<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
/ / Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/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)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
[LOGO]
September 22, 1997
DEAR SARA LEE STOCKHOLDER:
It is my pleasure to invite you to Sara Lee Corporation's 1997 Annual
Meeting of Stockholders. At
last year's annual meeting, a number of you encouraged us to find a larger site
so we could better accommodate our many loyal stockholders who attend our annual
meeting. I am pleased to report
that this year's meeting will be held in FESTIVAL HALL A AT NAVY PIER, 600 E.
GRAND AVENUE, CHICAGO, ILLINOIS on Thursday, October 30, 1997, at 10:00 a.m.
We've included a map and directions to Navy Pier and the meeting site on the
back page of this proxy statement.
The formal notice of the meeting follows on the next page. In addition to
the three items of business, we will also discuss Sara Lee's 1997 performance
and answer your questions. Enclosed with this proxy statement are your voting
card, a postage-paid envelope to return your voting card, your admission ticket
to the meeting and Sara Lee's 1997 Annual Report.
Your vote is important. Whether you plan to attend the meeting or not,
please sign, date and return the enclosed voting card in the envelope provided.
If you attend the meeting and prefer to vote in person, you may do so.
I also wanted to let you know that Sara Lee recently launched an Internet
site on the World Wide Web (http://www.saralee.com) to provide stockholders and
other interested parties with ready access to information about Sara Lee. I hope
you'll visit our new site.
I look forward to seeing you at the meeting.
Sincerely,
[LOGO]
John H. Bryan
Chairman and Chief Executive Officer
<PAGE>
[LOGO]
------------------------------------------
NOTICE OF THE 1997
ANNUAL MEETING OF STOCKHOLDERS
------------------------------------------
The Annual Meeting of Stockholders of Sara Lee Corporation will be held on
Thursday, October 30, 1997, at 10:00 a.m., in FESTIVAL HALL A AT NAVY PIER, 600
E. GRAND AVENUE, CHICAGO, ILLINOIS for the following purposes:
1. to elect 18 directors;
2. to ratify the appointment of Arthur Andersen LLP as our independent
accountants for the 1998 fiscal year;
3. to act on one stockholder proposal; and
4. to transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on September 2, 1997 are
entitled to notice of and to vote at the Annual Meeting.
Whether or not you plan to attend the meeting, please sign, date and return
the enclosed voting card in the envelope provided.
By Order of the Board of Directors
[SIG]
Janet Langford Kelly
Senior Vice President, Secretary and
General Counsel
September 22, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INFORMATION ABOUT SARA LEE CORPORATION.................................... 1
INFORMATION ABOUT THE ANNUAL MEETING...................................... 1
Information About Attending the Annual Meeting.......................... 1
Information About this Proxy Statement.................................. 1
Information About Voting................................................ 1
Information for Sara Lee Employees Who are Stockholders................. 2
Information Regarding Tabulation of the Vote............................ 2
Quorum Requirement...................................................... 2
Information About Votes Necessary for Action to be Taken................ 2
Other Matters........................................................... 2
ELECTION OF DIRECTORS..................................................... 3
MEETINGS AND COMMITTEES OF THE BOARD...................................... 7
DIRECTOR COMPENSATION..................................................... 8
SARA LEE COMMON STOCK AND ESOP STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE
OFFICERS................................................................ 9
EXECUTIVE COMPENSATION.................................................... 10
Report of the Compensation and Employee Benefits Committee on Executive
Compensation.......................................................... 10
Performance Graph....................................................... 13
Summary Compensation Table.............................................. 14
Option Grants in Last Fiscal Year....................................... 15
Option Exercises and Fiscal Year-End Values............................. 16
Employment Agreements................................................... 17
Severance Plans......................................................... 17
RETIREMENT PLANS.......................................................... 17
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS............................. 18
STOCKHOLDER PROPOSAL AND SARA LEE RESPONSE................................ 18
OTHER INFORMATION......................................................... 20
Stockholder Proposals for the 1998 Annual Meeting....................... 20
Sara Lee's Form 10-K.................................................... 20
Expenses of Solicitation................................................ 20
</TABLE>
<PAGE>
INFORMATION ABOUT SARA LEE CORPORATION
Sara Lee is a global manufacturer and marketer of high-quality, brand-name
consumer products. We have operations in more than 40 countries and market
branded consumer products in more than 140 countries. We employ 141,000 people
worldwide. Our headquarters is located in Chicago, Illinois and our address is
Three First National Plaza, Chicago, Illinois 60602-4260. Our telephone number
is (312) 726-2600.
INFORMATION ABOUT THE ANNUAL MEETING
INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
Our Annual Meeting will be held on Thursday, October 30, 1997 at 10:00 a.m.
in Festival Hall A at Navy Pier, 600 E. Grand Avenue, Chicago, Illinois. If
you'd like to attend the Annual Meeting please bring your admission ticket with
you. Your admission ticket is included with this proxy statement and is attached
to your proxy card. Simply detach the proxy card from your ticket, sign, date
and mail your proxy card in the enclosed envelope and bring your admission
ticket to the meeting. If you want to attend the meeting, but your shares are
held in the name of a broker or other nominee, please send a written request for
an admission ticket to Sara Lee's Secretary, Janet Langford Kelly, and include
in your request an account statement or letter from the nominee indicating that
you were the beneficial owner of the shares at the close of business on
September 2, 1997.
INFORMATION ABOUT THIS PROXY STATEMENT
We sent you this proxy statement and the enclosed proxy card because Sara
Lee's Board of Directors is soliciting your proxy to vote your shares at the
Annual Meeting. If you own Sara Lee common stock in more than one account, such
as individually and also jointly with your spouse, you may receive more than one
set of these proxy materials. To assist us in saving money and to provide you
with better stockholder services, we encourage you to have all your accounts
registered in the same name and address. You may do this by contacting Sara
Lee's Shareholder Services Department at (312) 558-8662. This proxy statement
summarizes information that we are required to provide to you under the rules of
the Securities and Exchange Commission and which is designed to assist you in
voting your shares. On September 22, 1997, we began mailing these proxy
materials to all stockholders of record at the close of business on September 2,
1997.
INFORMATION ABOUT VOTING
Stockholders can vote on matters presented at the Annual Meeting in two
ways:
- By Proxy -- You can vote by signing, dating and returning the enclosed
proxy card. If you do this, the individuals named on the card (your
"proxies") will vote your shares in the manner you indicate. You may
specify on your proxy card whether your shares should be voted for all,
some or none of the nominees for director and whether your shares should
be voted for or against the ratification of Arthur Andersen and the
stockholder proposal to be presented at the meeting. If you do not
indicate instructions on the card, your shares will be voted FOR the
election of the directors, FOR the ratification of Arthur Andersen as
independent accountants for the 1998 fiscal year and AGAINST the
stockholder proposal.
- In Person -- You may come to the Annual Meeting and cast your vote there.
1
<PAGE>
You may revoke your proxy at any time before it is exercised by sending a
written notice of revocation to Sara Lee's Secretary, Janet Langford Kelly, by
providing a later dated proxy or by voting in person at the meeting.
Each share of Sara Lee common stock is entitled to one vote. As of September
2, 1997, there were 480,725,013 shares of common stock outstanding. Each share
of Sara Lee Employee Stock Ownership Plan Convertible Preferred Stock is
entitled to 5.133 votes. As of September 2, 1997, there were 4,267,227 shares of
ESOP Stock outstanding. The common stock and the ESOP Stock vote together on all
matters as a single class.
INFORMATION FOR SARA LEE EMPLOYEES WHO ARE STOCKHOLDERS
If you are one of our many employees who is a stockholder and you
participate in the Employee Stock Ownership Plan (the ESOP), the Sara Lee Common
Stock Fund under any of Sara Lee's retirement or savings plans (the Savings
Plans), or in Sara Lee's Dividend Reinvestment Plan (the DRIP), you will receive
one proxy with respect to all of your shares registered in the same name.
Employees whose accounts are not registered in the same name will receive a
separate proxy with respect to their individual, ESOP, Savings Plans or DRIP
shares. If you participate in the ESOP you are entitled to direct the ESOP
trustee how to vote the shares allocated to your account, as well as a
proportionate share of unallocated or unvoted shares. If you participate in any
of the Savings Plans you have the right to direct the Savings Plans trustee how
to vote the shares allocated to your account. If you participate in the Savings
Plans and you do not return a proxy with respect to Savings Plans shares, your
Savings Plans shares will be voted by the Savings Plans trustee in the same
proportion as shares held by the Savings Plan trustee for which voting
instructions have been received.
INFORMATION REGARDING TABULATION OF THE VOTE
Sara Lee has a policy that all proxies, ballots and votes tabulated at a
meeting of the stockholders are confidential, and the votes will not be revealed
to any Sara Lee employee or anyone else, other than to the non-employee
tabulator of votes or an independent election inspector, except (1) as necessary
to meet applicable legal requirements or (2) in the event a proxy solicitation
in opposition to the election of the Board of Directors is filed with the
Securities and Exchange Commission. Representatives of Harris Trust and Savings
Bank will tabulate votes and act as Inspectors of Election at the meeting.
QUORUM REQUIREMENT
A quorum of stockholders is necessary to hold a valid meeting. If
stockholders entitled to cast at least a majority of all the votes entitled to
be cast at the meeting are present in person or by proxy, a quorum will exist.
Abstentions and broker non-votes are counted as present for establishing a
quorum. A broker non-vote occurs when a broker votes on some matter on the proxy
card but not on others because the broker does not have the authority to do so.
INFORMATION ABOUT VOTES NECESSARY FOR ACTION TO BE TAKEN
Eighteen directors will be elected at the meeting by a plurality of all the
votes cast at the meeting, meaning that the eighteen nominees for director with
the most votes will be elected. In an uncontested election for directors, the
plurality requirement is not a factor. Other action requires an affirmative vote
of the majority of the votes cast on the matter. Abstentions and non-votes will
have no effect on the result of the vote on the three items to be presented at
the meeting.
OTHER MATTERS
The Board of Directors does not know of any other matter which will be
presented at the Annual Meeting other than the proposals discussed in this proxy
statement. Under our Bylaws, generally no business besides the three items
discussed in this proxy statement may be transacted at the meeting. However, if
any other matter properly comes before the Annual Meeting, your proxies will act
on such proposal in their discretion.
2
<PAGE>
ELECTION OF DIRECTORS
[PHOTO]
BOARD OF DIRECTORS
SEATED FROM LEFT: Michael E. Murphy, Rozanne L. Ridgway, Allen F. Jacobson,
Frans H.J.J. Andriessen, Donald J. Franceschini, Hans B. van Liemt, Paul A.
Allaire, Joan D. Manley, Newton N. Minow, C. Steven McMillan
STANDING FROM LEFT: John H. Bryan, Duane L. Burnham, Charles W. Coker, Richard
L. Thomas, Sir Arvi H. Parbo, Vernon E. Jordan, Jr., Frank L. Meysman, James L.
Ketelsen, Willie D. Davis
Sara Lee's directors are elected each year at the Annual Meeting by the
stockholders. We do not have a staggered board. Eighteen directors will be
elected at this year's Annual Meeting. Each director will serve until the 1998
Annual Meeting of stockholders and until he or she is succeeded by another
qualified director who has been elected. All the nominees are currently
directors.
Frank L. Meysman was elected to the Board by the other directors on March
27, 1997, at the same time that he was promoted to Executive Vice President.
Historically, Sara Lee's officers at the level of Executive Vice President and
above serve on the Board.
Michael E. Murphy, Sara Lee's Vice Chairman and Chief Administrative Officer
and a Director since 1979, is retiring from Sara Lee. Mike joined Sara Lee in
1979 as an Executive Vice President and our Chief Financial and Administrative
Officer. Sara Lee and its Board of Directors wish to extend Mike our sincerest
thanks for his many important and lasting contributions to the success of Sara
Lee and our very best wishes to him and his family.
If a nominee is unavailable for election, the proxy holders may vote for
another nominee proposed by the Board or the Board may reduce the number of
directors to be elected at the Annual Meeting. The following information is
furnished with respect to each nominee for election as a director. The ages of
the nominees are as of October 30, 1997.
3
<PAGE>
PAUL A. ALLAIRE Chairman and Chief Executive Officer of Xerox Corporation
(information processing). Mr. Allaire became a director of Sara Lee in 1989. He
is a director of Lucent Technologies, J.P. Morgan & Co. Inc., Rank Xerox
Limited, Fuji Xerox Co., Ltd., Xerox Financial Services, Inc. and SmithKline
Beecham plc and a trustee of Carnegie-Mellon University and Worcester
Polytechnic Institute. Mr. Allaire is also a director of the Ford Foundation, a
member of the board of the Council on Foreign Relations and member of the
Council on Competitiveness. He is a member of The Business Council and the
Business Roundtable. Age 59.
FRANS H.J.J. ANDRIESSEN Professor, European Integration, University of
Utrecht, 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), DHV Beheer BV,
DELA Cooperatie 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. Age 68.
JOHN H. BRYAN Chairman of the Board and Chief Executive Officer of Sara Lee
Corporation. 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, 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 former Chairman of the Chicago Council on
Foreign Relations. Age 61.
DUANE L. BURNHAM Chairman of the Board and Chief Executive Officer of
Abbott Laboratories (health care products and services). He became a director of
Sara Lee in 1991. Mr. Burnham is also a director of NCR Corporation and Northern
Trust Corporation. He 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 Chairman of 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. Age 55.
CHARLES W. COKER Chairman of the Board and Chief Executive Officer of
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. Age 64.
WILLIE D. DAVIS President of All-Pro Broadcasting, Inc. (radio stations), 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., L.A. Gear,
Inc., Strong Fund, Rally's Hamburgers, Inc. and WICOR, Inc. Mr. Davis is a
trustee of the University of Chicago and Marquette University. Age 63.
DONALD J. FRANCESCHINI Vice Chairman of Sara Lee Corporation since March,
1997, Executive Vice President from January, 1994 to March, 1997, 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
4
<PAGE>
January, 1994. He is a member of the Chicago Council on Foreign Relations and of
the Babcock Board of Visitors of Wake Forest University. He is a member of the
Board of Trustees of Rush-Presbyterian-St. Luke's Medical Center (Chicago) and
is a member/patron of the Fairfield Historical Society (Fairfield, Connecticut).
Age 62.
ALLEN F. JACOBSON Retired Chairman of the Board and Chief Executive Officer
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 Deluxe
Corporation, Mobil Corporation, Potlatch Corporation, Silicon Graphics, Inc., U
S WEST, Inc. and Valmont Industries, Inc. Mr. Jacobson is a member of the
National Academy of Engineering. Age 71.
VERNON E. JORDAN, JR. Senior partner of the Washington, D.C. law firm of
Akin, 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 Group, Ryder System, Inc., Union Carbide
Corporation, Callaway Golf Company and Xerox Corporation. He is also a trustee
of the Ford Foundation and a director of 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. Age 62.
JAMES L. KETELSEN Retired Chairman of the Board and Chief Executive Officer
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. Inc. and its subsidiary, Morgan Guaranty Trust
Co. Age 66.
HANS B. VAN LIEMT Retired Chairman of the Board of Management of DSM NV
(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 1994. 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. Age 64.
JOAN D. MANLEY Retired Group Vice President and retired director of Time
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. Age 65.
C. STEVEN MCMILLAN President of Sara Lee Corporation since March, 1997,
Executive Vice President from 1993 to March, 1997 and Senior 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. Age 51.
5
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FRANK L. MEYSMAN Executive Vice President of Sara Lee Corporation since
March, 1997, Senior Vice President from March, 1994 to March, 1997 and Vice
President from 1992 to 1994. Mr. Meysman has also been Chairman of the Board of
Management of Sara Lee/DE, N.V., a subsidiary of Sara Lee, since 1994. Mr.
Meysman became a director of Sara Lee in March, 1997. In addition to his
management responsibility for Sara Lee's Coffee and Grocery and Household and
Body Care lines of business, Mr. Meysman manages all four of Sara Lee's lines of
business in the Asia-Pacific region. He is a member of the Supervisory Board of
VNU, a Dutch-based publishing company and director of the Zeneca Group, a U.K.
based pharmaceutical company. Age 45.
NEWTON N. MINOW Counsel to, and former partner of, the law firm of 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 Big Flower Press. Mr. Minow is
the former Chairman of the Carnegie Corporation of New York, an advisory trustee
and former trustee and 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. Age 71.
SIR ARVI H. PARBO A.C. Chairman of WMC Limited (exploration and mining)
since 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 a member of the Chase
International Advisory Committee and the China International Trust and
Investment Corporation (CITIC) International Advisory Council. Age 71.
ROZANNE L. RIDGWAY Former Ambassador and Assistant Secretary of State for
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, a trustee of the National Geographic
Society, 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. Age 62.
RICHARD L. THOMAS Retired Chairman of First Chicago NBD Corporation (bank
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., The Sabre Holdings
Group, Inc., Scotsman Industries, Inc. and IMC Global, Inc. Mr. Thomas is a life
trustee of the Chicago Symphony Orchestra, 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. Age 66.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES.
6
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MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met six times during the fiscal year. In addition to
meetings of the full Board, directors also attended meetings of Board
committees. Attendance by directors at meetings of the Board and Board
committees during the year was in excess of 93%. The Board of Directors has
standing audit, board affairs and corporate governance, compensation and
employee benefits, executive, employee and public responsibility, and finance
committees. The following table shows the membership of the various committees.
<TABLE>
<CAPTION>
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COMMITTEE MEMBERSHIP ROSTER
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BOARD AFFAIRS EMPLOYEE AND
AND CORPORATE COMPENSATION AND PUBLIC
NAME AUDIT GOVERNANCE EMPLOYEE BENEFITS EXECUTIVE RESPONSIBILITY FINANCE
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<S> <C> <C> <C> <C> <C> <C>
Paul A. Allaire X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Frans H.J.J. Andriessen X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
John H. Bryan X X* X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Duane L. Burnham X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Charles W. Coker X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Willie D. Davis X X X X*
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Donald J. Franceschini X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Allen F. Jacobson X X* X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Vernon E. Jordan, Jr. X* X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
James L. Ketelsen X X X X*
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Hans B. van Liemt X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Joan D. Manley X X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
C. Steven McMillan X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Frank L. Meysman X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Newton N. Minow X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Michael E. Murphy X X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Sir Arvi H. Parbo X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Rozanne L. Ridgway X X
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
Richard L. Thomas X X* X
- -------------------------------------------------------------------------------------------
</TABLE>
- --------------------
* Chairperson
AUDIT COMMITTEE. The Audit 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. The Audit Committee met four times during the year.
7
<PAGE>
BOARD AFFAIRS AND CORPORATE GOVERNANCE COMMITTEE. The Board Affairs and
Corporate Governance Committee reviews and considers directorship policies and
practices from time to time, screens and recommends candidates for director, and
reviews the management succession plan and executive resources. The Board
Affairs and Corporate Governance Committee met one time during the year.
Candidates for director suggested by stockholders are 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, Janet Langford Kelly, Sara Lee Corporation, Three First National
Plaza, Chicago, Illinois 60602-4260.
COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE. The Compensation and Employee
Benefits Committee reviews and approves Sara Lee's compensation philosophy
covering corporate officers and other key management employees; reviews the
competitiveness of Sara Lee's total compensation practices; determines the
annual base salaries and incentive awards to be paid to executive officers and
approves the annual salaries of all corporate officers and certain other
executives; reviews and approves salary ranges for corporate officers and other
key management employees; approves the terms and conditions of proposed
incentive plans applicable to corporate officers and other key management
employees; approves and administers Sara Lee's employee benefit plans; and
reviews and approves 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. None of the members is,
or has ever been, an employee of Sara Lee. The Compensation and Employee
Benefits Committee met three times during the year.
EXECUTIVE COMMITTEE. 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 one time during the year.
EMPLOYEE AND PUBLIC RESPONSIBILITY COMMITTEE. 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 the year.
FINANCE COMMITTEE. The Finance Committee reviews the Corporation's
financial policies and performs other duties as requested by the Board of
Directors from time to time. The Finance Committee met four times during the
year.
DIRECTOR COMPENSATION
Directors who are Sara Lee employees receive no fees for their services as
directors. Outside directors receive an annual retainer of $62,500 and an annual
grant of options to purchase 5,000 shares of common stock (5,500 shares for
chairs of committees of the Board). Outside directors may elect to receive
common stock, options to purchase common stock, or a combination of stock and
options, in lieu of all or a portion of their annual retainer. Directors do not
receive any meeting or attendance fees.
Outside directors may elect to defer part or all 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, are paid
in cash on dates selected by the director.
During the 1997 fiscal year, Sara Lee paid fees for legal services performed
by the law firm of Sidley & Austin, of 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
affiliate of First Chicago NBD Corporation, of which Richard L. Thomas is the
retired Chairman of the Board.
8
<PAGE>
SARA LEE COMMON STOCK AND ESOP STOCK OWNERSHIP
BY DIRECTORS AND EXECUTIVE OFFICERS
This table indicates how much common stock and ESOP Stock the executive
officers and directors beneficially owned as of September 2, 1997. In general,
"beneficial ownership" includes those shares a director or executive officer has
the power to vote, or the power to transfer, and stock options that are
exercisable currently or become exercisable within 60 days. 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>
----------------------------------------------------------------------------------------
SHARES OF COMMON OPTIONS NUMBER OF SHARES
STOCK BENEFICIALLY EXERCISABLE OF ESOP STOCK
NAME OWNED WITHIN 60 DAYS BENEFICIALLY OWNED
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Paul A. Allaire 16,941 17,660
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Frans H.J.J. Andriessen 4,147 10,000
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
John H. Bryan 1,363,616(1)(2)(3) 727,923 435
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Duane L. Burnham 6,565 25,322
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles W. Coker 45,443(1) 25,322
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Willie D. Davis 12,163 11,000
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Donald J. Franceschini 792,201(1)(2)(3) 161,666 246
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Allen F. Jacobson 8,779(3) 15,049
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Vernon E. Jordan, Jr. 9,601 18,660
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
James L. Ketelsen 23,763 18,917
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hans B. van Liemt 3,728 10,000
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Joan D. Manley 21,328 10,000
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
C. Steven McMillan 228,739(2) 238,998 435
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Frank L. Meysman 25,140(3) 482,089
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Newton N. Minow 64,718(1)(3) 10,000
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Michael E. Murphy 443,909(2)(3)(4) 346,241 435
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sir Arvi H. Parbo 8,985 10,000
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rozanne L. Ridgway 5,027 10,000
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard L. Thomas 174,076(1) 17,885
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Directors and Executive Officers
as a group (24 persons) 3,629,980 2,650,927 3,309
- ----------------------------------------------------------------------------------------
</TABLE>
- --------------------
(1) 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.
(2) Includes restricted shares granted under Sara Lee's 1995 Long-Term Incentive
Stock Plan (and predecessor plans) as described on page 11.
(3) Includes shares of common stock with respect to which the following
directors and executive officers share voting and investment power with
others: Mr. Bryan, 19,334 shares; Mr. Franceschini, 7,715 shares; Mr.
Jacobson, 8,779 shares; Mr. Meysman, 3,117 shares; Mr. Minow, 64,718 shares;
and Mr. Murphy, 267,830 shares.
(4) As noted above, Mr. Murphy is retiring and, therefore, is not standing for
reelection.
9
<PAGE>
As of September 2, 1997, all directors and executive officers as a group
beneficially owned 6,280,907 shares of common stock, or 1.31% of the outstanding
shares of common stock, and 3,309 shares of ESOP Stock, or 0.08% of the
outstanding shares of ESOP Stock. No person named in the table owns more than 1%
of the outstanding shares of common stock or of the outstanding shares of ESOP
Stock. Each share of ESOP Stock is convertible into four shares of common stock.
As of September 2, 1997, State Street Bank & Trust Company of Boston, 200
Newport Avenue, North Quincy, Massachusetts 02171, as Trustee for the ESOP, held
4,267,227 shares of ESOP Stock (all of the outstanding shares of ESOP Stock), of
which 1,525,927 shares (35.76%) were allocated to participant accounts and
2,741,300 shares (64.24%) were unallocated shares. Each Sara Lee employee who
participates in the ESOP is entitled to direct the Trustee how to vote the
shares allocated to his or her account as well as a proportionate share of
unallocated or unvoted shares.
EXECUTIVE COMPENSATION
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 shown in the Performance Graph
on page 13. 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.
10
<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 amount
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
options 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 position level. The total
number of shares available for the granting of stock options during fiscal year
1997 was 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 is 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 is 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 (i.e., performance shares) 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, receive 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 years
1997-1999 performance measures for corporate positions, including Messrs. Bryan,
McMillan, Murphy and Franceschini, consist of cumulative primary earnings per
share growth over the three-year performance cycle, and three-year average
return on capital. To the extent that target performance levels are exceeded, a
maximum of 125% of the performance shares initially awarded may be earned.
Beginning in fiscal year 1997, participation in the LTPIP was modified to
exclude operating unit executives. In place of the LTPIP, operating unit
executives, including Mr. Meysman, were provided
11
<PAGE>
with a combination of increased stock options and the potential to earn
restricted shares of stock for operating profit results above the superior
performance level
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 14 maintain ownership levels which exceed their
target.
CHIEF EXECUTIVE OFFICER'S COMPENSATION AND CORPORATE PERFORMANCE FOR FISCAL
YEAR 1997. 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 1997. Primary earnings per share constituted 60% of the
weighting of these goals and the remaining 40% was based on the attainment of
other strategic and individual performance goals. Sara Lee's primary earnings
per share of $2.03 represented a 10.9% increase over fiscal year 1996. The
Committee evaluated Mr. Bryan's strategic and individual performance in
achieving other financially related goals including, but not limited to, 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 $1,241,468, which represents 133.75% of his base salary
earnings for fiscal year 1997 and was below the maximum allocation possible
under the Performance-Based Annual Incentive Plan.
On August 28, 1996, Mr. Bryan was granted an option to purchase 200,000
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 1996. Mr. Bryan was granted 12,500 performance
shares under the fiscal year 1997-1999 Long-Term Performance Incentive Plan.
TAX DEDUCTIBILITY CONSIDERATIONS. In 1993, the Internal Revenue 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 Internal Revenue Code and the
Corporation's Executive Compensation Philosophy and Principles, or in the event
that the Committee determines that compliance with Section 162(m) 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).
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
12
<PAGE>
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, James L. Ketelsen, Joan D. Manley
and Rozanne L. Ridgway
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AS OF JUNE 28
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Sara Lee Corporation 100 100 87 124 144
Peer Composite 100 99 94 116 140
S&P 500 100 114 115 145 183
Assumes an investment of $100 on June 27, 1992, and the reinvestment of
dividends.
<CAPTION>
1997
<S> <C>
Sara Lee Corporation 191
Peer Composite 186
S&P 500 247
Assumes an investment of $100 on June 27, 1992, and the reinvestment of
dividends.
</TABLE>
Sara Lee has elected to utilize a weighted composite of the S&P Foods, Household
Products and Textiles (Apparel) Manufacturers Indices because no single
standardized industry index represents a comparable peer group. As of June 28,
1997, the three indices are comprised of the following companies: the S&P Foods
Index -- CPC International Inc., Campbell Soup Company, ConAgra, Inc., General
Mills, Inc., H.J. Heinz Company, Hershey Foods Corporation, Kellogg Company, The
Quaker Oats Company, Ralston Purina Group, Sara Lee Corporation, Unilever N.V.,
Wm. Wrigley Jr. Company; the S&P Household Products Index -- The Clorox Company,
Colgate-Palmolive Company, Kimberly-Clark Corporation, The Procter & Gamble
Company, and the S&P Textiles (Apparel) Manufacturers Index -- Fruit of the
Loom, Inc., Liz Claiborne, Inc., Russell Corp., V.F. Corporation. The returns on
the Peer Composite index were calculated as follows: at the beginning of each
fiscal year the amount invested in each S&P industry sector index was equivalent
to the percentage of Sara Lee's operating profits in its food, household and
body care and apparel businesses, respectively, for the preceding year. As a
result, the investment allocation was re-weighted each year to reflect the
profit percentage change that occurred in Sara Lee's business mix during the
prior year.
13
<PAGE>
SUMMARY COMPENSATION TABLE
The table below shows the before-tax compensation for John H. Bryan, the
Chairman and Chief Executive Officer of Sara Lee, and the four next highest
compensated executive officers of Sara Lee.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS PAYOUTS
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) (#)(2) ($)(3) ($)(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John H. Bryan 1997 $ 928,200 $1,241,468 $ 89,128 $ 400,000 604,591 $ 178,364 $ 58,472
Chairman of the Board 1996 $ 928,200 $1,303,378 $ 67,384 $ 863,500 1,141,107 -- $ 34,080
and Chief Executive
Officer 1995 $ 921,609 $1,117,912 $ 181,720 $ 690,000 150,000 -- $ 42,117
C. Steven McMillan 1997 $ 617,308 $ 661,754 $ 31,821 $ 208,000 214,533 $ 125,344 $ 52,162
President* 1996 $ 567,854 $ 610,443 -- $ 412,500 161,918 -- $ 39,140
1995 $ 515,192 $ 556,407 $ 81,387 $ 345,000 75,000 -- $ 28,086
Michael E. Murphy 1997 $ 577,115 $ 608,395 $ 6,952 $ 208,000 356,661 $ 89,203 $ 73,243
Vice Chairman and Chief 1996 $ 561,419 $ 637,211 -- $ 412,500 545,812 -- $ 50,246
Administrative Officer 1995 $ 543,046 $ 644,596 $ 74,271 $ 345,000 75,000 -- $ 30,360
Donald J. Franceschini 1997 $ 553,635 $ 467,766 $ 8,947 $ 208,000 147,525 $ 81,474 $ 62,406
Vice Chairman* 1996 $ 520,289 $ 521,017 -- $ 412,500 80,000 -- $ 17,455
1995 $ 495,385 $ 532,539 -- $ 345,000 75,000 -- $ 15,834
Frank L. Meysman(5) 1997 $ 398,050 $ 377,869 $ 10,063 -- 67,349 -- --
Executive Vice President* 1996 $ 386,245 $ 359,961 -- -- 63,000 -- --
1995 $ 488,126 $ 323,559 -- -- 78,000 -- --
</TABLE>
* Effective March 27, 1997.
- -------------------------
(1) Market value of restricted shares of common stock 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 will be
forfeited. In the event of a change of control, the restrictions imposed on
the restricted shares will lapse, and all restricted shares will be released
to participants. As of June 28, 1997, the market value and aggregate number
of all restricted shares held by Messrs. Bryan, McMillan, Murphy and
Franceschini were, respectively, $11,184,419 (265,900), $5,489,156
(130,500), $5,993,906 (142,500) and $3,083,181 (73,300).
(2) Represents options to purchase common stock granted pursuant to Sara Lee's
stock option plans. Amounts reported in this column include Restoration
Options granted during fiscal years 1995, 1996 and 1997, as discussed on
page 11.
(3) Market value of shares awarded on August 27, 1997 under the FY1995-1997
Long-Term Performance Incentive Plan.
(4) The amounts reported in this column for fiscal year 1997 include (i) all
amounts allocated to the following officers under the ESOP and a
supplemental retirement plan (as discussed on pages 17-18): Mr. Bryan,
$55,744, Mr. McMillan, $31,761, Mr. Murphy, $33,483 and Mr. Franceschini,
$21,333, (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 following officers: Mr. Bryan, $2,728, Mr.
McMillan, $1,881 and Mr. Murphy, $2,300, and (iii) premiums paid by Sara Lee
in connection with universal life insurance policies which are owned by
certain of the following officers: Mr. McMillan, $18,520, Mr. Murphy,
$37,460 and Mr. Franceschini, $41,073.
(5) Mr. Meysman's compensation information contained in this Proxy Statement has
been converted from Dutch guilders to U.S. dollars based upon an average
foreign exchange rate.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table gives more information on stock options granted during
the last fiscal year.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
TERM
% OF TOTAL
OPTIONS
NUMBER OF SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS GRANTED IN FISCAL PRICE EXPIRATION 5% (3) 10% (3)
NAME (#)(1) YEAR ($/SH) DATE ($) ($)
<S> <C> <C> <C> <C> <C> <C>
John H. Bryan New Grant (2)
200,000 2.46 % $ 32.06 8/28/06 $ 4,032,472 $10,219,077
Restoration Options
35,047 0.43 39.31 12/2/97 69,465 138,957
32,081 0.40 39.31 11/30/98 129,449 265,230
187,749 2.31 39.31 7/3/99 994,854 2,068,056
77,912 0.96 39.31 7/1/02 960,142 2,154,663
71,802 0.88 39.31 8/25/03 1,098,940 2,543,022
C. Steven McMillan New Grant (2)
100,000 1.23 % $ 32.06 8/28/06 $ 2,016,236 $ 5,109,538
Restoration Options
10,058 0.12 41.94 12/2/97 11,893 23,545
6,225 0.08 38.75 11/30/98 25,508 52,338
3,229 0.04 41.94 11/30/98 10,741 21,775
12,964 0.16 38.75 7/3/99 69,318 144,301
12,163 0.15 41.94 7/3/99 56,513 116,217
16,232 0.20 38.75 1/28/03 223,207 509,421
13,532 0.17 38.75 8/25/03 206,207 477,918
18,621 0.23 41.94 8/24/04 334,208 785,262
21,509 0.26 41.94 8/30/05 451,534 1,091,086
Michael E. Murphy New Grant (2)
100,000 1.23 % $ 32.06 8/28/06 $ 2,016,236 $ 5,109,538
Restoration Options
18,004 0.22 39.75 12/2/97 25,805 51,276
15,809 0.19 39.75 11/30/98 55,030 111,981
85,956 1.06 39.75 7/3/99 407,549 841,325
34,240 0.42 39.75 7/1/02 402,232 895,981
2,869 0.04 32.88 6/23/03 37,026 85,789
7,752 0.10 39.75 6/23/03 110,578 252,778
13,289 0.16 32.88 8/25/03 176,648 411,206
35,979 0.44 39.75 8/25/03 529,658 1,216,390
20,717 0.26 32.88 8/24/04 323,215 773,276
22,046 0.27 39.75 8/30/05 448,698 1,088,965
Donald J. Franceschini New Grant (2)
100,000 1.23 % $ 32.06 8/28/06 $ 2,016,236 $ 5,109,538
Restoration Options
10,219 0.13 41.50 7/1/02 118,762 262,845
4,087 0.05 41.50 1/28/03 53,708 120,684
18,055 0.22 41.50 8/25/03 265,216 605,077
15,164 0.19 41.50 1/27/04 240,587 555,174
Frank L. Meysman New Grant (2)
55,000 0.68 $ 32.06 8/28/01 $ 487,167 $ 1,076,512
Restoration Options
4,315 0.05 37.25 11/5/01 44,408 98,130
656 0.01 40.25 7/3/99 3,153 6,510
7,378 0.09 42.63 5/5/02 86,897 192,020
$ 12.7 $ 32.2
All Stockholders N.A. N.A. N.A. N.A. Billion Billion
</TABLE>
NOTES TO OPTION GRANTS IN LAST FISCAL YEAR ON THE FOLLOWING PAGE.
15
<PAGE>
NOTES TO OPTION GRANTS IN LAST FISCAL YEAR
(1) 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 11) does not result in
an increase in the total combined number of shares and options held by an
employee.
(2) Exercise price equals 100% of the fair market value of the common stock on
the date of grant and may be exercised within 10 years, except for Mr.
Meysman, whose options may be exercised within five years due to Dutch tax
laws. 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
that Mr. Meysman's options are exercisable immediately due to Dutch tax
laws. In the event of a change of control of Sara Lee, the Compensation and
Employee Benefits 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 11.
(3) The dollar amounts indicated in these columns are the result of calculations
assuming growth rates required by the rules of the Securities and Exchange
Commission. These growth rates are not intended 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.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows the number and value of stock options (exercised
and unexercised) for Messrs. Bryan, McMillan, Murphy, Franceschini and Meysman
during the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE- MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($) (1)
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
John H. Bryan 446,497 $2,944,800 557,924 356,667 $3,818,749 $ 4,522,863
C. Steven McMillan 143,002 1,977,889 153,998 243,914 1,386,328 2,269,472
Michael E. Murphy 289,149 2,229,372 41,455 398,120 382,112 2,769,694
Donald J. Franceschini 60,800 984,942 76,666 225,859 1,352,549 2,288,172
Frank L. Meysman 46,942 770,314 197,089 -- 2,778,338 --
</TABLE>
(1) Calculated based on the share price of common stock on June 27, 1997 (the
last business day of the fiscal year) of $42.06 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.
16
<PAGE>
EMPLOYMENT AGREEMENTS
Mr. Meysman has employment agreements with Sara Lee and Sara Lee/DE N.V., a
subsidiary of Sara Lee ("Sara Lee/DE"). Under the agreements, Mr. Meysman
currently receives an annual base salary of 800,000 Dutch guilders (which is
approximately $400,000). Mr. Meysman also participates 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. Mr. Meysman's
agreement with Sara Lee may be terminated at any time. Mr. Meysman's agreement
with Sara Lee/DE generally may be terminated upon six months prior notice, at
which time his participation in Sara Lee plans ceases. Generally, if Mr.
Meysman's employment is terminated without cause, he is entitled to severance
equal to at least one year's salary plus other benefits which are described
below in the description of Sara Lee's severance plans. If Mr. Meysman's
employment is terminated at the option of Sara Lee/DE after age 57 1/2, or at
his option after age 60, he will be paid 90% of his base salary for the first
year following such termination of employment and 80% of his base salary for
each year thereafter until he reaches age 62, subject to reduction under certain
circumstances.
SEVERANCE PLANS
Sara Lee has a severance policy for all corporate officers of Sara Lee. The
policy provides that if an officer's employment is terminated without cause, the
officer will receive between 12 and 24 months of salary as severance payments.
The amount of actual severance payments depends on the officer's position,
length of service and age. Officers also receive a partial 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 six months' salary, if the
terminated officer is 50 years of age or older, or up to three 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.
RETIREMENT PLANS
The following table shows the approximate annual pension benefits payable
under Sara Lee's qualified pension plan, as well as a nonqualified supplemental
benefit plan. The compensation covered by the pension program is based on an
employee's annual salary and bonus. The amounts payable under the pension
program are computed on the basis of a straight-life annuity and are not subject
to deduction for Social Security benefits or other amounts. Benefits accrued
under a defined benefit 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.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL NORMAL RETIREMENT PENSION
BASED UPON THE INDICATED CREDITED SERVICE
FINAL
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>
17
<PAGE>
As of September 2, 1997, Messrs. Bryan, McMillan, Murphy and Franceschini
had 23, 19, 18 and 5 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 7
years of credited service under the pension plans of Sara Lee/DE N.V., a
subsidiary of Sara Lee. He does not participate in Sara Lee's pension plans.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP to serve as the independent public accountants of
Sara Lee for its fiscal year ending June 27, 1998. The Board seeks to have the
stockholders ratify the appointment of Arthur Andersen. Arthur 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. Sara Lee paid Arthur Andersen approximately $8,490,000 for audit and
audit related fees during the past fiscal year. Representatives of Arthur
Andersen will be present at the Annual Meeting to respond to questions and to
make a statement if they desire to do so. If the appointment of Arthur Andersen
is not ratified by the stockholders, the Board of Directors may appoint other
independent public accountants based upon the recommendation of the Audit
Committee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
FISCAL YEAR 1998.
STOCKHOLDER PROPOSAL AND SARA LEE RESPONSE
School Sisters of Notre Dame, 13105 Watertown Plank Road, Elm Grove,
Wisconsin, owner of 50 shares of Common Stock, Sisters of the Holy Family, 159
Washington Boulevard, Fremont, California, owner of 5,000 shares of Common
Stock, The Ancilla Domini Sisters, Donaldson, Indiana, owner of 1,000 shares of
Common Stock, Congregation of Holy Cross, Southern Province, 2111 Brackenridge
Street, Austin, Texas, owner of 500 shares of Common Stock, Sisters of St.
Francis, 3390 Windsor Avenue, Dubuque, Iowa, owner of 10,700 shares of Common
Stock, Benedictine Sisters, 530 Bandera Road, San Antonio, Texas, owner of 200
shares of Common Stock, Christian Brothers Investment Services, Inc., 675 Third
Avenue, New York, New York, owner of 11,200 shares of Common Stock, The
Congregation of the Sisters of St. Dominic, 1 Ryerson Avenue, Caldwell, New
Jersey, owner of 100 shares of Common Stock, Dominican Province of St. Albert
the Great, 1909 South Ashland Avenue, Chicago, Illinois, owner of 375 shares of
Common Stock, Congregation of the Sisters of Saint Agnes, 475 Gillet Street,
Fond du Lac, Wisconsin, owner of 2,900 shares of Common Stock, Sisters of St.
Dominic, 496 Weston Highway, Blauvelt, New York, owner of 3,000 shares of Common
Stock, School Sisters of Notre Dame of St. Louis, 320 East Ripa Avenue, St.
Louis, Missouri, owner of 8,000 shares of Common Stock and Sisters of the Holy
Spirit and Mary Immaculate, 301 Yucca Street, San Antonio, Texas, owner of
shares of Common Stock having a market value of at least $1,000, have given
notice that they intend to submit the following proposal and statement in
support thereof:
WHEREAS, Sara Lee/DE, N.V. manufactures smoking tobacco products and some
chewing tobacco products.
- A Sara Lee product, Drum cigarette tobacco, is a leading cigarette tobacco
sold in the United States;
- Drum has been advertised in ways known to appeal to and reach minors;
18
<PAGE>
- Sara Lee seems so embarrassed by the fact that it is a tobacco company
that it did not mention any of its tobacco products in its 1995 annual
report, while it named more than 100 other company brands;
- Any fiscal benefits these tobacco-related products may generate undermine
the positive image our company enjoys with its household and personal care
products;
- Many institutional investors believe tobacco-related companies would
produce better financial returns if their tobacco businesses were
separated from their other businesses;
- The American Medical Association, in April, 1996, called on investors to
sell Sara Lee stock because of its involvement in tobacco;
- Despite the fact that, like Sara Lee, Kimberly Clark was not recognized as
a "tobacco company," the State of West Virginia included Kimberly Clark on
the list of those it was suing to recapture tobacco-related state health
expenditures;
- Increased litigation coming in various countries and states, as well as
private insurers, indicate new and ominous challenges that might undermine
the value of Sara Lee's stock if it is included in such litigation or
recognized to be involved in tobacco;
- The likelihood exists that our Company's products, like Hanes and our
other personal products, may be boycotted if we do not divest ourselves of
tobacco-related products. Already a consumer boycott of other tobacco
companies' products has been launched by INFACT, a consumer activist
group;
- Partly because of response to shareholder concerns such as is indicated in
this resolution, and because it came to realize its involvement in tobacco
was "not compatible" with the rest of its operations, Kimberly Clark
spun-off its tobacco related entities. The day after its announcement, its
stock increased 5%;
RESOLVED that shareholders ask management to take steps to accomplish a
separation of the Corporation's tobacco business from all its non-tobacco
businesses by January 1, 1998.
SUPPORTING STATEMENT OF THE PROPONENTS
The proponents of this resolution did not think it advisable to challenge
the Company's involvement in tobacco production because it represents less than
5% of its annual revenues. However, with the AMA's listing of Sara Lee as a
company to be divested from because of its tobacco-presence, we feel it is time
for the company to rid itself of a product which used, as intended, creates
ill-health and death. We feel a Company such as ours -- which has made a name
for itself by promoting personal care -- should not be involved in production of
products that undermine personal health. A spin-off may not only help preserve
our Company's assets from further litigation here and abroad, it will also
preserve its good reputation.
If you agree that Sara Lee should free itself of any involvement in tobacco
in the United States of America or any where in the world, please vote "yes"
(FOR) for this resolution.
THE RESPONSE OF SARA LEE'S BOARD OF DIRECTORS
Sara Lee's independently managed Dutch subsidiary, Sara Lee/DE, N.V., is one
of the oldest companies in Europe with operations dating back to 1753. Sara
Lee/DE grew over the centuries into a leading Dutch trading company dealing in
coffee, tea and loose tobacco.
Sara Lee/DE sells cut and loose tobacco, principally in Europe. In the last
fiscal year, sales from tobacco products represented less than 2% of Sara Lee's
overall revenues and 97% of such revenues were derived outside the United
States.
19
<PAGE>
In response to the issues raised in the current public discussion of tobacco
products as well as by some stockholders and the proposed nationwide settlement
of state and federal tobacco litigation, management and the Board of Directors
of Sara Lee are actively engaged in a comprehensive review of Sara Lee/DE's
tobacco business. This review is ongoing. The concerns raised by Sara Lee's
stockholders in the proposal are well-known to management and the Board of
Directors and are being carefully considered.
Management and the Board of Directors of Sara Lee recognize their duty to
fulfill Sara Lee's primary purpose of creating long-term stockholder value,
while at the same time being a responsible member of the communities in which
Sara Lee operates. The Board of Directors also understands the critical
importance of responding to and addressing legitimate concerns of stockholders.
The review of the tobacco business must consider Sara Lee's stockholders,
employees, customers and the communities in which Sara Lee operates and sells
its products as well as evolving attitudes toward tobacco products, the proposed
nationwide tobacco settlement and the costs and benefits of any specific action
regarding the tobacco business. It is critical that management and the Board of
Directors of Sara Lee carefully consider these and other factors in order to
reach a decision that is in the best long-term interest of Sara Lee and its
stockholders.
The issues involved in considering the future of the tobacco business,
particularly in light of the proposed nationwide tobacco settlement, are complex
and interrelated with numerous other issues. For example, Sara Lee/DE's coffee
and tobacco businesses are highly integrated and share significant resources and
trademarks. Management and the Board believe that, without first completing a
thorough and complete analysis, it would be imprudent to dispose of Sara
Lee/DE's cut and pipe tobacco business. Therefore, the proposal should be
rejected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST
ADOPTION OF THIS PROPOSAL.
OTHER INFORMATION
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
If you wish to submit proposals for possible inclusion in Sara Lee's 1998
Proxy Statement, we must receive them on or before Monday, May 25, 1998.
Proposals should be mailed to Sara Lee Corporation, to the attention of Sara
Lee's Secretary, Janet Langford Kelly, 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. A copy of the Bylaws may be obtained
from Janet Langford Kelly, Sara Lee's Secretary.
SARA LEE'S FORM 10-K
A copy of Sara Lee's Annual Report on Form 10-K for the fiscal year ended
June 28, 1997, 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.
EXPENSES OF SOLICITATION
This solicitation is being made by mail, but may also be made by telephone
or in person by Sara Lee officers and employees (without additional
compensation). In addition, we have hired Morrow & Co., Inc. for $14,000 plus
associated costs and expenses, to assist in the solicitation. 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.
20
<PAGE>
[LOGO]
Three First National
Plaza
Chicago, Illinois
60602-4260
[MAP OF SHAREHOLDER MEETING LOCATION]
<PAGE>
DIRECTIONS
<TABLE>
<S> <C> <C>
FROM THE SOUTHWEST I-55 North to I-90/94 West to Ohio On Ohio Street go East.
FROM THE SOUTH Street Turn right on Fairbanks/
FROM THE SOUTHEAST I-57N to I-90/94 West to Ohio Street Columbus Drive and then
FROM THE NORTH I-90/94 West to Ohio Street left on Illinios to Navy
FROM THE WEST I-90/94 East to Ohio Street Pier. Proceed East along
I-290 East to I-90/94 West to Ohio the North side of the Pier
Street to Entrance 1 (Main drop
off for taxis and buses).
Parking is available in the
East garage. The current
rate for short-term parking
ranges from $10.25 to
$13.25.
</TABLE>
<PAGE>
SARA LEE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
[ ]
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 proposals 1 and 2 and AGAINST proposal 3.
For All,
For Withheld Except To withhold as to
As to All as noted less than all
1. Election of Directors / / / / / / nominees, strike
through the names
Paul A. Allaire, Frans H.J.J. of one or more
Andriessen, John H. Bryan, Duane L. nominees
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,
Frank L. Meysman, Newton N. Minow,
Sir Arvi H. Parbo A.C., Rozanne L.
Ridgway and Richard L. Thomas.
The Board of Directors recommends a vote FOR
proposals 1 and 2 and AGAINST stockholder proposal 3
_________________________________
Nominee Exception(s)
_________________________________
_________________________________
2. Ratify the appointment of Arthur Andersen LLP For Against Abstain
as independent public accountants. / / / / / /
3. Stockholder proposal. For Against Abstain
/ / / / / /
Dated ____________________________, 1997
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
officer, 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 30, 1997
10 A.M.
NAVY PIER -- FESTIVAL HALL A
CHICAGO, ILLINOIS
<PAGE>
PROXY PROXY
SARA LEE CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, OCTOBER 30, 1997
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 NAVY PIER -- FESTIVAL HALL A, 600 E.
GRAND AVENUE, CHICAGO, ILLINOIS, ON OCTOBER 30, 1997, 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 IN THE DISCRETION OF
THE PROXIES ON ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING.
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.
- -------------------------------------------------------------------------------
