3M 2015 Annual Report Download - page 114

TableofContents
oneyearvolatility,themedianofthetermoftheexpectedliferollingvolatility,themedianofthemostrecenttermoftheexpected
lifevolatilityof3Mstock,andtheimpliedvolatilityonthegrantdate.Theexpectedtermassumptionisbasedontheweighted
averageofhistoricalgrants.
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RestrictedStockandRestrictedStockUnits
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ThefollowingtablesummarizesrestrictedstockandrestrictedstockunitactivityfortheyearsendedDecember31:
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2015 2014 2013 
   Weighted    Weighted    Weighted 
   Average    Average Average 
Numberof GrantDate Numberof GrantDate Numberof GrantDate 
Awards FairValue Awards FairValue Awards FairValue 
Nonvestedbalance—          
AsofJanuary1  2,817,786 $ 104.41  3,105,361  $ 92.31  3,261,562  $ 85.17 
Granted          
Annual  671,204  165.86  798,615   126.79  946,774   101.57 
Other  26,886  156.94  78,252   152.74  44,401   111.19 
Vested  (1,010,612) 89.99  (1,100,675)  90.37  (1,100,095)  79.93 
Forfeited  (64,176) 118.99  (63,767)  97.23  (47,281)  90.82 
AsofDecember31  2,441,088 $ 127.47  2,817,786  $ 104.41  3,105,361  $ 92.31 
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AsofDecember31,2015,therewas$84millionofcompensationexpensethathasyettoberecognizedrelatedtonon-vested
restrictedstockandrestrictedstockunits.Thisexpenseisexpectedtoberecognizedovertheremainingweighted-averagevesting
periodof24months.Thetotalfairvalueofrestrictedstockandrestrictedstockunitsthatvestedduringtheyearsended
December31,2015,2014and2013was$166million,$145millionand$114million,respectively.TheCompany’sactualtax
benefitsrealizedforthetaxdeductionsrelatedtothevestingofrestrictedstockandrestrictedstockunitsfortheyearsended
December31,2015,2014and2013was$62million,$54millionand$43million,respectively.
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Restrictedstockunitsgrantedunderthe3M2008Long-TermIncentivePlangenerallyvestthreeyearsfollowingthegrantdate
assumingcontinuedemployment.Dividendequivalentsequaltothedividendspayableonthesamenumberofsharesof3Mcommon
stockaccrueontheserestrictedstockunitsduringthevestingperiod,althoughnodividendequivalentsarepaidonanyofthese
restrictedstockunitsthatareforfeitedpriortothevestingdate.Dividendsarepaidoutincashatthevestdateonrestrictedstock
units,exceptforperformanceshareswhichdonotearndividends.Sincetherightstodividendsareforfeitable,thereisnoimpacton
basicearningspersharecalculations.Weightedaveragerestrictedstockunitsharesoutstandingareincludedinthecomputationof
dilutedearningspershare.
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PerformanceShares
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Insteadofrestrictedstockunits,theCompanymakesannualgrantsofperformancesharestomembersofitsexecutivemanagement.
The2015performancecriteriafortheseperformanceshares(organicvolumegrowth,returnoninvestedcapital,freecashflow
conversion,andearningspersharegrowth)wereselectedbecausetheCompanybelievesthattheyareimportantdriversoflong-term
stockholdervalue.Thenumberofsharesof3Mcommonstockthatcouldactuallybedeliveredattheendofthethree-year
performanceperiodmaybeanywherefrom0%to200%ofeachperformancesharegranted,dependingontheperformanceofthe
Companyduringsuchperformanceperiod.Non-substantivevestingrequiresthatexpensefortheperformancesharesberecognized
overoneorthreeyearsdependingonwheneachindividualbecamea3Mexecutive.Performancesharesdonotaccruedividends
duringtheperformanceperiod.Therefore,thegrantdatefairvalueisdeterminedbyreducingtheclosingstockpriceonthedateof
grantbythenetpresentvalueofdividendsduringtheperformanceperiod.
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