<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SARA LEE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SARA LEE CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(1)
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------------
(4) Date filed:
------------------------------------------------------------------------
- --------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[LOGO]
-------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 31, 1996
-------------------------------------------------------
TO THE STOCKHOLDERS OF
SARA LEE CORPORATION:
Notice is hereby given that the annual meeting of the stockholders of SARA
LEE CORPORATION will be held at THE ART INSTITUTE OF CHICAGO, ARTHUR RUBLOFF
AUDITORIUM, COLUMBUS DRIVE BETWEEN MONROE AND JACKSON STREETS, CHICAGO,
ILLINOIS, on Thursday, October 31, 1996, at 10:00 A.M., Chicago time, for the
following purposes:
1. to elect 18 directors;
2. to ratify the appointment of Arthur Andersen LLP as the independent
public accountants of Sara Lee Corporation for fiscal year 1997; and
3. to transact such other business as may properly come before the
meeting or any adjournments thereof.
Stockholders of record at the close of business on September 1, 1996, are
entitled to notice of and to vote at the annual meeting.
Your attention is directed to the accompanying Proxy Statement and proxy.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR
MAILING IN THE UNITED STATES.
By Order of the Board of Directors
[SIG]
Janet Langford Kelly
Senior Vice President, Secretary and
General Counsel
September 20, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
NOTICE OF ANNUAL MEETING................................................................................. Cover
PROXY STATEMENT.......................................................................................... 1
ELECTION OF DIRECTORS.................................................................................... 2
OWNERSHIP OF COMMON STOCK AND ESOP STOCK BY DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS................... 9
MEETINGS AND COMMITTEES OF THE BOARD..................................................................... 10
Audit Committee........................................................................................ 10
Compensation and Employee Benefits Committee........................................................... 10
Board Affairs and Corporate Governance Committee....................................................... 11
Executive Committee.................................................................................... 11
Finance Committee...................................................................................... 11
Employee and Public Responsibility Committee........................................................... 11
DIRECTOR COMPENSATION.................................................................................... 11
EXECUTIVE COMPENSATION................................................................................... 12
Report of the Compensation and Employee Benefits Committee on
Executive Compensation............................................................................... 12
Performance Graph...................................................................................... 16
Summary Compensation Table............................................................................. 17
Option Grants Table.................................................................................... 18
Option Exercises and Fiscal Year-End Values............................................................ 20
Employment Agreements.................................................................................. 20
RETIREMENT PLANS......................................................................................... 21
Pension Plan........................................................................................... 21
Employee Stock Ownership Plan.......................................................................... 22
Severance Plans........................................................................................ 22
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS............................................................ 22
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING............................................................ 23
OTHER MATTERS............................................................................................ 23
</TABLE>
<PAGE>
[LOGO]
September 20, 1996
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 31, 1996
The enclosed proxy is solicited by the Board of Directors of Sara Lee
Corporation, a Maryland corporation ("Sara Lee"), to be voted at the annual
meeting of stockholders to be held on October 31, 1996, or any postponement or
adjournment thereof ("Annual Meeting"). A stockholder returning a proxy may
revoke it at any time prior to exercise of the proxy at the Annual Meeting by
executing and delivering a later-dated proxy which is voted at the Annual
Meeting, by voting in person at the Annual Meeting or by delivering written
notice to the Secretary of Sara Lee at any time before the proxy is exercised. A
proxy returned by a stockholder which is not subsequently revoked will be voted
in accordance with the instructions indicated thereon. If no instructions are
indicated on a duly executed and returned proxy, the shares represented by the
proxy will be voted FOR the election of the 18 nominees for director proposed by
the Board of Directors and set forth herein, FOR the ratification of the
appointment of Arthur Andersen LLP as the independent public accountants of Sara
Lee for fiscal year 1997, and in accordance with the judgment of the persons
named in the proxy as to such other matters as may properly come before the
Annual Meeting.
If you are a stockholder and also participate in the Sara Lee Corporation
Employee Stock Ownership Plan (the "ESOP"), in the Sara Lee Corporation Common
Stock Fund under any of Sara Lee's employee retirement or savings plans
(collectively, the "Savings Plans"), or in Sara Lee's Dividend Reinvestment Plan
(the "DRP"), you will receive one proxy with respect to all shares registered in
the same name. Stockholders whose accounts are not registered in the same name
will receive a separate proxy with respect to their individual and ESOP, Savings
Plan or DRP shares. Each ESOP participant is entitled to direct the ESOP trustee
how to vote the shares allocated to such participant's account, as well as a
proportionate share of unallocated or unvoted shares. Each Savings Plan
participant has the right to direct the Savings Plan trustee how to vote the
shares allocated to such participant's account. If a participant in any of the
Savings Plans does not return a proxy with respect to Savings Plan shares, the
participant's Savings Plan shares shall be voted by the Savings Plan trustee in
the same proportion as shares held by the Savings Plan trustee for which voting
instructions have been received.
Sara Lee has a policy that all proxies, ballots and votes tabulated at a
meeting of the stockholders of Sara Lee which identify the specific vote of a
stockholder shall be confidential, and that such votes shall not be revealed to
any employee of Sara Lee or any third party other than to the non-employee
tabulator of such votes or an independent election inspector appointed to
certify the results of the stockholder vote, except (1) as shall be necessary to
meet applicable legal requirements or (2) in the event there shall be filed with
the Securities and Exchange Commission a proxy solicitation in opposition to the
election of the Board of Directors.
The mailing address of the principal office of Sara Lee is Three First
National Plaza, Chicago, Illinois 60602-4260. This Proxy Statement and enclosed
proxy were first mailed to stockholders entitled to notice of and to vote at the
Annual Meeting on or about September 20, 1996.
Only stockholders of record at the close of business on September 1, 1996
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
As of the Record Date, there were 485,182,003 shares of Sara Lee Common Stock
("Common Stock") outstanding and entitled to vote at the Annual Meeting, each
such share being entitled to cast one vote, and 4,396,280 shares of Employee
Stock Ownership Plan Convertible Preferred Stock ("ESOP Stock") outstanding and
entitled to vote at the Annual Meeting, each such share being entitled to cast
5.133 votes. The Common Stock and the ESOP Stock vote together as a single class
on the matters scheduled to be considered at the Annual Meeting.
1
<PAGE>
The presence in person or by proxy of stockholders entitled to cast a majority
of all the votes entitled to be cast at the meeting will constitute a quorum.
Abstentions and broker non-votes are counted for purposes of determining the
presence of a quorum for the transaction of business. If there is not a quorum
at the Annual Meeting, the stockholders present in person or represented by
proxy at the meeting have the power to adjourn the meeting until such time as
there is a quorum. At such time as there is a quorum of stockholders present in
person or represented by proxy, the Annual Meeting will reconvene without notice
to stockholders, other than an announcement at the meeting prior to adjournment,
unless the adjournment is for more than 120 days after the Record Date or a new
record date has been set. Under applicable Maryland law, in determining whether
either of the proposals contained in this Proxy Statement has received the
requisite number of affirmative votes, abstentions will not be counted and will
have no effect on the outcome of the vote.
ELECTION OF DIRECTORS
The names of, and certain information with respect to, the nominees of the
Board of Directors for election as directors, to serve until the 1997 annual
meeting of stockholders and until their successors are elected and qualify, are
set forth below and were furnished to Sara Lee by the nominees. All the nominees
have been previously elected as directors by the stockholders.
If, for any reason, any of the nominees shall become unavailable for
election, the individuals named in the enclosed proxy may exercise their
discretion to vote for any substitutes proposed by the Board of Directors,
unless the Board of Directors should decide to reduce the number of directors to
be elected at the Annual Meeting. The affirmative vote of a plurality of the
votes cast at the meeting is required to elect a director.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES LISTED
HEREIN.
The following information is furnished with respect to each nominee for
election as a director. The ages of the nominees are as of October 31, 1996.
<TABLE>
<S> <C>
PAUL A. ALLAIRE
Chairman and Chief Executive Officer of Xerox Corporation
[PHOTO1] (information processing). Mr. Allaire became a director of
Sara Lee in 1989. He is a director of Rank Xerox Limited,
Fuji Xerox Co., Ltd., Xerox Financial Services, Inc.,
SmithKline Beecham plc and the New York Stock Exchange,
Inc. and a trustee of Carnegie- Mellon University and
Worcester Polytechnic Institute. Mr. Allaire is a member
of the Board of the Council on Foreign Relations and
Chairman of the Council on Competitiveness. He is a member
of The Business Council and the Business Roundtable. Mr.
Allaire is a member of the Audit and Employee and Public
Responsibility Committees of Sara Lee. Age 58.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
FRANS H.J.J. ANDRIESSEN
Professor, European Integration, University of Utrecht,
[PHOTO2] the Netherlands. Mr. Andriessen is a former Minister of
Finance in the Netherlands. He became a member of the
Commission of the European Communities in 1981, and was
first Vice President of the Commission from 1989 until
1993. He is a member of the board of SHV (Steenkool en
Handelsvereniging) and Robeco. He is special advisor to
KPMG Netherlands. He became a director of Sara Lee in
1993. Mr. Andriessen is a member of the Supervisory Board
of Sara Lee/DE N.V., a subsidiary of Sara Lee. Mr.
Andriessen is a member of the Audit and Employee and
Public Responsibility Committees of Sara Lee. Age 67.
JOHN H. BRYAN
Chairman of the Board and Chief Executive Officer of Sara
[PHOTO3] Lee. Mr. Bryan became a director of Sara Lee in 1974. He
is a director of Amoco Corporation, First Chicago NBD
Corporation and General Motors Corporation. Mr. Bryan is a
past Chairman and a director of the Grocery Manufacturers
of America, Inc., Vice Chairman of The Business Council
and a member of the Business Roundtable, and a director
and past national Chairman of the Business Committee for
the Arts. He is the past Chairman of Catalyst and a
trustee of the University of Chicago, Vice Chairman of the
Board of Trustees of The Art Institute of Chicago and
Chairman of the Chicago Council on Foreign Relations. Mr.
Bryan is Chairman of the Executive Committee and a member
of the Board Affairs and Corporate Governance, Employee
and Public Responsibility and Finance Committees of Sara
Lee. Age 60.
DUANE L. BURNHAM
Chairman of the Board and Chief Executive Officer of
[PHOTO4] Abbott Laboratories (health care products and services).
He became a director of Sara Lee in 1991. Mr. Burnham is a
member of the Business Roundtable and the Commercial Club
of Chicago. He is also a member of the Boards of the
Healthcare Leadership Council, Evanston Hospital
Corporation (Evanston, IL), the Lyric Opera (Chicago), and
the Chicago Council on Foreign Relations. Mr. Burnham is a
trustee of Northwestern University and the Museum of
Science and Industry (Chicago), and a member of the
Advisory Board of the J.L. Kellogg Graduate School of
Management at Northwestern University. He is a member of
the Employee and Public Responsibility and Finance
Committees of Sara Lee. Age 54.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
CHARLES W. COKER
Chairman of the Board and Chief Executive Officer of
[PHOTO5] Sonoco Products Company (packaging products manufacturer).
He became a director of Sara Lee in 1986. Mr. Coker is
also a director of NationsBank Corporation, Springs
Industries, Inc. and Carolina Power and Light Company. He
is Chairman of the Board of Hollings Cancer Center. Mr.
Coker is a member of the Compensation and Employee
Benefits and Employee and Public Responsibility Committees
of Sara Lee. Age 63.
WILLIE D. DAVIS
President of All-Pro Broadcasting, Inc. (radio stations),
[PHOTO6] a privately owned company. Mr. Davis became a director of
Sara Lee in 1983. He is also a director of The Dow
Chemical Company, Kmart Corporation, Alliance Bank (Culver
City, California), Johnson Controls Inc., MGM Grand Inc.
and WICOR. Mr. Davis is a trustee of the University of
Chicago and Marquette University. He is Chairman of the
Employee and Public Responsibility Committee and a member
of the Board Affairs and Corporate Governance,
Compensation and Employee Benefits and Executive
Committees of Sara Lee. Age 62.
DONALD J. FRANCESCHINI
Executive Vice President of Sara Lee since January 1994,
[PHOTO7] Senior Vice President from 1993 to January 1994, and Vice
President from 1992 to 1993. Mr. Franceschini was
President of Playtex Apparel, Inc. from 1986 until its
acquisition by Sara Lee in 1991. He became a director of
Sara Lee in January 1994. Mr. Franceschini is a past
President of the State of Delaware-American Institute of
Industrial Engineers. He is a member of the Chicago
Council on Foreign Relations, and a member/patron of the
Fairfield Historical Society (Fairfield, Connecticut). He
is a member of the Employee and Public Responsibility and
Finance Committees of Sara Lee. Age 61.
ALLEN F. JACOBSON
Retired Chairman of the Board and Chief Executive Officer
[PHOTO8] and a director of Minnesota Mining & Manufacturing Company
(industrial, imaging, and health care products). Mr.
Jacobson was Chairman of the Board and Chief Executive
Officer of Minnesota Mining & Manufacturing Company from
1986 to 1991. He became a director of Sara Lee in 1990.
Mr. Jacobson is also a director of Abbott Laboratories,
Deluxe Corporation, Mobil Corporation, Northern States
Power Company, Potlatch Corporation, Prudential Insurance
Company, Silicon Graphics, Inc., U S WEST, Inc. and
Valmont Industries, Inc. Mr. Jacobson is a member of the
National Academy of Engineering. He is Chairman of the
Compensation and Employee Benefits Committee and a member
of the Board Affairs and Corporate Governance, Executive
and Finance Committees of Sara Lee. Age 70.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
VERNON E. JORDAN, JR.
Senior partner of the Washington, D.C. law firm of Akin,
[PHOTO9] Gump, Strauss, Hauer & Feld L.L.P. Mr. Jordan became a
director of Sara Lee in 1989. He served as President of
the National Urban League, Inc. from 1972 to 1982. Mr.
Jordan is a director of American Express Company, Bankers
Trust New York Corporation and its subsidiary, Bankers
Trust Company, Dow Jones & Company, Inc., J.C. Penney
Company, Inc., Revlon, Inc., Revlon Group, Ryder System,
Inc., Union Carbide Corporation and Xerox Corporation. He
is also a director of the Ford Foundation and The Lyndon
Baines Johnson Foundation. Mr. Jordan is a trustee of
Howard University and a governor of the Joint Center for
Political and Economic Studies. He is Chairman of the
Audit Committee and a member of the Executive, Employee
and Public Responsibility and Board Affairs and Corporate
Governance Committees of Sara Lee. Age 61.
JAMES L. KETELSEN
Retired Chairman of the Board and Chief Executive Officer
[PHOTO10] of Tenneco Inc. (diversified industrial corporation). He
was Chairman of the Board and Chief Executive Officer of
Tenneco Inc. from 1978 to 1992. Mr. Ketelsen became a
director of Sara Lee in 1982. He is also a director of GTE
Corporation and J.P. Morgan & Co. and its subsidiary,
Morgan Guaranty Trust Co. He is Chairman of the Finance
Committee and a member of the Board Affairs and Corporate
Governance, Compensation and Employee Benefits and
Executive Committees of Sara Lee. Age 65.
HANS B. VAN LIEMT
Retired Chairman of the Board of Management of DSM NV
[PHOTO11] (chemicals). Mr. van Liemt served as Chairman of the Board
of Management of DSM NV from 1984 to 1993. Mr. van Liemt
became a director of Sara Lee in 1995. He is Chairman of
the Supervisory Board of Sara Lee/DE N.V., a subsidiary of
Sara Lee. Mr. van Liemt is Chairman of the Supervisory
Boards of Gamma Holding NV and Oce-Van der Grinten NV. He
is also a member of the Supervisory Boards of ABN-AMRO
Holding NV, Van Leer Group Foundation, Arnhemsche Holding
NV and Stienstra Holding BV. Mr. van Liemt is a trustee of
the Foundation of the Catholic University of Nijmegen and
the Lucas-Franciscus Foundation for Revalidation. He is
active on the boards of the Preference Shares Foundation
of Koninklijke PTT NV, the Preference Shares Foundation of
Philips NV and of the Preference Shares Foundation of EVC
International. He is a member of the Audit and Finance
Committees of Sara Lee. Age 63.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
JOAN D. MANLEY
Retired Group Vice President and retired director of Time
[PHOTO12] Incorporated (communications). Mrs. Manley became a
director of Sara Lee in 1982. She is also a director of
Aon Corporation, BFP Holdings, Inc., and Viking Office
Products, Inc. Mrs. Manley is a member of the Audit,
Finance and Employee and Public Responsibility Committees
of Sara Lee. Age 64.
C. STEVEN MCMILLAN
Executive Vice President of Sara Lee since 1993 and Senior
[PHOTO13] Vice President from 1986 to 1993. Mr. McMillan became a
director of Sara Lee in 1993. He is also a director of
Electrolux Corporation and Illinova Corporation. Mr.
McMillan is a member of the Advisory Board of the Stedman
Nutrition Center of the Duke University Medical School, a
member of the Board of Advisors of Troy State University
Business School, a member of the Productivity Council of
the Grocery Manufacturers of America, Inc. and a trustee
of the Museum of Contemporary Art in Chicago. He is a
member of the Employee and Public Responsibility and
Finance Committees of Sara Lee. Age 50.
NEWTON N. MINOW
Counsel to, and former partner of, the Chicago law firm of
[PHOTO14] Sidley & Austin. He became a director of Sara Lee in 1988.
Mr. Minow served as Chairman of the Federal Communications
Commission from 1961 to 1963. He is also a director of Aon
Corporation, Manpower, Inc., and True North Communications
Inc. Mr. Minow is Chairman of the Carnegie Corporation of
New York, a trustee and former Chairman of the Board of
Trustees of the RAND Corporation, and former Chairman of
the Board of Governors of the Public Broadcasting Service.
He is also a life trustee of the University of Notre Dame
and a life trustee of Northwestern University, where he
serves as the Walter H. Annenberg Professor of
Communications Law and Policy. Mr. Minow is a member of
the Audit and Finance Committees of Sara Lee. Age 70.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
MICHAEL E. MURPHY
Vice Chairman and Chief Administrative Officer of Sara Lee
[PHOTO15] since 1994, Vice Chairman and Chief Financial and
Administrative Officer from 1993 to 1994, and Executive
Vice President and Chief Financial and Administrative
Officer from 1979 to 1993. He became a director of Sara
Lee in 1979. Mr. Murphy is a director of GATX Corporation
and Payless ShoeSource, Inc. He is a member of the
Advisory Board of the J.L. Kellogg Graduate School of
Management of Northwestern University, member of the
Chicago Committee of the Chicago Council on Foreign
Relations, member of the Executive Committee of the Civic
Federation of Chicago and a director of Northwestern
Memorial Corporation (university hospitals), the Lyric
Opera (Chicago), Jobs-for-Youth (Chicago), Chicago
Cultural Center Foundation, Chicago Central Area
Committee, and Big Shoulders Fund (Chicago) and a
principal of Chicago United. Mr. Murphy is a member of the
Employee and Public Responsibility, Executive and Finance
Committees of Sara Lee. Age 60.
SIR ARVI H. PARBO A.C.
Chairman of WMC Limited (exploration and mining) since
[PHOTO16] 1974, and also Munich Reinsurance Company of Australia
Limited and Zurich Australian Insurance Group. Sir Arvi
became a director of Sara Lee in 1991. He is a director of
Aluminum Company of America and of Hoechst Australia
Limited, and a member of the Chase International Advisory
Committee and the China International Trust and Investment
Corporation (CITIC) International Advisory Council. Sir
Arvi is a member of the Audit and Finance Committees of
Sara Lee. Age 70.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
ROZANNE L. RIDGWAY
Former Ambassador and Assistant Secretary of State for
[PHOTO17] European and Canadian Affairs and since July 1994, Chair
(non-executive) of the Baltic American Enterprise Fund.
She became a director of Sara Lee in 1992. Ambassador
Ridgway served in the U.S. Foreign Service from 1957 until
her retirement in 1989, including assignments as
Ambassador for Oceans and Fisheries Affairs; Ambassador to
Finland; Counselor of the Department of State; and
Ambassador to the German Democratic Republic. Ambassador
Ridgway is a director of Bell Atlantic Corporation, The
Boeing Company, Citicorp and its subsidiary, Citibank,
Emerson Electric Company, Minnesota Mining & Manufacturing
Company, RJR Nabisco, Inc. and Union Carbide Corporation.
She serves on the International Advisory Board of the New
Perspective Fund. Ambassador Ridgway is also a director of
the Center for Naval Analysis and a trustee of the
National Geographic Society and of Hamline University, a
member of the American Academy of Diplomacy, and a Fellow
of the National Academy of Public Administration. She is a
Director of The Atlantic Council of the United States
(association to promote understanding of international
security, political and economic problems), where she also
served as President from 1989 until 1993 and Co-Chair from
1993 until 1996. She is a member of the Compensation and
Employee Benefits and Employee and Public Responsibility
Committees of Sara Lee. Age 61.
RICHARD L. THOMAS
Retired Chairman of First Chicago NBD Corporation (bank
[PHOTO18] holding company) and The First National Bank of Chicago.
Mr. Thomas became a director of Sara Lee in 1976. He is
also a director of First Chicago NBD Corporation, CNA
Financial Corporation, The PMI Group, Inc., and IMC
Global, Inc. Mr. Thomas is a life trustee of the
Orchestral Association of Chicago, a trustee of
Rush-Presbyterian-St. Luke's Medical Center (Chicago) and
a trustee of Northwestern University. He is also Chairman
of the Board of Trustees of Kenyon College. Mr. Thomas is
Chairman of the Board Affairs and Corporate Governance
Committee and a member of the Audit and Executive
Committees of Sara Lee. Age 65.
</TABLE>
8
<PAGE>
OWNERSHIP OF COMMON STOCK AND ESOP STOCK
BY DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table contains information as to the beneficial ownership of
Common Stock and ESOP Stock as of September 1, 1996, by each director and
nominee for director, the executive officers named in the Summary Compensation
Table on page 17, and by all directors and executive officers as a group. Except
as otherwise noted, the persons named in the table below have sole voting and
investment power with respect to all shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF NUMBER OF
COMMON SHARES OF
STOCK ESOP STOCK
BENEFICIALLY BENEFICIALLY
NAME OWNED OWNED
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Paul A. Allaire................................... 26,159 (1) --
Frans H.J.J. Andriessen........................... 8,287 (1) --
John H. Bryan..................................... 1,535,597 (1),(2),(3),(4) 382
Duane L. Burnham.................................. 20,002 (1) --
Charles W. Coker.................................. 58,880 (1),(2) --
Willie D. Davis................................... 17,663 (1) --
Donald J. Franceschini............................ 889,709 (1),(2),(3),(4) 199
Allen F. Jacobson................................. 18,328 (1),(4) --
Vernon E. Jordan, Jr.............................. 18,459 (1) --
James L. Ketelsen................................. 33,380 (1) --
Hans B. van Liemt................................. 7,999 (1) --
Joan D. Manley.................................... 25,984 (1) --
C. Steven McMillan................................ 378,986 (1),(3) 382
Frank L. Meysman.................................. 247,915 (1),(4) --
Newton N. Minow................................... 69,718 (1),(2),(4) --
Michael E. Murphy................................. 718,285 (1),(3),(4) 382
Sir Arvi H. Parbo A.C............................. 12,625 (1) --
Rozanne L. Ridgway................................ 8,926 (1) --
Richard L. Thomas................................. 177,076 (1)(2) --
Directors and Executive Officers as a group (24
persons)........................................ 4,941,160 (1),(2),(3),(4) 2,670
</TABLE>
- --------------------
(1) Includes shares of Common Stock which the following directors and executive
officers have the right to acquire within 60 days upon the exercise of stock
options: Mr. Allaire, 9,218 shares; Mr. Andriessen, 5,000 shares; Mr. Bryan,
183,100 shares; Mr. Burnham, 13,437 shares; Mr. Coker, 13,437 shares; Mr.
Davis, 5,500 shares; Mr. Franceschini, 130,799 shares; Mr. Jacobson, 9,549
shares; Mr. Jordan, 9,718 shares; Mr. Ketelsen, 9,617 shares; Mr. van Liemt,
5,000 shares; Mrs. Manley, 5,000 shares; Mr. McMillan, 204,454 shares; Mr.
Meysman, 231,682 shares; Mr. Minow, 5,000 shares; Mr. Murphy, 293,729
shares; Mr. Parbo, 5,000 shares; Ms. Ridgway, 5,000 shares; Mr. Thomas,
5,500 shares; and executive officers other than named executive officers,
363,537 shares.
(2) Includes shares of Common Stock owned by relatives or held in trusts for the
benefit of relatives with respect to which the named persons disclaim any
beneficial interest.
(3) Includes restricted shares granted under Sara Lee's 1995 Long-Term Incentive
Stock Plan (and predecessor Long-Term Incentive Plans) as described on page
13.
(4) Includes shares of Common Stock with respect to which the following
directors and executive officers share voting and investment power with
others: Mr. Bryan, 17,784 shares; Mr. Franceschini, 5,440 shares; Mr.
Jacobson, 8,779 shares; Mr. Meysman, 3,117 shares; Mr. Minow, 64,718 shares;
and Mr. Murphy, 243,342 shares.
9
<PAGE>
As of September 1, 1996, all directors and executive officers as a group
beneficially owned, or were deemed to beneficially own, 4,941,160 shares of
Common Stock, or 1.02% of the outstanding shares of Common Stock on that date,
and 2,670 shares of ESOP Stock, or 0.06% of the outstanding ESOP Stock on that
date. No person named in the table owns more than 1% of the outstanding Common
Stock or of the outstanding ESOP Stock. Each share of ESOP Stock is convertible
into 4 shares of Common Stock, as provided in the ESOP.
As of September 1, 1996, State Street Bank & Trust Company of Boston, 200
Newport Avenue, North Quincy, Massachusetts 02171, as trustee for the ESOP
("Trustee"), held 4,396,280 shares of ESOP Stock (all of the outstanding shares
of ESOP Stock), of which 1,343,615 shares (30.56%) were allocated to participant
accounts and 3,052,665 shares (69.44%) were unallocated shares. Each ESOP
participant is entitled to direct the Trustee how to vote the shares allocated
to his account as well as a proportionate share of unallocated or unvoted
shares.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held six meetings during the fiscal year ended June
29, 1996. The average attendance by directors at the meetings of the Board of
Directors and Board committees was 98%. All directors attended at least 75% of
the meetings of the Board of Directors and Board committees of which they are
members. The Board of Directors has standing audit, board affairs and corporate
governance, compensation and employee benefits, executive, employee and public
responsibility and finance committees.
AUDIT COMMITTEE. The Audit Committee is presently comprised of Vernon E.
Jordan, Jr., (Chairman), Paul A. Allaire, Frans H.J.J. Andriessen, Hans B. van
Liemt, Joan D. Manley, Newton N. Minow, Arvi H. Parbo and Richard L. Thomas. The
Audit Committee held three meetings during fiscal year 1996. This Committee
provides oversight regarding accounting, auditing and financial reporting
practices of Sara Lee. Each year it recommends to the Board of Directors a firm
of independent public accountants to serve as auditors with whom it discusses
the scope and results of their audit, non-audit services, fees for services and
their independence in servicing Sara Lee. The Audit Committee meets with Sara
Lee's internal auditors to discuss the work they perform and also is informed by
management and the independent public accountants about the adequacy of
compliance with Sara Lee's existing major accounting and financial policies;
procedures and policies relative to the adequacy of Sara Lee's internal
accounting controls; and compliance with the Foreign Corrupt Practices Act of
1977 and other federal and state laws relating to accounting practices.
COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE. The Compensation and Employee
Benefits Committee is presently comprised of Allen F. Jacobson (Chairman),
Charles W. Coker, Willie D. Davis, James L. Ketelsen, and Rozanne L. Ridgway,
none of whom are, or have ever been, employees of Sara Lee. The functions of the
Compensation and Employee Benefits Committee are to review and approve Sara
Lee's total compensation philosophy covering corporate officers and other key
management employees; to review the competitiveness of Sara Lee's total
compensation practices; to determine the annual base salaries and incentive
awards to be paid to specified executive officers and approve the annual
salaries of all corporate officers and certain other highly-paid executives; to
review and approve salary ranges for corporate officers and other key management
employees; to approve the terms and conditions of proposed incentive plans
applicable to corporate officers and other key management employees; to approve
and administer Sara Lee's incentive and other employee benefit plans, subject to
the approval of the Board of Directors or the stockholders of Sara Lee, where
appropriate; and to review and approve special hiring and severance arrangements
with executive officers. A director is not eligible to serve as a member of the
Compensation and Employee Benefits Committee if a Sara Lee employee is a member
of the board of directors of the company which employs such director. The
Compensation and Employee Benefits Committee held three meetings in fiscal year
1996.
10
<PAGE>
BOARD AFFAIRS AND CORPORATE GOVERNANCE COMMITTEE. The Board Affairs and
Corporate Governance Committee is presently comprised of Richard L. Thomas
(Chairman), John H. Bryan, Willie D. Davis, Allen F. Jacobson, Vernon E. Jordan,
Jr. and James L. Ketelsen. The functions of the Board Affairs and Corporate
Governance Committee are to review and consider directorship policies and
practices from time to time, to screen and recommend candidates for director,
and to review the management succession plan and executive resources. The Board
Affairs and Corporate Governance Committee held one meeting in fiscal year 1996.
Candidates for director suggested by stockholders will be considered by the
Board Affairs and Corporate Governance Committee. Such suggestions, together
with biographical information about the suggested candidate, should be submitted
to the Secretary, Sara Lee Corporation, Three First National Plaza, Chicago,
Illinois 60602-4260.
EXECUTIVE COMMITTEE. The Executive Committee is presently comprised of John
H. Bryan (Chairman), Willie D. Davis, Allen F. Jacobson, Vernon E. Jordan, Jr.,
James L. Ketelsen, Michael E. Murphy and Richard L. Thomas. The Executive
Committee exercises the authority of the Board on such matters as are delegated
to it by the Board of Directors from time to time and exercises the authority of
the Board between meetings of the Board of Directors. The Executive Committee
met two times during fiscal year 1996.
FINANCE COMMITTEE. The Finance Committee is presently comprised of James L.
Ketelsen (Chairman), John H. Bryan, Duane L. Burnham, Donald J. Franceschini,
Allen F. Jacobson, Hans B. van Liemt, Joan D. Manley, C. Steven McMillan, Newton
N. Minow, Michael E. Murphy and Arvi H. Parbo. The Finance Committee reviews the
Corporation's financial policies and performs such other duties as may be
directed or delegated to the Finance Committee by the Board of Directors from
time to time. The Finance Committee met four times during fiscal year 1996.
EMPLOYEE AND PUBLIC RESPONSIBILITY COMMITTEE. The Employee and Public
Responsibility Committee is presently comprised of Willie D. Davis (Chairman),
Paul A. Allaire, Frans H.J.J. Andriessen, John H. Bryan, Duane L. Burnham,
Charles W. Coker, Donald J. Franceschini, Vernon E. Jordan, Jr., Joan D. Manley,
C. Steven McMillan, Michael E. Murphy and Rozanne L. Ridgway. The Employee and
Public Responsibility Committee provides oversight and guidance in those areas
concerning Sara Lee's obligations to its employees and to its major public
constituencies, including its stockholders, customers, consumers and the
communities in which Sara Lee operates. The Employee and Public Responsibility
Committee met three times during fiscal year 1996.
DIRECTOR COMPENSATION
Outside directors receive an annual retainer of $62,500 in cash, with no
additional cash compensation for service as a committee chairperson. Pursuant to
the 1995 Non-Employee Director Stock Plan, outside directors receive an annual
grant of options to purchase 5,000 shares of Common Stock (plus an additional
option to purchase 500 shares for chairs of standing committees of the Board),
and may elect to receive Common Stock, options to purchase Common Stock, or a
combination thereof, in lieu of all or a portion of their annual retainer.
Management directors receive no fees for their services as a director.
Outside directors may elect to defer payment of all or a portion of their annual
retainer under a non-qualified, unfunded deferred compensation plan. Deferred
amounts are invested, at the election of the director, in an interest-bearing
account or a stock equivalent account. The amounts deferred, plus any
appreciation thereon, are paid in cash on the dates specified by the director.
During fiscal year 1996, Sara Lee paid fees for legal services performed by
the law firm of Sidley & Austin, to which Newton N. Minow is of counsel, and the
law firm of Akin, Gump, Strauss, Hauer & Feld L.L.P., of which Vernon E. Jordan,
Jr. is a senior partner. Sara Lee paid fees for banking services to an
11
<PAGE>
affiliate of First Chicago NBD Corporation, of which Richard L. Thomas is the
retired Chairman of the Board.
EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of Sara Lee's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings by reference,
including this Proxy Statement, in whole or in part, the following Report of the
Compensation and Employee Benefits Committee on Executive Compensation and the
Performance Graph shall not be incorporated by reference into any such filings.
REPORT OF THE COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE ON EXECUTIVE
COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY AND PRINCIPLES
The Compensation and Employee Benefits Committee ("Committee"), composed of
directors who are not employees or former employees of Sara Lee, is responsible
for the approval and administration of compensation programs for Sara Lee's
executive officers. In conducting its review of executive compensation matters,
the Committee utilizes the compensation data and advisory services of
independent compensation consultants. Sara Lee's philosophy of executive
compensation is based on the following principles:
- - Executive compensation programs shall support the attainment of Sara Lee's
short-term and long-term strategic and financial objectives by rewarding its
executive officers for continuous improvement in earnings per share and growth
in stockholder value.
- - Total compensation shall represent competitive levels of compensation when
compared to the financial performance and compensation levels of executives of
global companies against which Sara Lee competes for management talent.
- - Performance-related pay shall be a significant component of total
compensation.
- - Equity ownership plans shall be designed and administered to encourage
significant stock ownership in Sara Lee by its executives to align their
interests with those of stockholders.
BASE SALARY
Executive officers' salaries are determined by evaluating the
responsibilities of their positions and their performance, and by reference to
the median levels of salaries paid in the competitive marketplace for comparable
executive ability and experience. This marketplace consists of a select peer
group of the largest U.S.-based, global consumer products companies, many of
which are represented in the Peer Composite index (as defined on page 16) shown
in the Performance Graph on page 16. The same competitive peer group is used for
all components of the compensation package. Individual salary increases, which
are considered annually, are based on Sara Lee's financial performance and the
attainment of individual non-financial objectives during the preceding fiscal
year. In the case of operating executive officers, other factors considered are
the financial results of their business units as well as non-financial
performance measures, such as market share; manufacturing productivity; product
quality and relationships with customers, suppliers and employees; employee
safety; environmental quality of operations; business ethics; leadership and
management development. The Committee exercises its judgment in determining the
impact that these or any other relevant performance criteria have on setting the
executive officers' salaries.
12
<PAGE>
ANNUAL INCENTIVES
The chairman and other named officers are eligible for annual incentive
awards under either (1) the Performance-Based Annual Incentive Plan that was
approved by stockholders in October 1995, or (2) a lesser incentive award based
upon the attainment of specific financial and non-financial performance goals
that are set at the beginning of each fiscal year. Included among the financial
performance goals are specified earnings per share results and, in the case of
most operating executives, specified levels of operating profits for those
operations for which the executive is accountable. Typical non-financial goals
would include, but are not limited to, management development, succession
planning and workplace diversity initiatives.
LONG-TERM INCENTIVE PLANS
Under the 1995 Long-Term Incentive Stock Plan (approved by the stockholders
in October 1995) the Committee has granted stock awards, in the form of stock
options and performance shares (also referred to as restricted shares), which
provide an incentive for executive officers to maximize long-term stockholder
value. In making its annual determination of stock awards, the Committee does
not consider an individual's current stock option or other Sara Lee stock
holdings.
Stock options to purchase common stock are granted annually under the 1995
Long-Term Incentive Stock Plan to executive officers at an option price of 100%
of the market value on the date of grant, with a maximum term of 10 years. The
Committee sets guidelines for the number of shares subject to each option grant
based on the evaluation of competitive compensation data at the median level of
the select peer group and the executive officer's base salary and position. The
total number of shares available for the granting of stock options each year is
based on the number of shares of Common Stock outstanding and the earnings per
share performance of Sara Lee during the immediately preceding fiscal year.
To encourage stock ownership by executive officers, restoration stock
options (Restoration Options) are granted simultaneously with the exercise of
the original stock option. Restoration Options are intended to encourage an
executive officer to exercise a stock option earlier than might otherwise occur,
thus resulting in increased share ownership by the executive officer.
Restoration Options are granted when an executive officer exercises an option by
surrendering (or attesting to) currently owned shares to purchase the shares
subject to the option as well as to satisfy tax withholding obligations related
to the exercise of the option. Restoration Options are subject to the same terms
and conditions as the original options, including the expiration date, except
that the option price of a Restoration Option is the fair market value on the
date of its grant rather than the option price of the original option. Only one
Restoration Option will be granted for each original stock option granted after
June 29, 1994 and the market value of the underlying stock must have appreciated
by at least 25% before a Restoration Option may be granted.
Sara Lee has adopted the Long-Term Performance Incentive Program ("LTPIP")
under the 1995 Long-Term Incentive Stock Plan as the only long-term performance
incentive program under which the Committee could award executive officers
shares of common stock which may be earned based upon achievement of specified
corporate and/or group financial goals.
Performance shares have been granted annually at the beginning of each new
three-year performance cycle. For Dutch tax purposes, Dutch participants who are
resident in the Netherlands, have received stock options in lieu of performance
shares of common stock under the LTPIP. The Committee has set target award
levels at approximately the median value of the competitive peer group. The
fiscal year 96-98 performance measures for corporate positions, including
Messrs. Bryan and Murphy, consist of cumulative primary earnings per share
growth over the three-year performance cycle, and three-year average returns on
capital and equity. In addition to these performance measures, Messrs.
Franceschini and McMillan also have operating profit and return on average
investment for their respective business
13
<PAGE>
groups as performance measures. Mr. Meysman's performance measures consist of
cumulative operating profit and return on average investment for his business
group. To the extent that target performance levels are exceeded, a maximum of
125% of the performance shares initially awarded may be earned.
STOCK OWNERSHIP GUIDELINES
In keeping with Sara Lee's principle of designing and maintaining stock
incentive plans to encourage significant stock ownership in Sara Lee by its
executives, the Committee has approved target levels of stock ownership
(excluding stock options and performance shares that have been awarded but not
yet earned) to clarify for executives the levels of stock ownership that Sara
Lee believes are significant. The target levels of stock ownership range from
five times annual base salary for the Chief Executive Officer to approximately
two-thirds of annual base salary for operating unit vice presidents. These
target ownership levels are applicable to about 500 of Sara Lee's key
executives. All five executive officers named in the Summary Compensation Table
on page 17 maintain ownership levels which exceed their target.
CHIEF EXECUTIVE OFFICER'S COMPENSATION AND CORPORATE PERFORMANCE FOR FISCAL
YEAR 1996
As a part of Sara Lee's efforts to obtain maximum tax deductibility of
executive compensation, which is also discussed in the following section,
several significant modifications were made to Mr. Bryan's compensation program
in fiscal year 1996. Mr. Bryan's actual base salary was capped at its current
level of $928,200 and his most significant executive perquisites were
eliminated. The forgone value of future base salary increases and perquisites
were replaced with performance-based forms of compensation.
In addition to the performance goal and incentive pool funding formula that
are specified in the Performance-Based Annual Incentive Plan, the Committee also
set specific financial and non-financial performance goals for Mr. Bryan at the
beginning of fiscal year 1996. Primary earnings per share constituted 57% of the
weighting of these goals and the remaining 43% was based on the attainment of
other strategic and individual performance goals. Sara Lee's primary earnings
per share of $1.83 represented a 13.0% increase over fiscal year 1995. The
Committee evaluated Mr. Bryan's strategic and individual performance in
achieving other financially related goals including return on equity, return on
invested capital and debt-to-capital ratio. The Committee also evaluated
non-financial goals such as management development, succession planning and
workplace diversity initiatives. Based upon the Committee's assessment of Mr.
Bryan's performance in relation to these factors, he earned an incentive award
of $1,303,378 which represents 140.42% of his base salary earnings for fiscal
year 1996 and was below the maximum allocation possible under the
Performance-Based Annual Incentive Plan.
On August 30, 1995, Mr. Bryan was granted an option to purchase 160,000
shares of Common Stock of Sara Lee by the Committee in accordance with the
guidelines of the Committee referred to above and Sara Lee's earnings per share
performance for fiscal year 1995. Mr. Bryan was granted 31,400 performance
shares under the fiscal year 96-98 Long-Term Performance Incentive Plan.
TAX DEDUCTIBILITY CONSIDERATIONS
In 1993, the Code was amended to limit the deductibility of certain
compensation in excess of $1 million paid to each of the five highest paid
executive officers. The Committee has adopted policies which are intended to
maximize the tax deductibility of executive compensation, consistent with its
responsibility to provide motivational and competitive compensation which is
performance-based. In the event of a conflict between Section 162(m) of the Code
and the Corporation's Executive Compensation Philosophy and Principles, or in
the event that the Committee determines that compliance with Section 162(m) of
the Code is not in the best interests of the Corporation and its stockholders,
the Committee may take such actions as it deems appropriate, regardless of the
impact of such actions on the tax deductibility of compensation paid to
executive officers covered by Section 162(m).
14
<PAGE>
SUMMARY
The Compensation and Employee Benefits Committee believes that the
compensation programs of Sara Lee and the administration of those programs well
serve the interests of Sara Lee stockholders. These programs allow Sara Lee to
attract, retain and motivate exceptional management talent and to compensate
executives in a manner that reflects their contribution to both the short and
long-term performance of the corporation. Sara Lee intends to continue to
emphasize performance-based compensation programs that it believes positively
affect stockholder value.
Allen F. Jacobson, Chairman
Charles W. Coker
Willie D. Davis
James L. Ketelsen
Rozanne L. Ridgway
15
<PAGE>
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in cumulative total
stockholder return on Common Stock with (i) the cumulative total return of the
Standard and Poor's 500 Stock Index ("S&P 500") and (ii) the cumulative total
return of a weighted composite of Standard and Poor's Foods, Household Products
and Textile-Apparel Manufacturers Indices, respectively ("Peer Composite").
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AS OF JUNE 30
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Sara Lee 100 131 128 113 156 182
Peer Composite 100 109 107 102 128 155
S&P 500 100 113 129 131 165 208
</TABLE>
- --------------------------------------------------------------------------------
Assumes an investment of $100 on June 30, 1991, and the reinvestment of
dividends.
- --------------------------------------------------------------------------------
Sara Lee has elected to utilize a weighted composite of the S&P Foods, Household
Products and Textile-Apparel Manufacturers Indices because no single
standardized industry index represents a comparable peer group. As of June 30,
1996, the three Indices are comprised of the following companies: the S&P Foods
Index -- Archer-Daniels-Midland Co., CPC International Inc., Campbell Soup
Company, ConAgra, Inc., General Mills, Inc., H.J. Heinz Company, Hershey Foods
Corporation, Kellogg Company, The Quaker Oats Company, Ralston Purina Group,
Sara Lee Corporation, Unilever N.V., Wm. Wrigley Jr. Company; the S&P Household
Products Index -- The Clorox Company, Colgate-Palmolive Company, Kimberly-Clark
Corporation, The Procter & Gamble Company, and the S&P Textile-Apparel
Manufacturers Index -- Fruit of the Loom, Inc., Liz Claiborne, Inc., Russell
Corp., Springs Industries, V.F. Corporation. The returns on the Peer Composite
were calculated as follows: at the beginning of each fiscal year the amount
invested in each S&P industry sector index was equivalent to the percentage of
Sara Lee's operating profits in its food, household and body care and apparel
businesses, respectively, for the preceding year. As a result, the investment
allocation was re-weighted each year to reflect the profit percentage change
that occurred in Sara Lee's business mix during the prior year.
16
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for the
Chief Executive Officer of Sara Lee and each of the four other most highly
compensated executive officers of Sara Lee and its subsidiaries (collectively,
the "named executive officers") for services rendered during the fiscal years
ended June 29, 1996, July 1, 1995 and July 2, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
AWARDS
ANNUAL COMPENSATION -----------------------
---------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) (#)(2) ($)(3)
- --------------------------------- ---- -------- ---------- ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John H. Bryan 1996 $928,200 $1,303,378 $ 67,384(4) $863,500 1,141,107 $ 34,080
Chairman of the Board 1995 $921,609 $1,117,912 $181,720 $690,000 150,000 $ 42,117
and Chief Executive Officer 1994 $892,500 $ 676,515 $166,600 None 100,089 $ 53,517
Michael E. Murphy 1996 $561,419 $ 637,211 $ --(5) $412,500 545,812 $ 50,246
Vice Chairman and Chief 1995 $543,046 $ 644,596 $ 74,271 $345,000 75,000 $ 30,360
Administrative Officer 1994 $529,573 $ 394,532 $ 2,670 None 45,100 $ 25,658
C. Steven McMillan 1996 $567,854 $ 610,443 $ --(5) $412,500 161,918 $ 39,140
Executive Vice President 1995 $515,192 $ 556,407 $ 81,387 $345,000 75,000 $ 28,086
1994 $475,000 $ 441,750 $ 67,202 None 61,605 $ 32,467
Donald J. Franceschini 1996 $520,289 $ 521,017 $ --(5) $412,500 80,000 $ 17,455
Executive Vice President 1995 $495,385 $ 532,539 $ --(5) $345,000 75,000 $ 15,834
1994 $379,250 $ 324,117 $ --(5) $470,000 42,800 $ 13,546
Frank L. Meysman (6) 1996 $386,246 $ 359,961 $ --(5) None 63,000 None
Senior Vice President 1995 $488,126 $ 323,559 $ --(5) None 78,000 None
1994 $222,198 $ 168,515 $ --(5) None 18,734 None
</TABLE>
- --------------------
(1) Market value of restricted shares of Common Stock awarded under the 1989
Incentive Stock Plan and the 1995 Long-Term Incentive Stock Plan on the date
of grant. Dividends on the restricted shares awarded to each participant are
escrowed during the period of the restriction. Dividends and interest on the
escrowed dividends will be distributed at the end of the restriction period
in the same proportion as the restrictions on the restricted shares lapse as
a result of achieving specified performance goals. To the extent the
performance goals are not attained, both dividends and interest would be
forfeited by the participant. In the event of a change of control (as
defined in the Plans), the restrictions imposed on the restricted shares
will lapse, and all restricted shares will be released to participants. The
number of restricted shares awarded during fiscal year 1996 and the
aggregate number and market value of restricted shares held by each of the
named executive officers at June 29, 1996, is set forth below. The market
value was calculated based on the closing price of Common Stock on June 28,
1996 (the last business day of the fiscal year), which was $32.50 per share.
<TABLE>
<CAPTION>
TOTAL RESTRICTED
SHARES SHARES HELD AT END OF
AWARDED FY 1996
IN FISCAL ---------------------
NAME YEAR 1996 SHARES MARKET VALUE
- --------------------------------- --------- ------- ------------
<S> <C> <C> <C>
John H. Bryan.................... 31,400 253,400 $8,235,500
Michael E. Murphy................ 15,000 136,000 $4,420,000
C. Steven McMillan............... 15,000 124,000 $4,030,000
Donald J. Franceschini........... 15,000 66,800 $2,171,000
Frank L. Meysman................. None N.A. N.A.
</TABLE>
17
<PAGE>
(2) Represents options to purchase Common Stock granted pursuant to the 1989
Incentive Stock Plan and the 1995 Long-Term Incentive Stock Plan. Amounts
reported in this column include Restoration Options granted during fiscal
years 1994, 1995 and 1996, as discussed on page 13.
(3) The amounts reported in this column for fiscal year 1996 include (i) all
amounts allocated to the following named executive officers under the ESOP
and the Supplemental Plan (as defined on page 21): Mr. Bryan, $27,751, Mr.
Murphy, $26,294, Mr. McMillan, $21,409, and Mr. Franceschini, $13,101, (ii)
interest accrued at above-market rates (as defined by the rules of the
Securities and Exchange Commission) on compensation deferred for prior
periods by the named executive officers: Mr. Bryan, $6,329, Mr. Murphy,
$5,910 and Mr. McMillan, $4,957, and (iii) premiums paid by Sara Lee in
connection with universal life insurance policies which are owned by certain
of the named executive officers: Mr. Murphy, $18,042, Mr. McMillan, $12,774,
and Mr. Franceschini, $4,354.
(4) The amount reported for Mr. Bryan includes $20,963 for the personal use of
corporate transportation.
(5) None of the named executive officers received perquisites or other personal
benefits in an amount large enough to require reporting in this column, nor
did any of them receive any other compensation required to be reported in
this column.
(6) Mr. Meysman's compensation information contained in this Proxy Statement has
been converted from Dutch guilders to U.S. dollars based upon an average
foreign exchange rate applicable for each fiscal year.
OPTION GRANTS TABLE
The following table shows stock option award information for the named
executive officers during fiscal year 1996. The table includes both new options
and Restoration Options granted upon the exercise of existing options. The grant
of a Restoration Option upon the exercise of an existing option is intended to
promote increased employee share ownership by encouraging the early exercise of
existing options. The grant of a Restoration Option (as described on page 13)
does not result in an increase in the total combined number of shares and
options held by an employee. The amounts shown as potential realizable values
for all stockholders represent the corresponding increases over a ten-year
period (the term of new options granted to non-Dutch optionees) in the market
value of 485,054,554 shares of Common Stock outstanding held by all stockholders
as of June 29, 1996, based on a share price of $32.50 (the closing price per
share of Common Stock on the last business day of fiscal year 1996).
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF
TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES OF
NUMBER OF GRANTED STOCK PRICE APPRECIATION
SECURITIES TO FOR OPTION TERM
UNDERLYING EMPLOYEES EXERCISE ---------------------------
OPTIONS GRANTED IN FISCAL PRICE EXPIRATION 5% (2) 10% (2)
NAME (#) YEAR ($/SH) DATE ($) ($)
- ---------------------- ------------------- --------- -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
John H. Bryan New Grant (1)
160,000 2.09% $27.44 8/30/05 $ 2,761,099 $ 6,997,167
Restoration Options
123,422 1.61% 29.93 6/26/96 140,367 279,168
40,621 0.53% 29.93 12/02/97 137,762 283,626
37,181 0.49% 29.93 11/30/98 187,694 396,063
38,390 0.50% 33.19 12/02/97 97,755 197,939
35,140 0.46% 33.19 11/30/98 151,916 315,156
217,619 2.84% 29.93 7/03/99 1,320,501 2,828,135
205,662 2.69% 33.19 7/03/99 1,114,053 2,345,189
90,307 1.18% 29.93 7/01/02 1,059,893 2,455,387
85,345 1.11% 33.19 7/01/02 981,156 2,231,597
55,227 0.72% 29.93 8/25/03 781,060 1,867,233
52,193 0.68% 33.19 8/25/03 734,716 1,723,722
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
% OF
TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES OF
NUMBER OF GRANTED STOCK PRICE APPRECIATION
SECURITIES TO FOR OPTION TERM
UNDERLYING EMPLOYEES EXERCISE ---------------------------
OPTIONS GRANTED IN FISCAL PRICE EXPIRATION 5% (2) 10% (2)
NAME (#) YEAR ($/SH) DATE ($) ($)
- ---------------------- ------------------- --------- -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Murphy New Grant (1)
80,000 1.04% $27.44 8/30/05 $ 1,380,549 $ 3,498,583
Restoration Options
38,361 0.50% 28.75 6/26/96 50,972 101,765
21,435 0.28% 28.75 12/02/97 75,261 155,564
19,952 0.26% 32.81 12/02/97 61,621 125,769
18,821 0.25% 28.75 11/30/98 96,272 203,973
17,519 0.23% 32.81 11/30/98 85,375 178,562
102,344 1.34% 28.75 7/03/99 624,555 1,343,124
95,259 1.24% 32.81 7/03/99 568,888 1,207,480
40,766 0.53% 28.75 7/01/02 472,508 1,099,428
37,945 0.50% 32.81 7/01/02 458,339 1,051,673
6,141 0.08% 28.75 6/23/03 83,287 199,050
5,717 0.07% 32.81 6/23/03 81,599 192,259
14,247 0.19% 28.75 8/25/03 198,323 476,245
26,567 0.35% 32.81 8/25/03 389,772 922,709
20,738 0.27% 32.81 8/24/04 353,486 860,327
C. Steven McMillan New Grant (1)
80,000 1.04% $27.44 8/30/05 $ 1,380,549 $ 3,498,593
Restoration Options
11,787 0.15% 30.94 12/02/97 29,083 58,971
16,616 0.22% 29.83 7/01/02 190,500 439,951
12,263 0.16% 30.94 7/01/02 132,859 302,645
19,543 0.26% 30.94 8/25/03 258,876 608,305
21,709 0.28% 29.83 8/24/04 348,072 852,897
Donald J. Franceschini New Grant (1)
80,000 1.04% $27.44 8/30/05 $ 1,380,549 $ 3,498,583
Frank L. Meysman New Grant (1)
43,000 0.56% $27.44 8/30/00 $ 325,990 $ 720,353
LTPIP Grant (3)
20,000 0.26% $27.44 8/30/00 $ 151,623 $ 335,048
All Stockholders N.A. N.A. N.A. N.A. $9.9 Billion $25.1 Billion
</TABLE>
- --------------------
(1) New options to purchase Common Stock granted under Sara Lee's 1995
Long-Term Incentive Stock Plan. All options were granted at 100% of the fair
market value of the Common Stock on the date of grant and may be exercised
within 10 years, except for certain optionees not resident in the United
States, whose options may be exercised within five years. The options
generally become exercisable in equal annual installments, which are
cumulative over a period of three years. No option may be exercised until
the expiration of one year from the date of grant, except for options
granted to certain employees not resident in the United States, which, for
tax purposes, are exercisable immediately. In the event of a change of
control of Sara Lee (as defined in the 1995 Long-Term Incentive Stock Plan),
the Committee may provide for appropriate adjustments, including
acceleration of vesting. The grant of a non-qualified option includes the
right to one Restoration Option which may be granted only if the market
value of the Common Stock underlying the option has increased by at least
25% on the exercise date. For more information on Restoration Options, see
page 13.
(2) The dollar amounts indicated in these columns are the result of calculations
assuming 5% and 10% growth rates as required by the rules of the Securities
and Exchange Commission. These growth rates are not intended
19
<PAGE>
by Sara Lee to forecast future appreciation, if any, of the price of Common
Stock, and Sara Lee expressly disclaims any representation to that effect.
(3) Mr. Meysman's new grant of an option to purchase 43,000 shares of Common
Stock is subject to the terms and conditions applicable to Dutch optionees
as described in footnote (1) above. For Dutch tax purposes, in lieu of
performance shares being granted under the LTPIP, Mr. Meysman and other
Dutch participants resident in the Netherlands receive stock options. The
option to purchase 20,000 shares of Common Stock granted to Mr. Meysman
under the LTPIP is also subject to the terms and conditions applicable to
optionees not resident in the United States as described in footnote (1)
above. Additionally, the sale of shares obtained through the exercise of
these options is restricted based upon achievement of specified corporate
and/or group financial goals. For more information on the LTPIP, see page
13.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to the named
executive officers concerning the exercise of stock options during fiscal year
1996, and concerning unexercised options held at the end of fiscal year 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE- MONEY OPTIONS AT
SHARES FISCAL YEAR-END (#) (1) FISCAL YEAR-END ($) (2)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John H. Bryan................ 1,159,097 $ 3,463,387 50,000 706,497 $ 484,500 $1,970,299
Michael E. Murphy............ 533,483 $ 1,904,503 3,333 368,730 $ 26,031 $ 986,113
C. Steven McMillan........... 91,113 $ 499,417 140,121 186,260 $ 515,177 $1,038,881
Donald J. Franceschini....... 0 $ 0 71,533 144,267 $ 571,445 $ 997,847
Frank L. Meysman............. 10,000 $ 78,100 176,682 None $ 1,317,039 None
</TABLE>
- --------------------
(1) Represents the number of shares of Common Stock underlying options held by
each named executive officer.
(2) Calculated based on the share price of Common Stock on June 28, 1996 (the
last business day of fiscal year 1996) of $32.50 less the option exercise
price. An option is in-the-money if the market value of the Common Stock
subject to the option exceeds the exercise price.
EMPLOYMENT AGREEMENTS
Mr. Meysman is a party to employment agreements (collectively, the
"Agreements") with Sara Lee and Sara Lee/DE N.V., a subsidiary of Sara Lee
("Sara Lee/DE"). Pursuant to the Agreements, Mr. Meysman is entitled (i) to an
annual base salary payable in Dutch guilders (which was $394,464 as of January
1, 1996 based upon an average foreign exchange rate used for purposes of the
conversion from Dutch guilders to U.S. dollars, and which is subject to annual
increases), (ii) to participate in Sara Lee's annual short-term incentive plan,
long-term incentive plans and deferred compensation plans on a basis
commensurate with other officers of Sara Lee, and (iii) to certain perquisites
commensurate with his position as Managing Director of Sara Lee/DE and an
officer of Sara Lee. Mr. Meysman's Agreement with Sara Lee/DE generally is
terminable by either party upon six months prior notice; his participation in
the aforementioned Sara Lee plans will cease upon his termination of employment
with Sara Lee/DE. Under certain circumstances, Mr. Meysman is entitled to
receive compensation at his then current base salary for up to 30 months
following termination of his employment by Sara Lee/DE, such compensation to be
increased by one month's salary for each year his age exceeds 50 years at the
date of such termination of employment. These severance obligations may be
reduced by a percentage of other income earned by Mr. Meysman during the period
severance benefits are payable. If Mr. Meysman's employment is
20
<PAGE>
terminated at the option of Sara Lee/DE after he attains age 57 years, or at his
option after he attains age 60 years, he will be paid 90% of his then base
salary for the first year following such termination of employment and 80% of
his then base salary for each year thereafter until he attains age 62 years,
subject to reduction under certain circumstances.
RETIREMENT PLANS
PENSION PLAN
The named executive officers (other than Mr. Meysman) participate in the
Sara Lee Corporation Pension and Retirement Plan (the "Pension Plan"), a defined
benefit pension plan which is qualified under Section 401(a) of the Code, and
the Sara Lee Corporation Supplemental Benefit Plan (the "Supplemental Plan"), a
nonqualified defined benefit plan. The Pension Plan has approximately 18,000
participants, and the named executive officers (other than Mr. Meysman)
participate in the Pension Plan on the same basis as all other eligible
employees. The annual pension benefit under the plans, taken together, is in
general determined by a participant's credited years of service multiplied by a
percentage of the participant's final average compensation (compensation during
the highest five consecutive years of the last ten years of employment). For the
named executive officers, the sum of amounts listed in the "Salary" and "Bonus"
column of the Summary Compensation Table is used as compensation in the
calculation of annual pension benefits. The Code places certain limitations on
the amount of pension benefits that may be paid under qualified plans. Any
benefits payable in excess of those limitations will be paid under the
Supplemental Plan. Benefits accrued under the Supplemental Plan with present
values exceeding $100,000 for participants age 55 and older and $300,000 for
participants who have not yet attained the age of 55 are funded with periodic
payments by Sara Lee to individual trusts established by the participants.
The following table may be used to calculate the approximate annual benefits
payable under the Pension Plan and the Supplemental Plan to participants in
specified final average compensation and years of service classifications,
assuming retirement on July 1, 1996, at age 65, payment in the form of a
straight-life annuity and no offset for Social Security benefits or individual
trust balances.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL NORMAL RETIREMENT
PENSION
BASED UPON THE INDICATED CREDITED
FINAL SERVICE
AVERAGE ----------------------------------------
COMPENSATION 10 YEARS 15 YEARS 25 YEARS 35 YEARS
- ------------ -------- -------- -------- ----------
<S> <C> <C> <C> <C>
$ 750,000 $131,250 $196,875 $328,125 $ 459,375
1,000,000 175,000 262,500 437,500 612,500
1,250,000 218,750 328,125 546,875 765,625
1,500,000 262,500 393,750 656,250 918,750
1,750,000 306,250 459,375 765,625 1,071,875
2,000,000 350,000 525,000 875,000 1,225,000
2,250,000 393,750 590,625 984,375 1,378,125
</TABLE>
As of September 1, 1996, Messrs. Bryan, Franceschini, McMillan and Murphy
had 22, 4, 18 and 17 full years of credited service, respectively, under the
Pension Plan and all except for Mr. McMillan have additional accrued benefits
under predecessor pension plans of companies acquired by Sara Lee. Mr. Meysman
has 6 years of credited service under the pension plan of Sara Lee/DE N.V., a
subsidiary of Sara Lee, and has no credited service under the Pension Plan. The
annual compensation covered by the Pension Plan and the Supplemental Plan, or,
for Mr. Meysman, by the Sara Lee/DE N.V. pension plan, for each of the named
executive officers for 1995 is as follows: Mr. Bryan, $2,046,012, Mr.
Franceschini, $1,040,327, Mr. McMillan, $1,108,069, Mr. Murphy, $1,196,182 and
Mr. Meysman, $378,028.
21
<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN
Sara Lee's Employee Stock Ownership Plan ("ESOP") is a tax-qualified
leveraged employee stock ownership plan. In general, employees of Sara Lee's
corporate office, or of a participating subsidiary or division, other than
employees covered by collective bargaining agreements, are eligible to
participate in the ESOP after having completed one year of service and attained
the age of 21. The named executive officers (other than Mr. Meysman) participate
in the ESOP on the same basis as all other eligible employees. Each year Sara
Lee makes contributions to the ESOP which, together with the dividends paid on
the ESOP Stock held by the ESOP, are used to pay principal and loan interest
incurred by the ESOP to purchase ESOP Stock. With each principal payment, a
portion of the ESOP Stock is allocated to participating employees, at a rate of
at least 1.75% of the participant's compensation. The Code places certain
limitations on the amount of ESOP Stock that may be allocated to a participant
under a tax-qualified employee stock ownership plan. Any allocation in excess of
those limitations will be reserved under the Supplemental Plan described above
under the caption "Pension Plan".
Participants are fully vested in their ESOP accounts upon completion of five
years of service, disability, retirement or death. A participant is not entitled
to a distribution from the ESOP until he terminates employment with Sara Lee,
becomes disabled or dies. The distribution will be made, at the election of the
participant, in Common Stock or cash. Distributions of excess ESOP allocations
from the Supplemental Plan are made only in cash.
For the calendar year ended December 31, 1995, Messrs. Bryan, Franceschini,
McMillan and Murphy were respectively allocated 50.2, 43.0, 50.2 and 50.2 shares
each of ESOP Stock to their accounts. Mr. Meysman does not participate in the
ESOP because he is not employed by a participating subsidiary or division. All
participants in the ESOP had an aggregate of 282,170 shares of ESOP Stock
allocated to their accounts. Under the Supplemental Plan, Messrs. Bryan,
Franceschini, McMillan and Murphy were respectively allocated units equivalent
to 145.2, 48.9, 100.2 and 134.6 shares of ESOP Stock to their accounts.
SEVERANCE PLANS
Sara Lee has a severance policy applicable to the named executive officers
(except for Mr. Meysman) and all corporate officers of Sara Lee which was
adopted in 1994. The Policy provides that if an officer's employment is
terminated other than for cause, such officer is entitled to receive severance
payments equal to a minimum of 12 and a maximum of 24 months of salary, the
number of which would depend on the officer's position, length of service and
age, and a pro rata payment under the incentive plans applicable to the fiscal
year in which the termination occurs. The terminated officer's participation in
Sara Lee's insurance plans, except for disability insurance (which ends on the
date of termination of employment), will continue for the same number of months
for which he or she is receiving severance payments. At the discretion of the
Chief Executive Officer of Sara Lee, the severance payments may be increased by
up to 6 months' salary, if the terminated officer is 50 years of age or older,
or up to 3 months' salary, if the terminated officer is 40 to 49 years of age.
Severance payments terminate if the terminated officer becomes employed by a
competitor of Sara Lee.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee and subject to ratification
by the stockholders at the Annual Meeting, the Board of Directors has appointed
Arthur Andersen LLP ("Andersen") to serve as the independent public accountants
of Sara Lee for its fiscal year ending June 28, 1997. Andersen, which has served
as the independent public accountants of Sara Lee since 1965, follows a policy
of rotating the partner in charge of Sara Lee's audit every seven years. Other
partners and non-partner personnel are rotated on a periodic basis.
Representatives of Andersen are expected to be present at the Annual Meeting,
will have the opportunity to make a statement, if they desire to do so, and will
be
22
<PAGE>
available to respond to appropriate questions. If the appointment of Andersen is
not ratified by the stockholders, the Board of Directors will appoint other
independent public accountants based upon the recommendation of the Audit
Committee.
The affirmative vote of a majority of the votes cast at the Annual Meeting
on this proposal is required to approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL
YEAR 1997.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
In order to be considered for inclusion in Sara Lee's proxy materials for
the 1997 annual meeting of stockholders, a stockholder proposal must be received
by Sara Lee no later than May 23, 1997. Proposals may be mailed to Sara Lee
Corporation, to the attention of the Secretary, Three First National Plaza,
Chicago, Illinois 60602-4260.
In addition, Sara Lee's Bylaws specify procedures for notifying Sara Lee of
nominations for director and other business to be properly brought before any
meeting of stockholders. The fact that Sara Lee may not insist upon compliance
with these procedures should not be construed as a waiver by Sara Lee of its
right to do so at any time in the future. A copy of the Bylaws may be obtained
from the Corporation's Secretary.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
matters which will be presented for consideration at the Annual Meeting other
than the proposals set forth in this Proxy Statement. If any other matters
properly come before the Annual Meeting, it is intended that the persons named
in the proxy will act in respect thereof in accordance with their best judgment.
A copy of Sara Lee's Annual Report on Form 10-K for the fiscal year ended
June 29, 1996, as filed with the Securities and Exchange Commission, will be
sent to any stockholder without charge upon written request addressed to Sara
Lee Corporation, to the attention of the Investor Relations and Corporate
Affairs Department, Three First National Plaza, Chicago, Illinois, 60602-4260.
The cost of solicitation of the proxies will be borne by Sara Lee. In
addition to solicitation of the proxies by use of the mails, employees of Sara
Lee, without extra remuneration, may solicit proxies personally or by telephone.
Georgeson & Company Inc. has been retained by management to assist in the
solicitation of proxies for a fee of $14,000 plus reimbursement of expenses.
Sara Lee will reimburse brokerage firms, nominees, custodians and fiduciaries
for their out-of-pocket expenses for forwarding proxy materials to beneficial
owners and seeking instruction with respect thereto.
By Order of the Board of Directors
[JANET LANGFORD KELLY SIGNATURE]
Janet Langford Kelly
Senior Vice President,
Secretary and General Counsel
September 20, 1996
23
<PAGE>
[LOGO]
Three First National
Plaza
Chicago, Illinois
60602-4260
Notice of
1996
Annual Meeting
of Stockholders and
Proxy Statement
- --------------------------------------------------------------------------------
10:00 A.M., THURSDAY, OCTOBER 31, 1996
PLEASE NOTE THAT THE ANNUAL MEETING WILL BE HELD AT
THE ART INSTITUTE OF CHICAGO
ARTHUR RUBLOFF AUDITORIUM
COLUMBUS DRIVE BETWEEN MONROE AND JACKSON STREETS
CHICAGO, ILLINOIS
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
Please sign, date and promptly return your
proxy in the enclosed envelope
<PAGE>
SARA LEE CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, OCTOBER 31, 1996
THE UNDERSIGNED STOCKHOLDER OF SARA LEE CORPORATION, A MARYLAND CORPORATION
(THE "COMPANY") HEREBY APPOINTS JOHN H. BRYAN, JUDITH A. SPRIESER AND JANET
LANGFORD KELLY, OR ANY OF THEM, AS THE UNDERSIGNED'S PROXY OR PROXIES, WITH FULL
POWER OF SUBSTITUTION IN EACH OF THEM, TO ATTEND THE ANNUAL MEETING OF
STOCKHOLDERS OF THE COMPANY TO BE HELD IN THE ART INSTITUTE OF CHICAGO, ARTHUR
RUBLOFF AUDITORIUM, COLUMBUS DRIVE BETWEEN MONROE AND JACKSON STREETS, CHICAGO,
ILLINOIS, ON OCTOBER 31, 1996 AT 10:00 A.M., CHICAGO TIME, AND ANY
POSTPONEMENT OR ADJOURNMENT THEREOF AND TO VOTE ALL SHARES OF COMMON STOCK
AND EMPLOYEE STOCK OWNERSHIP PLAN CONVERTIBLE PREFERRED STOCK OF THE COMPANY
WHICH THE UNDERSIGNED IS ENTITLED TO VOTE AT SUCH MEETING, AS FULLY AS THE
UNDERSIGNED COULD IF PERSONALLY PRESENT, UPON THE PROPOSALS SET FORTH ON THE
REVERSE SIDE HEREOF AND TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING, REVOKING ANY PROXY OR PROXIES HERETOFORE GIVEN. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE ANNUAL MEETING OF
STOCKHOLDERS AND OF THE ACCOMPANYING PROXY STATEMENT AND REVOKES ANY PROXY
HERETOFORE GIVEN WITH RESPECT TO SUCH MEETING.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
- --------------------------------------------------------------------------------
<PAGE>
SARA LEE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
[ ]
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF A
VALID PROXY IS RETURNED, AND NO CHOICE IS INDICATED WITH RESPECT TO A
PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
1. Election of Directors
Paul A. Allaire, Frans H.J.J. Andriessen, John H. Bryan, Duane L. Burnham,
Charles W. Coker, Willie D. Davis, Donald J. Franceschini, Allen F. Jacobson,
Vernon E. Jordan, Jr., James L. Ketelsen, Hans B. van Liemt, Joan D. Manley, C.
Steven McMillan, Newton N. Minow, Michael E. Murphy, Sir Arvi H. Parbo, A.C.,
Rozanne L. Ridgway and Richard L. Thomas.
For All
For Withheld Except nominees written in below.
/ / / / / /
----------------------------
Nominee Exception(s)
----------------------------
----------------------------
For Against Abstain
2. Ratify the appointment of / / / / / /
Arthur Andersen LLP as
independent public
accountants.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
Dated: , 1996
---------------------
Signature
------------------------------------
Signature
------------------------------------
NOTE: Please sign exactly as your name or names appear on the reverse side.
For joint accounts, each owner should sign. When signing as executor,
administrator, attorney, trustee or guardian, etc., please give your full title.
- --------------------------------------------------------------------------------
Detach Proxy Card Here
ADMISSION TICKET
SARA LEE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, OCTOBER 31, 1996
10 A.M.
THE ART INSTITUTE OF CHICAGO
ARTHUR RUBLOFF AUDITORIUM
COLUMBUS DRIVE BETWEEN MONROE AND JACKSON STREETS
CHICAGO, ILLINOIS
<PAGE>
EDGAR FORMAT APPENDIX
Pursuant to Rule 304(a) of Regulation S-T, following is a list of all graphic or
image information contained in the paper format version of Sara Lee
Corporation's 1996 Notice of Annual Meeting of Stockholders, Proxy Statement and
Form of Proxy;
1. The Notice of Annual Meeting (cover page) contained the Sara Lee
Corporation logo ("Logo"), centered at the top of the page. The Logo consists of
the words "SARA LEE CORPORATION" with "SARA LEE" printed in teal color ink and
"CORPORATION" printed in gray color ink.
2. The captions "TABLE OF CONTENTS" on the inside front cover page,
"PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER
31, 1996" on page 1, "ELECTION OF DIRECTORS" on page 2, "OWNERSHIP OF COMMON
STOCK AND ESOP STOCK BY DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS" on page
9, "MEETINGS AND COMMITTEES OF THE BOARD" on page 10, "DIRECTOR
COMPENSATION" on page 11, "EXECUTIVE COMPENSATION" on page 12, "RETIREMENT
PLANS" on page 21, "APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS" on page
22, "STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING" on page 23, "OTHER
MATTERS" on page 23, and the phrase "YOUR VOTE IS IMPORTANT" on the back
cover are printed in teal color ink.
3. Page 1 contains the Logo, centered at the top of the page.
4. Pages 2-8 contained 1-1/2 inch by 1-1/4 inch black-and-white
photographs of the corporations' nominees for director, as indicated on those
pages.
5. Page 16 contained a line graph, with the horizontal axis labeled in
years from 1991 through 1996, and the vertical axis labeled in dollars from
100 to 225, in increments of 25, on which the data contained in the table on
page 16 of the attached EDGAR format version of the Proxy Statement is
represented by three lines, labeled "Sara Lee," "Peer Composite" and "S&P
500," respectively. The line labeled "Sara Lee" is printed in teal color ink.
The data represented in the graph, and a key to the lines contained in the
graph, is set forth below the graph.
6. The back cover of the Proxy Statement contains the Logo in the upper
right hand corner of the page.
