3M 2015 Annual Report Download - page 113

TableofContents
StockOptionProgram
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ThefollowingtablesummarizesstockoptionactivityfortheyearsendedDecember31:
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2015 2014 2013 
  Weighted   Weighted   Weighted 
Numberof Average Numberof Average Numberof Average 
Options ExercisePrice Options ExercisePrice Options ExercisePrice 
Underoption—          
January1  39,235,557 $ 90.38  43,938,778  $ 83.84  56,565,030  $ 80.33 
Granted:          
Annual  5,529,544  165.91  5,736,183   126.77  6,220,810   101.55 
Progressive(Reload)  —  —  —   —  140,447   109.83 
Other  —  —  —   —  191   119.62 
Exercised  (5,978,382) 83.74  (10,219,261)  82.37  (18,825,218)  79.25 
Canceled  (234,274) 128.99  (220,143)  105.11  (162,482)  89.92 
December31  38,552,445 $ 102.01  39,235,557  $ 90.38  43,938,778  $ 83.84 
Optionsexercisable          
December31  27,262,062 $ 85.97  27,502,208  $ 81.42  32,038,228  $ 79.58 
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Stockoptionsvestoveraperiodfromonetothreeyearswiththeexpirationdateat10yearsfromdateofgrant.Outstandingoptions
undergrantincludegrantsfrompreviousplans.AsofDecember31,2015,therewas$69millionofcompensationexpensethathas
yettoberecognizedrelatedtonon-vestedstockoptionbasedawards.Thisexpenseisexpectedtoberecognizedovertheremaining
weighted-averagevestingperiodof21months.ForoptionsoutstandingatDecember31,2015,theweighted-averageremaining
contractuallifewas66monthsandtheaggregateintrinsicvaluewas$1.958billion.ForoptionsexercisableatDecember31,2015,
theweighted-averageremainingcontractuallifewas52monthsandtheaggregateintrinsicvaluewas$1.763billion.
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Thetotalintrinsicvaluesofstockoptionsexercisedduring2015,2014and2013was$465million,$615millionand$562million,
respectively.Cashreceivedfromoptionsexercisedduring2015,2014and2013was$501million,$842millionand$1.492billion,
respectively.TheCompany’sactualtaxbenefitsrealizedforthetaxdeductionsrelatedtotheexerciseofemployeestockoptionsfor
2015,2014and2013was$172million,$226millionand$208million,respectively.
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TheCompanydoesnothaveaspecificpolicytorepurchasecommonsharestomitigatethedilutiveimpactofoptions;however,the
Companyhashistoricallymadeadequatediscretionarypurchases,basedoncashavailability,markettrends,andotherfactors,to
satisfystockoptionexerciseactivity.
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Forannualandprogressive(reload)options,theweightedaveragefairvalueatthedateofgrantwascalculatedusingtheBlack-
Scholesoption-pricingmodelandtheassumptionsthatfollow.Asdiscussedearlier,theprogressive(reload)featurewaseliminated
in2005,resultinginnoactivityinthebelowtablefor2014andthereafter.
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StockOptionAssumptions
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Annual Progressive(Reload) 
 2015  2014  2013  2015  2014  2013 
Exerciseprice  $ 165.94  $ 126.72  $ 101.49  $ —  $ —  $ 109.84 
Risk-freeinterestrate  1.5 %  1.9 %  1.2 %  — %  — %  0.2 %
Dividendyield   2.5 %  2.6 %  2.7 %  — %  — %  2.7 %
Volatility   20.1 %  20.8 %  20.0 %  — %  — %  16.3 %
Expectedlife(months)   76   75   75   —   —   12 
Black-Scholesfairvalue  $ 23.98  $ 19.63  $ 13.46  $ —  $ —  $ 6.42 
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Expectedvolatilityisastatisticalmeasureoftheamountbywhichastockpriceisexpectedtofluctuateduringaperiod.Forthe2015
annualgrantdate,theCompanyestimatedtheexpectedvolatilitybasedupontheaverageofthemostrecent
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