Exhibit 10.3
MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT
[Date]
<<name>>
<<streetaddress>>
<<citystzip>>
In accordance with the terms of the MDU Resources Group, Inc.
Long-Term Performance-Based Incentive Plan (the "Plan"), pursuant to action of
the Compensation Committee of the Board of Directors of MDU Resources Group,
Inc. (the "Committee"), MDU Resources Group, Inc. (the "Company") hereby grants
to you (the "Participant") Performance Shares (the "Award"), subject to the
terms and conditions set forth in this Award Agreement (including Annexes A and
B hereto and all documents incorporated herein by reference), as set forth
below:
Target Award: <<shares>> Performance Shares
(the "Target Award")
Performance Period: [ ] through
[ ] (the "Performance
Period")
Date of Grant: [ ]
Dividend Equivalents: Yes
THESE PERFORMANCE SHARES ARE SUBJECT TO FORFEITURE AS PROVIDED HEREIN.
THIS AWARD AND AMOUNTS RECEIVED IN CONNECTION WITH THIS AWARD ARE ALSO
SUBJECT TO FORFEITURE, RECAPTURE OR OTHER ACTION IN THE EVENT OF AN
ACCOUNTING RESTATEMENT, AS PROVIDED IN ARTICLE 19 OF THE PLAN.
ADDITIONALLY, BY SIGNING THIS AWARD AGREEMENT YOU ARE ACKNOWLEDGING
AND AGREEING THAT ANY PERFORMANCE SHARE AWARD GRANTED TO YOU IN 2005
AND ANY AMOUNTS PAID OR PAYABLE OR DISTRIBUTED OR DISTRIBUTABLE
PURSUANT TO ANY SUCH PRIOR 2005 AWARD SHALL ALSO BE SUBJECT TO
FORFEITURE, RECAPTURE OR OTHER ACTION IN THE EVENT OF AN ACCOUNTING
RESTATEMENT, AS PROVIDED IN ARTICLE 19 OF THE PLAN.
Further terms and conditions of the Award are set forth in Annexes A
and B hereto, which are integral parts of this Award Agreement.
All terms, provisions and conditions applicable to the Award set forth
in the Plan and not set forth in this Award Agreement are hereby incorporated
herein by reference. To the extent any provision hereof is inconsistent with a
provision of the Plan; the provisions of the Plan will govern. The Participant
hereby acknowledges receipt of a copy of this Award Agreement, including Annexes
A and B hereto, and a copy of the Plan and agrees to be bound by all the terms
and provisions hereof and thereof.
MDU RESOURCES GROUP, INC.
By:
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Terry D. Hildestad
President and
Chief Executive Officer
Agreed:
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Participant
Attachments: Annex A
Annex B
2
ANNEX A
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TO
MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT
It is understood and agreed that the Award of Performance Shares
evidenced by the Award Agreement to which this is annexed is subject to the
following additional terms and conditions.
1. Nature of Award. The Target Award represents the opportunity to
receive shares of Company common stock, $1.00 par value ("Shares") and Dividend
Equivalents on such Shares. The number of Shares that may be earned under this
Award shall be determined pursuant to Section 2 hereof. The amount of Dividend
Equivalents that may be earned under this Award shall be determined pursuant to
Section 4 hereof. Except for Dividend Equivalents, which are paid in cash,
Awards will be paid in Shares.
2. Determination of Number of Shares Earned.
The number of Shares earned, if any, for the Performance Period shall
be determined in accordance with the following formula:
# of Shares = Payout Percentage X Target Award
The "Payout Percentage" is based on the Company's total shareholder return
("TSR") relative to that of the Peer Group listed on Annex B (the "Percentile
Rank") for the Performance Period, determined in accordance with the following
table:
- -------------------------------------------------------------------------------
Percentile Rank Payout Percentage
(% of Target Award)
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100th 200%
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75th 150%
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50th 100%
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40th 10%
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less than 40th 0%
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If the Company achieves a Percentile Ranking between the 40th and 50th
percentiles, the Payout Percentage shall be equal to 10%, plus 9% for each
Percentile Rank whole percentage above the
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40th percentile. If the Company achieves a Percentile Ranking between the 50th
and 100th percentiles, the Payout Percentage shall be equal to 100%, plus 2% for
each Percentile Rank whole percentage above the 50th percentile.
The Percentile Rank of a given company's TSR is defined as the percentage of the
Peer Group companies' returns falling at or below the given company's TSR. The
formula for calculating the Percentile Rank follows:
Percentile Rank = (n - r + 1)/n x 100
Where:
n = total number of companies in the Peer Group, including the
Company
r = the numeric rank of the Company's TSR relative to the Peer Group,
where the highest return in the group is ranked number 1
To illustrate, if the Company's TSR is the third highest in the Peer Group
comprised of 26 companies, its Percentile Rank would be 92. The calculation is:
(26 - 3 + 1)/26 x 100 = 92.
The Percentile Rank shall be rounded to the nearest whole percentage.
If the common stock of a company in the Peer Group ceases to be traded during
the 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.
Total shareholder return is the percentage change in the value of an investment
in the common stock of a company from the initial investment made 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.
All Performance Shares that are not earned for the Performance Period shall be
forfeited.
3. Issuance of Shares. Subject to any restrictions on distributions of
Shares under the Plan, and subject to Section 6 of this Annex A, the Shares
earned under the Award, if any, shall be issued to the Participant as soon as
practicable (but
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no later than the next March 15) following the close of the Performance Period.
4. Dividend Equivalents. Dividend Equivalents shall be earned with
respect to any Shares issued to the Participant pursuant to this Award. The
amount of Dividend Equivalents earned shall be equal to the total dividends
declared on a Share between the Date of Grant of this Award and the last day of
the Performance Period, multiplied by the number of Shares issued to the
Participant pursuant to the Award Agreement. Any Dividend Equivalents earned
shall be paid in cash to the Participant when the Shares to which they relate
are issued or as soon as practicable thereafter. If the Award is forfeited or if
no Shares are issued, no Dividend Equivalents shall be paid.
5. Termination of Employment.
(a) If the Participant's employment with the Company is
terminated for any reason other than "Cause" (as defined below) (1) during the
first year of the Performance Period, all Performance Shares (and related
Dividend Equivalents) shall be forfeited; (2) during the second year of the
Performance Period, determination of the Company's Percentile Rank for the
Performance Period will be made by the Committee at the end of the Performance
Period, and Shares (and related Dividend Equivalents) earned, if any, will be
paid based on the Payout Percentage, prorated for the number of full months
elapsed from and including the month in which the Performance Period began to
and including the month in which the termination of employment occurs; and (3)
during the third year of the Performance Period, determination of the Company's
Percentile Rank for the Performance Period will be made by the Committee at the
end of the Performance Period, and Shares (and related Dividend Equivalents)
earned, if any, will be paid based on the Payout Percentage without prorating.
(b) If the Participant's employment is terminated for "Cause" (as
defined below) during the Performance Period, all Performance Shares (and
related Dividend Equivalents) shall be forfeited.
(c) For purposes of the Award Agreement, the term "Cause" shall
mean the Participant's fraud or dishonesty that has resulted or is likely to
result in material economic damage to the Company or a Subsidiary, or the
Participant's willful nonfeasance if such nonfeasance is not cured within ten
days of written notice from the Company or a Subsidiary, as determined
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in good faith by a vote of at least two-thirds of the non-employee directors of
the Company at a meeting of the Board at which the Participant is provided an
opportunity to be heard.
6. Tax Withholding. Pursuant to Article 16 of the Plan, the Committee
shall have the power and the right to deduct or withhold, or require the
Participant to remit to the Company, an amount sufficient to satisfy any
Federal, state and local taxes (including the Participant's FICA obligations)
required by law to be withheld with respect to the Award. The Committee may
condition the delivery of Shares upon the Participant's satisfaction of such
withholding obligations. The Participant may elect to satisfy all or part of
such withholding requirement by tendering previously-owned Shares or by having
the Company withhold Shares having a Fair Market Value equal to the minimum
statutory withholding that could be imposed on the transaction (based on minimum
statutory withholding rates for Federal, state, and local tax purposes, as
applicable, including payroll taxes, that are applicable to such supplemental
taxable income). Such election shall be irrevocable, made in writing, signed by
the Participant, and shall be subject to any restrictions or limitations that
the Committee, in its sole discretion, deems appropriate.
7. Ratification of Actions. By accepting the Award or other benefit
under the Plan, the Participant and each person claiming under or through him or
her shall be conclusively deemed to have indicated the Participant's acceptance
and ratification of, and consent to, any action taken under the Plan or the
Award by the Company, its Board of Directors, or the Committee.
8. Notices. Any notice hereunder to the Company shall be addressed to
its office, 1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota
58506; Attention: Corporate Secretary, and any notice hereunder to the
Participant shall be addressed to him or her at the address specified on the
Award Agreement, subject to the right of either party to designate at any time
hereafter in writing some other address.
9. Definitions. Capitalized terms not otherwise defined herein or in
the Award Agreement shall have the meanings given them in the Plan.
10. Governing Law and Severability. To the extent not preempted by
Federal law, the Award Agreement will be governed by and construed in accordance
with the laws of the State of
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Delaware, without regard to conflicts of law provisions. In the event any
provision of the Award Agreement shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Award Agreement, and the Award Agreement shall be construed and enforced as if
the illegal or invalid provision had not been included.
11. No Rights to Continued Employment. The Award Agreement is not a
contract of employment. Nothing in the Plan or in the Award Agreement shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate the Participant's employment at any time, for any reason or no reason,
or confer upon the Participant the right to continue in the employ of the
Company or a Subsidiary.
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ANNEX B
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TO
MDU RESOURCES GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT
PEER GROUP COMPANIES
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Alliant Energy Corporation
Berry Petroleum Company - CL A
Black Hills Corporation
Comstock Resources, Inc.
Dycom Industries, Inc.
EMCOR Group Inc.
Encore Acquisition Company
Equitable Resources, Inc.
Florida Rock Industries, Inc.
Granite Construction Incorporated
Hanson PLC ADR
InfraSource Services, Inc.
Martin Marietta Materials, Inc.
National Fuel Gas Company
Northwest Natural Gas Company
NSTAR
OGE Energy Corp.
ONEOK, Inc.
Quanta Services, Inc.
Questar Corporation
SCANA Corporation
Southwest Gas Corporation
St. Mary Land & Exploration Company
Swift Energy Company
US Concrete, Inc.
Vectren Corporation
Vulcan Materials Company
Whiting Petroleum Corporation
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