3M 2006 Annual Report Download - page 104

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
NOTE 16. Management Stock Ownership Program (MSOP)
In May 2005, shareholders approved 36.75 million shares for issuance under the MSOP in the form of management
stock options, restricted stock, restricted stock units and stock appreciation rights. Under the plan, the Company has
principally issued management stock options that are granted at market value on the date of grant. Prior to 2005, under
previous plans, these options were generally exercisable one year after the date of grant, with expiration 10 years from
the date of grant. Effective with the May 2005 grant, the Company changed its vesting period from one to three years with
the expiration date remaining at 10 years from date of grant. Outstanding shares under option include grants from
previous plans. There were approximately 14,800 participants in the plan with outstanding options at December 31, 2006.
          
Management Stock Ownership Program
 2006 2005 2004
Number of Exercise Number of Exercise Number o
f
Exercise
  Options Price* Options Price* Options Price*
8QGHURSWLRQ± 
January 1 80,157,713 $62.40 78,293,754 $58.70 73,629,275 $52.42
Granted
Annual 11,339,848 87.23 11,391,723 76.87 12,499,425 84.39
Progressive (Reload) 652,552 80.44 751,995 81.19 892,425 83.10
Exercised (8,693,946) 47.71 (9,027,646) 48.30 (8,686,381) 44.81
Canceled (588,264) 74.72 (1,252,113) 75.65 (40,990) 79.85
December 31 82,867,903 $67.41 80,157,713 $62.40 78,293,754 $58.70
Options exercisable
December 31 64,218,738 $62.85 68,714,166 $60.03 65,471,418 $53.91
Shares available for grant
December 31 13,074,202 24,937,892 7,869,168
*Weighted average
MSOP Options Outstanding and Exercisable at December 31, 2006
 Options Outstanding Options Exercisable
Range of Remaining
Exercise Contractual Exercise Exercise
Prices Shares Life (months)* Price* Shares Price*
$43.35-64.50 46,731,809 48 $55.55 46,731,809 $55.55
$64.65-89.15 36,136,094 96 82.73 17,486,929 82.35
*Weighted average
For options outstanding at December 31, 2006, the weighted-average remaining contractual life was 69 months and
the aggregate intrinsic value was $1.075 billion. For options exercisable at December 31, 2006, the weighted-average
remaining contractual life was 58 months and the aggregate intrinsic value was $1.065 billion. As of December 31,
2006, there was $212 million of compensation expense that has yet to be recognized related to non-vested stock-
based awards that is expected to be recognized over a weighted-average period of 1.93 years. The total intrinsic
values of stock options exercised during 2006, 2005 and 2004, respectively, was $289 million, $278 million and
$339 million. Cash received from options exercised during 2006, 2005 and 2004, respectively, was $414 million,
$437 million and $389 million.
Effective with the May 2005 grant, the Company no longer issues options eligible for additional progressive (reload)
options; however, when a progressive option is issued upon the exercise of a pre-May 2005 non-qualified stock
option, the option is revalued and additional stock compensation expense is incurred. Refer to Note 1 for the impact of
stock-based compensation on net income and earnings per share.