MDU RESOURCES GROUP INC

2023 Compensation Framework

Compensation Committee Responsibilities and Objectives

The compensation committee is responsible for designing and approving our executive compensation program and setting compensation opportunities for our named executive officers. The objectives of our executive compensation program for executive officers are to:

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•recruit, motivate, reward, and retain high performing executive talent required to create superior stockholder value;

•reward executives for short-term performance as well as for growth in enterprise value over the long-term;

•ensure effective utilization and development of talent by working in concert with other management processes including performance appraisal, succession planning, and management development;

•help ensure that compensation programs do not encourage or reward excessive or imprudent risk taking; and

•provide a competitive package relative to industry-specific and general industry comparisons and internal equity, as appropriate.

The above executive compensation objectives are directly linked to our business strategy to ensure officers are focused on elements that drive our business success and create stockholder value.

Compensation Decision Process for 2023

The key activities and decisions regarding executive compensation made by the compensation committee during the 2023 included:

Components of Compensation

Our executive compensation program is designed to promote sustained long-term profitability and create stockholder value. The components of our named executive officers’ compensation are selected to drive financial and operational results as well as align the named executive officers’ interests with those of our stockholders. Pay components and performance measures are considered by the compensation committee as fundamental measures of successful company performance and long-term value creation. The components of our 2023 executive compensation include:

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Allocation of Total Target Compensation for 2023

Total target compensation consists of base salary plus target annual and long-term incentive compensation. Incentive compensation, which consists of annual cash incentive and long-term equity awards vesting after three years, comprises the largest portion of our named executive officers’ total target compensation because:

•equity awards align the interests of the named executive officers with those of stockholders by making a significant portion of their target compensation contingent upon future stock price performance;

•our named executive officers are in positions of authority to drive results, and therefore bear high levels of responsibility for our corporate performance;

•variable compensation helps ensure focus on goals that are aligned with overall company strategy; and

•annual cash incentive compensation is at risk and dependent upon company performance and the satisfaction of performance objectives.

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The compensation committee generally allocates a higher percentage of total target compensation to the long-term incentive than to the target annual cash incentive for our higher level executives because they are in a better position to influence the company’s long-term performance. The long-term incentive awards are paid in company common stock. These awards, combined with our stock retention requirements and our stock ownership policy, promote ownership of our stock by the named executive officers. As a result, the compensation committee believes the named executive officers, as stockholders, will be motivated to deliver long-term value to all stockholders.

Peer Groups

The compensation committee reviews the peer companies used for compensation analysis of executive positions and the company’s relative TSR performance periodically to assess their ongoing relevance and credibility.

Compensation Benchmarking Peer Group

The compensation committee’s independent compensation consultant, Meridian, aids in the selection of appropriate peer companies for our compensation benchmarking peer group by evaluating potential peer companies in the construction and engineering, utility and other related industries which are similar in size in terms of revenues and market capitalization. Meridian then uses this peer group along with other market survey information to evaluate and make recommendations regarding executive compensation. For the evaluation of 2023 executive compensation for our CEO and CFO performed in August 2022, the peer group used was unchanged from the prior year and consisted of the following companies:

For review of compensation of all other named executive officer positions, the independent compensation consultant used compensation data from additional companies in Willis Towers Watson’s 2022 General Industry Executive Compensation Survey which included the following companies:

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