UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
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 [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
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 transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
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________________________________________________________________________________
5) Total fee paid:
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[_] 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.:
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3) Filing Party:
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4) Date Filed:
________________________________________________________________________________
W. JAMES MCNERNEY, JR.
Chairman of the Board and
Chief Executive Officer
April 2, 2001 [LOGO] 3M
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders,
which will be held on Tuesday, May 8, 2001, 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/ Jim McNerney
2001 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
Notice of Annual Meeting of Stockholders ................................... iii
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
Does 3M offer stockholders the option of viewing Annual Reports to
Stockholders and Proxy Statements via the Internet? ...................... 4
How do I elect this option? ............................................... 4
What happens if additional proposals are presented at the meeting? ........ 4
May I propose actions for consideration at next year's Annual Meeting of
Stockholders or nominate individuals to serve as directors? .............. 5
Board Structure and Compensation ........................................... 6
Proposals To Be Voted On ................................................... 8
Proposal No. 1 -- Election of Directors ................................... 8
Proposal No. 2 -- Ratification of Independent Auditors .................... 12
Proposal No. 3 -- Stockholder Proposal .................................... 12
Proposal No. 4 -- Stockholder Proposal .................................... 14
Proposal No. 5 -- Stockholder Proposal .................................... 16
i
Common Stock Ownership of Directors and Executive Officers ................. 17
Beneficial Ownership Table ................................................ 18
Section 16(a) Beneficial Ownership Reporting Compliance ................... 19
Executive Compensation ..................................................... 20
Summary Compensation Table ................................................ 20
Options Grants in Last Fiscal Year ........................................ 23
Option Exercises and Fiscal Year-End Option Values Table .................. 24
Long-Term Incentive Plan Awards Table ..................................... 25
Estimated Annual Retirement Benefits Table Under Pension Plan ............. 26
Report of the Compensation Committee of the Board of Directors ............ 27
Stock Performance Graph .................................................... 30
Report of the Audit Committee of the Board of Directors .................... 31
Appendix A: 3M Board of Directors Audit Committee Charter ..................A-1
ii
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 8, 2001
PLACE RiverCentre
175 West Kellogg Boulevard
St. Paul, Minnesota
ITEMS OF BUSINESS (1) To elect three directors to the 2004 Class;
(2) To ratify the appointment of PricewaterhouseCoopers
LLP, independent auditors, to audit the consolidated
financial statements of the Company for the year 2001;
(3) To consider a stockholder proposal relating to election
of directors;
(4) To consider a stockholder proposal relating to indexed
stock options;
(5) To consider a stockholder proposal relating to
performance-based senior executive compensation; and
(6) 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 9, 2001.
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 1 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 APRIL 2,
2001.
iii
MINNESOTA MINING AND MANUFACTURING COMPANY
3M CENTER, ST. PAUL, MINNESOTA 55144
April 2, 2001
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 8, 2001
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 ("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 that will take place on May 8, 2001. 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 2000 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 five proposals scheduled to be voted on at the meeting:
* The election of directors to the 2004 Class.
* Ratification of the appointment of PricewaterhouseCoopers LLP,
independent auditors, to audit the consolidated financial statements
of the Company for the year 2001.
* Consideration of a stockholder proposal relating to election of
directors.
* Consideration of a stockholder proposal relating to indexed stock
options.
* Consideration of a stockholder proposal relating to performance-based
senior executive compensation.
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, "FOR" the ratification of the appointment of the
independent auditors, and "AGAINST" the stockholder proposals.
Q: WHAT SHARES OWNED BY ME CAN BE VOTED?
A: All shares owned by you as of March 9, 2001, 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, Wells Fargo 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. 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 nonvotes, 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 nonvotes are
not considered entitled to vote on that proposal.
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).
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 9, 2001, the RECORD DATE, is entitled to one vote at the Annual
Meeting. On February 28, 2001, we had 396,851,146 shares of common stock issued
and outstanding. The 75,165,382 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 nonvotes are counted as present for the purpose of determining the
presence of a quorum. Generally, broker nonvotes 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 Wells Fargo Bank Minnesota, N.A., 3M's transfer
agent, will tabulate the votes and act as the inspectors 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.
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) 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.
(2) Go to web site http://www.econsent.com/mmm.
(3) Review Important Considerations and Frequently Asked Questions.
(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, W.J. McNerney, Jr., 3M's
Chairman and CEO, E.A. Brennan, R.L. Ridgway, 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.
4
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, 2001. 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 8, 2002, and
February 7, 2002, 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.
* 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 must be
RECEIVED by the Secretary between January 8, 2002, and February 7,
2002, 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.
5
BOARD STRUCTURE AND COMPENSATION
During 2000, our Board had ten directors and the following four Committees:
Audit, Board Organization, Compensation, and Public Issues. The membership
during 2000 and the function of each Committee are described below. During 2000,
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 August 13-14, 2000, 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), Linda G. Alvarado, Edward M. Liddy, and
Aulana L. Peters.
Number of meetings in 2000: 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.
The Audit Committee operates under a written charter adopted by the Board
of Directors of 3M, a copy of which is attached as Appendix A to this proxy
statement.
BOARD ORGANIZATION COMMITTEE
Members: Livio D. DeSimone (Chair), Edward A. Brennan, Edward M. Liddy,
Aulana L. Peters, and Rozanne L. Ridgway.
Number of meetings in 2000: Three.
Functions:
* Selects and recommends candidates to the Board of Directors to be
submitted for election at the Annual Meeting and candidates to fill
any vacancies on the Board. 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; and
* Responsible for management succession plans and addressing Board
organizational and governance issues.
6
COMPENSATION COMMITTEE
Members: Edward A. Brennan (Chair), Rozanne L. Ridgway, Frank Shrontz, and
Louis W. Sullivan.
Number of meetings in 2000: Five.
Functions:
* Reviews compensation policies of the Company to ensure they provide
appropriate motivation for superior corporate performance and
increased shareholder value; and
* Determines, approves, and reports to the Board on all elements of
compensation for executive officers, as described in the Report of the
Compensation Committee.
PUBLIC ISSUES COMMITTEE
Members: Frank Shrontz (Chair), Linda G. Alvarado, Ronald O. Baukol, F.
Alan Smith, and Louis W. Sullivan.
Number of meetings in 2000: Three.
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 2000 for nonemployee directors. Directors who are
employed by 3M, Messrs. McNerney, DeSimone, and Baukol, do not receive any
compensation for their Board activities.
COMPENSATION TABLE FOR 2000
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
18.
7
PROPOSALS TO BE VOTED ON
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NUMBER OF NOMINEES AND CLASSIFICATION
The Certificate of Incorporation divides the Board into three classes.
Three directors have terms of office that expire at the 2001 Annual Meeting, and
only Edward A. Brennan is standing for reelection for a three-year term as a
member of the 2004 Class. Livio D. DeSimone and F. Alan Smith are not standing
for re-election. The three incumbent directors in the 2002 Class are continuing
to serve until the 2002 Annual Meeting. The four incumbent directors in the 2003
Class are continuing to serve until the 2003 Annual Meeting.
In order to balance membership in each of the three classes of directors,
two new nominees are standing for election to the 2004 Class. The new nominees
are W. James McNerney, Jr. and Kevin W. Sharer.
All nominees for election to the Board of Directors to the 2004 Class at
the 2001 Annual Meeting will be elected for a term of three years and shall
serve until their terms expire at the 2004 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 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 2000, the Company retained the law firm of Gibson, Dunn & Crutcher
LLP, with regard to various legal matters. Mrs. Peters was a partner in this
firm. She retired from the firm on December 31, 2000.
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.
8
NOMINEES FOR ELECTION TO THE 2004 CLASS:
[PHOTO] EDWARD A. BRENNAN, 67, 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, Exelon Corporation, and Dean Foods
Company. 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] W. JAMES MCNERNEY, JR., 51, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER (EFFECTIVE JANUARY 1, 2001); MEMBER OF THE FINANCE COMMITTEE.
Mr. McNerney was President and Chief Executive Officer, GE Aircraft
Engines from 1997-2000; 1995-97: President and Chief Executive Officer,
GE Lighting, Cleveland, OH; 1993-95: President, GE Asia-Pacific, Hong
Kong; 1991-92: President and Chief Executive Officer, GE Electrical
Distribution & Control, Plainville, CT; 1989-91: Executive Vice
President, GE Financial Services and GE Capital, Stamford, CT. 1988-89:
President, GE Information Services, Rockville, MD; 1982-88: General
Manager of GE Mobile Communications. Before joining General Electric in
1982, he first worked for Procter & Gamble in brand management and then
as a senior manager at McKinsey & Co. He is on the Advisory Board of
Kellogg Graduate School of Management and is a member of the World
Business Council for Sustainable Development and The Business Council.
DIRECTOR SINCE 2001
[PHOTO] KEVIN W. SHARER, 53, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER,
AMGEN INC., BIOTECHNOLOGY COMPANY, THOUSAND OAKS, CALIFORNIA. Mr.
Sharer joined Amgen in 1992 as its President and Chief Operating
Officer and served in that capacity until elected Amgen's Chairman and
Chief Executive Officer in 2000. Prior to joining Amgen, Mr. Sharer
served as President of the Business Markets Division of MCI
Communications Corporation, from 1989 to 1992, and served in numerous
executive capacities at General Electric Company, from 1984 to 1989. He
is a director of Unocal Corporation.
NEW NOMINEE
9
INCUMBENT DIRECTORS IN THE 2003 CLASS
[PHOTO] LINDA G. ALVARADO, 48, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ALVARADO
CONSTRUCTION, INC.; MEMBER OF THE AUDIT AND PUBLIC ISSUES COMMITTEES.
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 Lennox International Inc.,
Pitney Bowes, Inc., and Pepsi Bottling Group, Inc. She is a co-owner of
the Colorado Rockies Baseball Club.
DIRECTOR SINCE 2000
[PHOTO] RONALD O. BAUKOL, 63, 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. In 1986, Mr. Baukol was appointed Chairman and Chief
Executive, 3M United Kingdom PLC. Upon his return to the United States
in 1989, he was elected Group Vice President in 3M's health care
businesses and served as Vice President, Asia Pacific, Canada and Latin
America from 1991-1994 and as Executive Vice President, International
Operations since 1995. Mr. Baukol is a director of Graco, Inc. and The
Toro Company. He is a trustee and Vice Chairman of the United States
Council for International Business, a Governor of the Iowa State
University Foundation, a member of the International Programs Advisory
Council, Carlson School of Management, University of Minnesota.
DIRECTOR SINCE 1996
[PHOTO] EDWARD M. LIDDY, 55, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
THE ALLSTATE CORPORATION, THE PARENT OF ALLSTATE INSURANCE COMPANY, A
PERSONAL LINES INSURANCE COMPANY; MEMBER OF THE AUDIT AND BOARD
ORGANIZATION COMMITTEES. He was President and Chief Operating Officer
of Allstate from 1994 to 1998. Before joining Allstate, Mr. Liddy was
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.
DIRECTOR SINCE 2000
[PHOTO] AULANA L. PETERS, 59, RETIRED 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. Mrs. Peters was elected a member of the Public
Oversight Board ("POB") Panel of the American Institute of Certified
Public Accountants. Mrs. Peters is a member of the Regulatory Advisory
Committee of the New York Stock Exchange, and was a member of the
Steering Committee for Financial Accounting Standards Board's Financial
Reporting Project and a member of the POB's Blue Ribbon Panel on Audit
Effectiveness. Effective January 1, 2001, the POB has general oversight
responsibility for auditors. She is also a director of Merrill Lynch &
Co., Inc., Northrop Grumman Corp., and Callaway Golf Company.
DIRECTOR SINCE 1990
10
INCUMBENT DIRECTORS IN THE 2002 CLASS:
[PHOTO] ROZANNE L. RIDGWAY, 65, 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 Ambassador 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 The Boeing Company, Emerson Electric Co., Sara Lee Corporation, the
New Perspective Fund, the Center for Naval Analyses, and the National
Geographic Society. She is also chair of The Baltic-American Enterprise
Fund.
DIRECTOR SINCE 1989
[PHOTO] FRANK SHRONTZ, 69, 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
and Chevron Corporation. He is also a member of The Business Council.
DIRECTOR SINCE 1992
[PHOTO] LOUIS W. SULLIVAN, 67, PRESIDENT, MOREHOUSE SCHOOL OF MEDICINE,
ATLANTA, GEORGIA; MEMBER OF THE COMPENSATION 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., 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
11
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 2001. 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 2000 included: audit of consolidated financial statements of the
Company and its subsidiaries; limited reviews of interim consolidated financial
information; and consultations on matters related to accounting and financial
reporting.
PricewaterhouseCoopers LLP also provided a number of other audit and
nonaudit services to the Company during 2000, all of which were 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.
AUDIT FEES
The aggregate fees and expenses of PricewaterhouseCoopers LLP for
professional services provided for the audit of the consolidated financial
statements for the year ended December 31, 2000 included in the Company's Annual
Report on Form 10-K, and for the reviews of the interim consolidated financial
information included in the Company's Quarterly Reports on Form 10-Q for that
year were $4.5 million, of which an aggregate amount of $3 million had been
billed through December 31, 2000.
ALL OTHER FEES
The aggregate fees and expenses billed by PricewaterhouseCoopers LLP for
all services provided to the Company, other than the services described above
under "Audit Fees," for the year ended December 31, 2000, were $7.2 million.
These fees include audit services related to the Company's benefit plans and
statutory financial statements of certain of the Company's international
subsidiaries as well as other audit and nonaudit services.
PricewaterhouseCoopers LLP did not provide any services to the Company
relating to financial information systems design and implementation during the
year ended December 31, 2000.
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 2001. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE VOTED "FOR" RATIFICATION UNLESS A CONTRARY VOTE
IS SPECIFIED.
PROPOSAL NO. 3
STOCKHOLDER PROPOSAL
3M has received a stockholder proposal from Richard A. Dee, 115 East 89th
Street, New York, New York 10128 (the "Proponent"). The Proponent has requested
the Company to include the following proposal and supporting statement in its
proxy statement for the Annual Meeting of Stockholders. The Proponent owns 100
shares of 3M common stock. The stockholder proposal is quoted verbatim in
italics.
The Company disagrees with the adoption of the resolution proposed and asks
stockholders to review the "Company's Statement in Opposition to the Proposal,"
which follows the stockholder proposal. Our Board of Directors recommends a vote
"AGAINST" the stockholder proposal.
Approval of the stockholder proposal requires the affirmative vote of a
majority of the shares of common stock present or represented by proxy and
entitled to vote at the meeting.
12
Proponent's Proposal:
STOCKHOLDERS OF PUBLICLY-OWNED CORPORATIONS DO NOT 'ELECT' DIRECTORS.
DIRECTORS ARE 'SELECTED' BY INCUMBENT DIRECTORS AND MANAGEMENTS --
STOCKHOLDERS MERELY 'RATIFY' OR APPROVE DIRECTOR SELECTIONS MUCH AS THEY
RATIFY SELECTIONS OF AUDITORS.
THE TERM 'ELECTION OF DIRECTORS' IS MISUSED IN CORPORATE PROXY MATERIALS TO
REFER TO THE PROCESS BY WHICH DIRECTORS ARE EMPOWERED. THE TERM IS
INAPPROPRIATE -- AND IT IS MISLEADING. WITH NO CHOICE OF CANDIDATES, THERE
IS NO ELECTION.
IN A DEMOCRACY, THOSE WHO GOVERN ARE DULY ELECTED BY THOSE WHOM THEY
REPRESENT -- AND THEY ARE ACCOUNTABLE TO THEIR ELECTORS. CONTINUING IN
PUBLIC OFFICE REQUIRES SATISFYING CONSTITUENTS, NOT ONLY NOMINATORS.
CORPORATE DIRECTORS, WHO OFTEN DIVIDE THEIR TIME BETWEEN MANY COMPANIES,
TAKE OFFICE UNOPPOSED.
INCUMBENT DIRECTORS ARE ANXIOUS TO PROTECT THE POWER OVER CORPORATE
ACTIVITIES LEGALLY GRANTED TO THEM. INASMUCH AS CORPORATE GOVERNANCE IS IN
THE HANDS OF DIRECTORS, AND DIRECTORS OBVIOUSLY CONTROL BOARD COMPOSITION,
IN MY OPINION, BECAUSE STOCKHOLDERS REALLY DO NOT "ELECT" DIRECTORS, THE
'ELECTIVE PROCESS RIGHTS' OF STOCKHOLDERS ARE BEING IGNORED.
APPROVAL OF THIS CORPORATE GOVERNANCE PROPOSAL WILL PROVIDE 3M STOCKHOLDERS
WITH A CHOICE OF DIRECTOR CANDIDATES -- AN OPPORTUNITY TO VOTE FOR THOSE
WHOSE QUALIFICATIONS AND VIEWS THEY FAVOR.
IT IS HEREBY REQUESTED THAT THE 3M BOARD OF DIRECTORS ADOPT PROMPTLY A
RESOLUTION REQUIRING THE BOARD ORGANIZATION COMMITTEE TO NOMINATE TWO
CANDIDATES FOR EACH DIRECTORSHIP TO BE FILLED BY VOTING OF STOCKHOLDERS AT
ANNUAL MEETINGS. IN ADDITION TO CUSTOMARY PERSONAL BACKGROUND INFORMATION,
PROXY STATEMENTS SHALL INCLUDE A STATEMENT BY EACH CANDIDATE AS TO WHY HE
OR SHE BELIEVES THEY SHOULD BE ELECTED.
AS LONG AS INCUMBENTS ARE PERMITTED TO SELECT AND PROPOSE ONLY THE NUMBER
OF SO-CALLED "CANDIDATES" AS DIRECTORSHIPS TO BE FILLED -- AND AS LONG AS
IT IS IMPOSSIBLE, REALISTICALLY, FOR STOCKHOLDERS TO UTILIZE SUCCESSFULLY
WHAT IS SUPPOSED TO BE THEIR RIGHT TO NOMINATE AND ELECT DIRECTORS -- THERE
WILL BE NO PRACTICAL MEANS FOR STOCKHOLDERS TO BRING ABOUT DIRECTOR
TURNOVER UNTIL THIS OR A SIMILAR PROPOSAL IS ADOPTED. TURNOVER REDUCES THE
POSSIBILITY OF INBREEDING AND PROVIDES SOURCES OF NEW IDEAS, VIEWPOINTS,
AND APPROACHES.
THE 'POOL' FROM WHICH CORPORATE DIRECTORS ARE SELECTED MUST BE EXPANDED
FROM THE CURRENT PREPONDERANCE OF CHAIRMEN AND CEO'S, PRESENT AND RETIRED,
TO INCLUDE YOUNGER EXECUTIVES, INCLUDING MANY MORE WOMEN, WHOSE BACKGROUNDS
QUALIFY THEM WELL TO REPRESENT STOCKHOLDERS.
ALTHOUGH DELAWARE LAW PROVIDES FOR DIRECTOR NOMINEES TO BE SELECTED BY
INCUMBENTS, APPROVAL OF THIS PROPOSAL WILL ENABLE 3M STOCKHOLDERS TO
REPLACE ANY OR ALL DIRECTORS IF THEY BECOME DISSATISFIED WITH THEM -- OR
WITH THE RESULTS OF CORPORATE POLICIES AND/OR PERFORMANCE. NOT A HAPPY
PROSPECT EVEN FOR THOSE ABLE TO NOMINATE THEIR POSSIBLE SUCCESSORS!
THE BENEFITS THAT WILL ACCRUE TO 3M STOCKHOLDERS FROM DIRECTORS THAT HAVE
BEEN DEMOCRATICALLY-ELECTED, AND WHO ARE WILLING TO HAVE THEIR RESPECTIVE
QUALIFICATIONS AND VIEWS CONSIDERED CAREFULLY BY STOCKHOLDERS, FAR OUTWEIGH
ANY ARGUMENTS RAISED BY THOSE WHO ARE ACCUSTOMED TO BEING "SELECTED."
PLEASE VOTE FOR THIS PROPOSAL.
COMPANY'S STATEMENT IN OPPOSITION TO THE PROPOSAL
The basic premise of the Delaware General Corporation Law, under which the
Company is incorporated, is that all matters regarding the business of the
corporation are under the supervision and oversight of the Board of Directors.
This includes the task of determining nominees for election to the Board. The
Company believes that the appropriate role of the directors is to provide the
stockholders with a slate of nominees who, in the collective best judgment of
the Board, are the most qualified to provide oversight of the business of the
Company.
13
The Board of Directors believes the present nominating process ensures that
only those with the appropriate qualifications continue to serve on the Board.
The Board determines its nominees with regard to a broad spectrum of
qualifications and considerations, so as to provide a proper balance with
respect to the membership of the Board as a whole. In doing this, the Board
attempts to balance the interests and welfare of all constituents, customers,
market channel and technology partners, employees, communities, and citizenry
affected by the Company's operations, and its stockholders. This is the duty of
the Board of Directors. It is the Board's opinion that the present nominating
process has resulted in a well-functioning Board of Directors, with proper
balance for the interests of all the Company's constituents. To the extent that
stockholders wish to suggest qualified candidates, there are appropriate
procedures in place as set forth on page 5 of this proxy statement.
There can be no assurance that the process proposed by the proponent would
have the same result. It is likely that such a process would result in some, if
not most, qualified candidates being unwilling to run for a corporate Board
position. It is increasingly difficult to attract and retain the best candidates
for such positions, as there are often competing demands for such persons' time
and attention. The requirement to compete head-to-head with another candidate
would likely discourage the types of candidates being sought by the Company and
would create a political environment. Those elected in this proposed process may
feel the need to serve the interests of a particular constituency
disproportionately in order to regain election. In short, this process would
likely result in negative consequences to the internal balance of and conduct of
business by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL FOR THE
REASONS DESCRIBED ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED "AGAINST" THIS PROPOSAL UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN
VOTING THE PROXY.
PROPOSAL NO. 4
STOCKHOLDER PROPOSAL
3M has received a stockholder proposal from Edwin D. Hill, trustee for the
International Brotherhood of Electrical Workers' Pension Benefit Fund (the
"Proponent"). The Proponent has requested the Company to include the following
proposal and supporting statement in its Proxy Statement for the Annual Meeting
of Stockholders. The Proponent beneficially owns 59,129 shares of 3M common
stock. The stockholder proposal is quoted verbatim in italics, below.
The Company disagrees with the adoption of the resolution proposed below
and asks stockholders to review the "Company's Statement in Opposition to the
Proposal," which follows the stockholder proposal. Our Board of Directors
recommends a vote "AGAINST" the stockholder proposal.
Approval of the stockholder proposal requires the affirmative vote of a
majority of the shares of common stock present or represented by proxy and
entitled to vote at the meeting.
Proponent's Proposal:
RESOLVED, THAT THE SHAREHOLDERS OF MINNESOTA MINING AND MANUFACTURING
COMPANY (THE "COMPANY") REQUEST THAT THE BOARD OF DIRECTORS ADOPT AN
EXECUTIVE COMPENSATION POLICY THAT ALL FUTURE STOCK OPTION GRANTS TO SENIOR
EXECUTIVES SHALL BE PERFORMANCE-BASED. FOR THE PURPOSES OF THIS RESOLUTION,
A STOCK-OPTION IS PERFORMANCE-BASED IF ITS EXERCISE PRICE IS LINKED TO AN
INDUSTRY PERFORMANCE INDEX ASSOCIATED WITH THE PEER GROUP COMPANIES USED
FOR STOCK PRICE COMPARISONS IN THE COMPANY'S PROXY STATEMENT.
SUPPORTING STATEMENT
AS LONG-TERM SHAREHOLDERS OF THE COMPANY, WE SUPPORT EXECUTIVE COMPENSATION
POLICIES AND PRACTICES THAT PROVIDE CHALLENGING PERFORMANCE OBJECTIVES AND
SERVE TO MOTIVATE EXECUTIVES TO ACHIEVE LONG-TERM CORPORATE VALUE
MAXIMIZATION GOALS. WHILE SALARIES AND BONUSES COMPENSATE MANAGEMENT FOR
SHORT-TERM RESULTS, THE GRANT OF STOCK AND STOCK OPTIONS HAS BECOME THE
PRIMARY VEHICLE FOR FOCUSING MANAGEMENT ON ACHIEVING LONG-TERM RESULTS.
UNFORTUNATELY, THESE OPTION GRANTS CAN AND DO OFTEN PROVIDE LEVELS OF
COMPENSATION WELL BEYOND THOSE MERITED. IT HAS BECOME ABUNDANTLY CLEAR THAT
STOCK OPTION GRANTS WITHOUT SPECIFIC PERFORMANCE-BASED TARGETS OFTEN REWARD
14
EXECUTIVES FOR STOCK PRICE INCREASES DUE SOLELY TO A GENERAL STOCK MARKET
RISE, RATHER THAN IMPROVED OR SUPERIOR COMPANY PERFORMANCE.
INDEXED STOCK OPTIONS ARE OPTIONS WHOSE EXERCISE PRICE MOVES WITH AN
APPROPRIATE MARKET INDEX COMPOSED OF A COMPANY'S PRIMARY COMPETITORS. THE
RESOLUTION REQUESTS THAT THE COMPANY'S BOARD ENSURE THAT FUTURE COMPANY
STOCK OPTION PLANS LINK THE OPTION EXERCISE PRICE TO AN INDUSTRY
PERFORMANCE INDEX ASSOCIATED WITH THE PEER GROUP OF COMPANIES USED FOR
STOCK PRICE COMPARISONS IN THE COMPANY'S PROXY STATEMENT.
IMPLEMENTING AN INDEXED STOCK OPTION PLAN WOULD MEAN THAT OUR COMPANY'S
PARTICIPATING EXECUTIVES WOULD RECEIVE PAYOUTS ONLY IF THE COMPANY'S STOCK
PRICE PERFORMANCE WAS BETTER THEN THAT OF THE PEER GROUP AVERAGE. BY TYING
THE EXERCISE PRICE TO A MARKET INDEX, INDEXED OPTIONS REWARD PARTICIPATING
EXECUTIVES FOR OUTPERFORMING THE COMPETITION. INDEXED OPTIONS WOULD HAVE
VALUE WHEN OUR COMPANY'S STOCK PRICE RISES IN EXCESS OF ITS PEER GROUP
AVERAGE OR DECLINES LESS THAN ITS PEER GROUP AVERAGE STOCK PRICE DECLINE.
BY DOWNWARDLY ADJUSTING THE EXERCISE PRICE OF THE OPTION DURING A DOWNTURN
IN THE INDUSTRY, INDEXED OPTIONS REMOVE PRESSURE TO REPRICE STOCK OPTIONS.
IN SHORT, SUPERIOR PERFORMANCE WOULD BE REWARDED.
AT PRESENT, THE COMPANY'S STOCK OPTION PLAN(S) IS NOT INDEXED TO PEER GROUP
PERFORMANCE STANDARDS. FURTHER, OUR COMPANY'S STOCK PERFORMANCE HAS
SIGNIFICANTLY LAGGED THE S&P 500 INDEX ("S&P") AND DOW JONES INDUSTRIAL
AVERAGE ("DJIA") OVER THE PAST FIVE YEARS. AN INVESTMENT OF $100 IN OUR
COMPANY, THE S&P, AND DJIA ON DEC. 31, 1994, WAS WORTH $219.90, $350.30,
AND $330.80, RESPECTIVELY, FIVE YEARS LATER.
AS LONG-TERM OWNERS, WE FEEL STRONGLY THAT OUR COMPANY WOULD BENEFIT FROM
THE IMPLEMENTATION OF A STOCK OPTION PROGRAM THAT REWARDED SUPERIOR
LONG-TERM CORPORATE PERFORMANCE. IN RESPONSE TO STRONG NEGATIVE PUBLIC AND
SHAREHOLDER REACTIONS TO THE EXCESSIVE FINANCIAL REWARDS PROVIDED
EXECUTIVES BY NON-PERFORMANCE BASED OPTION PLANS, A GROWING NUMBER OF
SHAREHOLDER ORGANIZATIONS, EXECUTIVE COMPENSATION EXPERTS, AND COMPANIES
ARE SUPPORTING THE IMPLEMENTATION OF INDEXED STOCK OPTION PLANS. WE URGE
YOUR SUPPORT FOR THIS IMPORTANT GOVERNANCE REFORM.
COMPANY'S STATEMENT IN OPPOSITION TO THE PROPOSAL
The Compensation Committee of the Board of Directors is composed of four
nonemployee directors who administer the Company's executive compensation
program. The Committee works with independent consulting firms to inform itself
of developments in the design of compensation plans. The Committee seeks to
ensure that the Company's total compensation package is competitive with the
companies the Company competes with for executive talent, provides appropriate
links between executive compensation and the Company's performance and aligns
the interests of executives with those of stockholders.
The Committee gave appropriate consideration to the proposal calling for
the adoption of a market-indexed stock option plan where the option exercise
price would increase or decrease based on changes in the applicable index. The
Committee recommends a vote "AGAINST" the proposal for the following reasons:
The current stock option plan aligns the interests of executives with those
of stockholders. The executive realizes value from the options when Company
performance improves leading to an increase in the price of the Company's common
stock that benefits all stockholders. Alignment of the interests of executives
with those of stockholders is less clear under a market-indexed stock option
plan, particularly when the option price decreases with a decline in the market
index. In this instance, an executive benefits from a decline in the index while
stockholders do not. As a consequence of the poor alignment of interests with
stockholders generally, this option mechanism is not widely used, particularly
by those with whom the Company competes for executive talent.
Market-indexed options result in quarterly charges against earnings of the
Company, which further explains why this form of option is rare among U.S.
corporations. The Company believes that the use of indexed options depresses and
artificially adds volatility to the Company's earnings and is not beneficial to
stockholders' interests.
15
In sum, the Committee believes that the existing executive compensation
policy aligns executive incentives with the long-term interests of its
stockholders. The Committee also believes that the stockholder proposal would
undermine the long-term interests of the stockholders by adversely affecting the
Company's ability to attract and retain the most qualified executives needed to
manage its business.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL FOR THE
REASONS DESCRIBED ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED "AGAINST" THIS PROPOSAL UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN
VOTING THE PROXY.
PROPOSAL NO. 5
STOCKHOLDER PROPOSAL
3M has received a stockholder proposal from Matthew Hernandez, Corporate
Governance Advisor to the Sheet Metal Workers' National Pension Fund (the
"Proponent"). The Proponent has requested the Company to include the following
proposal and supporting statement in its proxy statement for the Annual Meeting
of Stockholders. The Proponent beneficially owns 41,100 shares of 3M common
stock. The stockholder proposal is quoted verbatim in italics, below.
The Company disagrees with the adoption of the resolution proposed below
and asks stockholders to review the "Company's Statement in Opposition to the
Proposal," which follows the stockholder proposal. Our Board of Directors
recommends a vote "AGAINST" the stockholder proposal.
Approval of the stockholder proposal requires the affirmative vote of a
majority of the shares of common stock present or represented by proxy and
entitled to vote at the meeting.
Proponent's Proposal:
RESOLVED, THAT THE SHAREHOLDERS OF MINNESOTA MINING AND MANUFACTURING
COMPANY ("COMPANY") HEREBY REQUEST THAT THE COMPANY'S BOARD OF DIRECTORS
TAKE THE NECESSARY STEPS TO ESTABLISH A PERFORMANCE-BASED SENIOR EXECUTIVE
COMPENSATION SYSTEM THAT FOCUSES THE FIVE MOST HIGHLY-PAID MEMBERS OF
MANAGEMENT ON ADVANCING THE LONG-TERM SUCCESS OF THE COMPANY. TO
DEMONSTRATE THAT SUCH STEPS HAVE BEEN TAKEN, WE REQUEST THAT THE
COMPENSATION COMMITTEE REPORT INCLUDED IN THE COMPANY'S ANNUAL REPORT TO
SHAREHOLDERS IDENTIFY SPECIFIC PERFORMANCE CRITERIA AND EXPLAIN WHY THEY
HAVE BEEN SELECTED; THE SPECIFIC TARGET LEVEL THAT MUST BE ACHIEVED TO
SATISFY THAT PERFORMANCE CRITERIA; AND RANK EACH PERFORMANCE FACTOR IN
ORDER OF IMPORTANCE, AS WELL AS IDENTIFY THE WEIGHT ATTACHED TO EACH
FACTOR.
SUPPORTING STATEMENT
THE LONG-TERM SUCCESS OF THE COMPANY DEPENDS ON THE ABILITY OF THE BOARD OF
DIRECTORS AND SENIOR MANAGEMENT TO ESTABLISH AND IMPLEMENT A STRATEGIC PLAN
THAT ENSURES THE COMPANY'S LONG-TERM SUCCESS. THIS STRATEGIC PLAN MUST MEET
THE NEEDS OF THE COMPANY'S CUSTOMERS, RECOGNIZE THE IMPORTANT CONTRIBUTIONS
OF ITS EMPLOYEES, ACCEPT THE COMPANY'S RESPONSIBILITY TO ASSOCIATE ITSELF
WITH RESPONSIBLE VENDORS AND SUPPLIERS, AND SATISFY ALL LEGAL AND ETHICAL
RESPONSIBILITIES TO THE COMPANY'S IMMEDIATE AND BROADER COMMUNITY.
SENIOR MANAGEMENT MUST BE KEENLY FOCUSED ON FULFILLING THESE STRATEGIC
PLANS. THE BEST WAY TO ENSURE PROPER FOCUS IS THROUGH A PERFORMANCE-BASED
EXECUTIVE COMPENSATION SYSTEM THAT GENEROUSLY REWARDS SUPERIOR PERFORMANCE.
SPECIFIC FINANCIAL AND NON-FINANCIAL PERFORMANCE CRITERIA SHOULD BE
SELECTED TO FOCUS THE FIVE MOST HIGHLY-PAID MEMBERS OF MANAGEMENT ON
ADVANCING THE LONG-TERM SUCCESS OF THE COMPANY.
THIS SYSTEM MUST BE TRANSPARENT, JUSTIFIABLE AND CHALLENGING TO FOCUS
SENIOR MANAGEMENT AND THE REST OF THE COMPANY. ACCOUNTABILITY MUST BE THE
CORNERSTONE OF THE SYSTEM. SUCH A SYSTEM WOULD SERVE TO MOTIVATE SENIOR
MANAGEMENT AND ALL OTHER EMPLOYEES THROUGHOUT THE RANKS.
IT IS OUR OPINION THAT TOO MANY COMPANIES, INCLUDING OUR COMPANY, REWARD
AVERAGE OR BELOW AVERAGE PERFORMANCE AND DO NOT MOTIVATE SENIOR MANAGEMENT
TO EXCEL. WE BELIEVE THAT RATHER THAN CHALLENGING THEM TO ACHIEVE SUPERIOR
PERFORMANCE, ENORMOUS COMPENSATION PACKAGES
16
EFFECTUATE SIGNIFICANT AND UNJUSTIFIABLE TRANSFERS OF WEALTH FROM
SHAREHOLDERS TO MANAGERS. WE DO NOT BELIEVE SUCH A SYSTEM IS IN
SHAREHOLDERS' INTEREST.
OUR COMPANY'S STOCK PERFORMANCE HAS SIGNIFICANTLY LAGGED THE S&P 500 INDEX
("S&P") AND DOW JONES INDUSTRIAL AVERAGE ("DJIA") OVER THE PAST FIVE YEARS.
AN INVESTMENT OF $100 IN OUR COMPANY, THE S&P, AND DJIA ON DEC. 31, 1994,
WAS WORTH $219.90, $350.30, AND $330.80, RESPECTIVELY, FIVE YEARS LATER.
YET, IN 1999 CHAIRMAN AND CEO LIVIO DESIMONE RECEIVED A SALARY OF
$1,047,600, A BONUS OF $947,502, A RESTRICTED STOCK AWARD OF $774,698, A
PERFORMANCE UNIT PLAN PAYOUT OF $1,336,500, AND HELD PROFIT SHARING STOCK
VALUED AT $4,047,229 AS OF DECEMBER 31, 1999. THE CURRENT COMPENSATION
COMMITTEE REPORT DOES NOT ADEQUATELY DETAIL HOW THE COMPANY'S EXECUTIVE
COMPENSATION SYSTEM FOCUSES SENIOR MANAGEMENT ON ACHIEVING LONG-TERM
SUCCESS.
WE BELIEVE THAT ADOPTION OF THIS PROPOSAL WOULD ADVANCE A SENIOR MANAGEMENT
COMPENSATION SYSTEM THAT PROMOTES ACCOUNTABILITY, ENSURES MANAGEMENT IS
REWARDED FOR EXCELLENT PERFORMANCE, AND FOCUSES MANAGEMENT AND ALL
EMPLOYEES ON ACHIEVING LONG-TERM SUCCESS.
COMPANY'S STATEMENT IN OPPOSITION TO THE PROPOSAL
As explained in greater detail in the Report of the Compensation Committee
beginning on page 27, 3M has had for many years a senior executive compensation
system consisting of the following key performance-based components. These
components represent approximately 75 to 80 percent of the total compensation of
the senior executives listed in the Summary Compensation Table set forth on page
20.
* Profit sharing is variable compensation based on quarterly economic
profit of 3M. Economic profit is quarterly net operating income minus a
charge for operating capital used by the business. The target is
increased economic profit, which in the opinion of the Compensation
Committee relates well to the creation of shareholder value since it
emphasizes the effective use of working capital and solid profitable
growth. If economic profit increases each quarter, profit sharing
payments in cash and stock go up. If economic profit decreases, profit
sharing payments go down.
* The Performance Unit Plan is variable, performance-based compensation
based on 3M's long-term performance. The amount payable with respect to
each performance unit granted in 2000 is linked to the performance
criteria of Real Growth (percentage amount by which 3M's worldwide unit
sales growth exceeds the weighted average of the Industrial Production
Index ("IPI") of the top seven industrial nations in which 3M does
business (the "Big 7 IPI")) 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. 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 are granted to each of the senior executives at the fair
market value on the date of the grant. The target is increased market
value of the Company's stock. Stock options provide value only when
Company performance improves leading to an increase in the price of the
Company's common stock that benefits all stockholders.
In the judgment of the Compensation Committee, this compensation system
rewards superior performance and challenges senior executives to achieve
superior performance. Similarly, the Report of the Compensation Committee
adequately explains the system and its objectives. Thus, the Committee and the
Board of Directors believes that the systems already in place address the
objectives stated by the Proponent.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL FOR THE
REASONS DESCRIBED ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED "AGAINST" THIS PROPOSAL UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN
VOTING THE PROXY.
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 28, 2001, for: (a) each director
and the nominees for director; (b) named
17
executive officers set forth in the Summary Compensation Table; 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
28, 2001 (60 days after February 28, 2001), through the exercise of any stock
option or other right. Options exercisable within 60 days after February 28,
2001, are shown separately.
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, Director 639 -- 0 639
Edward A. Brennan, Director 4,817 -- 12,586 17,403
Edward M. Liddy, Director 0 -- 1,000 1,000
Aulana L. Peters, Director 865 -- 12,341 13,206
Rozanne L. Ridgway, Director 1,288 -- 14,584 15,872
Kevin W. Sharer, Nominee -- -- -- --
Frank Shrontz, Director 3,031 -- 8,097 11,128
F. Alan Smith, Director 5,615 -- 15,325 20,940
Louis W. Sullivan, Director 1,807 -- 5,419 7,226
W. James McNerney, Jr.,
Director and
Chairman of the Board
and Chief Executive Officer
(effective January 1, 2001) 110,054(4) 0 0 110,054(4)
Livio D. DeSimone,
Director and
Chairman of the Board
and Chief Executive Officer
(through December 31, 2000) 220,538 492,571 0 713,109
Ronald O. Baukol,
Director and
Executive Vice President 43,085 131,861 0 174,946
John W. Benson,
Executive Vice President 28,755 52,296 0 81,051
Charles E. Kiester,
Senior Vice President* 46,391 64,038 0 110,429
Harold J. Wiens,
Executive Vice President 7,105 50,710 0 57,815
John J. Ursu,
Senior Vice President 33,179 45,854 0 79,033
All Directors and Executive
Officers as a Group
(26 persons) (5) 716,383 1,353,717 70,250 2,140,350
- ----------------------------------------------------------------------------------------------------
*Retired as Executive Officer effective November 10, 2000
18
FOOTNOTES TO BENEFICIAL OWNERSHIP TABLE
(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 28,
2001 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 21 of this proxy statement.
(2) Option prices for these shares range from $42.50 to $96.85 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 28, 2001, 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 stock have as yet been issued, and the directors have neither voting nor
investment powers in these shares of deferred stock.
(4) Restricted shares that generally vest in increments of 10 percent over
a ten-year period if the executive remains continuously employed by the Company
and are subject to forfeiture under certain circumstances.
(5) All directors and executive officers as a group owned beneficially less
than one percent 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 2000,
its directors and executive officers complied with all Section 16(a) filing
requirements. In making this statement, 3M has relied upon examination of the
copies of Forms 3, 4, and 5 and the written representations of its directors and
executive officers.
19
EXECUTIVE COMPENSATION
The following table shows compensation received by 3M's Chief Executive
Officer and its four other most highly paid executive officers and a retired
officer for 2000, 1999, and 1998.
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION(1)
--------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ---------------------------- --------------
PROFIT PROFIT SHARING OPTIONS PERFORMANCE
SHARING OTHER ANNUAL STOCK (RESTRICTED GRANTED UNIT PLAN ALL OTHER
SALARY CASH (BONUS) COMPENSATION STOCK AWARDS) NUMBER OF (LTIP) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(4) ($)(2)(3) SHARES(5) PAYOUTS($)(6) ($)(7)
- ------------------------------------------------------------------------------------------------------------------------------------
Livio D. DeSimone,* 2000 1,047,600 1,285,837 70,445 910,610 192,894 1,352,700 265,686
------------------------------------------------------------------------------------------------------
Chairman of the Board and 1999 1,047,600 947,502 81,318 774,698 155,456 1,320,300 169,956
------------------------------------------------------------------------------------------------------
Chief Executive Officer 1998 1,047,600 669,341 60,533 547,268 212,890 774,900 155,518
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald O. Baukol, 2000 561,900 498,289 -- 152,157 22,600 556,110 101,718
------------------------------------------------------------------------------------------------------
Executive Vice President 1999 521,700 423,918 -- 129,447 52,780 542,790 53,015
------------------------------------------------------------------------------------------------------
1998 521,700 299,466 -- 91,440 47,916 318,570 36,105
- ------------------------------------------------------------------------------------------------------------------------------------
John W. Benson, 2000 507,050 390,644 -- 56,582 47,530 360,720 42,106
------------------------------------------------------------------------------------------------------
Executive Vice President 1999 437,700 332,339 -- 48,137 45,811 139,365 30,641
------------------------------------------------------------------------------------------------------
1998 409,650 212,841 -- 16,080 28,398 81,795 27,216
- ------------------------------------------------------------------------------------------------------------------------------------
Charles E. Kiester,** 2000 500,500 371,337 -- 155,393 61,064 360,720 84,238
------------------------------------------------------------------------------------------------------
Senior Vice President 1999 447,200 315,914 -- 122,480 31,978 352,080 57,419
------------------------------------------------------------------------------------------------------
1998 426,900 223,171 -- 57,150 40,970 206,640 45,217
- ------------------------------------------------------------------------------------------------------------------------------------
Harold J. Wiens, 2000 471,550 375,297 -- 49,215 25,561 300,600 30,488
------------------------------------------------------------------------------------------------------
Executive Vice President 1999 397,000 270,063 50,827 36,383 25,727 80,685 31,646
------------------------------------------------------------------------------------------------------
1998 299,250 158,947 -- 11,486 10,560 47,355 29,943
- ------------------------------------------------------------------------------------------------------------------------------------
John J. Ursu, 2000 426,000 361,167 -- 57,064 37,791 360,720 51,585
------------------------------------------------------------------------------------------------------
Senior Vice President 1999 390,900 307,261 -- 48,547 28,282 234,720 53,302
------------------------------------------------------------------------------------------------------
1998 390,900 217,056 -- 34,290 34,915 137,760 45,699
- ------------------------------------------------------------------------------------------------------------------------------------
*Held position through December 31, 2000
**Retired as Executive Officer effective November 10, 2000
FOOTNOTES TO SUMMARY COMPENSATION TABLE
(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 21).
20
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 15,640 employees currently participate in profit sharing,
including the 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 2000, the
Company distributed a portion of these shares to Messrs. DeSimone, Baukol,
Kiester, and Ursu.
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.
The named individuals have accumulated as of December 31, 2000 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, 2000, and also on the respective
dates when the shares were issued into the custody of the Company:
- --------------------------------------------------------------------------------
VALUE AT VALUE
NAME SHARES DECEMBER 31, 2000 WHEN ISSUED
- ---- ------ ----------------- -----------
L.D. DeSimone .................. 26,922 $3,244,101 $2,354,175
R.O. Baukol .................... 4,498 542,009 393,306
J.W. Benson .................... 1,373 165,447 120,752
C.E. Kiester ................... 3,902 470,191 347,767
H.J. Wiens ..................... 1,095 131,948 97,022
J.J. Ursu ...................... 1,687 203,284 147,499
- --------------------------------------------------------------------------------
(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 2000, 1999, and 1998 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 23. The number and
price of all outstanding options were adjusted at the time of the
21
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 2000 reflects
this adjustment.
(6) "Performance Unit Plan (LTIP) Payouts" reflect 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 2000 covers the
base performance period from 1998-2000). Under the 2000 award, the amount earned
will be paid to these individuals in 2003, unless the participant elects to
defer the payout for three additional years. The numbers shown represent
estimates based upon information available as of February 28, 2001. More
specific information about the Performance Unit Plan is set forth on pages 25
and 28.
(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 nonterm 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 2000,
amounts deemed compensation under the Plan to the named executive officers in
the Summary Compensation Table were $7,145 for Mr. DeSimone; $14,440 for Mr.
Baukol; $12,119 for Mr. Benson; $15,378 for Mr. Kiester; $14,788 for Mr. Wiens;
and $17,093 for Mr. Ursu. These amounts were determined by treating the nonterm
portion of the coverage as an interest-free loan.
22
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants during 2000 to
each person named in the Summary Compensation Table.
- --------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------
% OF TOTAL GRANT DATE
OPTIONS/SARs VALUE
OPTIONS/ GRANTED EXERCISE OR -------------------
SARs TO EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(1)(2) DATE PRESENT VALUE($)(4)
---- ------------- --------------- ------------ ---------- -------------------
L.D. DeSimone 90,000 1.361% $86.70 5/9/2010 $ 2,020,500
13,137 0.199% 94.95 5/11/2001 217,811
29,874 0.452% 94.95 5/10/2002 495,311
2,027 0.031% 94.95 5/9/2003 33,608
30,366 0.459% 94.95 5/7/2004 503,468
27,490 0.416% 94.95 5/12/2006 455,784
R.O. Baukol 22,600 0.342% 86.70 5/9/2010 507,370
J.W. Benson 22,600 0.342% 86.70 5/9/2010 507,370
1,627 0.025% 94.95 5/11/2001 26,976
1,818 0.027% 94.95 5/10/2002 30,142
2,288 0.035% 94.95 5/9/2003 37,935
1,966 0.030% 94.95 5/7/2004 32,596
2,386 0.036% 94.95 5/6/2005 39,560
7,493 0.113% 94.95 5/12/2006 124,234
7,352 0.111% 94.95 5/12/2007 121,896
C.E. Kiester 22,600 0.342% 86.70 5/9/2010 507,370
4,652 0.070% 94.95 5/11/2001 77,130
5,070 0.077% 94.95 5/10/2002 84,061
5,996 0.091% 94.95 5/9/2003 99,414
6,898 0.104% 94.95 5/7/2004 114,369
8,382 0.127% 94.95 5/6/2005 138,974
7,466 0.113% 94.95 5/12/2006 123,786
H.J. Wiens 22,600 0.342% 86.70 5/9/2010 507,370
2,698 0.041% 94.95 5/12/2006 44,733
263 0.004% 94.95 5/12/2007 4,361
J.J. Ursu 15,000 0.227% 86.70 5/9/2010 336,750
1,639 0.025% 97.15 5/11/2001 27,929
1,851 0.028% 97.15 5/10/2002 31,541
3,709 0.056% 97.15 5/9/2003 63,201
1,794 0.027% 97.15 5/7/2004 30,570
6,302 0.095% 97.15 5/6/2005 107,386
7,496 0.113% 97.15 5/12/2006 127,732
- ------------------------------------------------------------------------------------------------------------
All Optionees
11,073 Participants 6,612,707 100.000% $89.20 $148,944,839
- ------------------------------------------------------------------------------------------------------------
FOOTNOTES TO OPTION GRANTS IN LAST FISCAL YEAR TABLE
(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
23
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 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.
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 $89.20 and represents the
weighted average exercise price of the options granted in 2000.
(3) The expiration date for the "All Optionees" line is shown as May 9,
2010, since that is the applicable date for the vast majority of options granted
during 2000.
(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 nontransferability 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 2000
and the value of unexercised options at the end of 2000 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 133,977 $1,966,029 389,677 192,894 $11,317,008 $5,670,942
R.O. Baukol 269 2,228 131,861 22,600 4,377,319 763,880
J.W. Benson 29,643 224,160 52,296 47,530 1,883,291 1,400,842
C.E. Kiester 44,037 588,887 62,244 61,064 1,908,800 1,746,635
H.J. Wiens 3,706 111,418 50,710 25,561 1,715,892 839,534
J.J. Ursu 29,903 380,002 45,854 37,791 1,273,676 1,039,170
- -------------------------------------------------------------------------------------------------------------
24
FOOTNOTE TO OPTION EXERCISES AND YEAR-END OPTION VALUES TABLE
(1) The "Value Realized" or the unrealized "Value of Unexercised
In-the-Money Options at FY-End" represents the aggregate difference between the
market value on the date of exercise or at December 31, 2000, in the case of the
unrealized values, and the applicable exercise prices. These differences
accumulate over what may be, in many cases, several years. These stock options
all have option periods of ten years when first granted, and Progressive Stock
Options have option periods equal to the remaining option period of the initial
nonqualified options resulting in Progressive Stock Options.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table shows information on awards during 2000 under the
Company's Performance Unit Plan for each person in the Summary Compensation
Table.
- -------------------------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
-------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE OR UNDER NON-STOCK PRICE BASED
SHARES, UNITS OTHER PERIOD PLANS (3)
OR OTHER UNTIL MATURATION -----------------------------
NAME RIGHTS(#)(1) OR PAYOUT(2) THRESHOLD($) 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
J.W. Benson 2,400 3 years 0 240,000 480,000
C.E. Kiester 2,400 3 years 0 240,000 480,000
H.J. Wiens 2,400 3 years 0 240,000 480,000
J.J. Ursu 2,400 3 years 0 240,000 480,000
- -------------------------------------------------------------------------------------------------
FOOTNOTES TO LONG-TERM INCENTIVE PLAN AWARDS TABLE
(1) The Company's Performance Unit Plan provides long-term compensation to
119 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 2000 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
28.
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 2000, including the executive officers in the Summary
Compensation Table, will receive payment in 2003, 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 2000 will be determined by the
Company's attainment of Real Growth and Economic Profit performance criteria
during a three-year performance period of 2000, 2001, and 2002. More detail
about current performance goals is available in the Compensation
25
Committee Report on page 28. At the beginning of every performance period,
participants may elect to defer the payout for three years beyond the base
performance period (for the 2000 award, the payout will be made in 2003, 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 2000, that rate was 6.28 percent) PLUS an amount based on
the Company's Economic Profit for the preceding year as a percentage of the
average operating capital (for 2000, that rate was 8.6 percent). The interest
would be payable, together with the base award, in January 2006.
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
- --------------------------------------------------------------------------------
FOOTNOTES TO PENSION PLAN TABLE
(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 individuals listed in the
Summary Compensation Table are presently entitled to the respective years of
service credit set opposite their names:
- --------------------------------------------------------------------------------
L.D. DeSimone ...................................... 44
R.O. Baukol ........................................ 34
J.W. Benson ........................................ 33
C.E. Kiester ....................................... 39
H.J. Wiens ......................................... 33
J.J. Ursu .......................................... 29
- --------------------------------------------------------------------------------
26
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee")
administers 3M's executive compensation program. The Committee, which is
composed of nonemployee directors, is responsible for approving and reporting to
the Board on all elements of compensation for elected corporate officers. The
Committee has furnished the following report on executive compensation for 2000.
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.
* 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 30 of this proxy statement.
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.
27
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 economic profit
of the Company. Economic profit is defined as quarterly net operating income
minus a charge for operating capital used by the business. The economic profit
measurement is directly related to the creation of stockholder value since it
emphasizes the effective use of capital and solid profitable growth.
Compensation paid under the profit sharing plan will rise and fall based on
Company performance. The Committee, as part of the overall compensation program,
determines the 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.
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 2000 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 20 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 2000
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
28
payout for the 2000 Award is payable in May 2003, 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 program. 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.
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 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. Mr. DeSimone received an increase in
the variable, performance-based portion of his compensation in 2000. Increases
in compensation over the amounts paid in 1999 were due to the increase and the
improved performance of the Company.
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
Rozanne L. Ridgway
Frank Shrontz
Louis W. Sullivan
29
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, 2000, 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, 1995 (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, 2000.
*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)
- -----------------------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
3M 100.0 134.5 136.2 121.4 171.4 216.2
DJIA 100.0 128.9 161.0 190.1 241.8 230.4
S&P 500 100.0 122.9 163.9 210.6 254.8 231.6
Annualized Return
- -----------------
3M 28.3% 34.5% 1.2% -10.9% 41.2% 26.2%
DJIA 36.7% 28.9% 24.9% 18.1% 27.2% -4.7%
S&P 500 37.4% 22.9% 33.3% 28.5% 21.0% -9.1%
30
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The role of the Audit Committee is to assist the Board of Directors in its
oversight of the Company's financial reporting process. The Board of Directors,
in its business judgment, has determined that all members of the Committee are
"independent," as required by applicable listing standards of the New York Stock
Exchange. The Committee operates pursuant to a Charter that was last amended and
restated by the Board on February 12, 2001, a copy of which is attached to this
proxy statement as Appendix A. As set forth in the Charter, management of the
Company is responsible for the preparation, presentation, and integrity of the
Company's financial statements, the Company's accounting and financial reporting
principles and internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. Our independent
auditors, PricewaterhouseCoopers LLP, are responsible for auditing the Company's
consolidated financial statements and expressing an opinion as to whether they
are presented fairly, in all material respects, in conformity with accounting
principles generally accepted in the United States of America.
In the performance of its oversight function, the Committee has:
* considered and discussed the audited financial statements with
management and our independent auditors;
* discussed with our independent auditors the matters required to be
discussed by Statements on Auditing Standards No. 61, Communication
with Audit Committees, and No. 71, Interim Financial Information, as
currently in effect;
* received the written disclosures from our independent auditors required
by Independence Standards Board Standard No.1, Independence Discussions
with Audit Committees, as currently in effect, and discussed the
independence of PricewaterhouseCoopers LLP with them; and
* reviewed the services provided by our independent auditors other than
their audit services and considered whether the provision of such other
services by our independent auditors is compatible with maintaining
their independence.
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Committee
referred to in the Charter, the Committee recommended to the Board that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000, to be filed with the Securities and
Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE OF THE 3M BOARD OF DIRECTORS
F. Alan Smith, Chair
Linda G. Alvarado
Edward M. Liddy
Aulana L. Peters
By Order of the Board of Directors.
/s/ Roger P. Smith
ROGER P. SMITH
SECRETARY
31
(This page has been left blank intentionally.)
APPENDIX A
3M BOARD OF DIRECTORS AUDIT COMMITTEE CHARTER
A. Purpose: The Audit Committee (the "Committee") of the Board of Directors
(the "Board") of Minnesota Mining and Manufacturing Company (the "Company")
serves as the representative of the Board for general oversight of the
Company's financial accounting and reporting process, system of internal
control, audit process, and process for monitoring compliance with laws and
regulations and the Company's Business Conduct Policies.
B. Membership: The Committee's membership is determined by the Board and
consists of at least three directors. The Committee shall meet all
applicable requirements of the Audit Committee Policy of the New York Stock
Exchange with respect to independence, financial literacy, and accounting
or related financial management expertise, and any other matters required
by the New York Stock Exchange and Securities Exchange Commission.
C. Roles and Responsibilities: The Committee's responsibility is one of
oversight. The management of the Company is responsible for the preparation
of complete and accurate financial statements in accordance with generally
accepted accounting principles and for maintaining appropriate accounting
and financial reporting principles and policies and internal controls
designed to assure compliance with accounting standards and laws and
regulations. The independent auditors are responsible for planning and
conducting an audit of the Company's annual consolidated financial
statements and reviewing the Company's quarterly financial statements. The
Committee shall have the authority to take any and all acts that it deems
necessary to carry out its oversight function, including but not limited
to:
1. Financial Reporting
a. Review the audited consolidated financial statements with
management and the independent auditor, including the results of
the audit; significant financial reporting issues judgments and
estimates made in preparing such financial statements; and any
other matter to be discussed with the independent auditors
pursuant to Statement on Auditing Standards No. 61, Communication
with Audit Committees, as currently in effect. After review,
recommend to the Board whether the audited financial statements
be included in the Company's Annual Report on Form 10-K.
b. Review and discuss with management and the independent auditor
the Company's quarterly financial results and the matters
required to be discussed with the Committee pursuant to the
Statement on Auditing Standards No. 71, Interim Financial
Information, as currently in effect.
2. Internal Audit
a. Review the annual plan and scope of work of the Company's
Corporate Auditing Department.
b. Review, as appropriate, the results of internal audits and
discuss related significant internal control matters with the
Company's internal auditor and Company management.
c. Discuss the adequacy of the Company's internal controls with the
Company's Corporate Auditing Department.
d. Review the appointment and replacement of the senior internal
auditing executive and review the responsibilities and staffing
of the Company's Corporate Auditing Department.
3. Independent Auditor
a. Select, evaluate, and recommend to the Board the nomination of
and, where appropriate, the replacement of, the independent
auditor. The independent auditor is ultimately accountable to the
Committee and the Board.
b. Evaluate and satisfy itself as to the independence of the
independent auditor by among other things, (i) ensure that the
independent auditor periodically submits to the Committee
A-1
a formal written statement delineating all relationships between
such auditor and the Company; (ii) actively engage in dialogue
with the independent auditor with respect to any disclosed
relationships or services that may impact its objectivity and
independence; and (iii) if appropriate, recommend that the Board
take action to satisfy itself of the independence of the
independent auditor.
c. Review the annual plan and scope and extent of services to be
provided by the independent auditors during the year, including
their audit examination and staffing for the audit, as well as
nonaudit services and all related fees for these and all other
services.
d. Discuss the adequacy of the Company's internal controls with the
independent auditor.
4. Risk Management and Compliance
a. Review periodically with management the Company's major financial
risk exposures and the steps management has taken to monitor and
mitigate such exposures.
b. Review the effectiveness of the system for monitoring compliance
with laws, regulations, and the Company's business conduct
policies and the results of management's investigation and
follow-up on any fraudulent acts or accounting irregularities.
c. Periodically obtain reports from management regarding compliance.
d. Review with 3M's General Counsel legal matters that may have a
material impact on the consolidated financial statements and any
material reports or inquiries received from regulators or
governmental agencies regarding compliance.
5. Meetings, Reports, and Charter Review
a. Hold regular meetings of the Committee, reporting significant
matters arising from such meetings to the Board and periodically
meet separately with the independent and internal auditors
without Company management present.
b. Prepare any report or other disclosures, including any
recommendation of the Committee, required by the rules of the
Securities and Exchange Commission to be included in the
Company's annual proxy statement.
c. Review and reassess the adequacy of this Charter at least
annually and submit it to the Board for approval.
A-2
ATTENDANCE CARD ATTENDANCE CARD
[LOGO] 3M [LOGO] 3M
Annual Meeting Annual Meeting
of Stockholders of Stockholders
- ----------------------------------- -----------------------------------
MAY 8, 2001 MAY 8, 2001
RIVERCENTRE RIVERCENTRE
175 WEST KELLOGG BLVD. 175 WEST KELLOGG BLVD.
ST. PAUL, MINNESOTA ST. PAUL, MINNESOTA
This is your ticket to the 2001 This is your ticket to the 2001
Annual Meeting. Please show it upon Annual Meeting. Please show it upon
arrival. Annual Meeting activities arrival. Annual Meeting activities
begin at 8:30 a.m. with product begin at 8:30 a.m. with product
demonstrations and displays. The demonstrations and displays. The
meeting starts at 10:00 a.m. After meeting starts at 10:00 a.m. After
the meeting, lunch will be served the meeting, lunch will be served
and the 3M store will open. and the 3M store will open.
The meeting will be held in the The meeting will be held in the
Roy Wilkins Auditorium. Hosts and Roy Wilkins Auditorium. Hosts and
hostesses will show you the way hostesses will show you the way
after you enter the RiverCentre. after you enter the RiverCentre.
SINCE PARKING SPACE IS LIMITED, SINCE PARKING SPACE IS LIMITED,
YOU ARE URGED TO CONSIDER YOU ARE URGED TO CONSIDER
CARPOOLING OR PUBLIC CARPOOLING OR PUBLIC
TRANSPORTATION. TRANSPORTATION.
[LOGO] Recycled Paper
40% Pre-consumer paper
10% Post-consumer paper
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
8, 2001, 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
web site 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 4, 2001, by Wells Fargo 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 4, 2001, 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
8, 2001, 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
web site 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 4, 2001 by Wells
Fargo 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 account. 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 4, 2001, 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.
MARCH 28, 2001
IMPORTANT:
NOTICE OF 2001 3M ANNUAL MEETING, INTERNET VOTING,
AND ONLINE ACCESS TO 2001 PROXY STATEMENT
AND 2000 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 2001 Proxy Statement and 2000 Annual
Report at:
http://investor.3M.com
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 8, 2001, at the RiverCentre, St.
Paul, Minnesota. The proposals to be voted on and procedures for voting are
described in the 2001 Proxy Statement.
You may request paper copies of the 2001 Proxy Statement and 2000 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.
IMPORTANT NOTICE:
3M STOCKHOLDERS CAN CHOOSE TO VIEW
FUTURE ANNUAL REPORTS AND PROXY STATEMENTS
VIA THE INTERNET
3M is again offering stockholders of record the option to view future
Annual Reports to Stockholders and Proxy Statements via the Internet, instead of
receiving copies of these documents in the mail. The following answers some of
the more frequently asked questions.
Q: WHO CAN VIEW THEIR MATERIALS ELECTRONICALLY?
A: This option is available only if you are a 3M stockholder "of record,"
(i.e., a stockholder registered on the books of 3M's transfer agent, Wells
Fargo Bank Minnesota, N.A., as holding 3M stock directly in your own name).
Q: HOW DO I ELECT THIS OPTION?
A: To view future Annual Reports to Stockholders and Proxy Statements on
the Internet, instead of receiving paper copies:
(1) 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.
(2) Go to website http://www.econsent.com/mmm.
(3) Review Important Considerations and Frequently Asked Questions.
(4) Follow the prompts.
Q: ARE THERE SPECIAL SYSTEM REQUIREMENTS?
A: To view the documents, you will need Internet access and Adobe Acrobat
Reader to view and/or print the documents. Stockholders are responsible for any
charges imposed by Internet service providers; 3M does not charge any fees for
access to its website.
Q: HOW AND WHERE DO I ACCESS THE WEBSITE?
A: When the 3M Proxy Statement and Annual Report are available, 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 delivered to stockholders who
have elected electronic delivery will cover shares directly registered with
Wells Fargo Bank Minnesota, N.A. in your name. Notification is expected to begin
on or about March 31.
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 receive paper copies of future Annual Reports to
Stockholders and Proxy Statements.
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
Go to the website:
http://www.eproxy.com/mmmm
Follow these four easy steps:
1. Read the accompanying Proxy Statement and have your proxy card at hand
2. Go to the website stated above
3. Enter the 3-digit company number and the 7-digit control number located at
the upper right hand corner on your proxy card
4. Follow the instructions and click on "Submit Vote" when you are finished
TO VOTE BY TELEPHONE
In the U.S., call toll-free 1-800-240-6326 using a touch-tone phone
Follow these four easy steps:
1. Read the accompanying Proxy Statement and have your proxy card at hand
2. In the U.S., call the toll-free number 1-800-240-6326 using a touch-tone
phone
3. Enter the 3-digit company number and the 7-digit control number located at
the upper right hand corner on your proxy card
4. Follow the recorded instructions
THANK YOU FOR SUBMITTING YOUR VOTE/PROXY.
IF YOU VOTE BY TELEPHONE OR INTERNET, YOU NEED NOT RETURN THE PROXY CARD.
[LOGO] 3M
MINNESOTA MINING
AND MANUFACTURING COMPANY
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 8, 2001
10:00 A.M.
RIVER CENTRE
175 WEST KELLOGG BLVD.
ST. PAUL, MINNESOTA
[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 8, 2001.
The stockholder(s) whose signature(s) appear(s) on the reverse side of this
proxy card hereby appoint(s) W.J. McNerney, Jr., E.A. Brennan, R.L. Ridgway 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 2001 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, 2001, 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,
2001, 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)
VOTING INSTRUCTIONS: THERE ARE THREE WAYS TO VOTE YOUR PROXY
COMPANY #
CONTROL #
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, 2001.
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
7, 2001.
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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, AND "AGAINST"
ITEMS 3, 4 AND 5.
1. Election of directors nominees to 2004 Class: [ ] Vote FOR [ ] Vote WITHHELD
all from
01 Edward A. Brennan 02 W. James McNerney, Jr. 03 Kevin W. Sharer nominees all nominees
__________________________________________
(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.) |__________________________________________|
2. Ratification of Independent Auditors [ ] For [ ] Against [ ] Abstain
3. Stockholder Proposal Relating to Election of Directors [ ] For [ ] Against [ ] Abstain
4. Stockholder Proposal Relating to Indexed Stock Options [ ] For [ ] Against [ ] Abstain
5. Stockholder Proposal Relating to Performance-based [ ] For [ ] Against [ ] Abstain
Senior Executive Compensation
6. 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, AND "AGAINST" ITEMS 3, 4 AND 5.
Address Change? Mark Box [ ]
Indicate changes below Date ________________________________
__________________________________________
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Signature(s) in Box
Please sign exactly as your name(s) appear(s)
on Proxy. 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.