William M. Brown
3MAbout William M. Brown
William M. “Bill” Brown, 62, is Chairman of the Board and Chief Executive Officer of 3M. He became CEO on May 1, 2024, and was appointed Chairman effective March 1, 2025; he has served as a director since 2024. Brown holds B.S. and M.S. degrees in mechanical engineering (Villanova) and an MBA from Wharton, and previously led Harris Corporation and L3Harris as Chairman/CEO and Executive Chair following the 2019 merger; earlier he spent 14 years at United Technologies in leadership roles . Under his early tenure, 3M delivered a 46.1% one‑year total shareholder return for 2024 and achieved Annual Incentive Plan (AIP) payouts of 128.6% of target; 2024 performance share awards accrued at 98.3% for Year 1, on metrics that included 20.0% Adjusted EPS growth and 4.9% free cash flow growth for compensation purposes .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| 3M Company | Chairman and CEO | 2025–present (Chair); CEO since May 2024 | Oversaw spin-off integration of Solventum, tightened operating rigor, and delivered 46.1% TSR in 2024 while driving cash flow and margin execution; led shareholder engagement on pay and redesigned PSAs for 2025 . |
| L3Harris Technologies | Chairman & CEO; Executive Chair | 2019–2021 (Chair/CEO); 2021–2022 (Exec. Chair) | Led post‑merger integration and governance as Chair/CEO/Exec. Chair at a complex global tech/aerospace company . |
| Harris Corporation | Chairman, President & CEO | 2014–2019 (Chairman from 2014); CEO since 2011 | Guided Harris up to combination with L3; extensive operating and governance leadership . |
| United Technologies Corporation | Various leadership roles | ~1997–2011 | Built operating and leadership credentials across UTC businesses . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Becton, Dickinson and Company | Director | Current | Current public company board service . |
| Celanese Corporation | Director | Prior 5 years | Past service within last five years . |
| L3Harris Technologies | Director | Prior 5 years | Past service within last five years . |
Fixed Compensation
| Element | 2024 target/annualized | Notes |
|---|---|---|
| Base salary | $1,800,000 | Effective on hire date May 1, 2024 (prorated in 2024) . |
| Perquisites and other | $612,013 | Includes aircraft personal-use incremental cost ($322,296), relocation (incl. tax reimbursements), 401(k)/VIP contributions, financial planning; no tax gross-ups other than taxable relocation . |
Performance Compensation
Annual Incentive (AIP) – 2024 (CEO paid on total company)
| Metric (weight) | Threshold | Target | Maximum | Actual vs plan | Payout % | Weighted payout |
|---|---|---|---|---|---|---|
| Local Currency Sales (33.3%) | $23,607m | $25,660m | $27,713m | 101% | 112.5% | 37.5% |
| Operating Income (33.3%) | $4,548m | $5,350m | $6,153m | 103% | 120.0% | 40.0% |
| Operating Cash Flow (33.3%) | $4,259m | $5,010m | $5,762m | 108% | 153.3% | 51.1% |
| Business performance factor | 128.6% | |||||
| Individual performance multiplier | 100% (no change) | |||||
| Sustainability modifier | 0% (no change) | |||||
| Approved payout (Brown) | $2,711,725 (on $2,108,610 target) |
Notes: 2024 one‑year TSR was 46.1%; committee used its exclusion policy (e.g., significant litigation, spin-off effects) to align payouts with operating performance and shareholder experience .
Long-Term Incentives (awarded in 2024)
| Award/metric | Structure | Targets and design | Brown’s 2024 grants |
|---|---|---|---|
| Performance Share Awards (PSAs) | 3-year plan with annual measurement: 2024 (50%), 2025 (30%), 2026 (20%) | Equally weighted: Adjusted EPS Growth, Free Cash Flow Growth, Relative Organic Sales Growth; 2024 thresholds/targets/maximums set and recast post spin-off . | Pro‑rata annual PSA grant target value $4,333,333; target shares 44,605 (threshold 8,921; max 89,210). Additional inducement PSA target $2,500,000; target shares 25,734 (threshold 5,147; max 51,468) . |
| Options | 10‑yr term; 3‑yr ratable vesting; strike = close on grant | Value realized only if stock price rises | Pro‑rata annual options grant value $4,333,333; 211,096 options @ $97.15, vest 1/3 on May 3, 2025/2026/2027 . |
| RSUs (inducement) | 3‑yr ratable vesting 1/3 per year | Dividend equivalents paid only if vested | $2,500,000 inducement RSU; 25,734 units vesting May 3, 2025/2026/2027 . |
Performance outcomes to‑date: For the 2024 PSA Year 1 tranche, accrual totaled 98.3% of target based on 20.0% Adjusted EPS Growth, 0.9% Relative Organic Sales Growth vs benchmark, and $4,309m Free Cash Flow used for comp purposes; final payout occurs after FY2026 .
2025 LTI design changes (shareholder-responsive)
- PSAs move to a single 3‑year cumulative performance period (2025–2027) with 50% Adjusted EPS and 50% Free Cash Flow; ±20% relative TSR modifier vs S&P 500 Industrials .
- Change responds to 2024 say‑on‑pay feedback and aims to tighten alignment with shareholder experience .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 25,734 restricted stock units; no common shares reported directly; all directors/officers each <1% of class . |
| Outstanding unearned PSAs (at max display) | 89,210 (2024 annual PSA) = $11.70m; 51,468 (inducement PSA) = $6.75m, valued at 12/31/24 price plus accrued dividend equivalents (SEC disclosure displays max in table) . |
| Unvested RSUs | 25,734 units; value $3,423,604 at 12/31/24 . |
| Unvested options | 211,096 options @ $97.15; intrinsic value (unvested, in‑the‑money) $6,742,406 at 12/31/24 . |
| Vesting calendar (pressure watchpoints) | Options: one‑third on May 3, 2025/2026/2027; Inducement RSUs: one‑third on May 3, 2025/2026/2027; PSAs cliff‑settle post 12/31/2026 . |
| Ownership guidelines (execs) | CEO 6x base salary; policy counts RSUs; all current NEOs “in compliance”; Brown’s compliance window to May 1, 2029 . |
| Hedging/pledging | Prohibited: no hedging, short sales, standing orders, margin accounts, or pledging; trades pre‑cleared and within windows . |
Employment Terms
| Topic | Terms for Brown / CEO |
|---|---|
| Start date | CEO effective May 1, 2024; Chairman effective March 1, 2025 . |
| Contract | No fixed‑term employment or change‑in‑control (CIC) agreement; market‑standard plan-based protections . |
| Severance plan | CEO: 24 months base salary; continued prorated AIP (capped at 100% of prorated target for post‑termination period); prorated RSU vesting; PSAs prorated; outplacement; release required; “better net” cutback for 280G—no gross‑ups . |
| Potential payouts (12/31/24 illustrations) | Qualifying termination (no CIC): $11.34m; with CIC: $19.25m; death: $19.39m; disability: $3.42m (components include unvested equity treatment) . |
| Clawback policy | Covers restatements (regardless of misconduct), non‑compliant reports due to misconduct, significant misconduct or risk‑management failures; recoupment of cash/equity; board discretion for other remedies . |
| Restrictive covenants | Protective covenant agreement with non‑compete and non‑solicit (as permitted by law) tied to inducement/annual equity . |
| Sign‑on/relocation | $3,000,000 hiring bonus (repayable under certain conditions within 3 years), inducement PSAs/RSUs ($2.5m each), relocation benefits . |
Performance & Track Record
- 2024 execution highlights: completed Solventum spin-off (April 1, 2024), delivered double‑digit Adjusted EPS growth and robust free cash flow used for compensation purposes, outperformed S&P 500 Industrials on TSR, advanced R&D pipeline and new product launches, improved supply chain metrics and service levels, and prioritized risk reduction in litigation and PFAS exit .
- AIP outcomes consistent with one‑year TSR (46.1%) at 128.6% payout; 2022 PSAs (pre‑Brown) paid 48.7%, aligning with three‑year annualized TSR of (0.6)% for 2022–2024 .
- Shareholder responsiveness: following a 45.3% say‑on‑pay outcome in 2024, the board conducted expanded engagement and redesigned the LTI program for 2025 (single 3‑year measures + TSR modifier) and enhanced disclosure on adjustments .
Board Governance
- Board service: Director since 2024; Chairman since March 1, 2025; not independent due to employment .
- Structure and dual‑role implications: 3M uses a combined Chair/CEO model buttressed by a robust Lead Independent Director (Jim Fitterling) with authority over agendas, materials, executive sessions, and shareholder outreach; independent directors meet in executive session at each regular meeting (two sessions per meeting) .
- Committees: all four standing committees (Audit; Compensation & Talent; Nominating & Governance; Science, Technology & Sustainability) are fully independent .
- Board effectiveness: overall 2024 attendance 97%; seven board meetings; active refreshment (8 of 11 nominees joined since 2021) .
- Director compensation context: Employee directors (including Brown) receive no director fees; non‑employee director design includes annual cash/stock retainers, lead independent and chair fees (e.g., LID $45,000), DSUs with hold‑until‑departure policy; increases for 2024 retainer levels were adopted .
Director Compensation (for Brown as a director)
- Employee directors do not receive board compensation; Brown’s compensation is solely as an executive (salary, AIP, equity) .
Compensation Peer Group (benchmarking)
- 2024 peer group included Abbott, Boeing, Caterpillar, Corning, Deere, DuPont, Eaton, Emerson, GE, Honeywell, ITW, JCI, Kimberly‑Clark, Parker‑Hannifin, P&G, TE Connectivity; Abbott, Boeing, J&J, P&G removed for 2025; Carrier, Colgate‑Palmolive, Cummins, Dow, Ecolab, General Dynamics, Northrop Grumman, Trane added .
- Brown’s 2024 target Total Direct Compensation ($17.95m) set at ~109% of peer median due to qualifications and large‑cap CEO track record; annualized LTI target $13m .
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay approval: 45.3% (below historical average); led to expanded outreach and program changes for 2025 (3‑year cumulative PSAs and TSR modifier; enhanced transparency on adjustments) .
- 2025 annual meeting: shareholders supported directors, auditor ratification, and say‑on‑pay (preliminary results) .
Compensation Structure Analysis
- Mix and leverage: CEO pay is predominantly at‑risk via annual AIP and LTI (PSAs/options), with 2024 inducement equity balanced 50% performance‑based; options align with stock price appreciation, PSAs with EPS/FCF/relative growth; RSUs provide retention .
- Adjustments policy: Committee applied an established exclusion framework (litigation, spin‑off, PFAS exit, pension risk transfer, etc.), increasing 2024 AIP payout from 78.3% to 128.6% and PSA Year‑1 accrual from 43.3% to 98.3%; disclosures detail rationale and are aligned with peer practice per consultant review .
- 2025 design shift: moving to cumulative 3‑year goals and a relative TSR modifier strengthens alignment with shareholder outcomes and addresses investor feedback .
- Governance safeguards: comprehensive clawback policy, prohibition on hedging/pledging, robust ownership guidelines, no fixed‑term/CIC agreements, “better net” excise tax cutback, and independent Compensation & Talent Committee with independent consultant (FW Cook) .
Risk Indicators & Red Flags
- 2024 say‑on‑pay at 45.3% signaled investor concern; program changes implemented for 2025 in response .
- Reliance on significant adjustments (litigation/spin-off) increases scrutiny risk; committee provided detailed framework and quantitative effect on payouts .
- Dual Chair/CEO role balanced by empowered Lead Independent Director and fully independent committees; frequent executive sessions .
- Hedging/pledging barred; no tax gross‑ups except standard taxable relocation; no single‑trigger CIC vesting .
Equity Ownership & Vesting Schedules (detail)
| Instrument | Quantity/terms | Vesting/timing | 12/31/24 disclosure value |
|---|---|---|---|
| Options (2024 annual) | 211,096 @ $97.15, exp. 5/2/2034 | 1/3 on 5/3/25, 5/3/26, 5/3/27 | $6,742,406 intrinsic value (unvested, in‑the‑money) . |
| Inducement RSUs (2024) | 25,734 units | 1/3 on 5/3/25, 5/3/26, 5/3/27 | $3,423,604 . |
| PSAs (2024 annual) | Target 44,605 (thresh 8,921; max 89,210) | 3‑yr perf; Year‑1 accrued 98.3%; settle by 3/15/27 | Max display $11,703,460; Year‑1 accrual 98.3% . |
| Inducement PSAs (2024) | Target 25,734 (thresh 5,147; max 51,468) | 3‑yr perf; same plan as annual PSA | Max display $6,752,087 . |
Employment Economics – CIC/Severance Illustrations (as of 12/31/24)
| Scenario | Cash severance | Equity/benefits | Total |
|---|---|---|---|
| Qualifying termination (no CIC) | $6,750,000 | Equity vest/proration, 401(k) vesting, outplacement | $11,342,939 |
| Qualifying termination (with CIC) | $6,750,000 | Accelerated RSUs/options; prorated PSAs; other benefits | $19,245,402 |
| Death | — | Immediate vest of RSUs/options; PSAs paid per plan; life insurance | $19,393,783 |
| Disability | — | Immediate RSU vest; continued option vesting term; PSAs per plan | $3,423,604 |
Investment Implications
- Alignment improving, but adjustments are material: The committee’s exclusions significantly lifted 2024 payouts (AIP from 78.3% to 128.6%; PSA Year‑1 accrual from 43.3% to 98.3%), a point investors will monitor alongside the 2025 shift to 3‑year cumulative goals and a TSR modifier; this should reduce adjustment reliance and tighten pay‑for‑performance over time .
- Retention risk appears controlled: Brown is covered by a strong severance framework, non‑compete/non‑solicit, robust ownership requirements, and meaningful unvested equity (options/RSUs/PSAs) vesting through 2027, which limits near‑term flight risk; however, watch vest dates for potential selling pressure as awards vest (May 2025/2026/2027) .
- Governance: Combined Chair/CEO role is mitigated by a powerful LID structure and independent committees; board engagement and 2025 say‑on‑pay support indicate improved governance traction post‑2024 vote .
- Trading signal watchpoints: Upcoming vesting windows (May each year) and PSA settlement (early 2027) could create incremental supply; hedging/pledging prohibitions reduce alignment risks, and option exposure incentivizes share‑price appreciation .
Sources: 3M 2025 DEF 14A (filed Mar 26, 2025) and 8‑K/press releases cited throughout.