
earnings per share component represented 25% of the award and payout could
range from no payment if the results were below the $1.19 target to a 200%
payout if the results were $1.37 or higher. | |

MDU Resources Group, Inc. Proxy Statement 23

Proxy Statement

The committee set the construction services business segments 2012 allocated earnings per share and return on invested capital target levels above the 2011 target levels and below the 2011 actual results. The construction materials and contracting business segments 2012 allocated earnings per share target level was set below the 2011 target level and 2011 actual results, and the 2012 return on invested capital target level was set above the 2011 target level and equal to the 2011 actual results. The 2012 target levels reflected significant uncertainty in the overall construction market, including an absence of a federal highway bill and continued low margins due to competitive bids on construction projects. The committee set the MDU Resources Group, Inc. earnings per share target at $1.19 because it was equal to the 2011 result, and the committee believed tying 25% of the incentive award to delivering at least $1.19 in 2012 was appropriate.

The construction services segments 2012 earnings per share and return on invested capital were 226.6% and 205.4% of their respective 2012 targets, equating to 200% of the target amount attributable to that component. The construction materials and contracting segments 2012 earnings per share and return on invested capital were 158.1% and 117.1% of their respective 2012 targets, equating to 155.9% of the target amount attributable to that component. MDU Resources Group, Inc.s 2012 earnings per share results were $(.01), equating to 0% of the target amount attributable to that component.

Overall results for 2012 were 133.5% of the 2012 target annual incentive award.

Electric and Natural Gas Distribution Segments For the electric and natural gas distribution segments, the 2012 award opportunity was comprised of two components:

| | the electric and natural gas
distribution business segments component represented 75% of the target award,
and payout could range 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: | |
| --- | --- | --- |
| | o | the 2012 allocated earnings per
share for the segment were at or above the 115% level and |
| | o | the 2012 return on invested
capital was at or above the 115% level. |
| | The MDU Resources Group, Inc.
earnings per share component represented 25% of the award and payout could
range from no payment if the results were below the $1.19 target to a 200%
payout if the results were $1.37 or higher. | |

The committee set the 2012 target for allocated earnings per share higher than the 2011 targets but lower than 2011 actual results to reflect a one-time income tax benefit in 2011. The committee set the 2012 return on invested capital target at the 2011 target level, which was below 2011 actual results to reflect a one-time income tax benefit in 2011. For 2012, the electric and natural gas distribution segments 2012 earnings per share and return on invested capital were 93.1% and 93.6% of their respective targets, equating to 66.7% of the target amount attributable to that component. MDU Resources Group, Inc.s 2012 earnings per share results were $(.01), equating to 0% of the target amount attributable to that component.

Overall results for these segments were 50% of the 2012 target annual incentive award.

The following table shows the changes in our performance targets and achievements for both 2011 and 2012:

	2011 Incentive Plan Performance Targets		2011 Incentive Plan Results		2012 Incentive Plan Performance Targets			2012 Incentive Plan Results
								EPS		EPS
					EPS		EPS	Business		MDU
					Business		MDU	Segment	ROIC	Resources
	EPS	ROIC	EPS	ROIC	Segment	ROIC	Resources	($) / (% of	(%) / (% of	($) / (% of
Name	($)	(%)	($)	(%)	($)	(%)	($)	Target)	Target)	Target)
Pipeline and Energy Services	1.97	7.9	1.96	7.9	0.99	5.8	1.19	1.78 / 200	8.3 / 200	(.01) / 0
Exploration and Production	1.99	7.1	2.20	7.9	2.10	6.9	1.19	(4.81) / 0	(13.9) / 0	(.01) / 0
Construction Services	2.39	6.0	4.46	9.6	3.61	7.4	1.19	8.18 / 200	15.2 / 200	(.01) / 0
Construction Materials and Contracting	0.35	3.2	0.40	3.5	0.31	3.5	1.19	0.49 / 200	4.1 / 111.8	(.01) / 0
Electric and Natural Gas Distribution	1.14	6.2	1.21	6.5	1.16	6.2	1.19	1.08 / 65.5	5.8 / 67.8	(.01) / 0

24 MDU Resources Group, Inc . Proxy Statement

Proxy Statement

The table below lists each named executive officers 2012 base salary, annual incentive target percentage, and the annual incentive earned.

Name	2012 Base Salary (000s) ($)	2012 Annual Incentive Target (%)	2012 Annual Incentive Earned (% of Target)	2012 Annual Incentive Earned (000s) ($)
Terry D. Hildestad	750.0	100	69.1	518.3
Doran N. Schwartz	300.0	50	69.1	103.7
Steven L. Bietz	360.5	65	148.5	348.0
J. Kent Wells	550.0	125	0.0	0.0
William E. Schneider	447.4	65	69.1	201.0

Messrs. Hildestads, Schwartzs, and Schneiders 2012 annual incentives were paid at 69.1% of target based on the following:

	Column A Percentage of Annual Incentive Target Achieved	Column B Percentage of Average Invested Capital	Column A x Column B
Construction Services Segment and
Construction
Materials and Contracting Segment	133.5%	29.2%	39.0%
Exploration and Production
Segment	0.0%	28.1%	0.0%
Pipeline and Energy Services
Segment	148.5%	8.8%	13.1%
Electric and Natural Gas
Distribution Segments	50.0%	33.9%	17.0%
Total (Payout Percentage)			69.1%

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 2012, 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. This resulted in an interest rate of 5.46%. 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. |

2012 Long-Term Incentives Awards Granted in 2012 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 use performance shares as the primary form of 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; no stock options, stock appreciation rights, or restricted shares are outstanding.

The compensation committee used the performance graph peer group as the comparator group to determine relative stockholder return and potential payments for the 2012 performance share awards. The performance graph peer group consisted of the following companies when the committee granted performance shares in February 2012:

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

MDU Resources Group, Inc. Proxy Statement 25

Proxy Statement

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 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. From an internal equity standpoint, the committee believed positions in the same salary grade should have the same long-term incentive target level. From an internal equity standpoint, the committee believed in keeping the chief executive officers long-term incentive target below a level indicated from the competitive assessment. Mr. Hildestads target was 150% of base salary, below the salary survey median of 231% of base salary for chief executive officers. 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. The 2012 long-term incentive targets as a percentage of base salary for Messrs. Schwartz, Bietz, and Schneider were unchanged from 2011 because the targets were in line with the competitive assessments targets. Mr. Wells long-term incentive target is 200% of base salary, which is higher than the 90% long-term incentive target for other executives in salary grade J. The higher target for Mr. Wells was pursuant to his letter agreement and reflects the committees judgment of offsetting Mr. Wells non-participation in our Supplemental Income Security Plan.

On February 16, 2012, 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 2012 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, 2012 through January 22, 2012, as shown in the following table:

Name	2012 Base Salary to Determine Target ($)	2012 Long-Term Incentive Target at Time of Grant (%)	2012 Long-Term Incentive Target at Time of Grant ($)	Average Closing Price of Our Stock From January 1 Through January 22 ($)	Resulting Number of Performance Shares Granted on February 16 (#)
Terry D. Hildestad	750,000	150	1,125,000	21.54	52,228
Doran N. Schwartz	300,000	75	225,000	21.54	10,445
Steven L. Bietz	360,500	90	324,450	21.54	15,062
J. Kent Wells	550,000	200	1,100,000	21.54	51,067
William E. Schneider	447,400	90	402,660	21.54	18,693

Assuming our three-year (2012 to 2014) total stockholder return is positive, from 0% to 200% of the target grant will be paid out in February 2015 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 16, 2012 Grant
90th or higher	200 %
70th	150 %
50th	100 %
40th	10 %
Less than 40th	0 %

26 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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 2015 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% through -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 2012 for 2009 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 12, 2009 for the 2009 through 2011 performance period. Our total stockholder return for the 2009 through 2011 performance period was 9.25%, which corresponded to a percentile rank of 25% 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 2007 through 2011 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.

For the five-year period of 2007 through 2011, our average annual stockholder return was minus .88%. Therefore, our pay ratio is not a meaningful statistic and a comparison to the pay ratio of the companies in the performance graph peer group could not be made. 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 stockholder return for the 2007 through 2011 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%.

MDU Resources Group, Inc. Proxy Statement 27

Proxy Statement

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 segment or the company, and the cost associated with the benefit level increase.

The chief executive officer did not recommend a 2012 SISP benefit level increase for any of the named executive officers, and the committee chose not to grant a 2012 SISP benefit level increase to the chief executive officer. The following table reflects our named executive officers SISP levels as of December 31, 2012:

Name	December 31, 2012 Annual SISP Benefits — Survivor ($)	Retirement ($)
Terry D. Hildestad	1,025,040	512,520
Doran N. Schwartz	175,200	87,600
Steven L. Bietz	386,640	193,320
J. Kent Wells	N/A	N/A
William E. Schneider	548,400	274,200

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 in 2012 satisfied the requirements for deductibility, except for $48,129 paid to Mr. Wells.

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. To the extent a change in control triggers liability for an excise tax, payment of the excise tax will be made by the individual. The company will not pay the excise tax. We do not consider the potential impact of Section 4999 or 280G when designing our compensation programs.

28 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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, 2012:

Name	Assigned Guideline Multiple of Base Salary	Actual Holdings as a Multiple of Base Salary	Number of Years at Guideline Multiple (#)
Terry D. Hildestad	4X	6.06	7.67
Doran N. Schwartz	3X	1.75	2.87	(1)
Steven L. Bietz	3X	4.09	10.33
J. Kent Wells	3X	1.07	1.67	(2)
William E. Schneider	3X	4.96	11.00

| (1) | Participant must meet ownership
requirement by January 1, 2015. |
| --- | --- |
| (2) | Participant must meet ownership
requirement by May 1, 2016. |

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 2012 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. See the Security Ownership section of the proxy statement for our policy on margin accounts and pledging of our stock.

C ompensation Committee Report

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Regulation 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 29

Proxy Statement
Summary
Compensation Table for 2012

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	2012	750,000			897,277		518,250		355,027	38,224	(3)	2,558,778
President
and CEO	2011	750,000			1,084,318		954,750		739,760	37,499		3,566,327
	2010	750,000			830,137		762,750		480,532	37,499		2,860,918
Doran N.
Schwartz	2012	300,000			179,445		103,650		100,935	34,224	(3)	718,254
Vice
President and CFO	2011	273,000			197,341		173,765		147,789	33,549		825,444
	2010	252,454			143,881		127,053		71,302	33,549		628,239
Steven L.
Bietz	2012	360,500			258,765		347,973		329,969	37,884	(3)	1,335,091
President
and CEO	2011	360,500			312,704		229,198		545,066	37,159		1,484,627
of WBI
Holdings, Inc.	2010	350,000			232,429		245,245		302,863	36,218		1,166,755
J. Kent
Wells	2012	550,000			877,331					96,470	(3)	1,523,801
President
and CEO of	2011	367,671	916,685	(4)	925,000	(5)	1,007,306	(6)		84,580	(7)	3,301,242
Fidelity
Exploration & Production Company	2010
William E.
Schneider	2012	447,400			321,146		200,950		240,068	38,224	(3)	1,247,788
Executive
Vice President -	2011	447,400			388,086		436,215		412,085	37,499		1,721,285
Bakken
Development	2010	447,400			297,122		37,805		306,909	37,499		1,126,735

| (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, 2012. |
| --- | --- |
| (2) | Amounts shown represent the change in the actuarial
present value for years ended December 31, 2010, 2011, and 2012 for the named
executive officers accumulated benefits under the pension plan, excess SISP,
and SISP, 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, 2010, 2011, and 2012, as follows: |

Name	Accumulated Pension Change — 12/31/2010 ($)	12/31/2011 ($)	12/31/2012 ($)	Above Market Earnings — 12/31/2010 ($)	12/31/2011 ($)	12/31/2012 ($)
Terry D. Hildestad	462,186	728,587	331,845	18,346	11,173	23,182
Doran N. Schwartz	71,302	147,789	100,935
Steven L. Bietz	302,863	545,066	329,969
J. Kent Wells
William E. Schneider	277,507	393,768	201,944	29,402	18,317	38,124

30 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

(3)

	401(k) ($)(a)	Life Insurance Premium ($)	Matching Charitable Contribution ($)	Additional LTD Premium ($)	Relocation ($)	Parking ($)	Payment In Lieu of Medical Coverage ($)	Spousal Travel ($)	Total ($)
Terry D. Hildestad	36,250	174	1,800						38,224
Doran N. Schwartz	33,750	174	300						34,224
Steven L. Bietz	36,250	174	1,460						37,884
J. Kent Wells	20,000	174		435	69,695	3,600	1,200	1,366	96,470
William E. Schneider	36,250	174	1,800						38,224

(a) Represents company contributions to 401(k) plan, which include matching contributions and contributions made in lieu of pension plan accruals after pension plans were frozen at December 31, 2009.

| (4) | Includes a cash recruitment payment of $550,000 and
guaranteed target annual incentive payment of $366,685. |
| --- | --- |
| (5) | Represents the aggregate grant date fair value of the
portion of Mr. Wells additional 2011 annual incentive award that was 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. |
| (6) | 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. |
| (7) | The 2011 amount for Mr. Wells all other compensation has
been reduced to reflect the removal of $4,925, an excess 401(k) company
match, that exceeded the limit when contributions from his prior company and
current company were aggregated. |

Grants of Plan-Based Awards in 2012

									All Other	All Other
									Stock	Option		Grant
									Awards:	Awards:	Exercise	Date Fair
			Estimated Future			Estimated Future			Number of	Number of	or Base	Value of
			Payouts Under
Non-Equity			Payouts Under
Equity			Shares of	Securities	Price of	Stock and
			Incentive Plan
Awards			Incentive Plan
Awards			Stock or	Underlying	Option	Option
	Grant		Threshold	Target	Maximum	Threshold	Target	Maximum	Units	Options	Awards	Awards
Name	Date		($)	($)	($)	(#)	(#)	(#)	(#)	(#)	($/Sh)	($)
(a)	(b)		(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)	(k)	(l)
Terry D.	3/1/2012(1	)	187,500	750,000	1,500,000
Hildestad	2/16/2012(2	)				5,223	52,228	104,456				897,277
Doran N.	3/1/2012(1	)	37,500	150,000	300,000
Schwartz	2/16/2012(2	)				1,045	10,445	20,890				179,445
Steven L.	3/1/2012(1	)	58,581	234,325	468,650
Bietz	2/16/2012(2	)				1,506	15,062	30,124				258,765
J. Kent
Wells	3/1/2012(1	)	171,875	687,500	1,375,000
	2/16/2012(2	)				5,107	51,067	102,134				877,331
William E.	3/1/2012(1	)	72,703	290,810	581,620
Schneider	2/16/2012(2	)				1,869	18,693	37,386				321,146

| (1) | Annual incentive for 2012 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 2012-2014 performance period granted pursuant
to the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan. |

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

Incentive Awards

Annual Incentive On March 1, 2012, the compensation committee recommended the 2012 annual incentive award opportunities for our named executive officers and the board approved these opportunities at its meeting on March 1, 2012. These award opportunities are reflected in the Grants of Plan-Based Awards table at grant on March 1, 2012, in columns (c), (d), and (e) and in the Summary Compensation Table as earned with respect to 2012 in column (g).

MDU Resources Group, Inc. Proxy Statement 31

Proxy Statement

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, Bietz, Wells, and Schneider must have remained employed by the company through December 31, 2012, 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 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 segment 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, 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. Annual incentive award payments for Messrs. Hildestad, Schwartz, and Schneider were determined based on achievement of performance goals at the following business segments (i) construction services and construction materials and contracting, (ii) exploration and production, (iii) pipeline and energy services, and (iv) electric and natural gas distribution - and were calculated as follows:

| | Column A Percentage of Annual Incentive Target Achieved | Column B Percentage of Average Invested Capital | Column A x Column
B |
| --- | --- | --- | --- |
| Construction Services Segment
and Construction Materials and Contracting Segment | 133.5 % | 29.2 % | 39.0 % |
| Exploration
and Production Segment | 0.0 % | 28.1 % | 0.0 % |
| Pipeline
and Energy Services Segment | 148.5 % | 8.8 % | 13.1 % |
| Electric
and Natural Gas Distribution Segments | 50.0 % | 33.9 % | 17.0 % |
| Total (Payout Percentage) | | | 69.1 % |

The award opportunity available to Mr. Bietz was:

Pipeline and Energy Services’ 2012 return on invested capital results as a % (weighted 37.5%) of 2012 target	Corresponding payment of annual incentive target based on return on invested capital	Pipeline and Energy Services’ 2012 earnings per share results as a % (weighted 37.5%) of 2012 target	Corresponding payment of annual incentive target based on earnings per share
Less than 85%	0%	Less than 85%	0%
85%	25%	85%	25%
90%	50%	90%	50%
95%	75%	95%	75%
100%	100%	100%	100%
103%	120%	103%	120%
106%	140%	106%	140%
109%	160%	109%	160%
112%	180%	112%	180%
115%	200%	115%	200%

32 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

MDU Resources Group, Inc.s consolidated 2012 earnings per share results (weighted 25%)	Corresponding payment of annual incentive target based on consolidated earnings per share results
Less than 100%	0 %
100 %	100 %
103 %	120 %
106 %	140 %
109 %	160 %
112 %	180 %
115 %	200 %

The award opportunity available to Mr. Wells was:

Exploration and Productions 2012 return on invested capital results as a % (weighted 37.5%) of 2012 target	Corresponding payment of annual incentive target based on return on invested capital	Exploration and Productions 2012 earnings per share results as a % (weighted 37.5%) of 2012 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 %
108 %	120 %	103 %	120 %
116 %	140 %	106 %	140 %
124 %	160 %	109 %	160 %
132 %	180 %	112 %	180 %
140 %	200 %	115 %	200 %

MDU Resources Group, Inc.s consolidated 2012 earnings per share results (weighted 25%)	Corresponding payment of annual incentive target based on consolidated earnings per share results
Less than 100%	0 %
100 %	100 %
103 %	120 %
106 %	140 %
109 %	160 %
112 %	180 %
115 %	200 %

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

Long-Term Incentive On February 14, 2012, 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 16, 2012. These grants are reflected in columns (f), (g), (h), and (l) of the Grants of Plan-Based Awards table and in column (e) of the Summary Compensation Table.

If the companys 2012-2014 total shareholder return is positive, from 0% to 200% of the target grant will be paid out in February 2015, depending on our 2012-2014 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 16, 2012 Grant
90th or higher	200 %
70th	150 %
50th	100 %
40th	10 %
Less than 40th	0 %

If the common stock of a company in the peer group ceases to be traded at any time during the 2012-2014 performance period, the company will be deleted from the peer group. Percentile rank will be calculated without regard to the return of the deleted company. If MDU Resources Group, Inc. or a company in the peer group spins off a segment of its business, the shares of the spun-off entity will be treated as a cash dividend that is reinvested in MDU Resources Group, Inc. or the company in the peer group.

MDU Resources Group, Inc. Proxy Statement 33

Proxy Statement

If the companys 2012-2014 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 %

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	2,558,778	29.3 %
Doran N. Schwartz	300,000	718,254	41.8 %
Steven L. Bietz	360,500	1,335,091	27.0 %
J. Kent Wells	550,000	1,523,801	36.1 %
William E. Schneider	447,400	1,247,788	35.9 %

Outstanding Equity Awards at Fiscal Year-End 2012

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	111,242(2	)	2,362,780
Doran N. Schwartz	21,144(2	)	449,099
Steven L. Bietz	32,041(2	)	680,551
J. Kent Wells	51,067(2	)	1,084,663
William E. Schneider	39,815(2	)	845,671

| (1) | Value based on the number of
performance shares reflected in column (i) multiplied by $21.24, the year-end
closing price for 2012. |
| --- | --- |
| (2) | Below is a breakdown by year of
the plan awards: |

Named Executive Officer — T erry D. Hildestad	2010	4,771	12/31/12
	2011	54,243	12/31/13
	2012	52,228	12/31/14
Doran N. Schwartz	2010	827	12/31/12
	2011	9,872	12/31/13
	2012	10,445	12/31/14
Steven L. Bietz	2010	1,336	12/31/12
	2011	15,643	12/31/13
	2012	15,062	12/31/14
J. Kent Wells	2010		12/31/12
	2011		12/31/13
	2012	51,067	12/31/14
William E. Schneider	2010	1,708	12/31/12
	2011	19,414	12/31/13
	2012	18,693	12/31/14

| Shares for the 2010 award are
shown at the threshold level (10%) based on results for the 2010-2012
performance cycle below threshold. |
| --- |
| Shares for the 2011 award are
shown at the target level (100%) based on results for the first two years of
the 2011-2013 performance cycle below target. |
| Shares for the 2012 award are
shown at the target level (100%) based on results for the first year of the
2012-2014 performance cycle below target. |

34 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

O ption Exercises and Stock Vested During 2012

Name (a)	Stock Awards — Number of Shares Acquired on Vesting (#) (d)(1)	Value Realized on Vesting ($) (e)(2)
Terry D. Hildestad
Doran N. Schwartz
Steven L. Bietz
J. Kent Wells	43,103	934,042
William E. Schneider

| (1) | Reflects the portion of Mr.
Wells additional 2011 annual incentive award that vested on February 16,
2012 and was paid in shares of our common stock determined by dividing
$925,000 by the stock price on December 30, 2011, according to the terms of
Mr. Wells award. |
| --- | --- |
| (2) | Reflects the value of the portion
of Mr. Wells additional 2011 annual incentive award that was paid in shares
of our common stock based on our closing stock price of $21.67 on February
16, 2012. |

P ension Benefits for 2012

Name (a)	Plan Name (b)	Number of Years Credited Service (#) (c)	Present Value of Accumulated Benefit ($) (d)
Terry D. Hildestad	MDU Pension Plan	35	1,662,318
	SISP I(1)(3)	10	2,126,747
	SISP II(2)(3)	10	3,511,576
	SISP Excess(4)	35	378,943
Doran N. Schwartz	MDU Pension Plan	4	94,002
	SISP II(2)(3)	5	489,028
Steven L. Bietz	WBI Pension Plan	28	1,154,443
	SISP I(1)(3)	10	799,197
	SISP II(2)(3)	10	768,065
	SISP Excess(4)	28	103,162
J. Kent Wells(5)
William E. Schneider	KR Pension Plan	16	800,720
	SISP I(1)(3)	10	1,479,910
	SISP II(2)(3)	10	1,748,343

(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, 2012, 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, 2012, calculated using a 3.45%, 3.59%, 3.76%, and 3.58% discount rate for the SISP excess, MDU pension plan, WBI pension plan, and KR pension plan, respectively, the 2013 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 Bietz. This is the earliest age at which the executives could begin receiving unreduced benefits. Retirement on December 31, 2012, was assumed for Messrs. Hildestad and Schneider, who were age 63 and 64, respectively, on that date. The amounts shown for the SISP I and SISP II were determined using a 3.45% discount rate and assume benefits commenced at age 65.

MDU Resources Group, Inc. Proxy Statement 35

Proxy Statement

| Pension Plans |
| --- |
| Messrs. Hildestad and Schwartz
participate in the MDU Resources Group, Inc. Pension Plan for Non-Bargaining
Unit Employees, which we refer to as the MDU pension plan. Mr. Bietz
participates in the Williston Basin Interstate Pipeline Company Pension Plan,
which we refer to as the WBI pension plan. 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.

To receive unreduced retirement benefits under the MDU pension plan and the WBI 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. Mr. Hildestad was eligible for unreduced retirement benefits under the MDU pension plan, and Mr. Schneider was eligible for unreduced retirement benefits under the KR pension plan on December 31, 2012. Participants whose employment terminates between the ages of 55 and 60, with 5 years of service under the MDU pension plan and the WBI 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 and the WBI 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%.

Benefits for single participants under the pension plans are paid as straight life annuities and benefits for married participants are paid as actuarially reduced annuities with a survivor benefit for spouses, unless participants choose otherwise. Participants hired before January 1, 2004, who terminate employment before age 55 may elect to receive their benefits in a lump sum. Mr. Bietz would have been eligible for a lump sum if he had retired on December 31, 2012.

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.

36 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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, 2012, 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 grandfathered under Section 409A of the Internal Revenue Code remain subject to SISP provisions then in effect, which we refer to as SISP I benefits. Regular SISP benefits that are subject to Section 409A of the Internal Revenue Code, which we refer to as SISP II benefits, are governed by amended provisions intended to comply with Section 409A. Participants generally have more discretion with respect to the distributions of their SISP I benefits.

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

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

Participants also can elect to receive their SISP I benefits in one of three actuarially equivalent forms a life annuity, 100% joint and survivor annuity, or a joint and two-thirds joint and survivor annuity, provided that the cost of providing these actuarial equivalent forms of benefits does not exceed the cost of providing the normal form of benefit. Neither the election to receive an actuarially 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. |

1
MDU Resources
Group, Inc. Proxy Statement	37

Proxy Statement

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

| SISP Excess
Benefits |
| --- |
| SISP excess benefits are equal to
the difference between (1) the monthly retirement benefits that would have
been payable to the participant under the pension plans absent the
limitations under the Internal Revenue Code and (2) the actual benefits
payable to the participant under the pension plans. Participants are only
eligible for the SISP excess benefits if (1) the participant is fully vested
under the pension plan, (2) the participants employment terminates prior to
age 65, and (3) benefits under the pension plan are reduced due to
limitations under the Internal Revenue Code on plan compensation. Effective
January 1, 2005, participants who were not then vested in the SISP excess
benefits were also required to remain actively employed by the company until age
60. In 2009, the plan was amended to limit eligibility for the SISP excess
benefit to current SISP participants (1) who 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, Bietz, and Schneider would be
entitled to the SISP excess benefit if they were to terminate employment
prior to age 65. 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.

N onqualified Deferred Compensation for 2012

Name (a) — Terry D. Hildestad	53,105	1,001,633
Doran N. Schwartz
Steven L. Bietz
J. Kent Wells
William E. Schneider	87,334	1,647,225	(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 2012 was 5.46% 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.

38 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, 2012. 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 (for employees hired before 2006), 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 2012 table. See the Pension Benefits for 2012 table and the Nonqualified Deferred Compensation for 2012 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.

The calculation of the present value of excess SISP benefits our named executive officers would be entitled to upon termination of employment under the SISP was computed based on calculations assuming an age rounded to the nearest whole year of age. Actual payments may differ. The terms of the excess SISP benefit are described following the Pension Benefits for 2012 table.

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, the reduction for amounts paid as retirement benefits would eliminate disability benefits assuming a termination of employment on December 31, 2012 for Messrs. Hildestad, Bietz, and Schneider.

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, Bietz, Wells, and Schneider and the annual incentives for Messrs. Hildestad, Bietz, 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 39

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. |

As of December 31, 2012, Messrs. Schwartz, Bietz, and Wells had not satisfied this requirement. Accordingly, if a December 31, 2012 termination other than for cause without a change of control is assumed, the named executive officers 2012-2014 performance share awards would be forfeited, any amounts earned under the 2011-2013 performance share awards for Messrs. Hildestad and Schneider would be reduced by one-third and such award for Messrs. Schwartz and Bietz would be forfeited, and any amounts earned under the 2010-2012 performance share awards for Messrs. Hildestad and Schneider would not be reduced and the award for Messrs. Schwartz and Bietz would be forfeited. Mr. Wells had no 2011-2013 or 2010-2012 performance share awards. The number of performance shares earned following a termination depends on actual performance through the full performance period. As actual performance for the 2010-2012 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 2011-2013 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 2012-2014 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, 2012, 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, 2012.

The compensation committee may consider providing severance benefits on a case-by-case basis for employment terminations. 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.

40 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Terry D. Hildestad

| Executive
Benefits and Payments Upon Termination or Change of Control | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Compensation: | | | | | | |
| Short-term
Incentive(1) | | | | | 750,000 | 750,000 |
| 2010-2012
Performance Shares | | | | | 1,107,087 | 1,107,087 |
| 2011-2013
Performance Shares | 816,176 | 816,176 | 816,176 | 816,176 | 1,224,265 | 1,224,265 |
| 2012-2014
Performance Shares | | | | | 1,144,577 | 1,144,577 |
| Benefits and Perquisites: | | | | | | |
| Regular SISP(2) | 5,709,419 | 5,709,419 | | 5,709,419 | 5,709,419 | |
| Excess SISP(3) | 378,944 | 378,944 | | 378,944 | 378,944 | |
| SISP Death
Benefits(4) | | | 12,024,426 | | | |
| Total | 6,904,539 | 6,904,539 | 12,840,602 | 6,904,539 | 10,314,292 | 4,225,929 |

| (1) | Represents
the target 2012 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, 2012, which was $42,710 per month for 15 years, commencing at
age 65. Present value was determined using a 3.45% discount rate. The terms
of the regular SISP benefit are described following the Pension Benefits for
2012 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 3.45% discount rate. The terms of the excess SISP benefit
are described following the Pension Benefits for 2012 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 3.45% discount rate. The terms of the SISP death benefit are
described following the Pension Benefits for 2012 table. |

MDU Resources Group, Inc. Proxy Statement 41

Proxy Statement

Doran N. Schwartz

| Executive
Benefits and Payments Upon Termination or Change of Control | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Compensation: | | | | | | | | |
| 2010-2012
Performance Shares | | | | | | | 191,882 | 191,882 |
| 2011-2013
Performance Shares | | | | | | | 222,811 | 222,811 |
| 2012-2014
Performance Shares | | | | | | | 228,902 | 228,902 |
| Benefits and Perquisites: | | | | | | | | |
| Regular SISP | 244,273 | (1) | 244,273 | (1) | 341,982 | (2) | 244,273 | (1) |
| SISP Death
Benefits(3) | | | | 2,055,217 | | | | |
| Disability
Benefits(4) | | | | | 855,522 | | | |
| Total | 244,273 | | 244,273 | 2,055,217 | 1,197,504 | | 887,868 | 643,595 |

| (1) | Represents
the present value of Mr. Schwartzs vested regular SISP benefit as of
December 31, 2012, which was $3,650 per month for 15 years, commencing at age
65. Present value was determined using a 3.45% discount rate. The terms of
the regular SISP benefit are described following the Pension Benefits for
2012 table. |
| --- | --- |
| (2) | Represents
the present value of Mr. Schwartzs vested SISP benefit described in footnote
1, 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 3.45% discount rate. |
| (3) | 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 3.45% discount rate. The terms of the SISP death benefit are
described following the Pension Benefits for 2012 table. |
| (4) | 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
3.59% discount rate. |

42 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Steven L. Bietz

| Executive
Benefits and Payments Upon Termination or Change of Control | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Compensation: | | | | | | |
| Short-term
Incentive(1) | | | | | 234,325 | 234,325 |
| 2010-2012
Performance Shares | | | | | 309,972 | 309,972 |
| 2011-2013
Performance Shares | | | | | 353,063 | 353,063 |
| 2012-2014
Performance Shares | | | | | 330,084 | 330,084 |
| Benefits and Perquisites: | | | | | | |
| Regular SISP(2) | 1,556,929 | 1,556,929 | | 1,556,929 | 1,556,929 | |
| Excess SISP(3) | 180,597 | 180,597 | | 180,597 | 180,597 | |
| SISP Death
Benefits(4) | | | 4,535,554 | | | |
| Total | 1,737,526 | 1,737,526 | 4,535,554 | 1,737,526 | 2,964,970 | 1,227,444 |

| (1) | Represents
the target 2012 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. Bietzs vested regular SISP benefit as of December
31, 2012, which was $16,110 per month for 15 years, commencing at age 65.
Present value was determined using a 3.45% discount rate. The terms of the
regular SISP benefit are described following the Pension Benefits for 2012
table. |
| (3) | Represents
the present value of all excess SISP benefits Mr. Bietz would be entitled to
upon termination of employment under the SISP. Present value was determined
using a 3.45% discount rate. The terms of the excess SISP benefit are
described following the Pension Benefits for 2012 table. |
| (4) | Represents
the present value of 180 monthly payments of $32,220 per month, which would
be paid as a SISP death benefit under the SISP. Present value was determined
using a 3.45% discount rate. The terms of the SISP death benefit are
described following the Pension Benefits for 2012 table. |

MDU Resources Group, Inc. Proxy Statement 43

Proxy Statement

J. Kent Wells

Executive Benefits and Payments Upon Termination or Change of Control
Compensation:
Short-term Incentive(1)		687,500	687,500
2012-2014 Performance Shares		1,119,133	1,119,133
Benefits and Perquisites:
Disability Benefits (2)	452,506
Total	452,506	1,806,633	1,806,633

44 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

William E. Schneider

Executive Benefits and Payments Upon Termination or Change of Control
Compensation:
Short-term Incentive(1)					290,810	290,810
2010-2012 Performance Shares					396,249	396,249
2011-2013 Performance Shares	292,124	292,124	292,124	292,124	438,174	438,174
2012-2014 Performance Shares					409,657	409,657
Benefits and Perquisites:
Regular SISP(2)	3,161,624	3,161,624		3,161,624	3,161,624
SISP Death Benefits(3)			6,433,110
Total	3,453,748	3,453,748	6,725,234	3,453,748	4,696,514	1,534,890

| (1) | Represents the target 2012 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. Schneiders vested regular SISP benefit as of December 31, 2012, which
was $22,850 per month for 15 years, commencing at age 65. Present value was
determined using a 3.45% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2012 table. |
| (3) | 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 3.45%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2012 table. |

MDU Resources Group, Inc . Proxy Statement 45

Proxy Statement

D irector Compensation for 2012

Name (a) — Thomas Everist	65,000		110,000	174	175,174
Karen B. Fagg	65,000		110,000	174	175,174
A. Bart Holaday	55,000	(3)	110,000	174	165,174
Dennis W. Johnson	70,000		110,000	174	180,174
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	(4)	110,000	174	165,174
Harry J. Pearce	130,000		110,000	174	240,174
John K. Wilson	55,000	(5)	110,000	174	165,174

| (1) | This column reflects the
aggregate grant date fair value of 5,467 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 19, 2012, which was $20.118. The $14.89
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) | Includes $14,999 that Mr. Holaday
received in our common stock in lieu of cash. |
| (4) | Includes $27,481 that Ms. Moss
received in our common stock in lieu of cash. |
| (5) | Includes $54,982 that Mr. Wilson
received in our common stock in lieu of cash. |

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

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

(1) The annual stock grant is 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 2012.

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.

46 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Our director stock ownership policy contained in our corporate governance guidelines requires each director to own our common stock equal in value to five times the directors annual cash 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.

Narrative Disclosure of our Compensation Policies and Practices as They Relate to Risk Management The human resources department 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. Based on the human resources departments assessment and taking into account information received from the risk identification process, senior management and our management policy committee concluded that risks arising from our compensation policies and practices for all employees are not 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, the human resources department 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, the human resources department identified the following practices designed to prevent excessive risk taking:

Business management and governance practices

	risk management is a specific performance competency to annual performance assessment of Section 16 officers
	board oversight on capital expenditure and operating plans that promotes careful consideration of financial assumptions
	limitation on business
acquisitions without board approval
	employee integrity training programs and anonymous reporting systems
	quarterly risk assessment reports at audit committee meetings
and
	prohibitions on holding company stock in an account that is subject to a margin
call, pledging company stock as collateral for a loan, and 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 the companys
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 payment downward
	use of caps on annual incentive awards and long-term incentive stock grant awards (200% of target for awards granted in 2012)
	discretionary clawbacks on incentive payments in the event of a financial restatement
	use of performance shares, rather than stock options or stock appreciation rights, as equity component of incentive compensation
	use of performance shares with a relative, rather than an absolute, total stockholder return performance goal and mandatory reduction
in award if total stockholder return is negative
	use of three-year performance periods to discourage short-term risk-taking

MDU Resources Group, Inc. Proxy Statement 47

Proxy Statement

| | substantive incentive goals measured primarily 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 the board |
| | 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. |

48 MDU Resources Group, Inc. Proxy Statement

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
David L. Goodin	51	Mr. Goodin was elected President and Chief Executive
Officer of the company and a director effective January 4, 2013. For more
information about Mr. Goodin, see Election of Directors.
Steven L. Bietz	54	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	51	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	53	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.
John G. Harp	60	Mr. Harp was elected chief executive officer of Knife
River Corporation effective January 1, 2012, and continues 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	39	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	63	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.
K. Frank Morehouse	54	Mr. Morehouse was elected president and chief executive
officer of Montana-Dakota Utilities Co., Great Plains Natural Gas Co.,
Cascade Natural Gas Corporation, and Intermountain Gas Company effective
January 4, 2013. Prior to that, he was executive vice president and general
manager of Cascade Natural Gas Corporation effective April 1, 2009, and
Intermountain Gas Company effective October 1, 2008; vice president-operations
of Montana-Dakota Utilities Co. and Great Plains Natural Gas Co. effective
January 29, 2007; Region Manager for Montana-Dakota Utilities Co. effective
October 1, 2004; and Region Manager of Great Plains Natural Gas Co. when it
was acquired July 1, 2000.
Cynthia J. Norland	58	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	58	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.

MDU Resources Group, Inc. Proxy Statement 49

Proxy Statement

| William E. Schneider | 64 | 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. |
| --- | --- | --- |
| Doran N. Schwartz | 43 | 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 | 53 | 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 | 56 | Mr. Wells was elected vice chairman of the company and a
director effective January 4, 2013, and continues to serve as president and
chief executive officer of Fidelity Exploration & Production Company, the
position for which he was hired effective May 2, 2011. For more information
about Mr. Wells, see Election of Directors. |

SECURITY 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, 2012.

| Name — Steven L.
Bietz | 69,392 | (4) | | * | |
| --- | --- | --- | --- | --- | --- |
| Thomas
Everist | 1,885,590 | (5) | | 1.0 | 29,243 |
| Karen B.
Fagg | 37,481 | | | * | |
| Terry D.
Hildestad | 214,073 | | | * | |
| A. Bart Holaday | 41,200 | | | * | |
| Dennis W.
Johnson | 88,583 | (6) | 4,560 | * | |
| Thomas C.
Knudson | 24,467 | | | * | |
| Richard H.
Lewis | 28,167 | | | * | 18,185 |
| Patricia L.
Moss | 63,225 | | | * | |
| Harry J.
Pearce | 218,017 | | | * | 48,081 |
| William E.
Schneider | 104,555 | (7) | 800 | * | |
| Doran N.
Schwartz | 24,763 | (4) (8) | 1,300 | * | |
| J. Kent
Wells | 27,743 | | | * | |
| John K.
Wilson | 90,549 | | | * | |
| All
directors and executive officers as a group (23 in number) | 3,222,078 | | 20,228 | 1.7 | 95,509 |

*	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)	These shares are included in the Common Shares
Beneficially Owned column.
(3)	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.
(4)	Includes full shares allocated to the officers account in
our 401(k) retirement plan.
(5)	Includes 1,820,000 shares of common stock acquired through
the sale of Connolly-Pacific to us.
(6)	Mr. Johnson disclaims all beneficial ownership of the
4,560 shares owned by his wife.
(7)	Mr. Schneider disclaims all beneficial ownership of the
800 shares owned by his wife.
(8)	The total includes 1,300 shares owned by Mr. Schwartzs
wife.

50 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

We prohibit our directors and executive officers from hedging their ownership of company common stock. They may not enter into transactions that allow them to benefit from devaluation of our stock or otherwise own stock technically but without the full benefits and risks of such ownership.

Directors, executive officers, and related persons are prohibited from holding our common stock in a margin account, with certain exceptions, or pledging company securities as collateral for a loan. Company common stock may be held in a margin brokerage account only if the stock is explicitly excluded from any margin, pledge, or security provisions of the customer agreement. Company common stock may be held in a cash account, which is a brokerage account that does not allow any extension of credit on securities. Related person means an executive officers or directors spouse, minor child, and any person (other than a tenant or domestic employee) sharing the household of a director or executive officer, as well as any entities over which a director or executive officer exercises control.

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	BlackRock, Inc. 40 East 52nd Street New York, NY 10022	11,808,063	(1)	6.25 %
Common Stock	T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202	11,315,091	(2)	5.90 %
Common Stock	State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111	9,760,389	(3)	5.20 %
Common Stock	The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355	10,319,105	(4)	5.46 %

| (1) | In a Schedule 13G/A, Amendment
No. 3, filed on February 5, 2013, BlackRock, Inc. reports sole voting and
dispositive power with respect to all shares as the parent holding company or
control person of BlackRock Capital Management, BlackRock Financial
Management, Inc., 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 Life
Limited, BlackRock (Netherlands) B.V., BlackRock Fund Managers Limited,
BlackRock Asset Management Ireland Limited, BlackRock International Limited,
and BlackRock Investment Management (UK) Limited. |
| --- | --- |
| (2) | In a Schedule 13G/A, Amendment
No. 1, filed on February 7, 2013, T. Rowe Price Associates, Inc. reports sole
voting power with respect to 1,724,000 shares and sole dispositive power with
respect to 11,315,091 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. |
| (3) | In a Schedule 13G, filed on
February 12, 2013, State Street Corporation reports shared voting and
dispositive power with respect to all shares as the parent holding company or
control person of State Street Global Advisors France S.A., State Street Bank
and Trust Company, SSGA Funds Management, Inc., State Street Global Advisors
Limited, State Street Global Advisors Ltd, State Street Global Advisors,
Australia Limited, State Street Global Advisors Japan Co., Ltd. and State
Street Global Advisors, Asia Limited. |
| (4) | In a Schedule 13G, filed on
February 13, 2013, The Vanguard Group reports sole dispositive power with
respect to 10,140,265 shares, shared dispositive power with respect to
178,840 shares and sole voting power with respect to 191,340 shares. These
shares include 127,440 shares beneficially owned by Vanguard Fiduciary Trust
Company, a wholly-owned subsidiary of The Vanguard Group, Inc., as a result
of its serving as investment manager of collective trust accounts, and
115,300 shares beneficially owned by Vanguard Investments Australia, Ltd., a
wholly-owned subsidiary of The Vanguard Group, Inc., as a result of its
serving as investment manager of Australian investment offerings. |

MDU Resources Group, Inc. Proxy Statement 51

Proxy Statement

R ELATED PERSON TRANSACTION DISCLOSURE

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

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

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

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

The audit committee and the board of directors reviewed two leases between an indirect subsidiary of the company and a Nevada limited liability company, MOJO Montana, LLC (MOJO). John G. Harp, who is chief executive officer of MDU Construction Services Group, Inc. and Knife River Corporation, 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. The leases expire June 30, 2013.

C ORPORATE GOVERNANCE

Director Independence The board of directors has adopted guidelines on director independence that are included in our corporate governance guidelines, which are available for review on our corporate website at http://www.mdu.com/Documents/Governance/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. |
| In determining director
independence for 2012, the board of directors considered the following
transactions or relationships: | |
| | Mr.
Everists ownership of approximately 1.87 million shares in 2011 and
approximately 1.89 million shares in 2012 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. The additional fees for 2011 were
$4,500, for 2012 were $5,000, and we expect them to be approximately $3,100
for 2013. Mr. Everist is a limited partner and owns less than 1% of
WebFilings, LLC. The MDU Resources Foundation (Foundation) made charitable
contributions to Medcenter One Foundation, which is now known as Sanford
Health following a merger effective July 2, 2012, in the amount of $500 in
2011 and $1,250 in 2012. Mr. Everist is a member of the board of directors of
the Sanford Health Foundation and his wife, Barbara Everist, is vice chairman
of the board of trustees of Sanford Health. |
| | charitable contributions from the
Foundation in the amount of $2,700 in 2011 and $2,625 in 2012 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 from the Foundation in the amount of
$3,750 in 2011 and $27,250 in 2012 to Jamestown College or its foundation
Mr. Holaday serves as a trustee for Jamestown College. |
| | charitable contributions from the
Foundation to the City of Dickinson in the amount of $20,000 in 2011 and 2012
Mr. Johnson is president of the City of Dickinson board of commissioners. |

52 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

charitable contributions from the Foundation to Colorado UpLift in the amount of $25,000 in 2011 and $20,000 in 2012 Mr. Lewis is a board director and chairman of the Development Board of Colorado UpLift; charitable contributions from the Foundation in the amount of $10,000 in 2011 and $5,000 in 2012 to the Alliance for Choice in Education Mr. Lewis serves on the 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 2012, no directors submitted resignations under this requirement.

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

| We intend to satisfy our
disclosure obligations regarding: | |
| --- | --- |
| | amendments to, or waivers of, any
provision of the code of conduct that applies to our principal executive
officer, principal financial officer, and principal accounting officer and
that relates to any element of the code of ethics definition in Regulation
S-K, Item 406(b) and |
| | waivers of the code of conduct
for our directors or executive officers, as required by New York Stock
Exchange listing standards by posting such information on our website at
http://www.mdu.com/Documents/Governance/IntegrityGuide.pdf. |

Board Leadership Structure and Boards Role in Risk Oversight The board separated the positions of chairman of the board and chief executive officer in 2006 and elected Harry J. Pearce, a non-employee independent director, as our chairman. 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. In August 2012, we amended our bylaws and corporate governance guidelines to require that our chairman be independent. The board believes that having separate positions and having an independent outside director serve as chairman is the appropriate leadership structure for the company and demonstrates our commitment to good corporate governance.

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including economic risks, environmental and regulatory risks, and others, such as the impact of competition, 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

MDU Resources Group, Inc. Proxy Statement 53

Proxy Statement

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 2012, the board of directors held seven meetings. Each director attended at least 75% of the combined total meetings of the board and the committees on which the director served during 2012. Director attendance at our annual meeting of stockholders is left to the discretion of each director. Three directors attended our 2012 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 four times during 2012. The committee members were Karen B. Fagg, chairman, Richard H. Lewis, A. Bart Holaday, and Patricia L. Moss.

| The nominating and governance
committee provides recommendations to the board with respect to: | |
| --- | --- |
| | board organization, membership,
and function |
| | committee structure and
membership |
| | succession planning for our
executive management and directors and |
| | corporate governance guidelines
applicable to us. |

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

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

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

54 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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/Governance/Pages/CorporateGovernanceGuidelines.aspx. See also the section entitled 2014 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, including experience relative to our companys
lines of business |
| | 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, technology, 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 any
affiliation or relationship 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.

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

MDU Resources Group, Inc. Proxy Statement 55

Proxy Statement

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 2012. 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
	○	the integrity of our financial
statements and system of internal controls
	○	our compliance with legal and
regulatory requirements
	○	the independent auditors
qualifications and independence
	○	the performance of our internal
audit function and independent auditors and
	○	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,
2012, 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, 2012,
for filing with the Securities and Exchange Commission. |
| Dennis W.
Johnson, Chairman |
| A.
Bart Holaday |
| Richard
H. Lewis |
| John
K. Wilson |

56 MDU Resources Group, Inc. Proxy Statement

Proxy St a t e m e n t

Compensation Committee

The compensation committee met five times during 2012. The compensation committee members are Thomas Everist, chairman, Karen B. Fagg, Thomas C. Knudson, and Patricia L. Moss.

The compensation committees responsibilities, as set fort h 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. Th e chie f 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 retained a compensation consultant in 2012 to prepare a competitive assessment for 2013 compensation for our Section 16 officers.

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.

During 2012, the compensation committee retained Towers Watson to prepare the 2013 competitive assessment covering our Section 16 officers. In an engagement letter dated March 23, 2012, the compensation committee asked Towers Watson to prepare separate executive compensation reviews for the Section 16 officers and for the chief executive officer. In its review for the Section 16 officers, excluding the chief executive officer, Towers Watson was asked to:

| | match the Section 16 officer positions to survey
data to generate 2013 market estimates
for base salaries and short-term and
long-term incentives |
| --- | --- |
| | address general trends in
executive compensation |
| | compare base
salaries and
target short-term and long-term incentives, by position, to market estimates
and recommend salary grade
changes as appropriate |
| | construct a
recommended 2013 salary grade structure |
| | verify the competitiveness of short-term and long-term incentive targets associated with salary grades and recommend modifications
as appropriate. |

MDU Resources Group, Inc. Proxy Statement 57

Proxy Statement

In the chief executive officer review, Towers Watson was asked to use survey data and data from the companys performance graph peer group to:

| | develop competitive estimates for
base salary and target
short-term and long-term incentives |
| --- | --- |
| | recommend changes in base salary and incentive targets based on the competitive data
and |
| | address general trends in
chief executive officer compensation. |

The compensation committee 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. The compensation committee authorized the company to participate in compensation and employee benefits surveys sponsored by Towers Watson in 2012.

The compensation committee requested and received information from its compensation consultant, Towers Watson, to assist the committee in determining whether Towers Watsons work raised any conflict of interest. The compensation committee has reviewed Towers Watsons responses to its request and determined that the work of Towers Watson did not raise any conflict of interest in 2012.

The board of directors determines compensation for our non-employee directors based upon recommendations from the compensation committee. The compensation committees practice has been to retain a compensation consultant every other year to conduct a competitive analysis on director compensation. The compensation committee did not retain an outside consultant for the 2012 compensation review for the board of directors. At its May 2012 meeting, the committee reviewed the analysis of competitive data and recent trends in director compensation, including independent chairman of the board compensation, prepared by the human resources department and the vice president-human resources. The companys analysis was based on proxy data from our performance graph peer group companies compiled by Equilar and on data from the National Association of Corporate Directors 2011/2012 Director Compensation Report. The committee compared the data to our directors compensation and each of its components. After review and discussion of the market data, which indicated that our median director compensation of $165,000 was below the median total direct compensation of $179,596 for large companies in the National Association of Corporate Directors 2011/2012 Director Compensation Report and consistent with the median total direct compensation of $162,002 of the peer companies, the compensation committee recommended, and the board approved, that no changes be made to director compensation for 2012. With respect to non-executive chairman of the board compensation comparison to other directors, the multiple of the median non-executive director total pay for the company was 1.45X as compared to 1.64X under the National Association of Corporate Directors 2011/2012 Director Compensation Report companies and 1.84X for the peer companies. The compensation committee recommended, and the board approved, that no changes be made to the non-executive chairman of the board compensation for 2012.

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 1 6 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 2012 or written representations that no Forms 5 were required, we believe that all such reports were timely filed, except that one Form 4 for Mr. Lewis reporting one transaction was filed one week late.

C ONDUCT OF MEETING; ADJOURNMENT

The chairman of the board has broad responsibility and authority to conduct the annual meeting in an orderly and timely manner. In addition, our bylaws provide that the meeting may be adjourned from time to time by the chairman of the meeting regardless of whether a quorum is present.

58 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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 matters are properly brought before the annual meeting, or any adjournment(s) thereof, your proxies include discretionary authority for the persons named in the enclosed proxy to vote or act on such matters in their discretion.

S HARE D ADDRESS STOCKHOLDERS

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

2 01 4 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 22, 2014, any stockholder who wishes to submit a nomination must submit the required notice to the corporate secretary on or before January 23, 2014.

Other Meeting Business: Ou r 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 22, 2014, 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 23, 2014.

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 22, 2014, stockholders must submit such written notice to the corporate secretary on or before January 23, 2014.

MDU Resources Group, Inc. Proxy Statement 59

Proxy Statement

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 22, 2014, 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 13, 2013.

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/Governance/Pages/CorporateGovernanceGuidelines.aspx.

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, 2012, 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
Marc h 13, 2013

60 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| E XHIBIT A — Towers Watson
2010 | Avanade | CH Energy Group |
| --- | --- | --- |
| General Industry
Executive | Avis Budget Group | CH2M Hill |
| Compensation
Database | Avista | Chemtura |
| | AXA Group | Chevron |
| | B&W Technical Services Y-12 | Chevron Phillips Chemical |
| 3M | Ball | Chiquita Brands |
| 7-Eleven | Bank of America | Choice Hotels International |
| A&P | Bank of Hawaii | CHS |
| A.H. Belo | Bank of New York Mellon | CIGNA |
| A.O. Smith | Bank of the West | Cimarex Energy |
| A. T. Cross | Barnes Group | Cintas |
| AAA Northern California, Nevada
& Utah | Barrick Gold of North America | Cisco Systems |
| AAA of Science | Baxter International | CIT Group |
| Abbott Laboratories | Bayer AG | Cleco |
| ABC | Bayer CropScience | Cliffs Natural Resources |
| Accenture | Bayer MaterialScience | CMS Energy |
| ACH Food | BB&T | CNA |
| Acuity Brands | BBVA | COACH |
| AEGON | BD | Cobank |
| AEI Services | Beckman Coulter | Coca-Cola |
| Aeropostale | Belo | Colgate-Palmolive |
| AFLAC | Bemis | Colorado Springs Utilities |
| Agilent Technologies | Best Buy | Columbia Sportswear |
| Agrium | BG US Services | Comcast |
| AIG | Big Lots | Comerica |
| Air Liquide | Bill & Melinda Gates
Foundation | Commerce Bancshares |
| Air Products and Chemicals | Biogen Idec | Commerce Insurance |
| Alcatel-Lucent | BJs Wholesale Club | ConAgra Foods |
| Alcoa | Black Hills Power and Light | Connell Limited Partnership |
| Alcon Laboratories | Blockbuster | ConocoPhillips |
| Alexander & Baldwin | Blue Cross Blue Shield of Florida | Conseco |
| Allegheny Energy | Blyth | Consolidated Edison |
| Allergan | Boehringer Ingelheim | Constellation Energy |
| Allete | Boeing | Consumers Union |
| Alliant Energy | BOK Financial | Continental Automotive Systems |
| Alliant Techsystems | Boston Scientific | ConvaTec |
| Allianz | Bovis Lend Lease | Convergys |
| Allstate | BP | Cooper Industries |
| Allured Business Media | Brady | Corning |
| Amazon.com | Bremer Financial | Covance |
| Ameren | Bristol-Myers Squibb | Covanta Holdings |
| American Chemical Society | Broadcom | Covidien |
| American Crystal Sugar | Burlington Northern Santa Fe | Cox Enterprises |
| American Electric Power | Bush Brothers | CPS Energy |
| American Express | C.H. Robinson Worldwide | Cracker Barrel Old Country Stores |
| American Family Insurance | CA | Crown Castle |
| American United Life | Cablevision Systems | Crump Group |
| American Water Works | Cabot | CSR |
| Ameriprise Financial | Cadbury | CSX |
| Ameritrade | Calgon Carbon | CUNA Mutual |
| Ameron | California Independent System
Operator | CVS Caremark |
| AMETEK | Callaway Golf | Cytec |
| Amgen | Calpine | Daiichi Sankyo |
| Anadarko Petroleum | Cameron International | Dana |
| Ann Taylor Stores | Capital One Financial | Dannon |
| AOL | Capitol Broadcasting WRAL | Darden Restaurants |
| APL | Cardinal Health | Day & Zimmermann |
| Appleton Papers | Career Education | DCP Midstream |
| Applied Materials | CareFusion | Dean Foods |
| ARAMARK | Cargill | Del Monte Foods |
| Archer Daniels Midland | Carlson Companies | Dell |
| Arctic Cat | Carnival | Delta Air Lines |
| Areva | Carpenter Technology | Deluxe |
| Armstrong World Industries | Catalent Pharma Solutions | Dennys |
| Arrow Electronics | Catholic Healthcare West | Dentsply |
| AstraZeneca | Cedar Rapids TV | Devon Energy |
| AT&T | Celgene | Devry |
| ATC Management | Cemex | Dex One |
| Atmos Energy | CenterPoint Energy | Diageo North America |
| Aurora Healthcare | CenturyLink | Dionex |
| Auto Club Group | Cephalon | Direct Energy |
| Automatic Data Processing | CF Industries | Disney Publishing Worldwide |

MDU Resources Group, Inc. Proxy Statement A-1

Proxy Statement

Dominion Resources	FPL Group	HR Access
Domtar	Franklin Resources	HSBC Holdings
Donaldson	Freddie Mac	Hubbard Broadcasting
Dow Chemical	Freedom Communications	Humana
Dow Corning	Freeport-McMoRan Copper &
Gold	Hunt Consolidated
Dow Jones	Future US	Huntington Bancshares
DPL	GAF Materials	Huntsman
DTE Energy	Gannett	Husky Injection Molding Systems
Duke Energy	Gap	Hyatt Hotels
DuPont	GATX	IBM
E.ON U.S.	Gavilon	IDACORP
E.W. Scripps	GDF SUEZ Energy North America	IDEXX Laboratories
Eastman Chemical	General Atomics	IKON Office Solutions
Eaton	General Dynamics	IMS Health
Ecolab	General Electric	Independence Blue Cross
Edison International	General Mills	Infragistics
Education Management	General Motors	ING
Eisai	Genworth Financial	Integrys Energy Group
El Paso Corporation	Genzyme	Intel
Electric Power Research Institute	Getty Images	Intercontinental Hotels
Eli Lilly	Gilead Sciences	International Data
EMC	GlaxoSmithKline	International Flavors &
Fragrances
EMCOR Group	GMAC Financial Services	International Paper
Emergency Medical Services	Goodrich	Invensys Controls
EMI Music	Goodyear Tire & Rubber	ION Geophysical
Enbridge Energy	Google	Iron Mountain
Energen	Gortons	Irvine Company
Energy Future Holdings	Graco	Irving Oil Commercial G.P
Energy Northwest	Great-West Life Annuity	ISO New England
Entergy	Greif	iSoft
EPCO	Gruma	ISP
Epson	Grupo Ferrovial	ITT Corporate
Equifax	GSM Association	J. Crew
Equity Office Properties	GTECH	J.C. Penney Company
ERCOT	Guardian Life	J.M. Smucker
Erie Insurance	Guideposts	J.R. Simplot
Ernst & Young	GXS	Jabil Circuit
ESPN	H&R Block	Jack in the Box
Essilor of America	H.B. Fuller	Jacobs Engineering
Evening Post Publishing KOAA	H.J. Heinz	JM Family
Evergreen Packaging	Hanesbrands	John Hancock
Evonik Degussa	Hannaford	Johnson & Johnson
Exelon	Harland Clarke	Johnson Controls
Express Scripts	Harley-Davidson	Journal Broadcast Group
Exterran	Harris Bank	Kaiser Foundation Health Plan
ExxonMobil	Harris Enterprises	Kalmbach Publishing
Fair Isaac	Harry Winston	Kaman Industrial Technologies
Fairchild Controls	Hartford Financial Services	Kao Brands
FANUC Robotics America	Hasbro	KBR
Farmers Group	Hawaiian Electric	Kellogg
Federal Home Loan Bank of San
Francisco	HBO	KeyCorp
Federal Reserve Bank of Atlanta	HCA Healthcare	Kimberly-Clark
Federal Reserve Bank of Cleveland	HD Supply	Kinder Morgan
Federal Reserve Bank of Dallas	Health Net	Kindred Healthcare
Federal Reserve Bank of
Philadelphia	Healthways	King Pharmaceuticals
Federal Reserve Bank of San
Francisco	Henkel of America	Kinross Gold
Federal Reserve Bank of St. Louis	Henry Ford Health Systems	KLA-Tencor
Ferderal-Mogul	Herman Miller	Knowles Electronics
Ferrellgas	Hershey	Koch Industries
Fidelity Investments	Hertz	Kohler
Fidelity National Information
Services	Hess	Kohls
Fifth Third Bancorp	Hewlett-Packard	KPMG
Firemans Fund Insurance	Highmark Blue Cross Blue Shield	L.L. Bean
First Horizon National	Hilton Worldwide	L-3 Communications
First Solar	Hitachi Data Systems	Lafarge North America
FirstEnergy	HNI	Lance
Fiserv	HNTB	Land OLakes
Fisher Communications	Hoffmann-La Roche	Lanxess
Flowserve	Home Shopping Network	Laureate Education
Fluor	Honeywell	Lear
Ford	Horizon Blue Cross Blue Shield of
New	Leggett and Platt
Forest Laboratories	Jersey	LES
Fortune Brands	Hormel Foods	Level 3 Communications
Forum Communications WDAY	Hospira	Levi Strauss
Fox Networks Group	Houghton Mifflin Harcourt
Publishing	Liberty Mutual

A-2 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Life Technologies	New York Times	Praxair
Lincoln Financial	New York University	Premera Blue Cross
Lockheed Martin	Newmont Mining	Principal Financial
Loews	NewPage	PrivateBancorp
LOMA	Nicor	Progress Energy
Lorillard Tobacco	Nielsen Expositions	Progressive Corporation
Lower Colorado River Authority	NIKE	Proliance Energy
LPL Financial	Nissan North America	Protective Life
Lyondell Chemical	Nokia	Providence Health & Services
M&T Bank	Noranda Aluminum	Prudential Financial
MAG Industrial Automation Systems	Norfolk Southern	Public Service Enterprise Group
Magellan Midstream Partners	Northeast Utilities	Puget Energy
Marathon Oil	Northern Power Systems	Pulte Homes
Marriott International	Northrop Grumman	Purdue Pharma
Marsh & McLennan	Northstar Travel Media	QUALCOMM
Marshall & Ilsley	NorthWestern Energy	Quest Diagnostics
Martin Marietta Materials	Northwestern Mutual	Quintiles
Mary Kay	NOVA Chemicals	R.R. Donnelley
Masco	Novartis	Ralcorp Holdings
Massachusetts Mutual	Novartis Consumer Health	Razorfish
MasterCard	Novell	RBC US
Mattel	Novo Nordisk Pharmaceuticals	Readers Digest
Matthews International	NRG Energy	Realogy
McClatchy	NSTAR	Redcats USA
McDermott	NV Energy	Reddy Ice
McDonalds	NW Natural	Redknee Solutions
McGraw-Hill	NXP Semi-Conductor	Reed Business
McKesson	Nycomed US	Regency Energy Partners LP
MDU Resources	Nypro	Regions Financial
MeadWestvaco	Occidental Chemical	Research in Motion
Mecklenburg County	Occidental Petroleum	Revlon
Media General	Office Depot	RF Micro Devices
Media Tec Publishing	OGE Energy	RGA Reinsurance Group
Medicines Company	Oglethorpe Power	Rio Tinto
MedImmune	Oklahoma Today Magazine	Roche Diagnostics
Medtronic	Omaha Public Power	Rockwell Automation
Merck & Co	Omgeo	Rockwell Collins
Meredith	OneBeacon Insurance	Rodale Press
MetLife	Open Text USA	RRI Energy
Microsoft	Orange Business Services	Ryder System
Midwest Independent	Oshkosh	S.C. Johnson
Transmission System Operator	Owens Corning	Safety-Kleen Systems
Milacron	Owens-Illinois	SAIC
Millennium Inorganic Chemicals	Pacific Gas & Electric	Salt River Project
Millipore	Pacific Life	SanDisk
Mine Safety Appliances	Parametric Technology	Sanofi Pasteur
Mirant	Parker Hannifin	Sanofi-Aventis
Mizuno USA	Parsons	Santee Cooper
Molson Coors Brewing	Pearson	Sarkes Tarzian KTVN
Molycorp Minerals	PennWell	Sarkes Tarzian WRCB
MoneyGram International	Penton Media	SAS Institute
Monsanto	Peoples Bank	Saturday Evening Post
Moodys	Pepco Holdings	Saudi Arabian Oil
Morgan Murphy Stations WISC	PepsiCo	Savannah River Nuclear Solutions
Mosaic	PerkinElmer	Savannah River Remediation
Motorola	Pervasive Software	SCA Americas
Munich Re Group	PetSmart	SCANA
Murphy Oil	Pfizer	Schlumberger
MWH Global	Phillips-Van Heusen	School Specialty
Nash-Finch	Phoenix Companies	Schreiber Foods
Nation	Pinnacle West Capital	Schurz KYTV
National Geographic Society	Pitney Bowes	Schurz WDBJ
National Renewable Energy
Laboratory	Pittsburgh Corning	Schwans
National Starch Polymers Group	PJM Interconnection	Scripps Networks Interactive
Nationwide	PlainsCapital	Seagate Technology
Navistar International	Plexus	Sealed Air
Navy Federal Credit Union	PNC Financial Services	Securian Financial Group
Naylor	PNM Resources	Security Benefit Group
NBC Universal	Polaris Industries	Sempra Energy
NCCI Holdings	Polymer Group	Sensata Technologies
Nestle USA	PolyOne	Sensient Technologies
NetJets	Portland General Electric	Shell Oil
New York Independent System
Operator	Potash	Sherwin-Williams
New York Life	PPG Industries	Shire Pharmaceuticals
New York Power Authority	PPL	Siemens

MDU Resources Group, Inc. Proxy Statement A-3

Proxy Statement

| Simpson Manufacturing | Trinity Industries | Towers Watson
2010 Energy |
| --- | --- | --- |
| Sinclair Broadcast Group | Tronox | Industry
Executive |
| Sirius XM Radio | TRW Automotive | Compensation
Database |
| Skype | T-Systems | |
| SLM | TUI | |
| Smith & Nephew | Tupperware | AEI Services |
| Smurfit-Stone Container | Twin Cities Public Television
TPT | Allegheny Energy |
| Snap-on | Tyco Electronics | Allete |
| Sodexo | U.S. Bancorp | Alliant Energy |
| Solutia | U.S. Foodservice | Ameren |
| Solvay America | UIL Holdings | American Electric Power |
| Sonoco Products | Unifi | Areva |
| Sony Corporation | Unilever United States | ATC Management |
| SourceMedia | Union Bank of California | Atmos Energy |
| Southern Company Services | Union Pacific | Avista |
| Southern Maryland Electric
Cooperative | UniSource Energy | BG US Services |
| Southern Union Company | Unisys | Black Hills Power and Light |
| Southwest Power Pool | United Airlines | California Independent System
Operator |
| Spectra Energy | United Parcel Service | Calpine |
| Spirit AeroSystems | United Rentals | CenterPoint Energy |
| Sprint Nextel | United States Cellular | CH Energy Group |
| SPX | United States Steel | Cleco |
| SRA International | United Technologies | CMS Energy |
| Stanford University | United Water | Colorado Springs Utilities |
| Stantec | UnitedHealth | Consolidated Edison |
| Starbucks | Unitil | Constellation Energy |
| StarTek | University of Texas | Covanta Holdings |
| Starwood Hotels & Resorts | M.D. Anderson Cancer Center | CPS Energy |
| State Farm Insurance | Unum Group | DCP Midstream |
| State Street | USAA | Direct Energy |
| Steelcase | USG | Dominion Resources |
| Sterling Bancshares | Valero Energy | DPL |
| Stop & Shop | Vectren | DTE Energy |
| STP Nuclear Operating | Verde Realty | Duke Energy |
| Stryker | Verizon | E.ON U.S. |
| Sun Life Financial | Vertex Pharmaceuticals | Edison International |
| SunTrust | VF | El Paso Corporation |
| Sunflower Broadcasting | Viacom | Electric Power Research
Institute |
| Sunoco | Village Farms | Enbridge Energy |
| Sunrise Senior Living | Visa | Energen |
| SuperMedia | Vision Service Plan | Energy Future Holdings |
| Swagelok | Vistar | Energy Northwest |
| Sybron Dental Specialties | Visteon | Entergy |
| Synacor | Volvo Group North America | EPCO |
| Takeda Pharmaceutical Company
Limited | Vulcan | ERCOT |
| Targa Resources | Vulcan Materials | Exelon |
| Target | VWR International | First Solar |
| Taubman Centers | Walt Disney | FirstEnergy |
| TD Bank Financial Group | Warnaco | FPL Group |
| Telefonica O2 | Washington Post | GDF SUEZ Energy North America |
| Tellabs | Waste Management | Hawaiian Electric |
| Temple-Inland | Watson Pharmaceuticals | IDACORP |
| Tenet Healthcare | Watts Water Technologies | Integrys Energy Group |
| Tennessee Valley Authority | Webster Bank | ISO New England |
| Teradata | Wellcare Health Plans | Kinder Morgan |
| Terex | Wellpoint | LES |
| Tesoro | Wells Fargo | Lower Colorado River Authority |
| Texas Petrochemicals | Wendys/Arbys Group | MDU Resources |
| Textron | Westar Energy | Midwest Independent Transmission
System |
| Thermo Fisher Scientific | Western Digital | Operator |
| Thomas & Betts | Westinghouse Electric | Mirant |
| Thomas Publishing | Weyerhaeuser | New York Independent System
Operator |
| Thomson Reuters | Whirlpool | New York Power Authority |
| Thrivent Financial for Lutherans | Whole Foods Market | Nicor |
| TIAA-CREF | Wisconsin Energy | Northeast Utilities |
| Time | Wm. Wrigley Jr. | NorthWestern Energy |
| Time Warner | Wolters Kluwer | NRG Energy |
| Time Warner Cable | Wray Edwin KTBS | NSTAR |
| Timken | Wyndham Worldwide | NV Energy |
| T-Mobile USA | Xcel Energy | NW Natural |
| Toro | Yahoo! | OGE Energy |
| Total System Services | Yankee Publishing | Oglethorpe Power |
| TransCanada | YRC Worldwide | Omaha Public Power |
| TransUnion | Yum! Brands | Pacific Gas & Electric |
| Travelers | Zale | Pepco Holdings |

A-4 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Pinnacle West Capital PJM Interconnection PNM Resources Portland General Electric PPL Progress Energy Proliance Holdings Public Service Enterprise Group Puget Energy Regency Energy Partners LP RRI Energy Salt River Project Santee Cooper SCANA Sempra Energy Southern Company Services Southern Maryland Electric Cooperative Southern Union Company Southwest Power Pool Spectra Energy STP Nuclear Operating Targa Resources Tennessee Valley Authority TransCanada UIL Holdings UniSource Energy Unitil Vectren Westar Energy Westinghouse Electric Wisconsin Energy Wolf Creek Nuclear Xcel Energy Effective Compensation, Inc.s 2010 Oil & Gas Compensation Survey ANKOR Energy LLC Antero Resources Approach Resources Inc. Aspect Holdings, LLC Atinum E&P, Inc. Atlas Energy Resources L.L.C.F Berry Petroleum Company Bill Barrett Corporation Black Hills Corporation BOPCO, L.P. BreitBurn Energy Partners LP Brigham Exploration Company Browning Oil Company, Inc. BTA Oil Producers, LLC Cabot Oil & Gas Corporation Cano Petroleum, Inc. Carrizo Oil & Gas Inc. Ceja Corporation Chaparral Energy, L.L.C. Chesapeake Energy Corporation Cimarex Energy Co. Comstock Resources Cohort Energy Company (J-W Operating) Concho Resources, Inc. Consol Energy Inc. Continental Resources, Inc. Crimson Exploration, Inc. Denbury Resources, Incorporated Devon Energy Corporation Duncan Oil, Inc. Dynamic Offshore Resources, LLC Eagle Rock Energy EnCana Oil & Gas Energen Resources Corporation Energy Partners, Ltd. Eni Petroleum Co. Inc. EOG Resources Inc EQT Corporation Equal Energy US Inc. (Altex Energy) EXCO Resources, Inc. Fasken Oil and Ranch, Ltd. Fidelity Exploration & Production FIML Natural Resources Forest Oil Corporation GMX Resources Inc. Goodrich Petroleum Company of Louisiana Great Western Drilling Company Harvest Natural Resources, Inc. Henry Resources LLC HighMount Exploration & Production, LLC Hilcorp Energy Company Hillwood International Energy Holmes Western Oil Corporation J. M. Huber Corporation Kinder Morgan CO2 Company L.P. Lake Ronel Oil Company Leed Petroleum LLC Linn Operating, Inc. Manti Resources Mariner Energy, Inc. Maritech Resources, Inc. McElvain Oil & Gas Properties, Inc. McMoran Oil and Gas Company Medco Petroleum Management LLC Merit Energy Company Mewbourne Oil Company Murchison Oil & Gas Inc. Mustang Fuel Corporation Nations Petroleum Company Ltd. Nearburg Producing Company Newfield Exploration Company Nexen Petroleum U.S.A., Inc. NFR Energy LLC Noble Energy, Inc. Oasis Petroleum Oxy Long Beach, Inc. (Thums Long Beach) Panhandle Oil and Gas Inc. PDC Energy (Petroleum Development Corporation) Penn Virginia Corporation Petroglyph Energy, Inc. Petrohawk Energy Corporation Petro-Hunt, LLC PetroQuest Energy, Inc. Phoenix Exploration Company Pioneer Natural Resources Company Plains Exploration & Production Company QEP Resources, Inc. (Questar Market Resources) Quantum Resources Management, LLC Quicksilver Resources Inc. Range Resources Corporation Read & Stevens, Inc. Resolute Energy Corporation Rex Energy Corporation Rosetta Resources, Inc. Samson Seneca Resources Corporation Sheridan Production Company Sinclair Services Company Southwestern Energy Production Company St. Mary Land & Exploration Company Stone Energy Corporation Summit Petroleum LLC Swift Energy Company Talisman Energy USA Inc. (Fortuna) T-C Oil Company Tema Oil and Gas Company Total E&P USA, Inc. Triad Energy Corporation Tri-Valley Corporation Ultra Petroleum Corporation Vantage Energy L.L.C Venoco, Inc. Vernon E. Faulconer, Inc. Wagner & Brown, Ltd. Walter Duncan, Inc. Whiting Petroleum Corporation Williams Woodside Energy Wynn-Crosby XTO Energy Inc. Yuma Exploration & Production Company, Inc. Mercers 2010 Total Compensation Survey for the Energy Sector AGL Resources AGL Resources Sequent Energy Management Abraxas Petroleum Corporation Aera Energy, LLC Aker Solutions Alliance Pipeline Alyeska Pipeline Service Company Ameren Corporation Ameren Corporation AmerenEnergy Fuels & Services Ameren Corporation Ameren Energy Resources Ameren Corporation AmerienIllinois Ameren Corporation AmerenUE American Transmission Company Apache Corporation Arch Coal, Inc. Associated Electric Cooperative, Inc. Atlas Energy, Inc. BG US Services BHP Billiton Petroleum (Americas), Inc. Baker Hughes, Inc. Baker Hughes, Inc. Baker Atlas Baker Hughes, Inc. Baker Hughes Drilling Fluids Baker Hughes, Inc. Baker Hughes Inteq Baker Hughes, Inc. Baker Oil Tools Baker Hughes, Inc. Baker Petrolite Baker Hughes, Inc. Centrilift Baker Hughes, Inc. Gaffney, Cline & Associates Baker Hughes, Inc. GeoMechanics International Baker Hughes, Inc. Hughes Christensen Baker Hughes, Inc. Production Quest Basic Energy Services Baytex Energy USA Ltd. Boardwalk Pipeline Partners, LP BreitBurn Energy Partners L.P. BreitBurn Energy Partners L.P. Eastern Division BreitBurn Energy Partners L.P. Orcutt Facility BreitBurn Energy Partners L.P. West Pico Facility BreitBurn Energy Partners L.P. Western Division BreitBurn Energy Partners L.P. Western Division, California Operations BreitBurn Energy Partners L.P. Western Division, Florida Operations BreitBurn Energy Partners L.P. Western Division, Wyoming Operations Brigham Exploration Company Brookfield Renewable Power

MDU Resources Group, Inc. Proxy Statement A-5

Proxy Statement

Buckeye Partners, L.P.	ENSCO International, Inc.	J-W Operating Company
Burnett Oil Co., Inc.	ENSCO International, Inc.	J-W Measurement Company
CCS Midstream Service, LLC	Deepwater Business Unit	J-W Operating Company
CEDA International Inc.	ENSCO International, Inc. North
& South	J-W Power Company
CGGVeritas	America Business Unit	J-W Operating Company
CHS Inc. Energy	EOG Resources, Inc.	J-W Wireline & Excell
CITGO Petroleum Corporation	EXCO Resources, Inc.	Kinder Morgan, Inc.
CPS Energy	EXCO Resources, Inc. EXCO
Appalachia	Lario Oil & Gas Company
Calfrac Well Services Corporation	EXCO Resources, Inc. EXCO East
TX/LA	Legacy Reserves, LP
California ISO	EXCO Resources, Inc. EXCO
Midstream	Linn Energy, LLC
Cameron International	EXCO Resources, Inc. EXCO	M-I SWACO
Cameron International
Aftermarket	Permian/Rockies	MCX Exploration (USA), Ltd.
Cameron International
Centrifugal	Edison Mission Energy	MDU Resources Group, Inc.
Cameron International	Edison Mission Energy	MDU Resources Group, Inc.
Compression Systems	EME Homer City Generation	WBI Holdings, Inc.
Cameron International	Edison Mission Energy	Magellan Midstream Holdings, LP
Distributor Valves Division	Edison Mission O&M	Magellan Midstream Holdings, LP
Cameron International Drilling
Systems	Edison Mission Energy	Pipeline/Terminal Division
Cameron International	Energy Mission Marketing & Trading	Magellan Midstream Holdings, LP
Drilling and Production Systems	Edison Mission Energy	Transportation
Cameron International	Midwest Generation EME	MarkWest Energy Partners LP
Engineered Valves Divison	Edison Mission Energy	MarkWest Energy Partners LP
Cameron International Flow Control	Midwest Generation, LLC	Gulf Coast Business Unit
Cameron International	El Paso Corporation	MarkWest Energy Partners LP
Measurement Division	El Paso Corporation	Liberty Business Unit
Cameron International	Exploration & Production	MarkWest Energy Partners LP
Petreco Process Systems	El Paso Corporation	Northeast Business Unit
Cameron International	Pipeline Group	MarkWest Energy Partners LP
Process Valves Division	EnerVest, Ltd.	Southwest Business Unit
Cameron International
Reciprocating	Energen Corporation	Medco Petroleum Management
Cameron International Subsea
Systems	Energen Corporation Energen
Resources	Mestena Operating, Ltd.
Cameron International Surface
Systems	Corporation	Mirant Corporation
Cameron International Valves
&	Energy Future Holdings
Corporation	Mitsui E&P USA LLC
Measurement	Energy Future Holdings
Corporation	Modec International Inc.
CenterPoint Energy	Luminant	Murphy Oil Corporation
Chesapeake Energy Corporation	Energy Future Holdings
Corporation	New York Power Authority
Chesapeake Energy Corporation
CEMI	TXU Energy	New York Power Authority
Chesapeake Energy Corporation	Enerplus Resources Fund
Enerplus	Blenheim-Gilboa Power Project
Chesapeake Midstream Partners	Resources (USA) Corporation	New York Power Authority
Chesapeake Energy Corporation
Compass	Eni US Operating Company, Inc.	Clark Energy Center
Chesapeake Energy Corporation	Entegra Power Services, LLC	New York Power Authority
Diamond Y	Equal Energy Ltd. Altex Energy
Corporation	Niagara Power Project
Chesapeake Energy Corporation	Explorer Pipeline Company	New York Power Authority
Great Plains	Exterran	Richard M. Flynn Power Plant
Chesapeake Energy Corporation
Hodges	Fasken Oil and Ranch, Ltd.	New York Power Authority
Chesapeake Energy Corporation
Midcon	Forest Oil Corporation	St. Lawrence/FDR Power Project
Chesapeake Energy Corporation
Nomac	GE Oil & Gas Operations LLC	Newfield Exploration Company
Cimarex Energy Co.	PII North America, Inc.	Nexen Petroleum USA, Inc.
Cinco Natural Resources
Corporation	Genesis Energy, LLC	NiSource Inc.
Citation Oil & Gas Corp.	Global Industries	NiSource Inc. Bay State Gas
Company
Cleco Corporation	Great River Energy	NiSource Inc. Columbia Gas of
Kentucky
Colonial Pipeline Company	Halliburton Company	NiSource Inc. Columbia Gas of
Ohio
Constellation Energy Partners LLC	Helmerich & Payne, Inc.	NiSource Inc. Columbia Gas of
Copano Energy	Hercules Offshore, Inc.	Pennsylvania
Crosstex Energy Services	Hess Corporation Exploration
& Production	NiSource Inc. Columbia Gas of
Virginia
DCP Midstream, LLC	HighMount Exploration &
Production LLC	NiSource Inc. NiSource Energy
DPL Inc.	Hilcorp Energy Company	Technologies
DTE Energy	Hilcorp Energy Company	NiSource Inc. NiSource Gas
Davis Petroleum Corp.	Harvest Pipeline Company	Transmission & Storage
Det Norske Veritas USA	Holly Corporation	NiSource Inc. Northern Indiana
Devon Energy	Holly Corporation Asphalt
Company	Fuel & Light
Dominion Resources, Inc.	Holly Corporation Logistic
Services	NiSource Inc. Northern Indiana
Public
Dominion Resources, Inc.	Holly Corporation Navajo
Refining	Service Company
Dominion Energy	Company	NiSource Inc. Transmission
Corporation
Dominion Resources, Inc.	Holly Corporation Refining and
Marketing	Nippon Oil Exploration USA Ltd.
Dominion Generation	Woods Cross	Noble Corporation
Dominion Resources, Inc.	Holly Refining and Marketing
Tulsa LLC	Noble Corporation Noble
Drilling
Dominion Virginia Power	Hunt Consolidated Hunt Oil
Company	Services, Inc.
Dresser-Rand Group Inc.	Husky Energy Inc.	Noble Energy, Inc.
Dresser-Rand Group Inc.	ION Geophysical Corporation	OGE Energy Corporation
Dresser-Rand New Equipment	J-W Operating Company	ONEOK, Inc.
Dresser-Rand Group, Inc.	J-W Operating Company	ONEOK, Inc. Kansas Gas Service
Division
Dresser-Rand Product Services	Cohort Energy Company	ONEOK, Inc. ONEOK Energy
Dresser-Rand Group, Inc. NAO	J-W Operating Company	Services Company
DynMcDermott Petroleum	J-W Gathering Company	ONEOK, Inc. ONEOK Partners
Operations Company

A-6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| ONEOK, Inc. Oklahoma Natural | Superior Energy Services, Inc.
LLC | Albemarle Corporation |
| --- | --- | --- |
| Gas Division | Superior Natural Gas Corporation | Alcoa, Inc. |
| ONEOK, Inc. Texas Gas Services
Division | TAQA New World Inc. | Alfa Laval, Inc. |
| Occidental Petroleum Corporation
| TAQA North USA | Allegheny County Sanitary
Authority |
| Thums Long Beach Company | TGS-NOPEC Geophysical Company | Allegheny Energy, Inc. |
| Oceaneering International, Inc. | Talisman Energy Inc. US | Allegheny Technologies, Inc. |
| Oceaneering International, Inc.
Americas | Tecpetrol Corporation | Allegiance Health |
| Oceaneering International, Inc.
Inspection | Tellus Operating Group, LLC | Allergan, Inc. |
| Oceaneering International, Inc.
Multiflex | Tesco Corporation | Allete, Inc. |
| Oceaneering International, Inc.
OIE | The Williams Companies, Inc. | Alliance Data Systems Corporation |
| PD Holdings Company | ThermaSource, Inc. | Alliance Defense Fund |
| PJM Interconnection | ThermaSource, Inc. | Alliance Residential LLC |
| PSNC Energy | ThermsSource Cementing | Alliant Energy Corporation |
| Parallel Petroleum LLC | TransCanada Corporation | Allstate Corporation |
| Parker Drilling Company | TransCanada Corporation | Ally Financial, Inc. |
| Pason Systems USA Corp. | US Pipeline Central | Alpha Natural Resources, Inc. |
| Pepco Holdings, Inc. | Transocean, Inc. | ALSAC St. Jude |
| Petroleum Development Corporation | Unit Corporation | Amazon.com, Inc. |
| Pioneer Drilling Company | Unit Corporation | Ambac Financial Group |
| Pioneer Natural Resources USA,
Inc. | Superior Pipeline Company, LLC | Ambius |
| Plains Exploration &
Production Company | Unit Corporation Unit Drilling
Company | Ameren Corporation |
| Pride International | Unit Corporation Unit Petroleum
Company | American Cancer Society, Inc. |
| Puget Sound Energy | Venoco, Inc. | American Commercial Lines, Inc. |
| Questar Corporation | Verado Energy, Inc. | American Dehydrated Foods, Inc. |
| Questar Corporation QEP
Resources | WGL Holdings, Inc. Washington
Gas | American Eagle Outfitters, Inc. |
| Quicksilver Resources Inc. | XTO Energy, Inc. | American Electric Power Company |
| R. Lacy, Inc. R. Lacy Services,
Ltd. | Xcel Energy Inc. | American Express Company |
| RAM Energy Resources, Inc. | | American Family Insurance |
| RKI Exploration & Production,
LLC | Towers Watson
2010/2011 | American Greetings Corporation |
| Range Resources Corp. | Top Management | American International Group,
Inc. |
| Regency Energy Partners LP | Compensation
Survey | American National Insurance |
| Repsol Services Company | | American Tire Distributors
Holdings, |
| Resolute Natural Resources
Company, LLC | | American Tower Corporation |
| Rosewood Resources, Inc. | 3M Company | American University |
| Rosewood Resources, Inc.
Advanced | 84 Lumber Company | American Water |
| Drilling Technologies | A. O. Smith Corporation | AMERIGROUP Corporation |
| Rowan Companies, Inc. | AAA | AmeriPride Services, Inc. |
| SCANA Corporation | AAR Corporation | Ameriprise Financial, Inc. |
| SCANA Corporation Carolina Gas | Aarons, Inc. | AmerisourceBergen Corporation |
| Transmission Corporation | Abbott Laboratories | Ameristar Casinos |
| SCANA Corporation SC Electric
& Gas | Abercrombie & Fitch | Ames True Temper |
| SandRidge Energy, Inc. | ABM Industries, Inc. | AMETEK, Inc. |
| Schlumberger Limited | Accident Fund Insurance Company
of | AMETEK, Inc./Advanced Measurement |
| Science Applications
International | America | Technologies |
| Corporation (SAIC) | Accor North America | Amgen, Inc. |
| Seawell Americas, Inc. | Acme Industries | Amica Mutual Insurance Company |
| SemGroup Corporation | The Actors Fund of America | Amkor Technology, Inc. |
| SemGroup Corporation SemCrude | Acuity | Amphenol Corporation |
| SemGroup Corporation SemGas | Acuity Brands, Inc. | AMR Corporation |
| SemGroup Corporation SemStream | ACUMED LLC | Anadarko Petroleum Corporation |
| Seneca Resources Corporation | Administaff, Inc. | Analog Devices |
| Seneca Resources Corporation
Bakersfield | Adobe Systems, Inc. | Anchor Bank NA |
| Seneca Resources Corporation
Williamsville | ADTRAN Incorporated | Andersen Corporation |
| Smith International | Advance Auto Parts, Inc. | Andersons, Inc. |
| SourceGas LLC | Advanced Micro Devices | Anixter International, Inc. |
| Southern Company | AECOM Technology Corporation | Annaly Capital Management |
| Southern Company | Aegon USA | AnnTaylor Stores Corporation |
| Alabama Power Company | Aeronix, Inc. | AOC LLC |
| Southern Company Georgia Power | Aeropostale, Inc. | Aon Corporation |
| Southern Company Gulf Power
Company | AES Corporation | Apache Corporation |
| Southern Company | Aetna, Inc. | Apollo Group |
| Mississippi Power Company | Affinia Group Intermediate
Holdings, Inc. | Apple, Inc. |
| Southern Union Company | AFLAC Incorporated | Applied Materials, Inc. |
| Southern Union Company | AFP, Inc. | AptarGroup, Inc. |
| Missouri Gas Energy | AGCO Corporation | ARAMARK Corporation |
| Southern Union Company | Agilent Technologies, Inc. | Arch Coal, Inc. |
| New England Gas | Agilysys, Inc. | Archstone |
| Southern Union Company | AGL Resources, Inc. | Armed Forces Insurance |
| Panhandle Energy | AgriBank, FCB | Armstrong World Industries |
| Southern Union Company | Air Products & Chemicals,
Inc. | Arrow Electronics, Inc. |
| Southern Union Gas Services | AirTran Holdings, Inc. | ArvinMeritor, Inc. |
| Southwestern Energy Company | Aker Solutions | Asahi Kasei Plastics NA, Inc. |
| Sprague Energy Corp. | AKSteel Holding Corporation | Asbury Automotive Group, Inc. |
| Stantec Inc. | Alaska Air Group, Inc. | Ascent Media Group |

MDU Resources Group, Inc. Proxy Statement A-7

Proxy Statement

ASCO Valve	Boeing Company	ConnectiCare Capital LLC
Ash Grove Cement Company	Boise Cascade Holdings LLC	Conocophillips
Ashland, Inc.	Boise, Inc.	Consol Energy, Inc.
Asset Marketing Service, Inc.	Bon-Ton Stores, Inc.	Consolidated Edison, Inc.
Assurant, Inc.	Borders Group, Inc.	Constellation Energy
Asurion Corporation	Borg Warner	Continental Airlines, Inc.
AT&T, Inc.	Bosch Packaging Services	Continental Data Graphics
Atlas Energy, Inc.	Bosch Rexroth Corporation	Convergys Corporation
Atmos Energy Corporation	Boston Scientific Corporation	Con-Way
Aurora Healthcare	Boy Scouts of America	Cook Communications Ministries
The Auto Club Group	Boyd Gaming Corporate	Cooper Tire & Rubber Company
Autodesk, Inc.	Bradley Corporation	Cooper-Standard Holdings, Inc.
Autoliv, Inc.	Brady Corporation	CooperVision, Inc.
Automobile Club of Southern
California	Bridgepoint Education	Core Mark Holding Company, Inc.
AutoNation, Inc.	Briggs & Stratton Corporation	Corinthian Colleges
AutoZone, Inc.	Brightpoint, Inc.	Corn Products International, Inc.
Avery Dennison Corporation	Brinks Company	Cornell University
Avis Budget Group	Bristol-Myers Squibb Company	Corning, Inc.
Avista Corporation	Broadcom Corporation	Correctional Medical Services
Avon Products, Inc.	Broadlane, Inc.	Corrections Corporation of
America
Axsys	Broadridge Financial Solutions	Costco Wholesale Corporation
B Braun Medical, Inc.	Brocade Communications Systems	Country Insurance & Financial
B/E Aerospace, Inc.	Brookdale Senior Living	Country of Spotsylvania
Babson College	Brown Shoe Company, Inc.	Covance, Inc.
Baker Hughes, Inc.	Brownells, Inc.	Covanta Holding Corporation
Baldor Electric Company	Brown-Forman Corporation	Coventry Health Care, Inc.
Ball Corporation	Brunswick Corporation	CPS Energy
Bank of America Corporation	Bryant University	Cracker Barrel Old Country Store,
Inc.
Bank of New York Mellon
Corporation	BSSI	Crane Company
Baptist Health	Bucyrus International, Inc.	Crosstex Energy, Inc.
Barilla America, Inc.	Buffets, Inc.	Crown Castle International
Corporation
Barloworld Handling	Burger King Holdings, Inc.	CSX Corporation
Basler Electric Company	C H Robinson Worldwide, Inc.	CTS Corporation
Baxter International, Inc.	C.R. Bard, Inc.	Cultural Institute Retirement
System
Baylor College of Medicine	Cabelas, Inc.	Cummins, Inc.
Baylor Health Care System	Cablevision Systems Corporation	CUNA Mutual Group
BB&T Corporation	Cabot Corporation	Curtiss Wright Corporation
Beacon Roofing Supply, Inc.	Caci International, Inc.	CVREnergy, Inc.
Bechtel Systems &
Infrastructure, Inc.	Caelum Research Corporation	CVS Caremark
Beckman Coulter, Inc.	California Casualty Management
Company	Cytec Industries, Inc.
Becton Dickinson & Company	California Dental Association	D R Horton, Inc.
Belk, Inc.	Calpine Corporation	Daimler Financial Services
Bemis Company, Inc.	Calumet Specialty Products
Partners LP	Dallas County
Bemis Manufacturing Company	Cameron International Corporation	Dal-Tile, Inc.
Benchmark Electronics, Inc.	Campbell Soup Company	Dana Holding Corporation
The Bergquist Company	Career Education Corporation	Danaher Corporation
Berkshire Hathaway	Carhartt, Inc.	Data Center, Inc.
Berry Plastics Corporation	CaridianBCT, Inc.	DaVita, Inc.
Berwick Offray LLC	Carlisle Cos, Inc.	Dean Foods Company
Best Buy Company, Inc.	Carlson Companies, Inc.	The Decurion Corporation
Big Lots, Inc.	CarMax	Deere & Company
Bimbo Bakeries USA	Carpenter Technology Corporation	Dekalb Regional Healthcare
Systems
Biodynamic Research Corporation	Carter	Delta Air Lines, Inc.
Biogen Idec, Inc.	Carters, Inc.	Delta Dental Plan of Michigan
Biomet	Catalyst Health Solutions	Deluxe Corporation
Bio-Rad Laboratories, Inc.	Caterpillar, Inc.	Dennys, Inc.
BJ Services Company	CB Richard Ellis	Denso International America
BJs Wholesale Club, Inc.	CBS Corporation	DENTSPLY International, Inc.
Black Hills Corporation	CC Media Holdings, Inc.	DePaul University
Blackrock, Inc.	CDM	Devon Energy Corporation
Blackstone Group LP	CEC Entertainment, Inc.	Dex One Corporation
Blockbuster, Inc.	CEI	DFW International Airport
Blue Cross Northeastern
Pennsylvania	Celanese Corporation	Dicks Sporting Goods, Inc.
Blue Cross of Idaho Health
Service, Inc.	Celgard, Inc.	Dickstein Shapiro LLP
BlueCross BlueShield of Arizona	Celgene Corporation	Diebold, Inc.
BlueCross BlueShield of Delaware	CEMEX, Inc.	Dillards, Inc.
BlueCross BlueShield of Louisiana	Centene Corporation	DIRECTV
BlueCross BlueShield of Nebraska	Comcast Corporation	Discover Financial Services, Inc.
BlueCross BlueShield of South
Carolina	Comerica, Inc.	Discovery Communications, Inc.
BlueCross BlueShield of Tennessee	Commercial Metals	DISH Network
Bluelinx Holdings, Inc.	CommScope, Inc.	Diversey, Inc.
BMW Manufacturing Corporation	Community Coffee Company LLC	Doherty Employer Services
Board of Governors of the	Community Health Systems, Inc.	Dole Food Company, Inc.
Federal Reserve System	The Community Preservation
Corporation	Dollar General Corporation
The Body Shop	Computer Task Group	Dollar Thrifty Automotive Group

A-8 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Dominion Resources, Inc.	Federal Reserve Bank of Chicago	Gilbarco, Inc.
Donaldson Company, Inc.	Federal Reserve Bank of Cleveland	Gilead Sciences, Inc.
Dover Corporation	Federal Reserve Bank of Dallas	Glatfelter Company
Dow Chemical	Federal Reserve Bank of Kansas
City	The Gleason Works
DPL, Inc.	Federal Reserve Bank of
Minneapolis	Global Partners LP
Dr. Pepper Snapple Group, Inc.	Federal Reserve Bank of
Philadelphia	GOJO Industries, Inc.
Dresser-Rand Group, Inc.	Federal Reserve Bank of San
Francisco	Gold Eagle Company
DST Systems, Inc.	Federal Reserve Bank of St. Louis	Goldman Sachs Group, Inc.
DTE Energy	FedEx Express	Goodman Manufacturing
Duane Reade Holdings, Inc.	FedEx Ground	Goodrich Corporation
Duke Energy Corporation	FedEx Office	Goodyear Tire & Rubber
Company
Duke Realty Corporation	Fender Musical Instruments	Google, Inc.
Duke University & Health
System	Ferguson Enterprises	Graco, Inc.
Dun & Bradstreet Corporation	Fermi National Accelerator
Laboratory	Graham Packaging Company, Inc.
DuPont	FerrellGas, Inc.	Grande Cheese Company
Dupont Fabros Technology	Ferro Corporation	Grange Mutual Insurance Company
Dyn McDermott	Fiberweb	Granite Construction, Inc.
Dynegy, Inc.	Fidelity National Financial	Graphic Packaging Holding Company
E TRADE Financial Corporation	Fidelity National Information
Services	Graybar Electric Company, Inc.
Early Warning Services	Fifth Third Bancorp	Great American Insurance/Great
Eastman Chemical Company	The First American Corporation	American Financial
Eastman Kodak Company	First Bank	Great Plains Energy, Inc.
Eaton Corporation	First Citizens Bank	Greenheck Fan Corporation
eBay, Inc.	First Horizon National
Corporation	Greif, Inc.
Echostar Corporation	First Solar, Inc.	Greyhound Lines, Inc.
Ecolab, Inc.	FirstEnergy Corporation	Grinnell Mutual Reinsurance
Company
Edison Mission Energy	Fiserv, Inc.	Group 1 Automotive, Inc.
Edward Jones & Company	Fleetwood Group	Grow Financial Federal Credit
Union
Edwards Lifesciences	Flexcon Company, Inc.	Growmark, Inc.
Einstein Noah Restaurant Group	Flexible Steel Lacing Company	GTECH Corporation
El Paso Corporation	Florida Power & Light Company	GuideStone Financial Resources
Electrolux Homecare of North
America	Flowers Foods, Inc.	Habitat for Humanity
International
Eli Lilly & Company	Flowserve Corporation	Halliburton Company
Elizabeth Arden, Inc.	Fluor Corporation	Hancock Holdings Company
EMC Corporation	FMC Corporation	Hanesbrands, Inc.
EMCOR Group, Inc.	FMC Technologies, Inc.	Hannaford Bros. Company
Emerson Climate Technologies,
Inc.	Follett Corporation	Hanover Insurance Group, Inc.
Emerson Electric	Foot Locker, Inc.	Hapag-Lloyd (America), Inc.
Enbridge Energy Partners LP	Ford Motor Company	Harley Davidson Motor Company
Energizer Holdings, Inc.	Fortune Brands	Harman International Industries
Energy Enterprise Solutions LLC	Fossil, Inc.	Harrahs Entertainment, Inc.
Energy Future Holdings	Foster Poultry Farms	Harris County Hospital District
Energy Transfer Equity LP	Foundation for California	Harsco Corporation
EnergySolutions, Inc.	Community Colleges	Hartford Financial Services
Enpro Industries (Fairbanks Morse
Engine)	Franklin Resources, Inc.	Harvard Vanguard Medical Associates
Entergy Corporation	Franklin W. Olin College of
Engineering	Harvey Industries
Enterprise GP Holdings LP	Freeman Dallas Corporate Office	Hasbro, Inc.
EOG Resources, Inc.	Freeport-McMoRan Copper &
Gold, Inc.	Hastings Mutual Insurance Company
EON US LLC	Fremont Group	Hawaiian Electric Industries,
Inc.
Equifax, Inc.	Friendly Ice Cream Corporation	Haynes & Boone LLP
Equity Residential	Froedtert & Community Health	Hayward Industries, Inc.
Erickson Retirement Communities	Frontier Communications
Corporation	Hazelden Foundation
Erie Insurance Group	Frontier Oil Corporation	HCA, Inc.
ESCO Corporation	Funeral Directors Life Insurance
Company	HCC Insurance Holdings, Inc.
ESCO Technologies	G&K Services	HD Supply, Inc.
Esterline Technologies
Corporation	Gallagher Arthur J & Company	HDR, Inc.
Etnyre International, Ltd.	Gannett Company	Health Care Service Corporation
Evraz, Inc.	Gap, Inc.	Health Management Association
Exel, Inc.	Gardner Denver, Inc.	Health Net
Exelon Corporation	Gas Technology Institute	Health Partners
Exempla Health Care, Inc.	Gaylord Entertainment	Health Plus of Michigan
Exide Technologies	General Cable Corporation	HealthNow New York
Expedia, Inc.	General Dynamics Corporation	HealthSouth Corporation
Express Scripts, Inc.	General Dynamics Information
Technology	HealthSpring, Inc.
Exterran Holdings, Inc.	General Electric Company	Heartland Food Corporation
Extra Space Storage	General Nutrition, Inc.	Heartland Payment Systems, Inc.
Exxon Mobil Corporation	Genesis Energy	Heat Transfer Research, Inc.
FAIR Plan Insurance Placement	Gentiva Health Services	Helmerich & Payne, Inc.
Facility of Pennsylvania	Genuine Parts Company	Hendrick Medical Center
Fairfield Manufacturing	Genworth Financial, Inc.	Hendrickson International
Family Dollar Stores	Genzyme Corporation	Henry Ford Health System
Fannie Mae	Georg Fischer Signet LLC	Hercules Offshore
Farmland Foods, Inc.	Georgia Gulf Corporation	Herman Miller, Inc.
Fastenal Company	Georgia Institute of Technology	Hershey Company
Federal Reserve Bank of Boston	Gerdau Ameristeel	Hertz Global Holdings, Inc.

MDU Resources Group, Inc. Proxy Statement A-9

Proxy Statement

Hess Corporation	ITT Corporation	Legal & General America
Hewitt Associates, Inc.	ITT Industries AES	Leggett & Platt, Inc.
Hewlett-Packard Company	J J Keller & Associates, Inc.	Lender Processing Services
Hexion Specialty Chemicals, Inc.	J R Simplot Company	Lennar Corporation
High Industries, Inc.	J&J Worldwide Services	Lennox International, Inc.
Highmark, Inc.	J.C. Penney Company	Level 3 Communications, Inc.
Hill Phoenix	Jabil Circuit, Inc.	Levi Strauss & Company
Hilti, Inc.	Jack In The Box, Inc.	Lexmark International, Inc.
Hitachi America, Ltd.	Jacobs Engineering Group, Inc.	Liberty Global, Inc.
HNI Corporation	Jacobs Technology, Inc.	Liberty Media Corporation
HNTB Corporation	James Hardie Building Products	Lieberman Research Worldwide
Holden Industries, Inc.	Jarden Corporation	Life Technologies Corporation
Holly Corporation	JB Hunt Transport Services, Inc.	Lifepoint Hospitals, Inc.
Hologic, Inc.	Jet Blue Airways	Limited Brands
Home Depot, Inc.	JM Family Enterprises	Lincare Holdings, Inc.
Home Shopping Network	Jo-Ann Stores, Inc.	Lincoln Electric Holdings, Inc.
Honeywell International, Inc.	John Crane, Inc.	Lincoln National Corporation
Horizon Blue Cross Blue Shield	John Wiley & Sons, Inc.	Lithia Motors, Inc.
Hormel Foods Corporation	Johns Hopkins University	Littelfuse, Inc.
Hospira, Inc.	Johnson & Johnson	Little Lady Foods
Host Hotels & Resorts, Inc.	Johnson Controls, Inc.	Live Nation Entertainment, Inc.
Hostess Brands	Johnson Financial Group	Liz Claiborne
Hot Topic, Inc.	Jones Apparel Group, Inc.	LKQ Corporation
Hubbell, Inc.	Jones Financial Companies LLLP	Lockheed Martin Corporation
Hudson City Bancorp, Inc.	Jones Lang LaSalle	Loews Corporation
Hu-Friedy Manufacturing Company,
Inc.	Jostens, Inc.	Lorillard, Inc.
Humana, Inc.	Joy Global, Inc.	Los Angeles Unified School
District
Hunter Industries	JPMorgan Chase & Company	Louisiana Pacific
Huntington Bancshares	Judicial Council of California	Lowes Companies, Inc.
Huntsman Corporation	Juniper Networks, Inc.	Lower Colorado River Authority
Huron Consulting Group	K Hovnanian Companies LLC	Lozier Corporation
Hutchinson Technology
Incorporated	Kalsec, Inc.	LPL Investment Holdings, Inc.
Hyatt Hotels Corporation	Kansas Farm Bureau	LSG Sky Chefs
Hyundai Motor Manufacturing of
Alabama	KAR Auction Services, Inc.	LSI Corporation
IAC/Interactivecorp	Katun Corporation	Lubrizol Corporation
Icahn Enterprises LP	KB Home	Lufthansa AirPlus Servicekarten
GmbH
IDEX Corporation	KBR, Inc.	Luther Midelfort-Mayo Health
System
IDEXX Laboratories, Inc.	Keihin North America	Lutron Electronics
IDT Corporation	Kellogg Company	Luxottica Retail
IKON Office Solutions	Kelly Services, Inc.	M & F Worldwide Corporation
Illinois Tool Works, Inc.	Kettering University	M & T Bank Corporation
Imation Corporation	Kewaunee Scientific Corporation	Macys, Inc.
IMS Health, Inc.	Keycorp	Magellan Health Services
Indiana Farm Bureau Insurance	Keystone Automotive Industries	Magna Seating Systems Engineering
Inergy Holdings LP	Keystone Foods Corporation	Malco Products, Inc.
Information Management Service	KI, Inc.	Malt-O-Meal
Ingersoll Rand	Kimberly-Clark Corporation	Manitowoc Company
Ingles Markets, Inc.	Kimley-Horn and Associates, Inc.	MANN+HUMMEL USA, Inc.
Ingram Industries, Inc.	Kinder Morgan Energy	Manpower International, Inc.
Ingram Micro, Inc.	Kindred Healthcare	Manpower, Inc.
Insight Enterprises, Inc.	Kinetic Concepts, Inc.	ManTech International
In-Sink-Erator	King Pharmaceuticals, Inc.	MAPFRE USA, Corporation
Institute for Defense Analyses	Kingston Technology	Marathon Oil Corporation
Institute of Nuclear Power
Operations	Klein Tools	Maricopa County Office of
Insurance Auto Auctions	Kohler Company	Management & Budget
Integrys Energy Group, Inc.	Kohls Corporation	Maricopa Integrated Health System
Intel Corporation	Komatsu America Corporation	Maritz, Inc.
Interbake Foods, Inc.	Kraft Foods, Inc.	Markel Corporation
InterMetro Industries Corporation	L. L. Bean, Inc.	Market Planning Solutions, Inc.
International Assets Holding
Company	L-3 Communications Holdings, Inc.	Marriott International, Inc.
International Business Machines
Corporation	L-3 Communications, Global
Security &	Mars North America
International Dairy Queen, Inc.	Engineering Solutions	Marsh & McLennan Companies
International Flavors &
Fragrances	La Macchia Enterprises	Marshall & Ilsley Corporation
International Game Technology	Lab Volt Systems	Marshfield Clinic
International Paper Company	Laboratory Corporation of America
Holdings	MARTA
Interpublic Group of Companies	Laclede Group, Inc.	Martin Marietta Materials, Inc.
Intertape Polymer Group	Lake Federal Bank	Mary Kay, Inc.
Intuit, Inc.	Lake Forest Academy	Maryland Department of
Transportation
Invacare Corporation	Lake Region Medical	Masco Corporation
Invensys Controls	Lance, Inc.	Massey Energy Company
Iron Mountain Canada Corporation	Landstar System, Inc.	MasTec, Inc.
The Irvine Company	Lantech.com	Master Halco
Ithaca College	Las Vegas Sands Corporation	Mattel, Inc.
Itochu International, Inc.	Leap Wireless International, Inc.	Maxim Integrated Products, Inc.
Itron, Inc.	Lear Corporation	Mayo Clinic

A-10 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

McAfee, Inc.	Natures Sunshine Products, Inc.	Packaging Corporation of America
McCormick & Company, Inc.	Navistar International
Corporation	Pactiv Corporation
McDonalds Corporation	Navy Exchange Service Command	Pall Corporation
MCG Health, Inc.	NBTY, Inc.	The Pampered Chef
McGraw-Hill Companies	NCCI Holdings, Inc.	Panduit Corporation
McKesson Medical-Surgical	NCR Corporation	Pantry, Inc.
MDU Resources Group, Inc. (WBI
Holdings)	Nebraska Public Power District	Papa Johns International
MeadWestvaco Corporation	Neiman Marcus	Parsons Child & Family Center
Mecklenburg County	Netflix, Inc.	Patterson Companies, Inc.
Medco Health Solutions, Inc.	New Jersey Resources Corporation	PC Connection, Inc.
Media General, Inc.	New York Times Company	Peabody Energy Corporation
Medline Industries	Newell Rubbermaid, Inc.	Pearson Education
Mens Wearhouse, Inc.	Newmont Mining Corporation	Penn National Gaming, Inc.
Mercer University	NewPage Corporation	Penn State Hershey Medical Center
Merck & Company	Nicor Gas	Penske Automotive Group, Inc.
Mercury General Corporation	Nicor, Inc.	Pentair, Inc.
Merit Medical Systems	The Nielsen Company	Pep BoysManny Moe & Jack
MeritCare Health System	NII Holdings, Inc.	Pepco Holdings, Inc.
Merrill Corporation	NiSource Corporate Services	Pepsi Bottling Group, Inc.
The Methodist Hospital	Nissin Foods (USA) Company, Inc.	PepsiCo, Inc.
MetroPCS Communications, Inc.	NJM Insurance Group	Perkinelmer, Inc.
Metropolitan Life Insurance
Company	Noble Energy, Inc.	Petsmart, Inc.
Metropolitan Transit Authority	The Nordam Group	Pfizer, Inc.
Mettler-Toledo International,
Inc.	Nordson Corporation	PG&E Corporation
MFS Investment Management	Nordstrom	Pharmavite LLC
MGIC Investment Corporation	Nordstrom, Inc.	Pharmerica Corporation
MGM Mirage	Norfolk Southern Corporation	PHH Arval
Miami Childrens Hospital	North Carolina State Employees
Credit Union	PHH Corporation
Miami Dade Community College	North Texas Tollway Authority	PHI, Inc.
Michael Baker Corporation	Northeast Utilities	Philip Morris International, Inc.
Michael Foods, Inc.	Northern Trust Corporation	Phillips Van Heusen Corporation
Michaels Stores, Inc.	Northrop Grumman Corporation	Phoenix Companies, Inc.
Micron Technology, Inc.	Northwestern Mutual	Picerne Military Housing
Midwest Research Institute	NovaMed Corporation	Piedmont Natural Gas Company,
Inc.
Mike Albert Leasing, Inc.	NRG Energy, Inc.	Pier 1 Imports
Millennium Inorganic Chemicals	NRUCFC	Pilgrims Pride Corporation
Mine Safety Appliances Company	Nstar	Pinnacle Airlines
Minnesota Management & Budget	Nucor Corporation	Pinnacle Foods Finance LLC
Mirant Corporation	NuStar Energy LP	Pinnacle West Capital Corporation
Mission Foods	NV Energy, Inc.	Pinnacol Assurance
Missouri Department of Conservation	NVIDIA Corporation	Pioneer Natural Resources Company
Missouri Department of
Transportation	NVR, Inc.	Pitney Bowes, Inc.
Mitsubishi International
Corporation	NYSE Euronext	Plains All American Pipeline LP
Mitsubishi Motor Manufacturing	OReilly Automotive, Inc.	Plexus Corporation
MMS Consultants, Inc.	Occidental Petroleum Corporation	PM Company
Mohawk Industries	Oceaneering International	PNC Financial Services Group,
Inc.
Mohegan Sun Casino	Oerlikon Balzers Coating USA,
Inc.	PNM Resources, Inc.
Molex, Inc.	Office Depot, Inc.	Polaris Industries, Inc.
Molina Health Care, Inc.	OfficeMax	Polymer Technologies
Molson Coors Brewing Company	OGE Energy Corporation	Polyone Corporation
Momentive Performance Materials,
Inc.	Ohio Public Employees Retirement
System	Popular, Inc.
Monsanto Company	Ohio State University	Port Authority of Allegheny
County
Moodys Corporation	The Ohio State University Medical
Center	Port of Portland
Moog, Inc.	Ohio University	Portland General Electric Company
Morgan Stanley	OHL	Poudre Valley Health Systems
Motorola, Inc.	Oil States International, Inc.	PPG Industries, Inc.
MTA Long Island Bus	Oil-Dri Corporation of America	PPL Corporation
MTD Products, Inc.	Old Dominion Electric Cooperative	Praxair, Inc.
MTS System Corporation	Old Republic Companies	Preformed Line Products Company
Mueller Industries, Inc.	Omnicare, Inc.	Premera Blue Cross
Murphy Oil Corporation	Omnicom Group	Priceline.com, Inc.
Mutual of Enumclaw Insurance
Company	Omnova Solutions, Inc.	Pride International, Inc.
Mutual of Omaha	ON Semiconductor Corporation	Prince William Health System
Mylan, Inc.	ONEOK, Inc.	Principal Financial Group, Inc.
NACCO Industries, Inc.	The Oppenheimer Group	Probuild Holdings, Inc.
Nalco Holding Company	Orange County Government	Progress Energy, Inc.
NASDAQ OMX Group, Inc.	Orbital Science Corporation	Progressive Corporation
Nash Finch Company	Oregon State Lottery	Project Management Institute
National Academies	Oshkosh Corporation	Property Casualty Insurers
Association
National Fuel Gas Company	Owens & Minor, Inc.	of America
National Futures Association	Owens Corning	Protective Life Corporation
National Interstate Insurance
Company	Owens-Illinois, Inc.	Prudential Financial, Inc.
National Oilwell Varco, Inc.	Oxford Industries	Psion Teklogix, Inc.
National Safety Council	PACCAR, Inc.	Psychiatric Solutions, Inc.
National Tobacco Company	Pacer International, Inc.	Public Service Enterprise Group,
Inc.

MDU Resources Group, Inc. Proxy Statement A-11

Proxy Statement

Public Storage	SAIC, Inc.	Sonoco Products Company
Public Utility District #1 of
Chelan County	Saks, Inc.	Source Interlink Companies, Inc.
Publix Super Markets, Inc.	Sakura Finetek USA, Inc.	South Jersey Gas Company
Puget Energy, Inc.	Salk Institute	Southco, Inc.
Pultegroup, Inc.	Sally Beauty Holdings, Inc.	Southeastern Freight Lines
QSC Audio Products, Inc.	Salt River Project	Southern Company
QTI Human Resources	Samuel Roberts Noble Foundation	Southern Poverty Law Center
Qualcomm, Inc.	San Antonio Water System	Southern Union Company
Quality Bicycle Products	San Manuel Band of Mission
Indians	Southwest Airlines
Quanta Services, Inc.	Sanderson Farms, Inc.	Southwest Gas Corporation
Quest Diagnostics Incorporated	Sandisk Corporation	Southwestern Energy Company
Questar Corporation	Sanmina-Sci Corporation	Space Dynamics Lab
Quiksilver, Inc.	SAS Institute, Inc.	Space Telescope Science Institute
Qwest Communications International,
Inc.	Sauer-Danfoss, Inc.	Spectra Energy Corporation
R L I Insurance Company	Savannah River Nuclear Solutions
LLC	Spectrum Brands, Inc.
R L Polk & Company	Save Mart	Spectrum Group International,
Inc.
Radio One	SCANA Corporation	Spectrum Health Downtown
Radioshack Corporation	Scansource, Inc.	Sprint Nextel Corporation
Ralcorp Holdings, Inc.	SCF Arizona	SPX Corporation
The Raymond Corporation	Schaumburg Township District
Library	St. Cloud Hospital
Raymond James Financial	Schein Henry, Inc.	St. John Health System
Raytheon Company	Schneider Electric	St. Jude Childrens Research
Hospital
REA Magnet Wire Company, Inc.	Schneider National, Inc.	St. Jude Medical, Inc.
Realogy Corporation	Schnitzer Steel Industries	St. Louis County Government
Recology	Schwan Food Company	St. Lukes Episcopal Health
System
Red Wing Shoe Company	Scientific Research Corporation	St. Marys at Amsterdam
Redcats USA	The Scooter Store	St. Vincent Hospital
Regal Entertainment Group	Scott & White Hospital	Stampin Up!
Regal-Beloit	Scotts Miracle-Gro Company	Stancorp Financial Group, Inc.
The Regence Group	Scripps Networks Interactive,
Inc.	Standard Motor Products, Inc.
Regency Centers Corporation	Seaboard Corporation	Stanley Black & Decker, Inc.
Regions Financial Corporation	Seacoast National Bank	Staples, Inc.
Reinsurance Group of America	Seacor Holdings, Inc.	Starbucks Corporation
Reliance Steel & Aluminum
Company	Sealed Air Corporation	Starwood Hotels & Resorts
Worldwide
Remington Arms Company, Inc.	Sealy, Inc.	State Corporation Commission
Renaissance Learning, Inc.	Seaman Corporation	State of Oregon
Renown Health	Sears Holdings Corporation	State Personnel Administration
Rent-A-Center, Inc.	Seco Tools, Inc.	State Street Corporation
Republic Services, Inc.	Select Medical Holdings
Corporation	Stater Bros. Holdings, Inc.
Res-Care, Inc.	Selective Insurance Group, Inc.	Steel Dynamics, Inc.
Rexel, Inc.	SEMCO Energy	Steel Technologies-Corporate
Reynolds American, Inc.	SemGroup Corporation	Steelcase, Inc.
Rice University	Sempra Energy	Stepan Company
RiceTec, Inc.	Sentara Healthcare	Sterilite Corporation
Rich Products Corporation	Sentry Group	STERIS
Richco	Sentry Insurance	Sterling Bank
Ricoh Electronics, Inc.	Serco, Inc.	Stewart & Stevenson
Rite Hite Holding Corporation	Service Corporation International	Stewart Information Services
Robert Bosch LLC	The ServiceMaster Company	Stonyfield Farm, Inc.
Robert Bosch Tool Corporation	Seventh Generation	Stryker Corporation
Robert Half International, Inc.	SFN Group, Inc.	Subuaru of Indiana Automotive,
Inc.
Roche Diagnostics	Shands HealthCare	Sulzer Pumps US, Inc.
Rock-Tenn Company	Sharp Electronics Corporation	Sun Healthcare Group, Inc.
Rockwell Automation	Shaw Group, Inc.	Sun Microsystems, Inc.
Rockwell Collins, Inc.	Sherwin-Williams Company	Suncoast Schools Federal Credit
Union
Rockwood Holdings, Inc.	Sigma Aldrich	Sungard Data Systems, Inc.
Rollins, Inc.	Sigma-Aldrich Corporation	Sunoco, Inc.
Roper Industries	Silgan Holdings, Inc.	Sunrise Senior Living, Inc.
Roper Industries, Inc.	Simmons Bedding Company	Sunstar Americas
Ross Stores, Inc.	Simon Property Group, Inc.	Suntrust Banks, Inc.
Rowan Companies, Inc.	Sirius XM Radio, Inc.	Supermedia, Inc.
Royal Bank of Canada	Sitel	SuperValue
Royal Caribbean Cruise Line	SJE-Rhombus	Susser Holdings Corporation
RR Donnelley & Sons Company	Skywest, Inc.	Sutter Health
RRI Energy	SLM Corporation	Swiss Reinsurance
RSC Equipment Rental	Smead Manufacturing Company	Sykes Enterprises
RSM McGladrey	SMSC Gaming Enterprise	Symetra Financial Corporation
Ruddick Corporation	Smurfit-Stone Container
Corporation	SYNNEX Corporation
Ryder System, Inc.	Snap-On, Inc.	Synovate
The Ryland Group	Snyders of Hanover	Synovus Financial Corporation
S&C Electric Company	Solae LLC	Synthes
Safety-Kleen Systems, Inc.	Sole Technology, Inc.	SYSCO Corporation
Safeway, Inc.	Solo Cup Company	Systemax, Inc.
Safilo USA	Solutia, Inc.	T. Rowe Price Group
SAGE Publications	Sonic Automotive, Inc.	Targa Resources Partners LP

A-12 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Target Corporation	Unilife Corporation	Virgin Media, Inc.
Tastefully Simple	Union Pacific Corporation	Visa, Inc.
The Taubman Company	Unisys Corporation	Vishay Intertechnology, Inc.
Taylor Corporation	United HealthCare Group	Visiting Nurse Association of the
Inland
TD Ameritrade Holding Corporation	United Natural Foods, Inc.	Counties
TDS Telecom Corporation	United Parcel Service, Inc.	Visiting Nurse Service of New
York
Team Health Holdings, Inc.	United Refining Company	Visteon Corporation
Tech Data Corporation	United Rentals, Inc.	Volvo Group North America
TECO Energy, Inc.	United States Steel Corporation	Vornado Realty Trust
Tecolote Research, Inc.	United Stationers, Inc.	Vought Aircraft Industries, Inc.
TelAlaska, Inc.	United Technologies Corporation	Vulcan Materials Company
Tele-Consultants, Inc.	United Way for Southeastern
Michigan	W C Bradley Company
Teledyne Technologies, Inc.	Unitrin, Inc.	W R Grace & Company
Teleflex	Universal American Corporation	W.R. Berkley Corporation
Telephone & Data Systems,
Inc.	Universal Forest Prods, Inc.	W.W. Grainger, Inc.
Tellabs Operations, Inc.	Universal Health Services	Wackenhut Services, Inc.
Temple-Inland, Inc.	Universal Orlando	Wake County Government
Tenaris, Inc.	University of Alabama at
Birmingham	Walgreen Company
Tenet Healthcare Corporation	University of Arkansas for
Medical Science	Wal-Mart Stores, Inc.
Tenneco, Inc.	The University of Chicago	Walt Disney Company
Teradata Corporation	University of Georgia	Walter Energy
Terex Corporation	University of Houston	Warnaco Group, Inc.
Terra Industries, Inc.	University of Kansas Hospital	Warner Music Group Corporation
Tescom Corporation	University of Louisville	Washington Post
Tesoro Corporation	University of Maryland Medical
Center	Washington Suburban Sanitary
Commission
Tetra Tech, Inc.	University of Miami	Washington University in St.
Louis
Texas County & District
Retirement System	University of Michigan	Waste Industries, Inc.
Texas Industries, Inc.	University of Minnesota	Waste Management, Inc.
Texas Instruments, Inc.	University of Nebraska-Lincoln	Watsco, Inc.
Texas Mutual Insurance Company	University of Notre Dame	Watson Pharmaceuticals, Inc.
Textron, Inc.	University of Pennsylvania	Wawa, Inc.
Thermo Fisher Scientific, Inc.	University of Rochester	Wayne Memorial Hospital
Thomas & Betts Corporation	University of South Florida	Wellcare Health Plans
TI Group Automotive Systems LLC	University of St. Thomas	Wellmark BlueCross BlueShield
Tiffany & Co.	University of Texas at Austin	Wellpoint, Inc.
The Timberland Company	University of Texas Health
Science Center	Wendys/Arbys Group, Inc.
Time Warner Cable	The University of Texas M.D.
Anderson	Werner Company
Time Warner, Inc.	Cancer Center	Werner Enterprises, Inc.
TIMET	University of Texas Southwestern	WESCO International, Inc.
Timken Company	Medical Center	West Penn Allegheny Health System
TJX Companies, Inc.	University of Wisconsin Medical
Foundation	West Pharmaceutical Services
Toll Brothers, Inc.	University Physicians, Inc.	West Virginia University Hospitals,
Inc.
Torchmark Corporation	Unum Group	Westar Energy, Inc.
The Toro Company	UPS	Western Refining, Inc.
Toys R Us, Inc.	Urban Outfitters, Inc.	Western Southern Financial Group
Tractor Supply Company	URS Corporation	Western Textile Companies
Travelcenters of America LLC	US Airways Group, Inc.	Western Union Company
Travelers Companies, Inc.	US Bancorp	Westfield Group
Travis County	US Foodservices	Westlake Chemical Corporation
Treasure Island Resort &
Casino	US Oncology Holdings, Inc.	Weston Solutions, Inc.
Tremco, Inc.	USAA	Weyerhaeuser Company
Tribune Company	USEC, Inc.	WGL Holdings, Inc.
Tri-Met	USG Corporation	Wheaton Franciscan Healthcare
Trinity Health	Utah Transit Authority	Wheels, Inc.
Trinity Industries	Utica National Insurance	Whirlpool Corporation
Triple-S Management Corporation	Vail Resorts Management Company	Whole Foods Market, Inc.
Triwest Healthcare Alliance	Valassis Communications, Inc.	Wilbur Smith Associates
TruckPro, Inc.	Valero Energy Corporation	The Wilder Foundation
True Value Company	Valhi, Inc.	Williams Companies, Inc.
TRW Automotive Holdings
Corporation	Valmont Industries, Inc.	Williams-Sonoma, Inc.
TSYS	Van Andel Institute	Wilmer Hale
Tufts Health Plan	Vangent, Inc.	Wilsonart International
Tupperware Corporation	Varian Medical Systems, Inc.	Windstream Communications
Turner Broadcasting System, Inc.	Vectren Corporation	Winn-Dixie Stores, Inc.
Tutor Perini Corporation	Venetian Resort-Hotel-Casino	Winpak Portion Packaging, Ltd.
Tyco Electronics	Ventura Foods LLC	Wisconsin Energy Corporation
Tyson Foods, Inc.	Venturedyne, Ltd.	Wisconsin Physicians Service
UAL Corporation	Verde Realty	Insurance Corporation
UDR	Verizon Communications, Inc.	Wolverine World Wide, Inc.
UGI Corporation	Vermeer Manufacturing Company	World Fuel Services Corporation
UMB Bank NA	VF Corporation	World Vision International
UMDNJ-University of Medicine
& Dentistry	Via Christi Regional Medical
Center	Worthington Industries
Underwriters Laboratories, Inc.	Viacom, Inc.	Wyle Laboratories
Unified Grocers, Inc.	Viant Health Payment Solutions	Wyndham Worldwide Corporation
Unified Personnel System	Viejas Enterprise	Wynn Resorts, Ltd.

MDU Resources Group, Inc. Proxy Statement A-13

Proxy Statement

Xcel Energy, Inc.
Xerox Corporation
Yahoo, Inc.
Yamaha Corporation of America
Yankee Candle Company
YKK Corporation of America
YSI
Yum Brands, Inc.
Zale Corporation
Zeon Chemicals LP
Zimmer, Inc.
Zions Bancorporation

A-14 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

E XHIBIT B
Companies
Surveyed using Equilar, Inc.
MDU Resources
Group, Inc. President & Chief Executive Officer
Competitive
Analysis to Determine Base Salary, Target Annual Cash Compensation, and Target Total Direct Compensation

AGL Resources Inc. Alliant Energy Corp. Ameren Corp. ARC Resources Ltd. Atmos Energy Corp. Avista Corp. Berry Petroleum Co. Black Hills Corp. Boardwalk Pipeline Partners, LP Chicago Bridge & Iron Co. Cimarex Energy Co. CMS Energy Corp. Comfort Systems USA Inc. Compass Minerals International Inc. Complete Production Services, Inc. Comstock Resources Inc. DCP Midstream Partners, LP Denbury Resources Inc. Diamond Offshore Drilling, Inc. DPL Inc. El Paso Corp. EMCOR Group, Inc. Energen Corp. Energy Transfer Equity, L.P. Enerplus Corp. Ensco plc EOG Resources, Inc. EQT Corp. Foster Wheeler AG Granite Construction Inc. Helix Energy Solutions Group, Inc. Helmerich & Payne, Inc. Integrys Energy Group, Inc. Key Energy Services Inc. Laclede Group, Inc. Layne Christenson Co. MarkWest Energy Partners, L.P. Martin Marietta Materials, Inc. MasTec, Inc. Nabors Industries Ltd. National Fuel Gas Co. New Jersey Resources Corp. Newfield Exploration Co. Nexen Inc. Nicor Inc. NiSource Inc. Noble Corp. Noble Energy Inc. Northwest Natural Gas Co. NorthWestern Corp. NV Energy Inc. Oceaneering International Inc. Patterson UTI Energy Inc. Pengrowth Energy Corp. Penn West Petroleum Ltd. Pepco Holdings, Inc. Petrohawk Energy Corp. Piedmont Natural Gas Co. Inc. Pike Electric Corp. Pioneer Natural Resources Co. Plains Exploration & Production Co. Precision Drilling Corp. Pride International Inc. QEP Resources, Inc. Quanta Services, Inc. Questar Corp. Range Resources Corp. Regency Energy Partners LP Rowan Companies Inc. RPC Inc. SCANA Corp. SM Energy Co. Southern Union Co. Southwest Gas Corp. Southwestern Energy Co. Spectra Energy Corp. Sterling Construction Co. Inc. Superior Energy Services Inc. Swift Energy Co. Talisman Energy Inc. Targa Resources Partners LP Texas Industries Inc. TransCanada Corp. UGI Corp. USEC Inc. Vectren Corp. Vulcan Materials Co. Westar Energy Inc. WGL Holdings, Inc. Whiting Petroleum Corp. Willbros Group, Inc. Wisconsin Energy Corp. Companies Surveyed using Equilar, Inc. MDU Resources Group, Inc. Vice President & Chief Financial Officer Competitive Analysis to Determine Base Salary, Target Annual Cash Compensation, and Target Total Direct Compensation Alliant Energy Corp. Ameren Corp. ARC Resources Ltd. Atmos Energy Corp. Avista Corp. Berry Petroleum Co. BJ Services Co. Black Hills Corp. Chicago Bridge & Iron Co. Cimarex Energy Co. CMS Energy Corp. Comfort Systems USA Inc. Compass Minerals International Inc. Complete Production Services, Inc. Comstock Resources Inc. Denbury Resources Inc. Diamond Offshore Drilling, Inc. DPL Inc. EMCOR Group, Inc. Enerplus Corp. Ensco plc EOG Resources, Inc. EQT Corp. Foster Wheeler AG Granite Construction Inc. Helix Energy Solutions Group, Inc. Helmerich & Payne, Inc. Integrys Energy Group, Inc. Key Energy Services Inc. Layne Christenson Co. MarkWest Energy Partners, L.P. Martin Marietta Materials, Inc. MasTec, Inc. Nabors Industries Ltd. National Fuel Gas Co. Newfield Exploration Co. Nexen Inc. NiSource Inc. Noble Corp. Noble Energy Inc. Northwest Natural Gas Co. NorthWestern Corp. NV Energy Inc. Oceaneering International Inc. Patterson UTI Energy Inc. Pengrowth Energy Corp. Penn West Petroleum Ltd. Pepco Holdings, Inc. Petrohawk Energy Corp. Pike Electric Corp. Pioneer Natural Resources Co. Plains Exploration & Production Co. Precision Drilling Corp Pride International Inc. QEP Resources, Inc. Quanta Services, Inc. Questar Corp. Range Resources Corp. Regency Energy Partners LP Rowan Companies Inc. RPC Inc. SCANA Corp. SM Energy Co. Southern Union Co. Southwest Gas Corp. Southwestern Energy Co. Sterling Construction Co. Inc. Superior Energy Services Inc. Swift Energy Co. Talisman Energy Inc. Texas Industries Inc. UGI Corp. USEC Inc. Vectren Corp. Vulcan Materials Co. Westar Energy Inc. Whiting Petroleum Corp. Willbros Group, Inc. Wisconsin Energy Corp.

MDU Resources Group, Inc. Proxy Statement B-1

Proxy Statement

| Companies
Surveyed using Equilar, Inc. |
| --- |
| Exploration and
Production Segment President & Chief Executive Officer |
| Competitive
Analysis to Determine Base Salary, Target Annual Cash Compensation, and Target Total Direct Compensation |
| Advantage Oil & Gas Ltd. |
| ATP Oil & Gas Corp. |
| Atwood Oceanics Inc. |
| Berry Petroleum Co. |
| Bill Barrett |
| BreitBurn Energy Partners L.P. |
| Cabot Oil & Gas Corp. |
| Cheniere Energy, Inc. |
| Clayton Williams Energy, Inc. |
| Comstock Resources Inc |
| Continental Resources Inc. |
| Eagle Rock Energy Partners L.P. |
| Energy XXI (Bermuda) Ltd. |
| EQT Corp. |
| EXCO Resources Inc. |
| Geokinetics Inc. |
| Global Geophysical Services Inc. |
| Gran Tierra Energy Inc. |
| Hercules Offshore, Inc. |
| Ion Geophysical |
| Linn Energy, LLC |
| Parker Drilling Co. |
| Penn Virginia Corp. |
| Petroleum Development Corp. |
| Pioneer Drilling Co. |
| Rosetta Resources Inc. |
| SM Energy Co. |
| Stone Energy Corp. |
| Swift Energy Co. |
| Vantage Drilling Co. |
| Venoco, Inc. |
| W&T Offshore Inc. |
| Whiting Petroleum Corp. |
| Companies
Surveyed using Equilar, Inc. |
| Pipeline and
Energy Services Segment President & Chief Executive Officer |
| Competitive
Analysis to Determine Base Salary, Target Annual Cash Compensation, |
| and Target Total
Direct Compensation |
| Atlas Pipeline Partners, L.P. |
| Basic Energy Services, Inc. |
| Cal Dive International, Inc. |
| Chesapeake Utilities Corporation |
| Copano Energy, L.L.C. |
| Core Laboratories Inc. |
| Delta Natural Gas Company, Inc. |
| Dune Energy, Inc. |
| Global Industries, Ltd. |
| National Fuel Gas Co. |
| Natural Gas Services Group, Inc. |
| Northwest Natural Gas Co. |
| Questar Corp. |
| RGC Resources, Inc. |
| South Jersey Industries, Inc. |
| Southern Union Co. |
| Western Gas Partners, LP |

B-2 MDU Resources Group, Inc. Proxy Statement

(This page has been left blank intentionally.)

MDU RESOURCES GROUP, INC.

ANNUAL MEETING OF STOCKHOLDERS

Tuesday, April 23, 2013 11:00 a.m. Central Daylight Saving Time 909 Airport Road Bismarck, ND

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

This proxy is solicited on behalf of the Board of Directors for the Annual Meeting of Stockholders on April 23, 2013.

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 23, 2013, 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.

●
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 22, 2013.
(	TELEPHONE –
1-800-560-1965 Use a touch-tone telephone to vote your proxy until
12:00 p.m. (CDT) on Monday, April 22, 2013.
*	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	o	o	o	06.	Thomas C. Knudson	o	o	o
02.	Karen B. Fagg	o	o	o	07.	Patricia L. Moss	o	o	o
03.	David L. Goodin	o	o	o	08.	Harry J. Pearce	o	o	o
04.	A. Bart Holaday	o	o	o	09.	J. Kent Wells	o	o	o
05.	Dennis W. Johnson	o	o	o	10.	John K. Wilson	o	o	o

2.	Ratification of Deloitte & Touche LLP as the company’s independent auditors for 2013.	o	For	o	Against	o	Abstain
3.	Approval, on a non-binding advisory basis, of the compensation of the company’s named executive officers.	o	For	o	Against	o	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: o Date

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

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MDU RESOURCES GROUP INC Proxy Solicitation & Information Statement 2013

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MDU RESOURCES GROUP INC — Proxy Solicitation & Information Statement 2013

31231_psi_2013-03-13_92b0b812-b10f-4928-b8a3-c0678b95c9e7.zip

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MDU RESOURCES GROUP INC Proxy Solicitation & Information Statement 2013