SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MINNESOTA MINING AND MANUFACTURING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
LIVIO D. DESIMONE
Chairman of the Board and
Chief Executive Officer
March 27, 2000 [LOGO] 3M
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders,
which will be held on Tuesday, May 9, 2000, at 10 a.m., at the RiverCentre, 175
West Kellogg Boulevard, St. Paul, Minnesota.
Details regarding admission to the meeting and the business to be conducted
are more fully described in the accompanying Notice of Annual Meeting and Proxy
Statement. I will report on current operations and discuss our plans for growth.
We also will leave plenty of time for your questions and comments.
The fine attendance of our stockholders at annual meetings over the years
has been very helpful in maintaining good communications and understanding. We
sincerely hope you will be able to be with us. YOUR ATTENDANCE CARDS TO THE
ANNUAL MEETING ARE LOCATED ON THE BACK COVER OF THIS PROXY STATEMENT.
Your vote is important. Whether or not you plan to attend the annual
meeting, I hope you will vote as soon as possible. This year you may vote over
the Internet, as well as by telephone or by mailing a traditional proxy card.
Voting over the Internet, by telephone, or by written proxy card will ensure
your representation at the Annual Meeting if you do not plan to attend in
person. Please review the instructions on the proxy card regarding each of these
voting options.
Thank you for your ongoing support of our Company.
Cordially,
/s/ Livio D. DeSimone
MINNESOTA MINING AND MANUFACTURING COMPANY
3M CENTER, ST. PAUL, MINNESOTA 55144
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME 10:00 a.m. on Tuesday, May 9, 2000
PLACE RiverCentre
175 West Kellogg Boulevard
St. Paul, Minnesota
ITEMS OF BUSINESS (1) To elect four directors to the 2003 Class;
(2) To ratify the appointment of PricewaterhouseCoopers
LLP, independent auditors, to audit the consolidated
financial statements of the Company for the year 2000;
(3) To approve an amendment to the Restated Certificate of
Incorporation to increase the authorized common stock;
(4) To approve an amendment to the Restated Certificate of
Incorporation to change par value; and
(5) To consider such other business as may properly come
before the meeting or any adjournments thereof.
RECORD DATE You are entitled to vote if you were a stockholder at
the close of business on Friday, March 10, 2000.
MEETING ADMISSION Two cutout admission tickets are included on the
back cover of this proxy statement.
VOTING BY PROXY Please submit a proxy as soon as possible so that your
shares can be voted at the meeting in accordance with your
instructions. You may submit your proxy
(1) Over the Internet,
(2) By telephone, or
(3) By mail.
For specific instructions, please refer to the QUESTIONS AND
ANSWERS on page 2 of this proxy statement and the voting
instructions on the proxy card.
By Order of the Board of Directors
/s/ Roger P. Smith
ROGER P. SMITH
SECRETARY
THIS PROXY STATEMENT AND PROXY CARD ARE BEING DISTRIBUTED ON OR ABOUT MARCH 27,
2000.
i
2000 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
Notice of Annual Meeting of Stockholders ................................................ i
Questions and Answers about the Proxy Materials and the Annual Meeting .................. 1
Why am I receiving these materials? .................................................... 1
What information is contained in these materials? ...................................... 1
What proposals will be voted on at the meeting? ........................................ 1
What are 3M's voting recommendations? .................................................. 1
What shares owned by me can be voted? .................................................. 1
What is the difference between holding shares as a stockholder of record and as a
beneficial owner? ..................................................................... 2
How can I vote my shares? .............................................................. 2
Can I change my vote? .................................................................. 2
How are votes counted? ................................................................. 2
What is the voting requirement to approve each of the proposals? ....................... 3
What does it mean if I receive more than one proxy or voting instruction card? ......... 3
How can I obtain an admission ticket for the meeting? .................................. 3
Where can I find the voting results of the meeting? .................................... 3
What class of shares is entitled to be voted? .......................................... 3
What is the quorum requirement for the meeting? ........................................ 3
Who will count the vote? ............................................................... 3
Is my vote confidential? ............................................................... 3
Who will bear the cost of soliciting votes for the meeting? ............................ 4
Board Structure and Compensation ........................................................ 5
Directors' Compensation ................................................................. 6
Compensation Table for 1999 ............................................................. 6
Proposals To Be Voted On ................................................................ 7
Proposal No. 1 -- Election of Directors ................................................ 7
Proposal No. 2 -- Ratification of Independent Auditors ................................. 11
Proposals No. 3 and 4 -- Proposals to Approve Amendments to the Restated Certificate
of Incorporation .................................................................... 11
Proposal No. 3 -- Proposal to Approve an Amendment to the Restated Certificate of
Incorporation to Increase the Authorized Common Stock ............................... 12
Proposal No. 4 -- Proposal to Approve an Amendment to the Restated Certificate of
Incorporation to Change Par Value ................................................... 13
ii
Common Stock Ownership of Directors and Executive Officers ............................... 13
Beneficial Ownership Table .............................................................. 14
Section 16(a) Beneficial Ownership Reporting Compliance .................................. 15
Transactions with Management ............................................................. 15
Executive Compensation ................................................................... 15
Summary Compensation Table .............................................................. 15
Option Grants in Last Fiscal Year ........................................................ 18
Option Exercises and Year-End Option Values .............................................. 19
Long-Term Incentive Plan Awards Table .................................................... 20
Estimated Annual Retirement Benefits Table Under Pension Plan ............................ 21
Report of the Compensation Committee ..................................................... 21
Stock Performance Graph .................................................................. 25
Additional Questions and Information Regarding Access to Future Annual Reports and Proxy
Statements via the Internet and Stockholder Proposals .................................... 26
Does 3M offer stockholders the option of viewing Annual Reports to Stockholders and
Proxy Statements via the Internet? ...................................................... 26
How do I elect this option? ............................................................. 26
What happens if additional proposals are presented at the meeting? ...................... 26
May I propose actions for consideration at next year's Annual Meeting of Stockholders or
nominate individuals to serve as directors? ............................................. 26
iii
MINNESOTA MINING AND MANUFACTURING COMPANY
3M CENTER, ST. PAUL, MINNESOTA 55144
March 27, 2000
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 9, 2000
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
Q: WHY AM I RECEIVING THESE MATERIALS?
A: The Board of Directors (the "Board") of Minnesota Mining and
Manufacturing Company (sometimes referred to as the "Company" or "3M") is
providing these proxy materials to you in connection with the solicitation by
the Board of proxies to be voted at 3M's Annual Meeting of Stockholders which
will take place on May 9, 2000. You are invited to attend the meeting and are
requested to vote on the proposals described in this proxy statement.
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates to the
proposals to be voted on at the meeting, the voting process, the compensation of
directors and our most highly paid officers, and certain other required
information. Our 1999 Annual Report is enclosed in this mailing and also
available to those accessing the proxy statement via the Internet.
Q: WHAT PROPOSALS WILL BE VOTED ON AT THE MEETING?
A: There are four proposals scheduled to be voted on at the meeting:
* The election of directors to the 2003 Class.
* Ratification of the appointment of PricewaterhouseCoopers LLP,
independent auditors, to audit the consolidated financial
statements of the Company for the year 2000.
* Approval of an amendment to the Restated Certificate of
Incorporation to increase the authorized common stock.
* Approval of an amendment to the Restated Certificate of
Incorporation to change par value.
Q: WHAT ARE 3M'S VOTING RECOMMENDATIONS?
A: Our Board of Directors recommends that you vote your shares "FOR" each
of the nominees to the Board and "FOR" each of the other proposals.
Q: WHAT SHARES OWNED BY ME CAN BE VOTED?
A: All shares owned by you as of March 10, 2000, the RECORD DATE, may be
voted by you. These shares include those (1) held directly in your name as the
STOCKHOLDER OF RECORD, including shares purchased through 3M's Dividend
Reinvestment Plan and 3M's General Employees Stock Purchase Plan and (2) held
for you as the BENEFICIAL OWNER through a stockbroker, bank, or other nominee,
including those shares acquired through 3M's Voluntary Investment Plan, Employee
Stock Ownership Plan, or Savings Plan.
Participants in 3M's Voluntary Investment Plan, Employee Stock Ownership
Plan, or Savings Plan may direct the trustee how to vote the shares allocated to
the participant's account by following the voting instructions contained on the
proxy card. The trustee of the Employee Stock Ownership Plan also votes
allocated shares of common stock for which it has not received direction, as
well as shares not allocated to individual participant accounts, in the same
proportion as it votes those directed shares for which voting instructions are
received. If voting instructions are invalid or if the proxy card is not
returned by the specified date, the trustee will vote the shares held in the
stockholder's Savings Plan and Voluntary Investment Plan accounts as directed by
the Public Issues Committee of the 3M Board of Directors.
1
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF
RECORD AND AS A BENEFICIAL OWNER?
A: Most 3M stockholders hold their shares through a stockbroker, bank, 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:
* STOCKHOLDER OF RECORD -- If your shares are registered directly
in your name with 3M's Transfer Agent, Norwest Bank Minnesota,
N.A., you are considered, with respect to those shares, the
STOCKHOLDER OF RECORD and these proxy materials are being sent
directly to you by 3M. As the STOCKHOLDER OF RECORD, you have the
right to grant your voting proxy directly to 3M or to vote in
person at the meeting. 3M has enclosed a proxy card for you to
use.
* BENEFICIAL OWNER -- If your shares are held in a stock brokerage
account or by a bank or other nominee, you are considered the
BENEFICIAL OWNER of shares held IN STREET NAME and these proxy
materials are being forwarded to you by your broker or nominee
who is considered, with respect to those shares, the STOCKHOLDER
OF RECORD. As the beneficial owner, you have the right to direct
your broker on how to vote and are also invited to attend the
meeting. However, since you are not the STOCKHOLDER OF RECORD,
you may not vote these shares in person at the meeting. Your
broker or nominee is obligated to provide you with a voting
instruction card for you to use.
Q: HOW CAN I VOTE MY SHARES?
A: Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may vote by granting a proxy or, for shares
held in street name, by submitting voting instructions to your broker or
nominee. In most instances, you will be able to do this over the Internet, by
telephone, or by mail. Please refer to the summary instructions below and those
included on your proxy card or, for shares held in street name, the voting
instruction card included by your broker or nominee.
* BY INTERNET -- If you have Internet access, you may submit your
proxy from any location in the world by following the "Vote by
Internet" instructions on the proxy card.
* BY TELEPHONE -- If you live in the United States, you may submit
your proxy by following the "Vote by Phone" instructions on the
proxy card.
* BY MAIL -- You may do this by signing your proxy card or, for
shares held in street name, the voting instruction card included
by your broker or nominee and mailing it in the enclosed, postage
prepaid and addressed envelope. If you provide specific voting
instructions, your shares will be voted as you instruct. If you
sign, but do not provide instructions, your shares will be voted
as described below in "HOW ARE VOTES COUNTED?"
Q: CAN I CHANGE MY VOTE?
A: You may change your proxy instructions at any time prior to the vote at
the Annual Meeting. For shares held directly in your name, you may accomplish
this by granting a new proxy or by attending the Annual Meeting and voting in
person. Attendance at the meeting will not cause your previously granted proxy
to be revoked unless you specifically so request. For shares held beneficially
by you, you may accomplish this by submitting new voting instructions to your
broker or nominee.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote "FOR" all of the nominees or
your vote may be "WITHHELD" with respect to one or more of the nominees. For
the other proposals, you may vote "FOR," "AGAINST," or "ABSTAIN." If you
"ABSTAIN," it has the same effect as a vote "AGAINST." If you sign your proxy
card or broker voting instruction card with no further instructions, your
shares will be voted in accordance with the recommendations of the Board,
except that any shares you hold in the Employee Stock Ownership Plan, Savings
Plan, and Voluntary Investment Plan will be voted by the trustee as described
on page 1 in "WHAT SHARES OWNED BY ME CAN BE VOTED?"
2
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: The nominees for election as directors at the Annual Meeting will be
elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting. The affirmative "FOR" vote of the holders
of a majority of the outstanding shares entitled to vote is required to amend
the Restated Certificate of Incorporation to increase the number of authorized
shares of common stock and change par value. All other proposals require the
affirmative "FOR" vote of a majority of those shares present and entitled to
vote. If you are a BENEFICIAL OWNER and do not provide the STOCKHOLDER OF RECORD
with voting instructions, your shares may constitute BROKER NON-VOTES, as
described in "WHAT IS THE QUORUM REQUIREMENT FOR THE MEETING?" on page 3. In
tabulating the voting result for any particular proposal, shares that constitute
BROKER NON-VOTES are not considered entitled to vote.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING
INSTRUCTION CARD?
A: It means your shares are registered differently or are in more than one
account. Please provide voting instructions for all proxy and voting
instruction cards you receive.
Q: HOW CAN I OBTAIN AN ADMISSION TICKET FOR THE MEETING?
A: Two cutout admission tickets are included on the back of this proxy
statement.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
A: We will announce preliminary voting results at the meeting and publish
final results in our quarterly report on Form 10-Q. A news release with voting
results will be available on our website
(www.3M.com/profile/pressbox/index.html). Voting results also will be mailed
with dividend checks payable June 12.
Q: WHAT CLASS OF SHARES IS ENTITLED TO BE VOTED?
A: Each share of our common stock outstanding as of the close of business
on March 10, 2000, the RECORD DATE, is entitled to one vote at the Annual
Meeting. On February 29, 2000, we had 397,140,724 shares of common stock issued
and outstanding. The 74,875,804 shares of common stock in the Company's treasury
on that date will not be voted.
Q: WHAT IS THE QUORUM REQUIREMENT FOR THE MEETING?
A: The quorum requirement for holding the meeting and transacting business
is a majority of the outstanding shares entitled to be voted. The shares may be
present in person or represented by proxy at the meeting. Both abstentions and
broker non-votes are counted as present for the purpose of determining the
presence of a quorum. Generally, broker non-votes occur when shares held by a
broker for a beneficial owner are not voted with respect to a particular
proposal because (1) the broker has not received voting instructions from the
beneficial owner and (2) the broker lacks discretionary voting power to vote
such shares.
Q: WHO WILL COUNT THE VOTE?
A: Representatives of Norwest Bank Minnesota, N.A., 3M's transfer agent,
will tabulate the votes and act as the inspector of election.
Q: IS MY VOTE CONFIDENTIAL?
A: The Company's Board of Directors has adopted a policy that all
stockholder proxies, ballots, and tabulations that identify stockholders are to
be maintained in confidence. No such document shall be available for
examination, nor shall the identity and vote of any stockholder be disclosed,
except as may be necessary to meet applicable legal requirements and to allow
the inspectors of election to certify the results of the stockholder vote. The
policy also provides that inspectors of election for stockholder votes shall be
independent and shall not be employees of the Company. Occasionally,
stockholders provide written comments on their proxy card that may be forwarded
to 3M management.
3
Q: WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE MEETING?
A: 3M will pay the entire cost of preparing, assembling, printing, mailing,
and distributing these proxy materials, except that certain expenses for
Internet access will be incurred by you if you choose to access the proxy
materials and/or vote over the Internet. In addition to the mailing of 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 such
solicitation activities. We also 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 $15,000 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.
ADDITIONAL QUESTIONS AND INFORMATION REGARDING ACCESS TO FUTURE ANNUAL
REPORTS AND PROXY STATEMENTS VIA THE INTERNET AND STOCKHOLDER PROPOSALS MAY BE
FOUND ON PAGE 26.
4
BOARD STRUCTURE AND COMPENSATION
Our Board has ten directors and the following four Committees: Audit, Board
Organization, Compensation, and Public Issues. The membership during 1999 and
the function of each Committee are described below.
During 1999, the Board of Directors met six times and various Committees of
the Board met as indicated below. With the exception of one director, who was
not able to attend the Board and Committee meetings on February 8, 1999, each
director attended all of the Board meetings and the meetings of Board Committees
on which the director served.
AUDIT COMMITTEE
Members: F. Alan Smith (Chair), Edward R. McCracken, Aulana L. Peters, and
Louis W. Sullivan.
Number of meetings in 1999: Four.
Functions:
* Reviews the Company's financial reporting process, internal
control systems, and the audit efforts of the Company's
independent and internal auditors;
* Recommends the appointment of independent auditors, subject to
stockholder ratification, and oversees their independence;
* Reviews with the independent auditors the scope of the annual
audit, including fees and staffing, and nonaudit services
provided by the auditors;
* Reviews findings and recommendations of the independent auditors
and management's response to the recommendations of the
independent auditors; and
* Reviews compliance with the Company's business conduct policies.
BOARD ORGANIZATION COMMITTEE
Members: Livio D. DeSimone (Chair), Edward A. Brennan, Edward R. McCracken,
Aulana L. Peters, and Rozanne L. Ridgway.
Number of meetings in 1999: Two.
Functions:
* Selects and recommends candidates to the Board of Directors to be
submitted for election at the Annual Meeting. The Board of
Directors has adopted criteria with respect to its membership and
the Committee will consider candidates recommended by
stockholders or others in light of these criteria. Subject to the
notice requirements in the Bylaws, a stockholder may submit the
name of a proposed nominee by writing to the Office of the
Secretary, Minnesota Mining and Manufacturing Company, 3M Center,
St. Paul, Minnesota 55144;
* Reviews and makes recommendations to the Board of Directors
concerning the composition and size of the Board and its
Committees, frequency of meetings, directors' fees, and similar
subjects;
* Reviews and makes recommendations concerning retirement and
tenure policy for Board membership, recommends proxies for
meetings at which directors are elected, audits programs for
senior management succession; and
* Deals with corporate governance issues.
5
COMPENSATION COMMITTEE
Members: Edward A. Brennan (Chair), Allen E. Murray, Rozanne L. Ridgway,
and Frank Shrontz.
Number of meetings in 1999: Four.
Functions:
* Reviews compensation policies of the Company to ensure they
provide appropriate motivation for corporate performance and
increased shareholder value; and
* Determines compensation policy for executive officers and
approves compensation changes for senior executive officers, and
administers management stock option plans and performance based
executive compensation plans.
PUBLIC ISSUES COMMITTEE
Members: Frank Shrontz (Chair), Ronald O. Baukol, Allen E. Murray, F. Alan
Smith, and Louis W. Sullivan. Frank Shrontz became Chair of the
Committee upon Ronald A. Mitsch's retirement from the Board in
May 1999. Ronald O. Baukol joined the Committee in May 1999.
Number of meetings in 1999: Two.
Functions:
* Reviews public policy and social trends affecting the Company;
* Monitors the Company's corporate citizenship activities; and
* Evaluates Company policies and programs to enable the Company to
respond appropriately to its social responsibilities and the
public interest in the conduct of its businesses, including
activities related to the improvement of the environment and
community relations.
DIRECTORS' COMPENSATION
The following table provides information on 3M's compensation and
reimbursement practices during 1999 for nonemployee directors. Directors who are
employed by 3M, Mr. DeSimone and Mr. Baukol, do not receive any compensation for
their Board activities.
COMPENSATION TABLE FOR 1999
Annual Director Retainer ......................................... $80,000
Minimum Percentage of Annual Retainer to be Paid in 3M Stock ..... 68.8%
Board Meeting Attendance Fees .................................... $ 1,800
Committee Meeting Attendance Fees ................................ $ 1,200
Additional Retainer for Committee Chair .......................... $ 5,500
Reimbursement for Expenses Attendant to Board Membership ......... Yes
Pursuant to the terms of the Company's 1992 Directors Stock Ownership
Program, nonemployee directors received $55,000 of the total annual retainer of
$80,000 in common stock of the Company. Nonemployee directors may elect to defer
payment of all or a portion of the foregoing fees payable in cash through a
deferred cash or common stock equivalents account, and fees payable in stock
through a deferred common stock equivalents account. The nonemployee directors
also may elect to receive common stock of the Company, on a current basis, at
current fair market value, in lieu of cash retainer and meeting fees.
Information regarding accumulated deferred stock is set forth in the section
entitled "Common Stock Ownership of Directors and Executive Officers" on page
13.
6
PROPOSALS TO BE VOTED ON
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NUMBER OF NOMINEES AND CLASSIFICATION
The Restated Certificate of Incorporation divides the Board into three
classes. Four directors have terms of office that expire at the 2000 Annual
Meeting, and two of the four directors are standing for reelection for a
three-year term as members of the 2003 Class. These are Ronald O. Baukol and
Aulana L. Peters. Allen E. Murray and Edward R. McCracken, the third and fourth
directors in the 2000 Class, will retire from the Board at the conclusion of the
Annual Meeting and are not standing for reelection. W. George Meredith elected
to take early retirement and has resigned from the Board effective August 1999.
The three incumbent directors in the 2001 Class are continuing to serve until
the 2001 Annual Meeting. The three incumbent directors in the 2002 Class are
continuing to serve until the 2002 Annual Meeting.
In order to balance membership in each of the three classes of Directors,
two new nominees are standing for election to the 2003 Class. The new nominees
are Linda G. Alvarado and Edward M. Liddy.
All nominees for election to the Board of Directors to the 2003 Class at
the 2000 Annual Meeting will be elected for a term of three years and shall
serve until their terms expire at the 2003 Annual Meeting or until their
successors are duly elected and have been qualified.
The persons named as proxies intend to vote the proxies for the election of
the four nominees to the Board of Directors. If any of the nominees should be
unavailable to serve as a director, an event which is not anticipated, the
persons named as proxies reserve full discretion to vote for any other persons
who may be nominated.
INFORMATION AS TO NOMINEES AND INCUMBENT DIRECTORS
The nominees and incumbent directors, their age, principal occupation or
position with the Company (shown in italics), experience, and the year first
elected as a director, are shown on the following pages.
None of the nominees or incumbent directors is related to any other nominee
or to any executive officer of the Company or its subsidiaries by blood,
marriage, or adoption. Except for current employees of the Company, no nominee
or incumbent director has been an employee of the Company within the past five
years.
During 1999, the Company retained the law firm of Gibson, Dunn & Crutcher
LLP, with regard to various legal matters. Mrs. Peters is a partner in this
firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION TO THE BOARD OF
EACH OF THE FOLLOWING NOMINEES. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE VOTED "FOR" EACH OF THE NOMINEES UNLESS A CONTRARY VOTE IS SPECIFIED.
7
NOMINEES FOR ELECTION TO THE 2003 CLASS:
[PHOTO] LINDA G. ALVARADO, 47, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ALVARADO
CONSTRUCTION, INC. In 1976, Ms. Alvarado founded Alvarado
Construction, Inc. and has overseen the growth of that enterprise as a
commercial general contracting firm. She is a director of U.S. West
Communications, Inc., Engelhard Corporation, Pitney Bowes, Inc., and
Pepsi Bottling Group, Inc. She is a member of the President's Advisory
Commission on Educational Excellence for Hispanic Americans and a
co-owner of the Colorado Rockies Baseball Club.
[PHOTO] RONALD O. BAUKOL, 62, EXECUTIVE VICE PRESIDENT, INTERNATIONAL
OPERATIONS; MEMBER OF THE PUBLIC ISSUES AND FINANCE COMMITTEES. Mr.
Baukol joined 3M as an engineer in the Medical Products Division
laboratory in 1966 and served there until 1970, at which time he took
leave to serve as a White House Fellow and later with the
Environmental Protection Agency in Washington, D.C. Upon his return to
3M in 1972, he served in several general management capacities in 3M's
health care businesses until being appointed General Manager of Riker
Laboratories, Inc. in 1982. In 1984, Mr. Baukol was appointed Vice
President and General Manager, Riker Laboratories, Inc. and in 1986,
Chairman and Chief Executive, 3M United Kingdom PLC. He was elected
Group Vice President, Pharmaceutical and Dental Products Group in
1989; Group Vice President, Medical Products Group in 1990; Vice
President, Asia Pacific in 1991; Vice President, Asia Pacific, Canada
and Latin America in 1994; and Executive Vice President, International
Operations in 1995. Mr. Baukol is a director of Graco, Inc. and The
Toro Company. He is Vice Chairman of the United States Council for
International Business, a Governor of the Iowa State University
Foundation, and a member of the International Programs Advisory
Council, Carlson School of Management, University of Minnesota.
DIRECTOR SINCE 1996
[PHOTO] EDWARD M. LIDDY, 54, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
OF THE ALLSTATE CORPORATION, THE PARENT OF ALLSTATE INSURANCE COMPANY,
A PERSONAL LINES INSURANCE COMPANY. Prior to this he served as
President and Chief Operating Officer from 1994 to 1998 and Senior
Vice President and Chief Financial Officer of Sears, Roebuck and Co.,
where he held a variety of senior operating and financial positions
since 1988. He is a director of The Kroger Co.
[PHOTO] AULANA L. PETERS, 58, PARTNER, GIBSON, DUNN & CRUTCHER LLP, A LAW
FIRM, LOS ANGELES, CALIFORNIA; MEMBER OF THE AUDIT AND BOARD
ORGANIZATION COMMITTEES. Mrs. Peters joined Gibson, Dunn & Crutcher as
an Associate in 1973. In 1980, she was named a Partner in the firm and
continued in the practice of law until 1984, when she accepted an
appointment as Commissioner of the Securities and Exchange Commission.
In 1988, after serving four years as Commissioner, she returned to the
private practice of law as Partner in the Gibson, Dunn & Crutcher
firm. Mrs. Peters is a member of the American and Los Angeles County
Bar Associations, the Regulatory Advisory Committee of the New York
Stock Exchange, the Financial Accounting Standards Board Steering
Committee of the Financial Reporting Project, Public Oversight Board
Panel on Audit Effectiveness, and the Legal Advisory Panel for the
National Association of Securities Dealers. She is also a director of
Merrill Lynch & Co., Inc., Northrop Grumman Corp., and Callaway Golf
Company.
DIRECTOR SINCE 1990
8
INCUMBENT DIRECTORS IN THE 2002 CLASS:
[PHOTO] ROZANNE L. RIDGWAY, 64, FORMER ASSISTANT SECRETARY OF STATE FOR EUROPE
AND CANADA; MEMBER OF THE BOARD ORGANIZATION AND COMPENSATION
COMMITTEES. Ambassador Ridgway served in the U.S. Foreign Service from
1957 to 1989, including assignments as Ambas sador for Oceans and
Fisheries Affairs, Ambassador to Finland and to the German Democratic
Republic, and from 1985 and until her retirement in 1989, Assistant
Secretary of State for European and Canadian Affairs. Ambassador
Ridgway served as President until 1993 and Co-Chair until mid-1996 of
the Atlantic Council of the United States, an association to promote
better understanding of major foreign policy issues. She is a director
of Bell Atlantic Corporation, The Boeing Company, Emerson Electric
Co., Nabisco, Sara Lee Corporation, and Union Carbide Corporation. She
is also chair of The Baltic-American Enterprise Fund.
DIRECTOR SINCE 1989
[PHOTO] FRANK SHRONTZ, 68, CHAIRMAN EMERITUS, THE BOEING COMPANY, MANUFACTURER
AND SELLER OF AIRCRAFT AND RELATED PRODUCTS; CHAIRMAN OF THE PUBLIC
ISSUES COMMITTEE AND MEMBER OF THE COMPENSATION COMMITTEE. Mr. Shrontz
joined The Boeing Company in 1958. In 1973, he left Boeing to serve as
Assistant Secretary of the Air Force and became Assistant Secretary of
Defense in 1976. In 1977, Mr. Shrontz returned to Boeing. After
several assignments, he was named President and a member of the Board
of Directors of Boeing in 1985. In 1986, he was named Chief Executive
Officer and, in 1988, Chairman of the Board. Mr. Shrontz retired from
Boeing in 1997. Mr. Shrontz is a director of Boise Cascade
Corporation, Chevron Corporation, and a citizen regent on the
Smithsonian Institution's Board of Regents. He is also a member of The
Business Council.
DIRECTOR SINCE 1992
[PHOTO] LOUIS W. SULLIVAN, 66, PRESIDENT, MOREHOUSE SCHOOL OF MEDICINE,
ATLANTA, GEORGIA; MEMBER OF THE AUDIT AND PUBLIC ISSUES COMMITTEES.
Since completion of his medical training, Dr. Sullivan has held both
professional and administrative positions in health care facilities
and medical training institutions. He joined Morehouse College as
Professor of Biology and Medicine in 1975 and was the founding dean
and director of the Medical Education Program at the college. He was
named President of Morehouse School of Medicine in 1981. He served as
Secretary, United States Department of Health and Human Services, from
1989 to 1993. He returned to Morehouse School of Medicine in 1993. Dr.
Sullivan is a director of Bristol-Myers Squibb Company, CIGNA
Corporation, Equifax, Inc., General Motors Corporation,
Georgia-Pacific Corporation, and Household International. He is also a
director of the Boy Scouts of America and a trustee of the Little
League Foundation.
DIRECTOR SINCE 1993
9
INCUMBENT DIRECTORS IN THE 2001 CLASS:
[PHOTO] EDWARD A. BRENNAN, 66, RETIRED CHAIRMAN OF THE BOARD, PRESIDENT, AND
CHIEF EXECUTIVE OFFICER, SEARS, ROEBUCK AND CO., A DIVERSIFIED COMPANY
ENGAGED IN MERCHANDISING, CHICAGO, ILLINOIS; CHAIRMAN OF THE
COMPENSATION COMMITTEE AND MEMBER OF THE BOARD ORGANIZATION COMMITTEE.
Mr. Brennan joined Sears in 1956. He was an Executive Vice President,
1978 to 1980; President and Chief Operating Officer for merchandising,
1980; Chairman and Chief Executive Officer, Sears Merchandise Group,
1981 to 1984; President and Chief Operating Officer, 1984 through
1985; and was elected Chairman of the Board and Chief Executive
Officer of Sears, Roebuck and Co. in 1986. Mr. Brennan retired from
Sears in 1995. He is a director of The Allstate Corporation, Morgan
Stanley Dean Witter & Co., AMR Corporation, Unicom Corporation, Dean
Foods Company, and The SABRE Group Holdings, Inc. He also is Chairman
of the Board of Trustees of DePaul University and Chairman of the
Board of Trustees of Rush-Presbyterian-St. Luke's Medical Center, and
a member of The Business Council.
DIRECTOR SINCE 1986
[PHOTO] LIVIO D. DESIMONE, 63, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER; CHAIRMAN OF THE BOARD ORGANIZATION AND FINANCE COMMITTEES.
Mr. DeSimone joined 3M as a process engineer with 3M Canada in 1957.
He served in various international and subsidiary capacities until his
appointment in 1971 as Managing Director of 3M Brazil. In 1975, he
served as General Manager, Building Service and Cleaning Products
Division, before being appointed Area Vice President, Latin America.
Mr. DeSimone was elected Vice President, Abrasives, Adhesives,
Building Service and Chemicals Group in 1979; Executive Vice
President, Life Sciences Sector in 1981; Executive Vice President,
Industrial and Consumer Sector in 1984; Executive Vice President,
Industrial and Electronic Sector in 1987; Executive Vice President,
Information and Imaging Technologies Sector in 1989; and Chairman of
the Board and Chief Executive Officer in 1991. He is a director of
Cargill, Incorporated, General Mills, Inc., Target Corp., and Vulcan
Materials Company. He is also a director of National Junior
Achievement, Inc., a trustee of the University of Minnesota
Foundation, and a member of the Board of Governors of The Nature
Conservancy.
DIRECTOR SINCE 1986
[PHOTO] F. ALAN SMITH, 68, CHAIRMAN OF ADVANCED ACCESSORY SYSTEMS, INC.,
SUPPLIER OF AUTOMOTIVE ACCESSORIES; CHAIRMAN OF MACKIE AUTOMOTIVE
SYSTEMS, AUTOMOTIVE SEQUENCING AND SUB-ASSEMBLY COMPANY; RETIRED
EXECUTIVE VICE PRESIDENT AND DIRECTOR, GENERAL MOTORS CORPORATION,
MANUFACTURER AND SELLER OF AUTOMOBILES AND AUTOMOTIVE PRODUCTS,
DETROIT, MICHIGAN; CHAIRMAN OF THE AUDIT COMMITTEE AND MEMBER OF THE
PUBLIC ISSUES COMMITTEE. Mr. Smith was a director of General Motors
Corporation from 1981 until his retirement in 1992. He joined General
Motors in 1956. He was Treasurer, 1973 to 1975; Vice President,
Finance, 1975 to 1978; Vice President of General Motors Corporation
and President and General Manager of General Motors of Canada Limited,
1978 to 1981; Executive Vice President, Finance, 1981 to 1988. In
1988, he was elected Executive Vice President, Operating Staffs and
Public Affairs and Marketing Staffs. He is a director of TransPro,
Inc. and a trustee of the Florida Institute of Technology.
DIRECTOR SINCE 1986
10
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee recommended and the Board of Directors appointed the
firm of PricewaterhouseCoopers LLP, independent auditors, to audit the
consolidated financial statements of the Company and its subsidiaries for the
year 2000. If the stockholders do not ratify the selection of
PricewaterhouseCoopers LLP, the Board of Directors will reconsider the
selection.
PricewaterhouseCoopers LLP has audited the Company's consolidated financial
statements since 1975. The firm has offices and affiliates in most localities
throughout the world where the Company has operations. Audit services provided
by the firm in 1999 included: audit of consolidated financial statements of the
Company and its subsidiaries; limited reviews of interim reports; reviews of
filings with the Securities and Exchange Commission; consultations on matters
related to accounting and financial reporting; audits of statutory financial
statements for certain foreign subsidiaries; and audits of the financial
statements of the Company's benefit plans.
PricewaterhouseCoopers LLP also provided a number of nonaudit services
during 1999, all of which were approved and reviewed by the Audit Committee.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the stockholders meeting and available to respond to appropriate questions and
will be given an opportunity to make a statement, if the representative chooses
to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT AUDITORS, TO AUDIT THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR 2000. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE VOTED "FOR" RATIFICATION UNLESS A CONTRARY VOTE
IS SPECIFIED.
PROPOSALS NO. 3 AND 4
PROPOSALS TO APPROVE AMENDMENTS TO THE
RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors believes that it is in the Company's best interest
to amend the Company's restated certificate of incorporation to (i) increase the
number of shares of common stock the Company is authorized to issue to 1.5
billion, and (ii) to change the par value of the Company's common stock to $0.01
per share.
Accordingly, at its meeting held on February 14, 2000, the Board of
Directors unanimously adopted a resolution proposing that an amendment to
paragraph A of Article FOURTH of the Company's Restated Certificate of
Incorporation (and a conforming change to the third sentence of paragraph A of
Article TENTH) be presented to the stockholders at the Annual Meeting for their
approval. Such amendment would change the number of authorized shares of common
stock and the par value and convert the issued shares of stock to shares with
the new par value. As amended, paragraph A of Article FOURTH would read in its
entirety as follows:
"FOURTH: A. The total number of shares of all classes of stock which
this Corporation shall have authority to issue is 1,510,000,000 consisting
of 10,000,000 shares of preferred stock without par value and 1,500,000,000
shares of common stock with a par value of $0.01 per share. Upon the
effectiveness of the amendment of this Article Fourth reducing the par
value of the common stock to $0.01, each outstanding share of common stock
shall be reclassified and changed into one share of common stock, par value
$0.01 per share."
If the amendment is approved by stockholders, the amendment would also
change the reference to par value in the third sentence of paragraph A of
Article TENTH of the Restated Certificate of Incorporation to $0.01 per share.
In compliance with SEC rules, this amendment will be separated into two
proposals for consideration by stockholders -- Proposal No. 3 sets forth the
proposed amendment to increase the authorized common stock and Proposal No. 4
sets forth the proposed amendment to change the par value.
11
If stockholders approve Proposal No. 3 but not Proposal No. 4, then the
Company will proceed only with amending the Restated Certificate of
Incorporation to increase the number of shares of common stock the Company is
authorized to issue. Such amendment will become effective upon the filing of a
Certificate of Amendment in accordance with the General Corporation Law of
Delaware. If stockholders approve Proposal No. 4 but not Proposal No. 3, then,
before the effectiveness of the amendment set forth in Proposal No. 4, the
Board reserves the right to abandon the amendment set forth in Proposal No. 4
without further action by stockholders, notwithstanding the authorization of
the amendment by stockholders.
If stockholders approve both Proposals, then the amendment to increase the
number of authorized shares of common stock and change par value will become
effective upon the filing of a Certificate of Amendment in accordance with the
General Corporation Law of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL
NO. 3 AND PROPOSAL NO. 4. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED FOR THESE PROPOSALS UNLESS A CONTRARY VOTE IS SPECIFIED.
PROPOSAL NO. 3
PROPOSAL TO APPROVE AN AMENDMENT TO THE RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors believes that it is in the Company's best interest
to amend the Company's Restated Certificate of Incorporation to increase the
number of shares of common stock the Company is authorized to issue to 1.5
billion.
As of February 29, 2000, 472,016,528 shares of common stock were issued,
including 397,140,724 outstanding shares and 74,875,804 shares held by the
Company in treasury. Approximately 31,000,000 shares were under option to
participants in the Company's stock option plans. As of the close of business on
February 29, 2000, none of the Company's 10,000,000 shares of authorized
preferred stock have been issued.
The Board of Directors has concluded that increasing the number of
authorized shares of common stock will give the Company the ability to respond
to growth of the Company's business that may occur in the future and to react
quickly to today's competitive, fast-changing environment. Since 1920, the
Company effected seven 2-for-1, one 3-for-1 and one 4-for-1 stock splits
following significant increases in the market price for 3M common stock.
Although the Board has not determined when and under what conditions it would
consider a stock split, the Board believes that the increase in the number of
authorized shares will provide flexibility in considering future stock splits
(effected in the form of a stock dividend) without the expense of a special
stockholder meeting or waiting until the next annual meeting. Although the
Company has no specific plans or commitments for the issuance of any of the
additional shares that would be authorized by the amendment, the Board of
Directors also believes that an increase in the authorized shares is desirable
because it would provide the Company flexibility for other actions the Company
might wish to take. These actions include, paying for acquisitions with stock of
the Company, equity offerings to raise capital, and employee benefit plans.
Accordingly, at its meeting held on February 14, 2000, the Board of
Directors unanimously adopted a resolution proposing that an amendment to
paragraph A of Article FOURTH of the Company's Restated Certificate of
Incorporation be presented to the stockholders at the Annual Meeting for their
approval. Such amendment would change the number of authorized shares of common
stock the Company is authorized to issue to 1.5 billion.
If the proposed amendment is approved, the Board of Directors may issue
such shares without further stockholder action except as required by law or
applicable stock exchange requirements. The additional shares, when issued, will
have the same voting and other rights as the Company's presently authorized
common stock. The holders of common stock do not have preemptive rights to
subscribe for additional shares of common stock.
Although the Board has no present intention of issuing any additional
shares of common stock as an anti-takeover step, the issuance of additional
common shares could be used to create impediments
12
to or otherwise discourage persons attempting to gain control of the Company.
For example, the issuance of additional shares could be used in a manner that
would dilute the voting power of shares then outstanding. Shares of common stock
could also be issued to persons or entities who would support the Board of
Directors in opposing a takeover bid which the Board determines to be not in the
best interests of the Company, its stockholders, and its employees.
The affirmative "FOR" vote by the holders of a majority of the outstanding
common stock entitled to vote is required to approve this amendment to the
Company's Restated Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS A CONTRARY VOTE IS SPECIFIED.
PROPOSAL NO. 4
PROPOSAL TO APPROVE AN AMENDMENT TO THE RESTATED CERTIFICATE OF
INCORPORATION TO CHANGE PAR VALUE
The Board of Directors believes that it is in the Company's best interest
to amend the Company's Restated Certificate of Incorporation to change the par
value of the Company's common stock to $0.01 per share. The change to "$0.01 par
value" common stock will have no impact on value of the Company's stock or the
rights of its stockholders. If the stockholders approve the proposed amendment,
the change in par value will, however, enable the Company to realize significant
reductions in the amount of the filing fees charged by various states for filing
its amended Certificate of Incorporation.
Accordingly, at its meeting held on February 14, 2000, the Board of
Directors unanimously adopted a resolution proposing that an amendment to
paragraph A of Article FOURTH of the Company's Restated Certificate of
Incorporation (and a conforming change to the third sentence of paragraph A of
Article TENTH) be presented to the stockholders at the Annual Meeting for their
approval. Such amendment would change the par value to $0.01 per share and
convert the issued shares of stock to shares with the new par value.
If stockholders approve the amendment, the amendment would also change the
reference to par value in the third sentence of paragraph A of Article TENTH of
the Restated Certificate of Incorporation to $0.01 per share.
The affirmative "FOR" vote by the holders of a majority of the outstanding
common stock entitled to vote is required to approve this amendment to the
Company's Restated Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS A CONTRARY VOTE IS SPECIFIED.
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning beneficial ownership
of the Company's common stock as of February 29, 2000, for: (a) each director
and the nominee for director; (b) the three most highly compensated executive
officers who are not also directors; and (c) the directors and executive
officers as a group. Unless otherwise indicated, each person has sole investment
and voting power (or shares such powers with his or her spouse) with respect to
the shares set forth in the following table.
The number of shares beneficially owned by each director or executive
officer is determined under the rules of the Securities and Exchange Commission,
and the information is not necessarily indicative of beneficial ownership for
any other purpose. Under such rules, beneficial ownership includes any shares as
to which the individual has the sole or shared voting power or investment power
and also any shares which the individual has the right to acquire as of April
29, 2000 (60 days after February 29, 2000), through the exercise of any stock
option or other right. Options exercisable within 60 days after February 29,
2000, are shown separately.
13
BENEFICIAL OWNERSHIP TABLE
- --------------------------------------------------------------------------------
COMMON STOCK
BENEFICIALLY OPTIONS SHARES HELD AS
NAME AND PRINCIPAL POSITION OWNED(1) EXERCISABLE(2) DEFERRED STOCK(3) TOTAL
--------------------------- ------------ -------------- ----------------- ---------
Linda G. Alvarado,
Nominee 0 -- 0 0
Edward A. Brennan,
Director 4,817 -- 11,198 16,015
Edward M. Liddy,
Nominee 0 -- 0 0
Edward R. McCracken,
Director 2,820 -- 3,106 5,926
Allen E. Murray,
Director 3,065 -- 16,291 19,356
Aulana L. Peters,
Director 865 -- 11,095 11,960
Rozanne L. Ridgway,
Director 1,307 -- 13,283 14,590
Frank Shrontz,
Director 3,031 -- 6,808 9,839
F. Alan Smith,
Director 5,615 -- 14,403 20,018
Louis W. Sullivan,
Director 1,761 -- 4,486 6,247
Livio D. DeSimone,
Chairman of the Board and
Chief Executive Officer 200,084 433,654 -- 633,738
Ronald O. Baukol,
Director and
Executive Vice President 41,966 114,092 -- 156,058
Giulio Agostini,
Senior Vice President 31,724 131,237 -- 162,961
John W. Benson,
Executive Vice President 27,074 36,128 -- 63,202
Raymond C. Richelsen,
Executive Vice President 34,226 60,827 -- 95,053
All Directors and Executive
Officers as a Group
(25 persons) (4) 602,170 1,339,161 1,941,331
- --------------------------------------------------------------------------------
(1) "Shares Held" include: stock held in joint tenancy, stock owned as tenants
in common, stock owned or held by spouse or other members of the nominee's
household, and stock in which the nominee either has or shares voting and/or
investment power, even though the nominee disclaims any beneficial interest in
such stock. Options exercisable within 60 days after February 29, 2000 are shown
separately. The "shares held" include shares of Profit Sharing Stock held by the
Company and subject to forfeiture, as more fully described in footnote 3 on page
16 of this proxy statement.
(2) Option prices for these shares range from $38.63 to $93.35 per share.
(3) "Shares Held as Deferred Stock" by nonemployee directors represent the
number of shares of the Company's common stock, as of February 29, 2000, which
the directors will receive upon termination of membership on the Board of
Directors for any reason. These shares result from the voluntary election by the
nonemployee directors to defer the payment of directors' fees. No shares of
common
14
stock have as yet been issued, and the directors have neither voting nor
investment powers in these shares of deferred stock.
(4) All directors and executive officers as a group owned beneficially less than
one-half of one percent (0.5%) of the outstanding common stock of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers to file with the Securities Exchange Commission reports
regarding their ownership and changes in ownership of our stock. 3M believes
that during 1999, its directors and executive officers complied with all Section
16(a) filing requirements with the following exceptions (1) one late report
filed by John W. Benson, Executive Vice President, Health Care Markets, with
respect to a gift of shares to charity and his children; (2) one late report
filed by Raymond C. Richelsen, Executive Vice President, Transportation,
Graphics and Safety Markets, with respect to a gift of shares to charity; (3)
one late report filed by W. George Meredith, former Director and Executive Vice
President, Corporate Services and Supply Chain Management, with respect to an
exercise of a stock option; and (4) one late report filed by David W. Powell,
Vice President, Marketing, with respect to an amendment to the initial Form 3 to
add additional shares held in street name. In making this statement, 3M has
relied upon the written representations of its directors and officers.
TRANSACTIONS WITH MANAGEMENT
During 1999, nine executive officers had loans outstanding with the Eastern
Heights Bank, a subsidiary of the Company. These loans were made in the ordinary
course of business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons of comparable circumstances and did not involve more than normal
risk of collectibility or present other unfavorable features. In 1999, the
Company sold Eastern Heights Bank to Norwest Bank Minnesota.
EXECUTIVE COMPENSATION
The following table shows compensation received by 3M's Chief Executive
Officer and its four other most highly paid executive officers for 1999, 1998,
and 1997.
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION(1)
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ---------------------------- -----------
PERFORMANCE
PROFIT PROFIT SHARING OPTIONS UNIT PLAN
SHARING OTHER ANNUAL STOCK (RESTRICTED GRANTED (LTIP) ALL OTHER
SALARY CASH (BONUS) COMPENSATION STOCK AWARDS) NUMBER OF PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(4) ($)(2)(3) SHARES(5) ($)(6) ($)(7)
- -----------------------------------------------------------------------------------------------------------------------------------
Livio D. DeSimone, 1999 1,047,600 947,502 81,318 774,698 155,456 1,336,500 169,956
-------------------------------------------------------------------------------------------------------
Chairman of the Board and 1998 1,047,600 669,341 60,533 547,268 212,890 774,900 155,518
-------------------------------------------------------------------------------------------------------
Chief Executive Officer 1997 1,047,600 551,270 95,298 574,799 160,897 777,700 162,429
- -----------------------------------------------------------------------------------------------------------------------------------
Ronald O. Baukol, 1999 521,700 423,918 -- 129,447 52,780 549,450 53,015
-------------------------------------------------------------------------------------------------------
Executive Vice President 1998 521,700 299,466 -- 91,440 47,916 318,570 36,105
-------------------------------------------------------------------------------------------------------
1997 468,900 314,531 50,548 96,040 37,662 95,950 41,718
- -----------------------------------------------------------------------------------------------------------------------------------
Giulio Agostini, 1999 518,400 408,545 50,586 199,668 22,600 356,400 62,306
-------------------------------------------------------------------------------------------------------
Senior Vice President 1998 518,400 288,608 -- 141,046 32,889 206,640 54,054
-------------------------------------------------------------------------------------------------------
1997 398,400 303,126 67,221 148,142 15,000 242,400 54,056
- -----------------------------------------------------------------------------------------------------------------------------------
John W. Benson, 1999 437,700 332,339 -- 48,137 45,811 141,075 30,641
-------------------------------------------------------------------------------------------------------
Executive Vice President 1998 409,650 212,841 -- 16,080 28,398 81,795 27,216
-------------------------------------------------------------------------------------------------------
1997 298,000 193,761 -- 0 19,660 55,550 31,351
- -----------------------------------------------------------------------------------------------------------------------------------
Raymond C. Richelsen, 1999 437,700 331,287 54,289 49,274 53,395 141,075 44,386
-------------------------------------------------------------------------------------------------------
Executive Vice President 1998 416,400 213,092 -- 16,458 30,943 81,795 42,065
-------------------------------------------------------------------------------------------------------
1997 310,260 199,283 -- 0 31,856 95,950 46,877
- -----------------------------------------------------------------------------------------------------------------------------------
15
(1) The amounts shown in the Summary Compensation Table do not include amounts
expensed for financial reporting purposes under the Company's pension plan. This
plan is a defined benefit plan. The amounts shown in the table do, however,
include those amounts voluntarily deferred by the named individuals under the
Company's Deferred Compensation Plan. The Deferred Compensation Plan allows
management personnel to defer portions of current base salary, profit sharing,
and performance unit compensation earned during the year.
(2) The amounts shown under the headings "Profit Sharing Cash (Bonus)" and
"Profit Sharing Stock (Restricted Stock Awards)" are payments received under the
Profit Sharing Plan. The terms "(Bonus)" and "(Restricted Stock Awards)" are
included to satisfy the requirements of the Securities and Exchange Commission
("SEC"). These payments are based upon the Company's performance and are
variable in accordance with a predetermined formula. The Compensation Committee
does not view these payments as bonus payments or restricted stock awards as
these terms are most often used. The Committee views bonus plans as plans which
provide for annual (as opposed to quarterly) payments from a pool rather than
based on a strict formula related to economic profit. Restricted stock awards
are generally outright grants of stock as opposed to payment in the form of
stock held in the custody of the Company (restricted period) in lieu of cash
under a formula-based profit sharing plan.
Generally, profit sharing is paid in cash; however, senior executive
management, as determined by the Compensation Committee, receive a portion of
their profit sharing in shares of the Company's common stock (see footnote 3 on
page 16).
The Company's Profit Sharing Plan provides for quarterly payments based
upon the number of shares of profit sharing assigned to a participant,
multiplied by an amount based on economic profit. Economic profit is defined as
quarterly net operating income minus a capital charge, and emphasizes the
effective use of working capital.
The number of profit sharing shares awarded to the individuals named is
determined by the Compensation Committee and is intended to reflect the level of
responsibility of the respective individual. Profit sharing payments are subject
to limitations when individual amounts exceed specified relationships to base
salary. Approximately 15,300 employees currently participate in profit sharing,
including the five individuals in the Summary Compensation Table.
(3) The amount shown under the heading "Profit Sharing Stock (Restricted Stock
Awards)" represents the portion of profit sharing issued as common stock to the
named individuals, valued at 100 percent of the fair market value of the
Company's common stock at the end of the quarterly profit sharing performance
period. The number of shares is determined by the Company's quarterly economic
profit performance. However, payment is deferred and conditional upon continued
employment by the Company. Therefore, pursuant to SEC rules, it is included
under the headings of "Long-Term Compensation."
The shares are held in the custody of the Company for a period of three
years or until age 65, whichever occurs first. Any termination of employment,
prior to that time, without the consent of the Compensation Committee or the
Board of Directors, other than upon death or permanent disability, will result
in forfeiture of the Profit Sharing Stock. The recipient is entitled to receive
dividends and vote these shares in the same manner as any other holder of the
Company's common stock during the period of custody by the Company. In 1999, the
Company distributed a portion of these shares to Messrs. DeSimone, Baukol, and
Agostini.
From the time of issuance throughout the Restricted Period, Profit Sharing
Stock rises or falls in value in direct relationship to the Company's common
stock market performance. Consequently, Profit Sharing Stock reflects both
short-term and long-term performance elements.
16
The named individuals have accumulated as of December 31, 1999, in one case
over ten years, the following shares of the Company's common stock under the
Company's Profit Sharing Plan. The Profit Sharing Stock is valued in this table
at the fair market value of such stock on December 31, 1999, and also on the
respective dates when the shares were issued into the custody of the Company:
- --------------------------------------------------------------------------------
VALUE AT VALUE
NAME SHARES DECEMBER 31, 1999 WHEN ISSUED
- ---- ------ ----------------- -----------
L.D. DeSimone .................. 41,351 $4,047,229 $2,839,613
R.O. Baukol .................... 3,908 382,496 335,376
G. Agostini .................... 6,833 668,780 557,917
J.W. Benson .................... 767 75,070 64,200
R.C. Richelsen ................. 785 76,832 65,689
- --------------------------------------------------------------------------------
(4) "Other Annual Compensation" includes the following, to the extent that the
aggregate thereof exceeds $50,000: personal benefits received by the named
individuals, amounts reimbursed to the individuals during the year for payment
of taxes, and that portion of interest above market rates (as determined by the
SEC) paid on that compensation voluntarily deferred by the individuals. The
personal benefits included in these numbers represent the amount of personal
financial planning services, an amount paid on behalf of the individual for the
term portion of insurance under the Company's Senior Executive Split Dollar
Plan, and air travel on corporate aircraft imputed to the individual as income
for tax purposes. In the case of Mr. DeSimone, nearly all of the "Other Annual
Compensation" received in 1999, 1998, and 1997 was a result of income imputed to
him for travel.
(5) The number of stock options shown in this column includes both annual grants
of incentive and nonqualified stock options and Progressive Stock Options, which
are described more fully in footnote 1 on page 18. The number and price of all
outstanding options were adjusted at the spin-off of Imation Corp. in order to
preserve the intrinsic value of the options. The number of stock options shown
in this column for 1999 reflects this adjustment.
(6) "Performance Unit Plan (LTIP) Payouts" reflects the value of the total grant
for each individual under the Company's Performance Unit Plan after the base
three-year performance period (i.e., the amount shown in 1999 covers the base
performance period from 1997-1999). Under the 1999 award, the amount earned will
be paid to these individuals in 2002, unless the participant elects to defer the
payout for three additional years. The numbers shown represent estimates based
upon information available as of February 29, 2000. More specific information
about the Performance Unit Plan is set forth on pages 20 and 23.
(7) "All Other Compensation" includes: (a) that amount of Performance Unit Plan
earnings allocated during the year to the base amounts determined after the
three-year performance periods of each respective grant, to the extent that such
earnings are in excess of market interest rates (as determined by the SEC); (b)
that amount deemed to be compensation to the individuals under the Company's
Senior Executive Split Dollar Plan in accordance with rules developed by the
SEC; and (c) all amounts contributed to the account of each named executive
under the Company's 401(k) plan. The Senior Executive Split Dollar Plan provides
insurance to all of the Company's executive officers under split dollar life
insurance, which is partly term insurance and partly whole life insurance with a
cash value. Under this Plan, the Company is reimbursed for the premium costs of
the non-term portion of coverage and a possible return when the arrangement
terminates either by insurance proceeds incident to the death of the individual
or by cash value after 15 years of participation in the Plan. During 1999,
amounts deemed compensation under the Plan to the named executive officers in
the Summary Compensation Table were $7,667 for Mr. DeSimone; $15,522 for Mr.
Baukol; $11,137 for Mr. Agostini; $13,122 for Mr. Benson; and $21,060 for Mr.
Richelsen. These amounts were determined by treating the non-term portion of the
coverage as an interest-free loan.
17
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants during 1999 to
each person named in the Summary Compensation Table.
- ------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------
% OF TOTAL GRANT DATE
OPTIONS/SARs VALUE
OPTIONS/ GRANTED EXERCISE OR -------------------
SARs TO EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(1)(2) DATE PRESENT VALUE($)(4)
---- ------------- ----------- ------------ ---- -------------------
L.D. DeSimone 90,000 1.580% $ 95.00 5-10-2009 $ 2,057,760
34,355 0.603% 77.75 5-07-2004 478,276
31,101 0.546% 77.75 5-12-2006 432,975
R.O. Baukol 22,600 0.397% 95.00 5-10-2009 516,726
269 0.005% 77.75 5-05-2000 3,745
4,555 0.080% 77.75 5-10-2002 63,413
6,020 0.106% 77.75 5-07-2004 83,808
19,336 0.339% 77.75 5-12-2006 269,187
G. Agostini 22,600 0.397% 95.00 5-10-2009 516,726
J.W. Benson 22,600 0.397% 95.00 5-10-2009 516,726
1,669 0.029% 93.10 5-11-2001 28,796
1,864 0.033% 93.10 5-10-2002 32,161
2,346 0.041% 93.10 5-09-2003 40,477
2,018 0.035% 93.10 5-07-2004 34,818
2,446 0.043% 93.10 5-06-2005 42,202
7,681 0.135% 93.10 5-12-2006 132,525
5,187 0.091% 93.10 5-12-2007 89,495
R.C. Richelsen 22,600 0.397% 95.00 5-10-2009 516,726
1,401 0.025% 93.30 5-05-2000 24,233
1,668 0.029% 93.30 5-11-2001 28,852
5,152 0.090% 93.30 5-10-2002 89,115
6,051 0.106% 93.30 5-09-2003 104,665
5,370 0.094% 93.30 5-07-2004 92,886
6,218 0.109% 93.30 5-06-2005 107,554
4,935 0.087% 93.30 5-12-2006 85,361
- ------------------------------------------------------------------------------------------------------------
All Optionees
10,580 Participants 5,697,333 100.000% $ 94.32 5-10-2009(3) $126,684,474
- ------------------------------------------------------------------------------------------------------------
(1) The Company has not granted any Stock Appreciation Rights ("SARs"), except
in limited circumstances to employees of certain subsidiaries who are not
subject to the tax laws of the United States where SARs have less onerous tax
consequences than stock options. The options shown for each individual include
both annual grants of Incentive Stock Options and nonqualified stock options and
grants of Progressive Stock Options ("PSOs"). Nonqualified options are subject
to a reload feature when exercised with the payment of the option price in the
form of previously owned shares of the Company's common stock. Such an exercise
results in further grants of PSOs. The first grant shown for each individual is
the annual grant. The remaining lines are PSOs. The PSO grants for each
individual were made on a single date, but are, pursuant to SEC rules, shown in
multiple lines because of different expiration dates.
PSO grants were made to participants who exercised nonqualified stock
options and who paid the purchase price using shares of previously owned Company
common stock. The PSO grant is for the number of shares equal to the shares
utilized in payment of the purchase price and tax withholding, if any. The
option price for the PSO is equal to 100 percent of the market value of the
Company's common stock on the date of the exercise of the primary option or,
alternatively, on the date of the PSO grant to the five named individuals in the
table, all of whom are subject to the requirements of Section 162(m) of the
Internal Revenue Code. The option period is equal to the remaining period of the
options exercised.
18
The participant must have owned Company common stock used for payment for
at least six months, and only one exercise of nonqualified options per
participant per calendar year will be eligible for PSO grants by the
Compensation Committee.
The presence of PSOs encourages early exercise of nonqualified stock
options, without foregoing the opportunity for further appreciation, and
promotes retention of the Company stock acquired.
In any event, a participant receiving an annual grant of nonqualified stock
options can never acquire more shares of Company common stock through successive
exercises of the initial and subsequent PSO grants than the number of shares
covered by the initial annual grant from the Committee.
(2) All options granted during the period were granted at the market value on
the date of grant if initial grants, or at the fair market values discussed in
footnote 1 above in the case of PSOs, as calculated from the average of the high
and low prices reported on the New York Stock Exchange Composite Index. The
option price shown for the "All Optionees" line is $94.32 and represents the
weighted average exercise price of the options granted in 1999.
(3) The expiration date for the "All Optionees" line is shown as May 10, 2009,
since that is the applicable date for the vast majority of options granted
during 1999.
(4) Pursuant to the rules of the SEC, the Company has elected to provide a grant
date present value for these option grants determined by a modified
Black-Scholes pricing model. The Company's use of this model should not be
construed as an endorsement of its accuracy at valuing options. All stock option
valuation models, including the Black-Scholes model, require a prediction about
the future movement of the stock price. Among key assumptions utilized in this
pricing model were: (i) that the time of exercise of stock options would be 66
months (26 months for PSOs) into the term of the option, which could be for
terms as long as ten years, in recognition of the historical exercise patterns
at the Company for these types of options; (ii) expected volatility of 22.3
percent (28.8 percent for PSOs); (iii) risk-free rate of return of 5.4 percent
(5.4 percent for PSOs); and (iv) dividend growth rate of 5 percent. No
adjustments for non-transferability or risk of forfeiture have been made. The
Company expresses no opinion that the present value will, in fact, be realized
and expressly disclaims any representation to that effect.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table provides information on option exercises during 1999
and the value of unexercised options at the end of 1999 for each person named in
the Summary Compensation Table.
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUE
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS/SARs
SHARES AT FY-END(#) AT FY-END($)(1)
ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- -------------- ----------- ------------- ----------- -------------
L.D. DeSimone 85,637 $1,061,052 433,654 90,000 $4,562,862 $258,750
R.O. Baukol 38,077 495,968 114,092 22,600 1,382,418 64,975
G. Agostini 0 0 108,637 22,600 2,603,616 64,975
J.W. Benson 28,403 284,303 36,128 45,811 823,508 174,808
R.C. Richelsen 37,440 412,103 30,032 53,395 222,755 205,862
- ----------------------------------------------------------------------------------------------------------------------
(1) The "Value Realized" or the unrealized "Value of Unexercised In-the-Money
Options at FY-End" represents the aggregate difference between the market value
on the date of exercise or at December 31, 1999, in the case of the unrealized
values, and the applicable exercise prices. These differences accumulate over
what may be, in many cases, several years. These stock options all have option
periods of ten years when first granted, and Progressive Stock Options have
option periods equal to the remaining option period of the initial nonqualified
options resulting in Progressive Stock Options.
19
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table shows information on awards during 1999 under the
Company's Performance Unit Plan for each person in the Summary Compensation
Table.
- ---------------------------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
-------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE OR UNDER NON-STOCK PRICE BASED
SHARES, UNITS OTHER PERIOD PLANS (3)
OR OTHER UNTIL MATURATION ---------------------------
NAME RIGHTS(#)(1) OR PAYOUT(2) THRESHOLD($) TARGET($) MAXIMUM($)
---- ------------ ------------ ------------ ----------- ----------
L.D. DeSimone 9,000 3 years $0 $900,000 $1,800,000
R.O. Baukol 3,700 3 years 0 370,000 740,000
G. Agostini 2,400 3 years 0 240,000 480,000
J.W. Benson 2,400 3 years 0 240,000 480,000
R.C. Richelsen 2,400 3 years 0 240,000 480,000
- ---------------------------------------------------------------------------------------------------
(1) The Company's Performance Unit Plan provides long-term compensation to 99
key management personnel based upon the Company's attainment of long-term
performance and growth criteria.
The Compensation Committee, of which none of the members are current
employees of the Company, administers the Plan. The Committee has sole
discretion in the selection of participants, performance criteria, size of
awards, performance period, and the timing and form of payment, as well as all
other conditions regarding awards.
Awards made in 1999 under the Performance Unit Plan are based on
performance criteria that focus management attention on two key factors that
create shareholder value: Real Growth and Economic Profit. The payout can vary
from $0 to $200 per unit. The payout can be reached by either performance
criteria alone, or by both in combination. The payout may be deferred by the
participant for three additional years and earn interest at a specified rate. No
amount will be payable under the Performance Unit Plan if the Company's Real
Growth is less than the Big 7 IPI and if Economic Profit is less than 75 percent
of the Economic Profit of the previous three years. More detail about current
performance goals is available in the Report of Compensation Committee on page
23.
The right to receive payment is contingent upon continued employment to the
payment date, and is subject to forfeiture prior to the payment date in the
event of termination of employment for any reason other than retirement under a
pension plan of the Company or physical or mental disability. Participants
receiving awards during 1999, including the five executive officers in the
Summary Compensation Table, will receive payment in 2002, provided that such
individuals continue employment with the Company until such payment date (except
in the event of death, retirement, or disability). Payment under the Plan may be
made in cash, shares of the Company's common stock, or any combination of cash
and stock, at the discretion of the Compensation Committee. In the past, payment
has been made only in cash.
(2) The value of awards granted for 1999 will be determined by the Company's
attainment of Real Growth and Economic Profit performance criteria during a
three-year performance period of 1999, 2000, and 2001. More detail about current
performance goals is available in the Compensation Committee Report on page 23.
At the beginning of every performance period, participants may elect to defer
the payout for three years beyond the base performance period (for the 1999
award, the payout will be made the beginning of 2002, unless the participant
elects to defer the payout for three additional years). Participants will earn
interest during the deferral period. The deferred amount will be subject to
forfeiture if the participant discontinues employment for any reason other than
death, disability, or retirement.
(3) The estimated future payouts do not include any interest factor that would
be earned annually during the optional three-year deferral period following the
performance period. Interest during the optional three-year deferral period
would accrue annually at a rate equal to the annualized yield to maturity of a
five-year Treasury note as of the last business day of the preceding year (for
1998, that rate was 4.54 percent) PLUS an amount based on the Company's Economic
Profit for the preceding year as a percentage of the average operating capital
(for 1998, that rate was 5.9 percent). The interest would be payable, together
with the base award, in January 2005.
20
ESTIMATED ANNUAL RETIREMENT BENEFITS TABLE UNDER PENSION PLAN
The following table shows the estimated annual benefits payable upon
retirement to the Company's executive officers in specified remuneration and
years of service classifications.
- -------------------------------------------------------------------------------
ANNUAL RETIREMENT BENEFITS
AVERAGE WITH YEARS OF SERVICE
ANNUAL EARNINGS INDICATED(2)
DURING THE HIGHEST -------------------------------------------------------
FOUR CONSECUTIVE 30 35 40 45
YEARS OF SERVICE(1) YEARS YEARS YEARS YEARS
- -------------------------------------------------------------------------------
$ 800,000 $ 356,315 $ 415,700 $ 461,700 $ 507,700
1,200,000 536,315 625,700 694,700 763,700
1,600,000 716,315 835,700 927,700 1,019,700
2,000,000 896,315 1,045,700 1,160,700 1,275,700
2,400,000 1,076,315 1,255,700 1,393,700 1,531,700
2,800,000 1,256,315 1,465,700 1,626,700 1,787,700
- -------------------------------------------------------------------------------
(1) Earnings include base salary, profit sharing cash, and the value of Profit
Sharing Stock (at the time of award) actually earned by the participant and does
not include any other forms of remuneration. The benefits are computed on the
basis of straight-life annuity amounts and are not subject to any deduction for
Social Security or other offset amounts.
(2) To provide for the retirement security of its employees, the Company has
defined benefit pension plans for U.S. employees. These plans are fully paid by
the Company, and employees become vested after five years of service. Under the
plans, a participant may retire with an unreduced pension at age 60 (61 or 62
for employees born after 1942) and if the participant's age and years of service
total at least 90 (91 or 92 for employees born after 1942) he or she would
receive a Social Security bridge to age 62. The five individuals listed in the
Summary Compensation Table are presently entitled to the respective years of
service credit set opposite their names:
- --------------------------------------------------------------------------------
L.D. DeSimone ....................................... 43
R.O. Baukol ......................................... 33
G. Agostini ......................................... 34
J.W. Benson ......................................... 32
R.C. Richelsen ...................................... 37
- --------------------------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE
This report was prepared at the direction of the Compensation Committee of
the Board of Directors (the "Committee"), which is composed entirely of
nonemployee directors of the Company. The Committee establishes and periodically
reviews compensation levels and policies for the Chief Executive Officer ("CEO")
and other executive officers and authorizes short-term and long-term
compensation in the form of cash or stock. The current members of the Committee
are Edward A. Brennan, who serves as Chair, Allen E. Murray, Rozanne L. Ridgway,
and Frank Shrontz.
COMPENSATION OBJECTIVES
The executive compensation program is designed to align total compensation
with the Company's strategic objectives and ensure that payouts are driven by
Company performance and employee contribution to the Company. Executive
compensation is linked to Company performance compared to specific financial and
nonfinancial objectives. These objectives range from achieving earnings and
sales growth targets to upholding the Company's Statement of Corporate Values
(which include customer satisfaction through superior quality and value,
attractive investor return, ethical business conduct, respecting the
environment, and fostering employee pride in the Company).
In determining the amount and type of executive compensation, the Committee
seeks to achieve the following objectives:
* To attract, motivate, and retain talented, competent, and resourceful
executive officers by providing competitive compensation.
21
* To encourage executives to hold significant amounts of Company stock.
* To require that a substantial portion of executive compensation is "at
risk" by being tied to quantifiable short-term and long-term measures
of the Company's performance.
PROCESS OF ESTABLISHING COMPENSATION
The Committee begins the process of establishing the amount of compensation
for the CEO and other executive officers by reviewing compensation surveys of
selected companies. Independent consultants specializing in executive
compensation primarily conduct the surveys. The Committee, in consultation with
the independent consultants, selects the companies included in the compensation
surveys. These companies consist of large industrial companies that are most
likely to be competitors for executive talent. The objective of the Committee is
to use the survey data to establish a competitive level of total compensation.
The Committee believes that the Company's most direct competitors for executive
talent are not necessarily all of the companies that would be included in a
group established to compare shareholder returns. Thus, the group of companies
for purposes of the compensation surveys is not the same as the peer group index
(DJIA and S&P 500) in the Comparison of Five-Year Cumulative Total Return graph
included on page 25 of this proxy statement.
The Committee does not target any specific quartile of the survey data for
total compensation or any component of total compensation (e.g., base salary,
profit sharing, performance unit plan, or stock options). The Committee's
objective of maintaining the total compensation at a competitive level has
resulted in short-term compensation (base salary and profit sharing cash) and
long-term compensation (performance unit plan, profit sharing stock, and stock
options) being at or very close to the median.
After the Committee has established the amount of total compensation for
the CEO and other executive officers, the Committee next determines what percent
of the total compensation should be allocated to short-term compensation in the
form of base salary and profit sharing cash and long-term compensation in the
form of the performance unit plan, profit sharing stock, and stock options. This
determination is subjective, but is based on information from the compensation
surveys and the objectives for executive compensation referred to above. It is
the Committee's long-standing policy that variable, at-risk compensation, both
short-term and long-term, should make up a significant portion of executive
compensation. Depending upon the level of the executive, the Committee targets
between 65 percent and 85 percent of executive compensation to be variable and
at risk by being tied to quantifiable measures of the Company's performance.
ELEMENTS OF THE COMPENSATION PROGRAM
Each of the components of short-term and long-term executive compensation
is described in greater detail below.
BASE SALARY
The Committee establishes base salaries annually in relation to base
salaries paid by the selected companies from the compensation surveys. Base
salaries may be adjusted from time to time according to guidelines established
for all employees to reflect increased salary levels within the group, increased
responsibilities, or individual performance. This is the only component of
executive compensation that is not variable.
PROFIT SHARING
Profit sharing is variable compensation based on quarterly performance
measurements for the Company. In 1999, the stockholders approved the change in
performance criteria recommended by the Compensation Committee from consolidated
net income to economic profit. Economic profit is defined as quarterly net
operating income minus a capital charge and emphasizes the effective use of
working capital. The economic profit measurement is deemed by the Committee to
be related more directly to the creation of stockholder value and will be more
sensitive to the performance of the Company. Thus, it is expected that
compensation paid under the new measurement will tend to rise and fall
relatively more sharply than payments under prior measurement criteria. The
Committee, as part of the overall compensation, determines number of shares of
profit sharing granted to the CEO and executive officers to achieve the
appropriate ratio between short-term, performance-based compensation and other
forms of compensation, and to reflect the level of responsibility of the
respective executive officer.
22
The amount payable under this plan shall be based on the number of shares
of profit sharing assigned to a participant, multiplied by an amount based on
quarterly economic profit. The total paid under this plan to the Company's five
most highly compensated officers will never exceed one-half percent of the
consolidated net income of the Company. Profit sharing payments are subject to
limitations when individual amounts exceed specified relationships to base
salary.
For the executive officers listed in the Summary Compensation Table, a
portion of profit sharing is paid in cash and a portion is paid in stock which
is held by the Company for three years or until age 65, whichever occurs first.
The ratio between that portion of profit sharing paid in cash and the portion
paid in stock to the named executive officers for 1999 is subjective and varies
from year to year and among executive officers. However, the more senior
executive officers generally have been paid a larger portion of profit sharing
in stock than less senior executive officers. More details about the Company's
Profit Sharing Plan are provided on page 16 of this proxy statement.
PERFORMANCE UNIT PLAN
The Performance Unit Plan is variable compensation based on the Company's
long-term performance. The Committee establishes the number of performance units
allocated to the CEO and executive officers to achieve the appropriate ratio
between long-term, performance-based compensation and other forms of
compensation. The amount payable with respect to each performance unit granted
is determined by and is contingent upon attainment of the performance criteria
described below over the applicable three-year performance period (each year
weighted equally).
The current performance criteria have been selected to focus management
attention on two key factors that create shareholder value: Real Growth and
Economic Profit.
PERFORMANCE CRITERIA:
(1) "Real Growth" is the percentage amount by which the Company's worldwide
unit sales growth as reported in the Company's Annual Report exceeds the
weighted average of the Industrial Production Index ("IPI") of the top seven
industrial nations in which the Company does business (the "Big 7 IPI"); and
(2) "Economic Profit" is the Company's net operating income (operating
income adjusted for income taxes) less the cost of capital utilized (average
operating capital multiplied by the cost of capital).
PERFORMANCE UNIT PLAN PAYMENTS:
The amount payable with respect to each performance unit granted in 1999 is
linked to the performance criteria of Real Growth and Economic Profit. The
payout can vary from $0 to $200 per unit. The payout can be reached by either
performance criteria alone, or by both in combination. The payout for the 1999
Award is payable in May 2002, in the form (at the discretion of the Committee)
of cash, stock, or a combination of cash and stock. The payout may be deferred
by the participant for three additional years and earn interest at a specified
rate. No amount will be payable under the Performance Unit Plan if the Company's
Real Growth is less than the Big 7 IPI and if Economic Profit is less than 75
percent of the Economic Profit of the previous three years.
STOCK OPTIONS
The Company's Stock Option plan is also variable compensation. It is based
on the market appreciation of the Company's common stock and is designed to
increase ownership of the Company's stock. The Company makes stock option grants
annually at 100 percent of the market price on the date of grant. The options
may be exercised after one year and have a ten-year life. The number of shares
under options to be granted to the CEO and executive officers is determined by
the Committee as part of the overall compensation. The awards are designed to
keep total compensation competitive with companies in the survey group, and as
such require subjective judgment as to the value of the award. The number of
option shares currently held by each executive is not considered in determining
awards. Stock options encourage executives to become owners of the Company,
which further aligns their interests with the stockholders. Options have no
value unless the price of the Company's stock increases.
23
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of Livio D. DeSimone, Chairman of the Board and Chief
Executive Officer, is determined by the same process and consists of the same
short-term and long-term components as for the other executive officers listed
in the Summary Compensation Table, namely base salary, profit sharing,
Performance Unit Plan, and stock options. A higher portion of Mr. DeSimone's
total compensation is variable and at risk by being tied to quantifiable
measures of the Company's performance. These measures are quarterly net income,
Real Growth, and Economic Profit, as those terms are defined above, and
appreciation in the value of 3M stock.
In addition, the compensation paid to Mr. DeSimone is also based on
performance against nonfinancial measures. These nonfinancial measures include
upholding the Company's Statement of Corporate Values (which include customer
satisfaction through superior quality and value, attractive investor return,
ethical business conduct, respecting the environment, and fostering employee
pride in the Company), management succession planning, and the general overall
perception of the Company by financial and business leaders.
No changes have been made to the fixed base salary portion of Mr.
DeSimone's compensation since January 1997 and no changes were made to the
variable, performance-based portion of Mr. DeSimone's compensation in 1999.
Increases in compensation over the amounts paid in 1998 were due solely to the
improved performance of the Company.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code limits the Company's ability to
deduct, for federal income tax purposes, certain compensation in excess of $1
million per year paid to persons named in the Summary Compensation Table. The
Committee intends to ensure that all compensation paid to the executive officers
named in the Summary Compensation Table continues to meet the deductibility
requirements of Section 162(m) to the extent that such requirements do not
compromise the Company's ability to design effective compensation plans that
meet the Company's executive compensation objectives described above.
CONCLUSION
The Committee is satisfied that the short-term and long-term compensation
paid to the executive officers of the Company create alignment with the
Company's strategic objectives and ensure that payouts are driven by Company
performance and employee contribution to the Company.
The Compensation Committee
Edward A. Brennan, Chair
Allen E. Murray
Rozanne L. Ridgway
Frank Shrontz
24
3M STOCK PERFORMANCE GRAPH
The following compares the Company's cumulative and annualized total
shareholder return, overall stock market performance with reinvested dividends*,
during the five fiscal years preceding December 31, 1999, against the Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average, both of which are
well-known and published industry indices. The Company is included in both the
S&P 500 Stock Index and the Dow Jones Industrial group of 30 companies. The
Company, as a highly diversified manufacturer and seller of a broad line of
products, is not easily categorized with other, more specific, industry indices.
The annual changes for the five-year period shown in the graph are based on
the assumption that $100 had been invested in the Company's stock and each index
on December 31, 1994 (as required by SEC rules), and that all quarterly
dividends were reinvested at the average of the closing stock prices at the
beginning and end of the quarter. The total cumulative dollar returns shown on
the graph represents the value that such investments would have had on December
31, 1999.
*The Company's interest in Imation Corp. was distributed to stockholders
as a special stock dividend payable in shares of Imation Corp. stock on July
15, 1996. The following graph accounts for this distribution as though it was
paid in cash and reinvested in common shares of the Company.
COMPARISON OF FIVE-YEAR CUMULATIVE AND ANNUALIZED TOTAL RETURN AMONG
3M, S&P 500 INDEX AND DOW JONES INDUSTRIAL AVERAGE
3M STOCK PERFORMANCE
(WITH DIVIDEND REINVESTMENT)
[PLOT POINTS CHART]
Cumulative Return (per graph)
- -----------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
3M 100.0 128.3 172.7 174.8 155.8 219.9
DJIA 100.0 136.8 176.3 220.2 260.1 330.8
S&P 500 100.0 137.5 168.9 225.2 289.4 350.3
Annualized Return
- -----------------
3M 1.5% 28.3% 34.5% 1.2% -10.9% 41.2%
DJIA 5.1% 36.7% 28.9% 24.9% 18.1% 27.2%
S&P 500 1.4% 37.4% 22.9% 33.3% 28.5% 21.0%
25
ADDITIONAL QUESTIONS AND INFORMATION REGARDING ACCESS TO FUTURE ANNUAL
REPORTS AND PROXY STATEMENTS VIA THE INTERNET AND STOCKHOLDER PROPOSALS
Q: DOES 3M OFFER STOCKHOLDERS THE OPTION OF VIEWING ANNUAL REPORTS TO
STOCKHOLDERS AND PROXY STATEMENTS VIA THE INTERNET?
A: Yes. 3M offers stockholders of record the option to view future Annual
Reports to Stockholders and Proxy Statements via the Internet, instead of
receiving paper copies of these documents in the mail.
Q: HOW DO I ELECT THIS OPTION?
A: If you are interested in viewing future Annual Reports to Stockholders
and Proxy Statements on the Internet, instead of receiving paper copies of these
documents, please do the following:
(1) Go to web site http://www.econsent.com/mmm.
(2) Review Important Considerations and Frequently Asked Questions.
(3) You will need your account number, which can be found above your
name and address on your dividend check stub and your social
security number, if you have a social security number.
(4) Follow the prompts.
Q: WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE MEETING?
A: Other than the proposals described in this proxy statement, we do not
expect any matters to be presented for a vote at the Annual Meeting. If you
grant a proxy, the persons named as proxy holders, L.D. DeSimone, 3M's Chairman
and CEO, E.A. Brennan, F. Alan Smith, or any of them, will have the discretion
to vote your shares on any additional matters properly presented for a vote at
the meeting. If for any unforeseen reason any of our nominees is not available
as a candidate for director, the persons named as proxy holders will vote your
proxy for such other candidate or candidates as may be nominated by the Board of
Directors.
Q: MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING
OF STOCKHOLDERS OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS?
A: You may submit proposals for consideration at future stockholder
meetings, including director nominations.
* STOCKHOLDER PROPOSALS: In order for a stockholder proposal to be
considered for inclusion in 3M's proxy statement for next year's
Annual Meeting, the written proposal must be RECEIVED by the
Secretary no later than 5 p.m. Central Time on November 27, 2000.
SUCH PROPOSALS MUST BE IN WRITING AND SENT VIA REGISTERED,
CERTIFIED, OR EXPRESS MAIL TO: ROGER P. SMITH, SECRETARY,
MINNESOTA MINING AND MANUFACTURING COMPANY, 3M CENTER, ST. PAUL,
MN 55144. PROPOSALS SENT BY ANY OTHER MEANS, INCLUDING FACSIMILE
OR OTHER FORMS OF ELECTRONIC SUBMISSIONS, WILL NOT BE ACCEPTED.
Such proposals also will need to comply with Securities and
Exchange Commission regulations regarding the inclusion of
stockholder proposals in Company sponsored proxy materials.
Similarly, in order for a stockholder proposal to be raised from
the floor during next year's Annual Meeting, the stockholder's
written notice must be RECEIVED by the Secretary between January
9, 2001, and February 8, 2001, and shall contain such information
as required under our Bylaws. Please note that these requirements
relate only to matters a shareholder wishes to bring before the
Annual Meeting. They do not apply to proposals that a shareholder
wishes to have included in the Company's proxy statement.
26
* NOMINATION OF DIRECTOR CANDIDATES: You may propose director
candidates for consideration by our Board Organization Committee.
In addition, our Bylaws permit stockholders to nominate directors
at a stockholder meeting. In order to make a director nomination
at a stockholder meeting, it is necessary that the stockholder's
written notice be RECEIVED by the Secretary between January 9,
2001, and February 8, 2001, and shall contain such information as
required under our Bylaws.
* COPY OF BYLAWS PROVISIONS: You may contact the Secretary at our
Company headquarters for a copy of the relevant provisions of the
Bylaws regarding the requirements for making stockholder
proposals and nominating director candidates.
By Order of the Board of Directors.
/s/ Roger P. Smith
ROGER P. SMITH
SECRETARY
27
ATTENDANCE CARD
[LOGO] 3M
Annual Meeting of Stockholders
- --------------------------------------------------------------------------------
MAY 9, 2000
RIVERCENTRE
175 WEST KELLOGG BLVD.
ST. PAUL, MINNESOTA
This is your ticket to the 2000 Annual Meeting. Please show it upon arrival and
keep it with you during the day. Annual Meeting activities begin at 8:30 a.m.
with product demonstrations and displays. The meeting starts at 10:00 a.m.
After the meeting, lunch will be served and the 3M store will open.
The meeting will be held in the Roy Wilkins Auditorium. Hosts and hostesses
will show you the way after you enter the RiverCentre.
Since parking space is limited, you are urged to consider carpooling or
public transportation.
ATTENDANCE CARD
[LOGO] 3M
Annual Meeting of Stockholders
- --------------------------------------------------------------------------------
MAY 9, 2000
RIVERCENTRE
175 WEST KELLOGG BLVD.
ST. PAUL, MINNESOTA
This is your ticket to the 2000 Annual Meeting. Please show it upon arrival and
keep it with you during the day. Annual Meeting activities begin at 8:30 a.m.
with product demonstrations and displays. The meeting starts at 10:00 a.m.
After the meeting, lunch will be served and the 3M store will open.
The meeting will be held in the Roy Wilkins Auditorium. Hosts and hostesses
will show you the way after you enter the RiverCentre.
Since parking space is limited, you are urged to consider carpooling or
public transportation.
[LOGO] Recycled Paper
40% Pre-consumer paper
10% Post-consumer paper
MINNESOTA MINING AND MANUFACTURING COMPANY
3M CENTER, ST. PAUL, MINNESOTA 55144 PROXY
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR USE AT THE ANNUAL MEETING ON
TUESDAY, MAY 9, 2000.
The stockholder(s) whose signature(s) appear(s) on the reverse side of this
proxy card hereby appoint(s) L.D. DeSimone, E.A. Brennan, F. Alan Smith or any
of them, each with full power of substitution, as proxies, to vote all shares of
common stock in Minnesota Mining and Manufacturing Company which the
stockholder(s) would be entitled to vote on all matters which may properly come
before the 2000 Annual Meeting of Stockholders and any adjournments thereof. THE
PROXIES SHALL VOTE SUBJECT TO THE DIRECTION INDICATED ON THE REVERSE SIDE OF
THIS CARD. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. THE PROXIES WILL VOTE AS THE BOARD OF DIRECTORS
RECOMMENDS WHERE A CHOICE IS NOT SPECIFIED.
FOR PARTICIPANTS IN 3M'S VOLUNTARY INVESTMENT PLAN (VIP), EMPLOYEE STOCK
OWNERSHIP PLAN (ESOP), AND SAVINGS PLAN:
In accordance with the terms of the VIP, ESOP, and Savings Plan, shares
allocated to my respective accounts in these plans on the record date will be
voted by the trustee, State Street Bank and Trust Company, in accordance with
the instructions indicated on the reverse side of this card, and in accordance
with the judgment of the trustee upon other business as may properly come before
the meeting and any adjournments or postponements thereof. If no instructions
are provided, or if this card is not received on or before May 4, 2000, shares
held in my account for the VIP and Savings Plan will be voted by the trustee as
directed by the Public Issues Committee of the 3M Board of Directors. If no
instructions are provided, or if this card is not received on or before May 4,
2000, shares held in my account for the ESOP will be voted by the trustee in the
same proportion that the other participants in the ESOP direct the trustee to
vote shares in their ESOP accounts.
(CONTINUED, AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
SHARES
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
ITEM 1. Election of directors
- Nominees to 2003 Class: (01) Linda G. Alvarado; (02) Ronald O. Baukol;
(03) Edward M. Liddy; (04) Aulana L. Peters
[ ] Vote FOR all nominees [ ] Vote FOR ALL EXCEPT
[ ] Vote WITHHELD from all nominees (use number before nominee's name
to indicate exceptions):
__________________________________
ITEM 2. Ratification of Independent Auditors
[ ] For [ ] Against [ ] Abstain
ITEM 3. Proposal to approve an amendment to the Restated Certificate of
Incorporation to increase authorized common stock
[ ] For [ ] Against [ ] Abstain
ITEM 4. Proposal to approve an amendment to the Restated Certificate of
Incorporation to change par value
[ ] For [ ] Against [ ] Abstain
- --------------------------------------------------------------------------------
ITEM 5. In their discretion, to vote upon other matters properly coming before
the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, IT WILL BE VOTED "FOR" ITEMS 1, 2, 3 AND 4.
--------------------------------
Signature
--------------------------------
Signature
--------------------------------
Date
Please sign exactly as your name(s)
appear above. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the
proxy.
VOTING INSTRUCTIONS
THERE ARE THREE WAYS TO VOTE YOUR PROXY
VOTE BY INTERNET
http://www.eproxy.com/mmm/
Use the Internet to vote your proxy 24 hours a day, 7 days a week. Have
your proxy card in hand when you access the web site. You will be prompted to
enter your 3-digit company number and a 7-digit control number (these numbers
are located on the proxy card) to create an electronic ballot.
VOTE BY TELEPHONE
1-800-240-6326
Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days
a week. Have your proxy card in hand when you call. You will be prompted to
enter your 3-digit company number and a 7-digit control number (these numbers
are located on the proxy card). Follow the recorded instructions.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage paid
envelope provided so that it is received by May 4, 2000.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE
YOUR SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED, AND RETURNED YOUR PROXY
CARD. THE DEADLINE FOR INTERNET OR TELEPHONE VOTING IS NOON (CENTRAL DAYLIGHT
TIME) ON MAY 8, 2000.
PARTICIPANTS IN 3M'S VOLUNTARY INVESTMENT PLAN, EMPLOYEE STOCK
OWNERSHIP PLAN, AND SAVINGS PLAN MAY INSTRUCT THE TRUSTEE HOW TO VOTE THEIR
SHARES VIA THE INTERNET, BY TELEPHONE, OR BY SIGNING AND RETURNING THE PROXY
CARD.
IF YOU VOTE BY THE INTERNET OR BY TELEPHONE, DO NOT MAIL BACK THE PROXY
CARD.
Thank you for voting.
[LOGO] 3M
MINNESOTA MINING AND MANUFACTURING COMPANY
3M CENTER, ST. PAUL, MINNESOTA 55144 PROXY
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR USE AT THE ANNUAL MEETING ON
TUESDAY, MAY 9, 2000.
The stockholder(s) whose signature(s) appear(s) on the reverse side of this
proxy card hereby appoint(s) L.D. DeSimone, E.A. Brennan, F. Alan Smith or any
of them, each with full power of substitution, as proxies, to vote all shares of
common stock in Minnesota Mining and Manufacturing Company which the
stockholder(s) would be entitled to vote on all matters which may properly come
before the 2000 Annual Meeting of Stockholders and any adjournments thereof. THE
PROXIES SHALL VOTE SUBJECT TO THE DIRECTION INDICATED ON THE REVERSE SIDE OF
THIS CARD. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. THE PROXIES WILL VOTE AS THE BOARD OF DIRECTORS
RECOMMENDS WHERE A CHOICE IS NOT SPECIFIED.
(CONTINUED, AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
ITEM 1. Election of directors:
* Nominees to 2003 Class: (01) Linda G. Alvarado (02) Ronald O. Baukol [ ] Vote FOR [ ] Vote WITHHELD
(03) Edward M. Liddy (04) Aulana L. Peters all nominees from all nominees
(except as marked)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, ------------------------------
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) | |
------------------------------
ITEM 2. Ratification of Independent Auditors
[ ] For [ ] Against [ ] Abstain
ITEM 3. Proposal to approve an amendment to the Restated Certificate
of Incorporation to increase the authorized common stock
[ ] For [ ] Against [ ] Abstain
ITEM 4. Proposal to approve an amendment to the Restated Certificate
of Incorporation to change par value
[ ] For [ ] Against [ ] Abstain
ITEM 5. In their discretion, to vote upon other matters properly coming
before the meeting
[ ] For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED.
IF NO DIRECTION IS GIVEN, IT WILL BE VOTED "FOR" ITEMS 1, 2, 3 AND 4.
Date _________________________
------------------------------
| |
------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear above. If held in joint tenancy,
all persons must sign. Trustees, administrators,
etc., should include title and authority.
Corporations should provide full name of
corporation and title of authorized officer
signing the proxy.
TO PARTICIPANTS IN THE 3M VOLUNTARY INVESTMENT PLAN
AND THE 3M EMPLOYEE STOCK OWNERSHIP PLAN
- --------------------------------------------------------------------------------
State Street Bank and Trust Company is Trustee of the Trusts established in
connection with the 3M Employee Stock Ownership Plan (the "ESOP") and the 3M
Voluntary Investment Plan (the "VIP"). As Trustee, it is the record owner of the
shares of common stock of Minnesota Mining and Manufacturing Company ("3M") held
in the ESOP and the VIP for the benefit of participants. Since the portion of
the 3M Payroll-Based Employee Stock Ownership Plan ("PAYSOP") applicable to
union-free employees was merged into the ESOP during 1990, the shares of 3M
common stock held in the PAYSOP Trust have now been transferred to the ESOP
Trust.
The ESOP and the VIP each permit participants, as Named Fiduciaries, to direct
the respective Trustees how to vote the number of shares of 3M common stock
allocated to the participants' respective accounts. Additionally, as a Named
Fiduciary of the ESOP, you are entitled to direct the Trustee how to vote a
proportionate number of shares which have not been allocated to participants or
for which no voting directions have been received. The number of shares of 3M
common stock held in your individual accounts in the ESOP and the VIP are
indicated at the top of the enclosed proxy card.
We enclose (1) a Notice of Annual Meeting of 3M Stockholders to be held on May
9, 2000, and Proxy Statement (unless you have consented to receive the Proxy
Statement via the Internet in which case the Proxy Statement is available at the
website in the enclosed notice), (2) instructions for giving voting directions
to the Trustee via the Internet, by telephone, or by mail through use of the
enclosed proxy card, and (3) a return envelope. The Trustee will vote, in
accordance with your directions, the shares of 3M common stock allocated to your
respective accounts if you give voting directions by (i) the Internet as
described in the enclosed voting instructions, (ii) telephone as described in
the enclosed voting instructions or (iii) completing the enclosed proxy card and
returning it in the enclosed return envelope so that it is received no later
than May 5, 2000 by Norwest Bank Minnesota, N.A., acting as tabulation agent for
the Trustee.
The Trustee remains at all times the record owner of the 3M common stock held in
the ESOP and VIP accounts. The ability to direct the Trustee how to vote confers
no right on participants to vote directly at the Annual Meeting of Stockholders.
Internet or telephone voting instructions must be properly followed or the
enclosed proxy card must be properly completed if voting directions are to be
honored. If the Internet or telephone voting instructions are not followed or if
the card is not received by May 5, 2000, or if the voting directions are
invalid, the shares held in your ESOP accounts will be voted by State Street
Bank and Trust Company in the same proportion that the other participants in the
ESOP direct the Trustee to vote the shares held in their ESOP accounts, and the
shares held in your VIP account shall be voted by State Street Bank and Trust
Company as directed by the Public Issues Committee of the 3M Board of Directors.
Please provide voting directions to the Trustee via the Internet or by telephone
in accordance with the enclosed voting instructions, or complete, date, sign,
and promptly return the enclosed proxy card.
TO PARTICIPANTS IN THE 3M SAVINGS PLAN
- --------------------------------------------------------------------------------
State Street Bank and Trust Company is Trustee of the Trust established in
connection with the 3M Savings Plan (the "Savings Plan"). As Trustee, it is the
record owner of the shares of common stock of Minnesota Mining and Manufacturing
Company ("3M") held in the Savings Plan for the benefit of participants. Since
the portion of the 3M Payroll-Based Employee Stock Ownership Plan ("PAYSOP")
applicable to employees eligible to participate in the Savings Plan was merged
into the Savings Plan during 1993, the shares of 3M common stock held in the
PAYSOP Trust have now been transferred to the Savings Plan.
The Savings Plan permits participants to direct the Trustee how to vote the
number of shares of 3M common stock allocated to the participants' respective
accounts. The number of shares of 3M common stock held in your individual
account in the Savings Plan are indicated at the top of the enclosed proxy card.
We enclose (1) a Notice of Annual Meeting of 3M Stockholders to be held on May
9, 2000, and Proxy Statement (unless you have consented to receive the Proxy
Statement via the Internet in which case the Proxy Statement is available at the
website in the enclosed notice), (2) instructions for giving voting directions
to the Trustee via the Internet, by telephone, or by mail through use of the
enclosed proxy card, and (3) a return envelope. The Trustee will vote, in
accordance with your directions, the shares of 3M common stock allocated to your
account if you give voting directions by (i) the Internet as described in the
enclosed voting instructions, (ii) telephone as described in the enclosed voting
instructions or (iii) completing the enclosed proxy card and returning it in the
enclosed envelope so that it is received no later than May 5, 2000 by Norwest
Bank Minnesota, N.A., acting as tabulation agent for the Trustee.
The Trustee remains at all times the record owner of the 3M common stock held in
the Savings Plan accounts. The ability to direct the Trustee how to vote confers
no right on participants to vote directly at the Annual Meeting of Stockholders.
Internet or telephone voting instructions must be properly followed or the
enclosed proxy card must be properly completed if voting directions are to be
honored. If the Internet or telephone voting instructions are not followed or if
the card is not received by May 5, 2000, or if the voting directions are
invalid, the shares held in your Savings Plan account shall be voted by State
Street Bank and Trust Company, as directed by the Public Issues Committee of the
3M Board of Directors.
Please provide voting directions to the Trustee via the Internet or by telephone
in accordance with the enclosed voting instructions, or complete, date, sign,
and promptly return the enclosed proxy card.
------------------------------
TWO EASY WAYS
TO SUBMIT YOUR VOTE/PROXY
------------------------------
24 HOURS A DAY, 7 DAYS A WEEK
Fast, Convenient, and Immediate Posting
------------------- --------------------
TO VOTE BY INTERNET TO VOTE BY TELEPHONE
------------------- --------------------
Go to the website: In the U.S., call toll-free
http://www.eproxy.com/mmm/ 1-800-240-6326 using
a touch-tone phone
Follow these four easy steps: Follow these four easy steps:
Read the accompanying Proxy (1) Read the accompanying Proxy
Statement and have your Statement and have your
proxy card at hand proxy card at hand
Go to the website stated above (2) In the U.S., call the toll-free
number 1-800-240-6326 using a
touch-tone phone
Enter the 3-digit company number and (3) Enter the 3-digit company number
the 7-digit control number located at and the 7-digit control number
the upper right hand corner on your located at the upper right hand
proxy card corner on your proxy card
Follow the simple instructions and (4) Follow the simple recorded
click on "Submit Vote" when you are instructions
finished
- --------------------------------------------------------------------------------
THANK YOU FOR SUBMITTING YOUR VOTE/PROXY.
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR PROXY CARD.
- --------------------------------------------------------------------------------
MINNESOTA MINING AND MANUFACTURING COMPANY
IMPORTANT NOTICE:
3M STOCKHOLDERS CAN CHOOSE TO VIEW
FUTURE ANNUAL REPORTS AND PROXY STATEMENTS
ON THE INTERNET
3M is offering stockholders of record the option to view future Annual
Reports to Stockholders and Proxy Statements via the Internet, instead of
receiving paper copies of these documents in the mail. This notice addresses a
number of questions that you may have about this option.
Q: WHO QUALIFIES?
A: This option is available only if you are a 3M stockholder "of record,"
(i.e., a stockholder who is registered on the books of 3M's transfer agent,
Norwest Bank Minnesota, N.A., as holding 3M stock directly in your own name).
Q: HOW DO I ELECT THIS OPTION?
A: If you are interested in viewing future Annual Reports to Stockholders
and Proxy Statements on the Internet, instead of receiving paper copies of these
documents, please do the following:
(1) Go to website http://www.econsent.com/mmm.
(2) Review Important Considerations and Frequently Asked Questions.
(3) You will need your account number, which can be found above your
name and address on your dividend check stub and your social
security number, if you have a social security number.
(4) Follow the prompts.
Q: WHAT ARE THE SYSTEM REQUIREMENTS?
A: To obtain the documents, you will need access to the Internet through
your personal computer. Commercial services such as America Online, MCI, AT&T
and many other Internet service providers offer access to the Internet with
Netscape Navigator, Microsoft Internet Explorer, or other Internet search engine
software. You also will need Adobe Acrobat Reader to view and/or print the
documents. (This software is available free of charge.) Stockholders are
responsible for any charges imposed by Internet service providers; 3M does not
charge any fees for access to its website.
Q: HOW DO I ACCESS THE WEBSITE ON THE INTERNET?
A: When the 3M Proxy Statement and Annual Report are available on its
Internet website, 3M will mail you a notice which will include a website address
to access the documents, instructions on voting your proxy via the Internet or
by telephone, and a proxy card if you choose to vote by mail. The proxy card
that is delivered to stockholders who have elected electronic delivery will
cover shares that are directly registered with Norwest Bank Minnesota, N.A. in
the stockholder's name. Notification is expected to begin on or about March 31st
of each year.
Q: HOW DO I REVOKE MY CONSENT?
A: You can revoke your consent at the website http://www.econsent.com/mmm.
Once there, click on the Proceed button, fill in the appropriate information and
click on the Submit button. You will then see the appropriate screen to change
your consent. You will then receive paper copies of future Annual Reports to
Stockholders and Proxy Statements.
MARCH 27, 2000
IMPORTANT:
NOTICE OF 2000 3M ANNUAL MEETING
AND ONLINE ACCESS TO 2000 PROXY STATEMENT
AND 1999 ANNUAL REPORT
Dear 3M Stockholder:
Thank you for consenting to receive the Proxy Statement and Annual Report
to Stockholders via the Internet instead of receiving paper copies in the mail.
Beginning today, you may access the 2000 Proxy Statement and 1999 Annual
Report at:
http://www.3M.com/profile/finance/proxy.html
Your proxy card and voting instructions are enclosed with this notice.
There are three ways to vote your proxy:
* INTERNET -- You may vote your proxy from any location in the world.
Follow the instructions on the proxy card.
* TELEPHONE -- If you live in the United States, you may submit your
proxy by following the instructions on the proxy card.
* MAIL -- You may do this by signing your proxy card and mailing it in
the enclosed, postage-paid, pre-addressed envelope.
YOUR VOTE IS IMPORTANT! PLEASE TAKE A MOMENT TO REVIEW THE PROXY
MATERIALS, AND VOTE YOUR SHARES AS SOON AS POSSIBLE.
You may also vote shares registered in your name at the Annual Meeting,
which will be held at 10 a.m. on Tuesday, May 9, 2000, at the RiverCentre, St.
Paul Minnesota. The proposals to be voted on and procedures for voting are
described in the 2000 Proxy Statement.
You may request paper copies of the 2000 Proxy Statement and 1999 Annual
Report by calling 1-800-3M-HELPS, or by e-mail at innovation@3M.com.
Stockholders are responsible for usage charges from Internet service
providers and telephone companies. 3M does not charge fees for electronic
access.