UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
______________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): February 11,
2010
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MDU
Resources Group, Inc.
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(Exact
name of registrant as specified in its charter)
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Delaware
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1-3480
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41-0423660
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(State
or other jurisdiction of incorporation)
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(Commission
File
Number)
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(I.R.S.
Employer
Identification
No.)
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1200
West Century Avenue
P.O.
Box 5650
Bismarck,
North Dakota 58506-5650
(Address
of principal executive offices)
(Zip
Code)
Registrant’s
telephone number, including area code: (701)
530-1000
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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[
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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[
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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ITEM
5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
Payment of 2009 Annual
Incentive Awards
The
Compensation Committee (the “Committee”) of the Board of Directors (the “Board”)
of MDU Resources Group, Inc. (the “Company”) established 2009 annual incentive
award opportunities for executive officers including those officers who are the
named executive officers in the Company’s proxy statement for the 2010 Annual
Meeting of Stockholders (collectively, “NEOs”), and the Board approved the award
opportunities in February 2009. The performance goals were (i)
budgeted earnings per share achieved (weighted 50%) and (ii) budgeted return on
invested capital achieved (weighted 50%). The goals were measured at the Company
level for Mr. Hildestad and Mr. Raile and at the business unit level, as
allocated, for Mr. Harp (MDU Construction Services Group, Inc.), Mr. Schneider
(Knife River Corporation) and Mr. Bietz (WBI Holdings, Inc.). Mr.
Bietz also had five individual performance goals relating to WBI Holdings,
Inc.’s safety results, and each goal that was not met reduced his annual
incentive award payment by 1%.
In
establishing the award opportunities, the Committee determined that achievement
of the 2009 performance goals (earnings per share and return on invested
capital) would be calculated without regard to any noncash ceiling test
impairment charges related to the Company’s natural gas and oil
properties. Consistent with this determination, no associated
earnings benefit resulting from lower depletion, depreciation and amortization
expenses would be considered in the calculation. The Company uses the
full-cost method of accounting for its natural gas and oil
activities. Under this method, the Company is required to perform
quarterly “ceiling tests” to compare the present value of the future net cash
flow from proven reserves to the book value of those reserves at the balance
sheet date. The Company recorded a $384.4 million noncash ceiling
test impairment charge on March 31, 2009 in response to the natural gas and oil
prices at that time.
The
Company limits the after-tax incentive compensation it will pay above the target
amount to 20% of earnings in excess of planned earnings. The Company
calculated the earnings in excess of planned earnings without regard to the
after-tax incentive amounts above target. For the 2009 awards, the
Company measured the 20% limitation at the major business unit level for
business unit executives, which include Messrs. Harp, Schneider and Bietz, and
at the Company level for corporate executives, which include Messrs. Hildestad
and Raile. The 20% limitation was also calculated without regard to
the noncash impairment charge and the associated depletion, depreciation and
amortization benefit.
On
February 10, 2010, the Committee certified achievement of the performance goals
for the NEOs’ 2009 annual incentive awards based on its review of the Company’s
and its business units’ 2009 performance results. If the noncash
impairment charge had not been excluded, the NEOs would not have received an
annual incentive payment for 2009. The Board approved payment of the
2009 annual incentive awards at its meeting on February 11, 2010. The
NEOs’ annual incentive award opportunities and payments for 2009 are set forth
in the 2009 NEO Annual Award Opportunity and Payment Chart, which is filed as
Exhibit 10.1 and incorporated herein by reference.
John G. Harp’s Additional
2009 Incentive
The
Committee awarded Mr. Harp the opportunity to earn an additional incentive, and
the Board approved this additional incentive opportunity in February
2009. If MDU Construction Services Group, Inc.’s 2009 actual return
on invested capital exceeded its 2009 weighted average cost of capital by 100 to
199 basis points, Mr. Harp would receive $100,000; if it exceeded 2009 weighted
average cost of capital by 200 or more basis points, Mr. Harp would receive an
additional $100,000, for a total of $200,000.
MDU
Construction Services Group, Inc. accumulated significant amounts of cash in
2009 through effective working capital management. Instead of
reducing its own debt, MDU Construction Services Group, Inc. loaned the cash to
other business units of the Company, which lowered the overall Company invested
capital. The Committee approved calculating MDU Construction Services
Group, Inc.’s 2009 return on invested capital to reflect the excess cash
accumulated. MDU Construction Services Group, Inc.’s 2009 return on
invested capital, as adjusted for the excess cash, was 12.5%, which exceeded its
2009 weighted average cost of capital of 11.1%, and the Committee approved a
$100,000 incentive payment to Mr. Harp for 2009.
Item
9.01 Financial
Statements and Exhibits
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Exhibit
Number
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Description
of Exhibit
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10.1
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MDU
Resources Group, Inc. 2009 NEO Annual Award Opportunity and Payment
Chart
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: February
18, 2010
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MDU
Resources Group, Inc. |
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By: |
/s/ Paul K.
Sandness
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Paul
K. Sandness |
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General
Counsel and Secretary |
EXHIBIT
INDEX
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Exhibit
Number
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Description
of Exhibit
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10.1
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MDU Resources Group, Inc. 2009 NEO Annual Award
Opportunity and Payment Chart |