Stock-Based Compensation

6 Months Ended

Jun. 30, 2025

Share-Based Payment Arrangement [Abstract]

Note 18. Stock-Based Compensation

The Company’s annual stock option, restricted stock unit, and performance share grant is typically made in the first quarter to provide a strong and immediate link between the performance of individuals during the preceding year and the size of their annual stock compensation grants. The grant to eligible employees uses the closing stock price on the grant date. Accounting rules require recognition of expense under a non-substantive vesting period approach, requiring compensation expense recognition when an employee is eligible to retire. Employees are considered eligible to retire at age 55 and after having completed ten years of service. This retiree-eligible population represents 31 percent of the annual grant stock option and restricted unit compensation expense; therefore, higher stock-based compensation expense is typically recognized in the first quarter. However, due to the spin-off of Solventum (see Note 2), the 2024 annual grant was made in May, after the April 1, 2024 separation.

In addition to the annual grants, the Company makes other minor grants of stock options, restricted stock units and other stock-based grants. The Company issues cash settled restricted stock units and stock appreciation rights in certain countries. The cash settled grants do not result in the issuance of common stock and are considered immaterial by the Company, and not included in the tables below.

In connection with the Solventum separation on April 1, 2024 (see Note 2), all outstanding stock-based compensation awards associated with Solventum employees converted into Solventum awards, became Solventum’s responsibility and were cancelled from 3M plans. In addition, for awards associated with remaining 3M employees, the number of shares underlying unvested stock awards was adjusted along with the exercise price and the number of shares underlying outstanding stock options. The adjustments to shares underlying unvested stock awards and outstanding stock options did not result in a material stock-based compensation cost.

Stock-Based Compensation Expense: Amounts recognized in the financial statements with respect to stock-based compensation programs, which include stock options, restricted stock, restricted stock units, performance shares and the General Employees’ Stock Purchase Plan (GESPP), are provided in the following table. Capitalized stock-based compensation amounts were not material.


	Three months ended June 30,				Six months ended June 30,
(Millions)	2025		2024		2025		2024
Cost of sales	$	8	$	19	$	19	$	24
Selling, general and administrative expenses	29		107		88		125
Research, development and related expenses	7		28		22		31
Stock-based compensation expenses	44		154		129		180
Income tax benefits	(9)		(33)		(9)		(14)
Stock-based compensation expenses (benefits), net of tax	$	35	$	121	$	120	$	166