Michael Roman, 3M Co. CEO
Total compensation: $5,195,051 for the year ended December 31, 2018
Non-equity incentive pay: $1,431,503
Other compensation: $141,771
Exercised stock options: $1,119,087
Value realized on vesting shares: $1,452,714
New stock options: 93,034
CEO pay ratio: 302:1
Median employee pay: $57,313
Total 2018 shareholder return: -16.9 percent
Note: Last March, 3M announced Roman would succeed Inge Thulin as CEO on July 1. And this year, the company’s board nominated Roman to succeed Thulin as chairman when shareholders gather at its annual meeting May 14. To reflect his new role as CEO, the company set Roman’s annual salary rate at $1.2 million per year and set his annual performance-based cash incentive target at $3.12 million.
During 2018, Roman realized $5.2 million in total compensation, up from the $3.4 million he realized in 2017. The company also recorded an expense of $3.61 million for new stock awards and $3.61 million for new stock option awards to Roman in 2018.
Thulin will retire as a 3M employee on June 1. His final year was his most lucrative. He realized $22.9 million in 2018, including $19.1 million from previously issued long-term equity awards.
When a company has two CEOs during a year, it can combine their compensation for purposes of calculating the CEO pay ratio. The ratio is a measure of the CEO’s compensation, which includes the grant date value of new long-term equity awards, with the total compensation of the median employee in the company.
While the summary compensation table of 3M’s proxy statement states Roman’s 2018 compensation, including the value of new options and stock awards, as $12.9 million and Thulin’s compensation as $20.5 million, the figure used for calculating the CEO pay ratio was $17.3 million.