3M (MMM): How I Voted

3M (MMM) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/8/2012. Voting ends 5/7 on Moxy Vote’s proxy voting platform, which listed fourteen “good causes,” including three consolidations, when I checked and voted on 5/6. ProxyDemocracy.org had four funds voting.

I make it a practice to vote against pay packages where NEOs were paid above median in the previous year. Yes, I know, this is pretty crude analysis. I’ll make exceptions where something obviously warrants different treatment. However, I’m concerned that NEOs are taking a greater and greater portion of wealth generated by companies.

According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay, Oxford Review of Economic Policy, Vol. 21, Issue 2, pp. 283-303, 2005), the aggregate compensation paid by public companies to their top-five executives during the period 1993-2003 totaled about $350 billion, and the ratio of this aggregate top-five compensation to the aggregate earnings of these firms increased from 5 percent in 1993-1995 to about 10 percent in 2001-2003.

At the same time, few firms want to admit to having average executives, so they seek to compensate their executives at above-average levels. They survey executive compensation at corporations and then set compensation packages that are above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average and their collective pay spiraling out of control.

3M’s SummaryCompensation Table shows that George W. Buckley, CEO & Chair was the highest paid named executive officer (NEO) at over $25M in 2011. I’m using Yahoo! Finance to determine market cap and  Wikipedia’s rule of thumb regarding classification. According to those sources, 3M is a Large-cap. According to the United States Proxy Exchange (USPX) guidelines (pages 9&10), using data from Equilar, the median CEO compensation for large-cap corporations was $10.8 million in 2010, so 3M’s pay is above that median.  I voted against the pay package and against amending the stock plan to provide bonuses. I also voted against the members of the compensation committee (Vance D. Coffman, Edward M. Liddy, Robert S. Morrison, Aulana L. Peters, Robert J. Ulrich).

I voted in favor of the proxy proposal #6 from Walden Asset Management seeking disclosure of political contributions. This seems like good governance to me. We should know where our money goes and I personally can support what the US Chamber of Commerce does with it, like opposing proxy access. Although I support in principle proposal #7 from Trillium Asset Management Corp. that seeks a ban on political contribution, I can’t support it at one company alone. That’s too much like disarmament by one country while others continue to arm.

Of course, I supported my own proposal #8, which seeks to have the board adopt a policy to split the CEO and Chair positions. How can a board dispassionately evaluate the CEO when the CEO also chairs the board? The Corporate Library/GMI, an independent investment research firm downgraded our company to “D” with “High Governance Risk” and “Very High Concern” in executive pay. I think splitting the positions would likely reduce those concerns.

On other matters, I voted with management.

Here’s the deadline for proposals by shareowners for next year:

In order for a stockholder proposal to be considered for inclusion in 3M’s Proxy Statement for next year’s Annual Meeting, our Corporate Secretary must receive the proposal by November 21, 2012. Such proposals must be sent via registered, certified, or express mail (or other means that allows the stockholder to determine when the proposal was received by the Company) to: Gregg M. Larson, Deputy General Counsel and Secretary, 3M Company, 3M Center, Building 220-13E-34, St. Paul, MN 55144-1000. Such proposals must comply with the SEC’s regulations regarding the inclusion of stockholder proposals in Company sponsored proxy materials, such as the stockholder continuing to own a minimum number of shares until the Annual Meeting and appearing in person or through an authorized representative at the meeting to present the proposal.

And here’s how I actually voted, using Moxy Vote’s proxy voting platform.

Proposals		My Vote

	ELECTION OF DIRECTOR: LINDA G. ALVARADO	Yes
	ELECTION OF DIRECTOR: VANCE D. COFFMAN	No
	ELECTION OF DIRECTOR: MICHAEL L. ESKEW	Yes
	ELECTION OF DIRECTOR: W. JAMES FARRELL	Yes
	ELECTION OF DIRECTOR: HERBERT L. HENKEL	Yes
	ELECTION OF DIRECTOR: EDWARD M. LIDDY	No
	ELECTION OF DIRECTOR: ROBERT S. MORRISON	No
	ELECTION OF DIRECTOR: AULANA L. PETERS	No
	ELECTION OF DIRECTOR: INGE G. THULIN	Yes
	ELECTION OF DIRECTOR: ROBERT J. ULRICH	No
	TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS 3M S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.	Yes
	ADVISORY APPROVAL OF EXECUTIVE COMPENSATION.	No
	TO APPROVE THE 2012 AMENDED AND RESTATED GENERAL EMPLOYEES STOCK PURCHASE PLAN.	Yes
	TO APPROVE THE AMENDED 2008 LONG-TERM INCENTIVE PLAN.	No
	STOCKHOLDER PROPOSAL ON LOBBYING.	Yes
	STOCKHOLDER PROPOSAL TO PROHIBIT POLITICAL SPENDING FROM CORPORATE TREASURY FUNDS.	Yes
	STOCKHOLDER PROPOSAL ON INDEPENDENT BOARD CHAIRMAN.	Yes