SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MINNESOTA MINING AND MANUFACTURING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
LIVIO D. DESIMONE
Chairman of the Board and
Chief Executive Officer
March 26, 1999 [LOGO] 3M
Dear Stockholder:
We cordially invite you to attend the 1999 Annual Meeting of Stockholders,
which will be held on Tuesday, May 11, 1999, at 10 a.m., at the RiverCentre
(formerly the St. Paul Civic Center), 175 West Kellogg Boulevard, St. Paul,
Minnesota.
The notice of the meeting and the proxy statement on the following pages cover
the formal business of the meeting. The meeting will consider the election of
directors, the ratification of the appointment of independent auditors for
1999, and the proposed amendments to the existing Executive Profit Sharing
Plan. 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.
Please vote your proxy via the Internet or by telephone as described in the
enclosed voting instructions or date, sign, and return the enclosed proxy card
in the envelope provided so that your shares will be voted at the Annual
Meeting. YOUR ATTENDANCE CARDS TO THE 1999 ANNUAL MEETING ARE LOCATED ON THE
BACK COVER.
Cordially,
/s/ L. DeSimone
<PAGE>
MINNESOTA MINING AND MANUFACTURING COMPANY
3M CENTER, ST. PAUL, MINNESOTA 55144
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD MAY 11, 1999
To the Stockholders of
Minnesota Mining and Manufacturing Company:
The Annual Meeting of Stockholders of Minnesota Mining and Manufacturing
Company will be held on Tuesday, May 11, 1999, at 10 a.m., at the RiverCentre
(formerly the St. Paul Civic Center), 175 West Kellogg Boulevard, St. Paul,
Minnesota, for the following purposes:
1. To elect three directors of the Company to the 2002 Class and one
director of the Company to the 2000 Class (see page 3 of the proxy
statement).
2. To ratify the appointment of PricewaterhouseCoopers LLP, independent
auditors, to audit the consolidated financial statements of the
Company for the year 1999 (page 22).
3. To consider adoption of amendments to the Executive Profit Sharing
Plan (page 22).
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed March 12, 1999, as the record date for
the determination of stockholders entitled to vote at the Annual Meeting and to
receive notice thereof. The transfer books of the Company will not be closed.
Examination of the list of stockholders entitled to vote can be arranged at the
office of Roger P. Smith, Secretary, 3M Center, St. Paul, Minnesota, during the
period of ten days prior to the meeting.
Stockholders are encouraged to vote their proxy via the Internet or by
telephone as described in the enclosed voting instructions or date, sign, and
return the enclosed proxy card in the enclosed envelope, to which no postage
need be affixed if mailed in the United States. YOUR ATTENDANCE CARDS TO THE
1999 ANNUAL MEETING ARE LOCATED ON THE BACK COVER.
/s/ Roger P. Smith
ROGER P. SMITH
SECRETARY
March 26, 1999
i
<PAGE>
CONTENTS
Notice of Annual Meeting of Stockholders ............................ i
Proxy Statement ..................................................... 1
*Item 1. Election of Directors ....................................... 3
Directors' Compensation ............................................. 7
Committees of the Board of Directors ................................ 8
Information as to Executive Officers ................................ 9
Compensation Committee Report on Executive Compensation ............. 10
Executive Compensation -- Summary Compensation Table ................ 14
Stock Options Table ................................................. 17
Option Exercises and Year-End Value Table ........................... 18
Long-Term Incentive Plan Awards Table ............................... 19
Pension Plan Table .................................................. 20
3M Stock Performance Graph .......................................... 21
Transactions with Management ........................................ 22
Section 16(a) Beneficial Ownership Reporting Compliance ............. 22
*Item 2. Ratification of Independent Auditors ........................ 22
*Item 3. Proposed Executive Profit Sharing Plan ...................... 22
Other Matters ....................................................... 24
Submission of Stockholder Proposals for 2000 Annual Meeting ......... 24
Exhibit A -- Proposed Executive Profit Sharing Plan ................. A-1
*To be voted on at the meeting
ii
<PAGE>
MINNESOTA MINING AND MANUFACTURING COMPANY
3M CENTER, ST. PAUL, MINNESOTA 55144
March 26, 1999
PROXY STATEMENT FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 11, 1999
The Board of Directors is soliciting proxies to be used at the Annual
Meeting of Stockholders on Tuesday, May 11, 1999, at 10 a.m., and at all
adjournments thereof, for the purposes set forth in the attached Notice of
Annual Meeting of Stockholders. The Company anticipates that the proxy
statement and the form of proxy enclosed will first be sent to its stockholders
on or about March 26, 1999.
WHO CAN VOTE
Only stockholders of record at the close of business on March 12, 1999,
are entitled to vote at the Annual Meeting. As of February 26, 1999, the
Company had outstanding and entitled to vote 402,390,382 shares of common stock
with par value of $0.50 per share. The 69,626,146 shares of common stock in the
Company's treasury on that date will not be voted.
HOW YOU CAN VOTE BY PROXY
If you are a registered stockholder (you hold your stock in your own
name), you may vote by one of the following methods:
* VIA THE INTERNET, by going to the web address
http://www.eproxy.com/mmm/ and following the enclosed instructions for
Internet voting;
* TELEPHONE VOTING, by dialing 1-800-240-6326 and following the enclosed
instructions for telephone voting;
* PROXY CARD, by completing and mailing the enclosed proxy card.
If you return your signed proxy card or use Internet or telephone voting
before the Annual Meeting, we will vote your shares as you direct. You have
three choices on each matter to be voted upon. For the election of directors,
you may vote for (1) all of the nominees, (2) none of the nominees, or (3) all
of the nominees except those you designate. See "Item 1. Election of
Directors." For each of the other items, you may vote "FOR," "AGAINST," or
"ABSTAIN" from voting.
IF YOU DO NOT SPECIFY ON YOUR PROXY CARD OR THROUGH INTERNET OR TELEPHONE
PROMPTS HOW YOU WANT TO VOTE YOUR SHARES, WE WILL VOTE THEM "FOR" THE ELECTION
OF ALL DIRECTOR NOMINEES, "FOR" RATIFICATION OF INDEPENDENT AUDITORS, AND "FOR"
ADOPTION OF THE EXECUTIVE PROFIT SHARING PLAN, AND AS OTHERWISE RECOMMENDED BY
THE NAMED PROXIES ON ANY OTHER MATTER PROPERLY BEFORE THE MEETING.
If your shares are held in "street name" (through a broker or other
nominee), you will need to contact your broker or other nominee to determine
whether you will be able to vote electronically via the Internet or by
telephone.
HOW YOU MAY REVOKE OR CHANGE YOUR VOTE
You can revoke your proxy at any time before it is voted at the Annual
Meeting by:
(1) Sending written notice of revocation to the Secretary;
(2) Submitting another proper proxy with a more recent date than that of
the proxy first given by (i) following the Internet voting
instructions, or (ii) following the telephone voting instructions, or
(iii) by signing and returning a proxy card to the Company; or
(3) Attending the Annual Meeting and voting in person.
Another person at the meeting may also represent you by executing a proper
proxy designating that person.
1
<PAGE>
VOTES REQUIRED/VOTING PROCEDURES
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 matters submitted to the
stockholders will require the affirmative vote of a majority of the shares of
the Company's common stock present or represented and entitled to vote at the
Annual Meeting.
Abstentions and broker non-votes (described below) will be counted as
present or represented at the Annual Meeting for purposes of determining
whether a quorum exists. Because abstentions with respect to any matter are
treated as shares present or represented and entitled to vote for the purposes
of determining whether that matter has been approved by the stockholders,
abstentions have the same effect as negative votes. Broker non-votes and shares
as to which proxy authority has been withheld with respect to any matter are
not deemed to be present or represented and entitled to vote for purposes of
determining whether stockholder approval of that matter has been obtained and
therefore will have no effect on the outcome of the vote on any such matter.
Proxies submitted by brokers that do not indicate a vote for some of the
proposals because the brokers don't have discretionary voting authority and
haven't received instructions from the beneficial owners on how to vote on
those proposals are called "broker non-votes."
DIVIDEND REINVESTMENT PLAN AND OTHER PLANS
Shares held for the account of persons participating in the Company's
dividend reinvestment plan will be voted automatically in accordance with the
vote indicated by the stockholder of record on the proxy. If no choice is
indicated, both record shares and shares held in the Company's dividend
reinvestment plan will be voted "FOR" Items 1, 2, and 3. If the stockholder
does not vote the shares held of record, the individual's shares held in the
dividend reinvestment account will not be voted.
If a stockholder is a participant in the Company's Voluntary Investment
Plan, Employee Stock Ownership Plan, or Savings Plan, participants may direct
the trustee how to vote the number of shares allocated to the participant's
account.
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 directed shares are voted. 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 Board of Directors.
COSTS OF SOLICITATION
The Company will bear the cost of preparing, printing, and mailing
material in connection with this solicitation of proxies. In addition to
mailing material, regular employees of the Company may make solicitations
personally and by telephone. The Company intends to reimburse brokerage firms,
banks, and others for their reasonable out-of-pocket expenses, including
clerical expenses, related to forwarding proxy material to beneficial owners of
stock or otherwise in connection with this solicitation of proxies. The Company
has retained Georgeson & Co., Inc., to assist in the solicitation at a cost of
approximately $15,000, plus reasonable out-of-pocket expenses.
CONFIDENTIAL VOTING
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.
ANNUAL REPORT
The 1998 Annual Report to Stockholders, which includes the consolidated
financial statements of the Company for the year ended December 31, 1998, was
mailed on or about March 26, 1999, to all stockholders entitled to vote at the
annual meeting.
2
<PAGE>
ITEM 1. ELECTION OF DIRECTORS
NUMBER OF NOMINEES AND CLASSIFICATION
The Restated Certificate of Incorporation of the Company, as amended, and
the Bylaws of the Company, as amended, provide that the Board of Directors
shall consist of such number of directors as shall be fixed from time to time
by resolution of the Board of Directors. At its meeting of February 8, 1999,
the Board of Directors fixed the number of directors constituting the entire
Board at eleven, effective as of the date of the 1999 Annual Meeting.
The Restated Certificate of Incorporation divides the Board into three
classes. Five directors have terms of office that expire at the 1999 Annual
Meeting, and three of the five directors are standing for reelection for a
three-year term as members of the 2002 Class. These are Rozanne L. Ridgway,
Frank Shrontz, and Louis W. Sullivan. Although Allen E. Murray, the fourth
director in the 1999 Class, has reached normal retirement age, the Board has
asked Mr. Murray to serve one more year. As a result of the Board's request,
Mr. Murray is standing for reelection at the 1999 Annual Meeting as a member of
the 2000 Class. Ronald A. Mitsch, the fifth director in the 1999 Class, has
elected to take early retirement and is not standing for reelection at the 1999
Annual Meeting. The four incumbent directors in the 2000 Class are continuing
to serve until the 2000 Annual Meeting. The three incumbent directors in the
2001 Class are continuing to serve until the 2001 Annual Meeting.
All nominees for election to the Board of Directors to the 2002 Class at
the 1999 Annual Meeting will be elected for a term of three years and shall
serve until their terms expire at the 2002 Annual Meeting or until their
successors are duly elected and have been qualified.
The persons named as proxies intend to vote the proxies for the election
of the four nominees to the Board of Directors. If any of the nominees should
be unavailable to serve as a director, an event which is not anticipated, the
persons named as proxies reserve full discretion to vote for any other persons
who may be nominated.
INFORMATION AS TO NOMINEES AND INCUMBENT DIRECTORS
The nominees and incumbent directors, their age, principal occupation or
position with the Company (shown in italics), experience, the year first
elected as a director, and common stock beneficially owned on February 26,
1999, are shown on the following pages.
"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 26, 1999, are
shown separately.
"Shares Held as Deferred Stock" by nonemployee directors represent the
number of shares of the Company's common stock, as of December 31, 1998, 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 otherwise
payable in cash into such deferred stock. 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.
As of February 26, 1999, executive officers and directors as a group
"beneficially owned" 692,124 shares. Executive officers held options
exercisable within 60 days after that date for 1,135,482 shares. All officers
and directors as a group owned beneficially less than one-half of one percent
(0.5%) of the outstanding common stock of the Company.
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 and
Dr. Mitsch who retired on November 1, 1998, no nominee or incumbent director
has been an employee of the Company within the past five years.
During 1998, the Company retained the law firm of Gibson, Dunn & Crutcher
LLP, with regard to various legal matters. Mrs. Peters is a partner in this
firm.
3
<PAGE>
NOMINEES FOR ELECTION TO THE 2002 CLASS:
[PHOTO] ROZANNE L. RIDGWAY, 63, 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 1992 and Co-Chair until 1996 of the Atlantic
Council of the United States, an association to promote better
understanding of major foreign policy issues. She is a director
of Bell Atlantic Corporation, The Boeing Company, Emerson
Electric Co., RJR Nabisco, Sara Lee Corporation, and Union
Carbide Corporation. She is also chair of The Baltic-American
Enterprise Fund.
DIRECTOR SINCE 1989 SHARES HELD..........................1,275
SHARES HELD AS DEFERRED STOCK.......11,867
[PHOTO] FRANK SHRONTZ, 67, CHAIRMAN EMERITUS, THE BOEING COMPANY,
MANUFACTURER AND SELLER OF AIRCRAFT AND RELATED PRODUCTS; MEMBER
OF THE COMPENSATION AND PUBLIC ISSUES COMMITTEES. Mr. Shrontz
joined The Boeing Company in 1958. In 1973, he left Boeing to
serve as Assistant Secretary of the Air Force and became
Assistant Secretary of Defense in 1976. In 1977, Mr. Shrontz
returned to Boeing. After several assignments, he was named
President and a member of the Board of Directors of Boeing in
1985. In 1986, he was named Chief Executive Officer and, in 1988,
Chairman of the Board. Mr. Shrontz retired from Boeing in 1997.
Mr. Shrontz is a director of Boise Cascade Corporation, Chevron
Corporation, and a citizen regent on the Smithsonian
Institution's Board of Regents. He is also a member of The
Business Council.
DIRECTOR SINCE 1992 SHARES HELD..........................3,031
SHARES HELD AS DEFERRED STOCK........5,461
[PHOTO] LOUIS W. SULLIVAN, 65, PRESIDENT, MOREHOUSE SCHOOL OF MEDICINE,
ATLANTA, GEORGIA; MEMBER OF THE AUDIT AND PUBLIC ISSUES
COMMITTEES. Since completion of his medical training, Dr.
Sullivan has held both professional and administrative positions
in health care facilities and medical training institutions. He
joined Morehouse College as Professor of Biology and Medicine in
1975 and was the founding dean and director of the Medical
Education Program at the college. He was named President of
Morehouse School of Medicine in 1981. He served as Secretary,
United States Department of Health and Human Services, from 1989
to 1993. He returned to Morehouse School of Medicine in 1993. Dr.
Sullivan is a director of Bristol-Myers Squibb Company, CIGNA
Corporation, Equifax, Inc., General Motors Corporation,
Georgia-Pacific Corporation, and Household International. He is
also a director of the Boy Scouts of America and a trustee of the
Little League Foundation.
DIRECTOR SINCE 1993 SHARES HELD..........................1,718
SHARES HELD AS DEFERRED STOCK........3,543
4
<PAGE>
NOMINEE FOR ELECTION TO THE 2000 CLASS:
[PHOTO] ALLEN E. MURRAY, 70, RETIRED CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER, MOBIL CORPORATION, PETROLEUM EXPLORATION,
MANUFACTURING AND MARKETING OF PETROLEUM AND PETROLEUM-BASED
PRODUCTS, FAIRFAX, VIRGINIA; MEMBER OF THE COMPENSATION AND
PUBLIC ISSUES COMMITTEES. Mr. Murray has been a director of Mobil
Corporation since 1977. He was Chairman of the Board, President,
and Chief Executive Officer from 1986 until 1993; and Chairman of
the Board and Chief Executive Officer until March 1994. He
retired from Mobil in 1994. He is a director of Metropolitan Life
Insurance Company, Lockheed Martin Corporation, Morgan Stanley
Dean Witter & Co., and St. Francis Hospital Foundation. He is
also an honorary director of the American Petroleum Institute; a
trustee of New York University; and a member of The Business
Council and the Council on Foreign Relations.
DIRECTOR SINCE 1985 SHARES HELD..........................3,065
SHARES HELD AS DEFERRED STOCK.......15,323
INCUMBENT DIRECTORS IN THE 2001 CLASS:
[PHOTO] EDWARD A. BRENNAN, 65, RETIRED CHAIRMAN OF THE BOARD, PRESIDENT,
AND CHIEF EXECUTIVE OFFICER, SEARS, ROEBUCK AND CO., A
DIVERSIFIED COMPANY ENGAGED IN MERCHANDISING, CHICAGO, ILLINOIS;
CHAIRMAN OF THE COMPENSATION COMMITTEE AND MEMBER OF THE BOARD
ORGANIZATION COMMITTEE. Mr. Brennan joined Sears in 1956. He was
an Executive Vice President, 1978 to 1980; President and Chief
Operating Officer for merchandising, 1980; Chairman and Chief
Executive Officer, Sears Merchandise Group, 1981 to 1984;
President and Chief Operating Officer, 1984 through 1985; and was
elected Chairman of the Board and Chief Executive Officer of
Sears, Roebuck and Co. in 1986. Mr. Brennan retired from Sears in
1995. He is a director of The Allstate Corporation, Morgan
Stanley Dean Witter & Co., AMR Corporation, Unicom Corporation,
Dean Foods Company, and The SABRE Group Holdings, Inc. He also is
Chairman of the Board of Trustees of DePaul University and
Chairman of the Board of Trustees of Rush-Presbyterian-St. Luke's
Medical Center, and a member of The Business Council.
DIRECTOR SINCE 1986 SHARES HELD..........................4,817
SHARES HELD AS DEFERRED STOCK........9,713
[PHOTO] LIVIO D. DESIMONE, 62, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER; CHAIRMAN OF THE BOARD ORGANIZATION AND FINANCE
COMMITTEES. Mr. DeSimone joined 3M as a process engineer with 3M
Canada in 1957. He served in various international and subsidiary
capacities until his appointment in 1971 as Managing Director of
3M Brazil. In 1975, he served as General Manager, Building
Service and Cleaning Products Division, before being appointed
Area Vice President, Latin America. Mr. DeSimone was elected Vice
President, Abrasives, Adhesives, Building Service and Chemicals
Group in 1979; Executive Vice President, Life Sciences Sector in
1981; Executive Vice President, Industrial and Consumer Sector in
1984; Executive Vice President, Industrial and Electronic Sector
in 1987; Executive Vice President, Information and Imaging
Technologies Sector in 1989; and Chairman of the Board and Chief
Executive Officer in 1991. He is a director of Cargill,
Incorporated, Dayton Hudson Corporation, General Mills, Inc., and
Vulcan Materials Company. He is also a director of National
Junior Achievement, Inc., a trustee of the University of
Minnesota Foundation, and a member of the Board of Governors of
The Nature Conservancy.
DIRECTOR SINCE 1986 SHARES HELD.......................208,632*
* INCLUDES 59,931 SHARES OF PROFIT SHARING STOCK HELD BY THE
COMPANY AND SUBJECT TO FORFEITURE. NOT INCLUDED ARE OPTIONS
EXERCISABLE WITHIN 60 DAYS: 1,745 SHARES AT $57.27 PER SHARE;
1,586 SHARES AT $63.04 PER SHARE; 70,897 SHARES AT $83.95 PER
SHARE; 122,890 SHARES AT $87.35 PER SHARE; AND 90,000 SHARES AT
$91.70 PER SHARE.
5
<PAGE>
[PHOTO] F. ALAN SMITH, 67, CHAIRMAN OF ADVANCED ACCESSORY SYSTEMS, INC.,
SUPPLIER OF AUTOMOTIVE ACCESSORIES; CHAIRMAN OF MACKIE AUTOMOTIVE
SYSTEMS, AUTOMOTIVE SEQUENCING AND SUB-ASSEMBLY COMPANY; RETIRED
EXECUTIVE VICE PRESIDENT AND DIRECTOR, GENERAL MOTORS
CORPORATION, MANUFACTURER AND SELLER OF AUTOMOBILES AND
AUTOMOTIVE PRODUCTS, DETROIT, MICHIGAN; CHAIRMAN OF THE AUDIT
COMMITTEE AND MEMBER OF THE PUBLIC ISSUES COMMITTEE. Mr. Smith
was a director of General Motors Corporation from 1981 until his
retirement in 1992. He joined General Motors in 1956. He was
Treasurer, 1973 to 1975; Vice President, Finance, 1975 to 1978;
Vice President of General Motors Corporation and President and
General Manager of General Motors of Canada Limited, 1978 to
1981; Executive Vice President, Finance, 1981 to 1988. In 1988,
he was elected Executive Vice President, Operating Staffs and
Public Affairs and Marketing Staffs. He is a director of
TransPro, Inc. and a trustee of the Florida Institute of
Technology.
DIRECTOR SINCE 1986 SHARES HELD..........................5,715
SHARES HELD AS DEFERRED STOCK.......13,481
INCUMBENT DIRECTORS IN THE 2000 CLASS:
[PHOTO] RONALD O. BAUKOL, 61, EXECUTIVE VICE PRESIDENT, INTERNATIONAL
OPERATIONS; MEMBER OF THE FINANCE COMMITTEE. Mr. Baukol joined 3M
as an engineer in the Medical Products Division laboratory in
1966 and served there until 1970, at which time he took leave to
serve as a White House Fellow and later with the Environmental
Protection Agency in Washington, D.C. Upon his return to 3M in
1972, he served in several general management capacities in 3M's
health care businesses until being appointed General Manager of
Riker Laboratories, Inc. in 1982. In 1984, Mr. Baukol was
appointed Vice President and General Manager, Riker Laboratories,
Inc. and in 1986, Chairman and Chief Executive, 3M United Kingdom
PLC. He was elected Group Vice President, Pharmaceutical and
Dental Products Group in 1989; Group Vice President, Medical
Products Group in 1990; Vice President, Asia Pacific in 1991;
Vice President, Asia Pacific, Canada and Latin America in 1994;
and Executive Vice President, International Operations in 1995.
Mr. Baukol is a director of Graco, Inc. and The Toro Company. He
is a trustee of the United States Council for International
Business and a Governor of the Iowa State University Foundation.
DIRECTOR SINCE 1996 SHARES HELD........................43,412*
* INCLUDES 3,526 SHARES OF PROFIT SHARING STOCK HELD BY THE
COMPANY AND SUBJECT TO FORFEITURE. NOT INCLUDED ARE OPTIONS
EXERCISABLE WITHIN 60 DAYS: 1,745 SHARES AT $57.27 PER SHARE;
1,586 SHARES AT $63.04 PER SHARE; 14,304 SHARES AT $83.95 PER
SHARE; 25,316 SHARES AT $87.35 PER SHARE; AND 22,600 SHARES AT
$91.70 PER SHARE.
[PHOTO] EDWARD R. MCCRACKEN, 55, CHAIRMAN OF THE BOARD, THE PRASAD
PROJECT; FORMER CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER, SILICON GRAPHICS, INC., SUPPLIER OF SYSTEMS AND
COMPONENTS FOR HIGH PERFORMANCE COMPUTING SOLUTIONS. MEMBER OF
THE AUDIT AND BOARD ORGANIZATION COMMITTEES. Mr. McCracken was
employed for sixteen years at Hewlett-Packard Company prior to
joining Silicon Graphics, Inc. in 1984 as its President and Chief
Executive Officer. In 1994, he was elected Chairman and Chief
Executive Officer. Mr. McCracken retired from Silicon Graphics,
Inc. in 1998. He is a director of National Semiconductor
Corporation and Tularik, Inc. He is Chairman of PRASAD America, a
charitable foundation; former co-chair of The United States
Advisory Council on the Information Infrastructure and Silicon
Valley Network, Inc.; and a Governor of the Iowa State University
Foundation.
DIRECTOR SINCE 1997 SHARES HELD............................320
SHARES HELD AS DEFERRED STOCK........1,936
6
<PAGE>
[PHOTO] W. GEORGE MEREDITH, 55, EXECUTIVE VICE PRESIDENT, CORPORATE
SERVICES AND SUPPLY CHAIN MANAGEMENT; MEMBER OF THE FINANCE
COMMITTEE. Mr. Meredith joined 3M United Kingdom PLC in 1967 as a
research supervisor and served in several materials control,
distribution, and manufacturing capacities in Europe and the
United Kingdom before being appointed Managing Director, Riker,
United Kingdom, in 1980. In 1983, Mr. Meredith was appointed
Managing Director, 3M Health Care, United Kingdom; in 1986,
General Manager, Riker Laboratories, Inc.; and in 1989, Division
Vice President, Pharmaceuticals Division. He was elected Group
Vice President, Pharmaceutical and Dental Products Group in 1990;
Group Vice President, Pharmaceuticals, Dental and Disposable
Products Group in 1991; and Executive Vice President, Life
Sciences Sector and Corporate Services in 1995. Mr. Meredith is a
trustee of Battelle Memorial Institute.
DIRECTOR SINCE 1996 SHARES HELD........................34,279*
* INCLUDES 2,315 SHARES OF PROFIT SHARING STOCK HELD BY THE
COMPANY AND SUBJECT TO FORFEITURE. NOT INCLUDED ARE OPTIONS
EXERCISABLE WITHIN 60 DAYS: 2,073 SHARES AT $48.24 PER SHARE;
1,837 SHARES AT $54.41 PER SHARE; 1,745 SHARES AT $57.27 PER
SHARE; 12,259 SHARES AT $63.04 PER SHARE; 6,532 SHARES AT
$65.77 PER SHARE; 9,229 SHARES AT $83.95 PER SHARE; 16,401
SHARES AT $87.35 PER SHARE; AND 22,600 SHARES AT $91.70 PER
SHARE.
[PHOTO] AULANA L. PETERS, 57, PARTNER, GIBSON, DUNN & CRUTCHER LLP, A LAW
FIRM, LOS ANGELES, CALIFORNIA; MEMBER OF THE AUDIT AND BOARD
ORGANIZATION COMMITTEES. Mrs. Peters joined Gibson, Dunn &
Crutcher as an Associate in 1973. In 1980, she was named a
Partner in the firm and continued in the practice of law until
1984, when she accepted an appointment as Commissioner of the
Securities and Exchange Commission. In 1988, after serving four
years as Commissioner, she returned to the private practice of
law as Partner in the Gibson, Dunn & Crutcher firm. Mrs. Peters
is a member of the American and Los Angeles County Bar
Associations, the Regulatory Advisory Committee of the New York
Stock Exchange, and the Legal Advisory Panel for the National
Association of Securities Dealers. She is also a director of
Merrill Lynch & Co., Inc., Mobil Corporation, Northrop Grumman
Corp., and Callaway Golf Company.
DIRECTOR SINCE 1990 SHARES HELD............................865
SHARES HELD AS DEFERRED STOCK........9,732
DIRECTORS' COMPENSATION
Directors who are not employed by the Company received in 1998 an annual
fee of $70,000 and Messrs. Brennan and Smith received additional fees of $5,500
per year for serving as Committee chairs. Nonemployee directors are paid $1,800
for attendance at meetings of the Board of Directors and $1,200 for attendance
at meetings of Committees of the Board. No directors' fees are paid to
directors who were also employees of the Company.
Pursuant to the terms of the Company's 1992 Directors Stock Ownership
Program, nonemployee directors received $45,000 of the total annual retainer of
$70,000 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 director
biographical materials on pages 4 through 7.
7
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
During 1998, the Board of Directors met six times and various Committees
of the Board met as indicated below. The Audit, Compensation, Board
Organization, and Public Issues Committees are standing Committees of the
Board. Each director attended all of the Board meetings and the meetings of
Board Committees on which the director served.
AUDIT COMMITTEE
Members: F. Alan Smith (Chair), Edward R. McCracken, Aulana L. Peters, and
Dr. Louis W. Sullivan.
Number of meetings in 1998: Four.
Functions:
* Oversees internal controls, audits, and financial reporting;
* Recommends the appointment of independent auditors, subject to
stockholder approval, and oversees their independence;
* Consults with the independent auditors, reviews and approves the
scope of the annual audit, including fees and staffing, and
approves nonaudit services provided by the auditors;
* Reviews findings and recommendations of the independent auditors
and management's response; and
* Reviews compliance with the Company's ethical business practices
policy.
COMPENSATION COMMITTEE
Members: Edward A. Brennan (Chair), Allen E. Murray, Rozanne L. Ridgway,
and Frank Shrontz.
Number of meetings in 1998: Four.
Functions:
* Reviews compensation policies of the Company to ensure they
provide appropriate motivation for corporate performance and
increased shareholder value; and
* Determines compensation policy for executive officers and
approves compensation changes for senior executive officers, and
administers management stock option plans and performance based
executive compensation plans.
BOARD ORGANIZATION COMMITTEE
Members: Livio D. DeSimone (Chair), Edward A. Brennan, Edward R.
McCracken, Aulana L. Peters, and Rozanne L. Ridgway.
Number of meetings in 1998: Three.
Functions:
* Selects and recommends candidates to the Board of Directors to be
submitted for election at the Annual Meeting. The Board of
Directors has adopted criteria with respect to its membership and
the Committee will consider candidates recommended by
stockholders or others in light of these criteria. Subject to the
notice requirements in the Bylaws, a stockholder may submit the
name of a proposed nominee by writing to the Office of the
Secretary, Minnesota Mining and Manufacturing Company, 3M Center,
St. Paul, Minnesota 55144;
8
<PAGE>
* Reviews and makes recommendations to the Board of Directors
concerning the composition and size of the Board and its
Committees, frequency of meetings, directors' fees, and similar
subjects;
* Reviews and makes recommendations concerning retirement and
tenure policy for Board membership, recommends proxies for
meetings at which directors are elected, audits programs for
senior management succession; and
* Deals with corporate governance issues.
PUBLIC ISSUES COMMITTEE
Members: Dr. Ronald A. Mitsch (Chair), Allen E. Murray, Frank Shrontz,
F. Alan Smith, and Dr. Louis W. Sullivan.
Number of meetings in 1998: 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 to its businesses, including
activities related to the improvement of the environment and
community relations.
INFORMATION AS TO EXECUTIVE OFFICERS
On the same basis as the "shares held" information provided on the
previous pages for nominees and incumbent directors, the following represents
shares of the Company's common stock held by the six executive officers named
in the Summary Compensation Table on page 14. Options exercisable within 60
days after February 26, 1999, are shown separately.
- --------------------------------------------------------------------------------
OPTIONS
NAME AND PRINCIPAL POSITION SHARES HELD (1) EXERCISABLE (2)
--------------------------- --------------- ---------------
Livio D. DeSimone,
Chairman of the Board and
Chief Executive Officer 208,632 287,118
Ronald A. Mitsch,
Vice Chairman of the Board and
Executive Vice President
(Retired effective November 1, 1998) 63,336 223,998
Ronald O. Baukol,
Executive Vice President 43,412 65,551
Giulio Agostini,
Senior Vice President 30,401 86,037
W. George Meredith,
Executive Vice President 34,279 72,676
Charles E. Kiester,
Senior Vice President 38,629 65,956
- --------------------------------------------------------------------------------
(1) 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 15 of this proxy statement.
(2) Option prices for these shares range from $42.50 to $93.35 per share.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report was prepared at the direction of the Compensation Committee of
the Board of Directors (the "Committee"), which is composed entirely of
nonemployee directors of the Company. The Committee establishes and
periodically reviews compensation levels and policies for the Chief Executive
Officer ("CEO") and other executive officers and authorizes short-term and
long-term compensation in the form of cash or stock. The current members of the
Committee are Edward A. Brennan, who serves as Chairman, Allen E. Murray,
Rozanne L. Ridgway, and Frank Shrontz.
COMPENSATION OBJECTIVES
The executive compensation program is designed to align total compensation
with the Company's strategic objectives and ensure that payouts are driven by
Company performance and employee contribution to the Company. Executive
compensation is linked to Company performance compared to specific financial
and non-financial 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 Company, 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 21 of this proxy
statement.
The Committee does not target any specific quartile of the survey data for
total compensation or any component of total compensation (e.g., base salary,
profit sharing, performance unit plan, or stock options). The Committee's
objective of maintaining the total compensation at a competitive level has
resulted in short-term compensation (base salary and profit sharing cash) and
long-term compensation (performance unit plan, profit sharing stock, and stock
options) being at or very close to the median.
After the Committee has established the amount of total compensation for
the CEO and other executive officers, the Committee next determines what
percent of the total compensation should be allocated to short-term
compensation in the form of base salary and profit sharing cash and long-term
compensation in the form of the performance unit plan, profit sharing stock,
and stock options. This determination is subjective, but is based on
information from the compensation surveys and the objectives for executive
compensation referred to above. It is the Committee's long-standing policy that
variable, at-risk compensation, both short-term and long-term, should make up a
significant portion of executive compensation. Depending upon the level of the
executive, the Committee targets between 65 percent and 85 percent of executive
compensation to be variable and at risk by being tied to quantifiable measures
of the Company's performance.
10
<PAGE>
ELEMENTS OF THE COMPENSATION PROGRAM
Each of the components of short-term and long-term executive compensation
is described in greater detail below.
BASE SALARY
The Committee establishes base salaries annually in relation to base
salaries paid by the selected companies from the compensation surveys. Base
salaries may be adjusted from time to time according to guidelines established
for all employees to reflect increased salary levels within the group,
increased responsibilities, or individual performance. This is the only
component of executive compensation that is not variable.
PROFIT SHARING
Profit sharing is variable compensation based on quarterly performance
measurements for the Company and is used to focus management attention on
profits and the effective use of assets. The Committee, as part of the overall
compensation, determines the number of profit sharing units 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 with respect to each profit sharing unit has in the
past been determined by dividing the Company's consolidated quarterly net
income, less a quarterly reserve of two and one-half percent of stockholders'
equity (or ten percent on an annual basis), by the number of outstanding shares
of the Company's common stock. No amount would be payable under the profit
sharing plan if the Company's quarterly net income had been equal to or less
than the quarterly reserve of two and one-half percent return on stockholders'
equity. Profit sharing payments are subject to limitations when individual
amounts exceed specified relationships to base salary.
The Compensation Committee has approved changes to the performance
criteria used to determine variable compensation under the profit sharing plan
in effect for approximately 15,300 employees of the Company in the United
States. The basic change is to replace the quarterly consolidated net income
measurement described above with economic profit. Economic profit is defined as
quarterly net operating income minus a capital charge and emphasizes the
effective use of working capital. Economic profit is generally accepted as a
measurement that relates more directly to the creation of stockholder value. As
the economic profit measurement will be more sensitive to performance of the
Company, it is expected that compensation paid under the new measurement will
tend to rise and fall relatively more sharply than payments under prior
measurement criteria. Although already in effect with regard to approximately
15,300 employees of the Company, requirements of the Internal Revenue Code of
1986, as amended, dictate that these same changes to the Executive Profit
Sharing Plan must be first approved by the Company's stockholders. This matter
is being presented to stockholders for their approval at the 1999 Annual
Meeting (see Item 3 on page 22).
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 1998 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 14 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).
11
<PAGE>
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 1998
is linked to the performance criteria of Real Growth and Economic Profit. The
payout can vary from $0 to $200 per unit. The payout can be reached by either
performance criteria alone, or by both in combination. The payout for the 1998
Award is payable on May 1, 2001, 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 Amended Performance Unit
Plan if the Company's Real Growth is less than the Big 7 IPI and if Economic
Profit is less than 75 percent of the Economic Profit of the previous three
years.
STOCK OPTIONS
The Company's Stock Option plan is also variable compensation. It is based
on the market appreciation of the Company's common stock and is designed to
increase ownership of the Company's stock. The Company makes stock option
grants annually at 100 percent of the market price on the date of grant. The
options may be exercised after one year and have a ten-year life. The number of
shares under options to be granted to the CEO and executive officers is
determined by the Committee as part of the overall compensation. The awards are
designed to keep total compensation competitive with awards made by 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. Indeed, the options granted during 1998 to the executive officers
named in the Summary Compensation Table on page 14 have been adversely affected
by the market value of the Company's common stock. The stock closed on December
31, 1998, at $71.125 per share. As shown in the Option Grants table on page 17,
the options granted during 1998 to these executive officers ranged from $93.35
per share for the annual grant to $87.35 for grants of Progressive Stock
Options (as explained in footnote 1 on page 17).
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of Livio D. DeSimone, Chairman of the Board and Chief
Executive Officer, is determined by the same process and consists of the same
short-term and long-term components as for the other executive officers listed
in the Summary Compensation Table, namely base salary, profit sharing,
performance unit plan, and stock options. A higher portion of Mr. DeSimone's
total compensation is variable and at risk by being tied to quantifiable
measures of the Company's performance. These measures are quarterly net income,
Real Growth and Economic Profit, as those terms are defined above, and
appreciation in the value of 3M stock.
In addition, the compensation paid to Mr. DeSimone is also based on
performance against non-financial measures. These non-financial 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.
12
<PAGE>
No changes have been made to the fixed base salary portion of Mr.
DeSimone's compensation since January 1997. In November 1997, the Committee
afforded Mr. DeSimone the opportunity to receive an increase in total
compensation based on short-term performance of the Company by increasing the
units of cash profit sharing participation, effective January 1, 1998. Thus,
although per unit payments were less in 1998 than in 1997, the aggregate amount
of the profit sharing cash set forth in the Summary Compensation Table for 1998
did increase over the amount earned in 1997. All other forms of variable,
performance-based compensation granted to Mr. DeSimone paid less in 1998 than
in 1997, based on the Company's performance.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code limits the Company's ability
to deduct, for federal income tax purposes, certain compensation in excess of
$1 million per year paid to persons named in the Summary Compensation Table.
The Committee intends to ensure that all compensation paid to the executive
officers named in the Summary Compensation Table continues to meet the
deductibility requirements of Section 162(m) to the extent that such
requirements do not compromise the Company's ability to design effective
compensation plans that meet the Company's executive compensation objectives
described above.
CONCLUSION
The Committee is satisfied that the short-term and long-term compensation
paid to the executive officers of the Company create alignment with the
Company's strategic objectives and ensure that payouts are driven by Company
performance and employee contribution to the Company.
The Compensation Committee
Edward A. Brennan, Chair
Allen E. Murray
Rozanne L. Ridgway
Frank Shrontz
13
<PAGE>
EXECUTIVE COMPENSATION
The following table shows compensation for services rendered in all
capacities to the Company and its subsidiaries during 1998, 1997, and 1996 by
the Chief Executive Officer and the next five highest-paid executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION (1)
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- ---------------------------- -----------
PERFORMANCE
PROFIT PROFIT SHARING OPTIONS UNIT PLAN
SHARING OTHER ANNUAL STOCK (RESTRICTED GRANTED (LTIP) ALL OTHER
SALARY CASH (BONUS) COMPENSATION STOCK AWARDS) NUMBER OF PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(4) ($)(2)(3) SHARES(5) ($)(6) ($)(7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Livio D. DeSimone, 1998 $1,047,600 $669,341 $60,533 $547,268 212,890 $752,400 $155,518
------------------------------------------------------------------------------------------------------
Chairman of the Board and 1997 1,047,600 551,270 95,298 574,799 160,897 777,700 162,429
------------------------------------------------------------------------------------------------------
Chief Executive Officer 1996 971,100 502,594 59,224 524,047 131,384 694,540 137,068
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald A. Mitsch,* 1998 575,250 295,555 63,089 162,394 71,693 459,800 85,239
------------------------------------------------------------------------------------------------------
Vice Chairman of the Board 1997 619,200 362,551 59,692 199,283 72,502 373,700 91,189
------------------------------------------------------------------------------------------------------
and Executive Vice President 1996 552,000 330,539 52,671 181,687 60,414 333,740 79,418
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald O. Baukol, 1998 521,700 299,466 -- 91,440 47,916 309,320 36,105
------------------------------------------------------------------------------------------------------
Executive Vice President 1997 468,900 314,531 50,548 96,040 37,662 95,950 41,718
------------------------------------------------------------------------------------------------------
1996 419,400 227,656 -- 77,710 39,377 85,690 41,970
- ------------------------------------------------------------------------------------------------------------------------------------
Giulio Agostini, 1998 518,400 288,608 -- 141,046 32,889 200,640 54,054
------------------------------------------------------------------------------------------------------
Senior Vice President 1997 398,400 303,126 67,221 148,142 15,000 242,400 54,056
------------------------------------------------------------------------------------------------------
1996 396,200 276,361 -- 96,316 21,888 216,480 37,236
- ------------------------------------------------------------------------------------------------------------------------------------
W. George Meredith, 1998 480,000 298,780 -- 68,580 39,001 309,320 51,976
------------------------------------------------------------------------------------------------------
Executive Vice President 1997 438,600 313,811 -- 72,030 31,829 373,700 36,193
------------------------------------------------------------------------------------------------------
1996 403,150 224,373 -- 38,308 30,051 85,690 36,196
- ------------------------------------------------------------------------------------------------------------------------------------
Charles E. Kiester, 1998 426,900 223,171 -- 57,150 40,970 200,640 45,217
------------------------------------------------------------------------------------------------------
Senior Vice President 1997 358,865 234,398 -- 60,025 28,779 161,600 45,605
------------------------------------------------------------------------------------------------------
1996 326,347 213,701 -- 54,725 29,991 144,320 35,357
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*(Retired effective November 1, 1998)
(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 earnings per share. 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 15).
The Company's Profit Sharing Plan provides for quarterly payments based
upon net income after deducting an allowance for a predetermined ten percent
annual rate of return on stockholder equity and is determined by multiplying the
number of profit sharing units awarded to an individual by this quarterly net
income, after deduction, divided by the number of the outstanding shares of the
Company's common stock.
14
<PAGE>
Because of the required minimum return on stockholder equity, profit
sharing tends to rise and fall relatively more sharply than changes in net
income.
The number of profit sharing units awarded to the individuals named is
determined by the Compensation Committee and is intended to reflect the level of
responsibility of the respective individual. Profit-sharing payments are subject
to limitations when individual amounts exceed specified relationships to base
salary. Approximately 15,300 employees currently participate in profit sharing,
including the six 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 net
income 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 1998,
the Company distributed a portion of these shares to Messrs. DeSimone, Mitsch,
Agostini, Meredith, Baukol, and Kiester.
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, 1998, in one
case over ten years, the following shares of the Company's common stock under
the Company's Profit Sharing Plan. The Profit Sharing Stock is valued in this
table at the fair market value of such stock on December 31, 1998, and also on
the respective dates when the shares were issued into the custody of the
Company:
- --------------------------------------------------------------------------------
VALUE VALUE
NAME SHARES AT 12/31/98 WHEN ISSUED
- ---- -------- ------------- -----------
L.D. DeSimone ......................... 59,931 $4,262,592 $3,514,449
R.A. Mitsch ........................... 10,713 761,962 760,103
R.O. Baukol ........................... 3,526 250,787 279,335
G. Agostini ........................... 6,907 491,260 501,459
W.G. Meredith ......................... 2,315 164,654 186,336
C.E. Kiester .......................... 2,646 188,197 200,197
- --------------------------------------------------------------------------------
(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 1998, 1997, and 1996 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 17. The number
and price of all outstanding options were adjusted at the spin-off of Imation
Corp. in order to preserve the intrinsic value of the options. The number of
stock options shown in this column for 1998 reflects this adjustment.
15
<PAGE>
(6) "Performance Unit Plan (LTIP) Payouts" reflects the value of the total
grant for each individual under the Company's Performance Unit Plan after the
three-year performance period (e.g., the payout earned in 1998 covers the
performance period from 1996-1998). Under the 1998 award, the payout will be
paid to these individuals in 2001, unless the participant elects to defer the
payout for three additional years. The numbers shown represent estimates based
upon information available as of February 26, 1999. More specific information
about the Performance Unit Plan is set forth on pages 11 and 19.
(7) "All Other Compensation" includes: (a) that amount of Performance Unit Plan
earnings allocated during the year to the base amounts determined after the
three-year performance periods of each respective grant, to the extent that
such earnings are in excess of market interest rates (as determined by the
SEC); (b) that amount deemed to be compensation to the individuals under the
Company's Senior Executive Split Dollar Plan in accordance with rules developed
by the SEC; and (c) all amounts contributed to the account of each named
executive under the Company's 401(k) plan. The Senior Executive Split Dollar
Plan provides insurance to all of the Company's executive officers under split
dollar life insurance, which is partly term insurance and partly whole life
insurance with a cash value. Under this Plan, the Company is reimbursed for the
premium costs of the non-term portion of coverage and a possible return when
the arrangement terminates either by insurance proceeds incident to the death
of the individual or by cash value after 15 years of participation in the Plan.
During 1998, amounts deemed compensation under the Plan to the named executive
officers in the Summary Compensation Table were $6,682 for Mr. DeSimone;
$11,276 for Dr. Mitsch; $13,616 for Mr. Baukol; $8,374 for Mr. Agostini;
$12,905 for Mr. Meredith; and $14,873 for Mr. Kiester. These amounts were
determined by treating the non-term portion of the coverage as an interest-free
loan.
16
<PAGE>
STOCK OPTIONS TABLE
The following table shows specified information with respect to option
grants during 1998 for each person named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------------
% OF TOTAL GRANT DATE
OPTIONS/SARs VALUE
OPTIONS/ GRANTED EXERCISE OR ---------------------
SARs TO EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED (#) (1) FISCAL YEAR ($/Sh) (1) (2) DATE PRESENT VALUE ($) (4)
---- --------------- --------------- -------------- ---------- ---------------------
<S> <C> <C> <C> <C> <C>
L.D. DeSimone 90,000 1.533% $ 93.35 5-12-2008 $ 1,836,900
34,089 0.580% 87.35 5-09-2003 463,270
58,126 0.990% 87.35 5-06-2005 789,932
30,675 0.522% 87.35 5-12-2006 416,873
R.A. Mitsch 50,000 0.851% 93.35 5-12-2008 1,020,500
1,267 0.022% 87.35 5-07-1999 17,219
5,296 0.090% 87.35 5-11-2001 71,973
15,130 0.258% 87.35 5-09-2003 205,617
R.O. Baukol 22,600 0.385% 93.35 5-12-2008 461,266
149 0.003% 87.35 5-07-1999 2,025
4,562 0.078% 87.35 5-05-2000 61,998
5,314 0.090% 87.35 5-11-2001 72,217
1,213 0.021% 87.35 5-10-2002 16,485
14,078 0.240% 87.35 5-06-2005 191,320
G. Agostini 22,600 0.385% 93.35 5-12-2008 461,266
2,978 0.051% 93.35 5-10-2002 60,781
7,311 0.124% 93.35 5-07-2004 149,218
W.G. Meredith 22,600 0.385% 93.35 5-12-2008 461,266
458 0.008% 87.35 5-05-2000 6,224
4,107 0.070% 87.35 5-11-2001 55,814
6,608 0.113% 87.35 5-09-2003 89,803
5,228 0.089% 87.35 5-06-2005 71,049
C.E. Kiester 15,000 0.255% 93.35 5-12-2008 306,150
1,239 0.021% 87.35 5-07-1999 16,838
891 0.015% 87.35 5-05-2000 12,109
391 0.007% 87.35 5-10-2002 5,314
2,420 0.041% 87.35 5-09-2003 32,888
8,902 0.152% 87.35 5-06-2005 120,978
12,127 0.207% 87.35 5-12-2006 164,806
- --------------------------------------------------------------------------------------------------------------------
All Optionees
(10,594 Participants) 5,872,537 100.000% 92.78 5-12-2008(3) $115,300,097
- --------------------------------------------------------------------------------------------------------------------
</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 ("PSO"). Nonqualified options are
subject to a reload feature when exercised with the payment of the option price
in the form of previously owned shares of the Company's common stock. Such an
exercise results in further grants of PSOs. The first grant shown for each
individual is the annual grant. The remaining lines are PSOs. The PSO grants
for each individual were made on a single date, but are, pursuant to SEC rules,
shown in multiple lines because of different expiration dates.
PSO grants were made to participants who exercised nonqualified stock
options and who paid the purchase price using shares of previously owned
Company common stock. The PSO grant is for the number of shares equal to the
shares utilized in payment of the purchase price and tax withholding, if any.
The option price for the PSO is equal to 100 percent of the market value of the
Company's common stock on the date of the exercise of the primary option or,
alternatively, on the date of the PSO
17
<PAGE>
grant to the six 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 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 Progressive Stock Options, 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 $92.78
and represents the weighted average exercise price of the options granted in
1998.
(3) The expiration date for the "All Optionees" line is shown as May 12, 2008,
since that is the applicable date for the vast majority of options granted
during 1998.
(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 69 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 17.6 percent (24 percent for PSOs); (iii) risk-free rate of
return of 5.7 percent (5.1 percent for PSOs); and (iv) dividend growth rate of
5.8 percent. No adjustments for non-transferability or risk of forfeiture have
been made. The Company expresses no opinion that the present value will, in
fact, be realized and expressly disclaims any representation to that effect.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table shows specified information with respect to option
exercises during 1998 and the value of unexercised options at the end of 1998
for each person named in the Summary Compensation Table.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
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
---- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L.D. DeSimone 160,056 $4,629,777 363,835 90,000 $504,341 $0
R.A. Mitsch 35,201 1,123,036 233,411 0 911,256 0
R.O. Baukol 38,667 1,168,755 99,389 22,600 266,714 0
G. Agostini 22,305 1,126,413 86,037 22,600 737,159 0
W.G. Meredith 25,102 768,864 100,517 22,600 569,872 0
C.E. Kiester 30,793 741,263 76,251 15,000 282,230 0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The "Value Realized" or the unrealized "Value of Unexercised In-the-Money
Options at FY-End" represents the aggregate difference between the market value
on the date of exercise or at December 31, 1998, in the case of the unrealized
values, and the applicable exercise prices. These
18
<PAGE>
differences accumulate over what may be, in many cases, several years. These
stock options all have option periods of ten years when first granted, and
Progressive Stock Options have option periods equal to the remaining option
period of the initial nonqualified options resulting in Progressive Stock
Options.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table shows specified information with respect to awards
during 1998 under the Company's Performance Unit Plan for each person in the
Summary Compensation Table.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE OR UNDER NON-STOCK PRICE BASED
SHARES, UNITS OTHER PERIOD PLANS (3)
OR OTHER UNTIL MATURATION ---------------------------
NAME RIGHTS (#)(1) OR PAYOUT (2) THRESHOLD ($) TARGET ($) MAXIMUM ($)
---- ------------- ---------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
L.D. DeSimone 9,000 3 years $0 $900,000 $1,800,000
R.A. Mitsch 5,500 3 years 0 550,000 1,100,000
R.O. Baukol 3,700 3 years 0 370,000 740,000
G. Agostini 2,400 3 years 0 240,000 480,000
W.G. Meredith 3,700 3 years 0 370,000 740,000
C.E. Kiester 2,400 3 years 0 240,000 480,000
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company's Performance Unit Plan provides long-term compensation to 94
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 1998 under the Amended 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 Amended 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 Compensation Committee
Report on page 11.
Payment is contingent upon continued employment to the payment date or
earlier retirement under the Company's pension plan. Participants receiving
awards during 1998, including the six executive officers in the Summary
Compensation Table, will receive payment in 2001, 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 1998 will be determined by the Company's
attainment of Real Growth and Economic Profit performance criteria during a
three-year performance period of 1998, 1999, and 2000. More detail about
current performance goals is available in the Compensation Committee Report on
page 11. At the beginning of every performance period, participants may elect
to defer the payout for three years (for the 1998 award, the payout will be
made the beginning of 2003). 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.
19
<PAGE>
(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
1997, that rate was 6.2 percent) plus an amount based on the Company's Economic
Profit for the preceding year as a percentage of the average operating capital
(for 1997, that rate was 6.6 percent). The interest would be payable, together
with the base award, in 2003.
PENSION PLAN TABLE
The following table shows estimated annual benefits payable to the
Company's executive officers upon retirement 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 $ 356,529 $ 415,950 $ 461,950 $ 507,950
1,200,000 536,529 625,950 694,950 763,950
1,600,000 716,529 835,950 927,950 1,019,950
2,000,000 896,529 1,045,950 1,160,950 1,275,950
2,400,000 1,076,529 1,255,950 1,393,950 1,531,950
- -------------------------------------------------------------------------------
(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 six individuals listed in
the Summary Compensation Table are presently entitled to the respective years
of service credit set opposite their names:
- --------------------------------------------------------------------------------
L.D. DeSimone .................................... 42
R.A. Mitsch (retired November 1, 1998) ........... 38
R.O. Baukol ...................................... 32
G. Agostini ...................................... 33
W.G. Meredith .................................... 31
C.E. Kiester ..................................... 37
- --------------------------------------------------------------------------------
20
<PAGE>
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, 1998, 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, 1993 (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, 1998.
*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]
<TABLE>
<CAPTION>
Cumulative Return (per graph)
- -----------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
3M 100.0 101.5 130.3 175.3 177.5 158.2
DJIA 100.0 105.1 143.7 185.2 231.3 273.2
S&P 500 100.0 101.4 139.3 171.2 228.3 293.4
Annualized Return
- -----------------
3M 11.5% 1.5% 28.3% 34.5% 1.2% -10.9%
DJIA 16.9% 5.1% 36.7% 28.9% 24.9% 18.1%
S&P 500 10.0% 1.4% 37.4% 22.9% 33.3% 28.5%
</TABLE>
21
<PAGE>
TRANSACTIONS WITH MANAGEMENT
During 1998, ten executive officers had loans outstanding with the Eastern
Heights Bank, a subsidiary of the Company. These loans were made in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons of comparable circumstances and did not involve
more than normal risk of collectibility or present other unfavorable features.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require disclosure of
late Section 16 filings by 3M directors and executive officers. Company staff
responsible for Section 16 reporting was one week late in filing Form 4 for
transactions by Messrs. Baukol, Kiester, Meredith, and Mitsch in which
previously owned stock was used as the method of paying for the exercise of
options under the Management Stock Ownership Program.
ITEM 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 1999. In accordance with the Bylaws of the Company, this appointment is
being presented to the stockholders for ratification. If the stockholders do
not ratify the selection of PricewaterhouseCoopers LLP, the Board of Directors
will reconsider the selection.
PricewaterhouseCoopers LLP (and its predecessor firm Coopers & Lybrand
L.L.P.) 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 1998
included: audit of consolidated financial statements of the Company and its
subsidiaries; limited reviews of interim reports; reviews of filings with the
Securities and Exchange Commission; consultations on matters related to
accounting and financial reporting; audits of statutory financial statements
for certain foreign subsidiaries; and audits of the financial statements of the
Company's benefit plans.
PricewaterhouseCoopers LLP also provided a number of nonaudit services
during 1998, all of which were approved or reviewed by the Audit Committee.
A representative of PricewaterhouseCoopers LLP is expected to be present
at the stockholders meeting and available to respond to appropriate questions
and will be given an opportunity to make a statement, if the representative
chooses to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT AUDITORS, TO AUDIT THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR 1999. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE VOTED "FOR" RATIFICATION UNLESS A CONTRARY VOTE
IS SPECIFIED.
ITEM 3. PROPOSED EXECUTIVE PROFIT SHARING PLAN
The Executive Profit Sharing Plan has been the Company's basic
performance-based compensation plan since 1956. The Plan was last submitted to
stockholders at the Company's 1994 Annual Meeting and was approved by the
stockholders. The Compensation Committee proposes to change the performance
criteria from consolidated net income to economic profit. Economic profit is
defined as quarterly net operating income minus a capital charge and emphasizes
the effective use of working capital. The economic profit measurement is deemed
by the Committee to be related more directly to the creation of stockholder
value and will be more sensitive to performance of the Company. Thus, it is
expected that compensation paid under the new measurement will tend to rise and
fall relatively more sharply than payments under prior measurement criteria.
Although these changes to the performance criteria are already in effect under
the profit sharing plan for approximately 15,300 employees of the company in
the United States, the Executive Profit Sharing Plan is being submitted for
stockholder approval in order to maximize deductibility of compensation paid
under the Plan, pursuant to Section 162(m) of the Internal Revenue Code of
1986, as amended.
22
<PAGE>
Current payments under the existing profit sharing plan to the six most
highly compensated employees of the Company are set forth in the Summary
Compensation Table on page 14, under the columns captioned "Profit Sharing Cash
(Bonus)" and "Profit Sharing Stock (Restricted Stock Awards)." More detail
about the existing plan is provided in footnotes 2 and 3 on pages 14-15.
OBJECTIVE: The objective of the proposed plan is to provide a mechanism
whereby the most highly compensated employees will have a significant portion
of their total compensation measured by the quarterly economic profit of the
Company, and thus be motivated by the opportunity of the Company's overall
growth and success.
PARTICIPATION AND ELIGIBILITY: Such executive officers of the Company as
determined by the Compensation Committee of the Board will be eligible to
receive payments hereunder. It is anticipated that this would include the six
executive officers named in the Summary Compensation Table, except Dr. Mitsch
who retired from the Company on November 1, 1998.
MANNER OF PAYMENT: Payment will be made on a quarterly basis in cash,
common stock, or a combination of cash and stock as determined by the
Compensation Committee of the Board. If payable in shares of the Company's
common stock, the shares of Profit Sharing Stock will be issued and granted
under the Company's 1997 Management Stock Ownership Program which was approved
by the Company's stockholders in 1997, or a similar successor plan approved by
stockholders.
QUARTERLY GROSS PROFIT SHARING AMOUNT: The Compensation Committee, or a
subcommittee comprised of at least two of its members, will determine the
manner and method of determining the conversion of short-term performance by
the Company into compensation to be paid to participants, with the
understanding that such compensation shall be based upon the number of shares
of profit sharing assigned to a participant, multiplied by the Quarterly Profit
Sharing Earnings Per Share, as defined in the Plan set forth in Exhibit A.
DATE OF PAYMENT: Payment of cash amounts to participants will be made
within 60 days after the close of each calendar and fiscal quarter. Shares of
Profit Sharing Stock may be restricted by action of the Compensation Committee
and held for several years before payment.
MAXIMUM PAYMENTS: The total paid under the Plan for the Company's five
most highly compensated executive officers will never exceed one-half percent
(0.5%) of the consolidated net income of the Company for any respective period,
and no individual participant will ever receive more than one-third (33 1/3%)
of this total Plan limit.
TAXES: All cash compensation received by participants under the Plan will
constitute ordinary income in the year in which it is received. Profit Sharing
Stock placed into the Company's custody as Restricted Stock will not result in
the recognition of any income or gain until released from custody and delivered
to the executive management participant. Dividends paid on Profit Sharing Stock
during Company custody will, however, be taxed as ordinary income in the year
received.
ADMINISTRATION: The Plan will be administered by the Compensation
Committee appointed by the Board of Directors from its outside directors, none
of whom is eligible for participation. The Committee is empowered to adopt
rules and regulations concerning the administration and interpretation of the
Plan, but the Committee will have no discretion with regard to the basic
criteria for determination of the Quarterly Gross Profit Sharing Amounts
discussed above and may not, in any event, alter the units or the amount
payable under the Quarterly Profit Sharing Earnings Per Share formula after the
commencement of a quarterly performance period.
PLAN AMENDMENT: The Board of Directors may at any time terminate or amend
the Plan, except that no amendment shall be made without prior approval of the
Company's stockholders which would (i) materially alter the method for
determination of the Quarterly Profit Sharing Earnings Per Share, or (ii)
materially alter the maximum limits for individual participants.
PLAN DURATION: The Plan is intended to be indefinite in duration, but may
be amended or terminated at any time by the Board of Directors, subject to the
above stated conditions. The Plan shall continue until so terminated.
23
<PAGE>
EFFECT OF VOTE: A favorable vote by the holders of a majority of the
Company's common stock present, or represented, and voting at the Annual
Meeting, at which a quorum is present is required to approve the Plan. In the
event that the Plan does not receive favorable majority vote, the result will
be that the short-term performance compensation presently paid to these most
highly compensated employees will not be deductible for federal income tax
purposes by the Company, to the extent that it, together with other nonexempt
compensation exceeds the amount provided by the statute. At that point, the
Compensation Committee or the Board as a whole may elect to forego the
deductibility or to restructure the compensation packages of these individuals
to attempt to maximize deductibility of the compensation paid to these most
highly compensated employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
EXECUTIVE PROFIT SHARING PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE VOTED "FOR" THIS PROPOSAL UNLESS A CONTRARY VOTE IS SPECIFIED.
OTHER MATTERS
The enclosed proxy confers upon the person or persons entitled to vote the
shares represented thereby discretionary authority to vote such shares in
accordance with their best judgment with respect to all matters which may
properly come before the meeting in addition to the scheduled items of
business. It is intended that proxies solicited by the Board of Directors,
unless otherwise specified therein, will be voted in accordance with the
recommendations of the Board of Directors.
The Management knows of no other matters that may properly be presented at
the Annual Meeting, but if other matters do properly come before the meeting,
it is intended that the persons named in the proxy will vote according to their
best judgment.
Stockholders are encouraged to vote their proxy via the Internet or by
telephone as described in the enclosed voting instructions or date, sign, and
return the enclosed proxy in the enclosed envelope, to which no postage need be
affixed if mailed in the United States. If you attend the Annual Meeting, you
may revoke your proxy at that time and vote in person if you desire; otherwise,
your proxy will be voted for you.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal submitted for inclusion in the Company's proxy statement and
form of proxy under Rule 14a-8 under the Securities Exchange Act of 1934 for
the 2000 Annual Meeting of Stockholders must be received no later than 5 p.m.
Central Time on November 26, 1999. 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.
Under the Company's Bylaws, if a shareholder wishes to nominate a director
or bring other business before the shareholders at the annual meeting, (i) the
shareholder's written notice must be received by the Secretary between January
12, 2000, and February 11, 2000, and (ii) the notice must contain the specific
information required in the Company's Bylaws. A copy of the Bylaws may be
obtained by writing to the Secretary. 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.
By Order of the Board of Directors.
/s/ Roger P. Smith
ROGER P. SMITH
SECRETARY
24
<PAGE>
EXHIBIT A
PROPOSED EXECUTIVE PROFIT SHARING PLAN
1. DEFINITIONS.
"Economic Profit." Economic Profit for the purpose of this Plan is defined
as the difference between the Quarterly Net Operating Income and the Quarterly
Capital Charge, as defined below.
"Quarterly Net Operating Income." Net Operating Income for the purpose of
this Plan is defined as the consolidated operating income of the Company and
its domestic and foreign subsidiaries, reduced by a charge for taxes based on
the Company's effective tax rate.
"Quarterly Capital Charge." The Quarterly Capital Charge will be
one-fourth of the Company's Cost of Capital multiplied by the amount of
Operating Capital as of the close of such calendar quarter.
"Cost of Capital." The Cost of Capital is a weighted average of the
Company's cost of funding, including both equity and debt financing.
"Operating Capital." Operating Capital for the purpose of this Plan is
defined as the total assets of the Company, reduced by the amount of any other
securities and the adjusted current liabilities (total current liabilities
minus short-term debt), and adjusted for any deferred taxes.
"Quarterly Profit Sharing Earnings Per Share." The quarterly Economic
Profit divided by the fixed number One Hundred Million (100,000,000) will
determine the Quarterly Profit Sharing Earnings Per Share.
"Quarterly Gross Profit Sharing Amount." The number of shares of profit
sharing assigned to an individual, multiplied by the Quarterly Profit Sharing
Earnings Per Share, will determine that individual's Quarterly Gross Profit
Sharing Amount.
2. PARTICIPATION. Such executive officers of the Company as determined by
the Compensation Committee of the Board of Directors (the "Committee") will be
eligible to receive payments under the Plan.
3. YEAR-TO-DATE CALCULATION. At the close of each quarter following the
first quarter, the Quarterly Gross Profit Sharing Amount and the limits of full
profit sharing participation will be accumulated for the year-to-date for the
purpose of calculated individual profit sharing payments on a year-to-date
basis. The Profit Sharing Payment for the current quarter will be the
difference between the year-to-date amount and the sum of the Profit Sharing
Payments to the individual in the prior quarters of the calendar year.
4. DATE OF PAYMENT. Profit Sharing Payments will be made within sixty days
after the close of each calendar quarter.
5. MANNER OF PAYMENT. Profit Sharing Payments may be made in cash, common
stock, or a combination of cash and stock as determined by the Committee.
6. MAXIMUM PAYMENTS. The total paid under this Plan for the Company's five
most highly compensated executive officers will never exceed one-half percent
(0.5%) of the consolidated net income of the Company for any respective period,
and no individual participant will ever receive more than one-third (33 1/3%) of
this total Plan limit.
7. ADMINISTRATION. The Plan will be administered by the Committee, none of
whom shall be eligible to participate. The Committee is authorized to adopt
rules and policies concerning the administration and interpretation of the
Plan, but the Committee will have no discretion with regard to the basic
criteria for the determination of Quarterly Gross Profit Sharing Amounts and
may not, in any event, alter the units or the Quarterly Profit Sharing Earnings
Per Share formula after the commencement of a quarterly performance period. If
required for compliance with legal or tax guidelines with regard to its role in
administering the Plan, the Committee may act through a subcommittee comprised
of at least two of its members, none of whom shall be eligible to participate
in the Plan.
A-1
<PAGE>
8. PLAN AMENDMENT. The Board of Directors may at any time terminate or
amend the Plan, except that no amendment shall be made, without prior approval
by the Company's stockholders, which would (i) alter the method for
determination of the Quarterly Profit Sharing Earnings Per Share, or (ii)
materially alter the maximum participation limits for individuals.
9. PLAN DURATION. The Plan is intended to be indefinite in duration, but
may be amended or terminated at any time by the Board of Directors as provided
herein. The Plan shall continue until so terminated.
A-2
<PAGE>
ATTENDANCE CARD
[LOGO] 3M
Annual Meeting of Stockholders
- --------------------------------------------------------------------------------
MAY 11, 1999
RIVERCENTRE
175 WEST KELLOGG BLVD.
ST. PAUL, MINNESOTA
This is your ticket to the 1999 Annual Meeting. Please show it upon arrival and
keep it with you during the day. Annual Meeting activities begin at 8:30 a.m.
with product demonstrations and displays. The meeting starts at 10:00 a.m.
After the meeting, lunch will be served and the 3M store will open.
The meeting will be held in the Roy Wilkins Auditorium. Hosts and hostesses
will show you the way after you enter the RiverCentre.
Since parking space is limited, you are urged to consider carpooling or
public transportation.
ATTENDANCE CARD
[LOGO] 3M
Annual Meeting of Stockholders
- --------------------------------------------------------------------------------
MAY 11, 1999
RIVERCENTRE
175 WEST KELLOGG BLVD.
ST. PAUL, MINNESOTA
This is your ticket to the 1999 Annual Meeting. Please show it upon arrival and
keep it with you during the day. Annual Meeting activities begin at 8:30 a.m.
with product demonstrations and displays. The meeting starts at 10:00 a.m.
After the meeting, lunch will be served and the 3M store will open.
The meeting will be held in the Roy Wilkins Auditorium. Hosts and hostesses
will show you the way after you enter the RiverCentre.
Since parking space is limited, you are urged to consider carpooling or
public transportation.
[LOGO] Recycled Paper
40% Pre-consumer paper
10% Post-consumer paper
<PAGE>
MINNESOTA MINING
AND MANUFACTURING COMPANY
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 11, 1999
10:00 A.M.
RIVERCENTRE
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 11, 1999.
The stockholder(s) whose signature(s) appear(s) on the reverse side of this
proxy card hereby appoint(s) L.D. DeSimone, A.E. Murray, and E.A. Brennan, 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 1999 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 6,
1999, 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 6, 1999, shares held in my accout 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)
<PAGE>
-----------------------
COMPANY #
CONTROL #
-----------------------
VOTING INSTRUCTIONS
THERE ARE THREE WAYS TO VOTE YOUR PROXY
VOTE BY THE 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 above) 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 above). 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 6, 1999.
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 10, 1999.
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.
Thank you for voting.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
PLEASE DETACH HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
<TABLE>
<S> <C>
ITEM 1. Election of directors:
* Nominees to 2002 Class: (01) Rozanne L. Ridgway [ ] Vote FOR [ ] Vote WITHHELD
(02) Frank Shrontz all nominees from all nominees
(03) Louis W. Sullivan
* Nominee to 2000 Class: (04) Allen E. Murray
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY ________________________________________________
INDICATED NOMINEE, WRITE THE NUMBER(S) OF THE | |
NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |________________________________________________|
ITEM 2. Ratification of Independent Auditors [ ] For [ ] Against [ ] Abstain
ITEM 3. Amendments to the Executive Profit Sharing Plan [ ] For [ ] Against [ ] Abstain
ITEM 4. 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 3.
Address Change? Mark Box [_] Indicate changes below: Dated: _________________________, 1999.
________________________________________________
| |
|________________________________________________|
Signature(s) in Box
Please sign exactly as your name(s) appear 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.
</TABLE>
<PAGE>
[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 11, 1999.
The stockholder(s) whose signature(s) appear(s) on the reverse side of this
proxy card hereby appoint(s) L.D. DeSimone, A.E. Murray, and E.A. Brennan, 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 1999 Annual Meeting of Stockholders and any adjournments thereof.
THE PROXIES SHALL VOTE SUBJECT TO THE DIRECTION INDICATED ON THE REVERSE SIDE
OF THIS CARD. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. THE PROXIES WILL VOTE AS THE BOARD OF DIRECTORS
RECOMMENDS WHERE A CHOICE IS NOT SPECIFIED.
(CONTINUED, AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, AND 3.
<TABLE>
<S> <C>
ITEM 1. Election of directors:
* Nominees to 2002 Class: (01) Rozanne L. Ridgway [ ] Vote FOR [ ] Vote WITHHELD
(02) Frank Shrontz all nominees from all nominees
(03) Louis W. Sullivan
* Nominee to 2000 Class: (04) Allen E. Murray
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY ________________________________________________
INDICATED NOMINEE, WRITE THE NUMBER(S) OF THE | |
NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |________________________________________________|
ITEM 2. Ratification of Independent Auditors [ ] For [ ] Against [ ] Abstain
ITEM 3. Amendments to the Executive Profit Sharing Plan [ ] For [ ] Against [ ] Abstain
ITEM 4. 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 3.
Dated: _________________________, 1999.
________________________________________________
| |
|________________________________________________|
Signature(s) in Box
Please sign exactly as your name(s) appear 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.
</TABLE>
<PAGE>
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
11, 1999, and Proxy Statement, (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 6, 1999 by Norwest Bank Minnesota, N.A., acting as tabulation
agent for the Trustee.
The Trustee remains at all times the record owner of the 3M common stock held
in the ESOP and VIP accounts. The ability to direct the Trustee how to vote
confers no right on participants to vote directly at the Annual Meeting of
Stockholders.
Internet or telephone voting instructions must be properly followed or the
enclosed proxy card must be properly completed if voting directions are to be
honored. If the Internet or telephone voting instructions are not followed or
if the card is not received by May 6, 1999, 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
11, 1999, and Proxy Statement, (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 6, 1999 by
Norwest Bank Minnesota, N.A., acting as tabulation agent for the Trustee.
The Trustee remains at all times the record owner of the 3M common stock held
in the Savings Plan accounts. The ability to direct the Trustee how to vote
confers no right on participants to vote directly at the Annual Meeting of
Stockholders.
Internet or telephone voting instructions must be properly followed or the
enclosed proxy card must be properly completed if voting directions are to be
honored. If the Internet or telephone voting instructions are not followed or
if the card is not received by May 6, 1999, 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.
<PAGE>
------------------------------
NOW TWO NEW AND EASY
WAYS TO SUBMIT YOUR VOTE/PROXY
------------------------------
24 HOURS A DAY, 7 DAYS A WEEK
Fast, Convenient and Immediate Posting
------------------- --------------------
TO VOTE BY INTERNET TO VOTE BY TELEPHONE
------------------- --------------------
Go to the website: In the U.S., call toll-free
http://www.eproxy.com/mmm/ 1-800-240-6326 using
a touch-tone phone
Follow these four easy steps: Follow these four easy steps:
Read the accompanying Proxy (1) Read the accompanying Proxy
Statement and have your Statement and have your
proxy card at hand proxy card at hand
Go to the website stated above (2) In the U.S., call the toll-free
number 1-800-240-6326 using a
touch-tone phone
Enter the 3-digit company number and (3) Enter the 3-digit company number
the 7-digit control number located at and the 7-digit control number
the upper right hand corner on your located at the upper right hand
proxy card corner on your proxy card
Follow the simple instructions and (4) Follow the simple recorded
click on "Submit Vote" when you are instructions
finished
- --------------------------------------------------------------------------------
THANK YOU FOR SUBMITTING YOUR VOTE/PROXY.
IF YOU VOTE BY TELEPHONE OR INTERNET, YOU NEED NOT RETURN THE PROXY CARD.
- --------------------------------------------------------------------------------
MINNESOTA MINING AND MANUFACTURING COMPANY
