3M CEO's compensation sinks 21%

Mike Roman, chair and chief executive of Maplewood-based 3M, saw his compensation decrease by $1.9 million in 2022.

Mike Roman

Chair, CEO

3M Corp.

Note: Roman has been CEO of 3M since July 2018 and a 3M employee for more than 30 years. His 2022 compensation was down 21% from the prior year. The biggest decrease came from his annual cash incentive, which was $1.8 million less as 3M hit only 54% of the financial and operational targets for 2022.

There is a growing trend in executive compensation to add environmental, social, governance (ESG) measures to pay plans. According to the pay consulting firm Semler Brossy, nearly 70% of S&P 500 companies have added ESG measures into their executive pay plans.

According to Semler Brossy, if ESG metrics are included in pay plans, shareholders want some teeth in the measures and solid disclosures on the goals and achievements toward them.

Based on the ESG scorecard, the compensation committee of the board decided not to increase or decrease executives' annual bonuses for 2022.

As disclosed in a recent Wall Street Journal article, one of 3M's largest shareholders raised questions about 3M's share performance and Roman's leadership.

Flossbach von Storch is a German mutual fund company that is among 3M's 10 largest shareholders with 1.6% of the company's shares outstanding. One of its portfolio managers sent a letter to the company and Roman voicing concerns over the litigation while noting that 3M's shares have had a negative total return of 32% since he became CEO.

3M is a member of the S&P 500 Index and the smaller Dow Jones industrial average. 3M's shares underperformed both indexes in 2022 — and have since Roman became CEO. In 2022 3M's shares had a negative total return of nearly 30%, while the S&P and Dow were respectively off 18% and 9%.