MDU RESOURCES GROUP INC - Proxy Solicitation & Information Statement 2014

DEF 14A 1 mdu140403s1_def14a.htm DEFINITIVE PROXY STATEMENT

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

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o Soliciting Material Pursuant to § 240.14a-12

MDU Resources Group, Inc.

(Name of Registrant as Specified In Its Charter)

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

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●
David L. Goodin President and Chief Executive Officer

| March 12, 2014 |
| --- |
| To Our Stockholders: |
| Please join us for the 2014 Annual Meeting
of Stockholders. The meeting will be held on Tuesday, April 22, 2014, 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 2013 Annual Meeting at which 89.07 percent of the common
stock was represented in person or by proxy. We hope for an even greater
representation at the 2014 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,
2014, 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 22, 2014 |
| Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on April 22, 2014 |
| The
2014 Notice of Annual Meeting and Proxy Statement and 2013 Annual Report to Stockholders are available at www.mdu.com/proxystatement. |

March 12, 2014

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 22, 2014, at 11:00 a.m., Central Daylight Saving Time, for the following purposes:

| (1) | Election of eleven directors nominated by
the board of directors for one-year terms; |
| --- | --- |
| (2) | Ratification of the appointment of Deloitte
& Touche LLP as the companys independent registered public accounting
firm for 2014; |
| (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, 2014, 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, 2014, 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	2
Director Nominees	3
Item 2. Ratification of Independent Registered Public Accounting Firm	10
Accounting and Auditing Matters	11
Item 3. Approval, on a Non-Binding Advisory Basis, of the
Compensation of the Companys Named Executive Officers	12
Executive Compensation	13
Compensation Discussion and Analysis	13
Compensation Committee Report	30
Summary Compensation Table for 2013	31
Grants of Plan-Based Awards in 2013	32
Outstanding Equity Awards at Fiscal Year-End 2013	35
Pension Benefits for 2013	36
Nonqualified Deferred Compensation for 2013	39
Potential Payments upon Termination or Change of Control	40
Director Compensation for 2013	45
Information Concerning Executive Officers	48
Security Ownership	49
Related Person Transaction Disclosure	51
Corporate Governance	51
Section 16(a) Beneficial Ownership Reporting Compliance	58
Conduct of Meeting; Adjournment	58
Other Business	58
Shared Address Stockholders	58
2015 Annual Meeting of Stockholders	58
Exhibit A
Companies that Participated in the Compensation Surveys used by Towers Watson	A-1

MDU Resources Group, Inc. Proxy Statement

Proxy Statement

PROXY STATEME NT

The board of directors of MDU Resources Group, Inc. is furnishing this proxy statement beginning March 12, 2014, to solicit your proxy for use at our annual meeting of stockholders on April 22, 2014, 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 $7,500 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 2014, 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.

VOTING INFORMA TION

Who may vote? You may vote if you owned shares of our common stock at the close of business on February 25, 2014. 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, 2014, we had 189,789,192 shares of common stock outstanding entitled to one vote per share.

What am I voting on? You are voting on:

| | election of eleven directors nominated by
the board of directors for one-year terms |
| --- | --- |
| | ratification of the appointment of Deloitte
& Touche LLP as the companys independent registered public accounting
firm for 2014 |
| | 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 Elec tion 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 Registered Public Accounting Firm for 2014

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

ITEM 1. ELECTION OF DIRECTORS

The board expresses its thanks to Thomas C. Knudson for his service on the board and the compensation committee. Mr. Knudson is not standing for re-election as a director after serving on the board since 2008.

All nominees for director are nominated to serve one-year terms until the annual meeting of stockholders in 2015 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.

Directo r Nominees

●	Director Since 1995
Age 64	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 40 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 26 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 19 years of board experience as
well as extensive knowledge of our business.

MDU Resources Group, Inc. Proxy Statement 3

Proxy Statement

●	Karen B. Fagg	Director Since 2005
	Age 60	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 June 2000, and chairman, chief executive officer, 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. In 2013, she served
on a three-person selection committee appointed by the Attorney General to
identify trustees for the Montana Healthcare Foundation Board. She also
became a board member of the Montana Justice Foundation, whose mission is to
achieve equal access to justice for all Montanans through effective funding
and leadership, and of the First Interstate BancSystem Foundation, which has
a strong commitment to community. She has been a board member of the Billings
Chamber of Commerce since July 2009 and its board chair since July 2013, as
well as a member of the Billings Catholic School Board since December 2011.
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. 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 through 2006, she served on
the ZooMontana Board and as vice chair from 2005 through 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 also has 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 over 20 years of business leadership and management experience,
including over 8 years 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.
●	David L. Goodin	Director Since January 4, 2013
	Age 52	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.

4 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| | 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. | |
| --- | --- | --- |
| | 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 30 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 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
Terry D. Hildestad as our president and chief executive officer in January
2013 was in recognition of the boards belief that he has 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. | |
| ● | Mark A. Hellerstein | Director Since 2013 |
| | Age 61 | Audit Committee |
| | Mr. Hellerstein was chief
executive officer of St. Mary Land & Exploration Company (now SM Energy
Company), an energy company engaged in the acquisition, exploration,
development, and production of crude oil, natural gas, and natural gas
liquids, from 1995 until February 2007; he was president from 1992 until June
1996 and executive vice president and chief financial officer from 1991 until
1992. He was first elected to the board of St. Mary in 1992 and served as
chairman of the board from 2002 until May 2009. Prior to joining St. Mary,
from 1980 to 1991 Mr. Hellersteins career included positions as chief
financial officer of CoCa Mines Inc., which mined and extracted minerals from
lands previously held by the public through the Bureau of Land Management;
American Golf Corporation, which manages golf courses in the United States;
and, Worldwide Energy Corporation, an oil and gas acquisition, exploration,
development, and production company with operations in the United States and
Canada. Mr. Hellerstein served on the board of directors of Transocean Inc.,
a leading provider of offshore drilling services for oil and gas wells, from
December 2006 to November 2007. | |
| | Mr. Hellersteins leadership has
been recognized with induction into the Rocky Mountain Oil and Gas Hall of
Fame, and Ernst & Young named Mr. Hellerstein both Rocky Mountain and
National Entrepreneur of the Year in 2005 and 2006, respectively. He
graduated number one in his class with a bachelors degree in accounting from
the University of Colorado. Mr. Hellerstein is a certified public accountant
(CPA), on inactive status. He received the Elijah Watts Sells Gold Medal
award for achieving the highest score in the United States on the November
1974 CPA exam out of 38,000 participants. Mr. Hellerstein has served on the
board for Community Resources, Inc. since September 2013, which is a
non-profit organization that brings programs into the Denver Public Schools
to enhance education. He served as a board director on the Denver Childrens
Advocacy Center (Center) from August 2006 until December 2011, including as
chairman the last three years, and continues to participate in and fund the
Centers Safe from the Start Program. The Centers mission is to provide a
continuum of care for traumatized children and their families. | |
| | The board concluded that Mr.
Hellerstein should serve as a director of MDU Resources Group, Inc., in light
of our business and structure, at the time we file our proxy statement for
the following reasons. MDU Resources Group, Inc. derives a significant
portion of its earnings from oil and natural gas production, one of the
companys growth centers. Mr. Hellerstein has extensive business experience,
recognized excellence, and demonstrated success and leadership in this
industry as a result of his 17 years of senior management experience and
service as board chairman of St. Mary. His skills and experience enable him
to contribute independent insight into the companys business and operations
and the economic environment and long-term strategic issues the company
faces. As a certified public accountant, on inactive status, with extensive
financial experience as a result of his employment as chief financial officer
with several companies, including public companies, Mr. Hellerstein
contributes significant finance and accounting knowledge to our board and
audit committee. His financial expertise assists the board in its oversight
of the companys financial reporting and financial risk management functions.
Mr. Hellerstein also brings to the board his knowledge of local, state, and
regional issues involving the Rocky Mountain region where we have important
operations. | |

MDU Resources Group, Inc. Proxy Statement 5

Proxy Statement

●	A. Bart Holaday	Director Since 2008
	Age 71	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 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; and is chairman and chief executive officer of the Dakota Foundation, a
nonprofit foundation that fosters social entrepreneurship. He is a past
member of the board of directors of the University of North Dakota
Foundation, National Venture Capital Association, Walden University, and the
U.S. Securities and Exchange Commission advisory committee on the regulation
of capital markets, and is a past 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.
	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.
●	Dennis W. Johnson	Director Since 2001
	Age 64	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 fourteenth 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,

6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| | 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 39 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 32 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 ten 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. | |
| ● | William E. McCracken | Director Since 2013 |
| | Age 71 | Nominating and Governance
Committee |
| | Mr. McCracken served as chief
executive officer of CA, Inc., one of the worlds largest information
technology management software companies, from January 2010 until January 7,
2013, after which he served as executive adviser to the new chief executive
officer until March 31, 2013, and after that as a consultant to the company
until December 31, 2013. Mr. McCracken was a director of CA, Inc. from May
2005 until January 7, 2013, serving as non-executive chairman of the board
from June 2007 to September 2009, interim executive chairman from September
2009 to January 2010, and executive chairman from January 2010 to May 2010.
He is president of Executive Consulting Group, LLC, a general business
consulting firm, since 2002. During his 36-year career with International
Business Machines Corporation, a manufacturer of
information processing products and a technology, software, and networking
systems manufacturer and developer, Mr. McCracken held a number of executive
positions, including general manager of IBM printing systems division from
1998 to 2001, general manager of marketing, sales, and distribution for IBM
PC Company from 1994 to 1998, and president of IBMs EMEA and Asia Pacific PC
Company from 1993 to 1994. From 1995 to 2001, he served on IBMs Chairmans
Worldwide Management Council, a group of the top 30 executives at IBM. Mr.
McCracken was a director of IKON Office Solutions, Inc., a provider of
document management systems and services, from 2003 to 2008, where he served
on its audit committee, compensation committee, and strategy committee at various
points in time during his tenure as a director. | |
| | Mr. McCracken has a bachelor of
science degree in physics and mathematics from Shippensburg University. He
has served on the board of the National Association of Corporate Directors
(NACD), a non-profit membership organization for corporate board members,
since 2010, and was named by the NACD as one of the top 100 most influential
people in the boardroom in 2009. He served on that organizations 2009 blue
ribbon commission on risk governance and in 2012 co-chaired its blue ribbon
commission on board diversity. He was elected vice-chair and has been a board
member of the Millstein Center for Global Markets and Corporate Ownership at
Columbia University since 2013 and is the New York chairman of the chairmans
forum since 2011. He is board chairman of Lutheran Social Ministries of New
Jersey, a charitable organization that provides adoption, assisted living,
counseling, and immigration and refugee services, and also is a board member
of PENCIL, a nonprofit organization that partners businesses with public
schools. | |
| | The board concluded that Mr.
McCracken 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. McCracken has extensive executive leadership
experience and significant experience in information technology through his
tenure at CA, Inc. and IBM. This experience coupled with his service as the
chair or a member of the board of other public companies and the NACD will
enable him to provide insight into the operations, challenges, and complex
issues our company is facing in todays environment and to make significant
contributions to the boards oversight of operational risk management functions
and corporate governance. | |

MDU Resources Group, Inc. Proxy Statement 7

Proxy Statement

●	Patricia L. Moss	Director Since 2003
	Age 60	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 improve access to capital and create private-public
partnerships, 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.
	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.
●	Harry J. Pearce	Director Since 1997
	Age 71	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 and serves on the excellence, finance, and compensation committees
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.

8 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| ● | 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. — J. Kent Wells | Director Since January 4, 2013 |
| --- | --- | --- |
| | Age 57 | Vice Chairman of the Corporation |
| | | President and Chief Executive
Officer |
| | | of Fidelity Exploration & Production
Company |
| | Mr. Wells was elected vice
chairman of the corporation 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 more
than 34 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 59 | 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 Foundation, Omaha,
Nebraska, and formerly served on the advisory board of U.S. Bank NA Omaha. | |

MDU Resources Group, Inc. Proxy Statement 9

Proxy Statement

| 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. |

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.

ITEM 2. RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The audit committee at its February 2014 meeting appointed Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2014. The board of directors concurred with the audit committees decision. Deloitte & Touche LLP has served as our independent registered public accounting firm since fiscal year 2002.

Although your ratification vote will not affect the appointment or retention of Deloitte & Touche LLP for 2014, the audit committee will consider your vote in determining its appointment of our independent registered public accounting firm for the next fiscal year. The audit committee, in appointing our independent registered public accounting firm, 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 registered public accounting firm for 2014.

10 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2014 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.

Accounting and Auditing Matters

Fees

The following table summarizes the aggregate fees that our independent registered public accounting firm, Deloitte & Touche LLP, billed or is expected to bill us for professional services rendered for 2013 and 2012:

Audit Fees (a) (e)	$ 2,760,620	2012 — $ 2,510,138
Audit-Related
Fees (b)	33,800	63,110
Tax Fees (c) (e)	66,049	23,745
All Other Fees (d)	1,374,455	0
Total Fees (f)	$ 4,234,924	$ 2,596,993
Ratio of Tax and
All Other Fees to Audit and Audit-Related Fees	51.55 %	0.92 %
*	The 2012 amounts were
adjusted from amounts shown in the 2013 proxy statement to reflect actual
amounts.
(a)	Audit fees for 2013 and 2012
consist of services rendered for the audit of our annual financial
statements, reviews of quarterly financial statements, statutory and
regulatory audits, compliance with loan covenants, reviews of financial
statements for MDU Construction Services Group, Inc. and subsidiaries, agreed
upon procedures associated with the annual submission of financial assurance
to the North Dakota Department of Health, comfort letter work relating to the
offering of common stock (2013 only), and work related to responding to a
comment letter from the Securities and Exchange Commission (2013 only).
(b)	Audit-related fees for 2013
and 2012 are associated with accounting research assistance, technical
accounting consultation regarding variable interest entities, guarantees, and
financing agreements (2013 only), workpaper review requested by the Idaho
Public Utilities Commission (2012 only), and the compliance audit for the
U.S. Department of Energy (2012 only).
(c)	Tax fees for 2013 relate to
consulting services for federal income tax pollution control associated with
the Big Stone power plant. Tax fees for 2012 relate to the review of
permanent tax benefits associated with Medicare Part D subsidies.
(d)	All other fees for 2013
relate to assistance in an internal investigation. There were no fees in this
category for 2012.
(e)	Audit fees for 2013 include
$30,000 associated with a financial statement audit, and tax fees for 2013
include $50,000 associated with tax services, in each case for Dakota Prairie
Refining, LLC. These fees are paid by Dakota Prairie Refining, LLC, but are
included in this table because Dakota Prairie Refining, LLC, is considered a
variable interest entity with respect to MDU Resources and consolidated in
its financial statements.
(f)	Total fees reported above
include out-of-pocket expenses related to the services provided of $385,216
for 2013 and $353,627 for 2012.

Pre-Approval Policy

The audit committee pre-approved all services Deloitte & Touche LLP performed in 2013 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.

MDU Resources Group, Inc. Proxy Statement 11

Proxy Statement

ITEM 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 2013 total target direct compensation in the form of
incentive compensation, except in the case of one officer promotion where his
incentive compensation was 47% of his total target direct 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, 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 2013. Accordingly, the following resolution is submitted for stockholder vote at the 2014 annual meeting:

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

As this is an advisory vote, the results will not be binding on the company, the board of directors, or the compensation committee and will not require us to take any action. The final decision on the compensation of our named executive officers remains with our compensation committee and our board of directors, although our board and compensation committee will consider the outcome of this vote when making future compensation decisions. As the board of directors determined at its meeting in May 2011, we will provide our stockholders with the opportunity to vote on our named executive officer compensation at every annual meeting until the next required vote on the frequency of stockholder votes on named executive officer compensation. The next required vote on frequency will occur at the 2017 annual meeting of stockholders.

The board of directors recommends a vote for the approval, on 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.

12 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

EXECUTIVE COMPENSATION

Compensation 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.

Executive Summary

Named Executive Officers

Our named executive officers for 2013 were:

| | David L. Goodin, who became
president and chief executive officer of MDU Resources Group, Inc. on January
4, 2013; Mr. Goodin was not a named executive officer last year |
| --- | --- |
| | Terry D. Hildestad, our
former president and chief executive officer, who retired on January 3, 2013 |
| | Doran N. Schwartz, our vice
president and chief financial officer |
| | J. Kent Wells, our vice
chairman and the president and chief executive officer of our exploration and
production business segment, Fidelity Exploration & Production Company, a
direct wholly-owned subsidiary of WBI Holdings, Inc. |
| | Jeffrey S. Thiede, who
became president and chief executive officer of our construction services
business segment, MDU Construction Services Group, Inc., effective April 30,
2013; Mr. Thiede was not a named executive officer last year and |
| | Paul K. Sandness, our
general counsel and secretary; Mr. Sandness was not a named executive officer
last year. |

Since Mr. Hildestad retired at the beginning of the year and received no increase in base salary or incentive compensation for 2013, we do not discuss Mr. Hildestad further in the Compensation Discussion and Analysis.

The chief executive officer of the construction services and construction materials and contracting business segments retired in April 2013. His responsibilities were divided between Jeffrey S. Thiede, who was promoted from president to president and chief executive officer of the construction services segment, and David C. Barney, who was promoted from president to president and chief executive officer of the construction materials and contracting segment and is not a named executive officer.

Key Financial Results for 2013

Consolidated GAAP earnings in 2013 were $278.2 million, or $1.47 cents per share, compared to a loss of $1.4 million, or 1 cent per share, in 2012.

Our total stockholder return for 2013 was 47.5%, as compared to 2.1% for 2012. Our average annual total stockholder return for the five-year period ended December 31, 2013 was 10.5%, compared to (2.3)% for the five-year period ended December 31, 2012.

In 2013 the company generated a 7.2% return on invested capital compared to a 6.7% weighted average cost of capital.

Total Realized Pay Compared to Total Compensation from the Summary Compensation Table

The compensation committee believes considering total realized pay, the actual remuneration received by the named executive, is equally as important as considering total compensation as presented in the Summary Compensation Table. Total realized pay reflects the compensation actually earned, which can differ substantially from 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. In addition, the Summary Compensation Table may show an increase in change in pension value and above-market earnings on nonqualified deferred compensation, depending on the valuation assumptions and discount rates used to calculate present value of pension benefits. The company excludes change in pension value and above-market earnings on nonqualified deferred compensation from total realized pay because:

| | increase in change in
pension value can have a large impact on total compensation as reported in
the Summary Compensation Table |
| --- | --- |
| | for some of our named
executive officers for 2013, the change in pension value was negative due to
the use of a higher discount rate to calculate present value; however, unlike
when the value is positive, the negative value does not reduce total
compensation as reported in the Summary Compensation Table and |

MDU Resources Group, Inc. Proxy Statement 13

Proxy Statement

the change in pension value is the difference in the present value of our qualified defined benefit retirement plan and our Supplemental Income Security Plan benefits, and the Supplemental Income Security Plan benefits partially depend on continued future employment in the case of Messrs. Goodin and Schwartz.

We define total realized pay as the sum of:

	base salary
	annual incentive award paid
with respect to the year
	the value realized upon the
vesting of long-term incentive awards of performance shares during the year
and
	all other compensation as
reported in the Summary Compensation Table.

The following table compares total realized pay for our named executives in 2013 to the total compensation as presented in the Summary Compensation Table. This table is not intended to be a substitute for the Summary Compensation Table.

| Named
Executive Officer — David L. Goodin | 625,000 | 1,610,625 | 0 | 37,517 | 2,273,142 | 4,047,413 |
| --- | --- | --- | --- | --- | --- | --- |
| Doran N. Schwartz | 345,000 | 296,355 | 0 | 34,881 | 676,236 | 1,047,274 |
| J. Kent Wells | 570,000 | 1,425,000 | N/A | 20,556 | 2,015,556 | 3,524,975 |
| Jeffrey S. Thiede | 367,068 | 825,000 | N/A | 66,282 | 1,258,350 | 1,258,350 |
| Paul K. Sandness | 344,000 | 354,595 | 0 | 39,131 | 737,726 | 1,124,864 |
| (1) | Performance shares and
dividend equivalents granted for the 2010-2012 performance period did not
vest and were forfeited because performance was below threshold. | | | | | |

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

| | total realized pay, which
is the sum of base salary, annual incentive awards paid, all other
compensation, and the value realized upon the | |
| --- | --- | --- |
| | ○ | vesting of restricted stock
during 2010 |
| | ○ | vesting of performance
shares during 2009 and 2010 (none vested during 2011, 2012, or 2013) |
| | total compensation as
reported in the Summary Compensation Table and | |
| | one-year total stockholder
returns for 2009 through 2013. | |

For years 2009 through 2012, the compensation information is for Mr. Hildestad, our chief executive officer for those years, and for 2013, the compensation information is for Mr. Goodin. This table is not intended to be a substitute for the Summary Compensation Table.

14 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

5 Year CEO Compensation and Total Stockholder Return

The compensation committee believes its approach to structuring the chief executive officers compensation is effective; as displayed in the above chart, 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.

Process for Determination of 2013 Compensation

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. |

Role of Compensation Consultants

For 2013, 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.

Our executive compensation policy provides for an assessment of the competitive pay levels for base salary and incentive compensation for each Section 16 officer position to be conducted at least every two years by an independent consulting firm. For 2013 compensation, the compensation committee retained Towers Watson, a nationally recognized consulting firm, to perform this assessment and to assist the compensation committee in establishing competitive compensation targets for our Section 16 officers.

MDU Resources Group, Inc. Proxy Statement 15

Proxy Statement

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, 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 and |
| | verify the competitiveness
of target short-term and long-term incentives associated with salary grades
and recommend modifications as appropriate. |

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 target incentives based on the competitive data and |
| | address general trends in
chief executive officer compensation. |

The compensation surveys and databases used by Towers Watson were:

| Survey* — Towers Watson 2011 CDB General Industry Executive
Database | 411 | 18,300 | 345 | 5,823,000 |
| --- | --- | --- | --- | --- |
| Towers Watson 2011 CDB Energy Services Executive
Database | 108 | 2,800 | 75 | 2,490,000 |
| Mercer 2011 Total Compensation Survey for the Energy
Sector | 290 | Not Reported | 233 | 928,000 |
| Towers Watson 2011 CSR Report on Top Management
Compensation | 1,574 | 4,800 | 630 | 1,513,000 |

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 2011, 2012, and 2013 were approximately $4.0, $4.1, and $4.5, respectively. Towers Watson aged the data from the date of the surveys by 3% on an annualized basis to estimate 2013 competitive targets.

After its February 2013 meeting, the compensation committee authorized the company to engage Towers Watson to provide competitive practice information with respect to the treatment by other exploration and production companies of ceiling test impairments for annual incentive purposes. Towers Watson analyzed the following fifteen companies with an earnings-based measure impacted by impairment charges:

| | Anadarko Petroleum
Corporation | | Eagle Rock Energy Partners,
L.P. | | PVR Partners L.P. |
| --- | --- | --- | --- | --- | --- |
| | Apache Corporation | | Encana Corporation | | Quicksilver Resources Inc. |
| | Atmos Energy
Corporation | | Goodrich Petroleum
Corporation | | SM Energy Company |
| | Black Hills Corporation | | Niska Gas Storage Partners
LLC | | Ultra Petroleum Corp. |
| | Chesapeake Energy
Corporation | | PDC Energy, Inc. | | WPX Energy, Inc. |

Role of Management

The chief executive officers during 2012 and 2013 played an important role in recommending 2013 compensation to the committee for the other named executive officers. Mr. Hildestad recommended 2013 compensation for Messrs. Schwartz, Wells, and Sandness after assessing their performance during 2012. Mr. Hildestad did not make any recommendations with respect to Mr. Goodins compensation for 2013. In connection with Mr. Thiedes promotion, Mr. Goodin recommended his compensation for the remainder of 2013. The chief executive officers considered the relative value of the named executive officers positions and their salary grade classifications. They reviewed the competitive assessment prepared by Towers Watson to formulate 2013 compensation recommendations for the compensation committee. The chief executive officers attended compensation committee meetings, but were not present during discussions regarding their own compensation.

16 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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:

	leadership		mentoring
	leading with integrity		financial responsibility
	achievement focus		safety
	risk management

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.

Timing of Compensation Decisions for 2013

The compensation committee, in conjunction with the board of directors, determined all compensation for each named executive officer for 2013. 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 2013 salary grades at its August 2012 and November 2012 meetings. At the November 2012 meeting, it established individual base salaries, target annual incentive award levels, and target long-term incentive award levels for 2013, except for Mr. Thiede, whose base salary and target annual incentive award were approved at the May 2013 meeting. At the February and March 2013 meetings, the compensation committee and the board of directors determined 2013 annual and long-term incentive awards, along with payments based on performance for the 2012 annual incentive awards and no payments for the 2010-2012 performance share awards. The February and March meetings occurred after the release of earnings for the prior year.

Stockholder Advisory Vote (Say on Pay)

Our stockholders had their third advisory vote on our named executive officers compensation at the 2013 Annual Meeting of Stockholders. Approximately 96% of the shares present in person or represented by proxy and entitled to vote on the matter approved the named executive officers compensation. The 96% approval is slightly higher than the results of our say on pay vote at the 2012 Annual Meeting, which was 92%. The compensation committee and the board of directors considered the results of the votes at their November 2012, May 2013, and November 2013 meetings and did not change our executive compensation program as a result of the votes.

Salary Grades for 2013

The compensation committee determines the named executive officers base salaries and target annual and long-term incentives 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 target annual and long-term incentive levels, which are expressed as a percentage of the individuals actual base salary. We generally place named executive officers into a salary grade based on historical classification of their positions; however, the compensation committee reviews each classification and may place a position into a different salary grade if it determines that the targeted competitive compensation for the position changes significantly or the executives responsibilities and/or performance warrants a different salary grade. Individual executives may be paid below, equal to, or above the salary grade midpoint.

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. |

MDU Resources Group, Inc. Proxy Statement 17

Proxy Statement

The committee increased the base salary midpoints for 2013 in salary grades A through I by a total of 2.8%, since the midpoints had not been increased in three years and the competitive assessment indicated that target total annual compensation and total direct compensation were below the market median at the 50th percentile. The midpoint of salary grade I, which is Messrs. Schwartzs and Sandness salary grade, was increased by 3.1% from $325,000 to $335,000.

The committee established a new salary grade L for 2013 for our president and chief executive officer position, which was formerly in salary grade K. Based on the competitive assessment, the committee established the midpoint of salary grade L at $763,000.

The committee assigned the vice chairman and president and chief executive officer of Fidelity Exploration & Production Company to salary grade K in recognition of the greater responsibility that Mr. Wells would assume as vice chairman. The midpoint of salary grade K was established at $500,000 to accommodate the higher market compensation data associated with his responsibilities.

In connection with his promotion, Mr. Thiede was moved from salary grade H to salary grade J, with a midpoint of $390,000, which has been the midpoint for that salary grade for a number of years.

The committee did not change the target incentive compensation guidelines for the salary grades, except that Mr. Sandness target annual and long-term incentives were increased to 60% and 85% of base salary, respectively, to place his target total annual compensation and total direct compensation closer to the market median.

Our named executive officers salary grade classifications for 2013 are listed below, along with the base salary ranges associated with each classification:

| Position | Grade | Name | 2013
Salary Grade Base Salary (000s) — Minimum ($) | Midpoint ($) | Maximum ($) |
| --- | --- | --- | --- | --- | --- |
| President and CEO | L | David L. Goodin | 610 | 763 | 916 |
| Vice President and CFO | I | Doran N. Schwartz | 268 | 335 | 402 |
| Vice Chairman and President and CEO, Fidelity
Exploration & Production Company | K | J. Kent Wells | 400 | 500 | 600 |
| President and CEO, Construction Services Group | J | Jeffrey S. Thiede | 312 | 390 | 468 |
| General Counsel and Secretary | I | Paul K. Sandness | 268 | 335 | 402 |

Allocation of Total Target Compensation for 2013

Incentive compensation, which consists of annual cash incentive awards and three-year performance share awards under our Long-Term Performance-Based Incentive Plan, comprises a significant portion of our named executive officers total target compensation 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
significant portion of their target compensation contingent upon results that
are beneficial to stockholders. |

The following table shows the allocation of total target compensation for 2013 among the individual components of base salary, annual incentive, and long-term incentive:

| Name | %
of Total Target Compensation Allocated to Base Salary (%) | %
of Total Target Compensation Allocated to Incentives — Annual
(%) | Long-Term (%) | Annual
+ Long-Term (%) |
| --- | --- | --- | --- | --- |
| David L. Goodin | 25.0 | 37.5 | 37.5 | 75.0 |
| Doran N. Schwartz | 44.4 | 22.2 | 33.4 | 55.6 |
| J. Kent Wells | 23.5 | 29.4 | 47.1 | 76.5 |
| Jeffrey S. Thiede (1) | 52.6 | 47.4 | | 47.4 |
| Paul K. Sandness | 40.8 | 24.5 | 34.7 | 59.2 |

(1) Mr. Thiedes percentages were calculated using a base salary that was prorated for 2013 as follows: one-third at an annualized rate of $330,000 and two-thirds at an annualized rate of $385,000. Mr. Thiede was not a participant in the Long-Term Performance-Based Incentive Plan in 2013.

18 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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. As discussed later, Mr. Goodins long-term incentive percentage was kept at a lower level to balance his higher Supplemental Income Security Plan benefit. 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, discussed later, 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.

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 2008 through 2012 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 2008 through 2012, our average annual stockholder return was (2.3)%. Therefore, our pay ratio was 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 2008 through 2012 period.

2013 Compensation for Our Named Executive Officers

Base Salaries, Total Annual Compensation, and Total Direct Compensation

David L. Goodin

In connection with Mr. Goodins promotion to president and chief executive officer of the company effective January 4, 2013, the compensation committee moved Mr. Goodin from salary grade J to salary grade L, with a midpoint of $763,000, and recommended a base salary increase for Mr. Goodin from $385,000 to $625,000. The committee noted that the $625,000 was below the median salary of $650,000 for the chief executive officers from the performance graph peer companies and below the median salary of $930,000 for the chief executive officers from the salary survey data, both as noted in the competitive assessment. The committee believed it was appropriate for Mr. Goodins 2013 base salary to be less than market and less than the 2013 midpoint due to his newness in the position. The committee also established Mr. Goodins target total annual cash compensation of $1,562,500, which was above the median total cash compensation of $1,335,000 paid to chief executive officers from the performance graph peer companies and below the median total cash compensation of $1,920,000 paid to chief executive officers from the salary survey data, both as noted in the competitive assessment. From a total direct compensation perspective, the committee established a target of $2,500,000, which was below the competitive reference points of $2,970,000 for the performance graph peer group and $4,685,000 for the salary survey companies.

Doran N. Schwartz

For 2013, the compensation committee awarded Mr. Schwartz, our vice president and chief financial officer, a 15.0% increase, raising his salary from $300,000 to $345,000, or to 103% of the midpoint of salary grade I. Combined with his target annual and long-term incentive, this would result in target total annual compensation of 64% and total direct compensation of 57% of the 2013 competitive salary survey data at the 50th percentile. The compensation committees rationale for the increase was in recognition of his:

| | renewal and expansion of
the companys credit facility |
| --- | --- |
| | continued growth in the
treasury area |
| | cultivation of excellent
relationships with the investment community and |
| | relatively low salary
compared to the chief financial officers of performance graph peer companies. |

MDU Resources Group, Inc. Proxy Statement 19

Proxy Statement

J. Kent Wells

For 2013, the compensation committee awarded Mr. Wells, our vice chairman and president and chief executive officer of Fidelity Exploration & Production Company, a 3.6% increase, raising his salary from $550,000 to $570,000, or 114% of the midpoint of salary grade K. Combined with his target annual and long-term incentives, this would result in target total annual compensation of 118% and total direct compensation of 95% of the 2013 competitive salary survey data at the 50th percentile. The compensation committees rationale for the increase was in recognition of:

| | a 25% increase in
production from 2011 to 2012 |
| --- | --- |
| | a shift in the production
mix from 80% natural gas and 20% oil and liquids in 2011 to 60% natural gas
and 40% oil and liquids in 2012 and |
| | outstanding leadership at
Fidelity Exploration & Production Company. |

Jeffrey S. Thiede

Mr. Thiede was promoted to president and chief executive officer of MDU Construction Services Group, Inc. effective April 30, 2013. In connection with his promotion, the compensation committee moved Mr. Thiede from salary grade H to salary grade J with a midpoint of $390,000 and increased Mr. Thiedes base salary from $330,000 to $385,000. Combined with his target annual incentive, his prorated target total annual compensation was $696,667. The committees rationale for the increase was recognizing Mr. Thiedes assumption of the additional duties and responsibilities as chief executive officer, as well as recognizing the success he achieved as president of MDU Construction Services Group, Inc. since January 2012.

Paul K. Sandness

For 2013, the compensation committee awarded Mr. Sandness, our general counsel and secretary, a 3% increase, raising his salary from $334,000 to $344,000, or to 103% of the midpoint of salary grade I. Combined with his increased target annual and long-term incentives, this would result in target total annual compensation of 89% and total direct compensation of 86% of the 2013 competitive salary survey data at the 50th percentile. The compensation committees rationale for the increase was in recognition of Mr. Sandness successful management of company litigation and his leadership in the corporate governance area.

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.

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, because:

| | earnings per share is a
generally accepted accounting principle measurement and is a key driver of
stockholder return over the long-term and |
| --- | --- |
| | return on invested capital
measures how efficiently and effectively management deploys capital, where
sustained returns on invested capital in excess of a business segments cost
of capital create value for our stockholders. |

For the first time in 2013, the compensation committee selected earnings as the performance measure for two business segments. For the construction services segment, key earnings levels were selected in order to balance conservative financial planning as well as earnings volatility, instead of tying performance to allocated earnings per share and budgeted return on invested capital.

To provide the compensation committee with a competitive practice reference point in terms of how other exploration and production companies treat ceiling test impairments for annual incentive purposes, we engaged Towers Watson to prepare the analysis discussed in the Role of Compensation Consultants section above. The committee considered Towers Watsons report and selected earnings, as adjusted, for the exploration and production segment to motivate the chief executive officer to increase and maintain production at a high level and develop the appropriate mix of production and replacement reserves, without regard to the effect on earnings of non-cash impairments and hedge accounting, the pricing components over which he had no control.

20 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

For the named executive officers working at MDU Resources Group, Inc., who were Messrs. Goodin, Schwartz, and Sandness, the compensation committee continued to base annual incentives on the achievement of performance goals at the business segments: (i) the construction materials and contracting and construction services segments, taken together, (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.

As established by the compensation committee in March 2013, the annual performance measures and goal weightings for the business segment leaders were:

| Position | Business
Segment | Business Segment Goal Weighting — Budgeted Allocated EPS (%) | Budgeted ROIC (%) | Budgeted Earnings (%) | EPS (%) (1) | |
| --- | --- | --- | --- | --- | --- | --- |
| Chief Executive
Officer | Construction
Materials & Contracting Construction Services | 18.75 | 18.75 | 37.5 | (2) | 25.0 |
| President and Chief
Executive Officer | Pipeline and Energy
Services | 37.5 | 37.5 | | | 25.0 |
| President and Chief
Executive Officer | Electric and
Natural Gas Distribution | 37.5 | 37.5 | | | 25.0 |
| President and Chief
Executive Officer | Exploration and
Production | | | 75.0 | (3) | 25.0 |

| (1) | Earnings
per share for purposes of the annual incentive calculation reflect the
adjustments referred to in footnote 3. |
| --- | --- |
| (2) | Earnings
were defined as GAAP earnings. |
| (3) | Earnings
were defined as GAAP earnings reported for the exploration and production
segment, adjusted to exclude the (i) effect on earnings of any noncash
write-downs of oil and natural gas properties due to ceiling test impairment
charges and any associated earnings benefit resulting from lower depletion,
depreciation and amortization expenses and (ii) the effect on earnings of any
noncash gains and losses that result from (x) ineffectiveness in hedge
accounting, (y) derivatives that no longer qualify for hedge accounting
treatment, or (z) the discontinuation of hedge accounting treatment. |

After the chief executive officer of our two construction segments retired in late April 2013 and Messrs. Thiede and Barney were promoted, the compensation committee left Mr. Thiedes annual incentive performance measure unchanged from what it had been earlier in the year, namely the construction services business segments GAAP earnings. This determination had no effect on the calculation of the annual incentive awards for the executive officers at MDU Resources Group, Inc., as discussed above, which were to be calculated as if the former chief executive officer of the construction business segments had remained employed through the end of 2013.

Except for our construction services business segment, 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. 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. If the compensation committee utilizes a return on invested capital target for a business segment, it 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.

In the case of our construction services business segment, we utilized key earnings levels to structure the annual incentive. The specific earnings levels and their associated incentive payment amounts are addressed in Construction Services Segment Earnings Goal section below.

Our Named Executive Officers Target Annual Incentive Compensation

The compensation committee established the named executive officers target annual incentive as a percentage of each officers actual 2013 base salary.

Messrs. Goodins, Schwartzs, and Sandness 2013 target annual incentives were 150%, 50%, and 60% of base salary, respectively, based on the following:

In connection with his promotion, Mr. Goodins target annual incentive was set at 150% of base salary, or $937,500, which was above the 107% and 103% of base salary paid to chief executive officer positions based on salary survey data and performance graph peer group data, respectively, from the competitive assessment. The committees rationale for assigning an above-market target annual incentive percentage was to offset a below-market target long-term incentive and to ensure, from an internal equity standpoint, that Mr. Goodins target incentive was above the target incentives of his direct reports.

MDU Resources Group, Inc. Proxy Statement 21

Proxy Statement

| | For Mr. Schwartz, the target annual
incentive of 50% of base salary was below the 71% and 58% of base salary paid
to chief financial officers based on salary survey data and performance graph
peer group data, respectively, from the competitive assessment. Since prior
years had shown little difference between Mr. Schwartzs target incentive and
the targets from the competitive assessments, the committee decided to forego
changing his target. |
| --- | --- |
| | For Mr. Sandness, the target annual
incentive was increased from 50% to 60% of base salary to be approximately
equal to the 59% of base salary paid to top legal executives based on salary
survey data from the competitive assessment. |

Mr. Wells 2013 target incentive was unchanged at 125% of base salary, which was above the 57% of base salary paid to comparable positions in the survey data and below the average of 234% of base salary paid at exploration and production companies (Berry Petroleum Company, EQT Corporation, and Whiting Petroleum Corporation) in our performance graph peer group from the competitive assessment. The compensation committee determined, as it had last year, that the target incentive of 125% of base salary was appropriate given the significant investment in the exploration and production segment and the desire to incentivize and motivate Mr. Wells to generate earnings that can greatly impact overall company earnings.

Mr. Thiedes 2013 target incentive was 90% of base salary, which remained unchanged from the target incentive he had before his promotion, but was to be calculated based on his prorated base salary. His position was not included in the competitive assessment prepared by Towers Watson. The committee believed maintaining the 2013 target incentive of 90% of base salary was appropriate because it would compensate Mr. Thiede for not having received any long-term performance share grants.

MDU Resources Group, Inc. EPS Goal

The MDU Resources Group, Inc. earnings per share component represented 25% of the award opportunity for all business segment leaders except for Mr. Thiede. Payout could range from no payment if the results were below 85% of the $1.27 target to a 200% payout if the results were $1.46 or higher. The committee set the target at $1.27, which was above the 2012 target of $1.19 and above the adjusted 2012 results of $1.15, which eliminated the effect of $246.8 million after-tax noncash charges relating to the write-down of oil and natural gas properties in 2012, discontinued operations, and the net benefit related to natural gas gathering operations litigation. The 2013 target was established based on adjusted earnings at the exploration and production segment as described in footnote 3 to the table under What the Performance Measures Are and Why We Chose Them above. The higher 2013 earnings per share target level was based primarily on anticipated higher earnings at all business segments.

Earnings per share for 2013 were, on a GAAP basis, $1.47 and, on an adjusted basis, $1.49. The payment on this component was 200% of target.

Exploration and Production Segment Earnings Goal

For the exploration and production segment, 75% of the 2013 award opportunity was based on earnings adjusted as described in footnote 3 to the table under What the Performance Measures Are and Why We Chose Them above. Payout could range from no payment if 2013 earnings were below the 90% level to a 200% payout if the segments 2013 earnings were at or above the 105% level.

The committee set the exploration and production segments 2013 earnings target level at $84 million, which was above the 2012 target level of $78.4 million and 20.7% above 2012 adjusted results, which excluded the noncash ceiling test impairments. The higher 2013 earnings target level was approved by the board in the 2013 business plan and also based on an anticipated increase in production and continued shifting of production to more oil and natural gas liquids and less natural gas.

The segments 2013 earnings were $98.4 million equating to a 200% payment on the segment earnings component, which coupled with MDU Resources Group, Inc.s earnings per share being 200% of target, resulted in a 2013 annual incentive payment for Mr. Wells of $1,425,000 or 200% of target.

Electric and Natural Gas Distribution Segments EPS and ROIC Goals

For the electric and natural gas distribution segments, 75% of the 2013 award opportunity was based on allocated earnings per share and budgeted return on invested capital, equally weighted. 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:

| | the 2013 allocated earnings per share for
the segment were at or above the 115% level and |
| --- | --- |
| | the 2013 return on invested capital was at
or above the 115% level. |

22 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The committee set the 2013 target for allocated earnings per share higher than the 2012 target and higher than 2012 actual results to reflect anticipated growth in the western North Dakota region of the service territory. The committee set the 2013 return on invested capital target lower than the 2012 target level and higher than the 2012 actual results to reflect higher invested capital associated with its growth projects.

For 2013, the electric and natural gas distribution segments earnings per share and return on invested capital were 108.3% and 103.4% of their respective targets, equating to 155.5% and 122.6%, respectively, of the target amount attributable to those components, which coupled with MDU Resources Group, Inc.s earnings per share being 200% of target, led to overall results for these segments of 154.3% of the 2013 target annual incentive award.

Pipeline and Energy Services Segment EPS, ROIC, and Safety Goals

For the pipeline and energy services segment, 75% of the 2013 award opportunity was based on allocated earnings per share and budgeted return on invested capital, equally weighted. Payout could range from no payment if the results were below the 85% level to a 200% payout if:

| | the 2013 allocated earnings per share for
the segment were at or above the 115% level and |
| --- | --- |
| | the 2013 return on invested capital was at
or above the 115% level. |

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:

| | each established local safety committee
will conduct eight meetings per year |
| --- | --- |
| | each established local safety committee
must conduct four site assessments per year |
| | report vehicle accidents and personal
injuries by the end of the next business day, which will be achieved only if
85% or more of the reports are submitted by the end of the next business day |
| | achieve the targeted vehicle accident
incident rate of 1.85 or less and |
| | achieve the targeted personal injury
incident rate of 2.3 or less. |

The committee set the pipeline and energy services segments 2013 allocated earnings per share target higher than the 2012 target, reflecting increased earnings associated with a full years results of our natural gas processing facility. The 2013 allocated earnings per share target was set below the 2012 actual results due to the positive 2012 earnings impact of a benefit related to natural gas gathering operations litigation. The committee set the 2013 return on invested capital target below the 2012 target level and below the 2012 actual results, reflecting increased invested capital in our diesel refinery and reflecting the positive 2012 earnings impact of a benefit related to natural gas gathering operations litigation.

Results at the pipeline and energy services segment (before adjustment for the five safety goals) were 44.0% and 57.4%, respectively, of the 2013 allocated earnings per share and return on invested capital measures, resulting in no payment on either component. These results, coupled with MDU Resources Group, Inc.s earnings per share being 200% of target and all five safety goals being met, led to overall results for these segments of 50% of the 2013 target annual incentive.

Construction Services Segment Earnings Goal

Mr. Thiedes 2013 incentive award opportunity was established by Mr. Goodin and the former chief executive officer of the construction services segment and was left unchanged by the compensation committee when he was promoted. His award opportunity was based solely on the construction services business segments 2013 earnings, where the payout could range from no payment if the results were below $14.5 million to 250% of the target amount if the results were at or above $35.8 million.

For the construction services segment, key earnings levels were selected to balance conservative financial planning as well as earnings volatility, instead of tying performance to allocated earnings per share and budgeted return on invested capital. The committee set the business segments 2013 earnings target at the level required to deliver a return on invested capital that was approximately equal to the business segments weighted average cost of capital. The committee set the earnings required to generate a maximum payment at the level necessary to generate a return on invested capital of approximately 550 basis points above the business segments weighted average cost of capital.

The construction services segments 2013 earnings were $52.2 million.

Mr. Thiedes 2013 annual incentive payment was $825,000 or 250% of target.

MDU Resources Group, Inc. Proxy Statement 23

Proxy Statement

Construction Services and Construction Materials and Contracting Segments Performance Goals

For purposes of determining the annual incentive awards of the MDU Resources Group, Inc. executives, including Messrs. Goodin, Schwartz, and Sandness, these segments were combined, with the targets and weightings structured as follows:

Construction Materials & Contractings 2013 ROIC results as a % of 2013 target (weighted 18.75%)	Corresponding payment of annual incentive target based on ROIC	Construction Materials & Contractings 2013 EPS results as a % of 2013 target (weighted 18.75%)	Corresponding payment of annual incentive target based on EPS	Construction Services 2013 earnings(1) results as a % of 2013 target (weighted 37.5%)	Corresponding payment of annual incentive target based on earnings
Less than 85%	0%	Less than 85%	0%	Less than $14.5M	0%
100%	100%	100%	100%	100%	100%
191%	200%	115%	200%	$35.8M or greater	250%

(1) Earnings is defined as GAAP earnings reported for the construction services segment.

Targets and corresponding payments that fall in between stated levels are set out in more detail in the Narrative Discussion Relating to the Summary Compensation Table and Grants of Plan-Based Awards Table.

For the construction materials and contracting business segment, the committee set the 2013 allocated earnings per share higher than the 2012 target and higher than 2012 actual result to reflect increased construction activity in western North Dakota, improvement in the Texas operations, and increased asphalt demand. The committee set the 2013 return on invested capital target higher than the 2012 target level and higher than the 2012 actual result due to higher anticipated earnings and continued restraint in the growth of the business segments invested capital.

The construction services segments 2013 earnings were $52.2 million, which was greater than 171% of the earnings target and equated to 250% of the annual incentive target. The construction materials and contracting segments 2013 earnings per share and return on invested capital were 148.1% and 141.9% of their respective 2013 targets, equating to 173.3% of the target incentive amount attributable to those components.

Coupled with MDU Resources Group, Inc.s earnings per share being 200% of target, overall results for 2013 were 208.8% of the 2013 target annual incentive award.

The following two tables show the 2012 and 2013 incentive plan performance targets and results by business segment.

Name	2012 Incentive Plan Performance Targets — EPS Business Segment ($)	ROIC (%)	EPS MDU Resources ($)	2012 Incentive Plan Results — EPS Business Segment ($)	ROIC (%)		EPS MDU Resources ($)
Pipeline and Energy
Services	0.99	5.8	1.19	1.78		8.3		(.01	)
Exploration and
Production	2.10	6.9	1.19	(4.81	)	(13.9	)	(.01	)
Construction
Services	3.61	7.4	1.19	8.18		15.2		(.01	)
Construction
Materials and Contracting	0.31	3.5	1.19	0.49		4.1		(.01	)
Electric and
Natural Gas Distribution	1.16	6.2	1.19	1.08		5.8		(.01	)

Name	2013 Incentive Plan Performance Targets — EPS Business Segment ($)	ROIC (%)	Business Segment Earnings ($)	EPS MDU Resources ($)	2013 Incentive Plan Results — EPS Business Segment ($) / (% of Target)	ROIC (%) / (% of Target)	Business Segment Earnings ($) / (% of Target)	EPS MDU Resources ($) / (% of Target)
Pipeline and Energy
Services	1.16	5.4		1.27	0.51 / 0	3.1 / 0		1.49 / 200
Exploration and
Production			84.0	1.27			98.4 / 200	1.49 / 200
Construction
Services			20.9				52.2 / 250
Construction
Materials and Contracting	0.52	4.3		1.27	0.77 / 200	6.1 / 146.5		1.49 / 200
Electric and
Natural Gas Distribution	1.20	5.9		1.27	1.30 / 155.5	6.1 / 122.6		1.49 / 200

24 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The table below lists each named executive officers 2013 base salary, target annual incentive percentage, and the annual incentive earned.

Name — David L. Goodin	625.0	150.0	171.8	1,610.6
Doran N. Schwartz	345.0	50.0	171.8	296.4
J. Kent Wells	570.0	125.0	200.0	1,425.0
Jeffrey S. Thiede *	366.7	90.0	250.0	825.0
Paul K. Sandness	344.0	60.0	171.8	354.6

Mr. Thiedes 2013 Annual Incentive Earned was established using a base salary that was prorated for 2013 as follows: one-third at an annualized rate of $330,000 and two-thirds at an annualized rate of $385,000.

Messrs. Goodins, Schwartzs, and Sandness 2013 annual incentives were paid at 171.8% of target based on the following:

Construction Services Segment and Construction Materials and Contracting Segment	208.8%	28.5%	59.5%
Exploration and Production Segment	200.0%	26.6%	53.2%
Pipeline and Energy Services Segment	50.0%	9.8%	4.9%
Electric and Natural Gas Distribution Segments	154.3%	35.1%	54.2%
Total (Payout Percentage)			171.8%

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 2013, 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 4.58%. 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. |

2013 Long-Term Incentives

Performance Share Awards

We use the Long-Term Performance-Based Incentive Plan, which has been approved by our stockholders, for long-term incentive compensation, with 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 has used relative stockholder return in comparison to the performance graph peer group as the performance measure for a number of years, including the 2013 performance share awards. The performance graph peer group consisted of the following companies when the committee granted performance shares in March 2013:

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

MDU Resources Group, Inc. Proxy Statement 25

Proxy Statement

Since the March 2013 grant, Berry Petroleum Company has been removed from the performance graph peer group because it was acquired.

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 target annual incentive, we determined the target long-term incentive 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. The committee kept the chief executive officers target long-term incentive below a level indicated from the competitive assessment. Mr. Goodins target was 150% of base salary, below the salary survey median of 309% of base salary and below the performance graph peer group median of 247% of base salary for chief executive officers. The compensation committee has historically set the president and chief executive officers 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.

Messrs. Schwartzs and Wells target long-term incentives were unchanged from 2012. Mr. Schwartzs target long-term incentive of 75% of base salary was below the salary survey median of 119% of base salary and below the performance graph peer group median of 143% of base salary for chief financial officers. Mr. Wells target long-term incentive was 200% of base salary, which was above the salary survey median of 113% and below the performance graph peer group median of 444% of base salary paid to comparable positions based on survey data and proxy data, respectively, from the competitive assessment. We believe that Mr. Wells long-term incentive target enhances retention since he cannot participate in any of our defined benefit retirement plans.

Mr. Thiede received no long-term incentive awards in 2013.

Mr. Sandness target long-term incentive was increased from 75% to 85% of base salary and was slightly below the salary survey median of 92% of base salary.

On March 4, 2013, the board of directors, upon recommendation of the compensation committee, made performance share grants to the named executive officers, except Mr. Thiede. The compensation committee determined the target number of performance shares granted to each named executive officer by multiplying the named executive officers 2013 base salary by his target long-term incentive and then dividing this product by the average of the closing prices of our stock from January 1, 2013 through January 22, 2013, as shown in the following table:

Name — David L. Goodin	625,000	150	937,500	21.91	42,788
Doran N. Schwartz	345,000	75	258,750	21.91	11,809
J. Kent Wells	570,000	200	1,140,000	21.91	52,031
Jeffrey S. Thiede
Paul K. Sandness	344,000	85	292,400	21.91	13,345

Assuming our three-year (2013 to 2015) total stockholder return is positive, from 0% to 200% of the target grant will be paid out in February 2016 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.

26 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

During 2012, the compensation committee reviewed its long-term incentive award program and the use of performance shares as the only long-term award and relative total stockholder return as the sole performance measure. After considering alternative approaches, the committee determined to continue using performance shares as the only long-term award in order to keep long-term incentives based solely on performance. However, the committee modified the program due to:

| | the added difficulty of comparing
the companys diversified operations to a peer group comprised primarily of
single industry firms and |
| --- | --- |
| | a number of the performance graph
peer group companies also grant awards based solely on time vesting. |

The committee determined, in order to be competitive and keep executives incentivized, to lower the threshold performance level from the 40th percentile to the 25th percentile and increase the threshold payout percentage from 10% to 20%. In addition, the performance level for maximum payout was lowered from the 90th percentile to the 75th percentile, as follows:

Long-Term Incentive Payout Percentages

The Companys Percentile Rank	Payout Percentage of March 4, 2013 Grant
75th or higher	200%
50th	100%
25th	20%
Less than 25th	0%

Payouts for percentile ranks falling between the intervals will be interpolated. We also will pay dividend equivalents in cash on the number of shares actually earned for the performance period. The dividend equivalents will be paid in 2016 at the same time as the performance share awards are paid.

As had been established for awards granted beginning in 2011, 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:

Total Stockholder Return	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 2013 for 2010 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 March 5, 2010 for the 2010 through 2012 performance period. Our total stockholder return for the 2010 through 2012 performance period was (1.22)%, which corresponded to a percentile rank of 13% against our performance graph peer group and resulted in no shares or dividend equivalents being paid to the named executive officers.

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.

MDU Resources Group, Inc. Proxy Statement 27

Proxy Statement

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 Mr. Goodin and Mr. Sandness, 10.5% for Mr. Schwartz, and 5% for Mr. Wells and Mr. Thiede.

Supplemental Income Security Plan Benefits Offered We offer certain key managers and executives, including all of our named executive officers, except Mr. Wells and Mr. Thiede, 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 effective 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 recommended, and the compensation committee approved, a 2013 SISP benefit level increase for Mr. Schwartz. The benefit level increase corresponded to one level below which Mr. Schwartzs 2013 salary would otherwise qualify. The recommendation was to recognize Mr. Schwartzs performance relating to the successful renewal of the companys credit facility.

The committee also approved a 2013 SISP benefit level increase for Mr. Goodin. The benefit level increase corresponded to one level below which Mr. Goodins 2013 salary would otherwise qualify. The benefit level increase recognized Mr. Goodins promotion to the president and chief executive officer position. The following table reflects our named executive officers SISP levels as of December 31, 2013:

Name	December 31, 2013 Annual SISP Benefits — Survivor ($)	Retirement ($)
David L. Goodin	552,960	276,480
Doran N. Schwartz	233,184	116,592
J. Kent Wells	N/A	N/A
Jeffrey S. Thiede	N/A	N/A
Paul K. Sandness	328,080	164,040

Nonqualified Defined Contribution Plan The company adopted the Nonqualified Defined Contribution Plan, or NQDCP, effective January 1, 2012, to provide deferred compensation for a select group of management or highly compensated employees who do not participate in the SISP. The compensation committee, upon recommendation from the chief executive officer, determines which employees will participate in the NQDCP for any year. The compensation committee determines the amount of employer contributions under the plan, which are credited to plan accounts and not funded. After satisfying a four-year vesting requirement for each contribution, the contributions and investment earnings will be distributed to the executive in a lump sum upon separation from service with the company or in annual installments commencing upon the later of (i) separation from service and (ii) age 65. The four-year vesting requirement is waived if the participant dies while employed by the company.

28 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The committee, upon recommendation of the chief executive officer, selected Mr. Thiede as a participant for 2013 with an employer contribution of $33,000 or 10% of his base salary as of January 1, 2013. The contribution was awarded to recognize his promotion to president of the construction services segment and achievement of an annualized return on invested capital that was 4.7 percentage points higher than the weighted average cost of capital for the construction services segment. We believe that Mr. Thiedes participation in this plan and the four-year vesting requirement enhances retention since he cannot participate in any of our defined benefit retirement plans.

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 2013 satisfied the requirements for deductibility.

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

Section 4999 of the Internal Revenue Code imposes an excise tax on payments to executives and others of amounts that are considered to be related to a change of control if they exceed levels specified in Section 280G of the Internal Revenue Code. 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.

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, 2013:

Name — David L. Goodin	4X	2.13	1.00	(1)
Doran N. Schwartz	3X	2.54	3.87	(2)
J. Kent Wells	3X	1.49	2.67	(3)
Jeffrey S. Thiede	3X	0.15	(4)
Paul K. Sandness	3X	4.80	9.75

| (1) | Participant must meet ownership
requirement by January 1, 2018. |
| --- | --- |
| (2) | Participant must meet ownership
requirement by January 1, 2015. |
| (3) | Participant must meet ownership
requirement by May 1, 2016. |
| (4) | Participant must meet ownership
requirement by January 1, 2019. |

MDU Resources Group, Inc. Proxy Statement 29

Proxy Statement

The compensation committee may consider the policy and the executives stock ownership in determining compensation. The committee, however, did not do so with respect to 2013 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

30 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Summary Compensation Table for 2013

| Name
and Principal Position (a) — David L. Goodin | Year (b) — 2013 | Salary ($) (c) — 625,000 | | Bonus ($) (d) — | | 1,241,280 | | Option Awards ($) (f) — | 1,610,625 | | 532,991 | All Other Compensation ($) (i) — 37,517 | (3) | 4,047,413 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| President and CEO | 2012 | | | | | | | | | | | | | |
| | 2011 | | | | | | | | | | | | | |
| Terry D. Hildestad | 2013 | 74,481 | (4) | | | | | | | | 17,928 | 13,565 | (3) | 105,974 |
| President and CEO | 2012 | 750,000 | | | | 897,277 | | | 518,250 | | 355,027 | 38,224 | | 2,558,778 |
| | 2011 | 750,000 | | | | 1,084,318 | | | 954,750 | | 739,760 | 37,499 | | 3,566,327 |
| Doran N. Schwartz | 2013 | 345,000 | | | | 342,579 | | | 296,355 | | 28,459 | 34,881 | (3) | 1,047,274 |
| Vice President and CFO | 2012 | 300,000 | | | | 179,445 | | | 103,650 | | 100,935 | 34,224 | | 718,254 |
| | 2011 | 273,000 | | | | 197,341 | | | 173,765 | | 147,789 | 33,549 | | 825,444 |
| J. Kent Wells | 2013 | 570,000 | | | | 1,509,419 | | | 1,425,000 | | | 20,556 | (3) | 3,524,975 |
| Vice Chairman of the | 2012 | 550,000 | | | | 877,331 | | | | | | 96,470 | | 1,523,801 |
| Corporation and | 2011 | 367,671 | | 916,685 | (5) | 925,000 | (6) | | 1,007,306 | (7) | | 84,580 | (8) | 3,301,242 |
| President and CEO of | | | | | | | | | | | | | | |
| Fidelity Exploration & | | | | | | | | | | | | | | |
| Production Company | | | | | | | | | | | | | | |
| Jeffrey S. Thiede | 2013 | 367,068 | | | | | | | 825,000 | | | 66,282 | (3) | 1,258,350 |
| President and CEO of | 2012 | | | | | | | | | | | | | |
| MDU Construction | 2011 | | | | | | | | | | | | | |
| Services Group, Inc. | | | | | | | | | | | | | | |
| Paul K. Sandness | 2013 | 344,000 | | | | 387,138 | | | 354,595 | | | 39,131 | (3) | 1,124,864 |
| General Counsel and | 2012 | | | | | | | | | | | | | |
| Secretary | 2011 | | | | | | | | | | | | | |

| (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, 2013. |
| --- | --- |
| (2) | Amounts
shown represent the change in the actuarial present value for years ended
December 31, 2011, 2012, and 2013 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, 2011, 2012, and 2013, as follows: |

Name	Accumulated Pension Change — 12/31/2011 ($)	12/31/2012 ($)	12/31/2013 ($)	12/31/2011 ($)	12/31/2012 ($)	12/31/2013 ($)
David L. Goodin			532,986				5
Terry D. Hildestad	728,587	331,845	(582,178	)	11,173	23,182	17,928
Doran N. Schwartz	147,789	100,935	28,459
J. Kent Wells
Jeffrey S. Thiede
Paul K. Sandness			(170,904	)

MDU Resources Group, Inc. Proxy Statement 31

Proxy Statement

(3)

	401(k) ($)(a)	Life Insurance Premium ($)	Matching Charitable Contribution ($)	Automobile Allowance ($)	Additional LTD Premium ($)	Nonqualified Defined Contribution Plan ($)	Total ($)
David L. Goodin	36,975	242	300				37,517
Terry D. Hildestad	11,752	13	1,800				13,565
Doran N. Schwartz	34,425	156	300				34,881
J. Kent Wells	20,400	156					20,556
Jeffrey S. Thiede	20,400	156		12,000	726	33,000	66,282
Paul K. Sandness	36,975	156	2,000				39,131

(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) | Mr.
Hildestads reported salary includes $65,827 of vacation payout. |
| --- | --- |
| (5) | Includes
a cash recruitment payment of $550,000 and guaranteed target annual incentive
payment of $366,685. |
| (6) | 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. |
| (7) | 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. |
| (8) | 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. |

Gr ants of Plan-Based Awards in 2013

									Grant Date Fair Value of Stock and Option Awards ($) (l)
		Estimated Future Payouts Under Non-Equity Incentive Plan Awards			Estimated Future Payouts Under Equity Incentive Plan Awards
Name (a)	Grant Date (b)	Threshold ($) (c)	Target ($) (d)	Maximum ($) (e)	Threshold (#) (f)		Target (#) (g)	Maximum (#) (h)
David L.	3/4/2013(1	)	290,625	937,500	1,940,625
Goodin	3/4/2013(2	)				8,558	42,788	85,576	1,241,280
Terry D.
Hildestad
Doran N.	3/4/2013(3	)	53,475	172,500	357,075
Schwartz	3/4/2013(2	)				2,362	11,809	23,618	342,579
J. Kent Wells	3/4/2013(1	)	178,125	712,500	1,425,000
	3/4/2013(2	)				10,406	52,031	104,062	1,509,419
Jeffrey S.	2/7/2013(3	)	231,000	330,000	825,000
Thiede
Paul K.	3/4/2013(3	)	63,984	206,400	427,248
Sandness	3/4/2013(2	)				2,669	13,345	26,690	387,138

| (1) | Annual
incentive for 2013 granted pursuant to the MDU Resources Group, Inc.
Long-Term Performance-Based Incentive Plan. |
| --- | --- |
| (2) | Performance
shares for the 2013-2015 performance period granted pursuant to the MDU
Resources Group, Inc. Long-Term Performance-Based Incentive Plan. |
| (3) | Annual
incentive for 2013 granted pursuant to the MDU Resources Group, Inc.
Executive Incentive Compensation Plan. |

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

Incentive Awards

Annual Incentive On March 4, 2013, the compensation committee recommended the 2013 annual incentive award opportunities for our named executive officers, except for Mr. Thiede, and the board approved these opportunities at its meeting on March 4, 2013. Mr. Thiedes 2013 annual incentive award opportunity was established on February 7, 2013 by Mr. Goodin and the former chief executive officer of the construction services segment and was left unchanged by the compensation committee when he was promoted. These award opportunities are reflected in the Grants of Plan-Based Awards table at grant on March 4, 2013, (February 7, 2013 for Mr. Thiede) in columns (c), (d), and (e) and in the Summary Compensation Table as earned with respect to 2013 in column (g).

32 MDU Resources Group, Inc. Proxy Statement

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. Based upon achievement of goals, actual payment may range from 0% to 207% of the target for Messrs. Goodin, Schwartz, and Sandness, from 0% to 200% of the target for Mr. Wells, and from 0% to 250% of the target for Mr. Thiede.

In order to be eligible to receive a payment of an annual incentive award under the Long-Term Performance-Based Incentive Plan, Messrs. Goodin and Wells must have remained employed by the company through December 31, 2013, 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. The application of any 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 Messrs. Schwartz, Thiede, and Sandness, participants who retire during the year at age 65 pursuant to their employers bylaws 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. Goodin, Schwartz, and Sandness 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	208.8 %	28.5 %	59.5 %
Exploration and
Production Segment	200.0 %	26.6 %	53.2 %
Pipeline and Energy
Services Segment	50.0 %	9.8 %	4.9 %
Electric and
Natural Gas Distribution Segments	154.3 %	35.1 %	54.2 %
Total (Payout
Percentage)			171.8 %

The award opportunity available to Mr. Wells was:

| Exploration and Productions
2013 earnings* results as a % of 2013 target
(weighted 75.0%) | Corresponding payment of annual incentive target based on earnings | MDU Resources Group, Inc.s consolidated 2013 earnings per share results as a % of target (weighted 25%) | Corresponding payment of annual incentive target based on con- solidated earnings per share result |
| --- | --- | --- | --- |
| Less than 90% | 0 % | Less than 85% | 0 % |
| 90 % | 25 % | 85 % | 25 % |
| 100 % | 100 % | 90 % | 50 % |
| 101 % | 120 % | 95 % | 75 % |
| 102 % | 140 % | 100 % | 100 % |
| 103 % | 160 % | 103 % | 120 % |
| 104 % | 180 % | 106 % | 140 % |
| 105 % | 200 % | 109 % | 160 % |
| | | 112 % | 180 % |
| | | 115 % | 200 % |

Earnings is defined as GAAP earnings reported for the exploration and production segment, adjusted to exclude the (i) effect on earnings of any noncash write-downs of oil and natural gas properties due to ceiling test impairment charges and any associated earnings benefit resulting from lower depletion, depreciation, and amortization expenses and (ii) the effect on earnings of any noncash gains and losses that result from (x) ineffectiveness in hedge accounting, (y) derivatives that no longer qualify for hedge accounting treatment, or (z) the discontinuation of hedge accounting treatment.

MDU Resources Group, Inc. Proxy Statement 33

Proxy Statement

The award opportunity available to Mr. Thiede was:

Construction Services 2013 earnings* results as a % of 2013 target (weighted 100%)	Corresponding payment of annual incentive target based on earnings
Less than 70%	0%
70%	70%
100%	100%
116%	130%
130%	160%
144%	190%
157%	220%
171%	250%
* Earnings
is defined as GAAP earnings reported for the construction services segment.

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

Long-Term Incentive

On March 4, 2013, the compensation committee recommended long-term incentive grants to the named executive officers, except for Mr. Thiede, in the form of performance shares, and the board approved these grants at its meeting on March 4, 2013. 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 2013-2015 total stockholder return is positive, from 0% to 200% of the target grant will be paid out in February 2016, depending on our 2013-2015 total stockholder return compared to the total three-year stockholder returns of companies in our performance graph peer group. The payout percentage is determined as follows:

The Companys Percentile Rank	Payout Percentage of March 4, 2013 Grant
75th or higher	200%
50th	100%
25th	20%
Less than 25th	0%

If the common stock of a company in the peer group ceases to be traded at any time during the 2013-2015 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.

If the companys 2013-2015 total stockholder return is negative, the number of shares otherwise earned, if any, for the performance period will be reduced in accordance with the following table:

Total Stockholder Return	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%

34 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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

Name — David L. Goodin	625,000	4,047,413	15.4%
Terry D. Hildestad	74,481	105,974	70.3%
Doran N. Schwartz	345,000	1,047,274	32.9%
J. Kent Wells	570,000	3,524,975	16.2%
Jeffrey S. Thiede	367,068	1,258,350	29.2%
Paul K. Sandness	344,000	1,124,864	30.6%

Outstanding Equity Awards at Fiscal Year-End 2013

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)
David L. Goodin	148,124(2	)	4,525,188
Terry D. Hildestad	146,206(2	)	4,466,593
Doran N. Schwartz	64,252(2	)	1,962,899
J. Kent Wells	206,196(2	)	6,299,288
Jeffrey S. Thiede
Paul K. Sandness	74,104(2	)	2,263,877

| (1) | Value
based on the number of performance shares reflected in column (i) multiplied
by $30.55, the year-end closing price for 2013. |
| --- | --- |
| (2) | Below
is a breakdown by year of the plan awards: |

| Named
Executive Officer | Award | Shares | End of Performance Period |
| --- | --- | --- | --- |
| David L. Goodin | 2011 | 30,376 | 12/31/13 |
| | 2012 | 32,172 | 12/31/14 |
| | 2013 | 85,576 | 12/31/15 |
| Terry D. Hildestad | 2011 | 108,486 | 12/31/13 |
| | 2012 | 37,720 | 12/31/14 |
| | 2013 | | 12/31/15 |
| Doran N. Schwartz | 2011 | 19,744 | 12/31/13 |
| | 2012 | 20,890 | 12/31/14 |
| | 2013 | 23,618 | 12/31/15 |
| J. Kent Wells | 2011 | | 12/31/13 |
| | 2012 | 102,134 | 12/31/14 |
| | 2013 | 104,062 | 12/31/15 |
| Jeffrey S. Thiede | 2011 | | 12/31/13 |
| | 2012 | | 12/31/14 |
| | 2013 | | 12/31/15 |
| Paul K. Sandness | 2011 | 24,156 | 12/31/13 |
| | 2012 | 23,258 | 12/31/14 |
| | 2013 | 26,690 | 12/31/15 |

Shares for the 2011 award are shown at the maximum level (200%) based on results for the 2011-2013 performance cycle above target.

Shares for the 2012 award are shown at the maximum level (200%) based on results for the first two years of the 2012-2014 performance cycle above target.

Shares for the 2013 award are shown at the maximum level (200%) based on results for the first year of the 2013-2015 performance cycle above target.

MDU Resources Group, Inc. Proxy Statement 35

Proxy Statement

P ension Benefits for 2013

| Name — (a) | Plan
Name — (b) | (c) | (d) | Payments During Last Fiscal Year ($) — (e) |
| --- | --- | --- | --- | --- |
| David L. Goodin | MDU Pension Plan | 26 | 839,516 | |
| | SISP I(1)(3) | 10 | 365,414 | |
| | SISP II(2)(3) | 10 | 570,332 | |
| | SISP II 2012 Upgrade(4) | 1 | 57,247 | |
| | SISP II 2013 Upgrade(4) | 0 | 782,190 | |
| | SISP Excess(5) | 26 | 30,865 | |
| Terry D. Hildestad | MDU Pension Plan | 35 | 1,438,289 | 95,896 |
| | SISP I(1)(3) | 10 | 2,061,898 | |
| | SISP II(2)(3) | 10 | 3,404,499 | |
| | SISP Excess(5) | 35 | 192,720 | 182,410 |
| Doran N. Schwartz | MDU Pension Plan | 4 | 77,776 | |
| | SISP II(2)(3) | 6 | 400,999 | |
| | SISP II 2013 Upgrade(4) | 0 | 132,714 | |
| J. Kent Wells(6) | | | | |
| Jeffrey S.
Thiede(6) | | | | |
| Paul K. Sandness | MDU Pension Plan | 29 | 1,383,460 | |
| | SISP I(1)(3) | 10 | 389,048 | |
| | SISP II(2)(3) | 10 | 1,088,256 | |
| | SISP Excess(5) | 29 | 153,245 | |

| (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, 2013, 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) | Benefit
level increases granted under SISP II on or after January 1, 2010 require an
additional three years of vesting service for the increase. Mr. Goodin
received a benefit increase effective January 1, 2012 and Messrs. Goodin and
Schwartz received benefit level increases effective January 1, 2013; the
present value of their accumulated benefits was calculated assuming that the
additional vesting requirements would be met. |
| (5) | The
number of years of credited service under the SISP excess reflects the years
of credited benefit service in the MDU pension plan as of December 31, 2009,
when the MDU pension plan was frozen, rather than the years of participation
in the SISP excess. We reflect years of credited benefit service in the MDU
pension plan because the SISP excess provides a benefit that is based on
benefits that would have been payable under the MDU pension plan absent
Internal Revenue Code limitations. |
| (6) | Messrs.
Wells and Thiede are not eligible to participate in the MDU pension plan and
do 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, 2013, calculated using a 4.32% and 4.48% discount rate for the SISP excess and MDU pension plan, respectively, the 2014 IRS Static Mortality Table for post-retirement mortality, and no recognition of future salary increases or pre-retirement mortality. The assumed retirement age for these benefits was age 60 for Messrs. Goodin, Schwartz, and Sandness. This is the earliest age at which the executives could begin receiving unreduced benefits. Mr. Hildestads benefits reflect his actual retirement date of January 3, 2013. The amounts shown for the SISP I and SISP II were determined using a 4.32% discount rate and assume benefits commenced at age 65.

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

The MDU pension plan 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.

36 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

To receive unreduced retirement benefits under the MDU pension plan, participants must either remain employed until age 60 or elect to defer commencement of benefits until age 60. Mr. Hildestad was eligible for unreduced retirement benefits under the MDU pension plan. Participants whose employment terminates between the ages of 55 and 60, with 5 years of service under the MDU pension plan, are eligible for early retirement benefits. Early retirement benefits are determined by reducing the normal retirement benefit by 0.25% per month for each month before age 60. 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 MDU pension plan 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. Goodin would have been eligible for a lump sum if he had retired on December 31, 2013.

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

Supplemental Income Security Plan We also offer select key managers and executives benefits under our defined benefit nonqualified retirement plan, which we refer to as the Supplemental Income Security Plan or SISP. Messrs. Goodin, Hildestad, Schwartz, and Sandness participate in the 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. Two of the named executive officers, Messrs. Goodin and Schwartz, received a benefit level increase effective January 1, 2013, which requires three years of vesting.

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, 2013, 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.

MDU Resources Group, Inc. Proxy Statement 37

Proxy Statement

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. |

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

38 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

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. Mr. Sandness would be entitled to the SISP excess benefit if he was to terminate employment prior to age 65. Mr. Goodin must remain employed until age 60 to become entitled to his SISP excess benefit. Mr. Hildestads benefits reflect his actual payment during 2013 as his retirement commenced before attainment of age 65 and the present value of his future payments that continue until he reaches age 65. Messrs. Schwartz, Wells, and Thiede 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.

Nonqualified Deferred C ompensation for 2013

Name	Executive Contributions in Last FY ($)	Registrant Contributions in Last FY ($)	Aggregate Earnings in Last FY ($)	Aggregate Withdrawals/ Distributions ($)
(a)	(b)	(c)	(d)	(e)	(f)
David L. Goodin			6	1,526
Terry D. Hildestad			46,850		1,048,483
Doran N. Schwartz
J. Kent Wells
Jeffrey S. Thiede		33,000	5,751		38,751	(1)
Paul K. Sandness

(1) Includes $33,000 which was awarded to Jeffrey S. Thiede under the Nonqualified Defined Contribution Plan which is reported for 2013 in column (i) of the Summary Compensation Table in this proxy statement.

Deferral of Annual Incentive Compensation 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 2013 was 4.58% 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.

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. |

Nonqualified Defined Contribution Plan

The company adopted the Nonqualified Defined Contribution Plan, effective January 1, 2012, to provide deferred compensation for a select group of management or highly compensated employees who do not participate in the SISP. The compensation committee determines the amount of employer contributions under the Nonqualified Defined Contribution Plan, which are credited to plan accounts and not funded. After satisfying a four-year vesting requirement for each contribution, the contributions and investment earnings will be distributed to the executive in a lump sum upon separation from service with the company or in annual installments commencing upon the later of (i) separation from service and (ii) age 65. Plan benefits become fully vested if the participant dies while actively employed. Benefits are forfeited if the participants employment is terminated for cause.

MDU Resources Group, Inc. Proxy Statement 39

Proxy Statement

Potential Payments upon Termination or Change of Control The following tables show the payments and benefits our named executive officers would receive in connection with a variety of employment termination scenarios and upon a change of control. For the named executive officers other than Mr. Hildestad, the information assumes the terminations and the change of control occurred on December 31, 2013. For Mr. Hildestad, the information relates to his actual retirement on January 3, 2013 and assumes that a change of control occurred on December 31, 2013. 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 include amounts under the Nonqualified Defined Contribution Plan, but do not include the named executive officers deferred annual incentive compensation. See the Pension Benefits for 2013 table and the Nonqualified Deferred Compensation for 2013 table, and accompanying narratives, for a description of the named executive officers accumulated benefits under our qualified defined benefit pension plans, the Nonqualified Defined Contribution Plan, and their deferred annual incentive compensation.

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 2013 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, 2013 for Mr. Sandness.

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. Goodin, Hildestad, Schwartz, Wells, and Sandness and the annual incentives for Messrs. Goodin and Wells, 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. |

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. |

40 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

As of December 31, 2013, Messrs. Goodin, Schwartz, and Wells had not satisfied this requirement. Accordingly, if a December 31, 2013 termination other than for cause without a change of control is assumed, the named executive officers 2013-2015 performance share awards would be forfeited; any amounts earned under the 2012-2014 performance share award for Mr. Sandness would be reduced by one-third and such awards for Messrs. Goodin, Schwartz, and Wells would be forfeited; and any amounts earned under the 2011-2013 performance share award for Mr. Sandness would not be reduced and the awards for Messrs. Goodin and Schwartz would be forfeited. Mr. Wells had no 2011-2013 performance share awards, and Mr. Thiede had no 2013-2015, 2012-2014, or 2011-2013 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 2011-2013 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 193% of the target award. For the 2012-2014 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 2013-2015 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, 2013, 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, 2013.

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.

MDU Resources Group, Inc. Proxy Statement 41

Proxy Statement

David L. Goodin — Executive Benefits and Payments Upon Termination or Change of Control	Voluntary Termination ($)	Not for Cause Termination ($)	Death ($)	Disability ($)	Change of Control (With Termination) ($)	Change of Control (Without Termination) ($)
Compensation:
Short-term
Incentive(1)					937,500	937,500
2011-2013
Performance Shares					494,749	494,749
2012-2014
Performance Shares					513,465	513,465
2013-2015
Performance Shares					1,336,911	1,336,911
Benefits and Perquisites:
Regular
SISP(2)	930,586	930,586		987,517	930,586
SISP Death
Benefits(3)			6,118,589
Disability
Benefits(4)				107,847
Total	930,586	930,586	6,118,589	1,095,364	4,213,211	3,282,625

| (1) | Represents the target 2013 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. Goodins vested regular SISP benefit as of December 31, 2013, which was
$12,145 per month for 15 years, commencing at age 65. Present value was
determined using a 4.32% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2013 table.
The amount payable for a disability reflects a credit for two additional
years of vesting, which would result in full vesting of the 2012 SISP
upgrade. |
| (3) | Represents the present value of
180 monthly payments of $46,080 per month, which would be paid as a SISP
death benefit under the SISP. Present value was determined using a 4.32%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2013 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 4.48% discount
rate. |

Terry D. Hildestad

Executive Benefits and Payments Upon Termination or Change of Control	Voluntary Termination ($) (1)	Change of Control ($)
Compensation:
2011-2013
Performance Shares	3,410,244	1,766,966
2012-2014
Performance Shares	602,011	602,011
2013-2015
Performance Shares
Total	4,012,255	2,368,977

(1) Mr. Hildestad retired on January 3, 2013. The information in this table relates to his actual retirement on January 3, 2013, and assumes that a change of control occurred on December 31, 2013. The amount shown for the 2011-2013 Performance Shares is based on actual performance, resulting in payment of 193% of the target award. The amount shown for the 2012-2014 Performance Shares is the target award, prorated based on the number of months Mr. Hildestad worked during the performance period. His termination qualified as normal retirement under our qualified pension plan and our SISP. Mr. Hildestad also had an accumulated benefit under our Nonqualified Deferred Compensation Plan. These plans and Mr. Hildestads benefits under them are described in the Pension Benefits for 2013 table and the Nonqualified Deferred Compensation for 2013 table and accompanying narratives.

42 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Doran N. Schwartz — Executive Benefits and Payments Upon Termination or Change of Control	Voluntary Termination ($)		Not for Cause Termination ($)	For Cause Termination ($)	Death ($)	Disability ($)		Change of Control (With Termination) ($)	Change of Control (Without Termination) ($)
Compensation:
2011-2013
Performance Shares								321,580	321,580
2012-2014
Performance Shares								333,404	333,404
2013-2015
Performance Shares								368,972	368,972
Benefits and Perquisites:
Regular SISP	240,266	(1)	240,266	(1)		320,355	(2)	240,266	(1)
SISP Death
Benefits(3)					2,580,217
Disability
Benefits(4)						761,399
Total	240,266		240,266		2,580,217	1,081,754		1,264,222	1,023,956

| (1) | Represents the present value of
Mr. Schwartzs vested regular SISP benefit as of December 31, 2013, which was
$4,380 per month for 15 years, commencing at age 65. Present value was
determined using a 4.32% discount rate. The terms of the regular SISP benefit
are described following the Pension Benefits for 2013 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 4.32% discount rate. |
| (3) | Represents the present value of
180 monthly payments of $19,432 per month, which would be paid as a SISP
death benefit under the SISP. Present value was determined using a 4.32%
discount rate. The terms of the SISP death benefit are described following
the Pension Benefits for 2013 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 4.48% discount
rate. |

J. Kent Wells — Executive Benefits and Payments Upon Termination or Change of Control	Disability ($)	Change of Control (With Termination) ($)	Change of Control (Without Termination) ($)
Compensation:
Short-term
Incentive(1)		712,500	712,500
2012-2014
Performance Shares		1,630,059	1,630,059
2013-2015
Performance Shares		1,625,709	1,625,709
Benefits and Perquisites:
Disability
Benefits (2)	399,567
Total	399,567	3,968,268	3,968,268

| (1) | Represents the target 2013 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
the disability benefit. Present value was determined using the 4.32% discount
rate applied for purposes of the SISP calculations. Though Mr. Wells is
not a participant in the SISP, this rate is considered reasonable for
purposes of this calculation as it would be applied if Mr. Wells were to become a SISP
participant. |

MDU Resources Group, Inc. Proxy Statement 43

Proxy Statement

Jeffrey S. Thiede

| Executive
Benefits and Payments Upon Termination or Change of Control | | |
| --- | --- | --- |
| Compensation: | | |
| Benefits and Perquisites: | | |
| Nonqualified Defined Contribution | | |
| Plan Death Benefit(1) | 38,751 | |
| Disability Benefits(2) | | 598,158 |
| Total | 38,751 | 598,158 |

| (1) | Represents
the value of Mr. Thiedes unvested Nonqualified Defined Contribution Plan
account at December 31, 2013, which would be paid upon death. |
| --- | --- |
| (2) | Represents
the present value of the disability benefit. Present value was determined
using the 4.32% discount rate applied for purposes of the SISP calculations.
Though Mr. Thiede is not a participant in the SISP, this rate is considered
reasonable for purposes of this calculation as it would be applied if Mr.
Thiede were to become a SISP participant. |

Paul K. Sandness

| Executive
Benefits and Payments Upon Termination or Change of Control | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Compensation: | | | | | | |
| 2011-2013 Performance Shares | 759,356 | 759,356 | 759,356 | 759,356 | 393,441 | 393,441 |
| 2012-2014 Performance Shares | 247,476 | 247,476 | 247,476 | 247,476 | 371,198 | 371,198 |
| 2013-2015 Performance Shares | | | | | 416,965 | 416,965 |
| Benefits and Perquisites: | | | | | | |
| Regular SISP(1) | 1,437,027 | 1,437,027 | | 1,437,027 | 1,437,027 | |
| Excess SISP(2) | 150,947 | 150,947 | | 150,947 | 150,947 | |
| SISP Death Benefits(3) | | | 3,630,256 | | | |
| Total | 2,594,806 | 2,594,806 | 4,637,088 | 2,594,806 | 2,769,578 | 1,181,604 |
| (1) | Represents
the present value of Mr. Sandness vested regular SISP benefit as of December
31, 2013, which was $13,670 per month for 15 years, commencing at age 65.
Present value was determined using a 4.32% discount rate. The terms of the
regular SISP benefit are described following the Pension Benefits for 2013
table. | | | | | |
| (2) | The
present value of all excess SISP benefits Mr. Sandness would be entitled to
upon termination of employment under the SISP was computed based on
calculations of ages rounded to the nearest whole age. Actual payments may
differ. The terms of the excess SISP benefit are described following the
Pension Benefits for 2013 table. | | | | | |
| (3) | Represents
the present value of 180 monthly payments of $27,340 per month, which would
be paid as a SISP death benefit under the SISP. Present value was determined
using a 4.32% discount rate. The terms of the SISP death benefit are
described following the Pension Benefits for 2013 table. | | | | | |

44 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Director Compensation for 2013

Name (a) — Thomas Everist	65,000		110,000	(2)	156		175,156
Karen B. Fagg	65,000		110,000	(2)	656		175,656
Mark A. Hellerstein
(3)	22,917		45,833	(4)	65		68,815
A. Bart Holaday	55,000	(5)	110,000	(2)	156		165,156
Dennis W. Johnson	70,000		110,000	(2)	156		180,156
Thomas C. Knudson	55,000		110,000	(2)	156		165,156
Richard H. Lewis
(6)	18,333		36,667	(4)	481,572	(7)	536,572
William E.
McCracken (3)	22,917		45,833	(4)	65		68,815
Patricia L. Moss	55,000		110,000	(2)	156		165,156
Harry J. Pearce	138,750		110,000	(2)	156		248,906
John K. Wilson	55,000	(8)	110,000	(2)	156		165,156

| (1) | Group life
insurance premium and a matching charitable contribution of $500 for Ms. Fagg. |
| --- | --- |
| (2) | Reflects
the aggregate grant date fair value of 3,603 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 20, 2013, which was
$30.528. The $7.62 in cash paid to each director for the fractional shares is
included in the amounts reported in column (c) to this table. |
| (3) | Elected a
Director effective August 1, 2013. |
| (4) | Reflects
the aggregate grant date fair value 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 20, 2013, which was $30.528. The stock
payment is pro-rated for directors who do not serve the entire calendar year.
There were 1,501 shares purchased for Messrs. Hellerstein and McCracken with
$10.80 in cash paid to each for the fractional shares, and for Mr. Lewis
there were 1,201 shares purchased with $2.54 in cash paid to Mr. Lewis for
the fractional share. |
| (5) | Includes
$54,977 that Mr. Holaday received in our common stock in lieu of cash. |
| (6) | Mr. Lewis
served on the board until April 23, 2013. |
| (7) | Comprised
of a group life insurance premium of $52, payments of $18,961 during 2013
from Mr. Lewis deferred compensation and the value of Mr. Lewis deferred
compensation at December 31, 2013, which is payable over five years in
monthly installments. |
| (8) | Includes
$54,977 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(1)	90,000
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(2)	110,000

| (1) | Increased
from $75,000 to $90,000 effective June 1, 2013. |
| --- | --- |
| (2) | 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 $156.

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.

MDU Resources Group, Inc. Proxy Statement 45

Proxy Statement

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 2013.

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.

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 included in the 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
and internal control 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 the ratio of executive
compensation to total stockholder return compared 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 |
| | discretionary clawbacks on
incentive payments in the event of a financial restatement |

46 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| | 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 |
| | substantive incentive goals
measured primarily by return on invested capital, earnings, 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. |

MDU Resources Group, Inc. Proxy Statement 47

Proxy Statement

I NFORMATION CONCERNING EXECUTIVE OFFICERS

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

| Name | Age | Present Corporate Position and
Business Experience |
| --- | --- | --- |
| David L. Goodin | 52 | 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. |
| David C. Barney | 58 | Mr. Barney was elected president and chief executive
officer of Knife River Corporation effective April 30, 2013; president
effective January 1, 2012; and president of its western area operations
effective October 2008. Prior to that, he was manager of its Northern
California region effective July 2005 and became president of Concrete, Inc.
in 1996. He joined Concrete, Inc. in 1986 and held numerous positions of
increasing responsibility before it was acquired by Knife River in September 1993. |
| Steven L. Bietz | 55 | 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 | 52 | Mr. Connors was elected vice president-renewable 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 | 54 | Mr. Del Vecchio was elected vice president-human 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. |
| Dennis L. Haider | 61 | Mr. Haider was elected executive vice president-business
development effective June 1, 2013. Prior to that, he was executive vice
president-business development and gas supply of Montana-Dakota Utilities
Co., Great Plains Natural Gas Co., Cascade Natural Gas Corporation and
Intermountain Gas Company from January 1, 2012 to May 31, 2013; executive
vice president-regulatory, gas supply, and business development of Cascade
Natural Gas Corporation and Intermountain Gas Company from October 1, 2010 to
December 31, 2011, and of Montana-Dakota Utilities Co. and Great Plains
Natural Gas Co. from October 1, 2008 to December 31, 2011; executive vice
president-business development and gas supply of Montana-Dakota Utilities Co.
and Great Plains Natural Gas Co. from August 1, 2005 to September 30, 2008.
He joined Montana-Dakota Utilities Co. in 1978 and held numerous positions
of increasing responsibility. |
| Douglass A. Mahowald | 64 | 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 | 55 | 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 | 59 | Ms. Norland was elected vice president-administration
effective July 16, 2007. Prior to that, she was the assistant vice
president-administration 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. |
| Nathan W. Ring | 38 | Mr. Ring was elected vice president, controller and chief
accounting officer effective January 3, 2014. Prior to that, he was treasurer
and controller for MDU Construction Services Group, Inc. since late April
2013, was its treasurer from September 2012 through late April 2013 and was
its controller from June 2012 until September 2012. Prior to that, he served
as assistant controller of D S S Company, a subsidiary of Knife River
Corporation, a subsidiary of the Company, from March 2009 to June 2012 and as
controller of another Knife River Corporation subsidiary, Hap Taylor &
Sons, Inc. doing business as Norms Utility Contractor, Inc., from March 2007
to March 2009. He joined MDU Resources Group, Inc. in 2001 as a tax analyst. |

48 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| Paul K. Sandness | 59 | 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. |
| --- | --- | --- |
| Doran N. Schwartz | 44 | 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 | 54 | Mr. Stumpf was elected vice president-strategic planning
effective December 1, 2006. Mr. Stumpf was vice president-corporate
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. |
| Jeffrey S. Thiede | 52 | Mr. Thiede was elected president and chief executive
officer of MDU Construction Services Group, Inc. effective April 30, 2013,
and president effective January 1, 2012. Prior to that, he was president of
Capital Electric Construction Company, Inc. effective July 2006, and
president of Oregon Electric Construction, Inc. effective October 2004. Prior
to joining the company, Mr. Thiede was a project director for DPR Construction
and worked in the field as an inside wireman. |
| J. Kent Wells | 57 | Mr. Wells was elected vice chairman of the corporation 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. |

S ECURITY OWNERSHIP

The table below sets forth the number of shares of our capital stock that each director and each nominee for director, each named executive officer, and all directors and executive officers as a group owned beneficially as of December 31, 2013.

Name	Common Shares Beneficially Owned(1)		Shares Held By Family Members(2)	Percent of Class	Deferred Director Fees Held as Phantom Stock(3)
Thomas Everist	1,139,193	(4)		*	29,998
Karen B. Fagg	42,081			*
David L. Goodin	43,477	(5)(6)	8,317	*
Mark A. Hellerstein	1,501			*
Terry D. Hildestad	10,249			*
A. Bart Holaday	46,646			*
Dennis W. Johnson	84,470	(7)	4,560	*
Thomas C. Knudson	28,070			*
William E. McCracken	1,501			*
Patricia L. Moss	66,328			*
Harry J. Pearce	221,620			*	49,323
Paul K. Sandness	53,996	(5)		*
Doran N. Schwartz	28,712	(5)(8)	1,300	*
Jeffrey S. Thiede	1,941	(5)		*
J. Kent Wells	27,743			*
John K. Wilson	95,995			*
All directors and executive officers as a group (26 in
number)	2,155,227		20,584	1.1	79,321

| * | 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 1,070,000 shares of
common stock acquired through the sale of Connolly-Pacific to us. |
| (5) | Includes full shares allocated to
the officers account in our 401(k) retirement plan. |
| (6) | The total includes 8,317 shares
owned by Mr. Goodins wife. |
| (7) | Mr. Johnson disclaims all
beneficial ownership of the 4,560 shares owned by his wife. |
| (8) | The total includes 1,300 shares
owned by Mr. Schwartzs wife. |

MDU Resources Group, Inc. Proxy Statement 49

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 — Common Stock	BlackRock, Inc. 40 East 52nd Street New York, NY 10022	Amount and Nature of Beneficial Ownership — 13,303,128	(1)	Percent of Class — 7.00 %
Common Stock	State Street Corporation State Street Financial Center One
Lincoln Street Boston, MA 02111	9,956,410	(2)	5.30 %
Common Stock	The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355	11,949,283	(3)	6.32 %
(1)	In a Schedule 13G/A, Amendment
No. 4, filed on January 30, 2014, BlackRock, Inc. reports sole voting power
with respect to 12,183,613 shares and sole dispositive power with respect to
13,303,128 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 Advisors, LLC, BlackRock Investment Management, LLC,
BlackRock Investment Management (Australia) Limited, BlackRock Life Limited,
BlackRock (Netherlands) B.V., BlackRock Fund Managers Ltd, BlackRock Asset
Management Ireland Limited, BlackRock International Limited, BlackRock
Investment Management (UK) Limited, BlackRock (Luxembourg) S.A., BlackRock
Asset Management North Asia Limited and BlackRock Fund Management Ireland
Limited.
(2)	In a Schedule 13G, filed on
February 3, 2014, 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., State Street
Global Advisors, Asia Limited and SSARIS Advisors LLC.
(3)	In a Schedule 13G/A, Amendment
No. 1, filed on February 11, 2014, The Vanguard Group reports sole
dispositive power with respect to 11,805,392 shares, shared dispositive power
with respect to 143,891 shares and sole voting power with respect to 172,291
shares. These shares include 106,291 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 103,600 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.

50 MDU Resources Group, Inc. Proxy Statement

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.

John G. Harp, who was chief executive officer of MDU Construction Services Group, Inc. and Knife River Corporation until his retirement in late April 2013, and his brother, Michael D. Harp, are managing members of MOJO Montana, LLC, a Nevada limited liability company (MOJO), which has leased properties located in Kalispell and Billings, Montana, to an indirect subsidiary of the company 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, which expired June 30, 2013, for these properties that provide for our indirect subsidiary to pay a combined monthly rent of $9,508 to MOJO. In May 2013, after Mr. Harp had retired, the leases were amended to extend the term for two additional years, for a combined monthly rent of $8,823, with the option to renew the leases for one additional year, expiring June 30, 2016. Rent for the additional year is to be renegotiated based upon fair market value as determined by the parties.

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/proxystatement/corporate-governance.
The board of directors has determined that current directors Thomas Everist,
Karen B. Fagg, Mark A. Hellerstein, A. Bart Holaday, Dennis W. Johnson,
Thomas C. Knudson (not standing for re-election), William E. McCracken,
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. |

The board of directors previously determined that Richard H. Lewis, who did not stand for re-election at the 2013 annual meeting, had no material relationship with us and was independent in accordance with our director independence guidelines and the New York Stock Exchange listing standards during the time he was a director.

In determining director independence, the board of directors reviewed and considered information about any transactions, relationships, and arrangements between the independent directors and their immediate family members and affiliated entities on the one hand, and the company and its affiliates on the other, and in particular the following transactions, relationships, and arrangements:

Business relationships with entities with which a director is affiliated: Purchase by the company in the ordinary course of business of cloud-based services for meeting SEC filing requirements from WebFilings, LLC, a company in which Mr. Everist is a limited partner who owns less than 1% of the company. Payments by the company to WebFilings in any of the last three fiscal years did not exceed the greater of $1 million or 2% of WebFilings consolidated gross revenues. The transaction was entered into on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated entities.

MDU Resources Group, Inc. Proxy Statement 51

Proxy Statement

| | Charitable contributions by the MDU Resources Foundation
(Foundation) to nonprofit organizations, where a director, or a directors
spouse, serves or has served as a director, chair, or vice chair of the board
of trustees, trustee, or member of the organization or related entity: Charitable contributions by the
Foundation to Sanford Health Foundation (formerly known as Medcenter One
Foundation), Billings Catholic School Foundation, Montana State University
Foundation, the Denver Childrens Advocacy Center, the University of North
Dakota Foundation, Jamestown College and its foundation, the City of
Dickinson, Colorado UpLift, and Alliance in Choice for Education. None of the
contributions made to any of these nonprofit entities during the last three
fiscal years exceeded in any single year the greater of $1 million or 2% of
the relevant organizations consolidated gross revenues. |
| --- | --- |
| | Ownership by directors of company stock: Ownership by Mr. Everist, directly or
indirectly, of approximately 1.14 million shares of company stock, which
represents less than 1% of our outstanding common stock, at December 31,
2013, and approximately 1.89 million shares, which was 1% of our outstanding
common stock, at December 31, 2012. |

| 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 2013, 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/proxystatement/integrity-guide. |

| 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

52 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

matters. Each quarter, the board of directors receives presentations from senior management on strategic matters involving our operations. The board holds strategic planning sessions with senior management to discuss strategies, key challenges, and risks and opportunities for the company.

While the board is ultimately responsible for risk oversight at our company, our three board committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. The audit committee assists the board in fulfilling its oversight responsibilities with respect to risk assessment and management in a general manner and specifically in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements, and, in accordance with New York Stock Exchange requirements, discusses policies with respect to risk assessment and risk management and their adequacy and effectiveness. Risk assessment reports are regularly provided by management to the audit committee or the full board. 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
2013, the board of directors held eight meetings. Each director attended at
least 75% of the combined total meetings of the board and the committees on
which the director served during 2013. Director attendance at our annual
meeting of stockholders is left to the discretion of each director. Three
directors attended our 2013 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/proxystatement/board-charters. Our corporate governance guidelines are available at http://www.mdu.com/proxystatement/corporate-governance, and our Leading With Integrity Guide is also on our website at http://www.mdu.com/proxystatement/integrity-guide.

| Nominating
and Governance Committee |
| --- |
| The
nominating and governance committee met four times during 2013. The committee
members are Karen B. Fagg, chairman, A. Bart Holaday, William E. McCracken,
and Patricia L. Moss. Richard H. Lewis served on the committee until the 2013
annual meeting, when he did not stand for re-election. William E. McCracken
joined the committee effective August 1, 2013. |

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.

MDU Resources Group, Inc. Proxy Statement 53

Proxy Statement

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

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

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

These guidelines provide information to stockholders who wish to recommend candidates for director for consideration by the nominating and governance committee. Stockholders who wish to actually nominate persons for election to our board at an annual meeting of stockholders must follow the procedures set forth in section 2.08 of our bylaws. You may obtain a copy of the bylaws by writing to the secretary of MDU Resources Group, Inc. at the address above. Our bylaws are also available on our website at http://www.mdu.com/proxystatement/corporate-bylaws. See also the section entitled 2015 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.

Since our 2013 annual meeting, Messrs. Hellerstein and McCracken were recommended to the nominating and governance committee and elected to the board effective August 1, 2013. Mr. Pearce, a non-employee director and our chairman of the board of directors, recommended Mr. McCracken, and Mr. Robert L. Nance, a former non-employee director and stockholder, recommended Mr. Hellerstein. The committee did not retain a search firm to identify or evaluate any nominee, and no fees were paid.

54 MDU Resources Group, Inc. Proxy Statement

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 2013. The audit committee members are Dennis W. Johnson, chairman, Mark A. Hellerstein, A. Bart Holaday, and John K. Wilson. Richard H. Lewis served on the committee until the 2013 annual meeting when he did not stand for re-election. Mark A. Hellerstein joined the committee effective August 1, 2013. The board of directors has determined that Messrs. Johnson, Hellerstein, Holaday, Lewis (during the time he was on the committee), and Wilson are audit committee financial experts as defined by Securities and Exchange Commission regulations, and Messrs. Johnson, Hellerstein, Holaday, Lewis (during the time he was on the committee), 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 registered public accounting firm, 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 registered public accounting firms qualifications and
independence |
| | ° | the
performance of our internal audit function and independent registered public
accounting firm 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, 2013, the audit committee has (1) reviewed and discussed the audited financial statements with management; (2) discussed with the independent registered public accounting firm (the Auditors) the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16, Communications with Audit Committees; (3) received the written disclosures and the letter from the Auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the Auditors communications with the audit committee concerning independence, and has discussed with the Auditors their 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, 2013, for filing with the Securities and Exchange Commission.

Dennis W. Johnson, Chairman Mark A. Hellerstein A. Bart Holaday John K. Wilson

MDU Resources Group, Inc. Proxy Statement 55

Proxy Statement

| Compensation
Committee |
| --- |
| The
compensation committee met five times during 2013. The compensation committee
members are Thomas Everist, chairman, Karen B. Fagg, Thomas C. Knudson, and
Patricia L. Moss. |

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

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

The compensation committee and the board of directors have sole and direct responsibility for determining compensation for our Section 16 officers and directors. The compensation committee makes recommendations to the board regarding compensation of all Section 16 officers, and the board then approves the recommendations. The compensation committee and the board may not delegate their authority. They may, however, use recommendations from outside consultants, the chief executive officer, and the human resources department. The chief executive officer, the vice president-human resources, and general counsel regularly attend compensation committee meetings. The committee meets in executive session as needed. The committees practice has been to retain a compensation consultant every other year to conduct a competitive analysis on executive compensation. The committee did not retain a compensation consultant in 2013 to prepare a competitive assessment for 2014 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 2013, the vice president-human resources and the human resources department prepared the 2014 competitive assessment covering our Section 16 officers. The vice president-human resources and the human resources department also worked with the chief executive officer to:

| | recommend
salary grade midpoints, base salaries, annual and long-term incentive
targets, benefit level increases under our Supplemental Income Security Plan,
and employer contributions under our Nonqualified Defined Contribution Plan
for our executive officers other than the chief executive officer and the
vice president-human resources |
| --- | --- |
| | review
recommended base salary grades, salary increases, and annual and long-term
incentive targets submitted by executive officers for officers reporting to
them for reasonableness and alignment with company or business segment
objectives |
| | review
and update annual and long-term incentive programs |
| | construct
a recommended 2014 salary grade structure and |
| | verify
the competitiveness of short-term and long-term incentive targets associated
with salary grades and recommended modifications as appropriate. |

As discussed in the Compensation Discussion and Analysis, Mr. Goodin recommended compensation for Mr. Thiede for the remainder of 2013 in connection with his promotion.

56 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

The compensation committee has sole authority to retain or obtain the advice of compensation consultants, legal counsel or other advisers to assist in consideration of the compensation of the chief executive officer, the other Section 16 officers, and the board of directors. The committee is directly responsible for the appointment, compensation and oversight of the work of any adviser retained by the committee. Prior to retaining an adviser and annually, the committee will consider all factors relevant to the advisers independence from management. 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 2013.

Annually the compensation committee conducts an assessment of any potential conflicts of interest raised by the work of any compensation consultant to determine if any conflict exists and how such conflict should be addressed. 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 2013.

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.

In an engagement letter dated March 14, 2013, and signed by the chairman of the compensation committee, the compensation committee retained Towers Watson to prepare the 2013 compensation review for the board of directors. In its review of board of director compensation, Towers Watson was asked to:

| | identify
market trends relative to director compensation |
| --- | --- |
| | report
on the competitive position of our director compensation program as compared
to our performance graph peer group |
| | recommend
alternatives for our board of directors to consider and |
| | research
our performance graph peer group companies to identify practices relating to
director recruitment, such as one-time stock grants upon election to the
board. |

At its May 2013 meeting, the committee reviewed Towers Watsons analysis of competitive data and recent trends in director compensation. The analysis compared our director compensation to that of our performance graph peer group, including the components of director compensation: retainer, committee chair premiums, and equity. The Towers Watson report showed the companys median total direct compensation, which includes the annual cash retainer, board fees, if applicable, and equity compensation, was at the 38th percentile at $165,000, versus the market median of the performance graph peer group of $170,084. Additionally, the companys committee chair premiums of $15,000, $10,000, and $10,000 for audit, compensation, and nominating/governance, respectively, approximated the median committee chair premiums of the performance graph peer group of $14,500, $10,000, and $8,000, respectively. Based on these results, the compensation committee recommended, and the board of directors approved, no change to director compensation or the committee chair premiums for 2013.

The human resources department augmented Towers Watsons report by showing a three-year history (2011, 2012, and 2013) of the non-executive chairman of the boards total direct compensation as compared to that of our performance graph peer group companies compiled by Equilar. Also, the human resources departments analysis included a two-year history (2012 and 2013) of the non-executive chairmans total direct compensation compared to total direct compensation for non-executive chairmen at large companies included in the National Association of Corporate Directors (NACD) Director Compensation Report, which have revenues ranging from $2.5 billion to $10 billion and a median revenue of $4.7 billion. The human resources department compared the total direct compensation in 2011, 2012, and 2013 of $240,000 for the companys non-executive chairman to the median total direct compensation of performance graph peer companies of $272,754, $282,202, and $239,511 for 2011, 2012, and 2013, respectively. Also, the total direct compensation for the companys non-executive chairman of $240,000 for 2012 and 2013 was below the median compensation for non-executive chairmen at large companies in the NACD Director Compensation Report.

Based on the competitive data, management recommended to the compensation committee that the non-executive chairmans additional retainer be increased from $75,000 to $90,000, effective June 1, 2013, which on an annual basis would reduce the difference between our non-executive chairmans 2013 total direct compensation and the median total direct compensation for non-executive chairman at large companies in the NACD Director Compensation Report. The compensation committee and the board of directors approved the increase in the non-executive chairmans additional retainer, resulting in an increase in his total direct compensation from $240,000 annually to $255,000 annually. The non-executive chairman of the board was not present during the compensation committees discussion of the report developed by the human resources department and did not vote in approving the recommendation.

MDU Resources Group, Inc. Proxy Statement 57

Proxy Statement

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

S ECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16 of the Securities Exchange Act of 1934, as amended, requires that officers, directors, and holders of more than 10% of our common stock file reports of their trading in our equity securities with the Securities and Exchange Commission. Based solely on a review of Forms 3, 4, and 5 and any amendments to these forms furnished to us during and with respect to 2013 or written representations that no Forms 5 were required, we believe that all such reports were timely filed, except that in August 2013, Mr. Dennis L. Haider filed an amended Form 3 to report ownership of 3,059 additional shares held in the companys direct registration system that were omitted from his original Form 3 filed in June 2013.

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.

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 HARED ADDRESS STOCKHOLDERS

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

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

2 015 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 28, 2015, any stockholder who wishes to submit a nomination must submit the required notice to the corporate secretary on or before January 22, 2015.

58 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

Other Meeting Business: Our bylaws also provide that no business may be brought before an annual meeting except (i) as specified in the meeting notice given by or at the direction of the board, (ii) as otherwise properly brought before the meeting by or at the direction of the board, or (iii) properly brought before the meeting by a stockholder entitled to vote who has complied with the procedures established by the bylaws. For business to be properly brought before an annual meeting by a stockholder (other than nomination of a person for election as a director which is described above) the stockholder must have given timely and proper notice of such business in writing to the corporate secretary, in accordance with, and containing all information provided for in the bylaws and such business must be a proper matter for stockholder action under the General Corporation Law of Delaware. To be timely, such notice must be delivered or mailed to the corporate secretary and received at our principal executive offices not later than the close of business 90 days prior to the first anniversary of the preceding years annual meeting of stockholders. For purposes of our annual meeting expected to be held April 28, 2015, 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 22, 2015.

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 28, 2015, stockholders must submit such written notice to the corporate secretary on or before January 22, 2015.

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 28, 2015, any stockholder who wishes to submit a proposal for inclusion in our proxy materials must submit such proposal to the corporate secretary on or before November 12, 2014.

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/proxystatement/corporate-bylaws.

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, 2013, which is required to be filed with the Securities and Exchange Commission. You may obtain a copy, without charge, upon written or oral request to the Office of the Treasurer of MDU Resources Group, Inc., 1200 West Century Avenue, Mailing Address: P.O. Box 5650, Bismarck, ND 58506-5650, Telephone Number: (701) 530-1000. You may also access our Annual Report on Form 10-K through our website at www.mdu.com.

| By
order of the Board of Directors, |
| --- |
| ● |
| Paul
K. Sandness |
| Secretary |
| March
12, 2014 |

MDU Resources Group, Inc. Proxy Statement 59

Proxy Statement

| E XHIBIT A — Towers Watson
2011 CDB | Carnival | Fiserv |
| --- | --- | --- |
| General
Industry | Carpenter Technology | Fluor |
| Executive
Database | Caterpillar | Ford |
| | CDI | Fortune Brands |
| | CF Industries | GAF Materials |
| 3M | CGI Technologies & Solutions | Gavilon |
| A.O. Smith | Chattem | General Atomics |
| Abbott Laboratories | Chemtura | General Dynamics |
| AbitibiBowater | Chiquita Brands | General Mills |
| Accenture | Choice Hotels International | General Motors |
| ACH Food | Chrysler | Genzyme |
| Acuity Brands | CHS | GlaxoSmithKline |
| Adecco | Cisco Systems | Goodman Manufacturing |
| Aerojet | Cliffs Natural Resources | Goodrich |
| Agilent Technologies | COACH | Google |
| Agrium | Coca-Cola | Graco |
| Air Liquide | Coca-Cola Enterprises | Greif |
| Air Products and Chemicals | Coinstar | Grupo Ferrovial |
| Alcoa | Colgate-Palmolive | GSI Commerce |
| Alcon Laboratories | Comcast | GTECH H.B. Fuller |
| Alexander & Baldwin | ConAgra Foods | Hanesbrands |
| Alliant Techsystems | Continental Automotive Systems | Harland Clarke |
| American Crystal Sugar | ConvaTec | Harley-Davidson |
| American Sugar Refining | Convergys | Harman International Industries |
| AMERIGROUP | Cooper Industries | Hasbro |
| AmerisourceBergen | CoreLogic | Haynes International |
| AMETEK | Corning | HBO |
| Amgen | Covance | HD Supply |
| Ann Taylor Stores | Covidien | Headway Technologies |
| AOL APL | CSR | Herman Miller |
| Appleton Papers | CSX | Hershey |
| Applied Materials | Curtiss-Wright | Hertz |
| ARAMARK | CVS Caremark | Hewlett-Packard |
| Armstrong World Industries | Cytec | Hexcel |
| Arrow Electronics | Daiichi Sankyo | Hilton Worldwide |
| Ashland | Daimler Trucks North America | Hitachi Data Systems |
| AstraZeneca | Dannon | HNI HNTB |
| AT&T | Darden Restaurants | Hoffmann-La Roche |
| Automatic Data Processing | Dassault Systems | Holcim |
| Avery Dennison | Day & Zimmermann | Home Depot |
| Avis Budget Group | Dean Foods | Honeywell |
| BAE Systems | Deckers Outdoor | Hormel Foods |
| Ball | Dell | Hostess Brands |
| Barnes Group | Delta Air Lines | Houghton Mifflin Harcourt
Publishing |
| Battelle Memorial Institute | Deluxe | Hunt Consolidated |
| Baxter International | Dentsply | Huron Consulting Group |
| Bayer AG | Dex One | Husky Injection Molding Systems |
| Bayer CropScience | Diageo North America | Hyatt Hotels |
| Beckman Coulter | Dollar Tree Stores | IBM |
| Belo | Domtar | IDEXX Laboratories |
| Bemis | Donaldson | IKON Office Solutions |
| Benjamin Moore | Dow Corning | Illinois Tool Works |
| Best Buy | DuPont | IMS Health |
| Big Lots | Eastman Chemical | Ingersoll Rand |
| Boeing | Eastman Kodak | Intel |
| Boston Scientific | Eaton | Intercontinental Hotels |
| Bovis Lend Lease | eBay | International Flavors &
Fragrances |
| Brady | Ecolab | International Paper |
| Bristol-Myers Squibb | Eli Lilly | Interpublic Group |
| Broadridge Financial Solutions | EMC | Intrepid Potash |
| Brown-Forman | EMD Millipore | Invensys Controls |
| Bucyrus International | Endo Pharmaceuticals | ION Geophysical |
| Bunge | Equifax | Irvine Company |
| Burlington Northern Santa Fe | Equity Office Properties | ITT |
| Bush Brothers | Ericsson | ITT Mission Systems |
| CA | Estee Lauder | J.M. Smucker |
| Calgon Carbon | Evergreen Packaging | J.R. Simplot |
| Cameron International | Experian Americas | Jabil Circuit |
| Cardinal Health | Express Scripts | Jack in the Box |
| Cargill | Fair Isaac | JetBlue |
| Carlson Companies | Federal-Mogul | JM Family Enterprises |
| Carmeuse North America Group | Fidelity National Information
Services | Johns-Manville |

MDU Resources Group, Inc. Proxy Statement A-1

Proxy Statement

Johnson & Johnson	Performance Food Group	Thermo Fisher Scientific
Johnson Controls	PerkinElmer	Thomas & Betts
Kaman Industrial Technologies	Pfizer	Time Warner
Kansas City Southern	Pitney Bowes	Time Warner Cable
Kao Brands	Plexus	Timken
KBR Kellogg	Polaris Industries	T-Mobile USA
Kimberly-Clark	Potash	Toro
Kinetic Concepts	PPG Industries	Total System Services
Kinross Gold	Praxair	Travelport
Koch Industries	ProBuild Holdings	Trident Seafoods
Kohler	Pulte Homes	TRW Automotive
Komatsu America	Purdue Pharma	Tupperware
L-3 Communications	QUALCOMM	Tyson Foods
Land OLakes	Quintiles	U.S. Foodservice Underwriters
Laboratories
Level 3 Communications	R.R. Donnelley	Unilever United States
Lexmark International	Ralcorp Holdings	Union Pacific
Life Technologies	Readers Digest	Unisys
Linde	Realogy	United Rentals
Lockheed Martin	Reddy Ice	United States Cellular
Lorillard Tobacco	Regal-Beloit	United States Steel
Lubrizol	Regency Centers	United Technologies
Lyondell Chemical	Rent-A-Center	URS Energy & Construction
Magellan Midstream Partners	Research in Motion	USG
ManTech International	Ricardo	UTi Worldwide
Marriott International	Rio Tinto	Valero Energy
Martin Marietta Materials	Roche Diagnostics	Vangent
Mary Kay	Rockwell Automation	Verde Realty
Mattel	Rockwell Collins	Verizon
Matthews International	Ryder System	Viacom
McClatchy	Safety-Kleen Systems	Vision Service Plan
McDonalds	SAIC	Visteon
McGraw-Hill	Sanofi-Aventis	Vulcan Materials
McKesson	SCA Americas	VWR International
MDC Holdings	Schreiber Foods	Walt Disney
MeadWestvaco	Schwans	Waste Management
Media General	Scotts Miracle-Gro	Wendys/Arbys Group
Medicines Company	Scripps Networks Interactive	Weyerhaeuser
Medtronic	Seagate Technology	Whirlpool
Merck & Co.	Sealed Air	Wilsonart International
Microsoft	ServiceMaster	Winnebago Industries
Milacron	ShawCor	Wm. Wrigley Jr.
Mitsubishi Power Systems Americas	Sherwin-Williams	Wyndham Worldwide
Molson Coors Brewing	Siemens AG	Xerox
Momentive Specialty Chemicals	Sigma-Aldrich	YRC Worldwide
Monsanto	Smith & Nephew	Yum! Brands
Mosaic	Snap-On
Motorola Mobility	Sodexo
Motorola Solutions	Sonoco Products	Towers Watson
2011 CDB
Murphy Oil	Space Systems Loral	Energy Services
MWH Global	Spirit AeroSystems	Executive
Database
Navistar International	SprintNextel
NCR	SPX	Acciona
Nestlé USA	SRA International	AGL Resources
Newmont Mining	Stantec	Allete
NewPage	Starbucks	Alliant Energy
Nissan North America	StarTek	Ameren
Nokia	Starwood Hotels & Resorts	American Electric Power
Noranda Aluminum	Statoil	Areva
Norfolk Southern	Steelcase	ATC Management
Novartis	Stryker	Avista
Novartis Consumer Health	Sulzer Pumps US	BG US Services
Novo Nordisk Pharmaceuticals	SunGard Data Systems	Black Hills
Nypro	Sunoco	California Independent System
Operator
Occidental Petroleum	Sunovion Pharmaceuticals	Calpine
Office Depot	SuperValu Stores	CenterPoint Energy
Omnicare	Swagelok	CH Energy Group
Orange Business Services	Syngenta Crop Protection	Cleco
Oshkosh	Takeda Pharmaceutical	CMS Energy
Overhead Door	Taubman Centers	Colorado Springs Utilities
Owens Corning	TE Connectivity	Consolidated Edison
Owens-Illinois	Tektronix	Constellation Energy
Oxford Industries	Temple-Inland	Covanta Holdings
Panasonic of North America	Teradata	CPS Energy
Parker Hannifin	Terex	Crosstex Energy
Parsons	Textron

A-2 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| DCP Midstream | TransCanada | Blue Cross of Northeastern
Pennslyvania |
| --- | --- | --- |
| Dominion Resources | UIL Holdings | Blue Cross of Idaho |
| DPL | UniSource Energy | Bosch Rexroth |
| DTE Energy | Unitil | Boyd Gaming |
| Duke Energy | Vectren | Boy Scouts of America |
| Edison International | Westar Energy | Bradley |
| EDP Renewables North America LLC | Westinghouse Electric | Brady |
| El Paso Corporation | Williams Companies | Bridgepoint Education |
| El Paso Electric | Wisconsin Energy | Briggs & Stratton |
| Enbridge Energy | Wolf Creek Nuclear | Brightpoint North America |
| Energen | Xcel Energy | Brookdale Senior Living |
| Energy Future Holdings | | Brownells |
| Energy Northwest | | Bryant University |
| Entergy | Towers Watson
2011 CSR Report | Buffets |
| EQT Corporation | on Top
Management Compensation | Cablevision Systems |
| ERCOT | | Caelum Research Corporation |
| Exelon | AAA | Caesars Entertainment |
| FirstEnergy | AAR Corporation | California Casualty Management |
| First Solar | ABB | California Dental Association |
| GenOn Energy | ABX Air | California Institute of
Technology |
| Hawaiian Electric | Acuity | CareFirst BlueCross BlueShield |
| Iberdrola Renewables | Acushnet | Carle Foundation Hospital |
| IDACORP | Advance Auto Parts | Carlson |
| Integrys Energy Group | Adventist Health System | CarMax |
| IPR GDF SUEZ North America | AEGON | Carpenter Technology |
| ISO New England | AFLAC | CB Richard Ellis |
| Kinder Morgan | AgFirst | Cell Therapeutics |
| LES | Alfa Laval | CEMEX |
| LG&E and KU Energy Services | Allegiance Health | CEVA Logistics |
| Lower Colorado River Authority | Allete | Chelan County Public Utility
District |
| McDermott | Alta Resources | Chicago Transit Authority |
| MDU Resources | Altegrity | Chickasaw Nation |
| MGE Energy | American Cancer Society | Chicos FAS |
| MidAmerican Holdings | American Career College | Childrens Healthcare of Atlanta |
| Midwest Independent Transmission | American Enterprise | Choice Hotels International |
| System Operator | American Greetings | CHS |
| New York Independent System
Operator | American Red Cross | CH2M Hill |
| New York Power Authority | American Textile | Chumash Employee Resource Center |
| NextEra Energy | American Water Works | CIGNA |
| Nicor | AmeriPride Services | City of Austin |
| Northeast Utilities | Ameristar Casinos | City of Chicago |
| NorthWestern Energy | Ames True Temper | City of Garland |
| NRG Energy | AMETEK/Advanced Measurement | City of Houston |
| NSTAR | Technology | City of Las Vegas |
| Nuscale Power | Amica Mutual Insurance | City of Philadelphia |
| NV Energy | Analytic Services (ANSER) | Classified Ventures |
| NW Natural | Andersen Corporation | Cleco |
| OGE Energy | ANH Refractories | ClubCorp |
| Oglethorpe Power | AOC | CNL Financial Group |
| Omaha Public Power | Asahi Kasei Plastics NA | Cobb County School District |
| Pacific Gas & Electric | Ascend Performance Materials | Coca-Cola Enterprises |
| Pepco Holdings | Assurant | College of St. Scholastica |
| Pinnacle West Capital | Aurora Healthcare | Colman Group |
| PJM Interconnection | Auto Club Group | Colorado Springs Utilities |
| PNM Resources | Automobile Club of Southern
California | Colsa |
| Portland General Electric | Avis Budget Group | CommIT Enterprises |
| PPL | Avista | CommScope |
| Progress Energy | Barloworld Handling | Community Coffee |
| Proliance Holdings | Baxa | Community Health Network |
| Public Service Enterprise Group | Baxter International | Compressor Controls |
| Puget Energy | Baylor College of Medicine | Computer Sciences Consulting
Group |
| Regency Energy Partners LP | Baylor Health Care System | Computer Task Group |
| Salt River Project | B Braun Medical | ConnectiCare Capital LLC |
| Santee Cooper | BE Aerospace | Core Laboratories |
| SCANA | Beam Global Spirits & Wine | Cornell University |
| SemGroup | Belk | Correctional Medical Services |
| Sempra Energy | Bemis | Country Financial |
| Southern Company Services | Beneficial Bank | Coventry Health Care |
| Southern Union Company | Berwick Offray | CPS Energy |
| Southwest Power Pool | Biomet | Cracker Barrel Old Country Stores |
| Spectra Energy | Black Hills | Crate & Barrel |
| STP Nuclear Operating | BlueCross BlueShield of Louisiana | Crown Castle |
| TECO Energy | BlueCross BlueShield of Nebraska | CUNA Mutual |
| Tennessee Valley Authority | BlueCross BlueShield of South
Carolina | D&B |
| Trans Bay Cable | BlueCross BlueShield of Tennessee | Decurion |

MDU Resources Group, Inc. Proxy Statement A-3

Proxy Statement

Delta Dental Plan of Michigan	Gerdau AmeriSteel	J&J Worldwide Services
Dennys	Gibraltar Steel Corporation	JM Family Enterprises
DENSO International	G&K Services	John Crane
DePaul University	Glatfelter	Johns Hopkins University
Devry	GNC	Johnson Controls
Dickstein Shapiro	Godiva Chocolatier	Johnson Financial Group
Diebold	Gold Eagle	Johnson Outdoors
Discover Financial Services	Graco	John Wiley & Sons
Doherty Employer Services	Graham Packaging	Joint Commission
Dollar General	Grande Cheese	Jones Lang LaSalle
Dollar Tree Stores	Grange Life Insurance	Joy Global
Dominos Pizza	Great American Insurance	J.R. Simplot
Donaldson	Greyhound Lines	Kewaunee Scientific Corporation
DSC Logistics	Grinnell Mutual Reinsurance	Keystone Automotive Industries
Duke Realty	GROWMARK	Keystone Foods
Duke University & Health
System	GTECH	KI
DuPont	GuideStone Financial Resources	Kindred Healthcare
Dupont Fabros Technology	Habitat for Humanity
International	Kingston Technology
Dyn McDermott	Harman International Industries	Klein Tools
Edison Mission Energy	Harris County Hospital District	Komatsu America
Education Management	Harvard Vanguard Medical
Associates	Kroger
Edward Jones	Harvey Industries	Laboratory Corporation of America
Edwards Lifesciences	Haynes International	Lake Region Medical
Elizabeth Arden	Hazelden Foundation	Lantech.com
EMCOR Group	HD Supply	Lawson Products
Emerson Climate Technologies	Health Care Services	Learning Care Group
Emerson Electric	HealthNow New York	Legal & General America
Enpro Industries (Fairbanks Morse
Engine)	H.E.B. Grocery	Leggett and Platt
Erickson Retirement Communities	Hendrick Medical Center	Leo Burnett
Erie Insurance	Hendrickson International	LG&E and KU Energy Services
ESCO Technologies	Henry Ford Health Systems	Lieberman Research Worldwide
ESM	Herman Miller	Limited Brands
Esterline Technologies	Highlights for Children	Littelfuse
Etnyre International	Highmark	Little Lady Foods
Evraz	Hill Phoenix	L.L. Bean
Exel	Hilti	Logic PD
Express Scripts	Hilton Worldwide	Louisiana-Pacific
Fairfield Manufacturing	Hines Interests	Lower Colorado River Authority
Farm Credit Bank of Texas	Hitachi America	Loyola University of Chicago
Farm Credit Foundations	HNI	Lozier
Farmland Foods	HNTB	LSG Sky Chefs
Federal Reserve Bank of Atlanta	Houston Metropolitan Transit
Authority	Luck Stone
Federal Reserve Bank of Chicago	Hu-Friedy Manufacturing Company	Lutron Electronics
Federal Reserve Bank of Dallas	Humana	Luxottica Retail
Federal Reserve Bank of
Minneapolis	Hunter Industries	La Macchia Enterprises
Federal Reserve Bank of
Philadelphia	Hutchinson Technology	Magellan Health Services
Federal Reserve Bank of Richmond	Hyundai Capital America	Magna Seating
Federal Reserve Bank of St. Louis	Hyundai Motor America	Malco Products
Federal Reserve Board	Hyundai Motor Manufacturing of
Alabama	Maricopa County Office of
FedEx Express	IDEX Corporation	Management & Budget
FedEx Ground	IDEXX Laboratories	Maricopa Integrated Health System
Ferguson Enterprises	II-VI	Marshfield Clinic
Fermi National Accelerator
Laboratory	IKON Office Solutions	Mars North America
Ferrellgas	Indiana Farm Bureau Insurance	Mary Kay
First American	Infogroup	MasterBrand Cabinets
First Citizens Bank	Information Management Service	Master Lock
First Commonwealth Financial	Ingram Industries	Mayo Clinic
First Solar	Insperity	McCain Foods USA
Fiserv	Institute for Defense Analyses	McGladrey
Fiskars Brands	Integra Lifesciences Corporation	Medco Health Solutions
Fleetwood Group	Intertape Polymer Group	Media General
Flexcon Company	Iron Mountain	Medica Health Plans
Flexible Steel Lacing	Irvine	Medical Group Management Assn
Fortune Brands	Isuzu Motors America	Mercedes-Benz Financial Services
Freeman Dallas	Ithaca College	Mercer University
Friendly Ice Cream	Ithaka Harbors	Merit Medical Systems
Froedtert Hospital	Itochu International	Merrill
Funeral Directors Life Insurance
Company	ITT Industries Information
Systems	Methodist Healthcare System
Gaylord Entertainment	ITT Mission Systems	MetLife
General Dynamics Information
Technology	Jabil Circuit	Metropolitan Atlanta Rapid
Transit Authority
Genesis Energy	Jackson Hewitt	Miami Childrens Hospital
GenOn Energy	Jacobs Technology	Mine Safety Appliances
Gentiva Health Services	Jarden	Miniature Precision Comps
Georg Fischer Signet	Jefferson Science Associates	Minnesota Management & Budget
Georgia Institute of Technology	J J Keller & Associates	Missouri Department of
Conservation

A-4 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| Missouri Department of
Transportation | Professional Golfers Association
of America | State Personnel Administration |
| --- | --- | --- |
| Mitsubishi International | Progressive | St. Cloud Hospital |
| Mitsui U S A. | Project Management Institute | Steelcase |
| Molex | Prometric Inc | Sterilite |
| Moneris Solutions | Property Casualty Insurers | Sterling Bancshares |
| MSC Industrial Direct | Association of America | St. Jude Childrens Research
Hospital |
| MTD Products | Publix Super Markets | St. Louis County Government |
| MTS Systems | Purdue Pharma | Stonyfield Farm |
| Mueller Water Products | QBE the Americas | St. Vincent Hospital |
| MultiPlan | QSC Audio Products | Subaru of Indiana Automotive |
| Mutual of Omaha | Qualex | Sykes Enterprises |
| Mylan | Qualis Health | Syncada |
| Nash-Finch | Quality Bicycle Products | Synthes |
| National Academies | Quest Diagnostics | Tastefully Simple |
| National Futures Association | QVC | Taubman |
| National Interstate Insurance | Radio One | Taylor |
| National Safety Council | RadioShack | TDS Telecom |
| Natures Sunshine Products | Recology | Tech Data |
| Navistar International | Regence Group | Technicolor |
| Navy Exchange Service Command | Regency Centers | Tecolote Research |
| NCCI Holdings | Regions Financial | Tele-Consultants |
| NCMIC | Reinsurance Group of America | Tennant Company |
| North Carolina State Employees
Credit Union | Renaissance Learning | Texas Industries |
| Nebraska Public Power District | RiceTec | Texas Mutual Insurance |
| Neenah Paper | Rice University | Therma Tru |
| NewPage | Rich Products | Thule |
| New York Community Bank | Ricoh Electronics | Timberland |
| NextEra Energy | Rite Hite Holding Corporation | TIMET |
| Nicor | Robert Bosch | TJX Companies |
| Nielsen | Rollins | Total System Services |
| NiSource | R.R. Donnelley | Transocean |
| NJM Insurance Group | RSC Equipment Rental | Travis County |
| NJVC LLC | Ryland Group | Treasure Island Resort &
Casino |
| Nordson Corporation | Safety-Kleen Systems | Tri-Met |
| Nordstrom Bank | Sakura Finetek USA | Trinity Consultants |
| North Texas Tollway Authority | Salk Institute | Trinity Health |
| Northwestern Memorial Hospital | Salt River Project | TriWest Healthcare Alliance |
| Northwestern Mutual | Samuel Roberts Noble Foundation | True Value Company |
| NuStar Energy | San Antonio Water System | Tufts Health Plan |
| OfficeMax | San Manuel Band of Mission
Indians | Turner Broadcasting |
| Ohio Public Employees Retirement
System | Sauer-Danfoss | UDR |
| Ohio State University | S&C Electric | UMDNJ-University of Medicine
& Dentistry |
| Ohio State University Medical
Center | Schaumburg Township District
Library | Underwriters Laboratories |
| OHL | Schneider Electric | United American Insurance |
| Old Dominion Electric | Schwan Food | UnitedHealth |
| Oncology Nursing Society | Scooter Store | United States Steel |
| One America Financial Partners | Sealed Air | United Stationers |
| 1st Source | Sealy | Universal Studios Orlando |
| Oppenheimer Group | Seco Tools | University Health System |
| Opus Bank | Securus Technologies | University of Alabama at
Birmingham |
| Orbital Science Corporation | SEMCO Energy | University of California,
Berkeley |
| Oshkosh | Sentara Healthcare | University of Chicago |
| Pall Corporation | Serco | University of Georgia |
| Pampered Chef | Shands HealthCare | University of Houston |
| Panduit Corporation | Sharp Electronics | University of Kansas Hospital |
| Patterson Companies | Simon Property Group | University of Maryland Medical
Center |
| Paychex | Simpson Housing | University of Miami |
| Pearson | SIRVA | University of Michigan |
| Penn National Gaming | Smead Manufacturing | University of Nebraska-Lincoln |
| Penn State Hershey Medical Center | SMSC Gaming Enterprise | University of North Texas |
| Pharmavite | Sole Technology | University of Notre Dame |
| PHH Arval | Solo Cup | University of Pennsylvania |
| Pier 1 Imports | Southco | University of Rochester |
| PMA Companies | Southeastern Freight Lines | University of South Florida |
| Polaris Industries | South Jersey Gas | University of St. Thomas |
| Policy Studies | Southwest Gas | University of Texas at Austin |
| Polymer Technologies | Space Dynamics Laboratory | University of Texas Health
Science Center |
| Popular | Space Telescope Science Institute | at Houston |
| Port of Portland | Spectrum Health Grand Rapids
Hospitals | University of Wisconsin Medical
Foundation |
| Poudre Valley Health Systems | Spinmaster | University of Wisconsin Hospital
and Clinics |
| Preformed Line Products | SPX Corporation | University Physicians |
| Premera Blue Cross | Stampin Up! | UPS |
| Premier | Standard Motor Products | URS |
| PREMIER Bankcard | Staples | USAA |
| Principal Financial | State Corporation Commission | U.S. Foodservice |

MDU Resources Group, Inc. Proxy Statement A-5

Proxy Statement

USG	American Transmission Company	CVR Energy, Inc. Refining & Marketing, LLC
Utah Transit Authority	Apache Corporation	Davis Petroleum Corp.
UT Southwestern Medical Center	Arch Coal, Inc.	DCP Midstream, LLC
Vail Resorts Management	Associated Electric Cooperative,
Inc.	Denbury Resources, Inc.
Valpak/Cox Target Media	Atlas Energy, L.P.	Det Norske Veritas US
Valspar	Baker Hughes, Inc.	Devon Energy
Ventura Foods	Baker Hughes, Inc. Completion	Diamond Offshore Drilling, Inc.
Venturedyne	and Production	Direct Energy Marketing Ltd. US
Verde Realty	Baker Hughes, Inc. Drilling and
Evaluation	DM PETEROLUEM OPERATIONS
Vermeer Manufacturing Company	Baker Hughes, Inc. Gulf of
Mexico	Dominion Resources, Inc.
Vesuvius USA	Baker Hughes, Inc. Integrated
Operations	Dominion Resources, Inc.
VF	Baker Hughes, Inc. Intelligent	Dominion Energy
Via Christi Health	Production Systems	Dominion Resources, Inc.
Viad	Baker Hughes, Inc. Reservior	Dominion Generation
Vi-Jon	Development Services	Dominion
Resources, Inc.
Virginia Farm Bureau Insurance
Sevice	Baker Hughes, Inc. US Land	Dominion Virginia Power
Visiting Nurse Service of NY	Basic Energy Services	Edison Mission Energy
Volvo Group North America	Baytex Energy USA Ltd.	El Paso Corporation
Wackenhut Services	BG US Services	El Paso Corporation Exploration
and
Walgreen Co.	BHP Billiton Petroleum
(Americas), Inc.	Production
Washington University in St.
Louis	Black Hills Energy	El Paso Corporation Pipeline
Group
Wawa	Boardwalk Pipeline Partners, LP	ElectriCities of North Carolina,
Inc.
Wayne Memorial Hospital	Boart Longyear	Enbridge Liquids Pipelines
W C Bradley	BreitBurn Energy Partners L.P.	Energen Corporation
Wellcare Health Plans	BreitBurn Energy Partners L.P.	Energen Corporation Energen
Wellmark BlueCross BlueShield	Eastern Division	Resources Corporation
Wells Dairy	BreitBurn Energy Partners L.P.	Energy Future Holdings
Corporation
Werner	Orcutt Facility	Energy Future Holdings
Corporation
West Bend Mutual Insurance	BreitBurn Energy Partners L.P.
West	Luminant
Western Southern Financial Group	Pico Facility	Energy Future Holdings
Corporation
Western Union Company	BreitBurn Energy Partners L.P.	TXU Energy
Westfield Group	Western Division	Enerplus Resources Fund
Enerplus
Weston Solutions	BreitBurn Energy Partners L.P.	Resources (USA) Corporation
West Penn Allegheny Health System	Western Division, California Operations	EnerVest Management Partners,
Ltd.
West Virginia University
Hospitals	BreitBurn Energy Partners L.P.	EV Energy Partners, LP
Wheaton Franciscan Healthcare	Western Division, Florida Operations	EnerVest, Ltd.
Wheels	BreitBurn Energy Partners L.P.	Eni US Operating Company, Inc.
Whirlpool	Western Division, Wyoming Operations	ENSCO International, Inc.
Whole Foods Market	BreitBurn Management Company	ENSCO International, Inc.
Wilder Foundation	Bridwell Oil Company	Deepwater Business Unit
WilmerHale LLP	Brigham Exploration Company	ENSCO International, Inc. North
& South
Wilsonart International	Brookfield Renewable Power	America Business Unit
Windstream Communications	Buckeye Partners, L.P.	Ensign United States Drilling,
Inc.
Winn-Dixie Stores	Burnett Oil Co., Inc.	Ensign United States Drilling,
Inc. California
Wisconsin Physicians Service
Insurance	Calfrac Well Services Corporation	Entegra Power Services, LLC
World Vision International	California ISO	Entergy
World Vision United States	Cameron International	Entergy Non-Regulated
Worthington Industries	Cameron International Drilling
and	Entergy Regulated
Wyle Laboratories	Production Systems	EOG Resources, Inc.
Yamaha Corporation of America	Cameron International Process
and	Equal Energy US Inc.
YKK Corporation of America	Compression Systems	ERIN Engineering and Research,
Inc.
YSI	Cameron International Valves
&	EXCO Resources, Inc.
Zale	Measurement	EXCO Resources, Inc. EXCO
Appalachia
Zebra Technologies Corporation	Caterpillar, Inc. Global
Petroleum	EXCO Resources, Inc. EXCO East
TX/LA
Zimmer	CEDA International Inc.	EXCO Resources, Inc. EXCO
Midstream
	CenterPoint Energy	EXCO Resources, Inc. EXCO
	Central Hudson Gas & Electric
Corp.	Permian/Rockies
Mercers 2011
Total Compensation	CHS Inc.	Explorer Pipeline Company
Survey for the
Energy Sector	CHS Inc. Energy, Energy
Marketing	Fasken Oil and Ranch, Ltd.
	CHS Inc. Energy, Refineries	Finley Resources Inc.
Abraxas Petroleum Corporation	Cimarex Energy Co.	First Solar
Advanced Drilling Technologies,
LLC	Cinco Natural Resources
Corporation	Forest Oil Corporation
Afren Resources USA, Inc.	Citation Oil & Gas Corp.	General Electric Energy
AGL Resources	CITGO Petroleum Corporation	Genesis Energy, LLC
AGL Resources Sequent Energy	Colonial Pipeline Company	Global Industries
Management	Consolidated Edison	Great River Energy
Aker Solutions	Copano Energy	Halliburton Company
Alliance Pipeline, Inc.	Copano Energy Scissortail
Energy, LLC	Helix Energy Solutions Group
Alliant Energy	Core Laboratories	Helmerich & Payne, Inc.
Alyeska Pipeline Service Company	CPS Energy	Hercules Offshore, Inc.
Ameren Corporation	Crosstex Energy Services	Hess Corporation
Ameren Corporation Ameren
Illinois	CVR Energy, Inc.	HighMount Exploration & Production LLC
Ameren Corporation Ameren
Missouri	CVR Energy, Inc. Coffeyville
Terminal, LLC	Hilcorp Energy Company
Ameren Corporation	CVR Energy, Inc. Crude
Transportation, LLC	Hilcorp Energy Company Harvest
AmerenEnergyResources	CVR Energy, Inc. Nitrogen
Fertilizers, LLC	Pipeline Company

A-6 MDU Resources Group, Inc. Proxy Statement

Proxy Statement

| Holly Corporation | NiSource Inc. NiSource Gas
Transmission | Seneca Resources Corporation
East |
| --- | --- | --- |
| Holly Corporation Asphalt
Company | & Storage | Seneca Resources Corporation
West |
| Holly Corporation Holly
Refining | NiSource Inc. Northern Indiana
Fuel | SK E&P Company |
| and Marketing Tulsa LLC | & Light | Southern Company |
| Holly Corporation Logistic
Services | NiSource Inc. Northern Indiana | Southern Company Gulf Power
Company |
| Holly Corporation Navajo
Refining | Public Service Company | Southern Company SouthernLINC |
| Company | NiSource Inc. Transmission
Corporation | Southern Union Company |
| Holly Corporation Refining and | Noble Corporation | Southern Union Company Missouri |
| Marketing Woods Cross | Noble Corporation Noble
Drilling | Gas Energy |
| Hunt Consolidated Inc. Hunt Oil
Company | Services, Inc. | Southern Union Company New |
| Husky Energy Inc. | Noble Energy, Inc. | England Gas |
| Information Handling Services
(IHS) | Northwest Natural Gas | Southern Union Company |
| ION Geophysical Corporation | NSTAR Electric & Gas | Panhandle Energy |
| Jacksonville Electric Authority | Oceaneering International, Inc. | Southern Union Company Southern |
| J-W Operating Company | Oceaneering International, Inc.
Americas | Union Gas Services |
| J-W Operating Company J-W | Oceaneering International, Inc.
Inspection | Southwestern Energy Company |
| Gathering Company | Oceaneering International, Inc. | Spectra Energy Corp. |
| J-W Operating Company J-W | Oceaneering Intervention Engineering | Sprague Energy Corp. |
| Manufacturing Company | Oceaneering International, Inc.
Umbilicals | Stantec Inc. |
| J-W Operating Company J-W | OGE Energy Corporation | Statoil |
| Measurement Company | ONEOK, Inc. | Superior Energy Services, Inc. |
| J-W Operating Company J-W | ONEOK, Inc. Kansas Gas Services
Division | Superior Energy Services, Inc. |
| Power Company | ONEOK, Inc. Oklahoma Natural | Completion Services |
| J-W Operating Company J-W
Wireline | Gas Division | Superior Energy Services, Inc. |
| & Excell | ONEOK, Inc. ONEOK Energy | Well Solutions |
| Kinder Morgan, Inc. | Services Company | Superior Energy Services, Inc.-
HB Rentals |
| Legacy Reserves LP | ONEOK, Inc. ONEOK Partners | Superior Pipeline Company |
| LG&E and KU Energy LLC | ONEOK, Inc. Texas Gas Services
Division | Talisman Energy Inc. US |
| LINN Energy, LLC | PacifiCorp | Tellus Operating Group, LLC |
| Magellan Midstream Holdings, LP | Parallel Petroleum LLC | Tesco Corporation |
| Magellan Midstream Holdings, LP | Parker Drilling Company | TGS-NOPEC Geophysical Company |
| Pipeline/Terminal Division | Pason Systems USA Corp. | The Williams Companies, Inc. |
| Magellan Midstream Holdings, LP | Pason Systems USA Corp. Auxsol
Inc. | THUMS Long Beach Company |
| Transportation | Pason Systems USA Corp. Pason Offshore | TOTAL E&P USA, Inc. |
| MarkWest Energy Partners LP | PDC Energy | TransCanada Corporation |
| MarkWest Energy Partners LP
Gulf Coast | Petrohawk Energy Corporation | TransCanada Corporation Energy
Group |
| Business Unit | Piedmont Natural Gas Company, Inc. | Transocean, Inc. |
| MarkWest Energy Partners LP | Pioneer Natural Resources | Unit Corporation |
| Liberty Business Unit | PJM Interconnection | Unit Drilling Company |
| MarkWest Energy Partners LP
Northeast | Plains All American Pipeline,
L.P. | Unit Petroleum Company |
| Business Unit | Plains All American Pipeline,
L.P. | United Water |
| MarkWest Energy Partners LP
Southwest | PAA Natural Gas Storage, L.P. | Venoco, Inc. |
| Business Unit | Plains Exploration &
Production Company | Verado Energy, Inc. |
| MCX Exploration (USA), Ltd. | Precision Drilling Corporation | Weatherford US Region |
| MDU Resources Group, Inc. | Puget Sound Energy | WGL Holdings, Inc. Washington
Gas |
| MDU Resources Group, Inc. WBI | QEP Resources, Inc | Whiting Petroleum Corporation |
| Holdings, Inc. | Quicksilver Resources Inc. | Xcel Energy Inc. |
| Mestena Operating, L.L.C. | R. Lacy, Inc. | |
| Mitsui E&P USA LLC | Range Resources Corp. | |
| Murphy Oil Corporation | Regency Energy Partners LP | |
| New York Power Authority | Regency Energy Partners LP
Contract | |
| New York Power Authority
Blenheim-Gilboa | Compression Segment | |
| Power Project | Repsol Services Company | |
| New York Power Authority Clark | RKI Exploration & Production,
LLC | |
| Energy Center | Rosewood Resources, Inc. | |
| New York Power Authority
Niagara | Rowan Companies, Inc. | |
| Power Project | Safety-Kleen Systems, Inc. | |
| New York Power Authority
Richard | SCANA Corporation | |
| M. Flynn Power Plant | SCANA Corporation Carolina Gas | |
| New York Power Authority St. | Transmission Corporation | |
| Lawrence/FDR Power Project | SCANA Corporation PSNC Energy | |
| Newfield Exploration | SCANA Corporation SC Electric
& Gas | |
| Nexen Petroleum USA, Inc. | SCANA Corporation SEMI (SCANA
Energy | |
| Nippon Oil Exploration USA Ltd. | Marketing, Inc.) | |
| NiSource Inc. | Schlumberger Limited | |
| NiSource Inc. Columbia Gas of
Kentucky | Schlumberger Oilfield Services | |
| NiSource Inc. Columbia Gas of | Science Applications
International | |
| Massachusetts | Corporation (SAIC) | |
| NiSource Inc. Columbia Gas of
Ohio | Seadrill Americas Inc. | |
| NiSource Inc. Columbia Gas of | SemGroup Corporation | |
| Pennsylvania | SemGroup Corporation SemCrude | |
| NiSource Inc. Columbia Gas of
Virginia | SemGroup Corporation SemGas | |
| NiSource Inc. Kokomo Gas And | SemGroup Corporation SemStream | |
| Fuel Company | Seneca Resources Corporation | |

MDU Resources Group, Inc. Proxy Statement A-7

MDU RESOURCES GROUP, INC.

ANNUAL MEETING OF STOCKHOLDERS

Tuesday, April 22, 2014 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 22, 2014.

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 22, 2014, 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.

Shareowner Services P.O. Box 64945 St. Paul, MN 55164-0945

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.proxypush.com/mdu Use the Internet to vote your proxy until 11:59 p.m. (CDT) on Monday, April 21, 2014.
(	TELEPHONE –
1-866-883-3382 Use a touch-tone telephone to vote your proxy until
11:59 p.m. (CDT) on Monday, April 21, 2014.
*	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	07.	William E. McCracken	o	o	o
02.	Karen B. Fagg	o	o	o	08.	Patricia L. Moss	o	o	o
03.	David L. Goodin	o	o	o	09.	Harry J. Pearce	o	o	o
04.	Mark A. Hellerstein	o	o	o	10.	J. Kent Wells	o	o	o
05.	A. Bart Holaday	o	o	o	11.	John K. Wilson	o	o	o
06.	Dennis W. Johnson	o	o	o

2.	Ratification of Deloitte & Touche LLP as the company’s independent registered public accounting firm for 2014.	o	For	o	Against	o	Abstain
3.	Approval, on a non-binding advisory basis, of the compensation of the companys 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 2014

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MDU RESOURCES GROUP INC — Proxy Solicitation & Information Statement 2014

31231_psi_2014-03-12_a938879f-6404-4c23-8700-6fdadd3b98be.zip

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MDU RESOURCES GROUP INC Proxy Solicitation & Information Statement 2014