Exhibit 10.1

 

Description of A Compensation Plan for Robert S. Morrison

 

 

On August 8, 2005, the Compensation Committee of the Board of Directors of 3M
Company (the “Company”) approved (and the independent directors of such Board
ratified, as necessary) a compensation plan (the “Plan”) for Robert S. Morrison
relating to his service as interim Chief Executive Officer (“CEO”) of the
Company (the “Service”).   As previously reported, Mr. Morrison, a Company
director since 2002, has served as the Company’s interim Chairman and CEO since
June 30, 2005.  The following is a description of the Plan provided pursuant to
the compensatory plan disclosure requirements of Item 601 of Regulation S-K.

 

Pursuant to the Plan, Mr. Morrison will receive an annual base salary of
$1,200,000 and annual profit sharing initially designed to pay $1,440,000 per
year, depending on the Company’s performance, both to be prorated based on the
length of his Service.  Under the Plan, the Compensation Committee also intends
to grant Mr. Morrison nonqualified stock options to purchase shares of the
Company’s common stock having an annual value of $3,500,000, subject to the
terms of our 2005 Management Stock Ownership Program (the “MSOP”) previously
filed as part of our Proxy Statement for the 2005 annual meeting of
stockholders.  The number of options is determined by the Black-Scholes value on
the date of each grant, with the exercise price being equal to the fair market
value of a share of our common stock on that same date. These options will be
granted on a quarterly basis during his Service, are exercisable for a ten-year
term and vest in annual installments over a three-year period.  The initial
quarterly grant was effective August 8, 2005, with options to purchase 48,396
shares of our common stock at an exercise price of $72.65 per share.  The Plan
includes Mr. Morrison’s waiver of participation in the Company’s pension plans,
together with the Compensation Committee’s interpretation of the MSOP to
recognize that his resignation from the Service upon the appointment of a new
chief executive officer shall be deemed to be a “Retirement” for the purpose of
the MSOP to preserve the ten-year option term.

 

In addition, under the Plan, Mr. Morrison is entitled to the reimbursement of
reasonable temporary housing expenses and the use of Company aircraft and
Company-furnished automobile with a driver. The Company has agreed to provide
Mr. Morrison a tax gross-up payment to cover the income taxes payable on any
imputed income resulting from such reimbursement or use.  Payment of the annual
retainer for Mr. Morrison’s services as a nonemployee director on the Company’s
Board of Directors has been suspended while he serves as the Company’s CEO.

 

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