MDU CONSTRUCTION SERVICES GROUP,
INC.
EXECUTIVE INCENTIVE COMPENSATION
PLAN
____________________________________________________________
I.
PURPOSE
The purpose of the Executive Incentive
Compensation Plan (the "Plan") is to provide an incentive for key
executives of MDU Construction Services Group, Inc. (formerly known
as Utility Services, Inc.) (the "Company") and any subsidiaries
participating in the Plan (each a "Subsidiary", and together, the
"Subsidiaries") to focus their efforts on the achievement of
challenging and demanding corporate objectives. The Plan
is designed to reward successful corporate performance calculated
from January 1 to December 31 of each Plan Year, as measured
against specified performance goals as well as exceptional
individual performance. When corporate or subsidiary
performance reaches or exceeds the performance targets and
individual performance is exemplary, incentive compensation awards,
in conjunction with salaries, will provide a level of compensation
which recognizes the skills and efforts of the key
executives.
II.
DEFINITIONS
Capitalized terms not otherwise defined herein
shall have the meanings given them in the Company’s Executive
Incentive Compensation Plan Rules and Regulations.
III.
BASIC PLAN CONCEPT
The Plan provides an opportunity to earn annual
incentive compensation based on the achievement of specified annual
performance objectives. A target incentive award for
each individual within the Plan is established based on the
position level and actual base salary, provided, however, that the
Compensation Committee of the Board of Directors (the "Committee")
of the Company in its sole discretion may, instead of actual
base
salary, use the assigned salary grade market
value (midpoint) ("Salary"). The target incentive award
represents the amount to be paid, subject to the achievement of the
performance objective targets established each
year. Larger incentive awards than target may be
authorized when performance exceeds targets; lesser or no amounts
may be paid when performance is below target.
It is recognized that during a Plan Year major
unforeseen changes in economic and environmental conditions or
other significant factors beyond the control of management may
substantially affect the ability of the Plan Participants to
achieve the specified performance goals. Therefore, in
its review of corporate performance the Committee, in consultation
with the Chief Executive Officer of MDU Resources Group, Inc., may
modify the performance targets. However, it is
contemplated that such target modifications will be necessary only
in years of unusually adverse or favorable external
conditions.
IV.
ADMINISTRATION
The Plan shall be administered by the Committee
with the assistance of the President of the Company. The
Committee shall approve annually, prior to the beginning of each
Plan Year, the list of eligible Participants, and the target
incentive award level for each position within the
Plan. The Plan's performance targets for the year shall
be approved by the Committee no later than its regularly scheduled
February meeting during that Plan Year. The Committee
shall have final discretion to determine actual award payment
levels, method of payment, and whether or not payments shall be
made for any Plan Year.
The Board of Directors of the Company may, at
any time and from time to time, alter, amend, supersede or
terminate the Plan in whole or in part, provided that no
termination, amendment or modification of the Plan shall adversely
affect in any material way an award that has met all requirements
for payment without
the written consent of the Participant holding
such award, unless such termination, modification or amendment is
required by applicable law.
V.
ELIGIBILITY
Key executives of the Company or the
Subsidiaries who are determined by the Committee to have a key role
in both the establishment and achievement of Company and/or
Subsidiary objectives shall be eligible to participate in the
Plan.
Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to
terminate any Participant's employment at any time, for any reason
or no reason in the Company's or a Subsidiary's sole discretion, or
confer upon any Participant any right to continue in the employment
of the Company or any Subsidiary. No executive shall
have the right to be selected to receive an award under the Plan,
or, having been so selected, to be selected to receive a future
award.
VI.
PLAN PERFORMANCE MEASURES
Performance measures shall be established that
consider shareholder and customer interests. These
measures shall be evaluated annually based on achievement of
specified goals.
The performance measure reflective of
shareholders' interest will be the percentage attainment of
corporate goals, as determined each year by the
Committee. This measure may be applied at the Company
level for some individuals, such as the President, whose major or
sole impact is Company-wide, or at the Subsidiary level for
individuals whose major or sole impact is on Subsidiary
results.
Individual performance will be assessed based on
the achievement of annually established individual
objectives.
Threshold, target and maximum award levels will
be established annually for each performance measure. The
Committee
will retain the right to make all
interpretations as to the actual attainment of the desired results
and will determine whether any circumstances beyond the control of
management need to be considered.
VII.
TARGET INCENTIVE AWARDS
Target incentive awards will be
expressed as a percentage of each Participant's
Salary. These percentages shall vary by position and
reflect larger reward opportunity for positions having greater
effect on the establishment and accomplishment of the Company's or
a Subsidiary's objectives. A schedule showing the target
awards as a percentage of Salary for eligible positions will be
prepared by the Committee for each Plan Year.
VIII.
INCENTIVE FUND DETERMINATION
The target incentive fund is the sum
of the individual target incentive awards for all eligible
Participants. Once the incentive targets have been
determined by the Committee, a target incentive fund shall be
established and accrued ratably by the Company. The
incentive fund and accruals may be adjusted during the
year.
After the close of each Plan Year,
the Company will prepare an analysis showing the Company's and each
Subsidiary's performance in relation to each of the performance
measures employed. This will be provided to the
Committee for review and comparison to threshold, target and
maximum performance levels. In addition, any
recommendations of the President will be presented at this
time. The Committee will then determine the amount of
the target incentive fund earned.
IX.
INDIVIDUAL AWARD DETERMINATION
Each individual Participant's award will be
based first upon the level of performance achieved by the Company
and/or the
Subsidiary and secondly based upon the
individual's performance. The criteria applicable for
assessing individual performance will be approved by the Committee
no later than its regularly scheduled February meeting during the
Plan Year. The assessment by the Committee, after
consultation with the President, of achievement relative to the
established criteria, as determined by a percentage from
0 percent to 200 percent, will be applied to the Participant's
target incentive award which has been first adjusted for Company or
Subsidiary performance.
X.
PAYMENT OF AWARDS
Except as provided below or as
otherwise determined by the Committee, in order to receive an award
under the Plan, the Participant must remain in the employment of
the Company or the Subsidiary for the entire Service
Year. If a Participant terminates employment with the
Company pursuant to Section 5.01 of the Company's Bylaws which
provides for mandatory retirement for certain officers on their
65th birthday (or terminates employment with a Subsidiary pursuant
to a similar Subsidiary Bylaw provision) and if the Participant's
65th birthday occurs during the Service
