Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

  Filed by the Registrant ý

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o

 

Preliminary Proxy Statement

 

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

ý

 

Definitive Proxy Statement

 

o

 

Definitive Additional Materials

 

o

 

Soliciting Material Pursuant to §240.14a-12


3M Company

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
         
Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

(1)

 

Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

 

 

 

 

Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

Table of Contents

George W. Buckley
Chairman of the Board, President and
Chief Executive Officer

LOGO   March 24, 2010

Dear Stockholder:

        I am pleased to invite you to attend 3M's Annual Meeting of Stockholders, which will be held on Tuesday, May 11, 2010, at 10 a.m., Central Daylight Time at the RiverCentre, 175 West Kellogg Boulevard, St. Paul, Minnesota.

        Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement. I will report on Company operations and discuss our plans for growth. There will also be time for your questions and comments.

        The fine attendance of our stockholders at Annual Meetings over the years has been very helpful in maintaining good communication. I sincerely hope you will be able to join us. Your attendance cards to the Annual Meeting are located on the back cover of this proxy statement.

        Your vote is important. Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. You may vote on the Internet, by telephone, or, if this proxy statement was mailed to you, by completing and mailing the enclosed traditional proxy card. Please review the instructions on the proxy card or the electronic proxy material delivery notice regarding each of these voting options.

        Thank you for your ongoing support of 3M.

Sincerely,

SIGNATURE


Table of Contents


2010 ANNUAL MEETING OF STOCKHOLDERS

NOTICE OF 2010 ANNUAL MEETING AND PROXY STATEMENT

TABLE OF CONTENTS

Notice of 2010 Annual Meeting of Stockholders

  iii

Proxy Statement

  1
 

Purpose of the Annual Meeting

  1
 

Annual Meeting Admission

  1
 

Information About the Notice of Internet Availability of Proxy Materials

  1
 

Stockholders Entitled to Vote

  2
 

Proposals You Are Asked to Vote On and the Board's Voting Recommendations

  3
 

Voting Requirements to Elect Directors and Approve Each of the Proposals Described in this Proxy Statement

  3
 

Voting Methods

  5
 

Changing Your Vote

  5
 

Counting the Vote

  5
 

Confidentiality

  6
 

Results of the Vote

  6
 

Delivery of Documents to Stockholders Sharing an Address

  6
 

List of Stockholders

  6
 

Cost of Proxy Solicitation

  7
 

Transfer Agent

  7

Governance of the Company

  8
 

Corporate Governance Guidelines

  8
 

Executive Sessions

  8
 

Board's Leadership Structure

  8
 

Lead Independent Director

  9
 

Communication with Directors

  9
 

Director Independence

  9
 

Director Nomination Process

  10
 

Board's Role in Risk Oversight

  12
 

3M Business Conduct Policies

  13
 

Related Person Transaction Policy and Procedures

  14
 

Policy on Adoption of a Rights Plan

  14

Board and Committee Membership

  15
 

Audit Committee

  16
 

Compensation Committee

  16
 

Finance Committee

  17
 

Nominating and Governance Committee

  18

Director Compensation and Stock Ownership Guidelines

  19

i


Table of Contents

Proposals To Be Voted On

  21
 

Proposal No. 1 — Election of the Ten Directors Identified in this Proxy Statement

  21
 

Proposal No. 2 — Ratification of the Appointment of Independent Registered Public Accounting Firm

  26
 

Proposal No. 3 — Approval of the Amended 2008 Long-Term Incentive Plan and Approval of the Expanded Performance Criteria Available Under the 2008 Long-Term Incentive Plan

  26
 

Proposal No. 4 — Stockholder Proposal on Special Meetings

  36

Information on Stock Ownership of Directors and Executive Officers

  39

Security Ownership of More Than 5 Percent Stockholders

  40

Section 16(a) Beneficial Ownership Reporting Compliance

  40

Executive Compensation

  41
 

Compensation Discussion and Analysis

  41
 

Compensation Committee Report

  53
 

Assessment of Risk Related to Compensation Programs

  54
 

Summary Compensation Table

  55
 

All Other Compensation Table

  56
 

2009 Grants of Plan-Based Awards Table

  57
 

Additional Information Regarding the Employment Agreements of the Named Executive Officers

  59
 

2009 Outstanding Equity Awards at Fiscal Year-End Table

  62
 

2009 Option Exercises and Stock Vested Table

  63
 

Pension Benefits

  64
 

Nonqualified Deferred Compensation

  66
 

Potential Payments Upon Termination or Change in Control. 

  67
 

Generally Available Compensation and Benefit Plans

  69

Compensation Committee Interlocks and Insider Participation

  72

Audit Committee Report

  72

Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm

  72

Fees of the Independent Registered Public Accounting Firm

  73

Requirements for Submission of Stockholder Proposals for Next Year's Annual Meeting

  74

Appendix A — Amended 3M 2008 Long-Term Incentive Plan

  A-1

ii


Table of Contents


3M COMPANY

3M Center, St. Paul, Minnesota 55144

NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS

TIME AND DATE   10:00 a.m., Central Daylight Time on Tuesday, May 11, 2010

PLACE

 

RiverCentre
175 West Kellogg Boulevard
St. Paul, Minnesota 55102

ITEMS OF BUSINESS

 

(1)

 

To elect the ten directors identified in this Proxy Statement, each for a term of one year.
    (2)   To ratify the appointment of PricewaterhouseCoopers LLP as 3M's independent registered public accounting firm.
    (3)   To approve the amended 2008 Long-Term Incentive Plan and to approve the expanded performance criteria available under the 2008 Long-Term Incentive Plan
    (4)   To consider one stockholder proposal, if properly presented at the meeting. See the Table of Contents for a description of the stockholder proposal.
    (5)   To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement.

ADJOURNMENTS AND POSTPONEMENTS

 

Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.

ANNUAL REPORT

 

Our 2009 Annual Report, which is not part of the proxy soliciting materials, is enclosed if the proxy materials were mailed to you. The Annual Report is accessible on the Internet by visiting www.proxyvote.com, if you have received the electronic proxy material delivery notice or already consented to the electronic delivery.

RECORD DATE

 

You are entitled to vote if you were a stockholder of record at the close of business on Friday, March 12, 2010.

MEETING ADMISSION

 

Either an admission ticket or proof of ownership of 3M stock, as well as a form of personal identification, must be presented in order to be admitted to the Annual Meeting. If you are a stockholder of record, your admission ticket is included on the back cover of this proxy statement. If your shares are held in the name of a bank, broker, or other holder of record, you must bring a brokerage statement or other proof of ownership with you to the Meeting, or you may request an admission ticket in advance. Please refer to the section entitled "Annual Meeting Admission" on page 1 for further details.

VOTING

 

For instructions on voting, please refer to the instructions on the E-Proxy Notice you received in the mail or, if you requested or received a hard copy of the Proxy Statement, on your enclosed proxy card.

    By Order of the Board of Directors,

 

 

GRAPHIC
    GREGG M. LARSON
Deputy General Counsel and Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 11, 2010: The Notice of Annual Meeting, Proxy Statement and the 2009 Annual Report are available at www.proxyvote.com. Enter the 12-digit control number located on the E-Proxy Notice or proxy card to view these materials.

THIS PROXY STATEMENT AND PROXY CARD ARE BEING DISTRIBUTED ON OR ABOUT MARCH 24, 2010.

iii


Table of Contents


PROXY STATEMENT

        The Board of Directors (the "Board") of 3M Company, a Delaware corporation ("3M" or the "Company") is soliciting proxies for the Annual Meeting of Stockholders. You are receiving a proxy statement because you own shares of 3M common stock that entitle you to vote at the meeting. By use of a proxy, you can vote whether or not you attend the meeting. The proxy statement describes the matters we would like you to vote on and provides information on those matters so you can make an informed decision.

        The information included in this proxy statement relates to proposals to be voted on at the meeting (if properly presented), the voting process, 3M's Board and Board committees, the compensation of directors and certain executive officers, and other required information.


Purpose of the Annual Meeting

        The purpose of the Annual Meeting is to elect directors and to conduct the business described in the Notice of Annual Meeting.


Annual Meeting Admission

        Only stockholders are invited to attend the meeting. An admission ticket or proof of ownership of 3M stock, along with personal identification, must be presented in order to be admitted to the Annual Meeting. If you are a stockholder of record, your admission ticket is on the back of this proxy statement. If your shares are held in the name of a bank, broker, or other holder of record, you must bring a brokerage statement or other proof of ownership with you to the Annual Meeting, or obtain an admission ticket in advance. Tickets are also available on the Internet voting site — www.proxyvote.com. If you do not provide photo identification or comply with the other procedures outlined above, you will not be admitted to the Annual Meeting.

        No cameras (including cell phone cameras), recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting.


Information About the Notice of Internet Availability of Proxy Materials

1


Table of Contents


Stockholders Entitled to Vote

        Each share of our common stock outstanding as of the close of business on March 12, 2010, the record date, is entitled to one vote at the Annual Meeting on each matter properly brought before the meeting. As of that date, there were approximately 711,924,240 shares of common stock issued and outstanding.

        Most 3M stockholders hold their shares through a stockbroker, bank, trustee, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially:

2


Table of Contents


Proposals You Are Asked to Vote On and the Board's Voting Recommendations

        The following proposals are scheduled to be voted on at the meeting. 3M's Board recommends that you vote your shares as indicated below.

 
 
  Proposals:
  The Board's
Voting Recommendations:

 
1.   The election of the ten directors identified in this Proxy Statement.   "FOR"
each nominee
to the Board
 
2.   The ratification of the appointment of PricewaterhouseCoopers LLP as 3M's independent registered public accounting firm.   "FOR"
 
3.   Approval of the amended 2008 Long-Term Incentive Plan and approval of the expanded performance criteria available under the 2008 Long-Term Incentive Plan   "FOR"
 
4.   Stockholder proposal on special meetings.   "AGAINST"
 

        Other than the proposals described in this proxy statement, the Board is not aware of any other matters to be presented for a vote at the Annual Meeting. If you grant a proxy by telephone, Internet, or by signing and returning your proxy card, any of the persons appointed by the Board of Directors as proxy holders — George W. Buckley, Patrick D. Campbell, and Gregg M. Larson — will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If any of our nominees is unavailable as a candidate for director, the above-named proxy holders will vote your proxy for another candidate or candidates as may be nominated by the Board of Directors.


Voting Requirements to Elect Directors and Approve Each of the Proposals Described in this Proxy Statement

        Quorum — The presence of the holders of a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting, present in person or represented by proxy, is necessary to constitute a quorum. Abstentions and "broker non-votes" are counted as present and entitled to vote for purposes of determining a quorum. A "broker non-vote" occurs when a bank, broker, or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

        Broker Vote — Previously, under New York Stock Exchange (NYSE) Rule 452, brokers were permitted to vote their clients' shares in "routine" matters (such as uncontested director elections and ratification of auditors) so long as the beneficial owner of those shares had not provided voting instructions to the broker at least ten days before a stockholder meeting. The SEC approved amendments to NYSE Rule 452, effective January 1, 2010, to change uncontested director elections from "routine" to "non-routine." As a result of this rule change, brokers are prohibited from voting in director elections after January 1, 2010, without specific instructions from beneficial owners. In addition, the proposal regarding the amended 2008 Long-Term Incentive Plan and approval of the expanded Performance Criteria available under such Plan and the stockholder proposal are considered to be

3


Table of Contents


"non-routine" and brokers are prohibited from voting on these matters without specific instructions from beneficial owners.

        If you are a beneficial owner (other than as a participant in the 3M Voluntary Investment Plan and Employee Stock Ownership Plan or the 3M Savings Plan), your bank, broker, or other holder of record is permitted to vote your shares on the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm, even if the record holder does not receive voting instructions from you.

        Election of Directors — In accordance with 3M's Bylaws, each director is elected by the vote of the majority of votes cast (which means the number of votes cast "for" a director's election exceeds the number of votes cast "against" that director's election with "abstentions" and "broker non-votes" not counted as a vote cast either "for" or "against" that director's election) with respect to that director's election at any meeting for the election of directors at which a quorum is present, provided that if, as of the tenth (10th) day preceding the date the Company first mails its notice of meeting for such meeting to the Company's stockholders, the number of nominees exceeds the number of directors to be elected (a "Contested Election"), the directors shall be elected by the vote of a plurality of the votes cast (which means that the nominees who receive the most affirmative votes are elected to serve as directors).

        For an election where the majority vote standard applies, the Nominating and Governance Committee has established procedures under which any incumbent director who is not elected shall offer to tender his or her resignation to the Board. In the event an incumbent director fails to receive a majority of the votes cast in an election that is not a Contested Election, the Nominating and Governance Committee, or such other committee designated by the Board of Directors, shall make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board of Directors shall act on the resignation, taking into account the Committee's recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the Securities and Exchange Commission) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision within ninety (90) days following certification of the election results. The Nominating and Governance Committee in making its recommendation and the Board of Directors in making its decision each may consider any factors and other information that they consider appropriate and relevant.

        An incumbent director who fails to receive a majority of the votes cast in an election that is not a Contested Election (as defined above) and who tenders his or her resignation pursuant to these Guidelines shall remain active and engaged in Board activities while the Nominating and Governance Committee and the Board decide whether to accept or reject such resignation, or whether other action should be taken; provided, however, it is expected that such incumbent director shall not participate in any proceedings by the Nominating and Governance Committee or the Board regarding whether to accept or reject such director's resignation, or whether to take other action with respect to such director.

        If the Board of Directors accepts a director's resignation, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors may fill the resulting vacancy pursuant to the Bylaws.

        All Other Proposals — The affirmative "FOR" vote of a majority of those shares present in person or represented by proxy at the meeting and entitled to vote on the matter is required to approve all other proposals. In tabulating the voting result for any particular proposal, abstentions and, if applicable, broker non-votes are not counted as votes "FOR" or "AGAINST" the proposal. An abstention will, however, be counted as entitled to vote on a proposal and will, therefore, have the effect of a vote "AGAINST." The stockholder proposal is presented as a request to the Board to take action. Affirmative votes for the stockholder proposal will inform the Board about the level of support for the proposal.

4


Table of Contents


Voting Methods

        If you hold shares directly as the stockholder of record, you may vote by granting a proxy or vote in person at the Annual Meeting by requesting a ballot, or, if you hold shares beneficially in street name, by submitting voting instructions to your broker or nominee. If you own shares beneficially as a participant in the 3M Voluntary Investment Plan and Employee Stock Ownership Plan or the 3M Savings Plan, you may vote by submitting voting instructions to the trustee. In most instances, you will be able to do this over the Internet, by telephone, or by mail. Even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Annual Meeting. Please refer to the summary instructions below and those included on your E-Proxy Notice or proxy card or, for shares held in street name, the voting instruction card included by your broker or nominee.

        The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. If you vote by telephone or on the Internet, you do not need to return your proxy card. Telephone and Internet voting for stockholders of record will be available 24 hours a day, up until 10:59 p.m. (Central Time) on May 10, 2010. Participants in 3M's Voluntary Investment Plan and Employee Stock Ownership Plan and the 3M Savings Plan may instruct the trustee how to vote their shares via the Internet, by telephone, or by signing and returning the proxy card by 10:59 p.m. (Central Time) on May 6, 2010.

        All shares that have been properly voted and not revoked will be voted at the Annual Meeting.


Changing Your Vote

        You may change your proxy instructions at any time prior to the vote at the Annual Meeting. You may enter a new vote by using the Internet or the telephone or by mailing a new proxy card or new voting instruction card bearing a later date (which will automatically revoke your earlier voting instructions). For shares held directly in your name, you may accomplish this by granting a new proxy or by voting in person at the Annual Meeting. For shares held beneficially by you, you may change your vote by submitting new voting instructions to your broker or nominee.


Counting the Vote

        In the election of directors, you may vote "FOR" or "AGAINST" one or more of the nominees or you may "ABSTAIN." For the other proposals, you may vote "FOR," "AGAINST," or "ABSTAIN," except that if you "ABSTAIN," it has the same effect as a vote "AGAINST." If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board. Shares held in your account in the 3M Voluntary Investment Plan and

5


Table of Contents


Employee Stock Ownership Plan or the 3M Savings Plan will be voted by the trustee as described in "Stockholders Entitled to Vote" on page 2.

        Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes and act as the inspectors of election.


Confidentiality

        The Company's Board of Directors has a policy that all stockholder proxies, ballots, and tabulations that identify stockholders are to be maintained in confidence. No such document will be available for examination, and the identity and vote of any stockholder will not be disclosed, except as necessary to meet legal requirements and allow the inspectors of election to certify the results of the stockholder vote. The policy also provides that inspectors of election for stockholder votes must be independent and cannot be employees of the Company. Occasionally, stockholders provide written comments on their proxy card that may be forwarded to 3M management.


Results of the Vote

        We will announce preliminary voting results at the meeting and disclose the preliminary results (or final results) in our Current Report on Form 8-K within four business days of the Annual Meeting date. A news release with voting results will also be available on our Web site www.3M.com/profile/pressbox/index.jhtml.


Delivery of Documents to Stockholders Sharing an Address

        Securities and Exchange Commission rules allow us to deliver a single copy of an annual report and proxy statement to any household not participating in electronic proxy material delivery at which two or more stockholders reside, if we believe the stockholders are members of the same family. This rule benefits both you and the Company. We believe it eliminates irritating duplicate mailings that stockholders living at the same address receive and it reduces our printing and mailing costs. This rule applies to any annual reports, proxy statements, proxy statements combined with a prospectus or information statements. Each stockholder will continue to receive a separate proxy card or voting instruction card.

        Your household may have received a single set of proxy materials this year. If you prefer to receive your own copy now or in future years, please request a duplicate set by calling 1-800-579-1639, by going to the following Web site: www.proxyvote.com, or by E-mail at sendmaterial@proxyvote.com, or in writing to 3M Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

        If a broker or other nominee holds your shares, you may continue to receive some duplicate mailings. Certain brokers will eliminate duplicate account mailings by allowing stockholders to consent to such elimination, or through implied consent if a stockholder does not request continuation of duplicate mailings. Since not all brokers and nominees may offer stockholders the opportunity this year to eliminate duplicate mailings, you may need to contact your broker or nominee directly to discontinue duplicate mailings to your household.


List of Stockholders

        The names of stockholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and for ten days prior to the meeting for any purpose germane to the meeting, between the hours of 7:45 a.m. and 4:30 p.m. (Central Time), at our principal executive offices at 3M Center, St. Paul, Minnesota, by contacting the Secretary of the Company.

6


Table of Contents


Cost of Proxy Solicitation

        3M will pay for the cost of preparing, assembling, printing, mailing, and distributing these proxy materials. You will need to obtain your own Internet access if you choose to access the proxy materials and/or vote over the Internet. In addition to mailing these proxy materials, the solicitation of proxies or votes may be made in person, by telephone, or electronic communication by our directors, officers, and employees, who do not receive any additional compensation for these solicitation activities. We have hired Georgeson Shareholder Communications, Inc. to assist us in the distribution of proxy materials and the solicitation of votes. We will pay Georgeson Shareholder Communications, Inc. a fee of $20,000 plus expenses for these services. We will also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to beneficial owners of stock.


Transfer Agent

        Our Transfer Agent is Wells Fargo Bank, N.A. All communications concerning stockholders of record accounts, including address changes, name changes, common stock transfer requirements, and similar issues can be handled by contacting Wells Fargo Bank, N.A. at 1-800-401-1952 (U.S.), 651-450-4064 (outside the U.S.), www.wellsfargo.com/shareownerservices, or in writing, P.O. Box 64854, St. Paul, MN 55164-0854.

7


Table of Contents


GOVERNANCE OF THE COMPANY

Corporate Governance Guidelines

        The Board has adopted Corporate Governance Guidelines that, along with the Certificate of Incorporation, Bylaws, and charters of the Board committees, provide the framework for the governance of the Company. The Board's Nominating and Governance Committee is responsible for overseeing and reviewing the Guidelines at least annually, and recommending any proposed changes to the Board for approval. The Corporate Governance Guidelines, the Certificate of Incorporation, Bylaws, and charters of the Board committees are available on our Web site at www.3M.com, under Investor Relations — Corporate Governance.


Executive Sessions

        Independent directors regularly meet in executive sessions without the Chairman and CEO or other members of management present to review the criteria upon which the performance of the Chairman and CEO is based, to review the performance of the Chairman and CEO against those criteria, to ratify the compensation of the Chairman and CEO as approved by the Compensation Committee, and to discuss any other relevant matters.


Board's Leadership Structure

        The Board's current leadership structure is characterized by:

        The Board believes that its current leadership structure provides independent board leadership and engagement while deriving the benefit of having our CEO also serve as Chairman of the Board. As the individual with primary responsibility for managing the Company's day-to-day operations and with in-depth knowledge and understanding of the Company, he is best positioned to chair regular Board meetings as we discuss key business and strategic issues. Coupled with an independent Lead Director, this combined structure provides independent oversight while avoiding unnecessary confusion regarding the Board's oversight responsibilities and the day-to-day management of business operations.

        The Board of Directors believes it is fundamentally wrong to permanently and inflexibly separate or combine the positions of Chairman of the Board and Chief Executive Officer. To do so prevents the Board from acting in the stockholders' best interests when selecting future Board leadership. The Board rejected permanently separating or combining the positions of Chairman and CEO in its Corporate Governance Guidelines, which are reviewed at least annually and available on our Web site at www.3M.com, under Investor Relations — Corporate Governance. Instead, the Board adopted an approach that allows it, in representing the stockholders' best interests, to decide who should serve as Chairman or CEO, or both, under present or anticipated future circumstances.

        The Board believes that the Company's corporate governance measures ensure that strong, independent directors continue to effectively oversee the Company's management and key issues related to executive compensation, CEO evaluation and succession planning, strategy, risk, and integrity. The Board has also designated one of their members to serve as lead director, with

8


Table of Contents


responsibilities (described in the next section) that are similar to those typically performed by a separate chairman.

        The Board believes that combining the roles of CEO and Chairman contributes to an efficient and effective Board. The independent directors recruited the current Chairman and CEO from outside 3M to be its leader in a time of changing and challenging global economic conditions. The Board believes that to drive change and continuous improvement within the Company, tempered by respect for 3M's traditions and values, the CEO must have maximum authority to be effective. The CEO is primarily responsible for effectively leading significant change, improving operational efficiency, driving growth, managing the Company's day-to-day business, managing the various risks facing the Company, and reinforcing the expectation for all employees of continuing to build on 3M's century-old tradition of uncompromising honesty and integrity. The Board currently believes the CEO is best able to chair regular Board meetings and, with his in-depth knowledge and understanding of the Company, bring key business issues and stakeholder interests to the Board's attention.


Lead Independent Director

        The 3M Board of Directors has designated one of their members to serve as a lead director, with responsibilities that are similar to those typically performed by an independent chairman ("Lead Director"). Dr. Vance Coffman currently serves as Lead Director. Dr. Coffman is a highly experienced director, currently serving on the boards of Amgen, Inc. and Deere & Company, and former Chairman and CEO of Lockheed Martin Corporation. His responsibilities include:


Communication with Directors

        The Board of Directors has adopted the following process for stockholders and other interested parties to send communications to members of the Board. Stockholders and other interested parties may communicate with the Lead Director, the chairs of the Audit, Compensation, Finance, and Nominating and Governance Committees of the Board, or with any of our other independent directors, by sending a letter to the following address: Corporate Secretary, 3M Company, 3M Center, Building 220-13E-34, St. Paul, MN 55144-1000.


Director Independence

        The Board of Directors has adopted a formal set of Director Independence Guidelines with respect to the determination of director independence, the full text of which is available on our Web site at www.3M.com, under Investor Relations — Corporate Governance. In accordance with these Guidelines, a director or nominee for director must be determined to have no material relationship with the Company other than as a director. The Guidelines specify the criteria by which the independence of our directors will be determined, including strict guidelines for directors and their immediate families with respect to past employment or affiliation with the Company or its independent registered public accounting firm.

9


Table of Contents


The Guidelines also prohibit Audit Committee members from having any direct or indirect financial relationship with the Company, and restrict both commercial and not-for-profit relationships of all directors with the Company. Directors may not be given personal loans or extensions of credit by the Company, and all directors are required to deal at arm's length with the Company and its subsidiaries, and to disclose any circumstance that might be perceived as a conflict of interest.

        In accordance with these Guidelines, the Board undertook its annual review of director independence. During this review, the Board considered transactions and relationships between each director, or any member of his or her immediate family and the Company and its subsidiaries and affiliates in each of the most recent three completed fiscal years. The Board also considered whether there were any transactions or relationships between directors or any member of their immediate family (or any entity of which a director or an immediate family member is an executive officer, general partner, or significant equity holder). The Board considered that in the ordinary course of business, transactions may occur between the Company and its subsidiaries and companies at which some of our directors are or have been officers. In particular, with respect to each of the most recent three completed fiscal years, the Board evaluated for each of the directors, Michael L. Eskew, Herbert L. Henkel, Edward M. Liddy, and Robert J. Ulrich, the annual amount of sales to 3M by the company where he serves (or served) as an executive officer, and purchases by that company from 3M, and determined that the amount of sales and purchases in each fiscal year was below one percent of the annual revenues of each of those companies, the threshold set forth in the Director Independence Guidelines. The Board also considered charitable contributions to not-for-profit organizations with which our directors or immediate family members are affiliated, none of which approached the levels set forth in our Director Independence Guidelines.

        As a result of this review, the Board affirmatively determined that the following directors are independent under these Guidelines: Linda G. Alvarado, Vance D. Coffman, Michael L. Eskew, W. James Farrell, Herbert L. Henkel, Edward M. Liddy, Robert S. Morrison, Aulana L. Peters, and Robert J. Ulrich. The Board has also determined that no members of the Audit Committee received any compensation from the Company other than directors' fees. George W. Buckley is considered to not be independent because of his employment as Chairman of the Board, President and Chief Executive Officer of the Company.


Director Nomination Process

Role of the Nominating and Governance Committee

        The Nominating and Governance Committee ("Committee") identifies individuals that the Committee believes are qualified to become Board members in accordance with the Board Membership Criteria set forth below, and recommends selected individuals to the Board for nomination to stand for election at the next meeting of stockholders of the Company in which directors will be elected. In the event there is a vacancy on the Board between meetings of stockholders, the Committee seeks to identify individuals that the Committee believes are qualified to become Board members in accordance with the Board Membership Criteria set forth below, and may recommend one or more of such individuals for appointment to the Board.

Nominees Proposed by Stockholders for Consideration by the Committee

        The Committee has a policy to consider properly submitted stockholder nominees for candidates for membership on the Board of Directors. Stockholders proposing individuals for consideration by the Committee must include at least the following information about the proposed nominee: the proposed nominee's name, age, business or residence address, principal occupation or employment, and whether such person has given written consent to being named in the proxy statement as a nominee and

10


Table of Contents


to serving as a director if elected. Stockholders should send the required information about the nominee to:

        In order for an individual proposed by a stockholder to be considered by the Committee for recommendation as a Board nominee for the 2011 Annual Meeting, the Corporate Secretary must receive the proposal no later than 5 p.m. Central Time on November 24, 2010. Such proposals must be sent via registered, certified, or express mail (or other means that allows the stockholder to determine when the proposal was received by the Company). The Corporate Secretary will send properly submitted stockholder proposed nominations to the Committee Chair for consideration at a future Committee meeting. Individuals proposed by stockholders in accordance with these procedures will receive the same consideration that individuals identified to the Committee through other means receive.

Stockholder Nominations

        In addition, 3M's Bylaws permit stockholders to nominate directors at an Annual Meeting of stockholders or at a special meeting at which directors are to be elected in accordance with the notice of meeting. Stockholders intending to nominate a person for election as a director must comply with the requirements set forth in the Company's Bylaws. With respect to nominations to be acted upon at our 2011 Annual Meeting, our Bylaws would require, among other things, that the Corporate Secretary receive written notice from the record stockholder no earlier than January 11, 2011, and no later than February 10, 2011. The notice must contain the information required by the Bylaws, a copy of which is available on our Web site at www.3M.com, under Investor Relations — Corporate Governance. Nominations received after February 10, 2011, will not be acted upon at the Annual Meeting.

Board Membership Criteria

        The Committee periodically reviews with the Board the requisite skills and characteristics of its members. 3M's Corporate Governance Guidelines contain Board Membership Criteria that apply to nominees for a position on 3M's Board. The Committee periodically reviews with the Board the appropriate skills and characteristics required of Board members given the current Board composition. It is the intent of the Board that the Board, itself, will be a high performance organization creating competitive advantage for the Company. To perform as such, the Board will be comprised of individuals who have distinguished records of leadership and success in their arena of activity and who will make substantial contributions to Board operations and effectively represent the interests of all stockholders. The Committee's and the Board's assessment of Board candidates includes, but is not limited to, consideration of:

11


Table of Contents

        In addition to these minimum requirements, the Committee will also evaluate whether the nominee's skills are complementary to the existing Board members' skills, the Board's needs for particular expertise in fields such as business, manufacturing, technology, financial, marketing, international, governmental, or other areas of expertise, and assess the nominee's impact on Board dynamics and effectiveness.

Diversity

        The Board of Directors values diversity as a factor in selecting nominees to serve on the Board, and believes that the diversity which exists in its composition provides significant benefit to the Board and the Company. Although there is no specific policy on diversity, the Nominating and Governance Committee considers the Board Membership Criteria in selecting nominees for directors, including "diversity of background." Such considerations may include gender, race, national origin, functional background, executive or professional experience, and international experience.

Identification, Evaluation, and Selection of Nominees

        The Committee periodically reviews the appropriate size and composition of the Board and anticipates future vacancies and needs of the Board. In the event the Committee recommends an increase in the size of the Board or a vacancy occurs, the Committee considers qualified nominees from several sources, including current Board members and nominees recommended by stockholders and other persons.

        The Committee may from time to time retain a director search firm to help the Committee identify qualified director nominees for consideration by the Committee.

        The Committee evaluates qualified director nominees at regular or special Committee meetings against the current Board Membership Criteria described above and reviews qualified director nominees with the Board. The Committee and the Chairman of the Board interview candidates that meet the Board Membership Criteria and the Committee selects nominees that best suit the Board's current needs and recommends one or more of such individuals for election to the Board.


Board's Role in Risk Oversight

        The Board has delegated to the Audit Committee through its charter the primary responsibility for the oversight of risks facing the Company. The charter provides that the Audit Committee "Discuss policies and procedures with respect to risk assessment and risk management, the Company's major risk exposures and the steps management has taken to monitor and mitigate such exposures."

        The Vice President and General Auditor, Corporate Auditing ("Auditor"), whose appointment and performance is reviewed and evaluated by the Audit Committee and who has direct access to the Committee, is responsible for leading the formal risk assessment and management process within the Company. The Auditor, through consultation with the Company's senior management, periodically assesses the major risks facing the Company and works with those executives responsible for managing each specific risk. The Auditor periodically reviews with the Audit Committee the major risks facing the Company and the steps management has taken to monitor and mitigate those risks. The Auditor's risk management report, which is provided in advance of the meeting, is reviewed with the entire Board by either the Chair of the Audit Committee or the Auditor. The executive responsible for managing a particular risk may also report to the full Board on how the risk is being managed and mitigated.

12


Table of Contents

        While the Board's primary oversight of risk is with the Audit Committee, the Board has delegated to other committees the oversight of risks within their areas of responsibility and expertise. For example, the Compensation Committee oversees the risks associated with the Company's compensation practices, including an annual review of the Company's risk assessment of its compensation policies and practices for its employees. The Finance Committee oversees risks associated with the Company's capital structure, its credit ratings and its cost of capital, long-term benefit obligations, and the Company's use of or investment in financial products, including derivatives used to manage risk related to foreign currencies, commodities, and interest rates. The Nominating and Governance Committee oversees the risks associated with the Company's overall governance and its succession planning process to understand that the Company has a slate of future, qualified candidates for key management positions.

        The Board believes that its oversight of risks, primarily through delegation to the Audit Committee, but also through delegation to other committees to oversee specific risks within their areas of responsibility and expertise, and the sharing of information with the full Board, is appropriate for a diversified technology and manufacturing company like 3M. The chair of each committee that oversees risk provides a summary of the matters discussed with the committee to the full Board following each committee meeting. The minutes of each committee meeting are also provided to all Board members. The Board also believes its oversight of risk is enhanced by its current leadership structure (discussed above) because the CEO, who is ultimately responsible for the Company's management of risk, also chairs regular Board meetings, and with his in-depth knowledge and understanding of the Company, is best able to bring key business issues and risks to the Board's attention.


3M Business Conduct Policies

        More than a century of operating with honesty and integrity has earned 3M trust from our customers, credibility with our communities, and dedication from our employees. All of our employees, including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, are required to abide by 3M's business conduct policies to ensure that our business is conducted in a consistently legal and ethical manner. These policies form the foundation of a comprehensive process that includes compliance with corporate policies and procedures and a companywide focus on uncompromising honesty and integrity in every aspect of our operations. Our business conduct policies cover many topics, including antitrust and competition law, conflicts of interest, financial reporting, protection of confidential information, and compliance with all laws and regulations applicable to the conduct of our business.

        Employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the business conduct policies. The Audit Committee has adopted procedures to receive, retain, and treat complaints received regarding accounting, internal accounting controls, or auditing matters, and to allow for the confidential and anonymous submission by employees or others of concerns regarding questionable accounting or auditing matters. Information on how to submit any such communications can be found on 3M's Web site at http://www.3m.com/busconducttrain/.

        The Board of Directors has adopted a Code of Business Conduct and Ethics for directors of the Company. This Code incorporates long-standing principles of conduct the Company and the Board follow to ensure the Company's business and the activities of the Board are conducted with integrity, adherence to the highest ethical standards, and in compliance with the law.

        The Company's Business Conduct Policies for employees and the Code of Business Conduct and Ethics for Directors are available on our Web site at www.3M.com under Investor Relations — Corporate Governance, and copies of these policies are also available to any stockholder upon request to Investor Relations.

13


Table of Contents


Related Person Transaction Policy and Procedures

        The Board of Directors has adopted a written Related Person Transaction Policy which is administered by the Nominating and Governance Committee. This policy applies to any transaction or series of transactions in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000, and a Related Person has a direct or indirect material interest. Under the Policy, Company management will determine whether a transaction meets the requirements of a Related Person Transaction requiring review by the Committee. Transactions that fall within this definition will be referred to the Committee for approval, ratification, or other action. Based on its consideration of all of the relevant facts and circumstances, the Committee will decide whether or not to approve such transaction and will approve only those transactions that are in the best interests of the Company. In the course of its review and approval or ratification of a transaction, the Committee shall consider:

        Any Committee member who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting such approval or ratification; provided, however, that such director may be counted in determining the presence of a quorum at a meeting of the Committee which considers the transaction.


Policy on Adoption of a Rights Plan

        In 2002 and 2003, a 3M stockholder submitted a shareholder proposal to 3M regarding the approval process for adopting a stockholders' rights plan (also known as a "poison pill"). 3M does not have a rights plan and is not currently considering adopting one. The Board continues to believe, however, that there may be circumstances under which adoption of a rights plan would be necessary to give the Board the negotiating power and leverage to obtain the best result for 3M stockholders in the context of a takeover effort.

        Following consideration of the favorable vote the stockholder proposal received and in light of this belief, the Board has adopted and reaffirmed a statement of policy on this topic. The Board's policy is that it will only adopt a rights plan if either (1) stockholders have approved adoption of the rights plan or (2) the Board in its exercise of its fiduciary responsibilities, including a majority of the independent members of the Board, makes a determination that, under the circumstances existing at the time, it is in the best interests of 3M's stockholders to adopt a rights plan without the delay in adoption that would come from the time reasonably anticipated to seek stockholder approval.

        The Board has directed the Nominating and Governance Committee to review this policy statement on an annual basis and to report to the Board on any recommendations it may have concerning the policy. The terms of the policy, as in effect, will be included in 3M's published Corporate Governance Guidelines and its proxy statement.

14


Table of Contents


BOARD AND COMMITTEE MEMBERSHIP

        The Board currently has ten directors and the following four Committees: Audit, Compensation, Finance, and Nominating and Governance. The membership during 2009 and the function of each Committee are described below.

        During 2009, the Board of Directors held six regularly scheduled meetings. Overall attendance at Board and committee meetings was 97 percent. Eight, one, and one of our directors attended 100, 94, and 79 percent, respectively, of the regularly scheduled meetings of the Board and Board committees on which they served in 2009.

        The Company has a long-standing policy that directors are expected to attend the Annual Meeting of Stockholders unless extenuating circumstances prevent them from attending. All directors attended last year's Annual Meeting of Stockholders.

        The Board and each Committee conducted an evaluation of their performance in 2009.

   
Name of Non-Employee Director
  Audit
  Compensation
  Finance
  Nominating
and
Governance

 
   

Linda G. Alvarado

       X                 X           
   

Vance D. Coffman

             X *              X     
   

Michael L. Eskew

       X                 X *        
   

W. James Farrell

       X                 X           
   

Herbert L. Henkel

       X *                    X     
   

Edward M. Liddy

       X                       X     
   

Robert S. Morrison

             X                 X *  
   

Aulana L. Peters

             X           X           
   

Robert J. Ulrich

             X                 X     
   

X = Committee Member; * = Chair

15


Table of Contents


Audit Committee

        In 2009, the Audit Committee met eight times. The Committee assists the Board in its oversight of the integrity of the Company's financial statements, compliance with legal and regulatory requirements, the qualifications, independence, and performance of the Company's independent registered public accounting firm (the "Independent Accounting Firm"), and the performance of the Company's internal auditing department. In addition, the Committee:

        The Board of Directors has determined that all of the Audit Committee members are "independent," "financially literate," and have "accounting or related financial management expertise" under the New York Stock Exchange listing standards. The Board has also determined that all of the Audit Committee members — Herbert L. Henkel (chair), Linda G. Alvarado, Michael L. Eskew, W. James Farrell, and Edward M. Liddy — are "audit committee financial experts" as that term is defined by applicable SEC regulations. The charter of the Audit Committee is available at www.3M.com under Investor Relations — Corporate Governance — Committee Charters.


Compensation Committee

        In 2009, the Compensation Committee met six times. The Committee reviews the Company's compensation practices and policies, annually reviews and approves (subject to ratification by the independent directors of the Board) the compensation for the CEO, annually reviews and approves the compensation for the other senior executives, evaluates CEO performance, reviews and discusses with management of the Company the Compensation Discussion and Analysis prepared in accordance with the SEC's disclosure rules for executive compensation, and furnishes a report for inclusion in the Company's proxy statement. In addition, the Committee:

16


Table of Contents

        The Board of Directors has determined that all Compensation Committee members are "independent" under the New York Stock Exchange listing standards. The Board has also determined that each Compensation Committee member qualifies as a "Non-Employee Director" under Rule 16b-3 of the Securities Exchange Act of 1934 and that each member (except Robert S. Morrison due to his service in 2005 as interim CEO), qualifies as an "outside director" under Section 162(m) of the Internal Revenue Code. The charter of the Compensation Committee is available at www.3M.com under Investor Relations — Corporate Governance — Committee Charters.


Finance Committee

        The Finance Committee met six times in 2009. The Committee assists the Board with its oversight of the Company's capital structure, financing, investment, and other financial matters of importance to the Company. In addition, the Committee:

17


Table of Contents

        The Board of Directors has determined that all Finance Committee members are "independent" under the New York Stock Exchange listing standards. The charter of the Finance Committee is available at www.3M.com under Investor Relations — Corporate Governance — Committee Charters.


Nominating and Governance Committee

        In 2009, the Nominating and Governance Committee met five times. The Committee establishes Board membership criteria, assists the Board by identifying individuals qualified to become Board members, recommends to the Board matters of corporate governance, facilitates the annual review of the performance of the Board and its Committees, and periodically reviews CEO and management succession plans. In addition, the Committee:

        The Board of Directors has determined that all Nominating and Governance Committee members are "independent" under the New York Stock Exchange listing standards. The charter of the Nominating and Governance Committee is available at www.3M.com under Investor Relations — Corporate Governance — Committee Charters.

18


Table of Contents


DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES

        The Nominating and Governance Committee periodically receives reports on the status of Board compensation in relation to other large U.S. companies and is responsible for recommending to the Board changes in compensation for nonemployee directors. In developing its recommendations, the Committee is guided by the following goals: compensation should fairly pay directors for work required in a company of 3M's size and scope, a significant portion of the total compensation should be paid in common stock to align directors' interests with the long-term interests of stockholders, and the structure of the compensation should be simple and transparent. Periodically, at the request of the Committee, Frederic W. Cook & Co., Inc. conducts a survey of director compensation at other large U.S. companies and provides expert advisory support to the Committee on the compensation of nonemployee directors. Neither the Company nor the Nominating and Governance Committee has any arrangement with any other compensation consultant who has a role in determining or recommending the amount or form of director compensation. Nonemployee directors' compensation includes the following compensation elements:

        Annual Compensation — In 2009, the Nominating and Governance Committee considered a board compensation study prepared by Frederic W. Cook & Co., Inc. Given the economic conditions and the fact that employees of the Company received no merit increase in 2009, the Committee recommended no increase in nonemployee director compensation. For 2009, the annual compensation for nonemployee directors was $205,000. Except as indicated, the annual compensation is payable in four installments following the end of each quarter of service, approximately 40 percent (or $85,000) in cash and approximately 60 percent (or $120,000) in stock payable after the Annual Meeting. In addition, the chair of a Board committee received an additional annual fee of $15,000. There are no meeting fees. In lieu of the cash fees, a director may elect to receive common stock of the Company. Each nonemployee director may voluntarily defer all or part of their annual cash fees or stock award until they cease to be members of the Board.

        All Other Compensation — The column below showing "All Other Compensation" includes the following items:

19


Table of Contents

        Each of these components is described in more detail below. The total 2009 compensation of our nonemployee directors is shown in the following table:

   
Director
  Fees Earned
Or Paid in
Cash($)(1)

  Stock
Awards($)(2)

  All Other
Compensation
($)(3)

  Total
($)

 
   

Linda G. Alvarado

    85,000     120,000     3,400     208,400  
   

Vance D. Coffman*

    100,000     120,000     4,512     224,512  
   

Michael L. Eskew*

    100,000     120,000     1,187     221,187  
   

W. James Farrell

    85,000     120,000     215     205,215  
   

Herbert L. Henkel*

    96,250     120,000     370     216,620  
   

Edward M. Liddy

    88,750     120,000     5,000     213,750  
   

Robert S. Morrison*

    100,000     120,000     10,182     230,182  
   

Aulana L. Peters

    85,000     120,000     14,469     219,469  
   

Robert J. Ulrich

    85,000     120,000         205,000  
   
*
Committee Chair

(1)
This column reports the amount of all fees earned or paid in cash for services as a director.

(2)
This column represents the grant date fair value of the stock awards made in 2009, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation. The Company does not grant stock options to nonemployee directors except that Robert S. Morrison has 92,632 fully-vested stock options outstanding, which were previously granted to him as interim Chairman of the Board and Chief Executive Officer of the Company from June 30 to December 6, 2005. Since all stock awards vest on the grant date, there are no unvested stock awards outstanding at year end.

(3)
This column includes participation in the matching gift program with Robert S. Morrison and Aulana L. Peters participating at the $10,000 level and Edward M. Liddy participating at the $5,000 level. This column also includes the incremental cost of complimentary products and the income imputed to the director for travel by the director's spouse on corporate aircraft to attend Board functions.

        Expenses.    Nonemployee directors are reimbursed for their expenses in connection with attending Board meetings (including expenses related to spouses when they are invited to attend Board events). Nonemployee directors may use the Company aircraft for travel to and from 3M Board meetings.

        Stock Ownership Guidelines.    The Board requires that each director retain the stock portion (currently valued at $120,000) of the annual compensation issued on or after October 1, 2007, until the director leaves the Board. Information regarding accumulated stock and deferred stock units is set forth in the section entitled "Information on Stock Ownership of Directors and Executive Officers."

20


Table of Contents


PROPOSALS TO BE VOTED ON

PROPOSAL NO. 1
ELECTION OF DIRECTORS

        The Board of Directors currently has ten members. At the 2010 Annual Meeting, each of the directors is standing for reelection to hold office until the 2011 Annual Meeting of Stockholders. We expect each nominee for election as a director to be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees, unless the Board chooses to reduce the number of directors serving on the Board. Each nominee elected as a director will continue in office until his or her successor has been elected and qualified, or until his or her earlier death, resignation, or retirement.

        Majority Vote Standard — In accordance with 3M's Bylaws, each director is elected by the vote of the majority of votes cast (which means the number of votes cast "for" a director's election exceeds the number of votes cast "against" that director's election with "abstentions" and "broker non-votes" not counted as a vote cast either "for" or "against" that director's election) with respect to that director's election at any meeting for the election of directors at which a quorum is present, provided that if, as of the tenth (10th) day preceding the date the Company first mails its notice of meeting for such meeting to the Company's stockholders, the number of nominees exceeds the number of directors to be elected (a "Contested Election"), the directors shall be elected by the vote of a plurality of the votes cast (which means that the nominees who receive the most affirmative votes are elected to serve as directors).

        For an election where the majority vote standard applies, the Nominating and Governance Committee has established procedures under which any incumbent director who is not elected shall offer to tender his or her resignation to the Board. In the event an incumbent director fails to receive a majority of the votes cast in an election that is not a Contested Election, the Nominating and Governance Committee, or such other committee designated by the Board of Directors, shall make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board of Directors shall act on the resignation, taking into account the Committee's recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the Securities and Exchange Commission) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision within ninety (90) days following certification of the election results. The Nominating and Governance Committee in making its recommendation and the Board of Directors in making its decision each may consider any factors and other information that they consider appropriate and relevant.

        An incumbent director who fails to receive a majority of the votes cast in an election that is not a Contested Election (as defined above) and who tenders his or her resignation pursuant to these Guidelines shall remain active and engaged in Board activities while the Nominating and Governance Committee and the Board decide whether to accept or reject such resignation, or whether other action should be taken; provided, however, it is expected that such incumbent director shall not participate in any proceedings by the Nominating and Governance Committee or the Board regarding whether to accept or reject such director's resignation, or whether to take other action with respect to such director. If the Board of Directors accepts a director's resignation, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors may fill the resulting vacancy pursuant to the Bylaws.

        Experience, Qualifications, Attributes, and Skills of Director Nominees — All of the nominees meet the Board Membership Criteria described in the section entitled "Director Nomination Process." The principal occupation, public company directorships held currently or during the last five years, and other background information about the nominees, including a discussion of the specific experience, qualifications, attributes, and skills of each nominee that led to the Board's conclusion that each nominee should serve as a director, is set forth on the following pages.

        The Board of Directors recommends a vote "FOR" the election of these nominees as directors.

21


Table of Contents

Nominees for Director:

GRAPHIC   Linda G. Alvarado, 58, President and Chief Executive Officer, Alvarado Construction, Inc., a Denver-based commercial general contractor, construction management and development company. In 1976, Ms. Alvarado founded Alvarado Construction, Inc. and has overseen the growth of that enterprise as a commercial general contracting and design/build development firm conducting business across the United States and internationally. Ms. Alvarado is on the board of the following public company in addition to 3M: Pitney Bowes, Inc. Ms. Alvarado formerly served on the boards of Lennox International Inc., QWEST Communications International, Inc., and The Pepsi Bottling Group, Inc. Ms. Alvarado's leadership role and experiences in establishing and building successful businesses, including founding and serving as President and Chief Executive Officer of Alvarado Construction, Inc., President of Palo Alto, Inc., which owns and operates numerous YUM! Brands restaurants in several states, and co-owner of the Colorado Rockies Major League Baseball Club, her skills in operations, financial and audit matters, and her experiences as a director at the public companies listed above, qualify her to serve as a director of 3M.
Director since 2000.

GRAPHIC

 

George W. Buckley, 63, Chairman of the Board, President and Chief Executive Officer since December 2005. Before joining 3M in 2005, Dr. Buckley was Chairman of the Board, President and Chief Executive Officer of the Brunswick Corporation, a global manufacturer and marketer of recreation products, since 2000, and served in other executive positions at Brunswick Corporation from 1997 to 2000. He also held various leadership roles at Emerson Electric Co. as Chief Technology Officer and President of the Electric Motors Division from 1993 to 1997. Dr. Buckley is on the boards of the following public companies in addition to 3M: Archer-Daniels-Midland Company and The Black & Decker Corporation. In addition, Dr. Buckley formerly served on the boards of Ingersoll-Rand plc and Tyco Corp. Dr. Buckley's Bachelor of Science degree in Electrical and Electronic Engineering and his Doctoral degree in Engineering in joint study at Huddersfield and Southampton Universities, his leadership roles at Emerson Electric Co. and British Railways (as Managing Director of the Central Services Division), his service as Chairman and Chief Executive Officer of Brunswick Corporation, his skills in business and financial matters, and his experiences as a director at the public companies listed above, qualify him to serve as director and Chairman of the Board of 3M.
Director since 2005.

GRAPHIC

 

Vance D. Coffman, 65, Retired Chairman of the Board and Chief Executive Officer, Lockheed Martin Corporation, a high technology aerospace and defense company. Dr. Coffman served in various executive capacities at Lockheed Martin Corporation before becoming Chairman and Chief Executive Officer in 1998. He retired as Chief Executive Officer in 2004 and as Chairman of the Board in 2005. Dr. Coffman is on the boards of the following public companies in addition to 3M: Amgen Inc. and Deere & Company. In addition, Dr. Coffman formerly served on the board of Bristol-Myers Squibb Company. Dr. Coffman's Bachelor of Science degree in Aerospace Engineering from Iowa State University and his Masters and Doctoral degrees in Aeronautics and Astronautics from Stanford University and his various leadership roles and experiences at Lockheed Martin, including serving as Chairman of the Board and Chief Executive Officer, his role in the integration of Lockheed and Martin Marietta Corporations, his skills in business and financial matters, and his experiences as a director at the public companies listed above, qualify him to serve as a director of 3M.
Director since 2002.

22


Table of Contents

GRAPHIC   Michael L. Eskew, 60, Retired Chairman of the Board and Chief Executive Officer, United Parcel Service, Inc., a provider of specialized transportation and logistics services. Mr. Eskew was appointed Executive Vice President in 1999 and Vice Chairman in 2000 before becoming Chairman and Chief Executive Officer in January 2002. He retired as Chairman of the Board and Chief Executive Officer at the end of 2007 but remained as a director of UPS. Mr. Eskew is on the boards of the following public companies in addition to 3M and United Parcel Service: International Business Machines Corp. and Eli Lilly and Company. Mr. Eskew's degree in industrial engineering from Purdue University, his leadership roles and experiences at United Parcel Service, including serving as Chairman of the Board and Chief Executive Officer, his knowledge of and extensive experiences in global logistics, his skills in financial and audit matters, and his experiences as a director at the public companies listed above, qualify him to serve as a director of 3M.
Director since 2003.

GRAPHIC

 

W. James Farrell, 67, Retired Chairman and Chief Executive Officer, Illinois Tool Works Inc., a multi-national manufacturer of highly engineered fasteners, components, assemblies and systems. Mr. Farrell served in various executive capacities since joining ITW before becoming Chairman and Chief Executive Officer in 1996. He retired as Chief Executive Officer in 2005 and as Chairman in 2006. Mr. Farrell is on the boards of the following public companies in addition to 3M: Abbott Laboratories, The Allstate Corporation, and UAL Corporation. In addition, Mr. Farrell formerly served on the boards of Kraft Foods,  Inc., and Sears, Roebuck and Co. Mr. Farrell's Bachelor of Science degree in electrical engineering from the University of Detroit, his leadership roles and experiences at Illinois Tool Works, including serving as Chairman of the Board and Chief Executive Officer, his knowledge of and extensive experiences in global diversified manufacturing, his skills in financial and audit matters, and his experiences as a director at the public companies listed above, qualify him to serve as a director of 3M.
Director since 2006.

GRAPHIC

 

Herbert L. Henkel, 61, Chairman of the Board (since May 2000), Ingersoll-Rand plc, a manufacturer of industrial products and components. Mr. Henkel retired as Ingersoll-Rand's Chief Executive Officer, a position he held since October 1999, on February 4, 2010, and will remain as Chairman of the Board until his retirement from the company on June 3, 2010. Mr. Henkel served as President and Chief Operating Officer of Ingersoll-Rand from April 1999 to October 1999. Mr. Henkel served in various leadership roles at Textron, Inc., including its President and Chief Operating Officer from 1998-1999. Mr. Henkel is on the board of the following public company in addition to 3M and Ingersoll-Rand plc: C. R. Bard, Inc. In addition, Mr. Henkel formerly served on the board of Pitney Bowes, Inc. and AT&T Corp. Mr. Henkel's Bachelor's and Master's degrees in Engineering from Polytechnic University of New York and Masters of Business Administration from the Lubin School at Pace University, his leadership roles and experiences at Textron, Inc. and Ingersoll-Rand, including serving as Chairman of the Board and Chief Executive Officer, his knowledge of and extensive experiences in engineering and manufacturing in multi industries, his skills in financial and audit matters, and his experiences as a director at the public companies listed above, qualify him to serve as a director of 3M.
Director since 2007.

23


Table of Contents

GRAPHIC   Edward M. Liddy, 64, Partner, Clayton, Dubilier & Rice, LLC, a private equity investment firm. Former Interim Chairman and Chief Executive Officer of American International Group, Inc. (AIG), a global insurance and financial services holding company (at the request of the U.S. Department of the Treasury, Mr. Liddy agreed to serve as Interim Chairman and Chief Executive Officer of AIG in September 2008 in conjunction with the U.S. Government's actions to provide stability to AIG and certain other financial service firms). He retired from that position on August 9, 2009. Mr. Liddy served as Chairman of the Board of the Allstate Corporation from January 1999 to April 2008. He served as Chief Executive Officer of Allstate from January 1999 to December 2006, President from January 1995 to May 2005, and Chief Operating Officer from August 1994 to January 1999. Mr. Liddy retired from his position as Chairman of Allstate in the spring of 2008. He became a partner in the private equity investment firm of Clayton, Dubilier & Rice, LLC from April to September 2008 and rejoined that firm as a partner in January 2010. In addition, Mr. Liddy formerly served on the boards of The Kroger Co., The Goldman Sachs Group, Inc., and The Boeing Company. Mr. Liddy's undergraduate degree from Catholic University and his Masters of Business Administration from George Washington University, his leadership roles and experiences at Sears, Roebuck & Co. as Chief Financial Officer from 1992-1994 and at Allstate as Chairman of the Board and Chief Executive Officer, his knowledge of and extensive experiences in insurance, his skills in financial and audit matters, and his experiences as a director at the public companies listed above, qualify him to serve as a director of 3M.
Director since 2000.

GRAPHIC

 

Robert S. Morrison, 67, Retired Vice Chairman of PepsiCo, Inc., a processor of packaged foods and beverages. Mr. Morrison served as Vice Chairman of PepsiCo, Inc. from 2001 to February 2003. From 1997 until the 2001 merger with PepsiCo, Mr. Morrison was Chairman, President and Chief Executive Officer of The Quaker Oats Company. Mr. Morrison served in various leadership roles at Kraft Foods, Inc, from 1983 to 1997, including its Chief Executive Officer from 1994-1997. From June 30 to December 6, 2005, Mr. Morrison served as interim Chairman of the Board and Chief Executive Officer of 3M Company. Mr. Morrison is on the boards of the following public companies in addition to 3M: Aon Corporation and Illinois Tool Works Inc. In addition, Mr. Morrison formerly served on the board of The Tribune Company. Mr. Morrison's Masters of Business Administration from the Wharton School, University of Pennsylvania, his leadership roles and experiences at Kraft Foods, The Quaker Oats Company, and PepsiCo., his knowledge of and extensive experiences in managing global consumer goods companies, his skills in business and financial matters, and his experiences as a director at the public companies listed above, qualify him to serve as a director of 3M.
Director since 2002.

24


Table of Contents

GRAPHIC   Aulana L. Peters, 68, Retired Partner, Gibson, Dunn & Crutcher LLP. Mrs. Peters is a retired partner of the law firm of Gibson, Dunn & Crutcher where she was a partner from 1980 to 1984 and 1988 to 2000. From 1984 to 1988, she served as a Commissioner of the Securities and Exchange Commission. From January 2001 to April 2002, Mrs. Peters served as a member of the Public Oversight Board ("POB") of the American Institute of Certified Public Accountants. Mrs. Peters has also served as a member of the Steering Committee for Financial Accounting Standards Board's Financial Reporting Project and a member of the POB's Blue Ribbon Panel on Audit Effectiveness. Currently, Mrs. Peters serves on the U.S. Comptroller General's Accountability Advisory Panel and is a member of the International Public Interest Oversight Board which oversees the standard setting process of the International Federation of Accountants for auditing, assurance, independence, and ethics standards. Mrs. Peters is on the boards of the following public companies in addition to 3M: Deere & Company and Northrop Grumman Corporation. In addition, Mrs. Peters formerly served on the board of Merrill Lynch & Co., Inc. Mrs. Peters' law degree from the University of Southern California, her experiences as a partner at Gibson, Dunn & Crutcher and as a Commissioner of the Securities and Exchange Commission, her extensive experience and skills in accounting and audit matters and her experiences as a director at the public companies listed above, qualify her to serve as a director of 3M.
Director since 1990.

GRAPHIC

 

Robert J. Ulrich, 66, Retired Chairman of the Board and Chief Executive Officer of Target Corporation, an operator of large-format general merchandise and food discount stores. Mr. Ulrich began his retailing career as a merchandising trainee in Target's department store division (Dayton Hudson) in 1967 and advanced through various management positions. He became Chairman and Chief Executive Officer of Target Stores in 1987 and was elected Chairman and Chief Executive Officer of Target Corporation in 1994. Mr. Ulrich retired as Target's Chief Executive Officer on May 1, 2008, and retired as Chairman of the Board on January 31, 2009. In addition, Mr. Ulrich formerly served on the board of YUM! Brands, Inc. Mr. Ulrich's bachelor of arts degree from the University of Minnesota, his leadership roles and experiences at Dayton Hudson and Target Corporation, his knowledge of and extensive experiences in retailing and in building Target Stores into the second-largest retailer in the United States, his skills in business and financial matters, and his experiences as a director at the public companies listed above, qualify him to serve as a director of 3M.
Director since 2008.

25


Table of Contents


PROPOSAL NO. 2

RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        The Audit Committee has appointed PricewaterhouseCoopers LLP as the independent registered public accounting firm to audit the Company's consolidated financial statements for the year ending December 31, 2010. If the stockholders do not ratify the selection of PricewaterhouseCoopers LLP, the Audit Committee will reconsider the selection.

        During 2009, PricewaterhouseCoopers LLP served as the Company's independent registered public accounting firm and also provided certain tax and other audit-related services. For a description of those services and the fees paid, see section entitled "Fees of Independent Registered Public Accounting Firm."

        Representatives of PricewaterhouseCoopers LLP are expected to attend the Annual Meeting where they will be available to respond to questions and, if they desire, to make a statement.

Recommendation of the Audit Committee

        The Audit Committee of the Board of Directors recommends a vote "FOR" the ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for 2010. Proxies solicited by the Board of Directors will be voted "FOR" ratification unless a contrary vote is specified.


PROPOSAL NO. 3

APPROVAL OF THE AMENDED 2008 LONG-TERM INCENTIVE PLAN AND APPROVAL OF THE
EXPANDED PERFORMANCE CRITERIA AVAILABLE UNDER THE 2008 LONG-TERM
INCENTIVE PLAN

        The 3M 2008 Long-Term Incentive Plan (the "2008 Plan") was adopted by the Board of Directors in February 2008 and approved by 3M's stockholders at the Annual Meeting of Stockholders on May 13, 2008. As part of this approval, 3M's stockholders authorized the issuance or delivery of 35,000,000 shares of 3M common stock pursuant to awards granted under the 2008 Plan. At their meetings in February 2010, the Compensation Committee recommended and the Board of Directors approved, subject to stockholder approval at the Annual Meeting, an amendment to the 2008 Plan that would make the following changes:

In addition to the above-described changes made by this amendment, the Company is also requesting that 3M's stockholders approve the expanded performance criteria available for the awards of Performance Units or Performance Shares made under the 2008 Plan.

26


Table of Contents

Summary of the Long-Term Incentive Plan

        The following is only a summary of the material terms of the 2008 Plan, as amended, and is qualified in its entirety by reference to the full plan document for the Plan, which is attached as Appendix A to this proxy statement.

27


Table of Contents

28


Table of Contents

29


Table of Contents

30


Table of Contents

31


Table of Contents

32


Table of Contents

 
   
  Awards with a grant date on or after February 9, 2010
 
  Awards with a grant
date prior to
February 9, 2010

  Individuals or entities
acquiring control of the
Company do assume or
otherwise provide for the
continuation of such
awards

  Individuals or entities
acquiring control of the
Company do not assume or
otherwise provide for the
continuation of such
awards

 
Options and Stock Appreciation Rights   Immediately vested and remain exercisable for a minimum of six months following the "change in control" (but not beyond the original expiration date)   Immediately vested and remain exercisable for a minimum of six months (but not beyond the original expiration date) only in the event the employee's employment is terminated without cause or the employee resigns for good reason within eighteen months following the "change in control"   Immediately vested and remain exercisable for a minimum of six months following the "change in control" (but not beyond the original expiration date)

Restricted Stock, Restricted Stock Units and Other Stock Awards

 

Immediately vested upon the "change in control"

 

Immediately vested only in the event the employee's employment is terminated without cause or the employee resigns for good reason within eighteen months following the "change in control"

 

Immediately vested upon the "change in control"

Performance Units and Performance Shares

 

All performance periods end and the Company immediately pays out the value of all outstanding units and shares based on one of several valuation methods

 

Performance periods end and the Company immediately pays out the value of all outstanding units and shares based on one of several valuation methods only with respect to an employee whose employment is terminated without cause or who resigns for good reason within eighteen months following the "change in control"

 

n/a

33


Table of Contents

Stock Awards under the 2008 Long-Term Incentive Plan

   
 
  During 2009
  Since Inception
(through February 26, 2010)

 
   
Name and Position
  Stock
Options

  Restricted
Stock Units

  Stock
Appreciation
Rights

  Other
Stock
Awards

  Stock
Options

  Restricted
Stock Units

  Stock
Appreciation
Rights

  Other
Stock
Awards

 
   

George W. Buckley
Chairman of the Board, President and Chief Executive Officer

    289,044     78,366     0     0     737,975     129,896     0     0  
   

Patrick D. Campbell
Senior Vice President and Chief Financial Officer

    81,464     17,964     0     0     202,673     31,938     0     0  
   

Inge G. Thulin
Executive Vice President, International Operations

    65,657     12,937     0     0     166,615     23,100     0     0  
   

Jean Lobey
Executive Vice President,
Safety, Security and Protection Services Business

    58,772     12,937     0     0     146,566     23,100     0     0  
   

Bradley T. Sauer
Executive Vice President,
Health Care Business

    73,431     12,937     0     0     169,105     23,100     0     0  
   

All Current Executive Officers

    1,001,144     260,364     0     0     2,635,712     473,167     0     0  
   

All Current Directors Who Are Not Executive Officers

    0     0     0     21,722     0     0     0     43,444  
   

All Employees
(Other Than Current Executive Officers)

    5,721,371     1,444,381     34,984     0     15,089,783     3,516,365     121,911     0  
   

34


Table of Contents

        The Board of Directors recommends a vote "FOR" the proposal to approve the amended 2008 3M Long-Term Incentive Plan, including an increase in the number of shares of common stock authorized for issuance under such Plan, and to approve the expanded Performance Criteria available under such Plan. Proxies solicited by the Board of Directors will be voted "FOR" this proposal unless a contrary vote is specified.

35


Table of Contents

Equity Compensation Plans Information

        Information as of December 31, 2009, concerning compensation plans under which the Company's equity securities are authorized for issuance is as follows:

Equity Compensation Plans Information (1)

 
  A
  B
  C
 
Plan Category
  Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
  Weighted-average
exercise price of
outstanding options,
warrants and rights
  Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in column (A)
 

Equity compensation plans approved by security holders

                   
 

Stock options

    74,268,165   $ 72.39      
 

Restricted stock units

    4,346,155          
 

Non-employee director deferred stock units

    193,710          
               
 

Total

    78,808,030   $ 72.39     15,507,162  
               
 

Employee stock purchase plan

            5,659,939  
               

Subtotal

    78,808,030   $ 72.39     21,167,101  
               

Equity compensation plans not approved by security holders

             
               

Total

    78,808,030   $ 72.39     21,167,101  
               

(1)
In column B, the weighted-average exercise price is only applicable to stock options. In column C, the number of securities remaining available for future issuance for stock options, restricted stock units, and stock awards for non-employee directors is approved in total and not individually with respect to these items.


PROPOSAL NO. 4

STOCKHOLDER PROPOSAL ON SPECIAL MEETINGS

        3M has received a stockholder proposal from Nick Rossi, P.O. Box 249, Boonville, CA 95415-0249, the owner of 1,000 shares (the "Proponent"). The Proponent has requested that the Company include the following proposal and supporting statement (in italics) in its proxy statement for the Annual Meeting of Stockholders. The proposal may be voted on at the Annual Meeting only if properly presented by the Proponent or the Proponent's qualified representative. For the reasons set forth following the Proponent's statement, your Board of Directors recommends that you vote "AGAINST" this proposal.

        RESOLVED, Shareowners ask our board to take the steps necessary to amend our bylaws and each appropriate governing document to give holders of 10% of our outstanding common stock (or the lowest percentage allowed by law above 10%) the power to call a special shareowner meeting. This includes that a large number of small shareowners can combine their holdings to equal the above 10% of holders. This includes that such bylaw and/or charter text will not have any exception or exclusion conditions (to the fullest extent permitted by state law) that apply only to shareowners but not to management and/or the board.

        A special meeting allows shareowners to vote on important matters, such as electing new directors, that can arise between annual meetings. If shareowners cannot call a special meeting investor returns

36


Table of Contents


may suffer. Shareowners should have the ability to call a special meeting when a matter merits prompt attention. This proposal does not impact our board's current power to call a special meeting.

        This proposal topic won more than 60%-support the following companies in 2009: CVS Caremark (CVS), Sprint Nextel (S), Safeway (SWY) and Motorola (MOT).William Steiner and Nick Rossi sponsored these proposals.

        The merits of this Special Shareowner Meetings proposal should also be considered in the context of the need for improvements in our company's 2009 reported corporate governance status:

        The Corporate Library www.thecorporatelibrary.com, an independent investment research firm, rated our company "High Concern" in Executive Pay. Our CEO George Buckley received $7.3 million in stock options and performance shares. This raised concerns over the link between executive pay and company performance since small increases in the company's share price can result in large financial awards. There could be payments of $28 million regarding Mr. Buckley upon his death, $21 million upon his disability and $30 million upon his resignation.

        Vance Coffman and James Farrell were each designated as "Flagged (Problem) Directors" by The Corporate Library: Mr. Coffman due to involvement with Bristol-Myers and a SEC lawsuit charging substantial accounting fraud and Mr. Farrell due to involvement with UAL Corporation prior to its bankruptcy.

        Aulana Peters, on our executive pay committee, was also on the Merrill Lynch executive pay committee as Merrill's Stanley O'Neal exited with $161 million after he acquired subprime assets that contributed to $40 billion in write-downs. Ms. Peters was also on the D-rated boards (by The Corporate Library) of Northrop Grumman (NOC) and Deere (DE) and receive our most against-votes. Vance Coffman was also on this same executive pay committee and served on the D-rated boards of Amgen (AMGN) and Deere (DE).

        We had no shareholder right to cumulative voting, to act by written consent or an independent board chairman. Shareholder proposals addressing these topics have received majority votes at other companies and would be excellent topics for our next annual meeting.

        The above concerns show there is need for improvement. Please encourage our board to respond positively to this proposal: Special Shareowner Meetings — Yes on 4.

Board's Statement Opposing the Proposal

        After careful consideration, and for the reasons set forth below, the Board believes that the proposal to ask our Board to take the steps necessary to permit holders of 10 percent of our outstanding common stock to call special stockholder meetings, subject to the conditions specified in the proposal, is not in the best interests of 3M or its stockholders for the following reasons:

37


Table of Contents

        The statement accompanying the proposal contains a number of inflammatory statements regarding our directors. The Board has chosen not to waste additional resources by responding to these statements.

Recommendation of the Board

        The Board of Directors recommends a vote "AGAINST" this proposal for the reasons discussed above. Proxies solicited by the Board of Directors will be voted "AGAINST" this proposal unless a stockholder indicates otherwise in voting the proxy.

38


Table of Contents


INFORMATION ON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

        The following table includes all 3M stock-based holdings, as of February 26, 2010, of the directors and the Named Executive Officers set forth in the Summary Compensation Table, and the directors and executive officers as a group.


Common Stock and Total Stock-Based Holdings

   
Name and Principal Position
  Stock (1)   Restricted
Stock Units (2)
  Total (3)  

Linda G. Alvarado, Director

    17,886         17,886  

Vance D. Coffman, Director

   
22,055
   
   
22,055
 

Michael L. Eskew, Director

   
16,245
   
   
16,245
 

W. James Farrell, Director

   
6,147
   
   
6,147
 

Herbert L. Henkel, Director

   
8,949
   
   
8,949
 

Edward M. Liddy, Director

   
26,880
   
   
26,880
 

Robert S. Morrison, Director

   
114,501
   
   
114,501
 

Aulana L. Peters, Director

   
45,077
   
   
45,077
 

Robert J. Ulrich, Director

   
5,964
   
   
5,964
 

George W. Buckley, Director,
Chairman of the Board, President and Chief Executive Officer

   
824,865
   
269,631
   
1,094,496
 

Patrick D. Campbell,
Chief Financial Officer

   
437,614
   
31,215
   
468,829
 

Inge G. Thulin,
Executive Vice President

   
345,507
   
48,028
   
393,535
 

Jean Lobey,
Executive Vice President

   
193,769
   
22,558
   
216,327
 

Bradley T. Sauer,
Executive Vice President

   
291,108
   
48,581
   
339,689
 

All Directors and Executive Officers as a Group (26 persons) (4)

   
4,295,986
   
683,760
   
4,979,746
 
   

FOOTNOTES TO COMMON STOCK AND TOTAL STOCK-BASED HOLDINGS TABLE

        (1)   This column lists beneficial ownership of 3M common stock as calculated under SEC rules, including restricted stock held by certain of the Executive Officers over which they have sole voting power but no investment power. The restricted stock generally vests over a three- to five-year period if the executive remains continuously employed by the Company and is subject to forfeiture under certain circumstances. Unless otherwise noted, voting power and investment power in the shares are exercisable solely by the named person, and none of the shares are pledged as security by the named person. In accordance with SEC rules, this column also includes shares that may be acquired pursuant to stock options that are or will be exercisable within 60 days of February 26, 2010 as follows: Mr. Buckley (781,133), Mr. Campbell (407,193), Mr. Thulin (328,880), Mr. Lobey (192,153), Mr. Sauer (274,679), and Mr. Morrison (92,632). Mr. Morrison's options were granted during his service as interim CEO from

39


Table of Contents

June 30 to December 6, 2005. This column also includes the number of shares of the Company's common stock which the nonemployee directors will receive upon termination of membership on the Board of Directors for any reason as follows: Ms. Alvarado (8,593), Mr. Coffman (16,648), Mr. Eskew (16,245), Mr. Farrell (6,147), Mr. Henkel (8,949), Mr. Liddy (26,880), Mr. Morrison (17,344), Mrs. Peters (39,707), and Mr. Ulrich (5,707). This column includes the following shares over which the identified director or Named Executive Officer has shared voting and investment power through family trusts or joint accounts: Mr. Morrison (3,934) and Mr. Campbell (1,878).

        (2)   This column represents restricted stock units that generally vest over a three- to five-year period, assuming continued employment until each vesting date (or until the individual retires from the Company, in some cases).

        (3)   This column shows the individual's total 3M stock-based holdings, including the securities shown in the "Stock" column (as described in note 1) and restricted stock units (as described in note 2).

        (4)   All directors and executive officers, as a group, owned beneficially less than one percent of the outstanding common stock of the Company.


SECURITY OWNERSHIP OF MORE THAN 5 PERCENT STOCKHOLDERS

        The following table sets forth information regarding beneficial ownership of more than 5 percent of the outstanding 3M stock as of December 31, 2009.

Name/Address
  Common Stock
Beneficially Owned
  Percent of
Class
 

State Street Corporation (1)
State Street Financial Center
One Lincoln Street
Boston, MA 02111

    53,307,941     7.5  

BlackRock, Inc. (2)
40 East 52nd Street
New York, NY 10022

   
37,891,111
   
5.35
 

        (1)   State Street Corporation ("State Street") reported in Schedule 13G filed with the SEC on February 12, 2010, that it held as of December 31, 2009, shared voting and shared dispositive power with respect to 53,307,941 shares of 3M common stock. State Street serves as trustee for certain 3M savings plans, including the Company's Voluntary Investment Plan and Employee Stock Ownership Plan, a 401(k) retirement savings plan. Under the terms of the plans, State Street is required to vote shares allocated to the accounts of the participants in accordance with instructions received from such participants. State Street disclaims beneficial ownership of all of the shares listed above.

        (2)   Based on information on a Schedule 13G filed by BlackRock, Inc. with the SEC on January 29, 2010.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers to file with the Securities and Exchange Commission reports regarding their ownership and changes in ownership of our stock. As a practical matter, 3M assists its directors and executive officers by monitoring transactions and completing and filing Section 16 reports on their behalf. 3M believes that during 2009, its directors and executive officers complied with all Section 16(a) filing requirements. In making this statement, 3M has relied upon examination of the copies of Forms 3, 4, and 5 and the written representations of its directors and executive officers.

40


Table of Contents


EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Summary

        3M's reaction to the global economic crisis that commenced in 2008 was early, swift, and vigorous. The Company's actions to preserve cash and protect profitability ranged from suspending stock repurchases to reducing capital expenditures to reducing acquisition activity to foregoing merit pay increases for employees to phasing out banked vacation. While 3M employees made many sacrifices to enable the Company to weather the storm triggered by the slowdown, 3M management also made important decisions and investments throughout 2009 in order to preserve and improve its future (maintaining its level of R&D investment, for example, and accelerating investments in China and India). The Company's financial performance over the past several quarters indicates that these actions are working, and 3M is well positioned for a return to growth.

        Despite these actions, 3M's sales for 2009 fell 8.5 percent from 2008, to $23.1 billion. The size of this decrease was in line with the overall economy, and close to the estimated decline in worldwide industrial production. Including special items, 3M's net income for 2009 fell 7.7 percent from 2008, to $3.193 billion. Reflecting its sensitivity to changes in the Company's income, 3M's Economic Profit (as defined below) for 2009 declined 19 percent compared to its Economic Profit for 2008.

        The impact of the global economic crisis on 3M and 3M's actions in response to the crisis were also reflected in the compensation provided to our Named Executive Officers. Like 3M's other salaried employees, none of the Named Executive Officers received merit pay increases in their cash compensation during 2009. The declines in 3M's sales and Economic Profit that commenced in the fourth quarter of 2008 and continued throughout most of 2009 resulted in a zero payout on the Performance Unit Plan awards issued to 3M's executives in 2007 for the three-year performance period of 2007-2009. While the impact varied from employee to employee, 3M also reduced the target value of the 2009 long-term incentive compensation awards made to its eligible employees by an average of 11 percent from the target value of the 2008 awards.

        While the Company's full year sales, net income, and Economic Profit declined as compared to 2008, the quarterly year-on-year comparisons improved throughout the year. For example, sales declined 21.3 percent in the first quarter, 15.1 percent in the second quarter, and 5.6 percent in the third quarter, while actually improving 11.1 percent in the fourth quarter. As a result of this improving performance, especially as compared to the plans we established at the beginning of 2009, when the economic crisis was in its early stages, the annual incentive compensation earned during 2009 by the Named Executive Officers (as well as many other 3M employees) exceeded their target amounts.

        Investors reacted to the strong management actions and improving performance by causing our stock price to rise from $57.54 at the end of 2008 to $82.67 at the end of 2009 (an increase of 44 percent, as compared to an increase of 23 percent in the S&P 500). This increase erased nearly all of the losses the Named Executive Officers (and 3M's other employees) experienced in the value of their outstanding stock options and restricted stock unit grants during the prior year (when 3M's stock price had declined from $84.32 at the end of 2007 to $57.54 at the end of 2008).

        During 2009 the Company changed the timing of its annual stock option grants from May to February. This change will provide a stronger and more immediate link between the performance of the eligible employees during the preceding year and the size of their annual stock option grants. Due to the difficulty of reliably predicting business performance or establishing meaningful performance targets in early 2009, the Compensation Committee decided to replace the performance shares that would otherwise have been granted to the Company's executives as part of their 2009 long-term incentive compensation awards with time-vested restricted stock units.

41


Table of Contents

Objectives of 3M's Executive Compensation Program

        3M believes that the compensation of its executives should be closely tied to the performance and growth of the Company, so that their interests are aligned with the interests of long-term 3M stockholders. Consistent with this philosophy, the following core principles provide a framework for the Company's executive compensation program:

The Compensation Committee regularly reviews the design of and risks associated with the Company's executive compensation program, with the assistance of its independent compensation consultant, and makes decisions concerning changes in the executive compensation program when appropriate. The Committee also makes individual pay decisions regarding the compensation of the Company's 19 senior executives, including the Chief Executive Officer.

Terms

        This Compensation Discussion and Analysis uses the following terms when discussing executive compensation of the Company:

42


Table of Contents

Benchmarking

        In order to accomplish the objective of providing competitive total compensation, 3M annually surveys the executive compensation practices of a large group of comparator companies (approximately 160, although the number and identity of the companies may vary from year to year). Survey data is adjusted to recognize the different sizes of the comparator companies (based on annual revenues) as compared to the size of 3M. The survey data is obtained from three consulting firms (Hewitt Associates, Frederic W. Cook & Co., Inc., and Towers Perrin). The survey comparator group consists of companies in the Dow Jones Industrial Average (modified to exclude financial services companies), and other companies with annual revenue exceeding $10 billion that participate in the three consultants' executive compensation surveys. By using survey data from a large number of comparator companies, 3M is able to conduct a rigorous benchmarking process with more complete and reliable data for each executive position benchmarked, including executive positions below the Named Executive Officers. The Committee does not review the identity of the companies in this survey comparator group.

        In addition, the same three consulting firms provide pay data and information on the executive compensation practices at the companies in 3M's executive compensation peer group. This pay data is used by the Committee to verify the benchmarking results for the Named Executive Officers and other senior executives, assuring that the Company's compensation objectives are being met. 3M's executive compensation peer group consists of the following 18 companies, as recommended by the Committee's independent compensation consultant and approved by the Committee:

Avery Dennison Corporation   Honeywell International Inc.
Caterpillar Inc.   Illinois Tool Works Inc.
Danaher Corp.   Johnson & Johnson
Deere & Company   Kimberly-Clark Corporation
E.I. du Pont de Nemours and Company   Medtronic, Inc.
Eaton Corporation   The Procter & Gamble Company
Ecolab Inc.   Textron Inc.
Emerson Electric Co.   Tyco International Ltd.
General Electric Company   United Technologies Corporation

        The companies in this executive compensation peer group were selected because (1) their performance is monitored regularly by the same market analysts who monitor the performance of 3M, and/or (2) they meet several criteria based on similarity of their business and pay models, market capitalization (based on an 8-quarter rolling average), and annual revenues. During 2009 the Committee reviewed both the criteria for selecting companies to be included in this peer group as well as the identity of the 21 companies previously included in the group, and decided to remove three companies from the peer group. Alcoa, Inc., Archer-Daniels-Midland Company, and SPX Corporation were removed from the peer group because they no longer satisfy either of the criteria for peer group membership.

43


Table of Contents

How the Committee uses this Benchmarking Information

        When establishing and adjusting the base salary, Total Cash Compensation and long-term incentive compensation of the Named Executive Officers and the Company's other senior executives, the Committee uses the pay data from the survey comparator group and compares these results with the pay data from the executive compensation peer group. The Committee also uses the information on the executive compensation practices at companies in the executive compensation peer group when considering additions to or changes in the Company's current executive compensation program and practices.

        With this information, the Committee generally aims to provide the Company's executives with Total Cash Compensation and long-term incentive compensation that is at or very close to the median of the corresponding compensation paid to executives by companies in the Benchmarking Groups. Both the Total Cash Compensation and long-term incentive compensation of these executives are modified based on their individual performance results, with high performers (but not average or low performers) receiving increases in compensation that can over time bring their amounts to or near the 75th percentile of the corresponding compensation paid to executives by companies in the Benchmarking Groups.

Role of the Compensation Committee and its Advisors

        3M pays its executives compensation to recognize their contributions to the success of its business and provide incentives for them to deliver performance that meets the growth, net income, and other objectives of the Company. All elements of this compensation are determined by the Compensation Committee of the Board of Directors (the "Committee"), which is composed solely of independent nonemployee directors. In addition, the Committee's decisions concerning the compensation of 3M's Chief Executive Officer are subject to ratification by all of the independent members of the Board of Directors.

        As of December 31, 2009, the members of the Committee were Vance D. Coffman, Robert S. Morrison, Aulana L. Peters, and Robert J. Ulrich. During 2009, the Committee was assisted by its independent compensation consultant, George B. Paulin of Frederic W. Cook & Co., Inc. In addition to participating in the meetings of the Committee, Mr. Paulin provides the Committee with significant assistance and advice in the review of the Company's salary structure, short-term and long-term incentive compensation plans, compensation-related risks, and other related executive pay policies. He also provides expert knowledge of marketplace trends and best practices relating to executive compensation practices and competitive pay levels. Mr. Paulin and his firm provide no other services to the Company or 3M management, with the exception of the pay survey data described above. He and his firm also provide expert advisory support to the Nominating and Governance Committee on the compensation of 3M's nonemployee directors.

        3M's executive officers assist the Committee with the process of determining the compensation of the Company's executives. In particular, Mr. Buckley, assisted by 3M's Senior Vice President, Human Resources, performs an annual performance evaluation of each of 3M's senior executives whose compensation is determined by the Committee. The results of this annual performance evaluation form the basis for Mr. Buckley's recommendations to the Compensation Committee as to the annual merit base salary and Total Cash Compensation increases for such senior executives as well as the size of their annual long-term incentive compensation awards. The Committee discusses these recommendations with Mr. Buckley at its meetings prior to making its decisions on the amount of these annual merit increases and long-term incentive compensation awards.

Elements of the Compensation Program

        The compensation program for 3M's executives consists of the following elements: base salary, short-term cash incentive in the form of an annual incentive, and long-term equity incentives in the form

44


Table of Contents


of performance shares, stock options, restricted stock or restricted stock units. 3M's executives also participate in various benefit plans made available to most of 3M's U.S. employees, are eligible to participate in several deferred compensation plans, and receive other benefits and a limited number of perquisites. The entire program applied to approximately 110 executives during 2009, including all five of the Named Executive Officers.

        3M pays each of its executives a base salary in cash on a monthly basis. The amount of this base salary is reviewed annually, and is not considered to be "at risk" as it does not vary with the performance of the Company. This base salary is designed to compensate the executives for the performance of their normal responsibilities, and it is the only component of their compensation that is considered to be fixed rather than variable in nature.

        3M provides its executives with short-term incentive compensation through annual incentive plans, which are designed to align a significant portion of their cash compensation with the financial performance of the Company and its business units. 3M's broad-based annual incentive plan delivers short-term incentive compensation based on three performance metrics: Organic Sales vs. target, Economic Profit vs. target, and total Company Economic Profit vs. the prior year. While the short-term incentive compensation earned by most 3M executives is determined under this annual incentive plan, the short-term incentive compensation earned by 3M's Named Executive Officers as well as the other senior executives whose compensation is decided by the Committee is determined under the Executive Annual Incentive Plan approved by 3M's stockholders at the 2007 Annual Meeting. A total of 19 3M executives participated in this Executive Annual Incentive Plan during 2009. This Executive Annual Incentive Plan, which is intended to comply with the requirements of Section 162(m) of the Internal Revenue Code, provides performance-based compensation for which the performance goal is the Company's earning of adjusted net income.

        The Executive Annual Incentive Plan establishes a maximum amount of annual incentive compensation that may be earned by each covered executive during a year, which is either one-quarter of one percent of the Company's adjusted net income for such year (for the Named Executive Officers) or one-tenth of one percent of the Company's adjusted net income for such year (for all other covered executives), and then provides the Committee with the discretion to pay each covered executive less than this maximum amount based on such factors as it deems relevant. The primary factors considered by the Committee in exercising this discretion are each executive's individual performance, each individual's target annual incentive, and the performance of the Company and its business units as measured by the three performance metrics referred to above and that are used to determine payouts under the broad-based annual incentive plan. While the Committee considers and is guided by the amounts that would be payable under the broad-based annual incentive plan (based on the performance of 3M and its business units) if these executives were covered by such plan, it is not bound by these results and does exercise its discretion to pay different amounts. Individual performance is considered as a factor based upon the annual performance evaluation that Mr. Buckley, assisted by 3M's Senior Vice President, Human Resources, does for each covered executive (other than himself) and that the independent members of the Board of Directors do for Mr. Buckley. These performance evaluations are done according to 3M's overall performance assessment and management processes, which involve setting annual financial and non-financial goals and objectives for each individual and then assessing each individual's performance against these goals and objectives at the end of the year. The annual assessment of individual performance assesses each executive's overall performance against these goals, but does not assess performance against each goal in a formulaic manner.

45


Table of Contents

        3M provides long-term incentive compensation to its executives through the Long-Term Incentive Plan approved by 3M's stockholders at the 2008 Annual Meeting. This Plan enables the Company to provide variable compensation to 3M's executives based on the Company's long-term performance. This compensation may be provided in the form of either performance units payable in cash or performance shares payable in the form of shares of 3M common stock. The amount of cash or the number of shares of 3M common stock payable with respect to each performance unit or performance share awarded is contingent upon attainment of the performance criteria selected each year by the Committee for the applicable performance period.

        The Long-Term Incentive Plan also enables the Company to provide compensation to 3M's executives based on the value of and changes in the value of the Company's common stock. This Plan authorizes the Committee to grant stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock awards to management employees of the Company. The Committee makes annual grants of stock options under this Plan to 3M's executives, including each of the Named Executive Officers. These options have an exercise price equal to the closing market price of the Company's common stock on the grant date, and generally expire ten years after the grant date. Grants of restricted stock and/or restricted stock units under this Plan may be made on an annual basis and/or to selected executives in appropriate circumstances. These circumstances have included the hiring of new executives as well as the need to retain current high-performing executives. These shares of restricted stock and restricted stock units vest over periods ranging from one to five years after the grant date, which encourage the executives to remain employed by the Company until the shares or units have vested.

        3M's executives generally participate in the same health care, disability, life insurance, pension, and 401(k) benefit plans made available to the Company's U.S. employees.

        Executives also receive a limited number of additional benefits and perquisites described in more detail in the All Other Compensation Table of this proxy statement. These additional benefits and perquisites are provided for the convenience (financial planning assistance, for example), financial security (retirement contributions and premiums for additional life insurance coverage, for example), and personal security (travel on corporate aircraft and monitoring service fees, for example) of the executives. While some of these additional benefits and perquisites are limited to a single executive (travel on corporate aircraft and monitoring service fees, provided only to Mr. Buckley), others are provided to many other employees besides the Company's executives (retirement contributions). During 2009 the Committee eliminated all remaining tax gross-up payments made to the Company's senior executives (including all of the Named Executive Officers) to reimburse them for the income taxes payable as a result of the income imputed to them as a result of perquisites or other personal benefits provided by the Company.

        Two of the Named Executive Officers (Mr. Buckley and Mr. Campbell) earn supplemental retirement benefits pursuant to their employment agreements with the Company, which were negotiated at the time they agreed to leave their previous employers and join 3M. These supplemental benefits are designed to replace the pension benefits they failed to earn under the plans of their previous employers because their accrued benefits under those plans do not grow with future increases in compensation.

        During 2009 the Committee approved (and the independent members of the 3M Board of Directors ratified) a grant of 5,420 restricted stock units to Mr. Buckley (which had a grant date value of $380,000) in performance of the Company's obligation to pay him $95,000 in annual life insurance premiums for the years 2009-2012 under his employment agreement.

46


Table of Contents

        3M's executives are eligible to participate in several deferred compensation programs that allow them to voluntarily defer the receipt of cash and certain stock compensation otherwise payable by the Company. During 2009 the Committee approved the modification of one of these deferred compensation programs (the 3M Deferred Compensation Plan) and the adoption of a new program effective in 2010 (the Deferred Compensation Excess Plan), which is designed to provide more flexibility for individual tax-planning purposes. In combination, the new program and the modified program neither increased the deferral opportunities available to the executives and other employees who are eligible to defer compensation thereunder nor increased the Company's cost of operating the programs.

How 3M Determined the 2009 Compensation of the Named Executive Officers

        All amounts were determined by the Committee, assisted by its independent compensation consultant, with the input of Mr. Buckley other than with respect to his own compensation (including his recommendations based on the results of the most recent annual performance evaluation of the senior executives whose compensation is determined by the Committee), and utilizing the compensation information from the companies in the Benchmarking Groups. In addition, during the process of determining their 2009 compensation, the Committee received and reviewed tally sheets comparing the amounts of compensation actually received by the Company's Named Executive Officers during 2008 to the amounts reported in its 2009 proxy statement as well as the compensation that would be owed to such individuals in the event of the termination of their employment. With this information, the Committee initially aimed to provide the Company's executives with Total Cash Compensation and long-term incentive compensation that is at or very close to the median value of the corresponding compensation paid to executives with similar responsibilities at companies in the Benchmarking Groups. However, the Committee then adjusted the stock option portion of the long-term incentive compensation provided to the Company's executives to reflect each executive's actual individual performance during the previous year. Individual performance is considered as a factor based upon the annual performance evaluation that Mr. Buckley, assisted by 3M's Senior Vice President, Human Resources, does for each Named Executive Officer (other than himself) and that the independent members of the Board of Directors do for Mr. Buckley. These performance evaluations are done according to 3M's overall performance assessment and management processes, which involve setting annual financial and non-financial goals and objectives for each individual and then assessing each individual's performance against these goals and objectives at the end of the year. The annual assessment of individual performance assesses each executive's overall performance against these goals, but does not assess performance against each goal in a formulaic manner. High performers may receive long-term incentive compensation awards valued at or near the 75th percentile of the long-term incentive compensation provided by companies in the Benchmarking Groups. Differences in the amounts of compensation provided to 3M's Named Executive Officers reflect a variety of factors, including job responsibilities, the market pay for executives performing similar responsibilities (as measured by the pay information obtained from companies in the Benchmarking Groups), experience and individual performance.

        Changes in the base salaries of the Named Executive Officers (as well as their target Total Cash Compensation) are considered annually by the Committee. Any adjustments are made after considering the most recent compensation survey data for executives with similar responsibilities at companies in 3M's Benchmarking Groups, each individual's position in the salary range for his or her position along with the individual's performance during the preceding annual period, and the experience of each individual. Consistent with the decision to forego merit pay increases that generally applied across the Company during 2009, the Committee did not make any changes in the base salaries or target Total Cash Compensation of the Named Executive Officers during 2009.

47


Table of Contents

        During 2009 the Committee chose to deliver short-term incentive compensation to its Named Executive Officers in the form of an annual cash incentive under the Executive Annual Incentive Plan. Each Named Executive Officer had a target annual incentive for the year, which is equal to the difference between their target Total Cash Compensation and their annual base salary. As explained above in the "Short-term incentive" discussion under "Elements of the Compensation Program," the Committee considered the amount of an individual's target annual incentive together with his individual performance during 2009 and the 2009 performance of 3M and its business units as measured under the Company's broad-based annual incentive plan when it exercised its discretion to determine the amount of each Named Executive Officer's annual incentive compensation for 2009.

        Since the Company satisfied the Executive Annual Incentive Plan's performance objective by earning Adjusted Net Income (defined as the net income of 3M as reported in its Consolidated Statement of Income as adjusted to exclude special items) in 2009 in the amount of $3.312 billion, the Plan authorized the Committee to approve payments of annual incentive compensation to each Named Executive Officer equal to one-quarter of one percent of such Adjusted Net Income ($8,280,000). Utilizing the discretion reserved to the Committee by the Plan, and in order to more closely align the payout to each individual with the 2009 performance of the Company and the relevant business unit as well as the individual's performance, the Committee decided to reduce the amounts payable to the Named Executive Officers (including Mr. Buckley, for whom the Committee's decision to approve the reduced amount of his 2009 annual incentive was ratified by the independent members of the 3M Board of Directors) from the authorized maximum amount to the following amounts:

   
Name
  Target Annual
Incentive

  Amount that
would have
been payable
under broad-
based annual
incentive plan

  Actual 2009
Incentive

 
   

George W. Buckley

  $ 2,795,000   $ 3,508,284   $ 3,859,112  

 

 

Patrick D. Campbell

  $ 508,400   $ 638,144   $ 701,958  

 

 

Inge G. Thulin

  $ 396,000   $ 507,672   $ 558,439  

 

 

Jean Lobey

  $ 353,600   $ 519,368   $ 571,304  

 

 

Bradley T. Sauer

  $ 381,600   $ 519,739   $ 571,713  

 

 

        As explained above, one of the primary factors considered by the Committee in utilizing its discretion to reduce the annual incentive payouts below the maximum permitted under the Executive Annual Incentive Plan is the amounts that would have been payable under the Company's broad-based annual incentive plan if the Named Executive Officers had been covered by such plan. The table above also shows these amounts, which are based on the performance of the Company and, as applicable, the respective business units of the Named Executive Officers during 2009 and the formulas for determining payouts based on that performance under the broad-based annual incentive plan (before considering individual performance). These amounts were based on the following performance results for the Company and, as applicable, the respective business units of the Named Executive Officers during 2009

48


Table of Contents


(dollar amounts in millions) in respect of each performance metric of the broad-based annual incentive plan:

Business Unit
  Organic
Sales
(Plan)
  Organic
Sales
(Actual)
  Organic
Sales
(Actual vs.
Plan)
  Economic
Profit
(Plan)
  Economic
Profit
(Actual)
  Economic
Profit
(Actual vs.
Plan)
  Total
Company
Economic
Profit vs.
Prior Year
  Weighted
Average
Payout %
Based on
Payout
Curve
 

Total Corporate

  $ 23,699   $ 23,802     100 % $ 1,565   $ 1,733     111 %   81 %   126 %

Total International

    15,315     15,330     100 %   1,760     1,969     112 %   81 %   128 %

Safety, Security & Protection Services Business

    3,304     3,323     101 %   387     456     118 %   81 %   147 %

Health Care Business

    4,367     4,459     102 %   733     826     113 %   81 %   136 %

The Company determined (and, with respect to Mr. Buckley, the independent members of the Board of Directors agreed), that during 2009 each of the Named Executive Officers exhibited strong performance against their goals, and the Committee determined (and, with respect to Mr. Buckley's payment, the independent members of the Board of Directors agreed) that this strong performance warranted an annual incentive compensation payout for each of the Named Executive Officers that was ten percent higher than the amount that would have been payable according to the formulas for the broad-based annual incentive plan for 2009. The amounts of these payouts also reflected the Committee's determination (and, with respect to Mr. Buckley's payment, the agreement of the independent members of the Board of Directors) of the appropriate amount of cash incentive compensation to pay for 2009 as a component of the Named Executive Officers' total compensation.

        After considering the most recent long-term incentive compensation data from companies in the Benchmarking Groups and after taking into account its evaluation of their individual performance during 2008, the Committee approved (and in the case of Mr. Buckley, the independent members of the Board of Directors ratified) the following changes in the Intended Value of the Named Executive Officers' long-term incentive compensation awards for 2009. These changes reflect the Committee's estimate that the value of the long-term incentive compensation awards made to similar executives by companies in the Benchmarking Groups would decline an average of 8 percent from the value of such awards made in 2008.

   
Name
  Intended Value of
2008 Awards

  Intended Value of
2009 Awards

  Change
 
   

George W. Buckley

  $ 8,500,000   $ 7,820,000   ($ 680,000 )

 

 

Patrick D. Campbell

  $ 2,058,000   $ 2,074,000    $ 16,000  

 

 

Inge G. Thulin

  $ 1,758,000   $ 1,506,000   ($ 252,000 )

 

 

Jean Lobey

  $ 1,504,000   $ 1,495,000   ($ 9,000 )

 

 

Bradley T. Sauer

  $ 1,656,000   $ 1,501,000   ($ 155,000 )

 

 

        Consistent with market practices at companies in the Benchmarking Groups, during 2009 the Committee chose to deliver one-half of the Intended Value of the long-term incentive compensation provided to 3M's Named Executive Officers in the form of stock options and the remaining one-half in the form of restricted stock units (before adjustment for individual performance). For 2009, the Committee decided not to grant any performance units or performance shares to the Named Executive Officers (or any of the Company's other executives). At a time of great uncertainty due to the economic crisis that existed in early 2009, the Committee believed it would be extremely difficult to fairly and accurately

49


Table of Contents


predict business performance or establish meaningful performance targets over a period of at least three years as required by the Long-Term Incentive Plan. Accordingly, for 2009 the Committee chose to replace the portion of the Named Executive Officers' (and the Company's other executives') annual long-term incentive compensation normally provided in the form of performance shares with restricted stock units that vest three years following the grant date assuming continued employment. Dividend equivalents equal to the dividends payable on the same number of shares of 3M common stock will accrue on these restricted stock units during the vesting period and be paid out in cash on the vesting date, although no dividend equivalents will be paid on any of these restricted stock units that are forfeited prior to the vesting date.

        Annual stock option grants occur in February, and the exercise price for these options is set at the fair market value of a share of 3M stock on the grant date (as required by the provisions of the Long-Term Incentive Plan approved by 3M's stockholders in 2008). Fair market value of a share of 3M stock as defined in the Long-Term Incentive Plan is the closing price at which 3M common stock traded on the New York Stock Exchange. Using the closing price of 3M common stock to establish the exercise price for stock option grants is a best practice among 3M's comparator and peer companies. Annual stock options granted under this Plan expire ten years after the grant date, and become exercisable in equal installments on each of the first three anniversaries of the grant date.

        2009 marked the final year of the three-year performance period of the long-term incentive compensation awards made to 3M's executives in 2007 under the Performance Unit Plan. The awards made during 2007 were designed to deliver compensation based on the performance of the Company over the years 2007, 2008, and 2009 as measured by two key metrics that create stockholder value: Economic Profit Growth and Sales Growth. Pursuant to the formula approved by the Committee at the time the awards were made, the Company's performance during this three-year performance period (average annual increase in Economic Profit of -2.4% and average annual increase in Organic Sales, as compared to the Industrial Production Index, of -0.5%) resulted in no payout for any of the awards made during 2007 (as compared to the original target value of $120 per performance unit).

        In August 2009 the Committee approved a correction in the payout of the awards the Company granted to its executives (including the Named Executive Officers) in 2006 under the Performance Unit Plan. In February 2009 the Committee determined the value and approved the payout of these 2006 awards. After that February meeting, the publisher of the Industrial Production Index (Global Insight), which is relied upon as the base for measuring 3M's Sales Growth over the 3-year performance period, restated the Index values for the years in such performance period. The restatement reflected the abrupt downturn in the world economy during the last half of 2008 that was not fully reflected in the original published Index values. As a result of this restatement, the correct payout was $20 per performance unit and not the $12 per performance unit the Committee initially approved at its February meeting prior to the publisher's restatement of this Index (based upon an average annual increase in Sales Growth of 0.3%, instead of 0.1%, as initially determined). Accordingly, in August the Committee approved (and in the case of Mr. Buckley, the independent members of the Board of Directors ratified) an additional

50


Table of Contents


payment of $8 per performance unit. Based on this corrected payout value, in August 2009 the Named Executive Officers received the following additional payments:

   
Name
  Original payment for
2006 Award

  Additional payment
for 2006 Award

  Total payment for
2006 Award

 
   

George W. Buckley

  $ 200,004   $ 133,336   $ 333,340  

 

 

Patrick D. Campbell

  $ 74,400   $ 49,600   $ 124,000  

 

 

Inge G. Thulin

  $ 64,800   $ 43,200   $ 108,000  

 

 

Jean Lobey

  $ 52,800   $ 35,200   $ 88,000  

 

 

Bradley T. Sauer

  $ 52,800   $ 35,200   $ 88,000  

 

 

These additional payments are reflected in the corrected amounts of their Non-Equity Incentive Plan Compensation for 2008 in the Summary Compensation Table that follows.

2010 Compensation Decisions

        Following the end of the year, the Committee considered the collective performance of the Named Executive Officers (and the Company's other executives) during 2009. The Committee concluded that the engagement, loyalty, and leadership exhibited by these individuals was a critical factor in the Company's ability to weather the impacts of the global economic crisis and deliver the business results it achieved during 2009. This strong performance was reflected in the performance of 3M stock during 2009. Based on this 2009 performance, the Committee decided to increase (on a one-time basis) the value of the 2010 long-term incentive compensation awards to the Named Executive Officers (and to the other executives of the Company), as described below. In the opinion of the Committee, providing this one-time increase properly aligns the rewards these individuals receive with their strong performance during 2009. Additionally, this increase in long-term incentive compensation will continue to motivate these individuals to continue that strong performance and engagement in 2010, which will be another critical performance year.

        Specifically, in February 2010 the Committee approved (and in the case of Mr. Buckley, the independent members of the 3M Board of Directors ratified) the following one-time increases in the Intended Value of the 2010 long-term incentive compensation awards under the Long-Term Incentive Plan: Mr. Buckley — $4,000,000; Mr. Campbell — $1,100,000; Mr. Thulin — $800,000; Mr. Lobey — $800,000; and Mr. Sauer — $800,000. The size of the increases varies from approximately 50 to 65 percent of the Intended Value of each individual's 2009 long-term incentive compensation awards.

        The Committee decided to deliver this additional value in the form of restricted stock units that vest in equal installments on each of the first three anniversaries of the grant date, assuming continued employment until each vesting date (or until the individual retires from the Company, in which case the units will continue to vest according to the three-year vesting schedule). Dividend equivalents equal to the dividends payable on the same number of shares of 3M common stock will accrue on these restricted stock units during the vesting period and be paid out in cash on each vesting date, although no dividend equivalents will be paid on any of these restricted stock units that are forfeited prior to the vesting date. Delivering this additional value in the form of restricted stock units (as compared to an additional cash bonus) will promote ongoing engagement and loyalty, further align the interests of these executives with those of 3M's stockholders, encourage retention, and conserve the Company's cash.

Stock Ownership Guidelines

        The Company's stock ownership guidelines apply to all Section 16 officers of the Company. They are designed to increase an executive's equity stake in 3M and more closely align his or her interests

51


Table of Contents


with those of 3M's stockholders. The guidelines provide that the Chief Executive Officer should attain beneficial ownership of 3M stock equal to five times his or her annual base salary at the time of appointment, Executive and Senior Vice Presidents should attain beneficial ownership of 3M stock equal to three times their annual base salary at the time of appointment, and Vice Presidents should attain beneficial ownership of 3M stock equal to two times their annual base salary at the time of appointment. While the stock ownership guidelines provide that executives should attain this beneficial ownership of 3M stock within five years of their appointment to these positions, all of our Named Executive Officers have already attained or exceeded these ownership levels. For purposes of these guidelines, shares owned directly by an officer or by members of the officer's immediate family, shares owned indirectly through an officer's account in the Company's 401(k) plan, unvested shares of restricted stock owned by an officer, and shares represented by unvested restricted stock units granted to an officer are considered to be beneficially owned by the officer and are counted in determining attainment of the required ownership level.

Policy on Reimbursement of Incentive Payments ("Clawback")

        The Company's Board of Directors has adopted a policy requiring the reimbursement of excess payments made to an executive in the event that 3M is required to make a material restatement of its financial statements and that executive's intentional misconduct caused the need for the restatement. This policy applies to the Section 16 officers of the Company.

Limit on Tax-Deductible Compensation

        Section 162(m) of the Internal Revenue Code prohibits 3M from deducting compensation paid in any year to its Chief Executive Officer and each other Named Executive Officer whose compensation is reported in the Summary Compensation Table for such year by reason of being among the three most highly compensated officers for that year, other than the Chief Executive Officer and the Chief Financial Officer ("Covered Employees"), in excess of $1 million, but does not subject performance-based compensation to this limit. Due to his service as the Company's interim Chief Executive Officer for a period of approximately six months in 2005, one of the members of the Committee (Robert S. Morrison) does not participate in the Committee's decisions involving performance-based compensation since he is not considered an "outside director" of the Company for purposes of Section 162(m) and the regulations published thereunder.

        The Committee continues to emphasize performance-based compensation for executives and thus minimize the effect of Section 162(m). However, the Committee believes that its primary responsibility is to provide a compensation program that attracts, retains, and rewards the executive talent necessary for the Company's success. Consequently, in any year the Committee may authorize nonperformance-based compensation in excess of $1 million. The Committee recognizes that the loss of the tax deduction may be unavoidable under these circumstances.

        During 2009 the Committee decided to replace the portion of the Named Executive Officers' annual long-term incentive compensation awards normally provided in the form of performance shares with service-based restricted stock units. Since these restricted stock units vest on the basis of continued employment with the Company, they do not qualify as performance-based compensation for purposes of Section 162(m). The Committee concluded that, in view of the economic crisis that existed at the time, the Company's need to provide long-term incentive compensation that would actually deliver its intended value to executives who remain with the Company outweighed the loss of the potential tax deduction available with performance shares that might have paid out on the basis of long-term Company performance.

52


Table of Contents

Severance or Change in Control Arrangements

        With the exception of Mr. Buckley and Mr. Campbell, who entered into employment agreements when they joined the Company (leaving senior positions at other major companies, and in the case of Mr. Buckley, a chief executive officer position), 3M does not have severance plans or arrangements with any of its Named Executive Officers. The absence of such arrangements reflects the Company's and the Committee's preference for operating without legally binding severance commitments, and preserves maximum flexibility to deal with individual situations if and when the need arises. Exceptions were made in the cases of Mr. Buckley and Mr. Campbell at the time they were hired by the Company, and were part of the employment terms and conditions offered by the Company to persuade them to leave their previous employers.

        Similarly, 3M does not have arrangements providing for payments or other compensation in the event of a change in control of the Company, other than the payment, exercise, or delivery of long-term incentive compensation awards issued prior to a change in control. For awards with a grant date prior to February 9, 2010, in the event of a change in control of the Company, both the Long-Term Incentive Plan and its predecessors provided for (1) accelerated vesting of outstanding stock options, restricted stock, and restricted stock units, and (2) the immediate termination and payout of all outstanding performance units and performance shares. This provision was intended to protect the previously-earned long-term incentive compensation of employees (including the Named Executive Officers) against the uncertainty and risk of nonpayment that might occur following a takeover of the Company.

        In 2010 the Board of Directors amended the Long-Term Incentive Compensation Plan to eliminate the prior "single trigger" accelerated vesting provision in the event of a change in control of the Company, and to establish a "double trigger" vesting acceleration provision. This new "double trigger" provision applies to awards with a grant date on or after February 9, 2010 (including the one-time grants of restricted stock units described above). Specifically, the provision means that an employee whose employment is terminated without cause or who resigns for "good reason" within eighteen months following a change in control of the Company will have (1) accelerated vesting of any outstanding stock options, restricted stock, and restricted stock units, and (2) an immediate payout of any outstanding performance unit and performance share awards. The Board of Directors also amended the Long-Term Incentive Plan to eliminate a provision that would have required the Company to provide employees (including the Named Executive Officers) with a gross-up payment in the event any excise tax was determined to apply as a result of the payment, vesting, or delivery of long-term incentive compensation awards made thereunder in the event of a change in control. The Company does not intend to include change in control "single trigger" accelerated vesting or excise tax gross-up provisions in future equity awards or agreements.


COMPENSATION COMMITTEE REPORT

        In accordance with the SEC's disclosure requirements for executive compensation, the Compensation Committee of the Board of Directors of 3M Company (the "Committee") has reviewed and discussed with 3M Management the Compensation Discussion and Analysis. Based on this review and these discussions with 3M Management, the Committee recommended to the Board of Directors that this Compensation Discussion and Analysis be included in the 2010 proxy statement of 3M Company.

53


Table of Contents


Assessment of Risk Related to Compensation Programs

        Based on the Company's recent assessment, the Company has determined that none of its compensation policies and practices is reasonably likely to have a material adverse effect on the Company. To conduct this assessment, the Company completed an inventory of its executive and non-executive compensation programs globally, with particular emphasis on incentive compensation plans or programs. Based on this inventory, the Company evaluated the primary components of its compensation plans and practices to identify whether those components, either alone or in combination, properly balanced compensation opportunities and risk. The Company believes that the Company's overall cash versus equity pay mix, balance of shorter-term versus longer-term performance focus, balance of revenue versus profit focused performance measures, stock ownership guidelines, and "clawback" policy all work together to provide its employees and executives with incentives to deliver outstanding performance to build long-term shareholder value, while taking only necessary and prudent risks. In this regard, the Company's strong ethics and its corporate compliance systems, which are overseen by the Audit Committee, further mitigate against excessive or inappropriate risk taking. The Compensation Committee, with assistance from its independent compensation consultant, George B. Paulin of Fredric W. Cook & Co., Inc., reviewed the Company's risk assessment and a separate risk assessment that Mr. Paulin conducted for the Committee on the Company's executive compensation policies and practices. Based on their consideration of these assessments, the Committee concurred with the Company's determination.

54


Table of Contents


Summary Compensation Table

        The following table shows the compensation earned or received during 2009, 2008, and 2007 by each of 3M's Named Executive Officers (as determined pursuant to the SEC's disclosure requirements for executive compensation in Item 402 of Regulation S-K).

   
Name and
Principal Position

  Year
  Salary
($)

  Stock
Awards
($)(1)

  Option
Awards
($)(2)

  Non-Equity
Incentive Plan
Compensation
($)(3)

  Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)(4)

  All Other
Compensation
($)(5)

  Total ($)
 
   

George W. Buckley

    2009     1,720,000     4,333,655     3,757,572     3,859,112     943,165     322,289     14,935,793  
 

Chairman of the

    2008     1,720,000     4,002,422     3,363,492     2,977,410     0     252,423     12,315,747  
 

Board, President and

    2007     1,670,000     79,250     3,417,792     4,521,495     3,624,406     409,908     13,722,851  
 

Chief Executive Officer

                                                 

Patrick D. Campbell

   
2009
   
762,600
   
972,032
   
1,059,032
   
701,958
   
905,716
   
88,510
   
4,489,848
 
 

Senior Vice President

    2008     757,050     987,222     785,916     601,473     1,310,462     90,138     4,532,261  
 

and Chief Financial

    2007     728,900     0     1,095,100     1,075,266     834,143     86,952     3,820,361  
 

Officer

                                                 

Inge G. Thulin

   
2009
   
594,000
   
700,021
   
854,148
   
558,439
   
697,638
   
126,870
   
3,531,116
 
 

Executive Vice

    2008     580,500     2,721,181     803,516     482,683     1,070,885     61,207     5,719,972  
 

President, International

    2007     522,000     0     828,677     797,623     422,288     62,303     2,632,891  
 

Operations

                                                 

Jean Lobey

   
2009
   
530,400
   
700,021
   
764,036
   
571,304
   
422,152
   
445,671
   
3,433,584
 
 

Executive Vice

    2008 (6)                            
 

President, Safety,

    2007 (6)                            
 

Security and Protection

                                                 
 

Services Business

                                                 

Bradley T. Sauer

   
2009
   
572,400
   
700,021
   
970,097
   
571,713
   
465,302
   
74,265
   
3,353,798
 
 

Executive Vice

    2008     564,300     2,721,181     694,907     493,588     803,447     53,314     5,330,737  
 

President, Health Care

    2007 (6)                            
 

Business

                                                 
   

FOOTNOTES TO SUMMARY COMPENSATION TABLE

        (1)   The amounts in the Stock Awards column reflect the aggregate grant date fair value of such Awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation. The amounts reported for the years 2007 and 2008 do not match the amounts reported in last year's proxy, due to the new reporting requirements adopted by the SEC in late 2009, which require the Company to restate the amounts for these years applying the new grant date fair value methodology. Assumptions made in the calculation of these amounts are included in Note 16 to the Company's audited financial statements for the fiscal year ended December 31, 2009, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 16, 2010.

        (2)   The amounts in the Option Awards column reflect the aggregate grant date fair value of such Awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation. The amounts reported for the years 2007 and 2008 do not match the amounts reported in last year's proxy, due to the new reporting requirements adopted by the SEC in late 2009, which require the Company to restate the amounts for these years applying the new grant date fair value methodology. Assumptions made in the calculation of these amounts are included in Note 16 to the Company's audited financial statements for the fiscal year ended December 31, 2009, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 16, 2010.

        (3)   The amounts in the Non-Equity Incentive Plan Compensation column reflect the annual incentive compensation earned during 2009 under the Company's Executive Annual Incentive Plan. As noted in the Compensation Discussion and Analysis, no amounts were earned during 2009 with respect

55


Table of Contents


to the Performance Unit Plan awards for the three-year performance period ended December 31, 2009. The amounts reported for 2008 include a corrective payment made in August 2009 with respect to the Performance Unit Plan awards for the three-year performance period ended December 31, 2008.

        (4)   The amounts in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column reflect the actuarial increase in the present value of each individual's pension benefits under all defined benefit pension plans of the Company, determined using the same interest rate and mortality assumptions as those used for financial statement reporting purposes. See Note 11 to the Company's audited financial statements for the fiscal year ended December 31, 2009, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 16, 2010. There were no above-market earnings on deferred compensation under the Company's nonqualified deferred compensation programs.

        (5)   See the All Other Compensation table below for details.

        (6)   No amounts are reported for Mr. Lobey for the years 2008 and 2007 or for Mr. Sauer for the year 2007 since they were not Named Executive Officers of the Company for those years.


All Other Compensation Table

   
2009 All Other Compensation  
 
  401(k)
Company
Match
(1)
  VIP Excess
Company
Match(2)
  Executive
Life
Insurance(3)
  Financial
Planning
  Personal
Aircraft
Use(4)
  Security
Systems/
Services(5)
  Relocation
(6)
  Personal
Auto
Use(7)
  Tax
Gross
Ups(8)
  3M
Products
(9)
  Total  

George W. Buckley

  $ 10,350   $ 66,375   $ 0   $ 13,864   $ 145,157   $ 35,231   $ 0   $ 50,607   $ 0   $ 705   $ 322,289  

Patrick D. Campbell

   
10,853
   
0
   
63,152
   
14,273
   
0
   
0
   
0
   
0
   
0
   
232
   
88,510
 

Inge G. Thulin

   
8,820
   
17,820
   
86,509
   
13,230
   
0
   
0
   
0
   
0
   
0
   
491
   
126,870
 

Jean Lobey

   
11,025
   
19,890
   
61,504
   
12,856
   
0
   
0
   
329,364
   
9,192
   
1,812
   
28
   
445,671
 

Bradley T. Sauer

   
8,820
   
17,172
   
34,973
   
13,230
   
0
   
0
   
0
   
0
   
0
   
70
   
74,265
 
   

FOOTNOTES TO ALL OTHER COMPENSATION TABLE

        (1)   The amounts shown reflect 3M matching contributions under the tax-qualified 3M Voluntary Investment Plan and Employee Stock Ownership Plan. All eligible employees under this Plan may receive 3M matching contributions on their pre-tax contributions to the Plan on up to six percent of their eligible pay.

        (2)   The amounts shown reflect 3M matching contributions under the non-qualified defined contribution plan known as the VIP Excess Plan. Eligibility for this plan and its matching contributions is limited to employees whose compensation exceeds a limit established by Federal income tax law for qualified defined contribution plans.

        (3)   The amounts shown reflect the amount of premiums paid by the Company on behalf of each individual with respect to their respective whole life or universal life insurance policies obtained for them under the Executive Life Insurance Plan.

        (4)   This amount reflects the aggregate incremental cost to the Company for Mr. Buckley's personal use of corporate aircraft during 2009. This aggregate incremental cost was calculated by combining the variable operating costs of such travel, including the cost of fuel, landing fees, on-board catering, and crew travel expenses.

        (5)   This amount reflects the expenses paid by 3M during 2009 for monitoring service fees and for services and materials needed to complete several projects improving the personal security of Mr. Buckley and his family at their residences.

56


Table of Contents

        (6)   This amount reflects relocation expenses paid by 3M during 2009 in connection with Mr. Lobey's assignment to Belgium, pursuant to the Company's relocation policy for such assignments. The expenses include the cost of moving household goods, reimbursing the loss on sale of his home, closing costs upon the sale of his home, a home sale bonus, visa/passport fees, travel expenses for a home finding trip, a resettlement allowance, residence permits, and tax equalization.

        (7)   This amount reflects the aggregate incremental cost to the Company for personal use of Company-provided automobiles and local ground transportation. These costs include lease payments (or the amortized purchase cost) for the vehicles, fuel, insurance premiums, and maintenance.

        (8)   This amount reflects additional compensation paid by the Company for the purpose of reimbursing Mr. Lobey for the income taxes payable with respect to income imputed to him as a result of the Company's payment of certain relocation expenses as well as in connection with tax equalization payments.

        (9)   These amounts reflect the aggregate incremental cost to the Company of providing certain 3M products to the individuals for their personal use.

2009 Grants of Plan-Based Awards Table

   
 
   
   
   
  All
Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
  All
Other
Option
Awards:
Number of
Securities
Underlying
Obligations
(#)(2)
   
   
 
 
   
  Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)   Exercise
or Base
Price of
Option
Awards
($/sh)(3)
  Grant
Date Fair
Value of
Stock and
Option
Awards ($)(4)
 
Name
  Grant
Date
  Target
($)
  Maximum
($)
 

George W. Buckley

    n/a     2,795,000     8,280,000                          

    02/09/09                       289,044     54.11     3,757,572  

    03/12/09                 226 (5)               10,830  

    06/12/09                 178 (5)               10,876  

    09/12/09                 147 (5)               10,913  

    12/12/09                 134 (5)               10,943  

    02/09/09                 72,261 (6)               3,910,043  

    09/01/09                 5,420 (7)               380,050  

Patrick D. Campbell

   
n/a
   
508,400
   
8,280,000
                         

    02/09/09                       81,464     54.11     1,059,032  

    02/09/09                 17,964 (6)               972,032  

Inge G. Thulin

   
n/a
   
396,000
   
8,280,000
                         

    02/09/09                       59,584     54.11     774,592  

    08/11/09                       6,073     71.34     79,556  

    02/09/09                 12,937 (6)               700,021  

Jean Lobey

    n/a     353,600     8,280,000                          

    02/09/09                       58,772     54.11     764,036  

    02/09/09                 12,937 (6)               700,021  

Bradley T. Sauer

   
n/a
   
381,600
   
8,280,000
                         

    02/09/09                       59,216     54.11     769,808  

    10/27/09                       14,215     76.00     200,289  

    02/09/09                 12,937 (6)               700,021  
   

FOOTNOTES TO GRANTS OF PLAN-BASED AWARDS TABLE

        (1)   The amounts shown as the Estimated Future Payouts Under Non-Equity Incentive Plan Awards reflect the target and maximum amounts that may be earned by each individual during 2009 under the Executive Annual Incentive Plan. This Plan establishes a maximum amount of annual incentive compensation that may be earned by each covered executive during a plan year, which for each of the Named Executive Officers was one-quarter of one percent of the Company's adjusted net income for

57


Table of Contents


2009, and then provides the Compensation Committee with the discretion to pay each covered executive less than this maximum amount based on such factors as it deems relevant. These factors include, but are not limited to, individual performance, each individual's target annual incentive, and the performance of the Company and its business units as measured by the three metrics used to determine payouts under the Company's broad-based annual incentive plan (see "Elements of the Compensation Program — Short-term incentive" in the Compensation Discussion and Analysis of this proxy statement). While the Committee considers and is guided by the amounts that would be payable under the annual incentive plan (based on the performance of 3M and its business units) if the Named Executive Officers were covered by such plan, it is not bound by these results and may exercise its discretion to pay different amounts.

        (2)   The amounts shown as the All Other Option Awards reflect the numbers of nonqualified stock options granted to each individual during 2009 under the 2008 Long-Term Incentive Plan. The options granted on February 9, 2009, were part of the Company's annual grant of stock options to the approximately 5,000 employees participating in the Plan. The options granted to Mr. Sauer on October 27, 2009, and to Mr. Thulin on August 11, 2009, represent progressive stock options (commonly referred to as a reloads) issued upon their exercise (via a stock swap, using shares of 3M common stock already owned by the optionee) of nonqualified options granted under pre-2005 versions of the Management Stock Ownership Program which provided for the receipt of such reloads when the optionee makes payment of the exercise price in shares of the Company's common stock. 3M offered progressive stock options with respect to nonqualified stock options granted before May 2005 to encourage executives to acquire and accumulate actual shares of 3M common stock by exercising their stock options early rather than holding such options until the end of their term and then immediately selling the shares acquired upon exercise. Stock options granted by the Company since May 2005 have not been eligible for the grant of new progressive stock options upon their exercise.

        (3)   The exercise price for all stock options granted under the Company's equity plans is set at the fair market value of a share of 3M common stock on the option grant date (as required by the provisions of the 2008 Long-Term Incentive Plan). As provided in the plan documents for these plans, the fair market value of a share of 3M common stock is computed as the closing price at which 3M common stock traded on the New York Stock Exchange on the applicable date.

        (4)   The amounts in the Grant Date Fair Value of Stock and Option Awards column were determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation. Assumptions made in the calculation of these amounts are included in Note 16 to the Company's audited financial statements for the fiscal year ended December 31, 2009, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 16, 2010.

        (5)   These amounts reflect additional grants of restricted stock units to Mr. Buckley in lieu of dividend equivalents on a portion of his outstanding restricted stock units, as required by his employment agreement.

        (6)   These amounts reflect the number of restricted stock units granted to each individual during 2009 under the 2008 Long-Term Incentive Plan. As discussed in the Compensation Discussion and Analysis, the restricted stock units grants granted on February 9, 2009, were made to replace the portion of each individual's annual long-term incentive compensation normally provided in the form of performance shares. These restricted stock units vest three years following the grant date assuming continued employment.

        (7)   This one-time grant of restricted stock units was made to Mr. Buckley in performance of the Company's obligation to pay him $95,000 in annual life insurance premiums for the years 2009-2012 under his employment agreement.

58


Table of Contents


ADDITIONAL INFORMATION REGARDING THE EMPLOYMENT
AGREEMENTS OF THE NAMED EXECUTIVE OFFICERS

        Some of the grants and compensation reflected in the above tables are a direct result of the employment agreements that the Company has entered into with two of the Named Executive Officers. The following summary identifies the material terms of these agreements that impacted the compensation of, and grants to, these individuals during 2009.

George W. Buckley

        3M has entered into an employment agreement with George W. Buckley providing for his employment as President and Chief Executive Officer of the Company and for his election as Chairman of the Board of Directors of 3M. The agreement became effective December 6, 2005, and has an initial term of three years. Beginning on December 6, 2006, the agreement automatically extends itself so that the remaining term of the agreement is always two years. However, the term will end on Mr. Buckley's 65th birthday (February 23, 2012) unless the parties otherwise agree. The Company and Mr. Buckley have amended the agreement on several occasions, and this summary reflects the agreement as amended.

        The agreement requires that Mr. Buckley receive an annual base salary of $1,600,000. This base salary will be reviewed at least annually and may be increased by the Compensation Committee of the Board, but may not be decreased without Mr. Buckley's consent. The agreement also requires that Mr. Buckley be eligible to participate in the Company's Executive Profit Sharing Plan (subsequently replaced by the Executive Annual Incentive Plan), with a target annual bonus which is the greater of $2,600,000 and 150 percent of his annual base salary.

        Pursuant to the agreement, the Company granted to Mr. Buckley nonqualified options to purchase 250,000 shares of 3M common stock at the fair market value of a share of 3M common stock on the effective date of such agreement ($78.15). These options have a ten-year term, and become exercisable in increments of 20 percent on each of the first five anniversaries of the grant date assuming continued employment with the Company. These options become vested and exercisable in full upon Mr. Buckley's death or termination due to disability, upon a termination of his employment by the Company without Cause, upon a termination of his employment by Mr. Buckley for Good Reason, or upon a change in control of the Company.

        Pursuant to the agreement, Mr. Buckley was also granted as of the agreement's effective date 50,000 restricted stock units with respect to shares of 3M common stock. These restricted stock units will vest in increments of 20 percent on each of the first five anniversaries of the grant date assuming continued employment with the Company. Dividend equivalents in the form of additional restricted stock units will be provided during the vesting period. These restricted stock units become vested in full upon Mr. Buckley's death or termination due to disability, upon a termination of his employment by the Company without Cause, upon a termination of his employment by Mr. Buckley for Good Reason, or upon a change in control of the Company. Mr. Buckley may not sell or otherwise dispose of the shares of 3M common stock received upon the vesting of these restricted stock units (except as required to pay withholding taxes) prior to the termination of his employment without the consent of the Compensation Committee of the Board.

        In order to replace the unvested restricted stock units that he forfeited as a result of leaving his previous employer, the agreement required the Company to grant Mr. Buckley (on the effective date of the agreement) 157,808 restricted stock units with respect to shares of 3M common stock. Twenty-five thousand of these restricted stock units vested on December 31, 2006, and the remaining 132,808 restricted stock units will vest on December 6, 2010, assuming continued employment with the Company. Dividend equivalents in the form of cash will be paid to Mr. Buckley during the vesting period. These restricted stock units become vested in full upon Mr. Buckley's death or termination due to

59


Table of Contents


disability, upon a termination of his employment by the Company without Cause, upon a termination of his employment by Mr. Buckley for Good Reason, or upon a change in control of the Company. Mr. Buckley may not sell or otherwise dispose of the shares of 3M common stock received upon the vesting of these restricted stock units (except as required to pay withholding taxes) prior to the termination of his employment without the consent of the Compensation Committee of the Board.

        As amended, the agreement gives Mr. Buckley (while he remains employed by the Company) the right to have the Company purchase one of his residences in Illinois or Minnesota at its then prevailing value (to be determined by an appraiser mutually agreeable to both parties) if he is unable to complete the sale of such residence within 120 days after electing to exercise this right.

        The agreement provides that Mr. Buckley will be eligible for the same perquisites that the Company makes available to its other senior executives. Mr. Buckley, along with members of his family and invited guests, is allowed to use the aircraft owned by the Company for personal travel. The Company will provide Mr. Buckley with an automobile and driver for travel in the Minneapolis-St. Paul area, and with an additional luxury automobile for which the Company will pay all insurance, maintenance, gasoline, and other operating expenses. The Company will provide appropriate security at Mr. Buckley's personal residences.

        The agreement provides that Mr. Buckley will earn a supplemental retirement benefit payable in the form of an annuity over his lifetime (or, if he so chooses, in the form of an annuity payable over his lifetime and the lifetime of a joint annuitant) beginning following his termination of employment. The amount of this benefit will be the amount by which (a) a single life annuity payable for Mr. Buckley's lifetime commencing at age 60 (or, if later, on the date of his termination of employment) equal to 40 percent of his highest average annual cash compensation (base salary plus bonus) during any three consecutive years during his final ten years of employment (but not less than a minimum amount of $4,200,000), exceeds (b) the sum of his actual pension benefits payable at age 60 (or, if later, on the date of his termination of employment) under the plans of the Company and his previous employers. The benefit formula for this supplemental retirement benefit increases by 2 percent (from 40 percent) for each full year following Mr. Buckley's 60th birthday that he remains employed by the Company, up to a maximum of 50 percent. This supplemental retirement benefit vests in full on December 6, 2010, upon Mr. Buckley's death or termination due to disability, upon a termination of his employment by the Company without Cause, or upon a termination of his employment by Mr. Buckley for Good Reason. In the event that the payments of this supplemental retirement benefit received by Mr. Buckley prior to his death (or by Mr. Buckley and his joint annuitant prior to their deaths) are less than the actuarially equivalent lump-sum value of such annuity payments determined at the time the payments commence, the Company will pay in a lump sum to his beneficiary (or to Mr. Buckley's estate, if the beneficiary is deceased) the amount by which such actuarially equivalent lump-sum value exceeds the amount of payments received prior to his death (or prior to the deaths of Mr. Buckley and his joint annuitant).

Patrick D. Campbell

        3M entered into an employment agreement with Patrick D. Campbell at the time he was hired to serve as the Senior Vice President and Chief Financial Officer of the Company. While most of this agreement's terms expired on the third anniversary of his employment commencement date (February 1, 2005), several of its provisions survived and remain in effect today. The Company and Mr. Campbell amended the agreement during 2008, and this summary reflects the agreement as amended.

        The agreement requires the Company to provide Mr. Campbell supplemental retirement benefits payable in the form of a lump sum following the termination of his employment. If he remains employed by 3M for at least ten years, the amount of this lump sum will be the actuarially equivalent present value of an annuity payable for his lifetime commencing at age 60 and based on 45 percent of his highest

60


Table of Contents


average annual compensation (base salary plus profit sharing or annual incentive) over a four-year period. If Mr. Campbell is employed by 3M for less than ten years, the amount of the lump sum and the lifetime annuity upon which the lump sum is based will be prorated accordingly (proration would reduce these amounts by a percentage determined by dividing the number ten less the number of years he was employed by 3M by the number ten). The amount of such benefits will be reduced by the amount of his benefits under 3M's other pension plans and the pension plans of his prior employer. Since Mr. Campbell has completed more than five years of employment with the Company, these supplemental retirement benefits are fully vested.

61


Table of Contents


        2009 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

   
 
  Option Awards
  Stock Awards
   
   
 
   
Name
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

  Option
Exercise
Price ($)

  Option
Expiration
Date

  Number of
Shares or
Units of Stock
That Have Not
Vested (#)

  Market Value
of Shares or
Units of Stock
That Have Not
Vested ($)

  Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)

  Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)

 
   

George W. Buckley

                                        10,842 (11)   896,308  

    200,000     50,000 (1)   78.150     12/06/2015                          

    286,807           87.350     05/09/2016                          

    124,557     64,167 (2)   84.780     05/08/2017                          

    73,422     146,846 (3)   77.180     05/13/2018                          

          289,044 (4)   54.110     02/08/2019                          

                            144,248 (7)   11,924,982              

                            72,261 (8)   5,973,817              

                            4,065 (9)   336,054              

Patrick D. Campbell

                                        2,717 (11)   224,614  

    9,395           55.975     02/01/2012                          

    40,000           64.500     05/14/2012                          

    44,000           61.850     05/13/2013                          

    64,873           84.400     05/09/2014                          

    7,289           80.950     02/01/2012                          

    71,185           76.800     05/08/2015                          

    73,000           87.350     05/09/2016                          

    29,959     15,434 (2)   84.780     05/08/2017                          

    19,671           89.650     02/01/2012                          

    17,155     34,313 (3)   77.180     05/13/2018                          

          81,464 (4)   54.110     02/08/2019                          

                            17,585 (8)   1,453,752              

Inge G. Thulin

                                        1,985 (11)   164,100  

    1,704           58.625     05/06/2011                          

    14,096           58.625     05/06/2011                          

    36,000           64.500     05/14/2012                          

    34,000           61.850     05/13/2013                          

    56,114           84.400     05/09/2014                          

    67,975           76.800     05/08/2015                          

    52,000           87.350     05/09/2016                          

    30,200     15,558 (2)   84.780     05/08/2017                          

    16,930     33,862 (3)   77.180     05/13/2018                          

          59,584 (4)   54.110     02/08/2019                          

          6,073 (5)   71.340     05/07/2010                          

                            25,481 (10)   2,106,514              

                            12,664 (8)   1,046,945              

Jean Lobey

                                        1,985 (11)   164,100  

    5,254           43.350     05/07/2010                          

    14,096           58.625     05/06/2011                          

    1,704           58.625     05/06/2011                          

    16,590           64.500     05/14/2012                          

    17,380           61.850     05/13/2013                          

    18,762           84.400     05/09/2014                          

    39,037           76.800     05/08/2015                          

    47,000           87.350     05/09/2016                          

    21,252     10,948 (2)   84.780     05/08/2017                          

    12,542     25,086 (3)   77.180     05/13/2018                          

          58,772 (4)   54.110     02/08/2019                          

                            12,687 (8)   1,048,834              

Bradley T. Sauer

                                        1,985 (11)   164,100  

    20,600           64.500     05/14/2012                          

    25,866           61.850     05/13/2013                          

    40,000           84.400     05/09/2014                          

    1,228           77.200     05/07/2010                          

    63,122           76.800     05/08/2015                          

    470           75.200     05/06/2011                          

    879           75.200     05/07/2010                          

    52,000           87.350     05/09/2016                          

    4,892           87.500     05/06/2011                          

    25,726     13,253 (2)   84.780     05/08/2017                          

    1,497           88.650     05/13/2013                          

    5,599           88.650     05/06/2011                          

    15,169     30,339 (3)   77.180     05/13/2018                          

          59,216 (4)   54.110     02/08/2019                          

          14,215 (6)   76.000     05/13/2013                          

                            25,481 (10)   2,106,514              

                            12,937 (8)   1,069,502              

62


Table of Contents

FOOTNOTES TO OUTSTANDING EQUITY AWARDS
AT FISCAL YEAR-END TABLE

        (1)   These stock options vest in full on December 6, 2010.

        (2)   These stock options vest in full on May 8, 2010.

        (3)   These stock options vest in installments of one-half on May 13, 2010, and May 13, 2011.

        (4)   These stock options vest in installments of one-third on each of February 8, 2010, February 8, 2011, and February 8, 2012.

        (5)   As progressive stock options, these options vest in full on February 11, 2010 (6 months following the grant date).

        (6)   As progressive stock options, these options vest in full on April 27, 2010 (6 months following the grant date).

        (7)   These restricted stock units vest in full on December 6, 2010.

        (8)   These restricted stock units vest in full on February 9, 2012.

        (9)   These restricted stock units vest in installments of one-third on each of December 31, 2010, December 31, 2011, and the earlier of December 31, 2012, or Mr. Buckley's last day of employment with the Company.

        (10) These restricted stock units vest in full on March 3, 2012.

        (11) The shares of 3M common stock to be delivered as a result of the Company's performance over the three-year performance period ending December 31, 2010, will not vest until December 31, 2010. Under the terms of the 3M Performance Unit Plan, these shares of 3M common stock will be delivered no later than March 15, 2011.


        2009 OPTION EXERCISES AND STOCK VESTED TABLE

   
 
  Option Exercises and Stock Vested
 
   
 
  Option Awards   Stock Awards  
Name
  Number of Shares
Acquired on
Exercise (#)
  Value Realized
on Exercise ($)
  Number of Shares
Acquired on
Vesting (#)
  Value Realized
on Vesting ($)
 

George W. Buckley

    0     0     12,521     979,709  

Patrick D. Campbell

    0     0     379     28,143  

Inge G. Thulin

    4,144     295,574     5,198     407,520  

Jean Lobey

    0     0     3,113     243,696  

Bradley T. Sauer

    3,027     229,980     3,987     181,249  

63


Table of Contents


        PENSION BENEFITS

        The following table shows the present value of the accumulated benefits payable to each of the Named Executive Officers, as well as the number of years of service credited to each individual, under each of the Company's defined benefit pension plans (including any supplemental arrangements pursuant to their employment agreements) determined using the same interest rate and mortality assumptions as those used for financial statement reporting purposes. See Note 11 to the Company's audited financial statements for the fiscal year ended December 31, 2009, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 16, 2010.

   
 
  2009 Pension Benefits Table
 
   
Name
  Plan Name   Number
of Years
Credited
Service (#)
  Present
Value of
Accumulated
Benefits ($)
  Payments
During
Last
Fiscal
Year ($)
 
George W. Buckley   Employee Retirement Income Plan     4     158,572     0  
    Nonqualified Pension Plan     4     3,171,671     0  
    Supplemental Retirement Plan     4     8,853,142     0  

Patrick D. Campbell

 

Employee Retirement Income Plan

 

 

7

 

 

241,064

 

 

0

 
    Nonqualified Pension Plan     7     1,412,772     0  
    Supplemental Retirement Plan     7     2,639,202     0  

Inge G. Thulin

 

Employee Retirement Income Plan

 

 

30

 

 

883,610

 

 

0

 
    Nonqualified Pension Plan     30     3,198,323     0  

Jean Lobey

 

Employee Retirement Income Plan

 

 

33

 

 

223,042

 

 

0

 
    Nonqualified Pension Plan     33     2,281,303     0  

Bradley T. Sauer

 

Employee Retirement Income Plan

 

 

27

 

 

578,503

 

 

0

 
    Nonqualified Pension Plan     27     2,225,977     0  

        The Employee Retirement Income Plan ("ERIP") is a tax-qualified defined benefit pension plan maintained by 3M for its eligible employees in the United States. Effective January 1, 2001, the Company amended the ERIP to include a pension equity formula for (1) employees hired or rehired on or after January 1, 2001, and (2) employees who voluntarily elected the pension equity formula during the one-time choice election period in 2001. Of the Named Executive Officers, Mr. Thulin and Mr. Sauer participate under the non-pension equity formula of the ERIP (the Portfolio I Plan), while Mr. Buckley, Mr. Campbell, and Mr. Lobey participate under the pension equity formula of the ERIP (the Portfolio II Plan). Retirement benefits under the ERIP are based on an employee's years of service and average annual earnings during the employee's four highest-paid consecutive years of service. As applied to the Named Executive Officers, earnings for purposes of the ERIP include base salary, profit sharing, and annual incentive compensation.

        Under the Portfolio I Plan, employees earn annual benefits payable at retirement generally equal to 1.15 percent of their high-four average annual earnings multiplied by their years of service plus 0.35 percent of their high-four average annual earnings in excess of a Social Security breakpoint multiplied by their years of service (up to a maximum of 35 years). The Social Security breakpoint is an average of the Social Security taxable wage bases for each of the 35 years ending with the year each employee qualifies for receiving unreduced Social Security retirement benefits. Under the Portfolio I Plan, an employee may retire with an unreduced pension at age 60 (61 or 62 for employees born after 1942) and if the employee's age and service at the time of retirement total at least 90 (91 or 92 for employees born after 1942) the employee would receive a Social Security bridge payment until age 62.

64


Table of Contents

Mr. Thulin is eligible to retire with reduced early retirement benefits under the Portfolio I Plan, with the reduction being equal to 5 percent of the pension otherwise payable for each year that he retires prior to age 61.

        Under the Portfolio II Plan, employees earn pension credits (from 3 percent to 12 percent) for each year of employment based on their age and accumulated years of service under the Plan. Once their employment ends, these accumulated pension credits are multiplied by their high-four average annual earnings and added to an amount determined by multiplying one-half of these accumulated pension credits by their high-four average annual earnings in excess of a Social Security integration level (70 percent of the Social Security taxable wage base in the year employment ends). The sum of these two amounts is then converted into an annuity payable over the lifetime of the employee using fixed conversion factors. The Portfolio II Plan does not provide any subsidies for early retirement.

        As a tax-qualified plan, the ERIP is subject to a variety of limits that apply to both the amount of any employee's earnings that may be considered when determining the benefits earned under the plan as well as the maximum amount of benefits that any employee may earn. The Nonqualified Pension Plan is designed to provide additional benefits to employees, including the Named Executive Officers, affected by these limits. The amount of benefits earned under this Nonqualified Pension Plan generally equal the amount of benefits an employee was not able to earn under the ERIP as a result of the limits imposed by Federal tax laws. The benefits earned under this Nonqualified Pension Plan are generally paid in the form of a single lump-sum cash payment following the termination of their employment (subject to any applicable delay under Federal tax laws). Current employees were given a one-time opportunity during 2008 to elect to receive their benefits earned under this Nonqualified Pension Plan in the form of a life annuity following their retirement, and both Mr. Buckley and Mr. Lobey did make this election to receive their benefits in the form of a life annuity.

        Mr. Buckley and Mr. Campbell also earn supplemental retirement benefits pursuant to their employment agreements with the Company. These supplemental benefits, which were negotiated at the time they agreed to leave their previous employers and join 3M, are designed to replace the pension benefits they failed to earn under the plans of their previous employers because their accrued benefits under those plans do not grow with future increases in compensation. These supplemental benefits are described in detail in the section titled "Additional Information Regarding the Employment Agreements of the Named Executive Officers" following the Grants of Plan-Based Awards Table.

65


Table of Contents


        NONQUALIFIED DEFERRED COMPENSATION

        The following table reflects the participation during 2009 by the Named Executive Officers in two nonqualified deferred compensation plans offered by the Company. The Deferred Compensation Plan allows eligible employees to defer for a number of years or until retirement from the Company the receipt of base salary, profit sharing, annual incentive compensation, and Performance Unit Plan award payouts. The VIP Excess Plan allows eligible employees to defer until retirement from the Company the receipt of base salary, profit sharing, and annual incentive compensation. Earnings are credited to the amounts deferred under both plans based on the returns paid on the investment funds available to participants in 3M's qualified 401(k) plan or a fixed rate of return based on corporate bond yields (as selected by each participant).

   
2009 Nonqualified Deferred Compensation Table  
Name
  Executive
Contributions
in Last FY ($)(1)
  Registrant
Contributions
in Last FY ($)(2)
  Aggregate
Earnings in
Last FY ($)(3)
  Aggregate
Withdrawals/
Distributions ($)
  Aggregate
Balance at Last
FYE ($)(4)
 

George W. Buckley

    1,818,355     66,375     1,788,986     0     6,221,573  

Patrick D. Campbell

   
0
   
0
   
99,909
   
0
   
583,683
 

Inge G. Thulin

   
29,700
   
17,820
   
925
   
0
   
48,445
 

Jean Lobey

   
30,940
   
19,890
   
4,417
   
0
   
55,247
 

Bradley T. Sauer

   
28,620
   
17,172
   
911
   
0
   
56,431
 

FOOTNOTES TO NONQUALIFIED DEFERRED COMPENSATION TABLE

        (1)   All amounts contributed by these individuals during 2009 have been included in the Summary Compensation Table as Salary or Non-Equity Incentive Plan Compensation earned in 2008 or 2009.

        (2)   All amounts contributed by the Company on behalf of these individuals during 2009 are included in the "All Other Compensation" column of the Summary Compensation Table.

        (3)   None of these amounts are included in the Summary Compensation Table as compensation earned in 2009.

        (4)   Of the amounts reported in this column, $3,820,969 of Mr. Buckley's balance at the end of 2009 and $112,088 of Mr. Campbell's balance at the end of 2009 were reported previously as compensation in the Company's Summary Compensation Tables for prior years.

66


Table of Contents


        POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

        The Company has entered into employment agreements with two of the Named Executive Officers that will require it to make payments to these individuals in the event of the termination of their employment or change in control of the Company. In addition, many of the Company's executive compensation, benefit, and deferred compensation plans provide the Named Executive Officers with certain rights or the right to receive payments in the event of the termination of their employment or upon a change in control of the Company. The amounts payable to each of the Named Executive Officers in each situation is reflected in the following table, assuming that each individual's employment had terminated or a change in control of the Company had occurred on December 31, 2009. As of December 31, 2009, Mr. Campbell, Mr. Lobey, and Mr. Thulin were eligible to retire under the Company's pension plans.

   
2009 Potential Payments upon Termination or Change in Control Table  
Name
  Triggering Event   Cash
Severance ($)(1)
  Outstanding
PUP
Awards ($)(2)
  Vested
Restricted
Stock/RSUs ($)(3)
  Vested
Options ($)(4)
  Supplemental
Pension ($)(5)
  Life
Insurance
Proceeds ($)(6)
 

George W. Buckley

 

Resignation without Good Reason/ Termination for Cause

    0     0     0     0     3,330,243 (10)   0  

 

Resignation for Good Reason/Non-Cause Termination

    9,057,349 (7)   0     11,924,991 (9)   226,000 (9)   12,183,385 (10)   0  

 

Change in Control

    0     806,677     18,234,861     9,287,281     3,171,671     0  

 

Death

    0     4,481,541     18,234,861     9,287,281     12,183,385     0  

 

Disability

    0     0     18,234,861     9,287,281     12,183,385 (10)   0  

Patrick D. Campbell

 

Resignation without Good Reason/Termination for Cause

   
0
   
0
   
0
   
0
   
4,351,271

(11)
 
0
 

 

Resignation for Good Reason/Non-Cause Termination

    1,271,000 (8)   0     0     0     4,351,271 (11)   0  

 

Change in Control

    0     202,153     1,453,762     2,514,990     1,412,772     0  

 

Death

    0     1,123,072     1,453,762     2,514,990     4,496,985 (12)   2,777,165  

 

Disability

    0     0     1,453,762     2,514,990     4,351,271 (11)   0  

Inge G. Thulin

 

Resignation without Good Reason/Termination for Cause

   
0
   
0
   
0
   
0
   
4,081,933

(13)
 
0
 

 

Resignation for Good Reason/Non-Cause Termination

    0     0     0     0     4,081,933 (13)   0  

 

Change in Control

    0     147,675     3,153,459     1,956,429     3,198,323     0  

 

Death

    0     820,417     3,153,459     1,956,429     2,040,966 (14)   1,907,640  

 

Disability

    0     0     3,153,459     1,956,429     4,081,933 (13)   0  

Jean Lobey

 

Resignation without Good Reason/Termination for Cause

   
0
   
0
   
0
   
0
   
2,504,345

(15)
 
0
 

 

Resignation for Good Reason/Non-Cause Termination

    0     0     0     0     2,504,345 (15)   0  

 

Change in Control

    0     147,675     1,048,825     1,816,250     2,281,303     0  

 

Death

    0     820,417     1,048,825     1,816,250     2,504,345 (16)   1,810,700  

 

Disability

    0     0     1,048,825     1,816,250     2,504,345 (15)   0  

Bradley T. Sauer

 

Resignation without Good Reason/Termination for Cause

   
0
   
0
   
0
   
0
   
2,804,480

(17)
 
0
 

 

Resignation for Good Reason/Non-Cause Termination

    0     0     0     0     2,804,480 (17)   0  

 

Change in Control

    0     147,675     3,176,016     1,952,584     2,225,977     0  

 

Death

    0     820,417     3,176,016     1,952,584     1,402,240 (18)   1,682,416  

 

Disability

    0     0     3,176,016     1,952,584     2,804,480 (17)   0  

67


Table of Contents

FOOTNOTES TO POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE IN CONTROL TABLE

        (1)   The amounts in this column reflect the amount of cash severance the Company would be obligated to pay these individuals pursuant to their employment agreements, as described below.

        (2)   The amounts in this column reflect the pro rata value of awards under the Performance Unit Plan for which the three-year performance period has not been completed, and the value of awards under the Performance Unit Plan for which the three-year performance period has been completed but which have not been paid out, and which would be paid upon the occurrence of the respective triggering events in accordance with the provisions of the Plan.

        (3)   The amounts in this column reflect the value of unvested 3M restricted stock or restricted stock units that would vest upon the occurrence of the respective triggering events in accordance with the provisions of the Management Stock Ownership Program, the Long-Term Incentive Plan, or the individual's employment agreement. Share values are based on the closing market price of 3M common stock on December 31, 2009 ($82.67).

        (4)   The amounts in this column reflect the spread value on December 31, 2009, of unvested, in-the-money 3M stock options that will vest upon the occurrence of the respective triggering events in accordance with the provisions of the Management Stock Ownership Program, the Long-Term Incentive Plan, or the individual's employment agreement. Spread values are based on the closing market price of 3M common stock on December 31, 2009 ($82.67).

        (5)   The amounts in this column reflect the present value of accumulated benefits under 3M's Employee Retirement Income Plan, 3M's Nonqualified Pension Plan and/or the individual's supplemental retirement arrangement based on such individual's employment agreement that would be paid to, or on behalf of, each individual upon the occurrence of the respective triggering events. For additional information regarding the terms of the Nonqualified Pension Plan or those individual supplemental retirement arrangements, see the explanation following the Pension Benefits Table and the summaries of these employment agreements in the section entitled "Additional Information Regarding the Employment Agreements of the Named Executive Officers," following the Grants of Plan-Based Awards Table. Except as noted, all of these amounts would be paid in the form of a single lump-sum cash payment.

        (6)   The amounts in this column reflect the life insurance proceeds that would be payable to each individual's beneficiary or beneficiaries pursuant to the universal life insurance policies obtained for them under the Executive Life Insurance Plan.

        (7)   Of this amount, $9,030,000 would be paid in cash in the form of 24 equal monthly installments of $376,250 each. The remainder of this amount reflects the amounts the Company would need to pay or incur in order to provide continued medical ($19,840), dental ($3,011), life insurance ($4,080), and accidental death & disability insurance ($418) benefits for a 24-month period following the termination of Mr. Buckley's employment, as required by his employment agreement.

        (8)   This amount would be paid in the form of a single lump-sum cash payment.

        (9)   The amounts in these columns reflect the remaining unvested 3M stock options and restricted stock units granted to Mr. Buckley at the time his employment with the Company commenced in 2005, and which would have vested upon the occurrence of the respective triggering event under the terms of his employment agreement with the Company.

        (10) This amount would be paid in the form of monthly annuity payments over the lifetime of Mr. Buckley (or over the lifetimes of Mr. Buckley and his designated beneficiary).

        (11) Of this total, $241,064 would be paid in the form of monthly annuity payments over the lifetime of Mr. Campbell (or over the lifetimes of Mr. Campbell and his designated beneficiary).

68


Table of Contents

        (12) Of this total, $241,064 would be paid in the form of monthly annuity payments over the lifetime of Mr. Campbell's surviving spouse if she elected to receive annuity payments in lieu of a single lump-sum cash payment following Mr. Campbell's death.

        (13) Of this total, $883,610 would be paid in the form of monthly annuity payments over the lifetime of Mr. Thulin (or over the lifetimes of Mr. Thulin and his designated beneficiary).

        (14) Of this total, $441,805 would be paid in the form of monthly annuity payments over the lifetime of Mr. Thulin's surviving spouse.

        (15) This amount would be paid in the form of monthly annuity payments over the lifetime of Mr. Lobey (or over the lifetimes of Mr. Lobey and his designated beneficiary).

        (16) Of this total, $223,042 would be paid in the form of monthly annuity payments over the lifetime of Mr. Lobey's surviving spouse if she elected to receive annuity payments in lieu of a single lump-sum cash payment following Mr. Lobey's death.

        (17) Of this total, $578,503 would be paid in the form of monthly annuity payments over the lifetime of Mr. Sauer (or over the lifetimes of Mr. Sauer and his designated beneficiary).

        (18) Of this total, $289,251 would be paid in the form of monthly annuity payments over the lifetime of Mr. Sauer's surviving spouse.

Generally Available Compensation and Benefit Plans

        Each of 3M's Named Executive Officers is eligible to participate in and receive compensation or benefits under several plans of the Company that provide for certain payments or rights in the event of the death of the individual or a change in control of the Company. Both of the Company's deferred compensation programs, the Deferred Compensation Plan and the VIP Excess Plan (including its predecessor, the VIP Plus Plan), provide that the plans will terminate and pay out the account balances of all participants immediately following a change in control of the Company. The Performance Unit Plan provides that the plan will terminate and the Company will immediately pay out the pro rata value of all outstanding performance units immediately following a change in control of the Company (based on the higher of the value of the units for the most recently completed performance period or the value of the outstanding units as if the performance of the Company during the remainder of each respective performance period equaled its performance to the date of the change in control). The Nonqualified Pension Plan provides that, in the event of a change in control of the Company, the Plan will terminate and pay out the remaining accrued benefits of all participants in either an immediate lump-sum cash payment or through the purchase of annuity contracts designed to pay the pension benefits that would otherwise have been paid following the retirement of each participant. The Management Stock Ownership Program and the Long-Term Incentive Plan provide that all outstanding stock options, restricted stock, and restricted stock units will immediately vest in full upon a change in control of the Company. All of these plans define a change in control of the Company as an event that satisfies the requirements of the applicable regulations under Section 409A of the Internal Revenue Code.

        The amounts shown above for each of the Named Executive Officers do not include payments and benefits generally provided on a non-discriminatory basis to all similarly situated salaried employees of the Company upon the termination of their employment with the Company, including: (a) accrued salary; (b) annual incentive earned with respect to completed performance periods; (c) unused vacation benefits; (d) retiree welfare benefits provided to substantially all of the Company's U.S. employees, including retiree medical and dental benefits; (e) distributions of account balances under the Company's qualified 401(k) plan; and (f) distribution of account balances in 3M's nonqualified deferred compensation plans, as described in the 2009 Nonqualified Deferred Compensation Table.

69


Table of Contents

George W. Buckley

        Mr. Buckley's employment agreement with the Company provides that in the event the Company terminates his employment without Cause or if he terminates his employment with Good Reason, he would receive: (a) cash severance equal to two times the sum of his annual base salary and target annual bonus payable in the form of 24 equal monthly installments (or in the form of an immediate lump sum, subject to a six-month delay if required under Section 409A of the Internal Revenue Code, if the termination occurs within two years following a Change of Control of the Company); (b) a pro rata portion of the annual bonus that he would otherwise have earned for the year in which his employment so terminates; (c) if a Change of Control of the Company causes any payment upon his termination of employment to be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, a tax gross-up payment with which to pay such tax and the additional taxes payable as a result of such payment; and (d) immediate vesting of the stock options, restricted stock units, performance units, and supplemental retirement benefits provided under the agreement, and continued welfare benefits for the period that cash severance benefits are payable. No severance benefits (other than accrued salary, bonus, and benefits) are payable in the event of the termination of Mr. Buckley's employment by the Company for Cause or by Mr. Buckley without Good Reason. In the event of the termination of Mr. Buckley's employment due to his death or disability, no severance benefits are payable (other than accrued salary, bonus, and benefits, including the supplemental retirement benefits provided under the agreement) other than a pro rata portion of the annual bonus he would otherwise have earned for the year in which his employment so terminates. If any payment or other benefit provided to Mr. Buckley pursuant to his employment agreement would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, Mr. Buckley would be entitled to receive a tax gross-up payment with which to pay such tax and the additional taxes payable as a result of such payment. As a condition to receiving any cash severance, pro rata annual bonus, or supplemental retirement benefits, Mr. Buckley will sign and deliver to the Company a standard release of claims. In his employment agreement with the Company and as confirmed in the release of claims, Mr. Buckley agrees that for a period of two years following the termination of his employment he will: (1) neither employ nor seek to employ any employee of the Company or encourage them to leave the Company, and (2) neither acquire an ownership interest in or perform certain services for a competitor of the Company.

        For purposes of Mr. Buckley's employment agreement, Cause means any of the following: (i) his commission of a felony or misdemeanor involving fraud, dishonesty, or moral turpitude; (ii) his material breach of such employment agreement; (iii) willful or intentional material misconduct by Mr. Buckley in the performance of his duties; (iv) willful and intentional failure by Mr. Buckley to materially comply with a specific, written direction of the Board of Directors that is consistent with normal business practice and not inconsistent with his responsibilities under such employment agreement; (v) a material violation of the Company's conflict of interest policy; (vi) a material violation of any Company policy that would be grounds for the immediate dismissal of any senior executive of the Company; or (vii) an order or determination of any court, administrative agency, or other entity that has the effect of prohibiting Mr. Buckley from performing his responsibilities under such employment agreement. For purposes of Mr. Buckley's employment agreement, Good Reason means any of the following (unless he agrees in writing that a specific event shall not be Good Reason): (i) the Company's material breach of his employment agreement; (ii) the Company's failure to assign his employment agreement to a successor of the Company or such successor's failure to explicitly assume and agree to be bound by such agreement; (iii) a requirement that Mr. Buckley be principally based at any office or location more than 30 miles from the Company's current headquarters in St. Paul, Minnesota; or (iv) upon or following a Change of Control of the Company, the failure to nominate and elect Mr. Buckley to serve as the chief executive officer, chairman of the board, or most senior executive officer of the Company or its top-tier parent entity. For purposes of Mr. Buckley's employment agreement, a Change of Control of the Company means any of the following (unless, solely for purposes of determining whether the stock options granted to him at the time he commenced employment with the Company become vested upon

70


Table of Contents


a Change of Control of the Company, he agrees in writing that a specific event shall not be considered a Change of Control): (i) any person becomes the owner of 20 percent or more of the voting securities of the Company; (ii) the members of the Board of Directors of the Company as of December 6, 2005, and their approved successors fail to constitute at least 50 percent of the members of such Board of Directors; (iii) a merger, consolidation, or reorganization involving the Company if the beneficial owners of the Company's voting securities immediately before such transaction are not expected to own more than 50 percent of the voting power of such voting securities in the corporation resulting from such transaction; (iv) a plan or agreement for the sale or other disposition of substantially all of the assets of the Company (other than to an entity more than 50 percent owned by the Company or an entity more than 50 percent owned by the beneficial owners of the voting securities of the Company immediately before the sale or other disposition); or (v) approval of a plan of liquidation by the stockholders of the Company; provided, however, that for purposes of determining whether shares of 3M common stock or other remuneration are to be delivered to Mr. Buckley upon a Change of Control with respect to the restricted stock units or performance units granted to him pursuant to his employment agreement and for purposes of determining whether the cash severance described above shall be paid in a lump sum instead of installments on account of a termination of his employment without Cause or for Good Reason upon or prior to the second anniversary of a Change of Control, there shall not be a Change of Control unless the event that would otherwise constitute a Change of Control satisfies the requirements of the applicable regulations under Section 409A of the Internal Revenue Code.

Patrick D. Campbell

        Mr. Campbell's employment agreement with the Company provides that in the event the Company terminates his employment without Cause or if he terminates his employment with Good Reason, he would receive: (a) cash severance equal to two times the sum of his annual base salary and target annual profit sharing or annual incentive if such termination occurs within the first five years following his employment commencement date and one times the sum of his annual base salary and target annual profit sharing or annual incentive if such termination occurs more than five years but no more than ten years following his employment commencement date, (b) a period of two years following the termination date in which to exercise the stock options granted to him at the time his employment commenced and the stock options he received as his annual stock option grant for 2002, and (c) immediate vesting of the supplemental retirement benefits provided under the agreement. No severance benefits (other than accrued salary, profit sharing or annual incentive, and benefits) are payable in the event of the termination of Mr. Campbell's employment by the Company for Cause or by Mr. Campbell without Good Reason. In the event of the termination of Mr. Campbell's employment due to his death or disability, no severance benefits (other than accrued salary, profit sharing or annual incentive, and benefits, including the supplemental retirement benefits provided under the agreement) are payable. If any payment or other benefit provided to Mr. Campbell pursuant to his employment agreement would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, Mr. Campbell would be entitled to receive a tax gross-up payment with which to pay such tax and the additional taxes payable as a result of such payment. As a condition to receiving any cash severance, Mr. Campbell will sign and deliver to the Company a standard release of claims.

        For purposes of Mr. Campbell's employment agreement, Cause means any of the following: (i) his indictment on or commission of a felony or misdemeanor involving fraud, dishonesty, or moral turpitude; (ii) his material breach of such employment agreement; (iii) willful or intentional material misconduct by Mr. Campbell in the performance of his duties; or (iv) willful or intentional failure by Mr. Campbell to materially comply with a specific, written direction of the Chief Executive Officer that is consistent with normal business practice and with his responsibilities under such employment agreement. For purposes of Mr. Campbell's employment agreement, Good Reason means any of the following (unless he agrees in writing that a specific event shall not be Good Reason): (i) the Company reduces his annual planned cash compensation by more than 15 percent, (ii) his relocation to a primary work site located more than 50 miles from his then current work site, or (iii) his reassignment to a position having primary responsibilities which are significantly less than those of his immediate previous position.

71


Table of Contents


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        The members of the Compensation Committee are named in the preceding section. No members of the Compensation Committee were officers or employees of 3M or any of its subsidiaries during the year, were formerly 3M officers (except that Robert S. Morrison served as interim Chairman of the Board and Chief Executive Officer from June 30, 2005, to December 6, 2005), or had any relationship otherwise requiring disclosure.

</