SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MDU Resources Group, Inc.
(Name of Registrant as Specified In Its Charter
.................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.............................................................
2) Aggregate number of securities to which transaction applies:
.............................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
4) Proposed maximum aggregate value of transaction:
.............................................................
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
..............................................................
2) Form, Schedule or Registration Statement No.:
..............................................................
3) Filing Party:
..............................................................
4) Date Filed:
..............................................................
MDU RESOURCES
GROUP, INC.
- --------------------------------------------------------------------------
400 North Fourth Street John A. Schuchart
Bismarck, ND 58501 Chairman &
(701) 222-7900 Chief Executive Officer
March 7, 1994
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held on Tuesday, April 26, 1994, at 11:00 A.M., Central Daylight Time, at 909
Airport Road, Bismarck, North Dakota 58504. The other directors and officers
join me in extending this invitation.
The formal matters to be acted upon at the meeting are described in the
accompanying Notice of Meeting and Proxy Statement. I would like to note for
your special attention that the Board of Directors has recommended that the
holders of Common Stock of the Company approve two proposals to amend the
Certificate of Incorporation. First, Article THIRD, which states the purposes
and powers of the Company, has not been amended since the original Certificate
was filed in 1924. As was the custom in those days it is lengthy and specific.
Current law permits a general statement. The name change authorized by the
stockholders in 1985 reflects the multidimensional nature of our Company. This
amendment is consistent with the operations of our Company. Second, the first
paragraph of Article FOURTH states the number of authorized shares and the par
value of Common Stock. The proposed amendment will increase the number of
authorized shares of Common Stock from 50,000,000 to 75,000,000 and reduce the
par value of Common Stock from $5.00 per share to $3.33 per share. The increase
in the number of authorized shares will insure that the Company will be able to
raise needed capital expeditiously and economically; provide sufficient Common
Stock for use in the several investment plans of the Company; and provide an
assured source of unissued Common Stock for issuance for other corporate
purposes which may develop from time to time. The reduction in par value will
enable the Company to effect a stock split in the future without going to the
stockholders for approval, should the Board of Directors decide it is in the
best interests of the Company to do so. In addition to the formal issues, a
brief report on current matters of interest will be presented. Luncheon will be
served following the meeting.
We were pleased with the response of our stockholders at the 1993 Annual
Meeting at which 87.5 percent of the Common Stock was represented in person or
by proxy. We hope that participation by our stockholders in the affairs of the
Company will increase and that there will be an even greater representation at
the 1994 meeting. If you are unable to attend the meeting but have questions or
comments on the Company's operations, we would like to hear from you.
Representation of your shares at the meeting is very important and we urge
that, whether or not you now plan to attend the meeting, you promptly mark,
date, sign and return the enclosed proxy card in the envelope provided for that
purpose. If you do attend the meeting, you may, if you wish, withdraw your proxy
and vote in person.
I hope you will find it possible to attend the meeting.
Sincerely,
JOHN A. SCHUCHART
MDU RESOURCES GROUP, INC.
400 NORTH FOURTH STREET
BISMARCK, NORTH DAKOTA 58501
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 1994
- --------------------------------------------------------------------------------
March 7, 1994
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
58504, on Tuesday, April 26, 1994, at 11:00 A.M., Central Daylight Time, for the
following purposes:
(1) To elect four directors to three year terms;
(2) To consider and take action upon a proposal, declared advisable by
the Board of Directors of the Company, to amend Article THIRD of the
Certificate of Incorporation pertaining to the corporate purposes and powers
of the Company, all as more fully described in the accompanying Proxy
Statement dated March 7, 1994;
(3) To consider and take action upon a proposal, declared advisable by
the Board of Directors of the Company, to amend Article FOURTH of the
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 50,000,000 with a par value of $5.00 per share to
75,000,000 with a par value of $3.33 per share, all as more fully described
in the accompanying Proxy Statement dated March 7, 1994; and
(4) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on February 28, 1994,
as the record date for the determination of common stockholders who will be
entitled to notice of and to vote at the meeting.
All stockholders who find it convenient to do so are cordially invited and
urged to attend the meeting in person. It is requested that you date, sign and
return the accompanying proxy in the enclosed return envelope, to which no
postage need be affixed if mailed in the United States. Your cooperation will be
appreciated.
By order of the Board of Directors,
LESTER H. LOBLE, II
Secretary
MDU RESOURCES GROUP, INC.
400 NORTH FOURTH STREET
BISMARCK, NORTH DAKOTA 58501
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PROXY STATEMENT
- --------------------------------------------------------------------------------
This Proxy Statement is furnished to the holders of Common Stock of MDU
Resources Group, Inc. (Company) on behalf of the Board of Directors of the
Company in connection with the solicitation of proxies to be used in voting at
the Annual Meeting of Stockholders to be held on April 26, 1994. The proxy
material was first forwarded to the holders of Common Stock on March 7, 1994.
Any stockholder giving a proxy may revoke it at any time prior to its use at
the meeting by filing with the Secretary either a written instrument of
revocation or a duly executed proxy bearing a later date. In addition, the
powers of a proxy holder are suspended if the person executing the proxy is
present at the meeting and informs the Secretary in open meeting that he wishes
to revoke his proxy and vote in person. Attendance at the meeting will not in
and of itself revoke a proxy.
The Company will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of shares of the Common Stock of the Company. In
addition to the use of the mails, proxies may be solicited by officers and
regular employees of the Company, by personal interview, by telephone or by
telegraph. Banks, brokerage houses and other institutions, nominees and
fiduciaries will be requested to forward the soliciting material to their
principals and to obtain authorizations for the execution of proxy cards and
will, upon request, be reimbursed for reasonable expenses incurred. Additional
solicitation of proxies will be made in the same manner under the special
engagement and direction of Georgeson & Company, Inc. at an anticipated cost to
the Company of approximately $6,000 plus out-of-pocket expenses.
VOTING SECURITIES OUTSTANDING
Only holders of record of Common Stock at the close of business on February
28, 1994, will be entitled to vote at the meeting. On such date there were
outstanding 18,984,654 shares of Common Stock. Each outstanding share of Common
Stock entitles the holder to one vote.
The Bylaws of the Company provide that a majority of the shares of Common
Stock issued and outstanding and entitled to vote in person or by proxy shall
constitute a quorum at a meeting of shareholders of the Company. Shares of
Common Stock represented by a properly signed and returned proxy are considered
present for purposes of determining a quorum.
Under Delaware law, if a quorum is present, the nominees for election as
directors who receive a plurality of the votes of shares present in person or
represented by proxy and entitled to vote shall be elected as directors.
"Withheld" votes are not included in the total vote cast for a nominee for
purposes of determining whether a plurality was received and, therefore, have no
negative effect.
Under Delaware law, the proposed amendments to the Certificate of
Incorporation require the affirmative votes of the holders of a majority of the
outstanding shares of Common Stock. Shares that are not voted for the
amendments, including abstentions or broker non-votes, will have the same effect
as a vote against the amendments.
As of February 28, 1994, no person held of record, or, to the knowledge of
the management of the Company, owned beneficially, 5 percent or more of the
outstanding shares of Common Stock of the Company.
PROPOSAL FOR AMENDMENT OF CERTIFICATE OF INCORPORATION: ARTICLE THIRD
On November 4, 1993, the Board of Directors unanimously adopted a resolution
declaring it advisable to amend Article THIRD of the Company's Certificate of
Incorporation to restate Article THIRD and to submit the
1
amendment to the stockholders for approval at the Annual Meeting. The proposed
amendment is set forth in Exhibit A to this Proxy Statement.
The current purpose and powers clause of the Certificate, which has not been
amended since the original Certificate was filed in 1924, contains three major
paragraphs and eighteen subparagraphs. Since 1924, custom, usage and the laws of
the state of Delaware have changed. Under current Delaware law, this specific
enumeration of business functions is no longer necessary, and a brief statement
of business purpose suffices. The Amendment would not restrict the Company's
current operations, would be consistent with those operations, and would
generally permit any kind of corporate activity so long as it is lawful.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Approval of the
proposed amendment to amend the purpose and powers clause requires the
affirmative vote of the holders of a majority of all of the outstanding Common
Stock of the Company. If a choice has been specified by a stockholder by means
of the ballot on the Proxy, the shares of Common Stock will be voted
accordingly. If no choice has been specified, the shares will be voted "FOR" the
proposal.
PROPOSAL FOR AMENDMENT OF CERTIFICATE OF INCORPORATION: ARTICLE FOURTH
As of the close of business on February 28, 1994, the authorized capital
stock of the Company consisted of 52,000,000 shares divided into four classes,
namely, Preferred Stock, Preferred Stock A, Preference Stock, and Common Stock.
The total number of shares of such Preferred Stock authorized is 500,000 shares
of the par value of $100 per share; the total number of shares of such Preferred
Stock A authorized is 1,000,000 shares without par value; the total number of
shares of such Preference Stock authorized is 500,000 without par value; and the
total number of shares of Common Stock authorized is 50,000,000 with a par value
of $5 per share. As of February 28, 1994, 18,984,654 common shares were issued
with 1,029,229 shares reserved for issuance under the Dividend Reinvestment and
the Tax Deferred Compensation Savings Plans of the Company.
The Board of Directors of the Company has proposed an amendment to the
Certificate of Incorporation of the Company to increase the authorized number of
common shares from 50,000,000 to 75,000,000 shares and to reduce the par value
of the Common Stock from $5.00 per share to $3.33 per share. The Resolution
adopted by the Board of Directors of the Company proposing this amendment to the
Certificate of Incorporation is attached hereto as Exhibit B.
The Board of Directors believes that the additional authorized common shares
may be needed to enable the Company to raise additional capital funds
expeditiously and economically for its ongoing operational needs, for issuance
in the Company's several investment plans or for possible acquisitions, stock
distributions or split, or other corporate purposes. The Board believes it
advisable to authorize additional shares to permit the issuance of shares of
Common Stock without the delay and the expense involved in obtaining stockholder
approval at the time such issuance is determined to be appropriate. The Company
would seek and obtain all necessary regulatory authority prior to the issuance
of additional shares of Common Stock.
The Board of Directors has no plan at the present time for the issuance or
use of the additional shares of Common Stock to be authorized by the amendment.
The issuance of additional shares of authorized Common Stock would be within the
discretion of the Board of Directors, without the requirement of further action
by stockholders unless such action is required by applicable law or the rules of
any stock exchange on which the Company's securities may then be listed. All
newly authorized shares would have the same rights as the presently authorized
shares, including the right to cast one vote per share and to participate in
dividends when and to the extent declared and paid. The Board of Directors
believes that the reduction in par value will enable the Company to effect a
stock split in the future without further shareholder approval should economic
conditions so warrant and the Board so determine.
The Board of Directors is unaware of any specific effort to obtain control of
the Company, and has no present intention of using the proposed increase in the
number of authorized shares of Common Stock as an anti-takeover device. However,
the Company's authorized but unissued capital stock could be used to make an
attempt to effect a change in control more difficult.
Decreasing the par value is not intended to have any effect on the market
value of the Common Stock.
2
Under the Company's Certificate of Incorporation, no holders of any class of
stock of the Company are entitled to any preemptive rights with respect to any
shares of the Company's capital stock.
None of the directors or officers of the Company has any interest, direct or
indirect, in the adoption of the proposed amendment except as a holder of shares
of the Common Stock of the Company.
No financial statements are furnished in connection with this proposal as
they are not deemed material for the exercise of prudent judgment with respect
thereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. Approval of the
proposed amendment to increase the authorized number of shares of Common Stock
and reduce the par value of Common Stock requires the affirmative vote of the
holders of a majority of all of the outstanding Common Stock of the Company. If
a choice has been specified by a stockholder by means of the ballot on the
Proxy, the shares of Common Stock will be voted accordingly. If no choice has
been specified, the shares will be voted "FOR" the proposal.
ELECTION OF DIRECTORS
At the meeting, four Directors will be elected to serve for a term of three
years until 1997 and until their respective successors are elected and qualify.
All of the nominees are incumbent Directors and are nominated for reelection.
Unless otherwise marked on the proxy, shares of the Common Stock represented by
the proxy will be voted for the four nominees named below. If any nominee
becomes unavailable for any reason, or if a vacancy should occur before the
election (which events are not anticipated), the shares represented by the proxy
will be voted for another person in the discretion of the persons named in the
proxy. Information concerning the nominees, including their ages, periods of
service as directors and business experience, according to information furnished
to the Company by the respective nominees, is set forth as follows:
FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------- --- ----------- -----------------------------------------------
San W. Orr, Jr. ........... 52 1978 Mr. Orr is an attorney and is in the business
(to be elected for a term of of financial and estate management. He is
three years expiring in 1997) Chairman of the Boards and a Director
of Marathon Electric Manufacturing
Corporation, Mosinee Paper Corporation,
and Wausau Paper Mills Company. He is a
Director of Wausau Insurance Companies,
M & I First American National Bank, and
M & I Marshall & Ilsley Bank. Mr. Orr
also serves various civic and
charitable organizations in Wisconsin
including the Board of Regents of the
University of Wisconsin System. He
currently serves on the Audit and
Compensation Committees of the Board of
Directors.
John A. Schuchart .......... 64 1976 Mr. Schuchart, Chairman of the Board and Chief
(to be elected for a term of Executive Officer, was named Chief Executive
three years expiring in 1997) Officer in June 1980 and Chairman in
May 1983. Mr. Schuchart also serves as
the Chairman of the Board and a
Director of Alaska Basic Industries,
Inc., Anchorage Sand and Gravel
Company, Inc., Concrete, Inc., Fidelity
Oil Co., Fidelity Oil Holdings, Inc.,
KRC Aggregate, Inc., KRC Holdings,
Inc., Knife River Coal Mining Company,
LTM, Incorporated, Rogue Aggregates,
Inc., Williston Basin Interstate
Pipeline Company; as a Director and the
President of Centennial Energy
Holdings, Inc., and Wibaux Gas Co.; all
being subsidiaries of the Company. Mr.
Schuchart is also Chairman of the
Managing Committee of Montana-Dakota
Utilities Co., a Division of the
Company.
3
FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------- --- ----------- -----------------------------------------------
Homer A. Scott, Jr. ....... 59 1981 Mr. Scott is engaged in the banking and
(to be elected for a term of ranching business in the states of Wyoming and
three years expiring in 1997) Montana. He is a Director and Chairman
of the Boards of First Interstate
BancSystem of Montana, Inc., and First
Interstate Bank of Commerce, Sheridan,
Wyoming, and a Director of First
Interstate Bank of Commerce, Billings,
Montana. Mr. Scott is a Director and
President of Sugarland Enterprises,
Inc., and the managing partner of
Sugarland Development Company, a
commercial property development company
in Sheridan, Wyoming. Mr. Scott also is
a Director of Flying V Cattle Company
and Padlock Ranch Company and a partner
in Scott Land and Livestock. He
currently serves on the Audit and
Compensation Committees of the Board of
Directors.
Sister Thomas Welder, 53 1988 Sister Welder is the President of the
O.S.B. ................... University of Mary, Bismarck, North Dakota. She
(to be elected for a term of is a Director of St. Alexius Medical
three years expiring in 1997) Center of Bismarck. She is also a
member of the North Dakota Vision 2000
Committee, the Theodore Roosevelt
Medora Foundation, and the
Accreditation Review Council of the
North Central Association of Colleges
and Schools. She currently serves on
the Nominating and Finance Committees
of the Board of Directors.
Certain information concerning the remaining directors, whose terms expire
either in 1995 or in 1996, including their ages, periods of service as directors
and business experience, according to information furnished to the Company, is
set forth as follows:
Douglas C. Kane ............ 44 1991 Mr. Kane joined the Company as Executive Vice
(term expiring in 1995) President and Chief Operating Officer in
January 1991. Prior to that time he was
President and Chief Executive Officer
of Knife River Coal Mining Company from
May 1990, President from September 1987
and previously had served as Senior
Vice President--Operations. Mr. Kane is
a Director of Alaska Basic Industries,
Inc., Anchorage Sand and Gravel
Company, Inc., Concrete, Inc., Fidelity
Oil Co., Fidelity Oil Holdings, Inc.,
KRC Aggregate, Inc., KRC Holdings,
Inc., Knife River Coal Mining Company,
LTM, Incorporated, and Rogue
Aggregates, Inc., all being
subsidiaries of the Company. Mr. Kane
is also a member of the Managing
Committee of Montana-Dakota Utilities
Co., a Division of the Company.
Richard L. Muus ............ 64 1985 Mr. Muus retired in April 1989 after 35 years
(term expiring in 1995) with the Midwest Federal Savings Bank, Minot,
North Dakota. At the time of his
retirement Mr. Muus was the President
and a Director of the bank. Mr. Muus is
a member and past Director and Officer
of the Minot Area Chamber of Commerce
and a past Director of the Minot Area
Development Corporation. He is a member
of the Military Affairs and Diplomats
Committee of the Chamber of Commerce.
He is a member of the Board of Regents
of Minot State University and also
serves on the Finance Committee of St.
Joseph Hospital, Minot, North Dakota.
He currently serves on the Audit and
Finance Committees of the Board of
Directors.
4
FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------- --- ----------- -----------------------------------------------
John L. Olson ............. 54 1985 Mr. Olson is President and the owner of Blue
(term expiring in 1995) Rock Products Company and of Blue Rock
Distributing Company located in Sidney,
Montana, a beverage bottling and
distributing company, respectively. Mr.
Olson also is the Chairman of the Board
and a Director of Admiral Beverage
Corporation, Worland, Wyoming, and
Ogden, Utah; he is Chairman of the
Board and Director of the Foundation
for Community Care, Sidney, Montana;
he is trustee for Blue Rock Products
Company Profit Sharing Trust. He
currently serves on the Audit and Nomi-
nating Committees of the Board of
Directors.
Joseph T. Simmons ......... 58 1984 Mr. Simmons is professor of Accounting and
(term expiring in 1995) Finance, University of South Dakota, Vermillion
and Visiting Professor of Finance,
University of Warsaw, Warsaw, Poland
(February -- July, 1994). Mr. Simmons
is the Chairman and President of
Simmons Financial Management, Inc. and
owner of Simmons & Associates. He also
serves on the Boards of RE/SPEC and
GRO/TECH in Rapid City, South Dakota.
He currently serves on the Finance
Committee of the Board of Directors.
Harold J. Mellen, Jr. .... 59 1989 Mr. Mellen joined the Company in 1985 as Vice
(term expiring in 1996) President--Corporate Development and was named
Senior Vice President--Finance and
Chief Financial Officer in May 1987,
Executive Vice President and Chief
Financial and Corporate Development
Officer in August 1989, and President
and Chief Corporate Development Officer
in May 1992. Mr. Mellen is a director
of General Atlantic Resources, Inc. of
Denver, Colorado, a public company of
which approximately 7.5 percent is
owned by Fidelity Oil Holdings, Inc. (a
subsidiary of the Company). Mr. Mellen
serves all subsidiaries as a Director
and/or an officer except Gwinner
Propane, Inc.; and
Prairielands Energy Marketing, Inc.
Mr. Mellen also serves as a member of
the Managing Committee of
Montana-Dakota Utilities Co., a
Division of the Company.
Robert L. Nance .......... 57 1993 Mr. Nance is the majority owner and President
(term expiring in 1996) of Nance Petroleum Corporation, Billings,
Montana, an oil and gas exploration and
production company. He is also a
Director of First Interstate Bank of
Commerce, Billings, Montana. He is
Chairman of the Board of the Deaconess
Billings Clinic Health Organization,
Deaconess Medical Center and Billings
Clinic, all of Billings, Montana. He
currently serves on the Finance
Committee of the Board of Directors.
5
FIRST YEAR
OF SERVICE
NAME AGE AS DIRECTOR BUSINESS EXPERIENCE
- ----------------------------- --- ----------- -----------------------------------------------
Charles L. Scofield ....... 69 1978 Mr. Scofield is the owner and President of The
(term expiring in 1996) Scofield Broadcasting Co., Inc. which is the
sole owner and licensee of KLPZ radio
station, Parker, Arizona. He is the
sole owner of KEYZ and KYYZ radio
stations in Williston, North Dakota. He
is a Director of the First National
Bank & Trust Company of Williston,
North Dakota, a Director of the North
Dakota Automobile Club (AAA) of Fargo,
North Dakota and the owner of a cattle
ranch in Montana. He currently serves
on the Nominating and Finance
Committees of the Board of Directors.
Stanley F. Staples, Jr. ..... 69 1984 Mr. Staples is President of Alexander
(term expiring in 1996) Properties, Inc., an investment management
firm, and of Northern Chief Iron
Company. Mr. Staples also serves on the
Board of Directors of Wausau Paper
Mills Company, M & I First American
National Bank, Marathon Electric
Manufacturing Corporation, Mosinee
Paper Corporation, and Murray
Machinery, Inc. He currently serves on
the Compensation and Nominating
Committees of the Board of Directors.
Except where expressly noted, no corporation or organization named above is a
parent, subsidiary or other affiliate of the Company.
During 1993, the Board of Directors had four meetings. The Board of Directors
has an Audit Committee, discussed under "Accounting and Auditing Matters," a
Nominating Committee, a Finance Committee and a Compensation Committee. The
Nominating Committee, which met three times during 1993, recommends to the full
Board of Directors nominees for directors and for executive officers. The
Nominating Committee will consider nominees recommended by stockholders if the
names of such nominees are submitted to the Secretary of the Company on or
before November 1, 1994, for the annual meeting to be held on April 25, 1995.
The Compensation Committee, which met four times during 1993, sets compensation
levels for executive officers and recommends to the full Board of Directors
compensation for the Directors of the Company. The Finance Committee, which met
three times during 1993, reviews corporate financial plans, policies, budgets,
investments, acquisitions, and reviews and authorizes actions necessary to issue
and sell Common Stock and debt securities of the Company.
6
EXECUTIVE COMPENSATION
Shown in the Summary Compensation Table below is information concerning the
annual and long-term compensation for services in all capacities to the Company
for the calendar years ending December 31, 1993, 1992, and 1991, and in the next
two Tables the option exercises and long-term incentive plan awards for the last
fiscal year of those persons who were, at December 31, 1993, (i) the Chief
Executive Officer and (ii) the other four most highly compensated executive
officers of the Company (the Named Officers). Footnotes supplement the
information contained in the Tables.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------- ----------------------------
AWARDS PAYOUTS
------------------ --------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS1 SATION2 AWARD(S) SARS3 PAYOUTS SATION4
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------------- ---- -------- -------- -------- -------- -------- -------- --------
John A. Schuchart 1993 314,000 68,432 -- 0 0 0 4,497
--Chairman of
the 1992 296,808 33,686 -- 0 28,530 0 4,364
Board & C.E.O. 1991 281,923 135,895 -- 0 0 0 4,238
Harold J. Mellen, Jr. 1993 176,995 42,328 -- 0 0 0 4,497
--President &
Chief 1992 160,334 21,600 -- 0 13,740 0 4,402
Corporate
Development
Officer 1991 151,691 81,000 -- 0 0 0 4,200
Joseph R. Maichel 1993 164,837 0 -- 0 0 0 3,777
--President &
C.E.O. of 1992 156,409 8,516 -- 0 13,740 0 4,331
Montana-Dakota
Utilities Co. 1991 150,100 45,001 -- 0 0 0 4,238
Douglas C. Kane 1993 131,960 35,264 -- 0 0 0 3,944
--Executive
Vice President 1992 125,723 20,412 -- 0 13,740 0 4,236
& Chief
Operating Officer 1991 105,908 67,364 -- 0 0 0 2,921
Martin A. White 1993 119,352 20,700 -- 0 0 0 920
--Vice
President-- 1992 115,000 11,040 -- 0 6,130 0 0
Corporate
Development 1991 13,269 0 -- 0 0 0 0
<FN>
- ------------------------------------------------------------
1 Granted pursuant to the Management Incentive Compensation Plan.
2 Perquisites and other personal benefits paid to each Named Officer
aggregate less than the minimum disclosure levels.
3 No options were granted during 1993. "SAR" is an acronym for "stock
appreciation right." The Company has no plan or program which uses stock
appreciation rights.
4 Company contributions to the Tax Deferred Compensation Savings Plan
(401(k) Plan).
7
AGGREGATED OPTION/SAR1 EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR1 VALUES
(D)
NUMBER OF (E)
(B) SECURITIES UNDERLYING VALUE OF UNEXERCISED,
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED (C) AT FISCAL YEAR-END3 AT FISCAL YEAR-END
ON VALUE (#) ($)
(A) EXERCISE2 REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- -------- ----------- ------------- ----------- -------------
John A. Schuchart.... 9,640 121,085 0 28,530 0 224,674
Harold J. Mellen, Jr. 5,340 69,754 0 13,740 0 108,202
Joseph R. Maichel.... 0 0 0 13,740 0 108,202
Douglas C. Kane...... 0 0 0 13,740 0 108,202
Martin A. White...... 0 0 0 6,130 0 48,274
<FN>
- ------------------------------------------------------------
1 "SAR" is an acronym for "stock appreciation right." The Company has no
plan or program which uses stock appreciation rights.
2 Reflects exercise of options under the 1983 Key Employees' Stock Option
Plan. No further options have been or will be granted under this plan and
no options remain outstanding.
3 The unexercised options are options granted under the 1992 Key Employee
Stock Option Plan (none of which are exercisable at this time).
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED PLANS
-------------------------------------
(A) (B) (C) (D) (E) (F)
PERFORMANCE
OR OTHER
NUMBER OF PERIOD
SHARES, UNITS UNTIL
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#)1 OR PAYOUT ($) ($) ($)
- ----------------------- ------------- ----------- --------- ------- -------
John A. Schuchart...... 28,530 12/31/94 52,638 105,276 157,914
Harold J. Mellen, Jr... 13,740 12/31/94 25,350 50,701 76,052
Joseph R. Maichel...... 13,740 12/31/94 25,350 50,701 76,052
Douglas C. Kane........ 13,740 12/31/94 25,350 50,701 76,052
Martin A. White........ 6,130 12/31/94 11,310 22,620 33,930
<FN>
- ------------------------------------------------------------
1 Dividend equivalents were granted pursuant to the 1992 Key Employee Stock
Option Plan based on the number of options granted in 1992 and held by
each Named Officer. Dividend equivalents will, if earned, entitle the
recipient to the cash amount equal to any dividend declared by the Board
of Directors on the Common Stock of the Company. Dividend equivalents may
be earned, from 0% to 150%, at the end of the three year performance cycle
(1992-1994) depending upon (1) the level of achievement of performance
goals established for the Company and Montana-Dakota Utilities Co. by the
Compensation Committee and (2) individual performance. Vesting is
accelerated upon a change in control. Dividend equivalents that are not
earned are forfeited.
The performance goals for the 1992-1994 performance cycle are based on
return on equity (25%), earnings per share (25%) and total shareholder
return (50%). Performance goals for Montana-Dakota Utilities Co., which
are applicable to Mr. Maichel, are based on regulatory return (50%) and
net income (50%).
8
SALARIED PENSION PLAN AND SUPPLEMENTAL INCOME SECURITY PLAN
YEARS OF CREDITED SERVICE 2
----------------------------------------------------------------------
REMUNERATION1 15 20 25 30 35 OR MORE
- ------------------------ -------- -------- -------- -------- ----------
$125,000... $ 77,940 $ 86,665 $ 95,365 $104,090 $112,790
150,000... 92,030 102,555 113,080 123,605 134,130
175,000... 106,120 118,445 130,795 143,120 155,445
200,000... 120,185 134,335 148,485 162,635 176,785
225,000... 134,275 150,225 166,200 182,150 198,100
250,000... 145,265 162,015 178,740 195,515 210,681
300,000... 162,545 179,295 196,020 212,795 227,961
400,000... 171,185 187,935 204,660 221,435 236,601
450,000... 171,185 187,935 204,660 221,435 236,601
<FN>
- ------------------------------------------------------------
1 Pension benefits are determined by the step-rate formula which places
emphasis on the highest consecutive 60 months of earnings within the final
10 years of service. Benefits for single participants under the Salaried
Pension Plan are paid as straight life amounts and benefits for married
participants are paid as actuarially reduced pensions with a survivorship
benefit for spouses, unless participants choose otherwise. The Salaried
Pension Plan also permits pre-retirement survivorship benefits upon
satisfaction of certain conditions. Additionally, certain reductions are
made for employees electing early retirement.
The Internal Revenue Code places maximum limitations on the amount of
benefits that may be paid in dollars under the Salaried Pension Plan. The
Company has adopted a non-qualified Supplemental Income Security Plan
(SISP) for senior management personnel. In 1993, 81 senior management
personnel participated in the SISP including the Named Officers. Both
plans cover salary shown in column (c) of the Summary Compensation Table
and exclude bonuses and other forms of compensation.
Upon retirement and attainment of age 65, participants in the SISP may
elect a retirement benefit or a survivors' benefit with the benefits
payable monthly for a period of 15 years.
2 As of December 31, 1993, the Named Officers were credited with the
following years of service under the plans; Mr. Schuchart: Pension, 18,
SISP, 11; Mr. Maichel: Pension, 23, SISP, 11; Mr. Mellen: Pension, 8,
SISP, 8; Mr. Kane: Pension, 3, SISP, 11; and Mr. White: Pension, 2, SISP,
2. The maximum years of service for benefits under the Pension Plan is 35
and under the SISP vesting begins at 3 years and is complete after 10
years. Benefit amounts under both plans are not subject to reduction for
offset amounts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Decisions on compensation for the Company's executive officers are made by
the Compensation Committee of the Board of Directors. The Committee was created
in 1967 and has been and is composed entirely of non-employee directors. In the
late part of each calendar year, the Committee reviews and approves, with any
modifications it deems appropriate, the Executive Compensation Policy for the
executive officers including the Chief Executive Officer. The approved plan is
implemented the following calendar year.
EXECUTIVE COMPENSATION POLICY
The Executive Compensation Policy is designed to attract and retain qualified
executive officers, to recognize above-average job performance and to provide a
direct and strong link between Company performance and executive pay. Total
compensation is intended to be competitive with that paid by comparable
companies in the regulated electric and gas utility industry and relevant
segments of the energy and mining industries.
There are four components of executive compensation:
(1) Base salary;
(2) Management Incentive Compensation Plan;
(3) 1992 Key Employee Stock Option Plan; and
(4) Restricted Stock Bonus Plan.
9
As indicated on page 9, the base salary component of compensation is designed
to be competitive with that paid by comparable companies. An external consultant
provides comparative surveys (Edison Electric Institute Executive Compensation
Survey, American Gas Association Top Management Survey, and Executive
Compensation Services Top Management Survey). The consultant also uses, as
appropriate, an oil and gas survey and a mining company survey for executives in
those positions. The external data from those surveys is used to develop a
market-consensus salary for each executive position. It is the policy of the
Compensation Committee to set 95% of the market-consensus salary as the market
value for the executive positions in the Company. The companies are not the same
as the peer group of companies used for the graph showing the comparison of five
year total shareholder returns, immediately following this report. The
Compensation Committee believes the Edison Electric Institute Executive
Compensation Survey, American Gas Association Top Management Survey, and
Executive Compensation Services Top Management Survey provide a broader base of
data and are commonly used in the utility industry to set executive
compensation. The Compensation Committee uses the market value of the position
together with an analysis of the value of the executive position and individual
evaluation to establish bases salaries for executive officers. To determine the
premium which should be added to the market-consensus salary used to set the
salary of the Chief Executive Officer to reflect the diversified nature of the
Company, the consultant uses a group of 12 peer companies (10 of which are the
same as those in the peer group used for the graph showing the comparison of
five year total shareholder returns, immediately following this report). These
12 companies are selected from utilities comparable to the Company. There was no
specific intent that these companies be different from the peer group. For 1994
they will be the same. This adjustment increased the value of the
market-consensus salary for the Chief Executive Officer for 1993 by 15%.
All executive officers are eligible for awards under the Company's various
incentive plans referred to above. The Compensation Committee believes that
offering incentives to executive officers will enhance the long-term performance
of the Company, promote cost efficiency and further overall shareholder returns.
The Committee uses these plans as it deems appropriate to achieve these goals.
1993 COMPENSATION FOR EXECUTIVE OFFICERS AND CHIEF EXECUTIVE OFFICER
Compensation paid to executive officers of the Company in 1993 was comprised
of base salary and cash awards under the Management Incentive Compensation Plan.
Additional dividend equivalents automatically accrued on options granted in 1992
to 16 executives of the Company (including all executive officers) pursuant to
the 1992 Key Employee Stock Option Plan. No awards were made in 1993 under the
1992 Key Employee Stock Option Plan or the Restricted Stock Bonus Plan (except
for one award of restricted stock made to one officer).
Base salary increases for executive officers during 1993 ranged from 3.1% to
5.9% and averaged 5.2%. Salary increases were a function of (1) the Compensation
Committee's assessment of the individual performance of each executive and (2)
the current salary of each executive compared to that paid by comparable
companies as determined by the external consultant (as discussed above). A more
favorable performance appraisal permitted a larger increase. If the current
salary lagged that paid by comparable companies a larger increase was permitted.
The base salaries during 1993 averaged 85% of the market-consensus salary for
the Company's executive positions. The Chief Executive Officer's base salary for
1993 reflected an increase of 5.9% over his 1992 base salary. This was 90% of
the market-consensus salary as adjusted by the premium of 15%. The Chief
Executive Officer's achievements and his 18 years with the Company were
considered as well as his achievement of his goal during 1993 of major
acquisitions of profitable companies not subject to rate regulation. The
Compensation Committee did not give formal weighting to the criteria used in
order to set salary increases for the executive officers or for the Chief
Executive Officer.
The Management Incentive Compensation Plan is structured so that cash
incentive awards reflect the attainment of specific annual levels of
performance. The performance measures used reflect both the shareholder's
interest (earnings) and the customer's interest (cost efficiency). Additionally,
individual performance is evaluated and appropriate adjustments to target award
levels may be made. Target award levels are a percentage of each participant's
assigned salary grade midpoint. The percentage for the Chief Executive Officer
was 35% and for the other executive officers ranged from 20% to 30%. A target
incentive fund is developed at the beginning of each plan year based upon the
aggregate target award levels of all participants. The size of the fund will
increase or decrease based upon actual Company performance in relation to the
pre-established goals. Individual awards will be greater or lesser than target
amounts based upon an assessment of individual performance. Awards can range
from 0% (less
10
than 90% of budgeted earnings per share) to 150% (more than 108% of budgeted
earnings per share) of the target amount. The annual corporate performance
targets for 1993 were based on the degree of achievement of 105% of budgeted
earnings. As a result of actual earnings exceeding threshold level of
performance, and individual performance goals being met, cash awards were made
under the plan for the year 1993 to 9 executive officers in the aggregate amount
of $265,350. The Chief Executive Officer received $68,432 for the year 1993.
This amount was a payout of 68% of the targeted award, based on the Company's
actual earnings exceeding the threshold level of performance and upon individual
performance.
The 1992 Key Employee Stock Option Plan is to motivate executives to achieve
specified long-term performance goals of the Company and to encourage ownership
by them of the common stock of the Company. It is designed to reinforce
financial and strategic objectives, to emphasize pay for performance, and to
focus executive effort on long-term sustainable value creation. This aligns the
interests of the executives with those of the shareholder. The plan consists of
two elements: stock option grants and dividend equivalents.
Since options were granted in 1992 and the initial 3 year performance cycle
(1992-94) is still running, the Compensation Committee determined that it was
not necessary to grant further options in 1993 to achieve the goals stated
above. However, under the terms of the 1992 option grants, dividend equivalents
automatically accrued in 1993 on these options. Dividend equivalents are accrued
based on the number of options held and are earned from 0% to 150% at the end of
each performance cycle based upon the achievement of the stated performance
goals; they are reflected in the Long Term Incentive Plan Table.
The Restricted Stock Bonus Plan provides for awards of restricted stock to
individuals when designated by the Compensation Committee as having demonstrated
superior individual performance. The awards serve as a motivator for long-term
performance and as a retention device for individuals who have demonstrated
superior performance. The executive has a stake in the company's financial
performance. Again, this aligns the interest of the executives with those of the
shareholder. No awards have been made under this plan to executive officers of
the Company since 1988. Restrictions lapsed with respect to 1000 shares granted
to Messrs. Kane and Mellen in 1988 pursuant to the Restricted Stock Bonus Plan
after expiration of the five-year restriction period.
26% of the Chief Executive Officer's total compensation during 1993 was based
on objective annual performance criteria (through the Management Incentive
Compensation Plan) or long-term performance criteria (through the 1992 Key
Employee Stock Option Plan, reflecting dividend equivalents accrued on the 1992
option grants). An average of 22% of the total compensation of the other
executive officers was based on objective annual performance criteria (through
the Management Incentive Compensation Plan) or long-term performance criteria
(through the 1992 Key Employee Stock Option Plan, reflecting dividend
equivalents accrued on the 1992 option grants). The Committee believes that
having 26% of the compensation of Chief Executive Officer and an average of 22%
of the compensation of other executive officers' at risk is sufficient to
provide a direct and strong link between Company performance and executive pay.
San W. Orr, Jr., Homer A. Scott, Jr., Member
Chairman Stanley F. Staples, Jr., Member
11
MDU RESOURCES GROUP, INC.
COMPARISON OF FIVE YEAR TOTAL SHAREHOLDER RETURN1
[chart]
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
MDU 100 128 124 159 180 226
S&P 500 100 132 128 166 179 197
PEER GROUP 100 128 133 175 194 213
<FN>
(1) All data is indexed to December 31, 1988, for the Company, the S&P 500, and
the peer group. Total shareholder return is calculated using the December
31 price for each year. It is assumed that all dividends are reinvested in
stock at the frequency paid, and the returns of each component peer issuer
of the group is weighted according to the issuer's stock market
capitalization at the beginning of the period. The peer issuers are Black
Hills Corp., Cilcorp Inc., Equitable Resources Inc., Florida Progress
Corp., Minnesota Power & Light Company, The Montana Power Company, Oneok
Inc., Questar Corp., South Jersey Industries, Teco Energy Inc., UGI Corp.,
and Utilicorp United Inc.
DIRECTORS' COMPENSATION
Each Director who is not an officer of the Company receives a $13,000 annual
retainer for Board Service, Audit and Compensation Committee Chairmen each
receive a $2,500 annual retainer, and Finance and Nominating Committee Chairmen
each receive a $1,000 annual retainer. All such Directors must defer $1,000 of
the annual Board retainer which amount is credited to a deferral account
quarterly. The deferral amount is divided by the market price of Company Common
Stock and converted to investment units. If dividends are paid on Company Common
Stock then an equivalent amount is credited for each investment unit and the
resulting amount is converted to investment units and credited to such
Directors' accounts. When a participating Director leaves the Board, dies or
becomes disabled, then the investment units credited to that Director's account
are multiplied times the market price of the Company Common Stock at that time,
converted to a dollar value and paid to the Director or named beneficiary in
equal monthly payments (with interest) over a five year period. Each Director
may also defer all or any part of the $12,000 Board retainer paid in cash.
Additionally, each Director who is not an officer of the Company receives $700
for each meeting of the Board of Directors attended and each Committee member
who is not an officer of the Company receives $700 for each Committee meeting
attended.
The Company also has a post-retirement arrangement for Directors who are not
officers of the Company which provides that after retirement from the Board, a
Director is entitled to receive compensation in an amount equal to the sum of
all annual retainers in effect at the time of retirement. Such amount will be
paid to the Director or named beneficiary in equal monthly installments over a
period of time equal to the period of service on the Board.
12
The Company also has a program whereby past Directors of the Company may be
chosen each year as "Director Emeritus" and each such past Director so chosen
may be invited to participate as a nonvoting member of the Company's Board of
Directors. Each such "Director Emeritus" serves for five years and receives no
compensation, other than reimbursement by the Company for reasonable travel
expenses in connection with attendance at meetings of the Company's Board of
Directors.
INFORMATION CONCERNING EXECUTIVE OFFICERS
Executive officers of the Company are elected by the Board of Directors and
serve until the next annual meeting of the Board. Any executive officer so
elected may be removed at any time by the affirmative vote of a majority of the
Board. Certain information concerning such executive officers, including their
ages, present corporate positions and business experience is set forth
below.
PRESENT CORPORATE POSITION
NAME AGE AND BUSINESS EXPERIENCE
- ----------------------------- --- ---------------------------------------------------------
John A. Schuchart............ 64 Chairman of the Board and Chief Executive Officer. For
information about Mr. Schuchart, see "Election of
Directors."
Cathleen M. Christopherson... 49 Ms. Christopherson was elected Vice President-Corporate
Communications effective November 1989. Prior to
that she served as Assistant Vice
President-Corporate Communications effective
September 1989 and Division Manager of
Montana-Dakota Utilities Co., a Division of the
Company, from August 1984.
Douglas C. Kane.............. 44 Executive Vice President and Chief Operating Officer. For
information about Mr. Kane, see "Election of Directors."
Lester H. Loble, II.......... 52 Mr. Loble was elected General Counsel and Secretary of
the Company effective May 1987. Mr. Loble also serves as
a Director and/or General Counsel and Secretary
of all subsidiaries of the Company except Wibaux
Gas Co.; Prairielands Energy Marketing, Inc.; and
Gwinner Propane, Inc. Mr. Loble is also a member
and the Secretary of the Managing Committee of
Montana-Dakota Utilities Co., a Division of the
Company.
Joseph R. Maichel............ 59 Mr. Maichel has been President, Chief Executive Officer
and a member of the Managing Committee of Montana-Dakota
Utilities Co., a Division of the Company, since
May 1990 and President since August 1985 and was
Group Vice President-Distribution of the Company
from February 1982.
Harold J. Mellen, Jr......... 59 President and Chief Corporate Development Officer. For
information about Mr. Mellen, see "Election of
Directors."
Vernon A. Raile.............. 49 Mr. Raile was elected Vice President, Controller and
Chief Accounting Officer effective August 1992. Prior to
that he was Controller and Chief Accounting
Officer from May 1989, Assistant Treasurer from
December 1987, and Tax Manager from March 1980.
Warren L. Robinson........... 43 Mr. Robinson was elected Vice President, Treasurer and
Chief Financial Officer of the Company effective August
1992. He is also Treasurer and Assistant
Secretary of Centennial Energy Holdings, Inc.,
Fidelity Oil Co., Fidelity Oil Holdings, Inc.,
Wibaux Gas Co. and Treasurer and Secretary of
Prairielands Energy Marketing, Inc., all being
subsidiaries of the Company. Prior to that he
served as Treasurer and Assistant Secretary from
December 1989, and as Manager of Corporate
Development and Assistant Treasurer from May 1989
to December 1989 and Manager of Corporate
Development from October 1988. Prior to that he
served as the Senior Vice President and Chief
Financial Officer of Great Falls Gas Company,
Great Falls, Montana.
13
PRESENT CORPORATE POSITION
NAME AGE AND BUSINESS EXPERIENCE
- ----------------------------- --- ---------------------------------------------------------
Martin A. White.............. 52 Mr. White was elected Vice President-Corporate
Development November, 1991. Prior to that he was Chairman
and Chief Executive Officer of White Resources
Corp., a mining company, from January 1990, and
Executive Vice President and Chief Operating
Officer of Consolidated TVX Mining Corporation
from January 1988. Prior to that he was President
and Chief Operating Officer of Entech, Inc., a
subsidiary of The Montana Power Company.
Rodney J. White.............. 57 Mr. White was elected Vice President-Marketing Strategy
September 1992. Prior to that he was Vice
President-Administration of Williston Basin
Interstate Pipeline Company from August 1986 to
August 1989 when he became President and a
Director of Prairielands Energy Marketing, Inc.,
and in 1993 President and a Director of Gwinner
Propane, Inc., subsidiaries of the Company.
Robert E. Wood............... 51 Mr. Wood has been Vice President-Public Affairs and
Environmental Policy of the Company since August, 1991.
Before that he was Vice President-Public Affairs
from June 1986. For five years prior thereto he
served as Manager of Legislative Affairs for the
Company.
SECURITY OWNERSHIP
The table below sets forth the number of shares of capital stock of the
Company owned beneficially as of December 31, 1993, by each director and each
nominee for director, each Named Officer and by all directors and executive
officers of the Company as a group.
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS
--------------------------- -------------------
NAME COMMON PREFERRED COMMON PREFERRED
- ----------------------------------------------- ------- --------- ------ ---------
Douglas C. Kane................................ 8,014(a) -- * --
Joseph R. Maichel.............................. 19,514(a)
Harold J. Mellen, Jr........................... 14,963(a) -- * --
Richard L. Muus................................ 2,934 -- * --
Robert L. Nance................................ 1,400
John L. Olson.................................. 3,000 -- * --
San W. Orr, Jr................................. 123,232(b) -- * --
John A. Schuchart.............................. 82,811(a)(f) -- * --
Charles L. Scofield............................ 8,000 -- * --
Homer A. Scott, Jr............................. 2,000(c) -- * --
Joseph T. Simmons.............................. 3,476 -- * --
Stanley F. Staples, Jr......................... 83,680(d) 300(d) * *
Sister Thomas Welder........................... 12,763(e) -- * --
Martin A. White................................ 3,682 -- * --
All directors and executive officers of the
Company as a group (20 in number)...... 392,531 300 2.1 *
<FN>
- ------------------------------------------------------------
* Less than one percent of the class.
(a) Includes full shares allocated to the officer's account in the Tax Deferred Compensation
Savings Plan.
(b) Mr. Orr serves as a co-trustee with shared voting and investment power of various trusts
and as an officer and director of the corporate trustee for various other trusts holding
these shares.
(c) Shares held by Homer A. Scott, Jr. Trust. Mr. Scott is a co-trustee of the trust and
shares voting and investment power with respect to these shares.
(d) All except 1000 shares of Common Stock are held in the name of Judd S. Alexander
Foundation, Inc. and Walter Alexander Foundation, Inc. Mr. Staples, as President of the
Judd S. Alexander Foundation, Inc., and Secretary of the Walter Alexander Foundation,
Inc., disclaims all beneficial ownership of the shares held by the Foundations.
(e) Shares of Common Stock owned by University of Mary. Sr. Welder, as President of the
University of Mary, disclaims all beneficial ownership of these shares.
(f) Includes 52,489 shares owned by Mr. Schuchart's wife. Mr. Schuchart disclaims all
beneficial ownership of the shares owned by his wife.
14
ACCOUNTING AND AUDITING MATTERS
The Board of Directors of the Company has appointed Arthur Andersen & Co.,
Certified Public Accountants, as independent auditors for the year ending
December 31, 1993. The appointment was made on the recommendation of the Audit
Committee of the Board of Directors which is presently composed of Messrs.
Richard L. Muus, John L. Olson, San W. Orr, Jr., and Homer A. Scott, Jr.
(Chairman).
The Audit Committee, established in 1972, meets regularly with management,
internal auditors, and representatives of the Company's independent public
accountants. The independent accountants have free access to the Committee and
the Board of Directors. In 1993, the Committee met three times and reviewed the
scope, timing and fees for the annual audit, other services provided by the
independent auditors, and the results of audit examinations completed by the
independent auditors, including the recommendations to improve internal controls
and the follow-up reports prepared by management. The Audit Committee reports
the results of its activities to the full Board of Directors. No member of the
Audit Committee is or has been an employee of the Company.
A representative of Arthur Andersen & Co. is expected to be present at the
Annual Meeting of Stockholders of the Company with the opportunity to make a
statement if he desires to do so and to respond to appropriate questions.
OTHER BUSINESS
The management of the Company knows of no other matter to come before the
meeting. However, if any matter requiring a vote of the stockholders should
arise, it is the intention of the persons named in the enclosed form of proxy to
vote in accordance with their best judgment.
1995 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to submit a proposal for inclusion in the proxy
material relating to the Company's Annual Meeting of Stockholders expected to be
held on April 25, 1995, must submit such proposal to the Secretary of the
Company on or before November 1, 1994.
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) FOR
THE YEAR ENDED DECEMBER 31, 1993, WHICH IS REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE MADE AVAILABLE TO STOCKHOLDERS TO
WHOM THIS PROXY STATEMENT IS MAILED, WITHOUT CHARGE, UPON WRITTEN REQUEST TO THE
OFFICE OF THE TREASURER OF MDU RESOURCES GROUP, INC., 400 NORTH FOURTH STREET,
BISMARCK, NORTH DAKOTA 58501.
By order of the Board of Directors,
LESTER H. LOBLE, II
Secretary
March 7, 1994
15
EXHIBIT A
RESOLVED, that the Board of Directors of MDU Resources Group, Inc., (the
"Corporation") hereby declares it advisable:
(A) that, as permitted by law, the purpose of the Corporation be amended to
include any lawful act or activity for which corporations may be organized under
the General Corporation Law of Delaware to reflect the fact that the Corporation
is a multidimensional natural resource company; and
(B) that, in order to effect the foregoing the Certificate of Incorporation of
the Corporation, as heretofore amended, be further amended by deleting Article
THIRD in its entirety, and by inserting in place thereof a new Article THIRD to
read as follows:
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware. Included within this purpose, without
limiting the generality of the foregoing sentence is (1) to own and
operate electric and gas public utility systems and (2) to transact
business as a multidimensional natural resource company.
The Corporation shall have and exercise all the powers conferred upon
corporations by the General Corporation Law of Delaware.
FURTHER RESOLVED, that the Board of Directors hereby directs that the
proposed amendment be attached as an exhibit to the proxy statement for the
Company's Annual Meeting of Stockholders to be held on April 26, 1994, for
consideration by the Stockholders entitled to vote in respect thereof.
EXHIBIT B
RESOLVED, that the Board of Directors of MDU Resources Group, Inc., hereby
declares it advisable:
(A) That the number of shares of Common Stock which the Company is authorized
to issue be increased from 50,000,000 shares of Common Stock with the par value
of $5.00 to 75,000,000 shares with the par value of $3.33, effective at the
close of business on the date on which the appropriate Certificate of Amendment
to the Company's Certificate of Incorporation is filed in the office of the
Secretary of State of the State of Delaware;
(B) That, in order to effect the foregoing, the Certificate of Incorporation
of the Company, as heretofore amended, be further amended by deleting the first
paragraph of Article FOURTH, and by inserting in place thereof a new first
paragraph of said Article FOURTH to read as follows:
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is Seventy-seven Million (77,000,000) divided into
four classes, namely, Preferred Stock, Preferred Stock A, Preference
Stock, and Common Stock. The total number of shares of such Preferred
Stock authorized is Five Hundred Thousand (500,000) shares of the par
value of One Hundred Dollars ($100) per share (hereinafter called the
"Preferred Stock") amounting in the aggregate to Fifty Million Dollars
($50,000,000). The total number of shares of such Preferred Stock A
authorized is One Million (1,000,0000) shares without par value
(hereinafter called the "Preferred Stock A"). The total number of shares
of such Preference Stock authorized is Five Hundred Thousand (500,000)
shares without par value (hereinafter called the "Preference Stock"). The
total number of shares of such Common Stock authorized is Seventy-five
Million (75,000,000) of the par value of Three and 33/100 Dollars ($3.33)
per share (hereinafter called the "Common Stock"), amounting in the
aggregate to Two Hundred Forty-nine Million Seven Hundred Fifty Thousand
Dollars ($249,750,000).
FURTHER RESOLVED, that the Board of Directors hereby directs that the
proposed amendment be attached as an exhibit to the proxy statement for the
Company's Annual Meeting of Stockholders to be held on April 26, 1994, for
consideration by the Stockholders entitled to vote in respect thereof.