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MDU Resources Executive Comp 2011

RESOLVED: That the shareholders of MDU Resources Group, Inc. (“Company”) request the Board's Compensation Committee, when setting senior executive compensation, include sustainability as one of the performance measures for senior executives under the Company’s annual and/or long term incentive plans. Sustainability is defined as how environmental, social and financial considerations are integrated into corporate strategy over the long term.
 
SUPPORTING STATEMENT
 
We believe that the long-term interests of shareholders, as well as other important constituents, is best served by companies that operate their businesses in a sustainable manner focused on long-term value creation. As the recent financial crisis demonstrates, those boards of directors and management that operate their companies with integrity and a focus on the long term are much more likely to prosper than ones that are dominated by a short-term focus. The best means of demonstrating a company’s commitment to the concept of sustainability is through incorporating it as a performance measure in the Company’s annual and/or long-term incentive plans.
 
We note that the Company has consistently affirmed its commitment to the concept of sustainability. The Company’s most recent proxy statement notes that, “Sustainable business development is also an important aspect of our business. . .” In its 2008 Sustainability Report, the Company’s President and CEO wrote:
 
Our work is essential, which is why it’s also important to us to ensure that our operations are sustainable.
 
We are committed to making significant contributions to society today, while making sure future generations can do the same tomorrow. We have worked to expand our economic, environmental and social contributions. . . .
 
We recognize the importance of collecting and tracking the factors in our day-to-day operations that have been identified by experts as being party of sustainable companies. We are working to implement data collection systems that will allow us to better track these factors.
 
While these words are laudable, incorporating them into the Company’s senior executive compensation program would give them real impact. Yet today, neither the Company’s annual incentive plan or its long-term incentive plan utilize any performance measures related to sustainability. We believe that this represents a serious shortcoming.
 
Other companies have added sustainability to the metrics that they use when determining executive compensation. British utility company National Grid announced last year it would partly base executive compensation on meeting targets for reducing carbon emissions. In addition, Xcel Energy in its 2009 proxy statement discloses that certain annual incentive payments are dependent on green house gas emission reductions alongside the weight given to meeting earnings per share targets. Also Intel Corporation calculates every employee’s annual bonus based on the firm’s performance on measures that include energy efficiency, completion of renewable energy and clean energy projects, and the company's reputation for environmental leadership.
 
We urge shareholders to vote FOR this important compensation reform.