3M 2015 Annual Report Download - page 112

TableofContents
Inaddition,theCompanyisnotabletoestimateapossiblelossorrangeoflossinexcessoftheestablishedaccrualsatthistime.
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NOTE15.Stock-BasedCompensation
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The3M2008Long-TermIncentivePlanprovidesfortheissuanceordeliveryofupto100millionsharesof3Mcommonstock
(includingadditionalshareholderapprovalssubsequentto2008)pursuanttoawardsgrantedundertheplan.Awardsunderthisplan
maybeissuedintheformofincentivestockoptions,nonqualifiedstockoptions,progressivestockoptions,stockappreciationrights,
restrictedstock,restrictedstockunits,otherstockawards,andperformanceunitsandperformanceshares.Awardsdenominatedin
sharesofcommonstockotherthanoptionsandstockappreciationrights,perthe2008Plan,countagainstthe100millionsharelimit
as3.38sharesforeveryonesharecoveredbysuchaward(forfullvalueawardswithgrantdatespriortoMay11,2010),as2.87
sharesforeveryonesharecoveredbysuchaward(forfullvalueawardswithgrantdatesonorafterMay11,2010,andpriorto
May8,2012),oras3.50sharesforeveryonesharecoveredbysuchaward(forfullvalueawardswithgrantdatesofMay8,2012or
later).Theremainingtotalsharesavailableforgrantunderthe2008LongTermIncentivePlanProgramare20,328,681asof
December31,2015.Therewereapproximately9,200participantswithoutstandingoptions,restrictedstock,orrestrictedstockunits
atDecember31,2015.
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TheCompany’sannualstockoptionandrestrictedstockunitgrantismadeinFebruarytoprovideastrongandimmediatelink
betweentheperformanceofindividualsduringtheprecedingyearandthesizeoftheirannualstockcompensationgrants.Thegrant
toeligibleemployeesusestheclosingstockpriceonthegrantdate.Accountingrulesrequirerecognitionofexpenseunderanon-
substantivevestingperiodapproach,requiringcompensationexpenserecognitionwhenanemployeeiseligibletoretire.Employees
areconsideredeligibletoretireatage55andafterhavingcompletedfiveyearsofservice.Thisretiree-eligiblepopulationrepresents
35percentofthe2015annualstock-basedcompensationawardexpensedollars;therefore,higherstock-basedcompensationexpense
isrecognizedinthefirstquarter.3Malsohasgrantedprogressive(reload)options.Theseoptionsarenonqualifiedstockoptionsthat
weregrantedtocertainparticipantsunderthe1997or2002ManagementStockOwnershipProgram,butforwhichthereloadfeature
waseliminatedin2005(onaprospectivebasisonly).
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Inadditiontotheannualgrants,theCompanymakesotherminorgrantsofstockoptions,restrictedstockunitsandotherstock-based
grants.TheCompanyissuescashsettledrestrictedstockunitsandstockappreciationrightsincertaincountries.Thesegrantsdonot
resultintheissuanceofcommonstockandareconsideredimmaterialbytheCompany.
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Amountsrecognizedinthefinancialstatementswithrespecttostock-basedcompensationprograms,whichincludestockoptions,
restrictedstock,restrictedstockunits,performanceshares,andtheGeneralEmployees’StockPurchasePlan(GESPP),areprovided
inthefollowingtable.Capitalizedstock-basedcompensationamountswerenotmaterialfortheyearsended2015,2014and2013.
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Stock-BasedCompensationExpense
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YearsendedDecember31 
(Millions)  2015  2014  2013 
Costofsales  $ 46  $ 47  $ 27 
Selling,generalandadministrativeexpenses   185   192   183 
Research,developmentandrelatedexpenses   45   41   30 
       
Stock-basedcompensationexpenses  $ 276  $ 280  $ 240 
       
Incometaxbenefits  $ (87) $ (79) $ (71)
       
Stock-basedcompensationexpenses,netoftax  $ 189  $ 201  $ 169 
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