CEO Pay Watch: The pay for Michael Roman, chairman and CEO of 3M Inc., increased 40% in 2021.

  • Total compensation for year-ended Dec. 31: $9,597,690
  • Salary: $1,337,487
  • Non-equity incentive pay: $3,131,774
  • Other compensation: $251,687
  • Exercised stock options: $1,071,878
  • Value realized on vesting shares: $3,804,864
  • New stock options: 207,302
  • CEO pay ratio: 253 to 1
  • Median employee pay: $71,821
  • Total 2021 shareholder return: 4.9%

Note: 91% of Roman's compensation is at-risk compensation, and much of that is longer term equity awards that depend on the value of 3M's share price.

But 3M's recent share price has limited Roman's realized compensation. Over the last year, the three-year and five-year pattern of 3M stock has trailed the performance of the S&P 500 and the peer group of companies for 3M. And since the start of 2021, 3M's shares are down 15%.

The company noted in the proxy that the share priced underperformance has led Roman's realized pay to be less than total compensation reported on the summary compensation table which counts the grant date value of equity awards.

Half of Roman's long-term equity incentive awards are in stock options and because the share price was $144.75 on March 1 the proxy noted that all of his stock options in the last three years are underwater. Those options were priced between $157.24 and $201.12.

Options generally have a 10-year life span so those options still have time to increase in value.

Financial performance in 2021 did earn Roman a cash incentive bonus of $3.1 million, which was 134% of the target for the year when 3M exceed revenue and profit growth targets and almost twice as much as his bonus in 2020.

The restricted stock that vested during the year for performance from 2019 to 2021 was paid at about 88% of the targeted amount for that period. And Roman was able to exercise some older stock options in 2021 that were likely granted in 2011.

The options gains and value realized from restricted stock awards did increase enough that Roman's total compensation increased 40% from his $6.8 million total in 2020.

Shareholders at 3M have added two additional proposals to this year's proxy in addition to standard proposals asking to approved auditors, directors and the company's executive compensation plan.

Shareholder John Montgomery, of the the John Montgomery Trust, added a proposal asking the company to create and publish a report on 3M's environmental costs. And Steven Milloy, owner of 20 shares of 3M stock, submitted a proposal asking the company for a report on its connections to China.

The board of directors opposes both proposals and asks shareholders to vote against them.