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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.:
        
 
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    (4)   Date Filed:
        
 

 


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Inge G. Thulin
Chairman of the Board, President and
Chief Executive Officer

LOGO   March 25, 2015

Dear Stockholder:

        We are pleased to invite you to attend 3M's Annual Meeting of Stockholders, which will be held on Tuesday, May 12, 2015, at 10:00 a.m., Central Daylight Time at a new location at the Palmer Events Center, 900 Barton Springs Road, Austin, Texas 78704. Our Electronics and Energy Business Group is headquartered in Austin, Texas and we are excited about having our Annual Meeting in Austin for the second time. We will also provide a live webcast of the meeting.

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

        We sincerely hope you will be able to join us at the Annual Meeting. The fine attendance of our stockholders at annual meetings over the years has been very helpful in maintaining good communication. For information on how to attend the Annual Meeting, or listen to the live webcast, please read "Annual Meeting Admission" on page 1 of the accompanying 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 your proxy 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


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2015 ANNUAL MEETING OF STOCKHOLDERS

NOTICE OF 2015 ANNUAL MEETING AND PROXY STATEMENT

TABLE OF CONTENTS

Notice of 2015 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

 
2

Stockholders Entitled to Vote

 
3

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

 
4

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

 
4

Voting Methods

 
6

Changing Your Vote

 
7

Counting the Vote

 
7

Confidentiality

 
7

Results of the Vote

 
7

Delivery of Documents to Stockholders Sharing an Address

 
7

List of Stockholders

 
8

Cost of Proxy Solicitation

 
8

Transfer Agent

 
8

Governance of the Company

 
9

Corporate Governance Overview

 
9

Corporate Governance Guidelines

 
10

Executive Sessions

 
10

Board and Committee Evaluations

 
10

Board's Leadership Structure

 
10

Independent Lead Director

 
11

Communication with Directors

 
12

Director Independence

 
12

Director Nomination Process

 
13

Board's Role in Risk Oversight

 
15

3M's Codes of Conduct

 
16

Hedging and Pledging Policies

 
16

Public Policy Engagement

 
16

Commitment to the Environment and Sustainability

 
17

Related Person Transaction Policy and Procedures

 
18

Policy on Adoption of a Rights Plan

 
18

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Board and Committee Information

  19

Audit Committee

 
19

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

 
20

Fees of the Independent Accounting Firm

 
21

Audit Committee Restrictions on Hiring Employees of the Independent Accounting Firm

 
21

Audit Committee Report

 
22

Compensation Committee

 
23

Finance Committee

 
23

Nominating and Governance Committee

 
24

Director Compensation and Stock Ownership Guidelines

 
26

2014 Director Compensation Table

 
27

Proposals To Be Voted On

 
28

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

 
28

Proposal No. 2 — Ratification of the Appointment of Independent Registered Public Accounting Firm for 2015

 
32

Proposal No. 3 — Advisory Approval of Executive Compensation

 
34

Security Ownership of Management

 
35

Security Ownership of Certain Beneficial Owners

 
36

Section 16(a) Beneficial Ownership Reporting Compliance

 
37

Executive Compensation

 
38

Compensation Discussion and Analysis

 
38

Compensation Committee Report

 
56

Compensation Committee Interlocks and Insider Participation

 
56

Assessment of Risk Related to Compensation Programs

 
56

2014 Summary Compensation Table

 
57

2014 All Other Compensation Table

 
58

2014 Grants of Plan-Based Awards Table

 
60

2014 Outstanding Equity Awards at Fiscal Year-End Table

 
63

2014 Option Exercises and Stock Vested Table

 
65

Pension Benefits

 
66

Nonqualified Deferred Compensation

 
68

Potential Payments Upon Termination or Change in Control

 
69

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

 
73

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3M COMPANY

3M Center, St. Paul, Minnesota 55144

NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS

TIME AND DATE   10:00 a.m., Central Daylight Time on Tuesday, May 12, 2015

PLACE

 

Palmer Events Center
900 Barton Springs Road
Austin, Texas 78704

ITEMS OF BUSINESS

 

(1)

 

Elect the ten directors identified in the Proxy Statement, each for a term of one year.
    (2)   Ratify the appointment of PricewaterhouseCoopers LLP as 3M's independent registered public accounting firm for 2015.
    (3)   Advisory approval of executive compensation.
    (4)   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 2014 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 Notice of Internet Availability of Proxy Materials, or previously consented to the electronic delivery of proxy materials.

RECORD DATE

 

You are entitled to vote if you were a stockholder of record at the close of business on Friday, March 13, 2015.

MEETING ADMISSION

 

If you wish to attend the Annual Meeting in person, you will need to RSVP and print your admission ticket at www.proxyvote.com. An admission ticket together with photo identification must be presented in order to be admitted to the Annual Meeting. Please refer to the section entitled "Annual Meeting Admission" on page 1 of the Proxy Statement for further details.

VOTING

 

For instructions on voting, please refer to the instructions on the Notice of Internet Availability of Proxy Materials 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
Vice President, Deputy General Counsel and Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 2015: The Notice of Annual Meeting, Proxy Statement, and the 2014 Annual Report are available at www.proxyvote.com. Enter the 12-digit control number located in the box next to the arrow on the Notice of Internet Availability of Proxy Materials or proxy card to view these materials.

THIS PROXY STATEMENT AND PROXY CARD, OR THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS, ARE BEING DISTRIBUTED TO STOCKHOLDERS ON OR ABOUT MARCH 25, 2015.

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PROXY STATEMENT

        The Board of Directors (the "Board") of 3M Company, a Delaware corporation ("3M" or the "Company") is soliciting proxies for the Company's 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 the directors identified in this Proxy Statement and to conduct the business described in the Notice of Annual Meeting.

Annual Meeting Admission

        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, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting.

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Information about the Notice of Internet Availability of Proxy Materials

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        Please note that you MAY NOT USE your Notice of Internet Availability of Proxy Materials to vote your shares; it is NOT a form for voting. If you return the Notice of Internet Availability of Proxy Materials in an attempt to vote your shares, that vote will not count.

        For more information about the Notice of Internet Availability of Proxy Materials, please visit: www.sec.gov/spotlight/proxymatters/e-proxy.shtml

Stockholders Entitled to Vote

        Each share of our common stock outstanding as of the close of business on March 13, 2015, 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 635,316,881 shares of common stock issued and outstanding.

        Most 3M stockholders hold their shares through a broker, bank, trustee, or other nominee (which for simplicity we refer to as a "broker 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:

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

        The following proposals are included in this Proxy Statement and 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 2015.   "FOR"
 
3.   Advisory approval of executive compensation.   "FOR"
 

        Other than the proposals described in this Proxy Statement, and the one stockholder proposal not included in the Proxy Statement as described, below, 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 as proxy holders — Nicholas C. Gangestad, Gregg M. Larson, and Inge G. Thulin — 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.

        After the deadline for a stockholder proposal to be considered for inclusion in 3M's Proxy Statement for this meeting had passed, we received a written request from Kenneth Bruce Jackson, Minster House, 9 Erica Drive, Wokingham, Berkshire, the United Kingdom, seeking, pursuant to our Bylaws, to present a proposal (the "Jackson's Proposal") from the floor at the meeting, without having it included in the Company's Proxy Statement. Jackson's Proposal requests that the Company's Board of Directors "discontinue the practice of not granting discretionary increases to pension benefits in company sponsored plans." The Company's Board does not believe that the proposal is in the best interests of the Company or its stockholders. Pursuant to Rule 14a-4(c) under the Securities Exchange Act of 1934, the named proxies will have discretion with respect to Jackson's Proposal and intend to exercise that discretion to vote "AGAINST" such proposal if properly presented at the meeting.

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 for purposes of determining a quorum. As discussed below, a "broker non-vote" occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or other

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nominee does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner.

        Broker Voting — Under New York Stock Exchange ("NYSE") rules, brokers have discretionary authority to vote their clients' shares in "routine" matters (such as ratification of auditors) so long as the beneficial owner of those shares did not provide voting instructions to the broker at least ten days before the stockholder meeting. Director elections, stockholder proposals, and executive compensation matters, including say-on-pay, say-on-frequency of say-on-pay, and say-on golden parachutes proposals, are not considered "routine" matters for these purposes. As a result, if you do not provide your broker with instructions as to how to vote your shares, your broker will be prohibited from voting on Proposals 1 and 3, resulting in a "broker non-vote" with respect to those proposals.

        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 broker or other nominee is permitted to vote your shares on the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2015, even if it 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. However, if the number of nominees exceeds the number of directors to be elected (a "Contested Election") as of the tenth (10th) day preceding the date the Company first mails its notice of the meeting to its stockholders, 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 will be 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 issuing a press release and filing 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 the procedures described above 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. 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.

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        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 Proposals 2 and 3. 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."

Voting Methods

        If you hold shares directly as the stockholder of record, you may vote by granting a proxy or by voting in person at the Annual Meeting by requesting a ballot. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker or other nominee or in person at the Annual Meeting by requesting a legal proxy from your broker or other 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 Notice of Internet Availability of Proxy Materials or proxy card or, for shares held in street name, the voting instruction card provided by your broker or other 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 Daylight Time, on May 11, 2015. 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 Daylight Time, on May 7, 2015.

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        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 voting 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), so long as the new vote is received before the deadlines described above under the heading "Voting Methods." You may also change your vote by granting a new proxy or by voting in person at the Annual Meeting.

Counting the Vote

        In the election of directors, you may vote "FOR" or "AGAINST" one or more of the nominees or you may "ABSTAIN." Abstentions will have no effect on the outcome of the election of directors. For Proposals 2 and 3, you may vote "FOR," "AGAINST," or "ABSTAIN," but please note that abstentions will have the same effect as a vote "AGAINST." If you sign your proxy card or broker voting instruction card but provide no voting 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 Employee Stock Ownership Plan or the 3M Savings Plan will be voted by the trustee as described in "Stockholders Entitled to Vote" beginning on page 3.

        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 issue a press release announcing the preliminary voting results for items of business properly presented at the meeting and will disclose the preliminary results for those items (or final results if available) in a Current Report on Form 8-K filed with the Securities and Exchange Commission within four business days of the Annual Meeting date. The press release with voting results will also be available on our Web site at 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 (a practice called "householding"). We believe that householding benefits both you and the Company by eliminating duplicate mailings to stockholders living at the same address and by reducing our printing and mailing costs. Each stockholder will continue to receive a separate proxy card or voting instruction card.

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        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 www.proxyvote.com, by e-mailing sendmaterial@proxyvote.com, or by writing to 3M Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Alternatively, if your household received multiple sets of proxy materials this year, and members of your household who are entitled to receive proxy materials would all prefer to receive only a single set of proxy materials, you may submit such a request as specified in the preceding sentence.

        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 other nominee directly to discontinue duplicate mailings to your household.

List of Stockholders

        A list of the stockholders of record entitled to vote at the Annual Meeting will be available for inspection at the Annual Meeting for any purpose germane to the meeting. The list also will be available for ten days prior to the meeting between the hours of 7:45 a.m. and 4:30 p.m., Central Daylight Time, at our offices at 3M Austin Center, 6801 River Place Blvd., Austin, Texas 78726, by contacting the Secretary of the Company.

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 by electronic communication by our directors, officers, and employees, who will 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.shareowneronline.com, or in writing, P.O. Box 64854, St. Paul, MN 55164-0854.

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GOVERNANCE OF THE COMPANY

Corporate Governance Overview

        The Company believes that good corporate governance practices serve the long-term interests of stockholders, strengthen the Board and management, and further enhance the public trust 3M has earned from more than a century of operating with uncompromising integrity and doing business the right way. The following sections provide an overview of 3M's corporate governance practices, including the Corporate Governance Guidelines, the Board's leadership structure and the responsibilities of the independent Lead Director, communication with directors, director independence, the director nomination process, the Board's role in risk oversight, the Codes of Conduct for directors and employees, public policy engagement, and the Company's commitment to the environment and sustainability.

        The following table provides an overview of our corporate governance practices:

 
Corporate Governance Highlights
 

Board size - ten directors

Nine of ten directors are independent

Annual election of all directors

Majority voting for directors in uncontested elections

Independent Lead Director with robust authority

Combined Chairman and CEO positions

Independent directors regularly meet in Board and committee executive sessions without management

Annual Board and committee self-evaluations, including regular review of board and committee composition

Annual independent directors' evaluation of Chairman and CEO

Broad risk oversight by the Board and its committees, with committee-level risk analyses reported to the full Board and senior-level internal auditor and Chief Compliance Officer appointed by, and reporting directly to, the Audit Committee

Standing Board committees comprised entirely of independent directors, with independent committee chairs empowered to establish committee agendas

Independent directors have complete access to management and employees

Average independent director tenure - 7.8 years, with 1 new independent director appointed since the 2014 Annual Meeting and 3 new independent directors appointed within the past 3 years

Independent director Tenure in Years

 

Code of Business Conduct and Ethics for directors

Code of Conduct for all employees, including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer

Disclosure committee for financial reporting

Stockholder ability to call a special meeting (25 percent threshold)

No supermajority voting provisions in bylaws or certificate of incorporation

No stockholders' rights plan (also known as a "poison pill")

Established protocol for stockholders to communicate with the independent Lead Director, the chairs of the Audit, Compensation, Finance, and Nominating and Governance Committees of the Board, any of the other independent directors or all of the independent directors as a group or the full Board

Established policies and criteria for director nominations, including candidates recommended by stockholders

Disclosure of public policy engagement on our Investor Relations Web site, including political contributions and membership in key trade associations

Long-standing commitment to environmental stewardship and sustainability

Annual advisory approval of executive compensation with approximately 97 percent of the votes cast in favor of the company's executive compensation program in 2014

Executive compensation best practices



         Years of Board Service

 

Number of    
Independent    
Directors      

 

Strong pay-for-performance philosophy

Incentive compensation subject to clawback policy


         0-3
  3        


Robust stock ownership guidelines for executive


         4-7
  2                     officers and stock retention policy for directors

         8-12
  1        


Prohibition of hedging or pledging 3M stock by


         13-15
  3                     directors and executive officers

Annual equity grant to non-employee directors

Board orientation/education program

Nine Board meetings in 2014 (overall attendance at Board and committee meetings was 97 percent)

 


No employment, severance, or change-in-control agreements with any senior executives, including the CEO

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Corporate Governance Guidelines

        The Board has adopted Corporate Governance Guidelines which provide a framework for the effective governance of the Company. The guidelines address matters such as the respective roles and responsibilities of the Board and management, the Board's leadership structure, the responsibilities of the independent Lead Director, director independence, the Board Membership Criteria, Board committees, and Board and management evaluation. 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 and Bylaws, the charters of the Board committees, the Director Independence Guidelines, and the Codes of Conduct provide the framework for the governance of the Company and are available on our Web site at www.3M.com, under Investor Relations — Corporate Governance.

Executive Sessions

        As an agenda item for every regularly scheduled Board and committee meeting, independent directors regularly meet in executive session, without the Chairman/CEO or other members of management present, to consider such matters as they deem appropriate.

Board and Committee Evaluations

        The Board conducts an annual self-evaluation to determine whether it and its committees are functioning effectively and consider opportunities for continual enhancement. The Nominating and Governance Committee solicits and receives comments from all directors and shares those comments with the Board. Based on the comments and further discussion and reflection, the Board makes an assessment reviewing areas in which the Board believes improvements could be made to increase the effectiveness of the Board and its committees as well as identifying existing practices which have contributed to high effectiveness and accordingly should be continued. Self-evaluation items requiring follow-up and/or the development and execution of implementation and action plans are monitored on a going-forward basis by the full Board, as well as by individual committees and the chairs thereof, as applicable. While this formal self-evaluation is conducted on an annual basis, directors share perspectives, feedback, and suggestions year-round.

Board's Leadership Structure

        The Board's leadership structure is characterized by:

        The Board of Directors believes that this leadership structure provides independent board leadership and engagement while deriving the benefits 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, our CEO is best positioned to chair regular Board meetings as the directors 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.

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        The Board believes that adopting a rigid policy on whether to separate or combine the positions of Chairman of the Board and CEO would inhibit the Board's ability to provide for a leadership structure that would best serve stockholders. As a result, the Board has rejected adopting a policy 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 combining the roles of CEO and Chairman contributes to an efficient and effective Board. 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. 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 integrity and doing business the right way.

        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 Corporate Governance Guidelines provide, in part, that:

        The Board has also designated one of its members to serve as Lead Director, with responsibilities (described in the next section) that are similar to those typically performed by an independent chairman.

Independent Lead Director

        The Board has designated one of its members to serve as a Lead Director, with responsibilities that are similar to those typically performed by an independent chairman ("Lead Director"). Michael L. Eskew was appointed Lead Director by the independent directors effective November 12, 2012, succeeding Dr. Vance Coffman who had served as Lead Director since 2006. Michael Eskew is a highly experienced director, currently serving on the boards of The Allstate Corporation, International Business Machines Corporation, and Eli Lilly and Company, and was the former Chairman and CEO of United Parcel Service, Inc. His responsibilities include, but are not limited to, the following:

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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, or all of them as a group, by sending a letter to the following address: Corporate Secretary, 3M Company, 3M Center, Building 220-14W-06, St. Paul, MN 55144-1000.

Director Independence

        The Board has adopted a formal set of Director Independence Guidelines with respect to the determination of director independence, which either conform to or are more exacting than the independence requirements of the NYSE listing standards, and 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 family members with respect to past employment or affiliation with the Company or its independent registered public accounting firm. The Guidelines also prohibit Audit and Compensation 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 the Company and a director or any member of a director's 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, the Board considered the annual

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amount of sales to 3M for each of the most recent three completed fiscal years by the company where director Muhtar Kent serves and the company where director Thomas "Tony" K. Brown served as an executive officer, as well as purchases by those companies from 3M. The Board 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 threshold 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, Sondra L. Barbour, Thomas "Tony" K. Brown, Vance D. Coffman, Michael L. Eskew, Herbert L. Henkel, Muhtar Kent, Edward M. Liddy, and Robert J. Ulrich. The Board has also determined that members of the Audit Committee and Compensation Committee received no compensation from the Company other than for service as a director. Inge G. Thulin, Chairman of the Board, President and Chief Executive Officer, is considered to not be independent because of his employment by the Company.

Director Nomination Process

Role of the Nominating and Governance Committee

        The Nominating and Governance Committee identifies individuals who 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 who 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. The Nominating and Governance Committee also focuses on overall Board-level succession planning at the director level.

Nominees Proposed by Stockholders for Consideration by the Committee

        The Committee has a policy to consider properly submitted stockholder recommendations 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 to serving as a director if elected. Stockholders should send the required information about the proposed 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 2016 Annual Meeting, the Corporate Secretary must receive the proposal by November 26, 2015. 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

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proposed by stockholders in accordance with these procedures will receive the same consideration received by individuals identified to the Committee through other means.

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 2016 Annual Meeting, our Bylaws would require, among other things, that the Corporate Secretary receive written notice from the record stockholder no earlier than January 13, 2016, and no later than February 12, 2016. 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 12, 2016, will not be acted upon at the 2016 Annual Meeting.

Board Membership Criteria

        3M's Corporate Governance Guidelines contain Board Membership Criteria which include a list of skills and characteristics expected to be represented 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 composed 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:

        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 business, manufacturing, technology, finance and accounting, marketing, international business, government, or other areas, and will 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 because its experience is that diversity provides significant benefit to the Board and the Company. Although there is no specific policy on diversity, the Committee considers the Board Membership Criteria in selecting nominees for directors, including diversity of background and experience. Such considerations may include gender, race, national origin, functional background, executive or professional experience, and international experience.

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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 retained Spencer Stuart in 2014 to help identify future Board candidates.

        The Committee evaluates qualified director nominees at regular or special Committee meetings against the Board Membership Criteria described above then in effect 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 Audit Committee's charter provides that the Audit Committee shall "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 (the "Auditor"), whose appointment and performance is reviewed and evaluated by the Audit Committee and who has direct reporting obligations 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.

        While the Board's oversight of risk primarily is performed by 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 risks associated with the Company's compensation practices, including by performing 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, credit ratings and cost of capital, long-term benefit obligations, and use of or investment in financial products, such as derivatives to manage risk related to foreign currencies, commodities, and interest rates. The Nominating and Governance Committee oversees risks associated with the Company's overall governance and its succession planning process to ensure 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

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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. Given his in-depth knowledge and understanding of the Company, the CEO is best able to bring key business issues and risks to the Board's attention.

3M's Codes of Conduct

        More than a century of operating with uncompromising 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 Code of Conduct 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 company-wide focus on uncompromising integrity in every aspect of our operations. Our Code of Conduct covers 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 Code of Conduct. 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 https://secure.ethicspoint.com/domain/media/en/gui/8897/index.html.

        The Board also 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 and adherence to the highest ethical standards, and in compliance with the law.

        The Company's Code of Conduct 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.

Hedging and Pledging Policies

        The Company's stock trading policies prohibit directors and the Company's executive officers from (i) purchasing any financial instrument that is designed to hedge or offset any decrease in the market value of the Company's common stock, including prepaid variable forward contracts, equity swaps, collars and exchange funds; (ii) engaging in short sales related to the Company's common stock; (iii) placing standing orders; (iv) maintaining margin accounts; and (v) pledging 3M securities as collateral for a loan. All transactions in 3M securities by directors and executive officers must be pre-cleared with the Deputy General Counsel.

Public Policy Engagement

        The Company believes that transparency with respect to the consideration, processes, and oversight of our engagement with lawmakers is important to our stockholders, and continuously makes efforts to give our stockholders useful information about our public policy engagement. Since 2007 (and updated several times since then), the Company has voluntarily published a detailed explanation of the Company's political activities which is available on our Web site at www.3M.com under Investor Relations — Corporate Governance — "Political Activities and Issue Advocacy." There, the Company sets out in detail its positions on important public policy issues, the factors we consider when making

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political contributions, and the processes we use for legal, financial, executive, and Board oversight of our political activities and contributions. We also provide links to the reports the 3M Political Action Committee files monthly with the Federal Election Commission and the Company's quarterly Lobbying Disclosure reports, as well as a detailed list of our contributions to state candidates and political parties, and contributions to "527" political organizations. The Company also discloses on its Web site the trade associations the Company joined where $25,000 or more of the dues are allocated for lobbying purposes by the trade association. The Company believes that these disclosures on our Web site, which exceed the disclosures required by law, offer transparency respecting the Company's public policy engagement and political activities.

Commitment to the Environment and Sustainability

        At 3M, we are working hard to help create a better world for people everywhere. We apply our ingenuity, our expertise, and our technology to solve problems innovatively, and with a focus on solutions for the longer term. Sustainability is fundamental to our business philosophy — from product development and manufacturing to how customers use our products.

        For more than 40 years, 3M has been a leader among global corporations in sustainability actions and measures, beginning with the creation of its groundbreaking Pollution Prevention Pays (3P) Program in 1975 to a broad portfolio of sustainable products today. As a global corporation, we believe that we have a significant responsibility to society in general, and especially to the communities in which we live and work. Fulfilling our responsibility is important both from an environmental stewardship perspective and as a key competitive strategy. Our corporate vision states: "3M technology advancing every company... 3M products enhancing every home... and 3M innovation improving every life." It is that vision — that focuses on our customers' needs and well-being — that guides our sustainability strategies and goals, and the respect we demonstrate for our social and physical environments.

        We have created hundreds of sustainable solutions and product platforms to help our customers manage their environmental footprint — from paint systems that reduce the need for cleaning solvents and window films that ease energy consumption to a greener tape that is made with plant-based adhesive and film.

        In January 2013, our CEO formed the Sustainability Center of Excellence by appointing two Vice Presidents to the Center. One of the Vice Presidents focuses on developing and commercializing products which help our customers solve their sustainability challenges and the other focuses on ensuring sustainability within 3M operations and supply chain. Both Vice Presidents report to the Executive Vice President of 3M Supply Chain, who reports to the CEO. The formation of the Sustainability Center of Excellence demonstrates the Company's commitment to integrate innovation and sustainability into our products and operations for the benefit of our customers and our communities. The primary role of the Center is to develop strategy, set significant goals to track progress, and drive sustainable actions throughout 3M. Sustainability will continue to be a vital focus as we work to truly advance every company, enhance every home, and improve every life.

        As part of our sustainability efforts, we have joined the United Nations Global Compact on Human Rights — a policy initiative for businesses to demonstrate their commitment to ten principles in the areas of human rights, labor, environment, and anti-corruption. We will report annually on these corporate responsibility efforts in our Sustainability Report.

        To learn more about our sustainability efforts, please view our Sustainability Report which is available on our Web site at www.3M.com under Investor Relations — Corporate Governance — "Social Responsibility."

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Related Person Transaction Policy and Procedures

        The Board of Directors has adopted a written Related Person Transaction Policy and Procedures 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 (as that term is defined in the Policy) has a direct or indirect material interest and which is required to be disclosed under Item 404(a) of Regulation S-K. Transactions that fall within this definition are referred to the Committee for approval, ratification, or other action. Based on its consideration of all of the relevant facts and circumstances, the Committee decides whether or not to approve a transaction and approves 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 considers:

        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, except that such a director may be counted in determining the presence of a quorum at a meeting at which the Committee 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 give the Board the negotiating power and leverage necessary 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 adopted and has 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 (including a majority of the independent members of the Board), in its exercise of its fiduciary responsibilities, 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 resulting from seeking 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, are included in 3M's published Corporate Governance Guidelines and its Proxy Statement.

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BOARD AND COMMITTEE INFORMATION

        The Board currently has ten directors and the following four committees: Audit, Compensation, Finance, and Nominating and Governance. On August 11, 2014, the Board of Directors elected Sondra L. Barbour as a director and appointed her as a member of the Audit and Finance Committees effective August 11, 2014. The membership during 2014 and the function of each committee are described below.

        During 2014, the Board of Directors held six regularly scheduled meetings and three telephonic meetings. Overall attendance at Board and committee meetings was 97 percent.

        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, except W. James Farrell, Robert Morrison, and Aulana Peters who did not stand for reelection.

        The Board and each committee conducted an evaluation of its performance in 2014.

Name of Non-Employee Director

  Audit   Compensation   Finance   Nominating
and
Governance

Linda G. Alvarado

     X                 X   

Sondra L. Barbour

     X             X       

Thomas "Tony" K. Brown

     X             X       

Vance D. Coffman

         X         X *    

Michael L. Eskew

         X *          X   

Herbert L. Henkel

     X *          X       

Muhtar Kent

     X             X       

Edward M. Liddy

         X             X *

Robert J. Ulrich

         X             X   

X = Committee Member; * = Chair

Audit Committee

        In 2014, 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"), the performance of the Company's internal auditing department, and furnishes a report for inclusion in the Company's Proxy Statement. In addition, the Committee:

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        The Board of Directors has determined that all of the Audit Committee members are "independent" and "financially literate" under the NYSE listing standards and that members of the Audit Committee received no compensation from the Company other than for service as a director. The Board has also determined that the following Audit Committee members — Herbert L. Henkel (chair), Linda G. Alvarado, Sondra L. Barbour, and Muhtar Kent — have "accounting or related financial management expertise" under the NYSE listing standards and are "audit committee financial experts" as that term is defined by applicable Securities and Exchange Commission regulations. The Audit Committee has adopted, and annually reviews, its charter setting forth its roles and responsibilities. The charter of the Audit Committee is available at www.3M.com under Investor Relations — Corporate Governance — Committee Charters.

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

        The Audit Committee is responsible for appointing and overseeing the work of the Independent Accounting Firm. The Audit Committee has established the following procedures for the pre-approval of all audit and permissible non-audit services provided by the Independent Accounting Firm.

        Before engagement of the Independent Accounting Firm for the next year's audit, the Independent Accounting Firm will submit to the Audit Committee for approval a detailed description of services it expects to render to the Company during that year for each of the following categories of services:

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        Before engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires the Independent Accounting Firm to report actual fees in comparison to the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage the Independent Accounting Firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging the Independent Accounting Firm.

        The Audit Committee has delegated pre-approval authority to the chair of the Committee. The chair must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

Fees of the Independent Accounting Firm

        The following table represents fees for professional services rendered by PricewaterhouseCoopers LLP ("PwC") for the audit of the Company's consolidated financial statements for the years ended December 31, 2013 and 2014, and fees billed for other services rendered by PricewaterhouseCoopers LLP during those periods.

        Audit and Non-Audit Fees ($ in millions)

 
  2013   2014  

Audit Fees:

  $ 14.9   $ 15.9  

Audit-Related Fees:

    2.1     3.3  

Tax Fees:

    0.5     0.5  

All Other Fees:

    0.1     0.1  

Total

  $ 17.6   $ 19.8  

        In the above table, in accordance with SEC rules, "Audit" fees consisted of audit work and review services, as well as work generally only the independent registered public accounting firm can reasonably be expected to provide, such as statutory audits, comfort letters, consents, and assistance with and review of documents filed with the Securities and Exchange Commission. "Audit related" fees consisted principally of employee benefit plan audits, internal control and system audit procedures, agreed-upon procedures, financial due diligence, acquisition or divestiture accounting, and other attest services. "Tax" fees consisted principally of tax compliance services in foreign jurisdictions. "All other" fees consisted of licenses for accounting software and other permissible services.

Audit Committee Restrictions on Hiring Employees of the Independent Accounting Firm

        The Audit Committee has adopted restrictions on the hiring by the Company of any PwC partner, director, manager, staff, reviewing actuary, reviewing tax professional, and any other persons having responsibility for providing audit assurance on any aspect of PwC's certification of the Company's financial statements. Audit assurance includes all work that results in the expression of an opinion on financial statements, including audits of statutory accounts.

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AUDIT COMMITTEE REPORT

        The Audit Committee oversees the Company's financial reporting process on behalf of the Board of Directors. The management of the Company is responsible for (i) the preparation of complete and accurate annual and quarterly consolidated financial statements ("financial statements") in accordance with generally accepted accounting principles in the United States, (ii) maintaining appropriate accounting and financial reporting principles and policies and internal controls designed to assure compliance with accounting standards and laws and regulations, and (iii) an assessment of the effectiveness of internal control over financial reporting. The Independent Accounting Firm is responsible for planning and conducting in accordance with the standards of the Public Company Accounting Oversight Board ("PCAOB") an audit of the Company's annual consolidated financial statements and a review of the Company's quarterly financial statements and expressing opinions on the Company's financial statements and internal control over financial reporting based on the integrated audits.

        In this context, the Audit Committee has met and held discussions with management and the Independent Accounting Firm regarding the fair and complete presentation of the Company's results and the assessment of the Company's internal control over financial reporting. The Audit Committee has discussed significant accounting policies applied by the Company in its financial statements, as well as alternative treatments. Management has represented to the Audit Committee that the Company's consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the Independent Accounting Firm. The Audit Committee has discussed with the Independent Accounting Firm matters required to be discussed pursuant to the PCAOB's Auditing Standards on Communications with Audit Committees, as currently in effect.

        In addition, the Audit Committee has reviewed and discussed with the Independent Accounting Firm the auditor's independence from the Company and its management. As part of that review, the Audit Committee has received the written disclosures and the letter required by applicable requirements of the PCAOB regarding the Independent Accounting Firm's communications with the Audit Committee concerning independence, and the Audit Committee has discussed the Independent Accounting Firm's independence from the Company.

        The Audit Committee also has considered whether the Independent Accounting Firm's provision of non-audit services to the Company is compatible with the auditor's independence. The Audit Committee has concluded that the Independent Accounting Firm is independent from the Company and its management.

        The Audit Committee has discussed with the Company's Internal Audit Department and Independent Accounting Firm the overall scope of and plans for their respective audits. The Audit Committee meets with the Internal Auditor, Chief Compliance Officer, the General Counsel, and representatives of the Independent Accounting Firm in regular and executive sessions, to discuss the results of their examinations, the evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting and compliance programs.

        In reliance on the reviews and discussions referred to above, the Audit Committee has recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014, for filing with the SEC.

Submitted by the Audit Committee

Herbert L. Henkel, Chair
Linda G. Alvarado
Sondra L. Barbour
Thomas "Tony" K. Brown
Muhtar Kent

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Compensation Committee

        In 2014, the Compensation Committee met five 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 Securities and Exchange Commission's disclosure rules for executive compensation, and furnishes a report for inclusion in the Company's Proxy Statement. In addition, the Committee:

        The Board of Directors has determined that all Compensation Committee members are "independent" under the NYSE listing standards, including the listing standards applicable to compensation committee members. 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 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. In compliance with the NYSE listing standards, the charter provides that the Compensation Committee has the authority to retain compensation consultants, counsel or other advisors as it deems appropriate, including the authority to approve such advisors' fees and retention terms. As discussed below under the heading "Compensation Discussion and Analysis," the Compensation Committee directly engaged and retained a compensation consultant in 2014 and determined, in accordance with the listing standards of the NYSE, that the consultant was independent of management under the NYSE's independence criteria.

Finance Committee

        In 2014, the Finance Committee met five times. The Committee assists the Board with its oversight of the Company's financial structure, including its overall capital structure, sources and uses of funds

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and related cash and financing plans, the Company's financial condition and capital strategy, and financial risk management. In addition, the Committee:

        The Board of Directors has determined that all Finance Committee members are "independent" under the NYSE 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 2014, the Nominating and Governance Committee met six times. The Committee establishes the 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 2014, the Committee recommended, and the Board approved, the addition of one new director, Sondra L. Barbour.

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        In addition, the Committee:

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

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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:

        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 May 2014, the Nominating and Governance Committee considered a board compensation study prepared by Frederic W. Cook & Co., Inc. As a result of that study, the Committee recommended and the Board approved an increase of $10,000 in the annual compensation for nonemployee directors from $260,000 to $270,000, effective January 1, 2014. All of the $10,000 increase was allocated to an increase in the annual stock retainer (from $140,000 to $150,000). The annual cash retainer of $120,000 remains unchanged. Approximately 44 percent of the annual compensation (or $120,000) is payable in cash in four quarterly installments and approximately 56 percent of the annual compensation (or $150,000) is payable in common stock after the Annual Meeting. In addition, the chairs of the Finance and Nominating and Governance Committees each receive an additional annual fee of $15,000, the chair of the Compensation Committee receives an additional annual fee of $20,000, and the Lead Director receives an additional annual fee of $30,000. The additional annual fee payable to the chair of the Audit Committee was increased from $20,000 to $25,000, effective January 1, 2014. There are no meeting fees. In lieu of the cash fees, a director may elect to receive common stock of the Company. Nonemployee directors may also voluntarily defer all or part of their annual cash fees or stock awards until they cease to be members of the Board.

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        All Other Compensation — The column below showing "All Other Compensation" includes matching gifts. The nonemployee directors are eligible to participate in the Company's matching gift program on the same terms as 3M employees. Under this program, the 3M Foundation will match up to a total of $5,000 a year in contributions by the director to eligible institutions of higher education.

2014 Director Compensation Table

        The total 2014 compensation of our nonemployee directors is shown in the following table:

Nonemployee Directors

  Fees Earned
Or Paid in
Cash ($)(1)
  Stock
Awards ($)(2)
  All Other
Compensation
($)(3)
  Total
($)

Linda G. Alvarado

  120,000   150,000      286   270,286

Sondra L. Barbour (elected August 11, 2014)

    46,630     58,767          0   105,397

Thomas "Tony" K. Brown

  120,000   150,000        74   270,074

Vance D. Coffman*

  136,882   150,000      160   287,042

Michael L. Eskew*

  168,215   150,000        75   318,290

W. James Farrell(4)

    44,176     55,069          0     99,245

Herbert L. Henkel*

  145,000   150,000          0   295,000

Muhtar Kent

  120,000   150,000   5,000   275,000

Edward M. Liddy*

  129,519   150,000      293   279,812

Robert S. Morrison(4)

    49,698     55,069   5,000   109,767

Aulana L. Peters(4)

    44,176     55,069   5,000   104,245

Robert J. Ulrich

  120,000   150,000        59   270,059
*
Committee Chair

(1)
This column represents 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 2014, 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. Since all stock awards vest on the grant date, there are no unvested stock awards outstanding at year end.

(3)
This column represents participation in the Company's matching gift program with Muhtar Kent, Robert Morrison, and Aulana Peters participating at the $5,000 level. This column also includes the incremental cost of complimentary products.

(4)
W. James Farrell, Robert Morrison, and Aulana Peters served as directors through the 2014 Annual Meeting of Stockholders held on May 13, 2014, and retired as a director as of that date in accordance with the Board's retirement policy.

        Stock Ownership Guidelines — The Board requires that each director retain the stock portion (currently valued at $150,000) 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."

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PROPOSALS TO BE VOTED ON

PROPOSAL NO. 1

ELECTION OF THE TEN DIRECTORS IDENTIFIED IN THIS PROXY STATEMENT

        At the 2015 Annual Meeting, ten directors are to be elected to hold office until the 2016 Annual Meeting of Stockholders and until their successors have been elected and qualified. All nominees are presently 3M directors who were elected by stockholders at the 2014 Annual Meeting, except for Sondra Barbour, who was elected to the Board in August 2014 and who is standing for election for the first time. The Nominating and Governance Committee, with input from the independent directors and the Chairman of the Board and CEO, identified Ms. Barbour and recommended her to the Board. 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.

        The Nominating and Governance Committee reviewed the Board Membership Criteria (described in the section of the Proxy Statement entitled "Director Nomination Process") and the specific experience, qualifications, attributes, and skills of each nominee, including membership(s) on the boards of directors of other public companies. The following pages contain biographical and other information about the nominees. Following each nominee's biographical information, we have provided information concerning the particular experience, qualifications, attributes, and skills that led the Nominating and Governance Committee and the Board to determine that each nominee should serve as a director. In addition, the majority of our directors serve or have served on boards and board committees (including as committee chairs) of other public companies, which the Board believes provides them with additional board leadership and governance experience, exposure to best practices, and substantial knowledge and skills that further enhance the functioning of our Board.

Nominees for Director:

GRAPHIC  

Linda G. Alvarado, 63, 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.

Director since: 2000

Other current directorships: Pitney Bowes, 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. Ms. Alvarado is a member of the Audit and Nominating and Governance Committees.

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GRAPHIC  

Sondra L. Barbour, 52, Executive Vice President, Information Systems and Global Solutions, Lockheed Martin Corporation, a high technology aerospace and defense company. Since joining Lockheed Martin in 1986, Ms. Barbour has served in various leadership capacities and has extensive technology experience, notably in the design and development of large-scale information systems. In 2013 she was appointed Executive Vice President, Information Systems & Global Solutions. From 2008 to 2013 she served as Senior Vice President, Enterprise Business Services and Chief Information Officer, heading all of the corporation's internal information technology operations, including protecting the company's infrastructure and information from cyber threats. Prior to that role she served as Vice President, Corporate Shared Services from 2007 to 2008 and Vice President, Corporate Internal Audit from 2006 to 2007 providing oversight of supply chain activities, internal controls, and risk management.

Director since: 2014

Ms. Barbour's degree in Computer Science and Accounting from Temple University, her leadership roles and experiences in Information Systems and Global Solutions at Lockheed Martin, her skills in information technology operations, including cyber security expertise, financial, internal controls and audit matters, and her experiences as a senior executive at Lockheed Martin, qualify her to serve as a director of 3M. Ms. Barbour is a member of the Audit and Finance Committees.


GRAPHIC

 


Thomas "Tony" K. Brown, 59, Retired Group Vice President, Global Purchasing, Ford Motor Company, a global automotive industry leader. Mr. Brown served in various leadership capacities in global purchasing since joining Ford in 1999. In 2008, he became Ford's Group Vice President, Global Purchasing, with responsibility for approximately $90 billion of production and non-production procurement for Ford operations worldwide. He retired from Ford on August 1, 2013. From 1997 to 1999 he served in leadership positions at United Technologies Corporation, including its Vice President, Supply Management. From 1991 to 1997 he served as Executive Director, Purchasing and Transportation at QMS Inc. From 1976 to 1991 he served in various managerial roles at Digital Equipment Corporation.

Director since: 2013

Other current directorships: ConAgra Foods, Inc. and Tower International, Inc.

Mr. Brown's Bachelor of Business Administration from American International College in Springfield, Massachusetts, his leadership roles, and his knowledge of and extensive experiences in global purchasing, management, and supply chain at Ford Motor Company and other companies, qualify him to serve as a director of 3M. Mr. Brown is a member of the Audit and Finance Committees.


GRAPHIC

 


Vance D. Coffman, 70, 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.

Director since: 2002

Other current directorships: Amgen Inc. (lead director) and Deere & Company

Dr. Coffman's Bachelor of Science degree in Aerospace Engineering from Iowa State University, 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 understanding of the challenges of managing a complex global organization, the breadth of his experiences and 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. Dr. Coffman is Chair of the Finance Committee and a member of the Compensation Committee.

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GRAPHIC  

Michael L. Eskew, 65, 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 of UPS 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 until December 31, 2014.

Director since: 2003

Other current directorships: The Allstate Corporation, International Business Machines Corporation (presiding director), and Eli Lilly and Company

Other directorships in the past five years: United Parcel Service, Inc.

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. Mr. Eskew is Lead Director, Chair of the Compensation Committee, and member of the Nominating and Governance Committee.


GRAPHIC

 


Herbert L. Henkel, 66, Retired Chairman and Chief Executive Officer, 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 retired as Chairman of the Board 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.

Director since: 2007

Other current directorships: The Allstate Corporation and C. R. Bard, Inc.

Other directorships in the past five years: Visteon Corporation

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, manufacturing, management, sales and marketing in a variety of 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. Mr. Henkel is Chair of the Audit Committee and member of the Finance Committee.


GRAPHIC

 


Muhtar Kent, 62, Chairman of the Board and Chief Executive Officer, The Coca-Cola Company, the world's largest beverage company. Mr. Kent has held the position of Chairman of the Board of The Coca-Cola Company since April 23, 2009, and the position of Chief Executive Officer since July 1, 2008. From December 2006 through June 2008, Mr. Kent served as President and Chief Operating Officer of The Coca-Cola Company. From January 2006 through December 2006, Mr. Kent served as President of Coca-Cola International and was elected Executive Vice President of The Coca-Cola Company in February 2006. From May 2005 through January 2006, he was President and Chief Operating Officer of The Coca-Cola Company's North Asia, Eurasia and Middle East Group, an organization serving a broad and diverse region that included China, Japan, and Russia. Mr. Kent is a board member of The Consumer Goods Forum, a fellow of the Foreign Policy Association, a member of the Business Roundtable, a past Chairman of the U.S.-China Business Council, and Chairman Emeritus of the U.S. ASEAN Business Council. He was also appointed as a member of the Eminent Persons Group for ASEAN by President Obama and former Secretary of State Clinton.

Director since: 2013

Mr. Kent's Bachelor of Science in Economics from Hull University, England, and Master of Science in Administrative Sciences from City University London, his extensive leadership roles and experiences at The Coca-Cola Company across multiple geographies, and his extensive international experience not only at The Coca-Cola Company but also in the organizations mentioned above, qualify him to serve as a director of 3M. Mr. Kent is a member of the Audit and Finance Committees.

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GRAPHIC  

Edward M. Liddy, 69, Partner, Clayton, Dubilier & Rice, LLC, a private equity investment firm. Mr. Liddy served as a partner of Clayton, Dubilier & Rice, LLC from April to September 2008 and rejoined the firm in January 2010. At the request of the Secretary of the U.S. Department of the Treasury, Mr. Liddy served as Interim Chairman and Chief Executive Officer of American International Group, Inc. (AIG), a global insurance and financial services holding company, from September 2008 until August 2009. Mr. Liddy served as Chairman of the Board of The Allstate Corporation, a personal lines insurer, from January 1999 to April 2008 and as its Chief Executive Officer from January 1999 to December 2006.

Director since: 2000

Other current directorships: Abbott Laboratories, AbbVie, 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 and 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 and risk management, his expertise and knowledge of financial and audit matters and corporate governance, and his experiences as a director at the public companies listed above, qualify him to serve as a director of 3M. Mr. Liddy is Chair of the Nominating and Governance Committee and member of the Compensation Committee.


GRAPHIC

 


Inge G. Thulin, 61, Chairman of the Board, President and Chief Executive Officer of 3M Company. Mr. Thulin served as President and Chief Executive Officer of 3M Company from February 24, 2012, to May 8, 2012. Mr. Thulin served as the Company's Executive Vice President and Chief Operating Officer from May 2011 to February 2012, with responsibility for all of 3M's business segments and International Operations. Prior to that, he was Executive Vice President of International Operations from 2004 to 2011. Mr. Thulin also has held numerous leadership positions in Asia Pacific, Europe and Middle East, and across multiple businesses.

Director since: 2012

Other current directorships: Chevron Corporation

Other directorships in the past five years: The Toro Company

Mr. Thulin's degrees in Marketing and Economics from Gothenburg University, his distinguished 3M career spanning more than three decades with leadership roles across multiple geographies and businesses, his in-depth understanding of 3M's global businesses, his expertise and knowledge of managing a large global corporation across multiple industries and markets, 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.


GRAPHIC

 


Robert J. Ulrich, 71, 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.

Director since: 2008

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 into the second-largest retailer in the United States, and his skills in business and financial matters, qualify him to serve as a director of 3M. Mr. Ulrich is a member of the Compensation and Nominating and Governance Committees.

Recommendation of the Board

        The Board of Directors unanimously recommends a vote "FOR" the election of these nominees as directors. Proxies solicited by the Board of Directors will be voted "FOR" these nominees unless a stockholder indicates otherwise in voting the proxy.

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PROPOSAL NO. 2

RATIFICATION OF THE APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2015

        The Audit Committee is directly responsible for the appointment, compensation (including approval of all fees), retention, and oversight of the Company's independent registered public accounting firm ("Independent Accounting Firm") retained to perform the audit of our financial statements and our internal control over financial reporting.

        The Audit Committee has appointed PricewaterhouseCoopers LLP ("PwC") to serve as 3M's Independent Accounting Firm for 2015. PwC has been 3M's Independent Accounting Firm since 1998. Prior to that, 3M's Independent Accounting Firm was Coopers & Lybrand (until its merger with Price Waterhouse in 1998). In accordance with SEC rules and PwC policy, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our Company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of the Company's lead audit partner pursuant to this rotation policy involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion by the full Committee and with management.

        The Audit Committee annually reviews PwC's independence and performance in connection with the Audit Committee's determination of whether to retain PwC or engage another firm as our Independent Accounting Firm. In the course of these reviews, the Audit Committee considers, among other things:

        Based on this evaluation, the Audit Committee believes that PwC is independent and that it is in the best interests of the Company and our stockholders to retain PwC to serve as our Independent Accounting Firm for 2015.

        We are asking our stockholders to ratify the selection of PwC as our Independent Accounting Firm for 2015. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of PwC to our stockholders for ratification as a matter of good corporate governance. If the selection of PwC is not ratified, the Audit Committee will consider whether it is appropriate to select another Independent Accounting Firm. Even if the selection is ratified, the Audit Committee may in its discretion select a different Independent Accounting Firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.

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        PwC representatives 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 unanimously recommends a vote "FOR" the ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for 2015. Proxies solicited by the Board of Directors will be voted "FOR" ratification unless a stockholder indicates otherwise in voting the proxy.

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PROPOSAL NO. 3

ADVISORY APPROVAL OF EXECUTIVE COMPENSATION

        As required by Section 14A of the Securities Exchange Act, the Company is providing its stockholders with the opportunity to approve, on an advisory basis, the compensation of its executives as described in this Proxy Statement. This is the fifth year that the Company is asking stockholders to vote on this type of proposal, known as a "say-on-pay" proposal. At the Annual Meeting of Stockholders held on May 13, 2014, approximately 97 percent of the shares that were voted on this issue voted to approve the compensation of the Company's Named Executive Officers as disclosed in last year's Proxy Statement.

        Thus, the Company is submitting to stockholders the following resolution for their consideration and approval:

        "RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company's Named Executive Officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (including in the Compensation Discussion and Analysis, the accompanying compensation tables and related narrative)."

        As described in the Compensation Discussion and Analysis portion of this Proxy Statement, 3M delivered another outstanding year in 2014, in terms of both financial performance and returns to its stockholders. These results reflected the strong performance of the Company's leadership team, including the Named Executive Officers, which impacted their annual and long-term incentive compensation earned during 2014. The Compensation Committee has taken additional actions to further strengthen the alignment between the incentive compensation of 3M's executives and both the financial performance of the Company and its business units as well as their individual performance. These actions are intended to enable even higher returns for the Company's stockholders, after 3M's common stock provided a total shareholder return (stock price appreciation plus dividends) of 20 percent during 2014.

        While the Board of Directors and the Compensation Committee intend to carefully consider the results of the voting on this proposal when making future decisions regarding executive compensation, the vote is not binding on the Company or the Board and is advisory in nature.

Recommendation of the Board

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

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SECURITY OWNERSHIP OF MANAGEMENT

        The following table includes all 3M stock-based holdings, as of February 28, 2015, 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)
  Deferred
Stock(3)
  Total(4)  

Linda G. Alvarado, Director

    16,890         10,037     26,927  

Sondra L. Barbour, Director

   
   
   
412
   
412
 

Thomas "Tony" K. Brown, Director

   
   
   
1,631
   
1,631
 

Vance D. Coffman, Director

   
6,118
   
   
33,710
   
39,828
 

Michael L. Eskew, Director

   
   
   
28,591
   
28,591
 

Herbert L. Henkel, Director

   
   
   
24,498
   
24,498
 

Muhtar Kent, Director

   
   
   
4,023
   
4,023
 

Edward M. Liddy, Director

   
   
   
43,806
   
43,806
 

Robert J. Ulrich, Director

   
12,781
   
   
6,453
   
19,234
 

Inge G. Thulin, Director,
Chairman of the Board, President and Chief Executive Officer

   
774,500
   
   
39,372
   
813,872
 

Nicholas C. Gangestad,
Senior Vice President and Chief Financial Officer

   
35,854
   
   
3,246
   
39,100
 

David W. Meline,
Former Senior Vice President and Chief Financial Officer

   
173,077
   
   
30,870
   
203,947
 

Hak Cheol Shin,
Executive Vice President

   
383,943
   
12,646
   
   
396,589
 

Julie L. Bushman,
Senior Vice President

   
134,350
   
12,646
   
   
146,996
 

Michael G. Vale,
Executive Vice President

   
115,209
   
15,733
   
   
130,942
 

All Directors and Executive Officers as a Group (28 persons)(5)

   
2,762,675
   
137,541
   
239,777
   
3,139,993
 

FOOTNOTES TO COMMON STOCK AND TOTAL STOCK-BASED HOLDINGS TABLE

        (1)   This column lists beneficial ownership of 3M common stock as calculated under Securities and Exchange Commission rules. 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 Securities and Exchange Commission 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 28, 2015, as follows: Mr. Thulin 712,019, Mr. Gangestad 29,710, Mr. Meline 173,077, Mr. Shin 331,679, Ms. Bushman 105,483, and Mr. Vale 106,288.

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        (2)   This column reflects 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). The executive officers do not have voting power with respect to the shares listed in this column.

        (3)   This column reflects shares earned by the directors as a result of their service on the Board of Directors, the payout of which has been deferred until following the termination of their membership on the Board of Directors. This column also includes the following shares of the Company's common stock which the executive officers are entitled to receive following their retirement from the Company as a result of their election to defer the payout of their 2010, 2011 and/or 2012 performance share awards under the 2008 Long-Term Incentive Plan: Mr. Thulin 39,372, Mr. Gangestad 3,246, Mr. Meline 30,870, and All Directors and Executive Officers as a Group 86,616. Neither the directors nor the executive officers have voting power with respect to the shares listed in this column.

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

        (5)   Each director and executive officer individually, and All Directors and Executive Officers as a Group, beneficially owned less than one percent of the outstanding common stock of the Company.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

        The following table sets forth information regarding beneficial owners of more than 5 percent of the outstanding shares of 3M common stock.

Name/Address
  Common Stock
Beneficially Owned
  Percent of
Class
 

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

  49,753,937     7.8  

The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 19355

 

39,984,727

   

6.23

 

BlackRock, Inc.(3)
40 East 52nd Street
New York, NY 10022

 

38,979,264

   

6.1

 

        (1)   In a Schedule 13G filed with the Securities and Exchange Commission on February 12, 2015, State Street Corporation reported that, as of December 31, 2014, it and its direct and indirect subsidiaries, acting in various capacities, had shared voting power and shared dispositive power with respect to 49,753,937 shares of 3M common stock, of which 16,367,934 shares were held 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. State Street Bank and Trust Company, an affiliate of State Street Corporation ("State Street Bank") provides custody, investment management, and corporate finance services to the Company and a number of employee benefit plans sponsored by the Company and its affiliates. The 3M Employee Retirement Income Plan, the 3M Voluntary Investment Plan and Employee Stock Ownership Plan, the 3M Savings Plan, and the 3M Employee Welfare Benefit Association utilize State Street Global Advisors, an affiliate of State Street Bank, as an investment manager for their respective employee benefit plans. State Street Bank also provides custody services for the Company's defined contribution plans in the U.S. Further, State Street Bank and Trust Company is a participant of 3M Company's $2.25 billion revolving credit agreement dated August 5, 2014. In total,

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the Company and the various employee benefit plans paid fees of $1.9 million to State Street Bank and its affiliates in 2014. The fees paid are regularly reviewed by the Company and the fiduciaries of the employee benefit plans and are determined to be reasonable for the services provided.

        (2)   In a Schedule 13G/A filed with the Securities and Exchange Commission on February 10, 2015, The Vanguard Group reported that, as of December 31, 2014, it had sole voting power with respect to 1,096,062 shares, sole dispositive power with respect to 38,939,597 shares, and shared dispositive power with respect to 1,045,130 shares. Vanguard provides investment management services to the Company's defined contribution plans in the U.S. through co-mingled mutual fund vehicles. The 3M Voluntary Investment Plan and Employee Stock Ownership Plan and the 3M Savings Plan use these investments in their defined contribution investment choices. Fees paid for investment management of these funds are incorporated into the fund NAV on a daily basis and fully disclosed as an expense ratio for the funds. As a result, these fees are paid by participants in the Company's defined contribution plans and are not paid by the Company. The total amount of the fees will fluctuate based on the plan participant allocation decisions. The fees are regularly reviewed by the fiduciaries of the retirement plans and are determined to be reasonable for the services provided.

        (3)   In a Schedule 13G/A filed with the Securities and Exchange Commission on February 9, 2015, BlackRock, Inc. reported that, as of December 31, 2014, it had sole voting power with respect to 31,021,581 shares and sole dispositive power with respect to 38,979,264 shares. BlackRock, Inc. and its affiliates provide investment management services to several employee benefit plans sponsored by the Company and its Canadian affiliate. The 3M Employee Retirement Income Plan, the 3M Voluntary Investment Plan and Employee Stock Ownership Plan, the 3M Savings Plan and the 3M Canada Company Master Trust utilize these investment management services. In total, the various employee benefit plans paid fees of $3.2 million in 2014 to BlackRock, Inc. and its affiliates, a majority of which was paid by the participants in the U.S. Voluntary Investment Plan and Employee Stock Ownership Plan. The fees paid are regularly reviewed by the fiduciaries of the employee benefit plans and are determined to be reasonable for the services provided.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and any person owning more than 10 percent of the outstanding shares of 3M common stock, to file with the Securities and Exchange Commission reports regarding their ownership and changes in their 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 2014, its directors and executive officers complied with all Section 16(a) filing requirements. In making this statement, 3M has relied upon examination of copies of Forms 3, 4, and 5 and the written representations of its directors and executive officers.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Summary

        This Compensation Discussion and Analysis describes 3M's executive compensation program, explains how 3M's Compensation Committee oversees and implements this program, and reviews the 2014 compensation of the Named Executive Officers whose compensation is disclosed in the tables that follow this portion of the Proxy Statement. For 2014, 3M's Named Executive Officers (as determined according to the applicable regulations of the Securities and Exchange Commission) were:

Name
 
Title
Inge G. Thulin   Chairman of the Board, President and Chief Executive Officer
Nicholas C. Gangestad   Senior Vice President and Chief Financial Officer
David W. Meline   Former Senior Vice President and Chief Financial Officer
Hak Cheol Shin   Executive Vice President, International Operations
Julie L. Bushman   Senior Vice President, Business Transformation and Information Technology
Michael G. Vale   Executive Vice President, Consumer Business Group

        3M delivered another outstanding year in 2014, in terms of both financial performance and returns to its stockholders. These results reflected the strong performance of the Company's leadership team, including the Named Executive Officers, and impacted their incentive compensation in the following ways:

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        The stock options granted to 3M's executives during and in years prior to 2014 grew in value as the Company's stock price increased from $140.25 on December 31, 2013, to $164.32 on December 31, 2014. 3M's common stock provided a total shareholder return (stock price appreciation plus dividends) of 20 percent during 2014. As reflected in the following table, 3M's stock performance (total shareholder return of 29.2 percent over the three years ending on December 31, 2014) continues to compare favorably with the stock performance of the peer companies included in the Company's executive compensation peer group (for which the median total shareholder return over the same three-year period was 21.5 percent).

GRAPHIC

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Factors Creating Alignment Between Pay and Performance and Balancing Risk

        3M's executive compensation program is designed to maintain a strong alignment between corporate performance and executive compensation by tying incentive compensation to the achievement of performance metrics that increase the Company's long-term value. The incentive compensation portion of the program rewards long-term value creation while also protecting the Company and its stockholders from inappropriate risk-taking and conflicts between the interests of the executives and the interests of the Company and its stockholders. Highlights of the program include:

Compensation Best Practices

        3M's executive compensation program incorporates and is administered according to the following best practices:

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Significant Compensation Actions During the Past Year

        During 2014 and the first two months of 2015, 3M and the Committee made the following decisions and took the following actions with respect to the Company's executive compensation program:

Say on Pay Advisory Approval of Executive Compensation

        As required by Section 14A of the Securities Exchange Act, in 2014 the Company conducted an annual advisory vote of stockholders with respect to the compensation of its Named Executive Officers. At the Company's Annual Meeting of Stockholders held on May 13, 2014, approximately 97 percent of the shares that were voted on this item approved the compensation of the Company's Named Executive Officers as disclosed in the 2014 Proxy Statement. While the approval was advisory in nature, the Committee has taken note of this very strong stockholder support and views the outcome as confirmation that stockholders generally believe that the pay of the Named Executive Officers is appropriately aligned with their performance and the performance of the Company as well as the interests of 3M's stockholders. As a consequence, the results of this vote have not caused the Committee to make any changes in either the executive compensation program or the compensation of any Named Executive Officer.

Principles 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:

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Terms

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

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Benchmarking

        In order to provide competitive Total Direct Compensation, 3M annually surveys the executive compensation practices of a large group of comparator companies (approximately 170, although the number and identity of the companies may vary from year to year). Survey data is statistically regressed 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 (Aon Hewitt, Frederic W. Cook & Co., Inc., and Towers Watson). The survey comparator group consists of companies in the Standard & Poor's 500 Index (excluding financial services companies) and/or other companies with annual revenue exceeding $20 billion that participate in the three consultants' executive compensation surveys. By using survey data covering 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. The Committee does not review the identity of the companies in this survey comparator group.

        In addition, Aon Hewitt and Frederic W. Cook & Co., Inc. 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 assess the reasonableness of the benchmarking results for each executive position benchmarked, helping to ensure that the Company's compensation objectives are being met. 3M's executive compensation peer group consists of the following 19 companies (which remain the same as in the previous year), as recommended by the Committee's independent compensation consultant and approved by the Committee:

Caterpillar Inc.   Illinois Tool Works Inc.
Corning Incorporated   Johnson & Johnson
Covidien plc   Kimberly-Clark Corporation
Danaher Corporation   Medtronic, Inc.
Deere & Company   Parker-Hannifin Corporation
Dow Chemical Company   The Procter & Gamble Company
Eaton Corporation plc   TE Connectivity Ltd.
E. I. du Pont de Nemours and Company   Tyco International plc
Emerson Electric Co.   United Technologies Corporation
Honeywell International Inc.    

        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 (investment peers), and/or (2) they meet criteria based on similarity of their business and pay models, market capitalization (based on an eight-quarter rolling average), and annual revenues.

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How the Committee Uses this Benchmarking Information

        The Committee considers the pay data from the Benchmarking Groups when determining each executive's Total Direct Compensation. For executives whose performance meets the Company's expectations, the Committee aims to provide them with target Total Cash Compensation that is at or very close to the median of the corresponding target compensation paid to executives in the Benchmarking Groups, and with long-term incentive compensation delivered through annual grants having values that are within a range of 80 to 120 percent of the median of the corresponding compensation values provided to executives in the Benchmarking Groups. Executives whose performance consistently exceeds the Company's expectations may receive Total Cash Compensation of 120 to 125 percent of the median of the corresponding compensation paid to executives in the Benchmarking Groups. Executives whose performance far exceeds the Company's expectations may also receive annual long-term incentive compensation grants having values that are within a range of 125 to 160 percent of the median of the corresponding compensation values provided to executives in the Benchmarking Groups.

        The Committee also uses information on the executive compensation practices at companies in the executive compensation peer group when considering design changes to the Company's executive compensation program. Overall, the Company believes that use of this information from the Benchmarking Groups enables the Committee to create better alignment between executive pay and performance and to help ensure that 3M can attract and retain high-performing executive leaders.

Role of the Compensation Committee and its Advisors

        3M provides compensation to its executives to recognize their contributions to the success of its business and reward them for delivering performance that meets the growth, profitability, and other objectives of the Company. All elements of this compensation are determined by 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.

        The Committee regularly reviews the design of and risks associated with the Company's executive compensation program and, with the assistance of its independent compensation consultant, makes decisions concerning changes in the executive compensation program when appropriate.

        During 2014, 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 advice regarding the Company's executive salary structure, annual and long-term incentive compensation plans, compensation-related risks, and other 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 independent advisory support to the Nominating and Governance Committee on the compensation of 3M's nonemployee directors so that valuation methodologies and peer groups are consistent with those used for executives and other employees. During the year the Committee conducted an evaluation of the independence of Mr. Paulin and his firm considering the relevant regulations of the Securities and Exchange Commission and the listing standards of the New York Stock Exchange, and it concluded that the services performed by Mr. Paulin and his firm raised no conflicts of interest.

        3M's executive officers assist the Committee with the process of determining the compensation of the Company's executives. In particular, Mr. Thulin, 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 these annual performance evaluations form the basis for Mr. Thulin's recommendations to the Committee as to the annual merit base salary and target annual incentive compensation increases for such senior executives, as well as the size of their

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annual long-term incentive compensation awards. The Committee discusses these recommendations with Mr. Thulin at its meetings prior to making its decisions on any change to an executive's annual base salary or target annual incentive compensation or any long-term incentive compensation awards.

        The Committee reviews and approves annual performance goals and objectives for 3M's Chief Executive Officer. Acting through its Chairman, the Committee also conducts and discusses with the independent members of the Board of Directors an annual evaluation of the Chief Executive Officer's performance against such goals and objectives. Finally, the Committee, assisted by its independent compensation consultant, annually reviews and approves (based on this annual evaluation), subject to ratification by the independent members of the Board of Directors, the compensation of the Chief Executive Officer.

Elements of the Compensation Program

        The compensation program for 3M's executives consists of the following elements:

        3M's executives also participate in various benefit plans made available to most of 3M's U.S. employees, are eligible to participate in three deferred compensation plans (which enable them to save for retirement or other financial planning purposes), and receive certain other benefits, each of which is described in the All Other Compensation Table. The entire program applied to approximately 110 executives during 2014, including all of the Named Executive Officers.

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        The following table shows how the 2014 Total Direct Compensation of the Named Executive Officers was apportioned among these elements, and how these elements relate to the strategic business goals of the Company. This table also reflects the relative balance among the elements as well as the alignment of their compensation with the goal of creating long-term value for the Company and its stockholders.

GRAPHIC

        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 does not vary with the performance of the Company. Base salaries are designed to compensate the executives for their normal day-to-day 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 annual incentive compensation through plans that are designed to align a significant portion of their Total Cash Compensation with the financial performance of the Company and its business units. Each executive is assigned a target amount of annual incentive compensation as part of his or her Total Cash Compensation, but the amount of annual incentive compensation actually paid depends on the performance of 3M and its relevant business units as well as their individual performance. For Mr. Thulin, annual incentive compensation represented 61 percent of his target Total Cash Compensation for 2014. For 3M's other Named Executive Officers, annual incentive compensation represented from 43 percent to 50 percent of their target Total Cash Compensation for 2014.

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        3M's AIP offers eligible employees the opportunity to earn short-term incentive compensation based on three performance metrics, which are weighted as indicated:

        The amount actually paid to an eligible employee for a particular year may range from 0 percent to 300 percent (reduced to 200 percent, effective for 2015) of the employee's target amount for that year, although the Committee has established a practice whereby any portion of an employee's annual incentive compensation payout that exceeds 200 percent of the employee's target amount is paid in the form of 3M restricted stock units that vest three years following the end of the year in which the compensation was earned, assuming continued employment. The amount of annual incentive compensation actually paid to an eligible employee may be increased by up to 30 percent or be reduced by up to 100 percent based on the employee's individual performance during that year. Individual performance takes into account both quantitative (financial results, for example) and qualitative (market and economic circumstances, for example) factors. In no event, however, may the total amount paid to an eligible employee exceed 300 percent (reduced to 200 percent, effective for 2015) of the employee's target amount for the year.

        While the annual incentive compensation earned by most 3M executives is determined under the AIP, the annual 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 Plan approved by 3M's stockholders at the 2007 Annual Meeting. A total of 20 3M senior executives participated in this Executive Plan during 2014. This Executive Plan, which is intended to provide compensation that is exempt from the $1 million annual deduction limit of Section 162(m) of the Internal Revenue Code, provides performance-based compensation for which the performance goal is the Company's Adjusted Net Income.

        The Executive Plan does provide the Committee with discretion to determine the amount of annual incentive compensation paid to 3M's Named Executive Officers and its other senior executives. The Executive Plan establishes a maximum amount of annual incentive compensation that may be earned by each covered executive for a year (a percentage of the Company's Adjusted Net Income for such year) and then the Committee utilizes this discretion to pay each covered executive less than this maximum amount based on such factors as it deems relevant. Since the Executive Plan was first adopted in 2007, the Committee has rarely used this discretion to pay a covered executive anything more or less than the same amount such executive would have received had he or she been participating in the broad-based AIP (including the individual performance multiplier).

        In determining the amount of annual incentive compensation paid to a covered executive, the executive's individual performance is considered based upon the annual performance evaluation that Mr. Thulin, assisted by 3M's Senior Vice President, Human Resources, does for each covered executive (other than himself) and the annual performance evaluation that the Compensation Committee acting through its Chairman does for Mr. Thulin. 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 the individual's overall performance against these goals and objectives at the end of the year.

        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 is a typical omnibus-type plan that

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authorizes the Committee to grant stock options, restricted stock, restricted stock units, stock appreciation rights, performance cash, performance shares, and other stock awards to management employees of the Company. The Company provides its executives with this long-term incentive compensation based on 3M common stock in order to effectively motivate such executives to build long-term stockholder value.

        3M's executives generally participate in the same health care, disability, life insurance, pension, and 401(k) benefit plans available to most of 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), or personal security (travel on corporate aircraft and home security equipment/monitoring, for example) of the executives. No tax gross-ups are provided on any of these additional benefits and perquisites.

How 3M Determined the 2014 Compensation of the Named Executive Officers

        All amounts were determined by the Committee, assisted by its independent compensation consultant, with the input of Mr. Thulin (other than with respect to his own compensation). This input included:

        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 time in their current positions, internal pay equity, and individual performance. Overall, the Committee aims to provide the Named Executive Officers with target Total Cash Compensation that is at or very close to the median value of the corresponding compensation provided to executives with similar responsibilities at companies in the Benchmarking Groups.

        However, the Committee adjusts the stock option portion (and, beginning in 2015, the performance share portion) of the long-term incentive compensation provided to the Named Executive Officers to reflect each individual's actual individual performance during the previous year.

        Changes in the base salaries and target Total Cash Compensation of the Named Executive Officers are considered annually by the Committee. Any adjustments are made after considering the most recent compensation data for executives with similar responsibilities at companies in the Benchmarking Groups, each individual's position in the salary range for his or her position, and the individual's performance during the preceding annual period.

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        In February 2014, the Committee approved the following increase in the base salary and target Total Cash Compensation of Mr. Shin. This increase was designed to reduce a significant gap that had arisen between his compensation and the median compensation paid for executives serving in similar positions at companies in the Benchmarking Groups.

 
Name
  Previous
Base
Salary

  New Base Salary
effective 2/1/14

  %
Increase

  Previous target
Total Cash
Compensation

  New target
Total Cash
Compensation
effective 2/1/14

  %
Increase

 

Hak Cheol Shin

  $678,729   $746,772   10%   $1,255,648   $1,381,526   10%
 

        In February 2014, the Committee approved (and in the case of Mr. Thulin, the independent members of the Board of Directors ratified) the following increases in the base salaries and target Total Cash Compensation of the Named Executive Officers following completion of their annual performance evaluations:

 
Name
  Previous
Base
Salary

  New Base Salary
effective 4/1/14

  %
Increase

  Previous target
Total Cash
Compensation

  New target
Total Cash
Compensation
effective 4/1/14

  %
Increase

 

Inge G. Thulin

  $1,352,000   $1,406,080   4%   $3,432,000   $3,569,280   4%
 

David W. Meline

     $732,186      $761,766   4%   $1,464,372   $1,523,533   4%
 

Hak Cheol Shin

     $746,772      $761,894   2%   $1,381,526   $1,409,502   2%
 

Julie L. Bushman

     $530,500      $551,957   4%   $981,469   $1,021,120   4%
 

Michael G. Vale

     $551,696      $562,729   2%   $1,020,636   $1,041,049   2%
 

        As a result of these increases, the target Total Cash Compensation of these Named Executive Officers ranged from 91 to 102 percent of the median value of the corresponding compensation provided to executives with similar responsibilities at companies in the Benchmarking Groups.

        In May 2014, the Committee approved the following increase in the base salary and target Total Cash Compensation of Ms. Bushman. This increase was designed to make her compensation better reflect the breadth and responsibility of her role leading the Company's business transformation team.

 
Name
  Previous
Base
Salary

  New Base Salary
effective 6/1/14

  %
Increase

  Previous target
Total Cash
Compensation

  New target
Total Cash
Compensation
effective 6/1/14

  %
Increase

 

Julie L. Bushman

  $551,957   $641,848   16%   $1,021,120   $1,123,232   10%
 

        In June 2014, the Committee approved the following increase in the base salary and target Total Cash Compensation of Mr. Gangestad as a result of his appointment to the position of Senior Vice President and Chief Financial Officer following the retirement of Mr. Meline. This increase was designed to bring his target Total Cash Compensation up to 70 percent of the median paid to executives serving in similar positions at companies in the Benchmarking Groups (and the Committee expects to finish bringing his cash compensation up to this median, assuming satisfactory performance).

 
Name
  Previous
Base
Salary

  New Base Salary
effective 6/1/14

  %
Increase

  Previous target
Total Cash
Compensation

  New target
Total Cash
Compensation
effective 6/1/14

  %
Increase

 

Nicholas C. Gangestad

  $367,005   $522,982   43%      $550,507   $1,045,964   90%
 

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        During 2014, the Committee provided the Named Executive Officers with the opportunity to earn short-term incentive compensation under the Executive Plan. Each Named Executive Officer's target annual incentive for the year was equal to the difference between his or her target Total Cash Compensation and annual base salary. Each of the Named Executive Officers was assigned to an appropriate business unit (the entire Company, in some cases) established under the AIP for the purpose of measuring business performance during 2014 and converting that performance into a payout based on the AIP's formulas. While none of the Named Executive Officers are covered by the AIP, the Committee rarely uses its discretion under the Executive Plan to pay the covered executives (other than Mr. Thulin) anything more or less than the same amount such executive would have received had he or she been participating in the AIP (including the individual performance multiplier).

        The amounts payable under the AIP for 2014 were based on the following performance results for the Company and, as applicable, the respective business units to which the Named Executive Officers were assigned:

 
 
  Local Currency Sales   Economic Profit    
  Weighted
Average
Payout %
Based on
Payout
Curve

 
  Total
Company
Economic
Profit vs.
Prior Year

(Dollar amounts in millions)
 
Business Unit

   
   
   
   
  Plan
  Actual
  Actual vs.
Plan

  Plan
  Actual
  Actual vs.
Plan

 

Total Company

  $31,795   $32,386   102%   $2,586   $2,791   108%   116%   125.8%
 

Total International

  $20,657   $20,691   100%   $2,990   $2,751     92%   116%   97.2%
 

Consumer Business Group

  $4,635   $4,603     99%   $558   $547     98%   116%   100.5%
 

        Since the Company satisfied the Executive Plan's performance objective by earning Adjusted Net Income of $4.956 billion for 2014, 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 ($12,390,000). As explained above, however, the Executive Plan authorizes the Committee to pay each covered executive less than this maximum amount based on such factors as it deems relevant. At its meeting in February 2015, the Committee approved (and with respect to Mr. Thulin, the independent members of the Board of Directors ratified) payment of the following amounts of annual incentive compensation under the Executive Plan for 2014, which it believes more closely aligns the payout to each individual with the 2014 performance of the Company and the assigned business units as well as the individual's performance:

 
Name
  Target Annual
Incentive*

  Actual 2014
Incentive

 

Inge G. Thulin

  $2,142,798   $3,500,000
 

Nicholas C. Gangestad

     $378,340      $476,102
 

David W. Meline

     $747,091      $464,667**
 

Hak Cheol Shin

     $639,360      $621,458
 

Julie L. Bushman

     $471,866      $653,176
 

Michael G. Vale

     $476,019      $525,978
 
*
These amounts are prorated to reflect the increases in Total Cash Compensation described above that resulted in corresponding increases in each individual's target annual incentive compensation.

**
The amount of Mr. Meline's payout was reduced to reflect the number of months he worked for the Company during 2014 prior to his retirement.

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        The Committee determined the amount of Mr. Thulin's annual incentive compensation for 2014 by considering first what his payout would have been had he been participating in the broad-based AIP (including the performance multiplier). The Committee went on to consider other factors in determining the amount of his payout, including the annual incentive/bonus compensation provided to CEOs of the companies in 3M's executive compensation peer group, Mr. Thulin's responsibility for delivering the Company's strong financial results, his success in building a strong leadership team, and his efforts to position the Company for future success through a continued focus on the three strategic levers of portfolio management, investing in innovation, and business transformation.

        Consistent with its past practice, the Committee utilized its discretion to pay each Named Executive Officer other than Mr. Thulin the same amount such executive would have received had he or she been participating in the broad-based AIP (including the individual performance multiplier).

        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 2013, the Committee approved (and in the case of Mr. Thulin, the independent members of the Board of Directors ratified) the following compensation values of the Named Executive Officers' annual long-term incentive compensation awards for 2014. For ease of comparison, the following table also shows the compensation values of the Named Executive Officers' 2013 annual long-term incentive compensation awards.

 
Name
  Compensation
Value of 2013
Annual Awards

  Compensation
Value of 2014
Annual Awards

 

Inge G. Thulin

  $8,320,100   $9,500,184
 

Nicholas C. Gangestad

     $284,884      $474,419*
 

David W. Meline

  $3,354,048   $3,029,797
 

Hak Cheol Shin

  $1,613,464   $1,580,157
 

Julie L. Bushman

  $1,333,351   $1,766,943
 

Michael G. Vale

  $1,720,129   $1,560,136
 
*
Reflects the fact that these annual awards were granted before Mr. Gangestad was promoted to the position of Chief Financial Officer.

        Consistent with market practices at companies in the Benchmarking Groups, during 2014 the Committee chose to deliver one-half of the target compensation value of the annual long-term incentive compensation awards provided to 3M's Named Executive Officers in the form of stock options (before adjustment for individual performance) and the remaining one-half in the form of performance shares. Performance shares awarded in 2014 will result in the issuance of actual shares of 3M common stock to 3M's Named Executive Officers only if the Company achieves selected financial goals over a three-year performance period ending on December 31, 2016. The number of shares of 3M common stock that will be issued for each 2014 performance share is linked to the Company's performance as measured by the criteria of Organic Sales Volume Growth, Return on Invested Capital, and the New Product Vitality Index. These performance criteria were selected because the Committee believes that they are important drivers of long-term stockholder value. Approximately 40 percent of the number of shares actually earned will be determined by Organic Sales Volume Growth, another 40 percent will be determined by Return on Invested Capital, and the remaining 20 percent will be determined by the New Product Vitality Index. Accordingly, 60 percent of each individual's long-term incentive opportunity attributable to these awards is tied to the Company's long-term sales growth objective, a key contributor to long-term

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stockholder value. Attainment of these three independent performance criteria is measured separately for each calendar year during the three-year measurement period, with each year weighted as follows (2014 — 50 percent; 2015 — 30 percent; and 2016 — 20 percent). However, the formulas by which the Company's performance is measured do not change over the three-year performance period.

        The number of shares of 3M common stock that will actually be delivered at the end of the three-year performance period ending on December 31, 2016, may be anywhere from 0 percent to 200 percent of each performance share granted, depending on the performance of the Company during such performance period. However, an executive may forfeit all or a portion of such shares if he or she does not remain employed by the Company throughout the three-year performance period.

        For 2014, the Committee approved the following formulas for determining the number of shares of 3M common stock to be delivered for each performance share awarded, with the total number of shares actually delivered being the sum of the number of shares earned as a result of the Company's achievement of each of the three financial goals. All three formulas remained the same as the formulas for the performance shares awarded in 2013. In the event that the Company's performance as measured by any of these performance criteria falls between any of the percentages listed below, the number of shares of 3M common stock earned is determined by interpolation.

 
Organic Sales Volume Growth Exceeding IPI
  % of
number of
performance
shares

  Return on
Invested Capital

  % of
number of
performance
shares

  New Product
Vitality Index

  % of
number of
performance
shares

  Total % of
number of
performance
shares

 

below –1.0%

    0%   below 18.0%     0%   below 29.0%     0%     0%
 

–1.0%

    8%   18.0%     8%   29.0%     4%   20%
 

0.5%

  40%   20.0%   40%   34.0%   20%   100%
 

2.0% or higher

  80%   22.0% or higher   80%   39.0% or higher   40%   200%
 

        The above formulas are not a prediction of how 3M will perform during the years 2014 through 2016. The sole purpose of these formulas, which were approved by the Committee in February 2014, is to establish a method for determining the payment of long-term incentive compensation under the Long-Term Incentive Plan. 3M is not providing any guidance, nor updating any prior guidance, of its future performance with the disclosure of these formulas, and you are cautioned not to rely on these formulas as a prediction of 3M's future performance.

        During 2014 the Committee approved one-time restricted stock unit grants to several of the Company's Named Executive Officers. These grants, which vest five years following the grant date assuming continued employment, were made for the purpose of retaining executives who have delivered outstanding and consistent performance and who are expected to make important contributions in the future. The grants are also expected to help stabilize the Company's executive team following the retirement of several key executives, as part of its overall succession planning process. Each grant was made in the form of restricted stock units corresponding to the number of shares of 3M common stock having a fair market value of $2,000,000 on the grant date. Except in cases of death or disability, all of the units will be forfeited in the event an executive's employment with the Company ends prior to the vesting date. These grants were made to Julie L. Bushman, Hak Cheol Shin, and Michael G. Vale.

        See the 2014 Grants of Plan-Based Awards Table in this Proxy Statement for information regarding grants of additional 2012, 2013, and 2014 performance shares made to Mr. Gangestad under the 2008 Long-Term Incentive Plan following his appointment as Senior Vice President and Chief Financial Officer in June. Consistent with the Company's treatment of other newly-appointed or promoted senior

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executives, these performance shares were intended to provide Mr. Gangestad with a portion of the long-term incentive compensation granted to comparable executives in those respective years, prorated to reflect the amount of time in his new position. The performance criteria and other material terms of these performance shares were the same as the performance criteria and other material terms of the performance shares granted to other executives of the Company during those respective years.

        2014 marked the final year of the three-year performance period of the performance share awards made to 3M's executives in 2012 (and, in some cases, in 2013 and 2014) under the Long-Term Incentive Plan. The performance share awards made during 2012 were designed to deliver compensation based on the performance of the Company over the years 2012, 2013, and 2014 as measured by its Organic Sales Volume Growth, Return on Invested Capital, and sales from new products as measured by the New Product Vitality Index. Pursuant to the formulas approved by the Committee at the time the initial awards were made, the Company's performance during this three-year performance period resulted in a payout of .835 shares of 3M common stock per 2012 performance share (based on annual Organic Sales Volume Growth vs. the worldwide Industrial Production Index of –0.7 percent in 2012, 0.5 percent in 2013, and 1.0 percent in 2014; annual Return on Invested Capital of 20.2 percent in 2012, 20.0 percent in 2013, and 22.1 percent in 2014; and annual New Product Vitality Index of 33.1 percent in 2012, 33.3 percent in 2013, and 32.8 percent in 2014).

 
Name
  Number of
target
performance
shares

  Number of
actual 3M
shares earned
(rounded)

  Value of
actual 3M
shares earned*

 

Inge G. Thulin

  49,359   41,215   $6,772,527

Nicholas C. Gangestad

  4,005   3,345   $549,615**

David W. Meline

  15,770   10,973***   $1,803,144

Hak Cheol Shin

  9,292   7,759   $1,274,978

Julie L. Bushman

  9,292   7,759   $1,274,978

Michael G. Vale

  9,292   7,759   $1,274,978
*
Value of the shares earned as of December 31, 2014, when the fair market value of a share of 3M common stock was $164.32.

**
Reflects the fact that Mr. Gangestad served in the position of Chief Financial Officer for only seven months of the three-year performance period.

***
The number of shares earned was reduced to reflect the number of months that Mr. Meline worked for the Company during the three-year performance period prior to his retirement.

Stock Ownership Guidelines

        The Company's stock ownership guidelines apply to all Section 16 officers of the Company and are designed to increase an executive's equity stake in 3M and more closely align his or her financial interests with those of 3M's stockholders. The guidelines provide that the Chief Executive Officer should attain beneficial ownership of 3M stock equal to six times his or her annual base salary, the Executive Vice Presidents and a majority of the Senior Vice Presidents should attain beneficial ownership of 3M stock equal to three times their annual base salaries, and Vice Presidents and the remaining Senior Vice Presidents should attain beneficial ownership of 3M stock equal to two times their annual base salaries.

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        The stock ownership guidelines provide that the number of shares required to be beneficially owned by each covered executive will be calculated based on such executive's annual base salary at the time of initial appointment to a Section 16 position and at the time of a position change from one multiple level to another multiple level, and the fair market value of 3M common stock at that time. Beginning December 31, 2013, and every three years thereafter, the stock ownership guidelines require the Company to recalculate the number of shares required to be beneficially owned by each covered executive using their annual base salary and fair market value of 3M common stock at the recalculation date.

        The stock ownership guidelines provide that each covered executive should attain the required beneficial ownership of 3M stock within five years of their initial appointment to a Section 16 position or a position change from one multiple level to another multiple level. The guidelines also provide that each covered executive whose required level of ownership increases as a result of a periodic recalculation will have three years from the recalculation date (or the balance of the five-year period since the date of their initial appointment or latest position change, if longer) to attain the required level of ownership. However, if a covered executive is not making adequate progress to meet the required level of ownership within the applicable time period, the guidelines provide that he or she will be required to hold and not sell a sufficient number of the after-tax 3M shares received upon the next payout of performance shares to be on track to satisfy the required ownership level. All of 3M's executives covered by the guidelines either have met or are on track to meet the required level of ownership within the applicable time periods. For more information concerning the 3M stock ownership of the Named Executive Officers, see the "Information on Stock Ownership of Directors and Executive Officers" in this Proxy Statement.

        For purposes of these guidelines, shares owned directly by a covered executive or by members of the covered executive's immediate family, shares owned indirectly through a covered executive's account in the Company's 401(k) plan or another deferred compensation plan, unvested shares of restricted stock owned by a covered executive, and shares represented by unvested restricted stock units granted to a covered executive are all considered to be beneficially owned by the covered executive and are counted in determining attainment of the required ownership level.

Prohibition of Hedging and Pledging

        To prevent speculation or hedging of interests in our equity by our executive officers, the Company prohibits short sales of 3M stock or the purchase or sale by these executive officers of financial instruments, including options, puts, calls, equity swaps, collars, or other derivative instruments that are directly linked to 3M stock. In addition, the Company also prohibits the use of standing orders, margin accounts, and pledging of securities by its executive officers.

Policy on Reimbursement of Incentive Payments ("Clawback")

        The Company's Board of Directors has adopted a policy requiring the reimbursement of excess incentive compensation payments made to an executive in the event that 3M is required to make a material restatement of its financial statements. This policy applies to all senior executives of the Company including all of the Named Executive Officers. This policy does not require any misconduct on the part of the covered executive whose excess incentive compensation payment is being reimbursed. As long as the Company is required to make a material restatement of its financial statements that causes an incentive compensation payout to be higher than it should have been, the Company may seek to recover the overpayment from all affected executives irrespective of whether their conduct contributed to the need for the restatement. The Company established this policy prior to the passage of the Dodd-Frank Act, which establishes new requirements for such policies. Upon issuance by the Securities and Exchange Commission of final implementing regulations for the Dodd-Frank Act's requirements, the Company will make any changes to its existing policy as may be required to comply with those regulations.

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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 that meets certain requirements under Section 162(m) to this limit. 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.

Severance or Change in Control Arrangements

        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.

        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. 3M's Long-Term Incentive Plan under which such long-term incentive awards are issued contains a "double trigger" accelerated vesting provision, meaning that the vesting of equity awards held by a Named Executive Officer is accelerated only (assuming that the awards are continued) if his or her employment is terminated in a qualifying termination within 18 months following a change in control of the Company.

        Finally, 3M does not have arrangements with any of its Named Executive Officers providing for the payment of excise tax gross-ups in the event of a change in control of the Company.

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Compensation Committee Report

        In accordance with the Securities and Exchange Commission'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 2015 Proxy Statement of 3M Company and 3M Company's Annual Report on Form 10-K for the year ended December 31, 2014.

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, a member of the Compensation Committee until his retirement from the Board at the Annual Meeting on May 13, 2014, 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.

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 stockholder 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 Frederic 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 that none of its compensation policies and practices is reasonably likely to have a material adverse effect on the Company.

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2014 Summary Compensation Table

        The following table shows the compensation earned or received during 2014, 2013, and 2012 by each of 3M's Named Executive Officers (as determined pursuant to the Securities and Exchange Commission's disclosure requirements for executive compensation in Item 402 of Regulation S-K).

   
Name and Principal Position
  Year
  Salary
($)

  Bonus
($)

  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
($)

 
   

Inge G. Thulin

    2014     1,392,560     0     4,750,085     4,053,263     3,500,000     5,806,064     613,617     20,115,589  

Chairman of the

    2013     1,339,000     0     4,160,025     3,046,438     2,441,842     4,955,735     425,668     16,368,708  

Board, President and

    2012     1,228,373     0     4,000,053     3,059,772     1,994,865     3,977,742     523,671     14,784,476  

Chief Executive Officer

                                                       

Nicholas C. Gangestad(6)

   
2014
   
449,493
   
0
   
2,207,637
   
188,579
   
476,102
   
755,436
   
41,561
   
4,118,808
 

Senior Vice
President and Chief
Financial Officer

                                                       

David W. Meline(7)

   
2014
   
385,222
   
0
   
1,409,049
   
1,382,983
   
464,667
   
569,966
   
70,833
   
4,282,720
 

Former Senior Vice

    2013     721,695     0     1,361,089     1,321,570     855,548     283,083     97,711     4,640,696  

President and Chief
Financial Officer

    2012     657,107     0     1,278,001     845,156     786,146     253,079     79,520     3,899,009  

Hak Cheol Shin

   
2014
   
765,496
   
0
   
2,833,107
   
637,534
   
621,458
   
2,007,619
   
111,142
   
6,976,356
 

Executive Vice

    2013     673,034     0     833,005     637,316     551,134     368,721     104,097     3,167,307  

President, International
Operations

    2012     637,000     0     753,024     771,668     434,859     624,074     104,466     3,325,091  

Julie L. Bushman(6)

   
2014
   
599,029
   
0
   
2,833,107
   
796,918
   
653,176
   
1,034,230
   
68,644
   
5,985,104
 

Senior Vice President,
Business Transformation
and Information Technology

                                                       

Michael G. Vale(6)

   
2014
   
559,971
   
0
   
2,833,107
   
620,450
   
525,978
   
701,854
   
67,001
   
5,308,361
 

Executive Vice
President, Consumer
Business Group

                                                       

FOOTNOTES TO 2014 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. Assumptions made in the calculation of these amounts are included in Note 14 to the Company's audited financial statements for the fiscal year ended December 31, 2014, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 12, 2015. The amounts included in this column for the performance share awards made during 2014 are calculated based on the probable satisfaction of the performance conditions for such awards. If the highest level of performance is achieved for these performance share awards, the maximum value of these awards at the grant date would be as follows: Mr. Thulin — $9,500,170; Mr. Gangestad — $4,415,274; Mr. Meline — $2,818,098; Mr. Shin — $1,666,032; Ms. Bushman — $1,666,032; and Mr. Vale — $1,666,032.

        (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. Assumptions made in the calculation of these amounts are included in Note 14 to the Company's audited financial statements for the fiscal year ended December 31, 2014, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 12, 2015.

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        (3)   The amounts in the Non-Equity Incentive Plan Compensation column reflect the annual incentive compensation earned by each individual during 2014 under the Company's Executive Annual Incentive Plan.

        (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 10 to the Company's audited financial statements for the fiscal year ended December 31, 2014, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 12, 2015. The interest rate used to measure the value of such pension benefits declined from 4.98 percent in 2013 to 4.10 percent in 2014, accounting for a significant portion of the increase in the value of the pension benefits of the Named Executive Officers. 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. Gangestad, Ms. Bushman, or Mr. Vale for the years 2013 and 2012 since they were not Named Executive Officers of the Company for those years.

        (7)   Mr. Meline retired from the Company effective July 1, 2014.

2014 All Other Compensation Table

 
 
  401(k)
Company
Contributions
($)(1)
  VIP
Excess
Company
Contributions
($)(2)
  Executive
Life
Insurance
($)(3)
  Financial
Planning
($)(4)
  Personal
Aircraft
Use
($)(5)
  Security
Systems/
Services
($)(6)
  Personal
Auto
Use
($)(7)
  Total
($)

Inge G. Thulin

    9,180   128,678   286,115   13,230   158,243   2,605   15,566   613,617

Nicholas C. Gangestad

 

  8,879

 

  13,185

 

    7,737

 

11,760

 

0

 

0

 

0

 

  41,561

David W. Meline

 

11,475

 

  44,360

 

    7,648

 

  7,350

 

0

 

0

 

0

 

  70,833

Hak Cheol Shin

 

  7,649

 

  39,280

 

  50,983

 

13,230

 

0

 

0

 

0

 

111,142

Julie L. Bushman

 

  9,180

 

0

 

  46,377

 

13,087

 

0

 

0

 

0

 

  68,644

Michael G. Vale

 

10,367

 

  33,710

 

    9,694

 

13,230

 

0

 

0

 

0

 

  67,001

FOOTNOTES TO 2014 ALL OTHER COMPENSATION TABLE

        (1)   The amounts shown reflect 3M matching and additional automatic 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 or Roth 401(k) contributions to the plan on up to six percent of their eligible pay. Eligible employees hired on or after January 1, 2009, also receive additional automatic 3M retirement income contributions equal to three percent of their eligible pay.

        (2)   The amounts shown reflect 3M matching contributions under the VIP Excess Plan, a nonqualified defined contribution plan. Eligibility for this plan and its matching contributions is limited to employees whose compensation exceeds a limit established by Federal income tax laws for tax-qualified defined contribution plans. The Plan permits eligible employees to save additional amounts from their current cash compensation beyond the contribution limits established by Federal tax laws, and to receive Company matching contributions similar to the matching contributions provided under the tax-qualified 3M Voluntary Investment Plan and Employee Stock Ownership Plan.

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        (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)   These amounts reflect fees for personal financial planning and tax return preparation services paid by the Company on behalf of each individual.

        (5)   This amount reflects the aggregate incremental cost to the Company for Mr. Thulin's personal use of corporate aircraft during 2014. This aggregate incremental cost was calculated by combining the variable operating costs of such travel, including the cost of fuel, landing fees, parking fees, trip preparation fees, enroute communication charges, enroute navigation charges, on-board catering, and crew travel expenses. The Compensation Committee requires Mr. Thulin to use the corporate aircraft for all business and personal travel.

        (6)   This amount reflects the expenses incurred by 3M during 2014 for home security equipment and monitoring services at the personal residence of Mr. Thulin.

        (7)   This amount reflects the aggregate incremental cost to the Company for Mr. Thulin's personal use of a Company-provided automobile and local ground transportation. These costs include lease payments for the vehicle, fuel, insurance premiums, repairs, and maintenance.

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Grants of Plan-Based Awards

        The following table reflects the various equity and non-equity plan awards granted to the Named Executive Officers during 2014. With the exception of the annual incentive compensation earned by such Named Executive Officers under the Executive Annual Incentive Plan, all of the awards referred to in this table were granted under the 2008 Long-Term Incentive Plan. All of the restricted stock unit awards listed in this table include the right to receive a cash payment of dividend equivalents (the dividends that would have been paid on the same number of shares of 3M common stock during the vesting period) at the vesting date. 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 and, in the case of performance share awards, are based upon the probable outcome of the applicable performance conditions. Assumptions made in the calculation of these amounts are included in Note 14 to the Company's audited financial statements for the fiscal year ended December 31, 2014, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 12, 2015.

2014 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
Options
(#)(6)
   
   
 
 
   
   
  Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2)   Estimated Future Payouts Under Equity Incentive Plan Awards(3)(4)(5)   Exercise
or Base
Price of
Option
Awards
($/sh)(7)
  Grant
Date Fair
Value of
Stock and
Option
Awards ($)
 
Name
  Type of
Grant(1)
  Grant
Date
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
 

Inge G. Thulin

  14PS     03/03/2014                 7,730     38,650     77,300                       4,750,085  

  Option     02/04/2014                                         206,168     126.72     4,053,263  

  AIP     n/a     2,142,798     12,390,000                                            

Nicholas C. Gangestad

 

14PS

   
03/03/2014
               
412
   
2,062
   
4,124
                     
253,420
 

  14PS     06/01/2014                 1,323     6,616     13,232                       885,618  

  13PS     06/01/2014                 1,102     5,510     11,020                       751,344  

  12PS     06/01/2014                 454     2,270     4,540                       317,255  

  Option     02/04/2014                                         9,592     126.72     188,579  

  AIP     n/a     378,340     12,390,000                                            

David W. Meline

 

14PS

   
03/03/2014
               
2,293
   
11,465
   
22,930
                     
1,409,049
 

  Option     02/04/2014                                         70,345     126.72     1,382,983  

  AIP     n/a     747,091     12,390,000                                            

Hak Cheol Shin

 

14PS

   
03/03/2014
               
1,356
   
6,778
   
13,556
                     
833,016
 

  Option     02/04/2014                                         32,428     126.72     637,534  

  RSU     12/01/2014                                   12,646 (8)               2,000,091  

  AIP     n/a     639,360     12,390,000                                            

Julie L. Bushman

 

14PS

   
03/03/2014
               
1,356
   
6,778
   
13,556
                     
833,016
 

  Option     02/04/2014                                         40,535     126.72     796,918  

  RSU     12/01/2014                                   12,646 (8)               2,000,091  

  AIP     n/a     471,866     12,390,000                                            

Michael G. Vale

 

14PS

   
03/03/2014
               
1,356
   
6,778
   
13,556
                     
833,016
 

  Option     02/04/2014                                         31,559     126.72     620,450  

  RSU     12/01/2014                                   12,646 (8)               2,000,091  

  AIP     n/a     476,019     12,390,000                                            

FOOTNOTES TO 2014 GRANTS OF PLAN-BASED AWARDS TABLE

        (1)   Abbreviations for the Type of Grant: 14PS = 2014 performance shares; 13PS = 2013 performance shares; 12PS = 2012 performance shares; Option = stock options; RSU = restricted stock units; AIP = annual incentive.

        (2)   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 2014 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 (established for

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purposes of complying with Section 162(m) of the Internal Revenue Code), which for each of the Named Executive Officers was one-quarter of one percent of the Company's Adjusted Net Income for 2014, and then permits the Compensation Committee to pay each covered executive less than this maximum amount based on such factors as it deems relevant. Since the Executive Annual Incentive Plan was first adopted in 2007, the Committee has rarely used this discretion to pay a covered executive (other than Mr. Thulin) anything more or less than the same amount such executive would have received had he or she been participating in the Company's broad-based Annual Incentive Plan (see "Elements of the Compensation Program — Annual Incentive" in the Compensation Discussion and Analysis of this Proxy Statement).

        (3)   The amounts shown as the Estimated Future Payouts Under Equity Incentive Plan Awards with respect to 2014 performance shares reflect the threshold, target, and maximum number of shares of 3M common stock that may be earned by each individual as a result of the 2014 performance shares granted to each individual during 2014 under the 2008 Long-Term Incentive Plan. The actual number of shares of 3M common stock to be delivered as a result of these performance shares will be determined by the performance of the Company during the three-year performance period of 2014, 2015, and 2016, as measured against three performance criteria selected by the Compensation Committee (Organic Sales Volume Growth, Return on Invested Capital, and the New Product Vitality Index). For more information on these performance criteria and the formulas for determining the number of shares of 3M common stock payable as a result of these performance shares, please refer to the "Long-Term Incentives — 2014 Annual Grants" portion of the Compensation Discussion and Analysis of this Proxy Statement.

        (4)   The amounts shown as the Estimated Future Payouts Under Equity Incentive Plan Awards with respect to 2013 performance shares reflect the threshold, target, and maximum number of shares of 3M common stock that may be earned by Mr. Gangestad as a result of the 2013 performance shares granted to him during 2014 under the 2008 Long-Term Incentive Plan. The actual number of shares of 3M common stock to be delivered as a result of these performance shares will be determined by the performance of the Company during the three-year performance period of 2013, 2014, and 2015, as measured against three performance criteria selected by the Compensation Committee (Organic Sales Volume Growth, Return on Invested Capital, and the New Product Vitality Index). For more information on these performance criteria and the formulas for determining the number of shares of 3M common stock payable as a result of these performance shares, please refer to the "Long-Term Incentives — 2013 Annual Grants" portion of the Compensation Discussion and Analysis of the Company's 2014 Proxy Statement.

        (5)   The amounts shown as the Estimated Future Payouts Under Equity Incentive Plan Awards with respect to 2012 performance shares reflect the threshold, target, and maximum number of shares of 3M common stock that may be earned by Mr. Gangestad as a result of the 2012 performance shares granted to him during 2014 under the 2008 Long-Term Incentive Plan. The actual number of shares of 3M common stock to be delivered as a result of these performance shares will be determined by the performance of the Company during the three-year performance period of 2012, 2013, and 2014, as measured against three performance criteria selected by the Compensation Committee (Organic Sales Volume Growth, Return on Invested Capital, and the New Product Vitality Index). For more information on these performance criteria and the formulas for determining the number of shares of 3M common stock payable as a result of these performance shares, please refer to the "Long-Term Incentives — 2012 Annual Grants" portion of the Compensation Discussion and Analysis of the Company's 2013 Proxy Statement.

        (6)   The amounts shown as the All Other Option Awards reflect the numbers of nonqualified stock options granted to each individual during 2014 under the 2008 Long-Term Incentive Plan. The options granted on February 4, 2014, were part of the Company's annual grant of stock options to the

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approximately 6,000 employees participating in the plan, and they vest in installments of one-third on each of the first three anniversaries of the grant date.

        (7)   The exercise price for all stock options granted under the Company's 2008 Long-Term Incentive Plan 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 plan). As provided in the plan, 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.

        (8)   These amounts reflect the grant of restricted stock units to the three named executives. These restricted stock units vest in full on the fifth anniversary of the grant date, assuming continued employment.

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        2014 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 ($)

 
   

Inge G. Thulin

                                        86,496(6)     14,213,023  

                                        77,300(7)     12,701,936  

      52,000                 0            87.35     05/09/2016                          

      45,758                 0            84.78     05/08/2017                          

      50,792                 0            77.18     05/13/2018                          

      59,584                 0            54.11     02/08/2019                          

      50,166                 0            78.72     02/07/2020                          

      43,560                 0            89.47     02/08/2021                          

    136,535       68,269(1)       87.89     02/07/2022                          

      68,316     136,634(2)     101.49     02/03/2023                          

                0     206,168(3)     126.72     02/02/2024                          

Nicholas C. Gangestad

                                       

  3,178(6)

   

     522,209

 

                                          4,124(7)          677,656  

                                        11,020(6)       1,810,806  

                                        13,232(7)       2,174,282  

        2,612                 0            84.78     05/08/2017                          

        2,888                 0            77.18     05/13/2018                          

        4,004                 0            54.11     02/08/2019                          

        3,362                 0            78.72     02/07/2020                          

        3,092                 0            89.47     02/08/2021                          

        4,145         2,074(1)       87.89     02/07/2022                          

        2,168         4,337(2)     101.49     02/03/2023                          

                0         9,592(3)     126.72     02/02/2024                          

David W. Meline

                                       

14,150(6)

   

  2,325,128

 

                                          3,822(7)          628,031  

      20,136                 0            71.12     08/31/2018                          

      16,065                 0            78.72     02/07/2020                          

      11,538                 0            89.47     02/08/2021                          

      37,713       18,857(1)       87.89     02/07/2022                          

      32,728       65,457(2)     101.49     02/03/2023                          

                0       70,345(3)     126.72     02/02/2024                          

Hak Cheol Shin

                                       

17,320(6)

   

  2,846,022

 

                                        13,556(7)       2,227,522  

      60,000                 0            87.35     05/09/2016                          

      35,441                 0            84.78     05/08/2017                          

      47,528                 0            77.18     05/13/2018                          

      58,772                 0            54.11     02/08/2019                          

      57,587                 0            78.72     02/07/2020                          

      49,595                 0            89.47     02/08/2021                          

      30,875       15,439(1)       87.89     02/07/2022                          

      12,816       25,634(2)     101.49     02/03/2023                          

                0       32,428(3)     126.72     02/02/2024                          

                            12,646(4)     2,077,991              

Julie L. Bushman

                                       

17,320(6)

   

  2,846,022

 

                                        13,556(7)       2,227,522  

      12,068                 0            84.78     05/08/2017                          

      10,424                 0            77.18     05/13/2018                          

      13,172                 0            78.72     02/07/2020                          

        9,000                 0            89.47     02/08/2021                          

      20,583       10,292(1)       87.89     02/07/2022                          

        8,216       16,434(2)     101.49     02/03/2023                          

                0       40,535(3)     126.72     02/02/2024                          

                            12,646(4)     2,077,991              

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Table of Contents

   
 
  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 ($)

 
   

Michael G. Vale

                                       

17,320(6)

   

  2,846,022

 

                                        13,556(7)       2,227,522  

        5,013                 0            87.35     05/09/2016                          

        2,156                 0            84.78     05/08/2017                          

        8,440                 0            77.18     05/13/2018                          

        8,444                 0            54.11     02/08/2019                          

        8,906                 0            78.72     02/07/2020                          

        7,812                 0            89.47     02/08/2021                          

      20,583       10,292(1)       87.89     02/07/2022                          

      14,568       29,137(2)     101.49     02/03/2023                          

                0       31,559(3)     126.72     02/02/2024