Good morning, welcome back to Austin for 3M's 2016 Annual Stockholder Meeting. As you know, we are a global company in every sense. Across our enterprise, we are proud of the many people who have fought and continue to fight for the cause of freedom. To all active service men and women, plus the veterans across our company, we salute your service and thank you for your contributions to freedom and to 3M. I would like to introduce Greg Lawson, our corporate secretary. Greg advises that a quorum is present and that all shareholders of record have been sent a notice of this meeting. On the record date of March 11, 2016, there were approximately 606 million shares of common stock issued and outstanding. More than 86% are present here in person or by proxy. I declare this meeting open for business.
This morning, we will elect our board of directors, ratify the appointment of 3M's independent public accounting firm for 2016, take an advisory vote on executive compensation, approve the 2016 long-term incentive plan, vote on two shareholder proposals, and then, as always, we will take your questions and comments, if any. First, I would like to talk to you about the enterprise and how the 3M Playbook is positioned to deliver efficient growth today and into the future. As you know, we are guided by our vision, which is inspirational and something to reach for. We complement our vision with six strategies, which are ingrained throughout the company. The first four focus on growth. The fifth is about people, and the last strategy is around operational excellence.
As you will see, our focus on operational excellence is enabling us to deliver premium returns, even in a low growth economic environment. Here you see the entire 3M Playbook. On the left-hand side, you see in addition to the vision and the strategies, our six leadership behaviors and our global code of conduct. On the right-hand side, our three key levers, portfolio management, investing in innovation, and business transformation, which are three big value creators. That is the 3M Playbook, and we continue to execute the Playbook to create even greater value for our customers and for you, our shareholders. Our progress is evident in 2015 results. Looking at the numbers, earnings rose to $7.58 per share. Company-wide, our team delivered organic growth of 1.3%.
I continue to be pleased with our team's ability to manage those things within our control, or in other words, to control the controllable. For the second consecutive year, we posted free cash flow conversion above 100%, while delivering a strong return on invested capital of 22.5%. We also had another robust margin performance, which is an important element of efficient growth. In 2015, we expanded margins company-wide to 23%, up 50 basis points year-over-year. Foreign currency was a headwind in 2015, reducing sales by nearly 7%. As a result, our company's total sales were slightly above $30 billion, down 5% year-over-year. In addition to these solid financial results, we continue to deploy capital to grow the business and return cash to our shareholders. Last year, we invested a total of $7 billion in research and development, CapEx, and acquisitions.
At the same time, we returned nearly $8 billion to our shareholders through dividends and share repurchases, which includes a 20% increase in our 2015 dividend. Overall, a very good performance in 2015, which we have continued into 2016. In the first quarter, we posted earnings of $2.05 per share, which is an increase of 11% year-over-year. As we expected, organic growth company-wide was down slightly at minus 1%. We delivered total sales of $7.5 billion, along with margins of 24%, up more than a full percentage point year-over-year. Our cash flow performance remains strong. In the first quarter, we improved our cash flow generation by 20% to $950 million. Also in the quarter, we returned nearly $2 billion to our shareholders through dividends and share repurchases.
This includes an 8% increase in your first dividend quarter, which marks 3M's 58th consecutive year of dividend increases. All in all, we had a very good start to this year with results that were in line with our own expectations. The 3M Playbook is built around delivering results today, which, as you see, we are doing. It's also about preparing our enterprise for the future. Our three key levers are powering us forward. I will make a few comments on each, beginning with the portfolio management. Back in 2012, we began taking action to focus and strengthen our portfolio of businesses. Since then, we have realigned from six sectors to five business groups and from 40 businesses to 26. When we combine businesses, we become more relevant to our customers while creating greater scale, agility, and improved productivity.
Last year, we also strengthened our portfolio through acquisitions, including Capital Safety and Membrana, which are outstanding additions to 3M's portfolio. At the same time, we divested businesses that no longer fit within our portfolio. On this slide, you see some recent examples. I will now move on to our second lever, which is investing in innovation. In 2015, we invested $1.8 billion in research and development, which supports our organic growth and premium returns. Just two months ago, we opened our new state-of-the-art laboratory in the U.S., which we named the 3M Carlton Science Center. It will house up to 750 scientists, who will leverage our 46 technology platforms to create unique, cutting-edge solutions for our customers. Finally, we continue to make good progress on our third lever, business transformation, which starts and ends with our customers.
Overall, we expect business transformation to result in $500 million-$700 million in annual operational savings by 2020 and another half a billion dollars in working capital improvement. Beyond our three levers, we are taking other action to position us for both short and long-term success. This includes investing our most important asset, our people. We recently launched a new leadership development platform that targets people at all levels in our company and incorporates our customers and our board of directors. This program also supports our new goal of doubling 3M's pipeline of diverse leaders by 2025. I've shared a lot of numbers this morning, yet the true power of 3M is what's behind those numbers. This includes the lives we improve and the problems we solve every day in 200 countries around the world. We use science to make the world safer, stronger, and healthier.
That is 3M science applied to life. That is why I, every day, grow even more confident in our future. The 3M Playbook is working, and our enterprise is only getting stronger. That concludes my report this morning, and at this time, I would like to introduce our Board of Directors. I will ask our directors to stand as they're introduced, and please hold your applause until all are introduced. Sondra Barbour, Executive Vice President, Information Systems and Global Solutions, Lockheed Martin. Tony Brown, retired Group Vice President, Global Purchasing, Ford Motor Company. Dr. Vance Coffman, retired Chairman of the Board and Chief Executive Officer, Lockheed Martin Corporation. Dave Dillon, retired Chairman of the Board and Chief Executive Officer, The Kroger Co. Mike Eskew, retired Chairman of the Board and Chief Executive Officer, United Parcel Service. Herb Henkel, retired Chairman of the Board and Chief Executive Officer, Ingersoll Rand.
Muhtar Kent, Chairman of the Board and Chief Executive Officer, The Coca-Cola Company. Ed Liddy, retired Chairman of the Board and Chief Executive Officer of The Allstate Corporation. Bob Ulrich, retired Chairman of the Board and Chief Executive Officer, Target Corporation. Pat Woertz, retired Chairman of the Board and Chief Executive Officer, Archer Daniels Midland Company. Greg Page, retired Chairman of the Board and Chief Executive Officer, Cargill, Incorporated. Greg is unable to join us today. Let's now recognize them with a big applause. Thank you. I will now turn the program over to Greg Lawson. Greg?
Thank you, Inge. Good morning, everyone. Before discussing the business items, please review the meeting rules that you received this morning. They are summarized on the screen behind me. These rules allow 3M to better accommodate the stockholders who attend this meeting and to be fair to everyone who wishes to speak. Your cooperation is greatly appreciated. As the agenda you also received indicates, the Board of Directors is presenting the following proposals, which are described in the proxy statement: elect the 12 directors identified in the proxy statement, ratify the appointment of PricewaterhouseCoopers as 3M's independent registered public accounting firm for 2016, approve on an advisory basis the compensation of our named executive officers, and approve the 2016 long-term incentive plan. Stockholders are presenting two proposals, which are also described in our proxy statement. We will vote on all of these proposals together after presenting each one.
No other items of business will be considered at the meeting. The Board appointed three inspectors of election for this meeting who are with us this morning. They are Matt Crescenzo, Tony Corridio, and Peter Thompson. They are independent of 3M and agents of Broadridge Financial Solutions. The first proposal is to elect 12 directors for a one-year term that expires at the 2017 annual meeting. The Board's nominees are Sondra Barbour, Tony Brown, Dr. Vance Coffman, Dave Dillon, Mike Eskew, Herb Henkel, Muhtar Kent, Ed Liddy, Greg Page, Inge Thulin, Bob Ulrich, and Pat Woertz. All nominees are standing for re-election to the Board, except Dave Dillon, Greg Page, and Pat Woertz, who are standing for election to the Board for the first time. The second proposal is to ratify the appointment of PricewaterhouseCoopers as 3M's independent registered public accounting firm.
The audit committee appointed PricewaterhouseCoopers to audit the 2016 consolidated financial statements of 3M and its subsidiaries. Tom Montminy, the lead audit partner from PricewaterhouseCoopers, is here at the meeting. The third proposal is to approve the compensation of our executives as described in the proxy statement. While the vote on this proposal is non-binding, the compensation committee and the board will carefully consider the outcome of the vote when making future compensation decisions. The fourth proposal is to approve the 2016 long-term incentive plan the board adopted in February, subject to stockholder approval. Under the 2016 plan, the Compensation Committee may grant options, performance shares, and other awards over the 10-year life of the plan. If approved, the new plan serves as the successor to our other existing equity incentive plans.
The material terms of the plan are summarized, and the full text of the plan is included in the proxy statement. The board recommends a vote for each nominee and for each of these proposals. We will now consider the stockholder proposal. The first proposal is on special meetings. Don Lewis represents James McRitchie, and may make a brief three-minute statement on the merits of the proposal. Don?
Proposal number 5, special shareholder meetings sponsored by James McRitchie of Elk Grove, California. Resolved, shareowners ask our board to take the steps necessary, unilaterally if possible, to attend our bylaws and each appropriate governing document to give holders in the aggregate of 15% of our outstanding common stock the power to call a special shareowner meeting. This proposal does not impact our board's current power to call a special meeting. A shareholder right to call a special meeting is a way to bring an important matter to the attention of both management and shareholders outside the annual meeting cycle. Shareowner input on the timing of shareowner meetings is especially important when events unfold quickly and issues may become moot by the next annual meeting. This is important because there could be 15 months between our annual meetings. Please vote to enhance shareholder value. Special shareholder meetings, Proposal 5.
Thank you.
Thank you, Don Lewis. The board opposes your proposal for the following reasons. Stockholders already have a meaningful right to call a special meeting. The company's bylaws allow 25% of 3M's outstanding stock to call a special meeting by submitting a written request to the board. The proposal, with its low 15% ownership requirement, could subject the company to disruption from special interest stockholder groups with an agenda not in the best interest of the company or the majority of stockholders. Convening a special meeting is a significant undertaking, both in terms of time and money. The current threshold of 25% strikes the appropriate balance between giving stockholders the ability to call a special meeting and protecting company resources. For these reasons, the board recommends voting against this proposal. The second stockholder proposal involves share repurchases and our executive compensation program.
Karen Escobedo represents Domini Social Investments, may make a brief three-minute statement on the merits of the proposal. Karen?
Good morning, Mr. Chairman, members of the board, fellow shareholders. My name is Karen Escobedo. I am representing the Domini Social Equity Fund, a long-term 3M shareholder, to move proposal number six. The proposal requires that the financial performance metrics utilized to determine the amount or vesting of any senior executive incentive compensation grant or award be adjusted to the extent practicable to exclude the impact of share repurchases. We believe the sensible measures will help to ensure that future decisions regarding share buybacks are not influenced by any executive compensation incentives. In October, a columnist for MarketWatch asked about 3M: What do you make of a company that announces restructuring moves that include possible job cuts while it buys back shares?
We would also ask what to make of the fact that 3M, a company that is driven by innovation, has spent $16 billion in research and development and capital expenditures over the past five years to support organic growth programs, $21 billion to buy back its own shares. If you add in $6 billion spent on strategic acquisitions during that period, 3M has split its spending to grow the business roughly equally with spending to buy its shares. As long-term investors, we question whether the line is being drawn in the right place. We question whether incentives might be misaligned. The temptation to devote capital to share buybacks is strong. Shareholders celebrate the short-term boost in stock price and the increase in earnings per share.
While buybacks may boost stock prices in the short term, we are concerned that they can deprive companies of the capital necessary for creating long-term growth. As a recent study by McKinsey points out, quote, "Investing at an attractive return will always create more value than repurchasing shares, but it may take longer. With a share repurchase, the effect on EPS is immediate, and with investing, it is delayed. Disciplined managers won't fall for the short-term benefit at the expense of long-term value creation." End quote. 3M describes itself as a company that never stops inventing. That laudable mission requires long-term capital investments. We want to ensure that the right incentives are in place to make the harder decisions to invest for the long-term growth of the company, because that is how lasting value is created.
In our view, senior executives are responsible for improving our company's operational performance, whereas the board of directors is responsible for determining when stock buybacks are appropriate. For this reason, we believe that senior executives should not receive larger pay packages simply for reducing the number of shares outstanding. Executive pay should be aligned with operational results, not financial engineering. Domini would like to thank 3M for speaking with them about this proposal and hopes that the dialogue will continue. Thank you.
Thank you, Karen. The board opposes your proposal for the following reasons. We make significant investments in our business to support long-term growth. In 2015, we invested $1.8 billion in research and development and $1.5 billion in capital expenditures. Repurchasing shares is an inherent part of our ongoing efforts to achieve a more efficient capital structure, from one that was nearly 100% equity financed to one that includes an appropriate mix of equity and low-cost debt. Our practice of having the board review and approve our capital structure helps ensure the proper focus on long-term growth. Finally, 3M generates significant cash flow to invest in the business for long-term growth while also returning cash to stockholders through dividends and share repurchases. For these reasons, the board recommends voting against this proposal. We are finished presenting the items of business in the proxy statement, and now it is time to vote.
If you submitted your proxy over the internet, by telephone, or by mail, it will be voted as you instructed. Please ask for a ballot only if you did not previously vote or if you wish to change your vote. If you need a ballot, please stand and an attendant will give you a ballot. When you have marked your ballots, please stand and the attendants will collect them. The polls are about to close. If there's any stockholder who has not turned in a ballot and wishes to do so at this time, please stand so that the attendants can pick up your ballot. The polls are now closed. The preliminary results of the meeting will be announced later in the meeting. This concludes the business segment of the meeting and our live webcast.