Exhibit 10.1


 


(Including
amendments


through
February 2010)


 


3M 2008 LONG-TERM
INCENTIVE PLAN


 


1.             Purposes.


 


The
purposes of this plan are to help 3M attract, retain and motivate outstanding
employees to increase shareholder value by contributing to the long-term growth
and success of its business; to more closely align the financial interests of
these employees with those of 3M’s other shareholders by linking a significant
portion of their compensation to the performance of the Company and its stock
price; to encourage employees to acquire an equity stake in the Company; to
help 3M attract and retain well-qualified individuals to serve as nonemployee
members of its Board of Directors; and to promote the alignment of interests of
these nonemployee directors with those of 3M’s other shareholders by providing
all or a portion of their compensation for serving as directors in the form of
3M common stock.


 


This
plan is intended to replace and succeed the 2005 Management Stock Ownership
Program, the 3M Performance Unit Plan, and the 1992 Directors Stock Ownership
Program.


 


2.             Definitions.


 


(a)                                  “Affiliate”
means any entity that is directly or indirectly controlled by the Company or in
which the Company has a significant equity interest, as determined by the
Committee.


 


(b)                                 “Award” means
any Incentive Stock Option, Nonqualified Stock Option, Progressive Stock
Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit,
Performance Unit, Performance Share or other Stock Award granted to a
Participant under this Plan.


 


(c)                                  “Code” means
the Internal Revenue Code of 1986, as amended.


 


(d)                                 “Committee”
means the Compensation Committee of 3M’s Board of Directors.


 


(e)                                  “Common Stock”
means the common stock of 3M Company with a par value of $0.01 per share.


 


(f)                                    “Company” means
3M Company, a Delaware corporation.


 


(g)                                 “Disqualifying
Termination” means a termination of a Participant’s employment with the Company
or an Affiliate due to (i) a material violation of any policy of the
Company or such Affiliate, including, without limitation, any of the Company’s
Business Conduct Policies, or (ii) embezzlement from or theft of property
belonging to the Company or such Affiliate.


 


(h)                                 “Dividend
Equivalents” means, on any dividend record date, that amount of cash or shares
equal in value to the dividend payable on shares of Common Stock as declared by
3M’s Board of Directors with respect to such dividend record date.


 


 

















 


(i)                                     “Fair Market
Value” means the closing price for a share of Common Stock as reported on the
New York Stock Exchange Composite Transactions.


 


(j)                                     “Full Value
Award” means any Award denominated or paid in shares of Common Stock other than
an Option or Stock Appreciation Right.


 


(k)                                  “Grant Date”
means the effective date of an Award granted to a Participant under this Plan.


 


(l)                                     “Incentive
Stock Option” means an Option granted under this Plan which satisfies the
requirements of section 422 of the Code and is so designated in the written or
electronic documents evidencing such Option.


 


(m)                               “Nonqualified
Stock Option” means an Option granted under this Plan which is not an Incentive
Stock Option.


 


(n)                                 “Option” means
a Participant’s right to purchase a specified number of shares of Common Stock
at a specified price for a specified period of time.


 


(o)                                 “Participant” means
an employee of the Company or an Affiliate whose participation in the Plan has
been approved by the Committee, or a nonemployee member of 3M’s Board of
Directors.


 


(p)                                 “Performance
Criteria” means such internal performance criteria for the Company or any
business segment thereof as determined by the Committee with respect to each
Performance Unit or Performance Share and may include any one or more of
several criteria, such as, but not limited to, return on capital employed,
return on assets or net assets, net sales, sales growth, sales or sales growth
from new products, market share, cash flow or cash flow conversion, earnings
per share, return on equity, stock price, gross margin or income, operating
margin or income, total shareholder return, stockholders’ equity, retained
earnings, economic value added, economic profit (after-tax operating income,
excluding non-recurring items, less the cost of capital), earnings before
interest and taxes, EBITDA, operating income, improvements in certain asset or
financial measures (including working capital, the ratio of sales to net
working capital and the ratio of debt to equity or to EBITDA), reductions in
certain asset or cost areas (including reductions in inventories or accounts
receivable or reductions in laboratory, engineering, sales or administrative
costs) or in debt, net income or variations of income criteria in varying time
periods, adjusted net income, employee diversity, employee engagement or
satisfaction, customer satisfaction, or general comparisons with other peer
companies or industry groups or classifications with regard to one or more of
these criteria.  The criteria may measure
performance on the basis of either the amount of a particular item during the
Performance Period or on increases or decreases in the amount of such item
during the Performance Period.  Such
criteria shall include a target for payment of the Performance Unit or
Performance Share at full face value and upper and lower limits for the measurement
of payment to Participants.


 


(q)                                 “Performance
Period” means a period of three years, unless determined otherwise by the
Committee in its discretion, during which period or any portion thereof the
Performance Criteria shall be measured for purposes of calculating the payment
with respect to each Performance Unit or Performance Share.


 


 

















 


(r)                                    “Performance
Share” means the right of a Participant to receive a payment in the form of
shares of Common Stock based upon the performance of the Company during a
Performance Period as measured by the Performance Criteria approved by the
Committee.


 


(s)                                  “Performance
Unit” means the right of a Participant to receive a payment in cash or shares
of Common Stock based upon the performance of the Company during a Performance
Period as measured by the Performance Criteria approved by the Committee.


 


(t)                                    “Plan” means
this 3M 2008 Long-Term Incentive Plan.


 


(u)                                 “Predecessor
Plan” means the 1997 Management Stock Ownership Program, the 2002 Management
Stock Ownership Program, and the 2005 Management Stock Ownership Program.


 


(v)                                 “Progressive
Stock Option” means a Nonqualified Stock Option granted to a Participant under
this Plan upon the exercise of a nonqualified stock option granted under the
1997 or the 2002 Management Stock Ownership Programs where such Participant
makes payment for all or part of the purchase price and withholding taxes in
shares of Common Stock.


 


(w)                               “Restricted
Period” means that period of time determined by the Committee during which a
Participant shall not be permitted to sell or transfer shares of Restricted
Stock granted under this Plan, and during which a Participant’s interest in
Restricted Stock Units or Restricted Stock granted under this Plan remains
subject to forfeiture.  Unless otherwise
determined by the Committee, any time-based Restricted Period shall be at least
three years.


 


(x)                                   “Restricted
Stock” means shares of Common Stock granted to a Participant under the Plan
subject to certain restrictions during the Restricted Period established by the
Committee.


 


(y)                                 “Restricted Stock
Unit” means the right of a Participant to receive an amount of cash or Common
Stock based on the Fair Market Value of a specified number of shares of Common
Stock following a Restricted Stock Period, subject to such terms and conditions
as the Committee may establish.


 


(z)                                   “Retires” or “Retirement”
means the termination of a Participant’s employment with the Company or an
Affiliate after attaining age 55 with at least five years of employment
service.


 


(aa)                            “Stock
Appreciation Right” means a Participant’s right to receive an amount of cash or
shares of Common Stock equal to the excess of the Fair Market Value of a
specified number of shares of Common Stock on the date the right is exercised
over the Fair Market Value of such number of shares of Common Stock on the
Grant Date.


 


(bb)                          “Stock Award”
means any award of Common Stock under the Plan and may include Restricted Stock
awards or other awards of Common Stock as determined appropriate by the
Committee.


 


 

















 


3.             Eligibility.


 


The
Committee will have the exclusive power and authority (except as it may
delegate such power and authority as permitted herein) to select the executives
and other employees of the Company and its Affiliates who may participate in
this Plan by receiving Awards made hereunder. 
All nonemployee members of the 3M Board of Directors shall also be
eligible to participate in and receive Awards made hereunder.


 


4.             Shares Available for Awards.


 


Unless
otherwise authorized by the Company’s stockholders, the total number of shares
of Common Stock that may be issued or delivered pursuant to Awards granted
under this Plan will be 64,000,000.  Of
this total, no more than 64,000,000 may be issued or delivered upon the
exercise of Incentive Stock Options.  The
necessary shares shall be made available at the discretion of the Board of
Directors from authorized but unissued shares, treasury shares, or shares
reacquired by the Company under corporate repurchase programs.


 


The
following rules shall apply for the purpose of determining the number of
shares of Common Stock remaining available for issuance under the Plan:


 


(a)           If an Award is
denominated in a fixed number of shares of Common Stock on the Grant Date, the
number of shares covered by such Award (as in the case of an Option or
Restricted Stock grant) or to which such Award relates (as in the case of a
Stock Appreciation Right) will be counted on the Grant Date against the total
number of shares available for issuance or delivery under the Plan.  If an Award is not denominated in a fixed
number of shares of Common Stock on the Grant Date (but is potentially payable
in such shares or the final number of shares is not determined until the
completion of a Performance Period), only the number of shares of Common Stock
actually issued or delivered as a result of such Award, if any, shall be
counted against the total number of shares available for issuance or delivery
under the Plan.


 


(b)           Notwithstanding the
provisions of Section 4(a) above, each Full Value Award with a Grant
Date on or after May 11, 2010 will be counted against the total number of
shares available for issuance or delivery under the Plan as 2.87 shares for
every one share covered by such Award (Full Value Awards with Grant Dates prior
to May 11, 2010 were counted against the total number of shares available
for issuance or delivery under the Plan as 3.38 shares for every one share
covered by such Award).


 


(c)           When an Award
granted under this Plan and denominated in shares of Common Stock (or any
portion thereof) expires, is cancelled, is forfeited or is otherwise terminated
without the issuance of such shares, or is settled in cash or consideration
other than shares of Common Stock, then the shares of Common Stock previously
counted against the total number of shares available for issuance or delivery
under the Plan on account of such Award (or portion thereof) will again be made
available for issuance hereunder.  When
an award granted under a Predecessor Plan and denominated in shares of Common
Stock (or any portion thereof) expires, is cancelled, is forfeited or is
otherwise terminated without the issuance of such shares, or is settled in cash
or consideration other than shares of Common Stock, then the shares of Common
Stock previously counted against the total number of shares available for
issuance or delivery under such Predecessor Plan on account of such Award (or
portion thereof) will be added to the total number of shares 


 


 

















 


available
for issuance or delivery under this Plan. 
Notwithstanding the rest of this Section 4(c), the following shares
of Common Stock will not be added to the total number of shares available or be
made available again for issuance under this Plan: (i) shares not issued
or delivered as a result of the net settlement of an outstanding stock option
or stock appreciation right; (ii) shares delivered to or withheld by the
Company to pay the exercise price of or the withholding taxes with respect to
an award; and (iii) shares repurchased on the open market with the
proceeds from the payment of the exercise price of an option.


 


(d)           Any shares of Common
Stock related to Awards granted through the assumption of, or in substitution
for, outstanding awards previously granted by a company acquired by the Company
or an Affiliate or with which the Company or any Affiliate combines, shall not
be counted against the total number of shares available for issuance or
delivery under the Plan.


 


5.             Terms of Awards.


 


The
Committee shall determine the type or types of Awards to be granted to each
Participant, which shall be evidenced by such written or electronic documents
as the Committee shall authorize; provided, however, that nonemployee members
of the 3M Board of Directors shall not be eligible to receive Incentive Stock
Options, Progressive Stock Options, Performance Units or Performance
Shares.  The following types of Awards
may be granted under this Plan:


 


(a)           Incentive Stock
Options — Incentive Stock Options granted hereunder shall have an exercise
price equal to one hundred percent (100%) of the Fair Market Value of a share
of Common Stock on the Grant Date. 
Incentive Stock Options granted hereunder shall become exercisable at
such time as shall be established by the Committee and reflected in the
documents evidencing such Options, and unless sooner terminated shall expire on
the tenth anniversary of the Grant Date.


 


(b)           Nonqualified Stock
Options — Nonqualified Stock Options granted hereunder shall have an exercise
price equal to no less than one hundred percent (100%) of the Fair Market Value
of a share of Common Stock on the Grant Date. 
Nonqualified Stock Options granted hereunder shall become exercisable
and shall expire at such time or times as shall be established by the Committee
and reflected in the documents evidencing such Options; provided, however, that
no Nonqualified Stock Option shall expire later than ten years after the Grant
Date (except that the Committee may extend the exercise period for Nonqualified
Stock Options granted to Participants in any country or countries for an
additional period of up to one year if and to the extent necessary to prevent
adverse tax consequences to such Participants under the laws of such country).


 


(c)           Progressive Stock Options - Whenever a Participant exercises a
nonqualified stock option granted under the 1997 or 2002 Management Stock
Ownership Program and makes payment of all or part of the purchase price and
withholding taxes, if any, in Common Stock, the Committee may in its discretion
grant such Participant a Progressive Stock Option.  The number of shares subject to such Progressive
Stock Option shall be equal to the number of shares of Common Stock utilized by
the Participant to effect payment of the exercise price and withholding taxes,
if any, for such nonqualified stock option. 
Each Progressive Stock Option granted hereunder shall have an exercise
price equal to one hundred percent (100%) of the Fair Market Value of a share
of Common Stock on the date of exercise of the nonqualified stock option, which
shall be the Grant Date of such Progressive Stock Option.  Each Progressive Stock Option granted
hereunder shall be exercisable six months after the Grant Date, and shall
expire at the same time the nonqualified stock option exercised by the
Participant would have expired.


 


 

















 


(d)           Stock Appreciation
Rights - The term of a Stock Appreciation Right shall be fixed by the Committee
and set forth in the documents evidencing such right, but no Stock Appreciation
Right shall be exercisable more than ten years after the Grant Date.  Each Stock Appreciation Right shall become
exercisable at the time or times determined by the Committee and set forth in
the documents evidencing such right. 
Each Stock Appreciation Right granted hereunder shall have a grant price
equal to one hundred percent (100%) of the Fair Market Value of a share of
Common Stock on the Grant Date.


 


(e)           Restricted Stock -
At the time a grant of Restricted Stock is made, the Committee, in its sole
discretion, shall establish a Restricted Period and such additional terms and
conditions as may be deemed appropriate for the incremental lapse or complete
lapse of restrictions with respect to all or any portion of the shares of
Common Stock represented by the Restricted Stock.  The Committee may also, in its sole
discretion, shorten or terminate the Restricted Period or waive any terms or
conditions for the lapse of restrictions with respect to all or any portion of
the shares of Common Stock represented by the Restricted Stock.  During the Restricted Period the Participant
shall generally have the rights and privileges of a stockholder as to such
Restricted Stock, including the right to vote such Restricted Stock and receive
dividend payments, except that the following restrictions shall apply: (i) none
of the Restricted Stock may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period and until the
satisfaction of any other terms and conditions prescribed by the Committee, if
any; and (ii) all of the Restricted Stock shall be forfeited and all
rights of the Participant shall terminate without further obligation on the
part of the Company unless the Participant shall have remained a regular
full-time employee of the Company or an Affiliate until the expiration or
termination of the Restricted Period and the satisfaction of the other terms
and conditions prescribed by the Committee, if any.  Any Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee may determine, in its
discretion, including, without limitation, book-entry registration or issuance
of one or more stock certificates bearing an appropriate legend recognizing the
terms, conditions and restrictions applicable to such Restricted Stock.  Upon the forfeiture of any Restricted Stock,
such shares of Common Stock represented by the Restricted Stock shall be
transferred to the Company without further action by the Participant.


 


(f)            Restricted Stock
Units - At the time a grant of Restricted Stock Units is made, the Committee,
in its sole discretion, shall establish a Restricted Period and such additional
terms and conditions as may be deemed appropriate for the incremental lapse or
complete lapse of restrictions with respect to all or any portion of such
Restricted Stock Units.  The Committee
may also, in its sole discretion, shorten or terminate the Restricted Period or
waive any terms or conditions for the lapse of restrictions with respect to all
or any portion of the Restricted Stock Units. 
During the Restricted Period the Participant will not have the rights
and privileges of a stockholder as to such Restricted Stock Units, including
the right to vote and receive dividend payments with respect to the shares of
Common Stock corresponding to such Restricted Stock Units; provided, however,
that at the sole discretion of the Committee, Dividend Equivalents may be
either currently paid in cash or shares or withheld by the Company for the
Participant’s account and either maintained in cash to be paid upon the
expiration of the Restricted Period or reinvested in additional Restricted
Stock Units.  Each grant of Restricted
Stock Units shall be subject to the following restrictions: (i) the
Participant shall not be entitled to the payment of cash or the delivery of the
shares of Common Stock corresponding to such Restricted Stock Units until the
expiration or termination of the Restricted Period and the satisfaction of any
other terms and conditions prescribed by the Committee, if any; (ii) none
of the Restricted Stock Units may be sold, transferred, assigned, pledged, or
otherwise


 


 

















 


encumbered
or disposed of at any time; and (iii) all of the Restricted Stock Units
and any deferred Dividend Equivalents shall be forfeited and all rights of the
Participant shall terminate without further obligation on the part of the
Company upon the termination of the Participant’s employment with the Company
or an Affiliate prior to the end of the Restricted Period for any reason other
than Retirement, total disability or death; provided, however, that if the
Committee so decides and the documents evidencing an Award of Restricted Stock
Units so provide, the preceding exception allowing such Restricted Stock Units
to vest following the Participant’s Retirement shall not apply so that such
Restricted Stock Units and any deferred Dividend Equivalents will be forfeited and
all rights of the Participant shall terminate without further obligation on the
part of the Company upon the Retirement of such Participant prior to the end of
the Restricted Period.


 


(g)           Other Stock Awards -
The Committee may, in its sole discretion, grant Stock Awards other than
Restricted Stock grants or Restricted Stock Units, and such Stock Awards may be
granted singly, in combination or in tandem with, in replacement of, or as
alternatives to grants or rights under this Plan or any other employee benefit
or compensation plan of the Company, including the plan of any acquired
entity.  If the Committee shall stipulate
terms and conditions with respect to such Stock Awards, the terms and
conditions will be set forth in the documents evidencing the Award.  If the terms and conditions with respect to
any Stock Award shall require the surrender or forfeiture of other grants or
rights under this Plan or any other employee benefit or compensation plan of
the Company, then the Participant shall not have any rights under such Stock
Award until the grants or rights exchanged have been fully and effectively
surrendered or forfeited.


 


(h)           Performance Units
and Performance Shares — At the time it approves each grant of Performance
Units or Performance Shares, the Committee shall determine the number of
Performance Units or Performance Shares granted to each Participant, the
proration, if any, of such Performance Units or Performance Shares if the
Participant retires prior to the completion of the relevant Performance Period,
the commencement and expiration of the relevant Performance Period, and the
Performance Criteria by which the payment value of the Performance Units or
Performance Shares will be determined. 
Payment of each Performance Unit and Performance Share shall occur no
later than the March 15 of the year immediately following the completion
of the respective Performance Period, unless a Participant shall have made an
effective election to defer the receipt of such payment pursuant to the terms
of an applicable deferred compensation plan and all applicable laws.  The amount payable with respect to each
Performance Unit and Performance Share shall be contingent upon the attainment
of the Performance Criteria selected by the Committee during the respective Performance
Period, and upon the continued employment of the Participant throughout such
Performance Period (or upon the Participant’s Retirement prior to the end of
such Performance Period).


 


6.             Payment of Awards.


 


Payment
of Awards may be in the form of cash, shares of Common Stock or combinations
thereof as the Committee shall determine, and with such other restrictions as
it may impose.  The Committee may permit
or require the deferral of any Award payment, subject to such terms, rules and
conditions as the Committee may establish, which may include provisions for the
payment or crediting of interest or Dividend Equivalents; provided, however,
that the Committee shall not have any authority to permit or require the
deferral of any Award payment to the extent that the exercise of such authority
would cause any excise tax to become due under section 409A of the Code.


 


 

















 


No
shares of Common Stock shall be issued to any Participant upon the exercise of
an Option granted under this Plan until full payment of the exercise price has
been made to the Company and the Participant has remitted to the Company the
required withholding taxes, if any. 
Payment of the exercise price and withholding taxes, if any, may be made
in whole or in part in shares of Common Stock, pursuant to such terms and
conditions as may be established from time to time by the Committee.  If payment is made in shares of Common Stock,
such shares shall be valued at their Fair Market Value on the day the Participant
exercises the Option or, as regards a withholding tax, on the date when the tax
obligation becomes due.  A Participant
need not surrender shares of already owned Common Stock as payment, and the
Company may, upon the giving of satisfactory evidence of ownership of such
shares by the Participant, deliver the appropriate number of additional shares
of Common Stock reduced by the number of shares required to pay the exercise
price and any required withholding taxes. 
Such form of evidence shall be determined by the Committee in its
discretion.


 


In
no event will the Company be required to deliver any fractional share of Common
Stock in connection with any Award.  In
the event that a Participant shall be entitled to receive a fraction of a share
of Common Stock in connection with an Award granted under the Plan, the Company
shall pay in cash, in lieu thereof, the Fair Market Value of such fractional
share.


 


7.             Termination of Awards.


 


If
a Participant’s employment with the Company or an Affiliate is terminated for
any reason other than (i) a Disqualifying Termination, (ii) Retirement,
(iii) a termination in connection with which the Participant executes a
written release of employment-related claims in favor of the Company that
provides (with the approval of the Company) for the nonforfeiture of Options
and Stock Appreciation Rights, (iv) a physical or mental disability as
recognized under a benefit plan maintained by the Participant’s employer, or (v) death,
and prior to the date of termination the Participant has not fully exercised an
Option or Stock Appreciation Right granted under this Plan, such Participant
may exercise the Option or Stock Appreciation Right within ninety (90) days
following the date of termination (but not beyond the expiration date of such
Option or Right) for the number of shares which the Participant could have
purchased or received a payment on the date of termination.  At the conclusion of such ninety-day period
(with respect to the Participant’s Options and Stock Appreciation Rights, and
at the time of termination with respect to any other Awards), participation
hereunder shall cease and all of the Participant’s Awards granted under this
Plan shall be automatically forfeited unless the documents evidencing such
Awards provide otherwise.


 


If
a Participant Retires, terminates employment with the Company or an Affiliate
and in connection with such termination the Participant executes a written
release of employment-related claims in favor of the Company that provides
(with the approval of the Company) for the nonforfeiture of Options and Stock
Appreciation Rights, or changes employment status as a result of a physical or
mental disability as recognized under a benefit plan maintained by the
Participant’s employer, without having fully exercised an Option or Stock
Appreciation Right, the Participant shall be entitled, within the remaining
term of the Option or Stock Appreciation Right (but not beyond the expiration
date of such Option or Right), to exercise such Option or Stock Appreciation
Right (provided, however, that in the event of a termination in connection with
which the Participant executes a written release of employment-related claims
in favor of the Company that provides (with the approval of the Company) for
the nonforfeiture of Options and Stock Appreciation Rights, the additional time
to exercise Options and Stock Appreciation Rights shall apply only to those 


 


 

















 


Options
and Stock Appreciation Rights which have vested prior to the date of
termination of employment).  If a
Participant who has thus Retired dies, without having fully exercised an Option
or Stock Appreciation Right, the Option or Stock Appreciation Right (including
any portion thereof not already exercisable at the time of the Participant’s
death) may be exercised within two years after the date of his or her death
(but not beyond the expiration date of such Option or Right) by the Participant’s
estate or by a person who acquired the right to exercise such Option or Stock
Appreciation Right by bequest or inheritance or by reason of the death of the
Participant.


 


If
a Participant, prior to Retirement, dies without having fully exercised an
Option or Stock Appreciation Right, the Option or Stock Appreciation Right
(including any portion thereof not already exercisable at the time of the
Participant’s death) may be exercised within two years following his or her
death (but not beyond the expiration date of such Option or Right) by the
Participant’s estate or by a person who acquired the right to exercise such
Option or Stock Appreciation Right by bequest or inheritance or by reason of
the death of the Participant.


 


Notwithstanding
the rest of this Section 7, if a Participant’s employment with the Company
or an Affiliate is terminated before he or she has fully exercised an Option or
Stock Appreciation Right under circumstances which the Committee believes to
warrant special consideration and the Committee has determined that the
Participant’s rights should not be forfeited at the time or times specified
above, the Option or Stock Appreciation Right (including any portion thereof
not already exercisable at the time of termination) may be exercised within two
years following his or her termination of employment (but not beyond the
expiration date of such Option or Right).


 


If
a Participant dies, either prior to or following Retirement, or becomes “disabled”
within the meaning of section 409A(a)(2)(C) of the Code, and has not yet
received the stock certificate for the shares of Common Stock represented by a
grant of Restricted Stock, Restricted Stock Units or other Stock Award, then
all restrictions imposed during the Restricted Period and any other terms and
conditions prescribed by the Committee, if any, shall automatically lapse and a
stock certificate shall be delivered to the Participant or the Participant’s beneficiary,
representative, or estate, as the case may be upon the Participant’s
demonstration to the satisfaction of the Committee that such Participant is
considered “disabled” for purposes of section 409A(a)(2)(C) of the Code.


 


If
a Participant Retires or changes employment status as a result of a physical or
mental disability as recognized under a benefit plan maintained by the
Participant’s employer prior to the payment date for an Award of Performance
Shares or Performance Units, such Retirement or change in status shall not
affect any rights of the Participant with respect to such Performance Shares or
Performance Units; provided, however, that the Committee may provide for the
proration of the Performance Shares or Performance Units granted to a Participant
who Retires prior to the completion of the Performance Period for such
Performance Shares or Performance Units.


 


If
a Participant dies without having received payment of any Performance Shares or
Performance Units granted under this Plan, payment of such Shares or Units
shall be made no later than March 15 of the year following the year in
which the Participant died to such Participant’s surviving beneficiary or
beneficiaries or, if there shall be no such surviving beneficiaries, to such
Participant’s estate in the following manner:


 


(i)  If the Participant dies after the expiration of a Performance
Period for such Performance Shares or Performance Units, the payment shall be
at the same rate as that paid to other Participants who survive until the payment
date; and


 


 

















 


(ii)  If the Participant dies before the expiration of a
Performance Period for such Performance Shares or Performance Units, the amount
of payment shall be at the lesser of:


 


•                                        the face or
target value of each outstanding Performance Share or Performance Unit for
which payment has not been made; or


 


•                                        any other
amount approved, in its discretion, by the Committee.


 


If
a Participant’s employment with the Company or an Affiliate is terminated due
to a Disqualifying Termination, participation hereunder shall cease and all of
the Participant’s Awards granted under this Plan shall be automatically
forfeited.


 


Participation
hereunder shall cease and all rights under the Plan with respect to Restricted
Stock or other Stock Awards granted to a Participant who has been participating
in this Plan as a nonemployee member of the 3M Board of Directors are
automatically forfeited by the Participant upon the date of termination of his
or her membership on the 3M Board of Directors for any reason other than: (i) retirement,
(ii) physical or mental disability as determined by the Committee, or (iii) death.


 


8.             Limits on Awards.


 


No
Participant shall be granted Options and Stock Appreciation Rights under this
Plan with respect to more than 1,000,000 shares of Common Stock in any calendar
year.  No Participant shall receive cash,
vested shares of Common Stock or other property as a result of Awards granted
under this Plan, other than Options and Stock Appreciation Rights, having a
value exceeding $30,000,000 in any calendar year.


 


9.             Plan Administration.


 


This
Plan will be administered by the Committee, which shall have full power and
authority to select the Participants, interpret the Plan, continue, accelerate
or suspend the exercisability or vesting of an Award, and adopt such rules and
procedures for operating the Plan as it may deem necessary or appropriate.  Its power and authority shall include, but
not be limited to, making any amendments to or modifications of the Plan which
may be required or necessary to make such Plan comply with the provisions of
any laws or regulations of any country or unit thereof in which the Company or
any Affiliate operates.  To do so, the
Committee may establish different terms and conditions for Awards made to
Participants who live in or are subject to taxation in one or more countries
other than the United States in order to accommodate the tax or other relevant
laws of such countries.  The Committee
may adopt one or more supplements or sub-plans under the Plan to implement
these different terms and conditions. 
Except for adjustments made in accordance with Section 11, no
Option or Stock Appreciation Right granted under this Plan may be repriced to
reduce the exercise or grant price of any outstanding Option or Stock Appreciation
Right, nor may any outstanding Option or Stock Appreciation Right granted under
this Plan be cancelled in exchange for cash, another Award, or an Option or
Stock Appreciation Right with an exercise or grant price that is less than the
exercise or grant price of the cancelled Option or Stock Appreciation Right,
without the prior approval of the Company’s stockholders.


 


 

















 


10.           Delegation of Authority.


 


To the extent permitted by Delaware law, the Committee may delegate to
officers of the Company any or all of its duties, power and authority under
this Plan subject to such conditions or limitations as the Committee may
establish; provided, however, that no officer shall have or obtain the
authority to grant Awards to (i) himself or herself, (ii) nonemployee
members of the 3M Board of Directors, or (iii) any person subject to
section 16 of the Securities Exchange Act of 1934.


 


11.           Adjustments.


 


In
the event of any change in the outstanding Common Stock of the Company by
reason of a stock split, stock dividend, combination or reclassification of
shares, recapitalization, merger or similar event, the Committee shall adjust
proportionately: (a) the number of shares of Common Stock (i) available
for issuance or delivery under this Plan in accordance with Section 4, (ii) for
which Awards may be granted to a single Participant in accordance with Section 8,
and (iii) subject to outstanding Awards granted under this Plan; (b) the
exercise prices of outstanding Awards; and (c) the appropriate Fair Market
Value and other price determinations for such Awards.  In the event of any other change affecting
the Common Stock or any distribution (other than normal cash dividends) to
holders of Common Stock, such adjustments in the number or kind of shares and
the exercise prices, Fair Market Value and other price determinations of the
affected Awards as the Committee shall, in its sole discretion, determine are
equitable, shall be made and shall be effective and binding for all purposes of
such outstanding Awards.  In the event of
a corporate merger, consolidation, acquisition of assets or stock, separation,
reorganization or liquidation, the Committee shall be authorized to cause the
Company to assume outstanding employee awards or issue replacement Awards to
affected employees, whether or not in a transaction to which section 424(a) of
the Code applies, and to make such adjustments in the terms of such awards as
it shall deem appropriate in order to maintain reasonable comparability or
equitable treatment between the assumed awards and the Awards granted under
this Plan as so adjusted.


 


12.           Withholding.


 


Prior
to the payment or settlement of any Award, the Participant must pay, or make
arrangements satisfactory to the Company for the payment of, any and all tax
withholding that in the opinion of the Company is required by law.  The Company or any Affiliate shall have the
right to deduct applicable taxes from any Award payment, to withhold from the
shares of Common Stock being issued or delivered in connection with an Award an
appropriate number of shares for the payment of taxes required by law, or to
take such other action as may be necessary in the opinion of the Company or
such Affiliate to satisfy all obligations for the withholding of such taxes.


 


13.           Transferability.


 


Except
as permitted in this Section 13, no Award granted under this Plan may be
assigned, transferred (other than a transfer by will or the laws of descent and
distribution as provided in Section 7), pledged, or hypothecated (whether
by operation of law or otherwise). 
Awards granted under this Plan shall not be subject to execution,
attachment, or similar process.  The
Committee may, in its sole discretion, permit individual Participants to
transfer the ownership of all or any of their Nonqualified Options granted
under this Plan to (i) the spouse, children or grandchildren of such
Participant (“Immediate Family Members”), (ii) a trust or trusts for the
exclusive benefit of 


 


 

















 


such
Immediate Family Members, or (iii) a partnership in which such Immediate
Family Members are the only partners, provided that (x) there may be no
consideration for any such transfer, and (y) subsequent transfers of
transferred Nonqualified Options shall be prohibited except those in accordance
with Section 7 (by will or the laws of descent and distribution).  The Committee may, in its sole discretion,
create further conditions and requirements for the transfer of Nonqualified
Options.  Following transfer, any such
Nonqualified Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer.  The events causing termination of Awards in
accordance with Section 7 hereof shall continue to be applied with respect
to the original Participant, following which the Nonqualified Options shall be
exercisable by the transferee only to the extent, and for the periods specified
in Section 7.


 


14.           Validity.


 


In
the event any provision of this Plan should be determined to be illegal or
invalid for any reason, it shall not affect the remaining provisions of the
Plan which shall remain in effect as if the illegal or invalid provision had
never been included herein.


 


15.           Governing Law.


 


The
provisions of this Plan shall be governed by, and interpreted and construed in
accordance with, the laws of the State of Delaware.


 


16.           Effective Date, Term, Amendment and
Termination of the Plan.


 


This
Plan will become effective on the date it is approved by the requisite vote of
the stockholders of 3M Company, and shall expire (unless it is terminated
before then) on the tenth anniversary of such effective date.  Such expiration shall not adversely affect
Awards granted under this Plan prior to such expiration date.  The Board of Directors may at any time amend
or terminate this Plan, except that no amendment or termination shall adversely
affect Awards granted under this Plan prior to the effective date of such
amendment or termination; provided, however, that no amendment shall be made
without the prior approval of the holders of a majority of the issued and outstanding
shares of Common Stock represented and entitled to vote on such amendment which
would (i) increase the aggregate number of shares of Common Stock
available for issuance or delivery under this Plan in accordance with Section 4
(except for adjustments made in accordance with Section 11), (ii) permit
the granting of Awards with purchase prices lower than those specified in Section 5,
or (iii) be a material amendment for which stockholder approval is
required by applicable law, regulation or stock exchange rule.


 


17.           Change in Control.


 


For
purposes of this Section 17, the following words and phrases shall have
the meanings indicated below, unless the context clearly indicates otherwise:


 


(a)           “Person” shall have
the meaning associated with that term as it is used in Sections 13(d) and
14(d) of the Act.


 


(b)           “Affiliates and
Associates” shall have the meanings assigned to such terms in Rule 12b-2
promulgated under Section 12 of the Act.


 


 

















 


(c)           “Act” means the
Securities Exchange Act of 1934.


 


(d)           “Continuing
Directors” shall have the meaning assigned to such term in Article Thirteenth
of the Restated Certificate of Incorporation of 3M Company.


 


(e)           “Cause” means (i) a
material violation of any policy of the Company or the Affiliate employing the
Participant, including, without limitation, any of the Company’s Business
Conduct Policies, or (ii) embezzlement from or theft of property belonging
to the Company or the Affiliate employing the Participant.


 


(f)            “Good Reason” means
(i) a material diminution in the Participant’s position, authority, duties
or responsibilities as in effect immediately prior to the Change in Control, (ii) a
material diminution in the Participant’s base salary or annual planned cash
compensation, or (iii) a material change in the geographic location at
which the Participant is required to perform services for the Company or the
Affiliate employing such Participant.


 


Notwithstanding
any other provision of this Plan to the contrary, all outstanding Options and
Stock Appreciation Rights with a Grant Date prior to February 9, 2010
shall (i) become immediately exercisable in full for the remainder of
their respective terms upon the occurrence of a Change in Control of the
Company, and (ii) remain exercisable in full for a minimum period of six
months following the Change in Control; provided, however, that in no event
shall any Option or Stock Appreciation Right be exercisable beyond the original
expiration date.  Similarly, all
restrictions regarding the Restricted Period or the satisfaction of other terms
and conditions prescribed by the Committee, if any, with respect to grants of
Restricted Stock, Restricted Stock Units or other Stock Awards with a Grant
Date prior to February 9, 2010, shall automatically lapse, expire, and
terminate and the Participant shall be immediately entitled to receive a stock
certificate for the number of shares of Common Stock represented by the
Restricted Stock, Restricted Stock Units or Stock Awards upon the occurrence of
a Change in Control.


 


Notwithstanding
any other provision of this Plan to the contrary, if a Participant’s employment
with the Company or an Affiliate is terminated without Cause or if the
Participant resigns for a Good Reason within eighteen months following a Change
in Control of the Company, then all of such Participant’s outstanding Options
and Stock Appreciation Rights with a Grant Date of February 9, 2010 or
later shall become immediately exercisable in full for the remainder of their
respective terms and shall remain exercisable in full for a minimum of six
months following the date of such termination or resignation; provided,
however, that in no event shall any Option or Stock Appreciation Right be
exercisable beyond the original expiration date.  Similarly, all restrictions regarding the Restricted
Period or the satisfaction of other terms and conditions prescribed by the
Committee, if any, with respect to grants of Restricted Stock, Restricted Stock
Units or other Stock Awards with a Grant Date of February 9, 2010 or
later, shall automatically lapse, expire and terminate and the Participant
shall be immediately entitled to receive a stock certificate for the number of
shares of Common Stock represented by the Restricted Stock, Restricted Stock
Units or Stock Awards upon the termination without Cause of the Participant’s
employment with the Company or an Affiliate or the Participant’s resignation
for Good Reason within eighteen months following a Change in Control of the
Company.


 


Notwithstanding
any other provision of this Plan to the contrary, all outstanding Options and
Stock Appreciation Rights shall become immediately exercisable in full and
remain exercisable in full for a minimum period of six months following a
Change in Control in which the individuals or entities 


 


 

















 


acquiring
control of the Company do not assume or otherwise provide for the continuation
of such Options and Rights for at least such six-month period; provided,
however, that in no event shall any Option or Stock Appreciation Right be
exercisable beyond the original expiration date.  Similarly, all restrictions regarding the
Restricted Period or the satisfaction of other terms and conditions prescribed
by the Committee, if any, with respect to grants of Restricted Stock, Restricted
Stock Units or other Stock Awards shall automatically lapse, expire, and
terminate and the Participant shall be immediately entitled to receive a stock
certificate for the number of shares of Common Stock represented by the
Restricted Stock, Restricted Stock Units or Stock Awards upon the occurrence of
a Change in Control in which the individuals or entities acquiring control of
the Company do not assume or otherwise provide for the continuation of such
Restricted Stock, Restricted Stock Units and other Stock Awards.


 


Notwithstanding
any other provision of this Plan to the contrary, upon the occurrence of a
Change in Control of the Company each Performance Period shall end and the
Company shall immediately distribute in cash or shares of Common Stock, as
appropriate, to the respective Participants the value of all outstanding
Performance Shares and Performance Units granted under this Plan with a Grant
Date prior to February 9, 2010, as determined in accordance with the
following rules:


 


(w)  With respect to those Performance Shares or Performance Units
for which the Performance Period had not been completed prior to the Change in
Control of the Company, the value of such Shares or Units for purposes of this Section 17
shall be equal to the product of a fraction, where the numerator of such fraction
is the number of full calendar months completed during the respective
Performance Period and prior to the Change in Control and the denominator of
such fraction is the total number of months in such Performance Period,
multiplied by the largest of:


 


•                                        the value of
such Performance Shares or Performance Units computed as if the Company’s
performance during the remainder of the Performance Period following the Change
in Control equaled its performance during those full calendar quarters
completed during the respective Performance Period and prior to the date of the
Change in Control;


 


•                                        the value of
such Performance Shares or Performance Units computed as if the Performance
Period for such Shares or Units was the three consecutive calendar year period
ending immediately prior to the year in which the Change in Control occurs; or


 


•                                        any other
amount approved, in its discretion, by the Committee.


 


(x)  With respect to those Performance Shares or Performance Units
for which the Performance Period has been completed at the time of a Change in
Control of the Company, the value of such Shares or Units for purposes of this Section 17
shall be the actual value as adjusted to reflect the actual Company performance
during the Performance Period.


 


Notwithstanding
any other provision of this Plan to the contrary, if a Participant’s employment
with the Company or an Affiliate is terminated without Cause or if the
Participant resigns for a Good Reason within eighteen months following a Change
in Control of the Company, then with respect to such Participant each
Performance Period shall end and the Company shall immediately distribute in
cash or shares of Common Stock, as appropriate, to such Participant the value
of all outstanding 


 


 

















 


Performance
Shares and Performance Units granted under this Plan with a Grant Date of February 9,
2010 or later, as determined in accordance with the following rules:


 


(y)  With respect to those Performance Shares or Performance Units
for which the Performance Period had not been completed prior to the
Participant’s termination or resignation, the value of such Shares or Units for
purposes of this Section 17 shall be equal to the product of a fraction,
where the numerator of such fraction is the number of full calendar months
completed during the respective Performance Period and prior to the termination
or resignation and the denominator of such fraction is the total number of
months in such Performance Period, multiplied by the largest of:


 


•                                        the value of
such Performance Shares or Performance Units computed as if the Company’s
performance during the remainder of the Performance Period following the
termination or resignation equaled its performance during those full calendar
quarters completed during the respective Performance Period and prior to the
date of the termination or resignation;


 


•                                        the value of
such Performance Shares or Performance Units computed as if the Performance
Period for such Shares or Units was the three consecutive calendar year period
ending immediately prior to the year in which the termination or resignation
occurs; or


 


•             any other
amount approved, in its discretion, by the Committee.


 


(z)  With respect to those Performance Shares or Performance Units
for which the Performance Period has been completed by the time of the
Participant’s termination or resignation, the value of such Shares or Units for
purposes of this Section 17 shall be the actual value as adjusted to
reflect the actual Company performance during the Performance Period.


 


For
purposes of this Section 17, a Change in Control of the Company shall be
deemed to have occurred only if a “change in the ownership” or a “change in
effective control” and/or a “change in the ownership of a substantial portion
of the assets” of the Company has taken place (as those terms are defined in
Treasury Regulations §1.409A-3(i)(5) or such other regulation or guidance
issued under section 409A of the Code.


 


The
Company shall pay to each Participant the amount of all reasonable legal and
accounting fees and expenses incurred by such Participant in seeking to obtain
or enforce his or her rights under this Section 17, or in connection with
any income tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to the payments made pursuant to this Section 17,
unless a lawsuit commenced by the Participant for such purposes is dismissed by
the court as being frivolous or otherwise improper under applicable court
rules.  The Company shall also pay to
each Participant the amount of all reasonable tax and financial planning fees
and expenses incurred by such Participant in connection with such Participant’s
receipt of payments pursuant to this Section 17.  Payment of these legal and accounting fees
and expenses, as well as these tax and financial planning fees and expenses,
shall be made as soon as administratively feasible, but no later than two and
one-half months following the end of the Participant’s taxable year in which
these fees and expenses have been incurred.


 


 

















 


18.           Miscellaneous.


 


(a)           Nothing in this Plan
or the fact that a person has received or become eligible to receive Awards
hereunder shall be deemed to give such person any right to be retained in the
employ of the Company or any Affiliate or to interfere with the right of the
Company or any Affiliate to discipline or terminate the employment of such
person at any time for any reason whatsoever. 
No person shall have any claim or right to receive Awards under this
Plan, except as provided in accordance with the provisions of this Plan and as
approved by the Committee.  Unless
otherwise specifically determined by the Committee, neither the Awards
themselves nor the payments received with respect to such Awards granted under
this Plan will be deemed a part of any Participant’s compensation for purposes
of determining such Participant’s payments or benefits under any benefit plan
or severance program of the Company or any Affiliate or under the severance pay
law of any country.


 


(b)           This Plan will be
unfunded.  The Company does not intend to
create any trust or separate fund in connection with the Plan.  The Company shall not have any obligation to
set aside funds or segregate assets to ensure the payment of any Award.  The Plan shall not establish any fiduciary
relationship between the Company and any Participant or other person.  To the extent any person holds any rights by
virtue of an Award under this Plan, such right (unless otherwise determined by
the Committee) shall be no greater than the right of an unsecured general
creditor of the Company.


 


(c)             Prior
to the payment or settlement of any Award, the Participant must pay or make
arrangements satisfactory to the Company and its Affiliates for the payment of
any and all tax withholding that in the opinion of the Company and its
Affiliates is required by law.  The
Company and its Affiliates shall have the right to deduct from any Award or any
payment due on account of any Award granted under this Plan the federal, state,
local or foreign income or other taxes required by law to be withheld with
respect to such Award or payment, to withhold from the shares of Common Stock
being issued or delivered in connection with an Award an appropriate number of
shares for the payment of taxes required by law, and to take such other action
as may be necessary in the opinion of the Company and its Affiliates to satisfy
all obligations for the withholding and payment of such taxes.


 


(d)             The
provisions of this Plan and the documents evidencing Awards granted under this
Plan shall be construed and interpreted according to the laws of the State of
Delaware.


 


(e)           In case any
provision of this Plan shall be ruled or declared invalid for any reason, said
illegality or invalidity shall not affect the remaining provisions, and the
remainder of the Plan shall be construed and enforced as if such illegal or
invalid provision had never been included herein.


 


(f)            To the extent
permitted by the Committee, each Participant shall have the right at any time
to designate any person, persons or entity as the beneficiary or beneficiaries
to whom payment of the Participant’s outstanding Awards shall be made in the
event of the Participant’s death.  Any
designation filed under the Plan may be revoked or changed by written
instrument so signed and filed prior to the Participant’s death.  If a Participant designates more than one
beneficiary to receive such Participant’s outstanding Awards and any
beneficiary shall predecease the Participant, the Company shall pay the
deceased beneficiary’s share to the surviving beneficiary


 


 

















 


or
beneficiaries proportionately, as the portion designated by the Participant for
each bears to the total portion designated for all surviving beneficiaries.


 


(g)           This Plan is
intended to comply and shall be administered in a manner that is intended to
comply with the requirements of Section 409A of the Code (including the
Treasury Department guidance and regulations issued thereunder), and shall be
construed and interpreted in accordance with such intent.  If the Committee determines that an Award,
Award document, payment, transaction or any other action or arrangement
contemplated by the provisions of this Plan would, if undertaken, cause a
Participant to become subject to any additional taxes or other penalties under Section 409A
of the Code, then unless the Committee specifically provides otherwise, such
Award, Award document, payment, transaction or other action or arrangement
shall not be given effect to the extent it causes such result and the related
provisions of the Plan and/or Award documents will be deemed modified or, if
necessary, suspended in order to comply with the requirements of Section 409A
of the Code to the extent determined appropriate by the Committee, in each case
without the consent of or notice to the Participant.


 


(h)           Although the Company
and its Affiliates may endeavor to structure an Award or payment hereunder so
that it (i) qualifies for favorable U.S. or foreign tax treatment, or (ii) avoids
adverse tax treatment, neither the Company nor any Affiliate makes any
representation to that effect and expressly disavows any commitment or
obligation to maintain favorable or avoid unfavorable tax treatment for any
Participant.