EXHIBIT B
MDU RESOURCES GROUP, INC.
CORPORATE GOVERNANCE GUIDELINES
The Board of Directors of MDU Resources Group, Inc. (“MDU”) will have a
substantial majority of directors who meet the criteria for independence
required by the New York Stock Exchange and the Statement of Policy of Director
Independence Standards adopted by the Board.
In determining independence, the Board will broadly consider all
relevant facts and circumstances, including the commercial, industrial,
banking, consulting, legal, accounting, charitable, and familial relationships
that a director (or an organization with which the director is affiliated) has
with MDU.
The Nominating and Governance Committee is responsible for reviewing
with the Board the requisite skills and characteristics for Board members, as
well as the composition of the Board as a whole. In assessing possible candidates for
nomination to the Board, the Nominating and Governance Committee will consider
the background, experience, skills, character, individual success in chosen
field, background in public companies, geographic diversity, and independence
of candidates. Prospective nominees for
director will be identified and recommended by the Nominating and Governance
Committee in accordance with the policies and criteria established from time to
time by the Board.
MDU’s Restated Certificate of Incorporation provides that the Board
will consist of between six and fifteen members with the exact number being
fixed from time to time by the Board.
Each director will reasonably manage his or her commitments in order
that they do not preclude devoting adequate time and attention to the
performance of his or her duties as a member of the Board and its committees.
A person who is not an officer of MDU will be ineligible to serve as a
director beyond the first regular meeting of the Board of Directors after the
date he shall have attained the age of 70, and a person who is a “high ranking
executive” of MDU (as that term is defined in Section 5.01 of MDU’s Bylaws) serving
as a director will be ineligible to continue service as a director or officer
of MDU beyond the first regular meeting of the Board of Directors after the
date he shall have attained the age of 65.
No former officer or former employee of MDU will be eligible for
election as director.
Although the Board has not established term limits, the Nominating and
Governance Committee will review each director’s continuation on the Board
coincident with that director’s being considered for re-nomination.
Any nominee for director who receives a greater number of votes
“withheld” from his or her election than votes “for” his or her election shall
tender his or her resignation for consideration by the Nominating and
Governance Committee. The Nominating and Governance Committee shall
promptly recommend to the Board the action to be taken with respect to such
resignation considering the factors set forth in the Policy on Majority Voting
for Directors, and the Board of Directors shall promptly act upon such
recommendation.
Newly
created directorships resulting from any increase in the number of directors or
any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall be
filled by a two-thirds vote of the continuing directors then in office, or a
sole remaining director, although less than a quorum, and directors so chosen
shall hold office for a term expiring at the next annual meeting of the
stockholders.
The business and affairs of MDU are under the direction of the Board of
Directors. The Board elects a chief executive
officer and other officers of MDU
who have those powers and duties regarding the day-to-day operations of MDU as
are specified in MDU’s Bylaws or as otherwise determined by the Board. In discharging their obligations, directors
will be entitled reasonably to rely on MDU’s employees and its outside advisors
and auditors. Directors are expected to
attend meetings of the Board and of committees on which they serve, and to
spend whatever time is necessary, including time to review materials
distributed in advance of Board or committee meetings, properly to discharge
their responsibilities.
Whenever a non-employee director serves as Chairman of the Board, the
Chairman shall consult with the Chief Executive Officer regarding the Board’s
meeting agendas, the quality and flow of information provided to the Board and
the effectiveness of the Board meeting process.
Conversely, if an employee director serves as Chairman and Chief
Executive Officer, a Lead Director, who is chosen by the independent directors,
shall consult with the Chairman concerning such matters. The Chairman of the Board, if not an
employee, or a Lead Director, if the Chairman is an employee, shall preside at
executive sessions of the independent directors.
The directors will be entitled to have MDU
purchase reasonable directors’ liability insurance on their behalf, to the
benefits of indemnification to the fullest extent permitted by law and MDU’s
Restated Certificate of Incorporation, Bylaws and any indemnification
agreements, and to exculpation as provided by state law and MDU’s Restated
Certificate of Incorporation.
The Board will have at all times an Audit Committee, a Compensation
Committee, and a Nominating and Governance Committee. No employee of MDU will be a member of any of
these committees, and all of the members of these committees will be
independent directors to the extent required by the New York Stock Exchange and
applicable laws. Committee members will
be appointed by the Board upon recommendation of the Nominating and Governance
Committee with consideration of the desires of individual directors. It is the sense of the Board that
consideration should be given to rotating committee members periodically.
Each committee will have a written charter that sets forth the
purposes, goals and responsibilities of the committee, as well as
qualifications for committee membership, procedures for committee member
appointment and removal, committee structure and operations, and process for
committee reporting to the Board. Each
charter will address annual performance evaluations of the committee.
The chairman of each committee, in consultation with the committee
members, will determine the frequency and length of committee meetings,
consistent with any requirements of the committee’s charter. The chairman of each committee, in
consultation with the members of the committee and management, will develop the
committee’s agenda. The schedule of
meetings for each committee will be furnished to all directors.
The Audit Committee is directly responsible for the appointment,
compensation, retention and oversight of the work of MDU’s independent auditors
engaged (including resolution of disagreements between management and the
independent auditors regarding financial reporting) for the purpose of
preparing and issuing an audit report or other attest services, and the
independent auditors shall report directly to the Audit Committee. The appointment of MDU’s independent auditors
shall be submitted for stockholder ratification at the next stockholders’
annual meeting following the auditors appointment.
The Board may, from time to time, establish or maintain additional
committees as necessary or appropriate.
The Board and the committees each have the authority to hire and fire
independent legal, financial or other advisors as they may deem necessary, and
to establish the terms and conditions of the particular engagement.
Directors have full and free access to officers and employees of MDU
and, as necessary, outside advisors. In
making any contact with an officer, employee or advisor, the director will take
into account the potential effect of any such contact on the orderly conduct of
MDU’s affairs.
The Board welcomes regular attendance at Board meetings of senior
executives of MDU. Whenever a non-employee
director serves as Chairman of the Board, the Chief Executive Officer shall
consult with the Chairman with respect to the attendance of other executives,
employees or advisors to MDU.
Conversely, if the Chairman is an employee director, the Chairman and
the Lead Director shall consult concerning such matters.
The Compensation Committee will review the directors’ compensation
policies and recommend changes, as appropriate, from time to time to the
Board. The Compensation Committee will
consider the relationship of director compensation and perquisites to customary
levels for comparable companies.
Each director is expected to own MDU Common Stock equal in value to five (5) times the director’s annual cash retainer, provided that, a director, with good cause and with the knowledge of the Board of Directors, may donate or assign all of the director’s MDU Common Stock to a charitable, religious, or non-profit organization in lieu of ownership.
(a) Shares acquired through purchases on the open market and participation in MDU’s director stock plans will be considered in ownership calculations as will ownership of MDU Common Stock by a spouse.
(b) It is recognized that each director may need up to five (5) years to fulfill target ownership expectations, such five-year period commencing January 1 of the year following the director’s initial election to the Board of Directors.
(c) The level of stock ownership will be monitored annually with a report to the Compensation Committee of the Board of Directors at the February meeting.
All new directors are expected
to participate in MDU’s orientation program. Director orientation will include
presentations by senior management to familiarize new directors with MDU’s
corporate culture, strategic plans, significant financial, accounting and risk
management policies and issues, compliance programs, the code of conduct and
ethics policy (Leading With Integrity Guide), principal executives, and internal
and independent auditors. In addition,
director orientation will include visits to MDU’s headquarters and, to the
extent practicable, the headquarters of MDU’s significant business units. Director orientation is open to all
directors.
All directors are responsible for keeping current their knowledge of
MDU’s business and the environment in which it operates.
The Compensation Committee will conduct an annual review of the Chief
Executive Officer’s performance and, either as a committee or together with
other independent directors (as directed by the Board), determine and approve
the compensation level of the Chief Executive Officer based on such review. Whenever there is a non-employee Chairman, the
Chairman will communicate with the Chief Executive Officer regarding results of
the Chief Executive Officer’s annual performance review. If the Chairman is an employee director, the
Lead Director will so communicate with the Chief Executive Officer.
The Nominating and Governance Committee will periodically report to the
Board on succession planning, including principles and policies for Chief
Executive Officer selection and performance review, as well as policies
regarding succession planning in the event of an emergency or the retirement of
the Chief Executive Officer.
The Board of Directors, in coordination with the Nominating and
Governance Committee, annually will review and evaluate the performance and functioning
of the Board and its committees.
10. Board
Positions With Other Public Companies
The
number of boards on which a director may sit may be reviewed on a case-by-case
basis by the Nominating and Governance Committee. However, as a general rule, each director
shall not hold more than three directorships of public companies in total,
including MDU. The chief executive
officer and other executive officers shall not be members of more than two
boards of other public companies. Service
on another public company’s board of directors should not create a conflict of
interest or impair the director’s or the executive officer’s ability to provide
sufficient time to carry out his or her duties as a director of MDU.
11. Review of Related Persons Transactions
Transactions that (1) involve directors, director nominees, executive officers, significant shareholders or other “related persons” in which MDU is or will be a participant, and (2) are of the type required to be reported under Item 404(a) of Regulation S-K of the Securities and Exchange Commission shall be reviewed by the Audit Committee for the purpose of determining whether such transactions are in the best interests of MDU.
“Transactions” for this purpose are any transactions since the beginning of MDU’s last fiscal year, or any currently proposed transaction, in which MDU was or is to be a participant, the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest, with exceptions as set forth in the Instructions to Item 404(a) of Regulation S-K. “Transactions” include but are not limited to any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships.
“Executive officer” means any of those persons identified as executive officers in MDU’s most recent proxy statement and those persons succeeding into those positions subsequent to the filing of the proxy statement.
“Related person” means
(i) any director, director nominee, executive officer, and any holder of five
percent or more of MDU’s Common Stock and any immediate family member thereof
which shall include any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and any person (other than a tenant or employee) sharing the household of such
director, director nominee, executive officer, or
It shall be the responsibility of the individual directors, director nominees, executive officers, and any holder of five percent or more of MDU’s Common Stock promptly to report to the General Counsel of MDU all proposed or existing Transactions in which MDU and they, or persons related to them, are parties or participants, and to provide such information with respect to such Transactions as MDU may request.
The General Counsel shall furnish to the Chairman of the Audit Committee any such report relating to a Transaction that, in the General Counsel’s judgment, may require reporting pursuant to Item 404 of Regulation S-K, together with a memorandum from the General Counsel (or his or her designee) setting forth the material facts and circumstances of the Transaction.
After review of the report and memorandum from the General Counsel, and after consideration of the material facts and circumstances, and such consultation with legal counsel and other advisors as it deems advisable, the Audit Committee shall make such determination or recommendation to the Board of Directors and appropriate officers of MDU with respect to such Transaction as the Audit Committee deems appropriate.
Upon receipt of the Audit Committee’s recommendation, the Board of Directors or officers, as the case may be, shall take such action as deemed appropriate in light of their respective responsibilities under applicable laws and regulations.
The provisions of this
12. Approval,
Adoption, Amendment and Restatement
Approved and
adopted by resolution of the Board of Directors dated
Amended and
restated by resolution of the Board of Directors dated
Amended by
resolution of the Board of Directors dated
Amended and
restated by resolution of the Board of Directors dated
Amended and
restated by resolution of the Board of Directors dated
Amended and
restated by resolution of the Board of Directors dated
Amended and
restated by resolution of the Board of Directors dated
Amended and
restated by resolution of the Board of Directors dated
Amended and
restated by resolution of the Board of Directors dated November 16, 2006; and
Amended and restated
by resolution of the Board of Directors dated