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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 Section240.14a-11(c) or
Section240.14a-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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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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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(4) Date Filed:
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[LOGO]
September 20, 1999
DEAR SARA LEE STOCKHOLDER:
It is my pleasure to invite you to Sara Lee Corporation's 1999 Annual
Meeting of Stockholders. This year's meeting will be held in the ARIE CROWN
THEATER AT MCCORMICK PLACE, 2301 SOUTH LAKE SHORE DRIVE, CHICAGO, ILLINOIS on
Thursday, October 28, 1999, at 10:00 a.m. A map and directions to the Arie Crown
Theater are located on the back page of this proxy statement and on the enclosed
admission ticket to the meeting.
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 1999 performance
and answer your questions. Enclosed with this proxy statement are your proxy
card, a postage-paid envelope to return your proxy card, your admission ticket
to the meeting and Sara Lee's 1999 Annual Report.
Your vote is important. Whether you plan to attend the meeting or not, you
may vote your shares via a toll-free telephone number or via the Internet or you
may sign, date and mail the enclosed proxy card in the envelope provided.
Instructions regarding all three methods of voting are contained on the proxy
card. If you attend the meeting and prefer to vote in person, you may do so.
I look forward to seeing you at the meeting.
Sincerely,
/s/ John H. Bryan
John H. Bryan
Chairman and Chief Executive Officer
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[LOGO]
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NOTICE OF THE 1999
ANNUAL MEETING OF STOCKHOLDERS
------------------------------------------
The Annual Meeting of Stockholders of Sara Lee Corporation will be held on
Thursday, October 28, 1999, at 10:00 a.m., in the ARIE CROWN THEATER AT
MCCORMICK PLACE, 2301 SOUTH LAKE SHORE DRIVE, CHICAGO, ILLINOIS for the
following purposes:
1. to elect 17 directors;
2. to vote on the 1999 Non-Employee Director Stock Plan;
3. to vote on the ratification of the appointment of Arthur Andersen LLP as
our independent public accountants for the 2000 fiscal year; and
4. to transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on September 1, 1999 are
entitled to notice of and to vote at the Annual Meeting.
Whether or not you plan to attend the meeting, we urge you to vote your
shares via a toll-free telephone number or via the Internet or by signing,
dating and mailing the enclosed proxy card in the envelope provided.
By Order of the Board of Directors
/s/ Roderick A. Palmore
Roderick A. Palmore
Senior Vice President, General Counsel
and
Secretary
September 20, 1999
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TABLE OF CONTENTS
<TABLE>
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<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........................................................... 3
ELECTION OF DIRECTORS..................................................... 3
MEETINGS AND COMMITTEES OF THE BOARD...................................... 9
DIRECTOR COMPENSATION..................................................... 10
SARA LEE STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS.............. 11
EXECUTIVE COMPENSATION.................................................... 12
Report of the Compensation and Employee Benefits Committee on Executive
Compensation.......................................................... 12
Performance Graph....................................................... 15
Summary Compensation Table.............................................. 16
Option Grants in Last Fiscal Year....................................... 17
Option Exercises and Fiscal Year-End Values............................. 18
Employment Agreements................................................... 18
Severance Plans......................................................... 18
Retirement Plans........................................................ 19
Compensation Committee Interlocks and Insider Participation............. 19
PROPOSAL TO APPROVE THE 1999 NON-EMPLOYEE DIRECTOR STOCK PLAN............. 19
Summary of the Plan..................................................... 19
Federal Income Tax Consequences......................................... 21
Administration of the Plan.............................................. 21
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS............................. 22
OTHER INFORMATION......................................................... 22
Stockholder Proposals for the 2000 Annual Meeting....................... 22
Sara Lee's Form 10-K.................................................... 22
Expenses of Solicitation................................................ 22
1999 NON-EMPLOYEE DIRECTOR STOCK PLAN..................................... A-1
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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 138,000 people
worldwide. The address of our principal executive office is Three First National
Plaza, Chicago, Illinois 60602-4260. Our telephone number is (312) 726-2600.
Sara Lee's website is located at www.saralee.com on the Internet.
INFORMATION ABOUT THE ANNUAL MEETING
INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
Our Annual Meeting will be held on Thursday, October 28, 1999 at 10:00 a.m.,
in the Arie Crown Theater at McCormick Place, 2301 South Lake Shore Drive,
Chicago, Illinois. Please note that the doors to the Theater will not open for
admission until 9:30 a.m. If you plan to attend the Annual Meeting, please bring
your admission ticket with you. Your admission ticket is included with this
proxy statement.
INFORMATION ABOUT THIS PROXY STATEMENT
We sent you these proxy materials 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 that is designed to assist you in voting your shares. On
September 20, 1999, we began mailing these proxy materials to all stockholders
of record at the close of business on September 1, 1999.
INFORMATION ABOUT VOTING
Stockholders can vote in person at the Annual Meeting or by proxy. There are
three ways to vote by proxy:
- By Telephone -- You can vote by telephone by calling toll-free
1-888-426-7034 and following the instructions on the proxy card;
- By Internet -- You can vote by Internet by following the instructions on
the proxy card; or
- By Mail -- You can vote by mail by signing, dating and mailing the
enclosed proxy card.
If your shares are held in the name of a bank, broker or other holder of
record, you will receive instructions from the holder of record that you must
follow in order for your shares to be voted. Telephone and Internet voting also
will be offered to stockholders owning stock through certain banks and brokers.
If your shares are not registered in your own name and you plan to attend the
Annual Meeting and vote your shares in person, you should contact your broker or
agent in whose name your shares are registered to obtain a broker's proxy card
and bring it and your admission ticket to the Annual Meeting in order to vote.
If you vote by proxy, the individuals named on the card (your proxies) will
vote your shares in the manner you indicate. You may specify whether your shares
should be voted for all, some or none of the
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nominees for director and whether your shares should be voted for or against
each of the other proposals. If you sign and return the card without indicating
your instructions, your shares will be voted for:
- The election of the 17 nominees for directors;
- The approval of the 1999 Non-Employee Director Stock Plan; and
- The ratification of the appointment of Arthur Andersen LLP as our
independent public accountants for the 2000 fiscal year.
You may revoke or change your proxy at any time before it is exercised by
sending a written revocation to Sara Lee's Secretary, Roderick A. Palmore, by
providing a later dated proxy, by voting in person at the meeting or through
Internet or telephone voting. Your latest telephone or Internet vote is the one
that is counted.
Each share of Sara Lee common stock is entitled to one vote. As of September
1, 1999, there were 883,697,353 shares of common stock outstanding. Each share
of Sara Lee Employee Stock Ownership Plan Convertible Preferred Stock (ESOP
Stock) is entitled to 10.264 votes. As of September 1, 1999, there were
3,563,449 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, you will receive one proxy
for all accounts registered in the same name. If all of your accounts are not
registered in the same name, you will receive a separate proxy for each account
that is registered in a different name. If you participate in the ESOP or the
Savings Plans, your proxy card will serve as voting instructions for the
trustees of those plans for shares allocated to your account, as well as a
proportionate share of any unallocated shares and unvoted shares. If you fail to
give voting instructions to the trustees, your shares will be voted by the
trustees in the same proportion as shares held by the trustees 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 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 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
Seventeen directors will be elected at the meeting by a plurality of all the
votes cast at the meeting, meaning that the seventeen nominees for director with
the most votes will be elected. In an
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uncontested election for directors, the plurality requirement is not a factor.
Approval of the 1999 Non-Employee Director Stock Plan and the ratification of
the appointment of Arthur Andersen LLP as our independent public accountants for
the 2000 fiscal year each requires an affirmative vote of the majority of the
votes cast on the matter. Abstentions and broker non-votes will have no effect
on the vote on the election of directors, the approval of the 1999 Non-Employee
Director Stock Plan or the ratification of Arthur Andersen LLP.
OTHER MATTERS
The Board of Directors does not know of any other matter that 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 proposals
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 matter in their discretion.
ELECTION OF DIRECTORS
Sara Lee's directors are elected each year at the Annual Meeting by the
stockholders. We do not have a staggered board. Seventeen directors will be
elected at this year's Annual Meeting. Each director's term lasts until the 2000
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.
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 28, 1999.
<TABLE>
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PAUL A. ALLAIRE Chairman of the Board of Xerox Corporation (information
[PHOTO] processing). Mr. Allaire became a director of Sara Lee in 1989. He is a
director of Lucent Technologies, J.P. Morgan & Co. Inc., priceline.com
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 and a member of the boards of the Council on Foreign
Relations and the Council on Competitiveness. He is a member of The
Business Council. Age 61.
FRANS H.J.J. ANDRIESSEN Professor, European Integration, University of
[PHOTO] Utrecht, the Netherlands. Mr. Andriessen is a former Minister of Finance
of 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
honorary 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 70.
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JOHN H. BRYAN Chairman of the Board and Chief Executive Officer of Sara
[PHOTO] Lee Corporation. Mr. Bryan became a director of Sara Lee in 1974. He is
a director of BP Amoco, Bank One Corporation and General Motors
Corporation. Mr. Bryan is a past Chairman and a director of the Grocery
Manufacturers of America, Inc., a member of The Business Council and 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 63.
DUANE L. BURNHAM Retired Chairman and Chief Executive Officer of Abbott
[PHOTO] Laboratories (health care products and services). He became a director
of Sara Lee in 1991. Mr. Burnham is also a director of Northern Trust
Corporation. He is also a member of the board of the Lyric Opera
(Chicago) and Chairman of the Chicago Council on Foreign Relations. Mr.
Burnham is a trustee of Northwestern University and a member of the
Advisory Board of the J.L. Kellogg Graduate School of Management at
Northwestern University and chairman of the medical affairs committee of
Northwestern University's Medical School. Age 57.
CHARLES W. COKER Chairman of the Board of Sonoco Products Company
[PHOTO] (packaging products manufacturer). He became a director of Sara Lee in
1986. Mr. Coker is also a director of Bank of America Corporation,
Springs Industries, Inc. and Carolina Power and Light Company. He is
Chairman of the Board of Hollings Cancer Center. Age 66.
</TABLE>
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JAMES S. CROWN General Partner of Henry Crown and Company (Not
[PHOTO] Incorporated) (diversified investments). He became a director of Sara
Lee in 1998. Mr. Crown is also a director of General Dynamics
Corporation and Bank One Corporation. Age 46.
WILLIE D. DAVIS President of All-Pro Broadcasting, Inc. (radio
[PHOTO] 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., Strong Fund, Rally's Hamburgers, Inc.,
Bassett Furniture, MGM Inc. and WICOR, Inc. Mr. Davis is a trustee of
the University of Chicago and Marquette University. Age 65.
VERNON E. JORDAN, JR. Senior partner of the Washington, D.C. law firm
[PHOTO] 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, 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. Mr. Jordan is a trustee of Howard University and a governor
of the Joint Center for Political and Economic Studies. Age 64.
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JAMES L. KETELSEN Retired Chairman of the Board and Chief Executive
[PHOTO] 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 68.
HANS B. VAN LIEMT Retired Chairman of the Board of Management of DSM NV
[PHOTO] (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 66.
JOAN D. MANLEY Retired Group Vice President and retired director of
[PHOTO] Time Incorporated (communications). Mrs. Manley became a director of
Sara Lee in 1982. She is also a director of BFP Holdings, Inc. and
Founders Fund. Age 67.
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C. STEVEN MCMILLAN President and Chief Operating Officer of Sara Lee
[PHOTO] Corporation since 1997, Executive Vice President from 1993 to 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 Illinova Corporation,
Pharmacia & Upjohn and Delta Galil Industries in Israel. Mr. McMillan is
a member of the Advisory Boards of the Stedman Nutrition Center of the
Duke University Medical School, the J.L. Kellogg Graduate School of
Management at Northwestern University and the Productivity Council of
the Grocery Manufacturers of America, Inc. He is a member of the
Supervisory Board of Sara Lee/DE N.V., a subsidiary of Sara Lee. He is
Chairman of the Board of the Joffrey Ballet and is a trustee of the
Museum of Contemporary Art in Chicago and the Chicago Symphony
Orchestra. He is also on the boards of the Executive Club of Chicago,
the Chicago Council on Foreign Relations and the Commercial Club of
Chicago. Age 53.
FRANK L. MEYSMAN Executive Vice President of Sara Lee Corporation since
[PHOTO] 1997, Senior Vice President from 1994 to 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 1997. In addition to his
management responsibility for Sara Lee's Coffee and Tea and Household
and Body Care lines of business, Mr. Meysman manages Sara Lee's
businesses in the Asia-Pacific region. He is a member of the Supervisory
Board of VNU, a Dutch-based publishing company. Age 47.
ROZANNE L. RIDGWAY Former Assistant Secretary of State for European and
[PHOTO] Canadian Affairs (1985-1989) 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, Emerson Electric Company,
Minnesota Mining & Manufacturing Company, Nabisco Group Holdings and
Union Carbide Corporation. She serves on the International Advisory
Board of the New Perspective Fund. Ambassador Ridgway is also a trustee
of the Center for Naval Analysis, the National Geographic Society and
Hamline University, a member of the American Academy of Diplomacy and a
Fellow of the National Academy of Public Administration. She also served
as President (1989-1993) and Co-Chair (1993-1996) of the Atlantic
Council of the United States. Age 64.
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JUDITH A. SPRIESER Executive Vice President and Chief Financial Officer
[PHOTO] of Sara Lee Corporation. Ms. Sprieser became a director and Executive
Vice President of Sara Lee in 1998. Ms. Sprieser has been with Sara Lee
since 1987. From 1994 to 1998 she served as Senior Vice President and
Chief Financial Officer of Sara Lee Corporation. Prior to that, she
served as President and Chief Executive Officer of Sara Lee Bakery,
North America. She is a director of USG Corporation, The Allstate
Corporation and The Chicago Network, and a member of the board of
trustees of Northwestern University and Window To The World
Communication, Inc. She is also a member of the Young Presidents
Organization and the American Institute of Certified Public Accountants.
Ms. Sprieser is a member of the Supervisory Board of Sara Lee/DE N.V., a
subsidiary of Sara Lee. Age 46.
RICHARD L. THOMAS Retired Chairman of First Chicago NBD Corporation and
[PHOTO] The First National Bank of Chicago. Mr. Thomas became a director of Sara
Lee in 1976. He is also a director of The PMI Group, Inc., The Sabre
Holdings Group, Inc., Unicom Corporation and IMC Global, Inc. Mr. Thomas
is a life trustee of the Chicago Symphony Orchestra and a trustee of
Rush-Presbyterian-
St. Luke's Medical Center (Chicago), Northwestern University and Kenyon
College. Age 68.
JOHN D. ZEGLIS President and a director of AT&T Corporation
[PHOTO] (telecommunications) since 1997. Mr. Zeglis joined AT&T in 1984 and
prior to becoming President he served in a number of senior executive
positions at AT&T. Mr. Zeglis became a director of Sara Lee in 1998. Mr.
Zeglis is also a director of Illinova Corporation and Helmerich & Payne,
Inc. He is also Chairman of the Board of Trustees of George Washington
University and a trustee of the Brookings Institute, Culver Educational
Foundation and United Way of Tri-State. Mr. Zeglis is also on the Board
of Trustees for the United Negro College Fund, and a member of the
Advisory Board of the J.L. Kellogg Graduate School of Management at
Northwestern University and a member of the University of Illinois
Business Advisory Council. Age 52.
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE FOR ALL OF THE
NOMINEES.
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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. All of the directors attended at least 75% of all the meetings of
the Board and those committees on which he or she served during the fiscal year.
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 these committees.
<TABLE>
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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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Paul A. Allaire X X X X*
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Frans H.J.J. Andriessen X X
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John H. Bryan X X* X X
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Duane L. Burnham X X
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Charles W. Coker X X* X X
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James S. Crown X X
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Willie D. Davis X X
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Vernon E. Jordan, Jr. X* X X X
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James L. Ketelsen X X X X*
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Hans B. van Liemt X X
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Joan D. Manley X X
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C. Steven McMillan X X
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Frank L. Meysman X X
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Rozanne L. Ridgway X X
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Judith A. Sprieser X X
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Richard L. Thomas X X* X X
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John D. Zeglis X X
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* Chair
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.
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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 once 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,
Roderick A. Palmore, 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. 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 once 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 $65,000 and an annual
grant of options to purchase 10,000 shares of common stock (11,000 shares for
chairs of committees of the Board). The exercise price of these options is equal
to the fair market value of Sara Lee's common stock on the date of grant. The
options expire after ten years. The options are generally not transferable,
except for transfers to immediate family members. 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. Directors are eligible
to receive restoration stock options upon exercise of their stock options.
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 interest and any
appreciation, are paid in cash on dates selected by the director.
During the 1999 fiscal year, Sara Lee paid fees for legal services performed
by the law firm of Akin, Gump, Strauss, Hauer & Feld L.L.P., of which Vernon E.
Jordan, Jr. is a senior partner.
10
<PAGE>
SARA LEE 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 1, 1999. 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>
---------------------------------------------------------------------------------------------------------------
OPTIONS CURRENTLY SHARE UNITS
EXERCISABLE OR AND
SHARES OF EXERCISABLE SHARE SHARES OF ESOP
NAME COMMON STOCK WITHIN 60 DAYS EQUIVALENTS(3) STOCK
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul A. Allaire 45,218 57,860
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frans H.J.J. Andriessen 14,998 41,332
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John H. Bryan (1)(2) 2,391,219 2,059,808 512,409 534
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Duane L. Burnham (2) 23,611 38,331
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James R. Carlson (2) 206,495 347,196 28,900 532
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles W. Coker (1) 101,002 80,542
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James S. Crown 12,566 30,874
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Willie D. Davis 29,110 37,216
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Vernon E. Jordan, Jr. 26,212 57,170 284
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James L. Ketelsen 47,526 69,776
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hans B. van Liemt 17,535 36,928
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joan D. Manley 52,894 30,968
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
C. Steven McMillan (1) 374,770 1,047,134 66,883 534
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frank L. Meysman (2) 129,491 1,217,831 119,900
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rozanne L. Ridgway 16,206 36,016
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Judith A. Sprieser (2) 132,385 371,960 60,929 525
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard L. Thomas (1) 376,534 49,338 6,161
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John D. Zeglis 4,842 20,000 458
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Directors and Executive Officers as a
group (21 persons) 4,437,109 6,382,718 972,630 3,259
- ----------------------------------------------------------------------------------------
</TABLE>
- -------------------------
(1) Includes shares of common stock owned by relatives or held in trusts or
partnerships for the benefit of relatives with respect to which the named
persons disclaim any beneficial interest.
(2) Includes shares of common stock with respect to which the following
directors and executive officers share voting and investment power with
others: Mr. Bryan, 215,421 shares; Mr. Burnham, 23,611 shares; Mr. Carlson,
6,685 shares; Mr. Meysman, 6,234 shares; and Ms. Sprieser, 73,528 shares.
(3) Includes restricted shares and restricted share units granted under Sara
Lee's 1998 Long-Term Incentive Stock Plan (and predecessor plans) and share
unit balances held under the Executive Deferred Compensation Plan and the
Director Deferred Compensation Plan. The value of share units and share
equivalents mirrors the value of Sara Lee common stock. The amounts
ultimately realized by the directors and executives will reflect all changes
in the market value of Sara Lee common stock from the date of deferral or
accrual until the date of payout. The share units and share equivalents do
not have voting rights, but are credited with dividend equivalents.
11
<PAGE>
As of September 1, 1999, all directors and executive officers as a group
beneficially owned 4,437,109 shares of common stock, or .50% of the outstanding
shares of common stock, and 3,259 shares of ESOP Stock, or .09% 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 eight shares of common
stock.
As of September 1, 1999, State Street Bank & Trust Company of Boston, 200
Newport Avenue, North Quincy, Massachusetts 02171, as Trustee for the ESOP, held
3,563,449 shares of ESOP Stock (all of the outstanding shares of ESOP Stock), of
which 1,522,715 shares (43%) were allocated to participant accounts and
2,040,735 shares (57%) 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
The Compensation and Employee Benefits Committee is comprised of directors
who are not employees or former employees of Sara Lee. Our responsibilities as
committee members include the approval and administration of the compensation
and benefit programs for Sara Lee's named executive officers whose compensation
is shown in this proxy statement. To assist us in this process, we use the
services of independent executive compensation consulting firms.
GUIDING COMPENSATION PRINCIPLES:
Sara Lee's executive compensation program is based upon the following
principles. The program will:
- support the attainment of Sara Lee's long and short-term strategic and
financial objectives;
- align executives' goals with our stockholders;
- reward executives for continuous improvement in earnings per share and
growth in stockholder value;
- be competitive in comparison with Sara Lee's peer companies;
- encourage significant ownership of Sara Lee stock; and
- be performance-based with variable pay constituting a significant portion
of total compensation.
TYPES OF COMPENSATION:
Sara Lee's executive compensation program consists of two main types of
compensation:
1. ANNUAL COMPENSATION which includes base salary and annual incentives.
The amounts of any annual incentives paid are based upon the degree to which
specific financial, strategic and non-financial objectives are accomplished.
2. LONG-TERM COMPENSATION includes stock options and restricted stock
units. The value of stock options and restricted stock units depends
significantly upon the future value of Sara Lee stock.
PEER GROUP:
The companies used by Sara Lee for compensation comparisons consist of a
select group of many of the largest global consumer products companies. Many of
these companies are represented in the Peer Composite index shown in the
Performance Graph on page 15. This peer group is used for comparisons of all
components of the compensation package.
12
<PAGE>
ANNUAL COMPENSATION:
BASE SALARY: We determine the appropriateness of executives' salaries by
considering the responsibilities of their positions, their individual
performance and by reference to the median salary levels paid by the peer group.
Salary increases are considered annually and are based on both financial and
non-financial results achieved by the executive during the preceding fiscal
year.
BONUS INCENTIVES: The annual incentive for the named executive officers is
the lesser of:
1. An incentive pool which is 1.5% of the net income in excess of that
necessary to achieve a 10% return on average total common stockholders' equity,
with 30% of the incentive pool allocated to the Chairman and the remainder
divided equally among the other named executive officers, or
2. An amount which is based upon the achievement of performance goals, set
at the beginning of each fiscal year, such as earnings per share, return on
capital, operating profit and non-financial objectives, including management
development and diversity representation goals.
LONG-TERM COMPENSATION:
Under the 1998 Long-Term Incentive Stock Plan, we review and approve awards
to Sara Lee's key executives in the form of stock options and restricted stock
units. These awards provide a strong incentive for the executives to maximize
long-term stockholder value.
STOCK OPTIONS: All stock options have an option price equal to the market
value of Sara Lee's stock on the grant date. The maximum term of each grant is
typically ten years. The terms and conditions may vary based upon the country in
which an employee lives, due to local tax or legal requirements. We set
guidelines by executive level for the number of shares available for grant.
RESTRICTED STOCK UNITS: The Long-Term Performance Incentive Plan (LTPIP)
provides annual grants of restricted stock units to about 140 participants,
including the named executive officers. These restricted stock units may be
earned three years later based upon achievement of specific earnings per share
and return on invested capital goals that we approve at the beginning of each
three-year performance cycle. The LTPIP provides that no restricted stock units
are earned for performance results at the "Threshold" level and as many as 125%
of the original units granted may be earned for "Outstanding" results.
LTPIP participants residing in the Netherlands, such as Mr. Meysman,
received special performance-based stock options in lieu of restricted stock
units for Dutch tax reasons.
STOCK OWNERSHIP:
We believe it is important to align executives' interests with those of our
stockholders. Sara Lee's executives have a substantial portion of their
incentive pay based upon Sara Lee's stock performance. Because we strongly
believe that our executives should have a meaningful stake in Sara Lee, stock
ownership guidelines now apply to about 1,300 of Sara Lee's key executives. The
ownership requirements range from a minimum of 2,000 to a high of 300,000
shares. Expressed as a percentage of salary, the ownership requirements range
from a low of about 40% to a high of about 700% of annual salary for these
executives.
To assist and encourage compliance with these ownership guidelines, Sara Lee
has adopted restoration stock options as a feature within its stock option
program. Restoration stock options encourage executives to accumulate shares of
Sara Lee stock for purposes of exercising their stock options. Restoration stock
options are granted when executives use currently owned shares to purchase the
stock option shares. Restoration stock options are subject to the same terms and
conditions as the original options they replace, except that the restoration
options' exercise price is equal to the market value of Sara Lee's common stock
on the date the restoration stock option is granted. In order to
13
<PAGE>
receive a restoration stock option, the market value of Sara Lee's stock must be
at least 25% greater than the exercise price of the option on the date the
option is exercised. A plan participant may receive restoration stock options
only twice in the same calendar year.
CHIEF EXECUTIVE'S COMPENSATION:
Mr. Bryan's base salary has been capped at $928,200 since 1995 as a part of
Sara Lee's strategy to maximize Sara Lee's tax deduction for executive
compensation. The forgone value of Mr. Bryan's base salary increases and certain
perquisites that were eliminated in 1995 are periodically replaced with
restricted stock units.
In addition to the provisions under the Performance-Based Annual Incentive
Plan described earlier, we set specific financial and non-financial performance
goals for Mr. Bryan at the beginning of fiscal year 1999. Diluted earnings per
share and return on invested capital results accounted for 75% of his fiscal
year 1999 incentive opportunity. The remaining 25% was related to other
corporate strategic and individual performance goals. Sara Lee's diluted
earnings per share results of $1.21 were a 9.0% increase over fiscal year 1998.
Other goals for which Mr. Bryan was responsible included a stock repurchase
initiative, succession planning activities and the completion of Sara Lee's
Project 2000 restructuring program.
Based upon our assessment of Mr. Bryan's and Sara Lee's performance during
fiscal year 1999, he earned an annual incentive payment of $1,462,718 that
represents 151.75% of his base salary earnings. This amount was below the
maximum award possible under the Performance-Based Annual Incentive Plan.
On August 27, 1998, Mr. Bryan was granted a stock option to purchase 500,000
shares of Sara Lee common stock at $24.03 per share, which was the market value
on that date. This grant was subject to a normal three-year vesting schedule.
Mr. Bryan was also granted 49,560 restricted stock units under the 1999-2001
Long-Term Performance Incentive Plan. This grant consisted of 16,160 shares
which were granted to replace forgone salary increases and perquisites that were
eliminated in order to maximize Sara Lee's tax deduction of executive
compensation under Section 162(m) of the Internal Revenue Code. A total of
25,551 performance shares were released to Mr. Bryan at the end of fiscal year
1999 under the 1997-1999 Long-Term Performance Incentive Plan. This represented
91.9% of the restricted performance shares granted to Mr. Bryan in August 1996.
TAX DEDUCTIBILITY OF COMPENSATION:
Section 162(m) of the Internal Revenue Code limits the tax deductibility of
certain compensation paid to named executive officers. This provision disallows
the deductibility of certain compensation in excess of $1 million per year
unless it is considered performance-based compensation under the tax code. We
have adopted policies and practices that should ensure the maximum tax deduction
possible under Section 162(m). However, we reserve the right to forego any or
all of the tax deduction if we believe it to be in the best long-term interests
of our stockholders.
SUMMARY:
We believe the compensation programs of Sara Lee are strategically
integrated with Sara Lee's business plan and are properly aligned with
stockholders' best interests. The programs allow Sara Lee to attract, retain and
motivate exceptional managers and reward them appropriately for exceptional
results. We continually monitor these programs and change them in recognition of
the dynamic, global marketplace in which Sara Lee competes. Sara Lee will
continue to emphasize performance and equity-based incentive plans that reward
increased stockholders' returns.
Compensation and Employee Benefits Committee
Charles W. Coker, Chairperson, James S. Crown, James L. Ketelsen, Hans B. van
Liemt, Joan D. Manley, Rozanne L. Ridgway and Richard L. Thomas
14
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AS OF JUNE 30
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SARA LEE CORPORATION PEER COMPOSITE S&P 500
<S> <C> <C> <C>
1994 $100 $100 $100
1995 $136 $120 $126
1996 $161 $146 $159
1997 $211 $188 $214
1998 $288 $235 $279
1999 $238 $208 $342
Assumes an investment of $100 on June 30, 1994, 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 30,
1999, the three indices are comprised of the following companies: the S&P Foods
Index -- Bestfoods, Campbell Soup Company, ConAgra, Inc., General Mills, Inc.,
H.J. Heinz Company, Hershey Foods Corporation, Kellogg Company, Nabisco Group
Holdings, 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, Fort James Corporation, 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., VF 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.
15
<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. Share amounts in the table and the
footnotes have been adjusted to reflect the 2-for-1 stock split effective
December 21, 1998.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS PAYOUTS
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LTIP
FISCAL SALARY BONUS COMPENSATION STOCK OPTIONS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) AWARDS($)(2) (#)(3) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
John H. Bryan 1999 963,900(1) 1,462,718 287,959(5) 1,189,440 500,000 --
Chairman of the Board 1,259,808(3)
and Chief Executive Officer 1998 928,200 1,819,272 140,817 2,755,200 1,500,000 117,843
1,062,680(3)
1997 928,200 1,241,468 89,128 400,000 400,000 178,364
809,182(3)
C. Steven McMillan 1999 769,038 895,391 106,459(5) 600,000 250,000 --
President and Chief 220,378(3)
Operating Officer 1998 700,000 1,021,300 6,870 1,845,000 750,000 18,023
341,244(3)
1997 617,308 661,754 31,821 208,000 200,000 125,344
229,066(3)
Judith A. Sprieser 1999 449,039 369,883 -- 336,000 120,000 --
Executive Vice 182,552(3)
President and Chief Financial 1998 393,846 367,064 -- 676,500 240,000 26,289
Officer 87,390(3)
1997 364,539 297,099 490 96,000 100,000 38,648
31,560(3)
Frank L. Meysman(6) 1999 462,121 485,566 -- -- 178,000 --
Executive Vice 1998 415,636 476,069 -- 2,900,000 570,000 --
President 33,880(3)
1997 398,050 377,869 10,063 -- 110,000 --
24,698(3)
James R. Carlson 1999 473,769 255,617 1,709 345,600 120,000 --
Senior Vice President 98,992(3)
1998 440,000 399,877 708 984,000 260,000 2,884
148,186(3)
1997 324,817 266,025 863 -- 70,000 45,124
24,474(3)
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(4)
<S> <C>
John H. Bryan 149,745
Chairman of the Board
and Chief Executive Officer 265,484
58,472
C. Steven McMillan 111,064
President and Chief
Operating Officer 145,714
52,162
Judith A. Sprieser 48,593
Executive Vice
President and Chief Financial 67,117
Officer
24,203
Frank L. Meysman(6) --
Executive Vice --
President
--
James R. Carlson 67,484
Senior Vice President
79,571
26,575
</TABLE>
- -----------------------------
(1) Mr. Bryan's salary is capped at $928,200. His salary for the 1999 fiscal
year reflects an additional pay period.
(2) Market value of restricted stock units on the date of grant. Dividends on
the restricted stock units are escrowed during the three-year performance
cycle. Dividends and interest on the escrowed dividends are distributed at
the end of the performance cycle in the same proportion as the restrictions
on the restricted stock units lapse. The restrictions lapse if, and only to
the extent that, certain performance goals are met. To the extent the
performance goals are not attained, the restricted stock units, the escrowed
dividends and interest will be forfeited. In the event of a change of
control, the Compensation and Employee Benefits Committee may provide for
the vesting of the restricted stock units. As of July 3, 1999, the market
value and aggregate number of all restricted stock units held by Messrs.
Bryan, McMillan, Meysman and Carlson and Ms. Sprieser were, respectively,
$4,701,600 (208,960), $2,880,000 (128,000), $2,250,000 (100,000), $1,404,000
(62,400) and $1,192,500 (53,000).
(3) These options are restoration stock options granted during fiscal years
1997, 1998 and 1999 and are described in the stock option table on the next
page.
(4) The amounts reported in this column for fiscal year 1999 include (i) all
amounts allocated to the following officers under the ESOP and a
supplemental benefit plan: Mr. Bryan, $146,299, Mr. McMillan, $81,714, Mr.
Carlson, $39,713 and Ms. Sprieser, $36,650, (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, $3,446, Mr. McMillan, $2,401 and Mr. Carlson, $194, 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,
$26,949, Mr. Carlson, $27,577 and Ms. Sprieser, $11,943.
(5) The amounts reported for Mr. Bryan and Mr. McMillan include $223,257 and
$72,191, respectively, for the personal use of corporate transportation.
(6) Mr. Meysman's compensation information contained in this proxy statement has
been converted from Dutch guilders to U.S. dollars based upon an average
foreign exchange rate.
16
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table gives more information on stock options granted during
the last fiscal year.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM
% OF TOTAL
OPTIONS
NUMBER OF SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS GRANTED IN FISCAL PRICE(2) EXPIRATION 5% (3) 10% (3)
NAME (#)(1) YEAR ($/SH) DATE ($) ($)
<S> <C> <C> <C> <C> <C> <C>
John H. Bryan New Grant (2)
500,000 2.94 24.0300 8/27/08 7,556,169 19,148,816
Restoration Options
74,112 0.44 30.1875 8/30/05 880,635 2,041,321
98,350 0.58 30.1875 8/28/06 1,374,361 3,273,452
410,504 2.42 30.1875 8/28/07 6,642,886 16,268,609
193,004 1.14 30.1875 8/24/04 1,900,518 4,287,251
146,650 0.86 30.1875 8/30/05 1,742,568 4,039,288
97,518 0.57 30.1875 8/28/06 1,362,734 3,245,760
38,668 0.23 30.1875 8/25/03 307,048 674,740
124,724 0.73 30.1875 7/1/02 730,760 1,559,226
76,278 0.45 30.1875 8/25/03 605,695 1,331,018
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
C. Steven McMillan New Grant (2)
250,000 1.47 24.0300 8/27/08 3,778,084 9,574,408
Restoration Options
33,582 0.20 30.3750 8/30/05 401,706 931,228
45,402 0.27 30.3750 8/28/06 638,666 1,521,290
16,262 0.10 30.3750 8/25/03 130,016 285,731
125,132 0.74 30.3750 8/28/07 2,038,277 4,992,181
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Judith A. Sprieser New Grant (2)
120,000 0.71 24.0300 8/27/08 1,813,481 4,595,716
Restoration Options
39,178 0.23 27.2050 8/30/05 429,699 999,820
6,774 0.04 27.2050 7/1/02 37,273 79,812
964 0.01 27.2050 8/25/03 7,125 15,714
46,452 0.27 27.2050 8/28/06 597,642 1,428,963
4,985 0.03 26.0938 8/28/06 56,761 133,808
13,742 0.08 26.0938 8/25/03 86,104 187,389
70,457 0.41 26.0938 8/28/07 934,293 2,264,186
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Frank L. Meysman New Grants (2)
150,000 0.88 24.5150 8/26/03 1,016,584 2,246,545
28,000 0.16 24.5150 8/26/03 189,762 419,355
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
James R. Carlson New Grant (2)
120,000 0.71 24.0300 8/27/08 1,813,481 4,595,716
Restoration Options
10,016 0.06 29.7344 8/30/05 116,841 270,697
17,318 0.10 29.7344 8/28/06 237,668 565,778
71,658 0.42 29.7344 8/28/07 1,139,123 2,788,241
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12.3
All Stockholders N.A. N.A. N.A. N.A. billion 31.3 billion
<CAPTION>
</TABLE>
- -------------------------
(1) The table includes both new options and restoration stock options granted
upon the exercise of existing options. The grant of a restoration stock
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 stock option (as described on
pages 13-14) does not result in an increase in the total combined number of
shares and options held by an employee. The options shown in the table are
generally not transferable, except for transfers to immediate family
members.
(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. As noted in the report of the Compensation and Employee Benefits
Committee of the Board of Directors, the options generally become
exercisable in three equal annual installments, on the first three
anniversary dates of the date of grant. 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.
(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.
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<PAGE>
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, Meysman and Carlson and Ms.
Sprieser during the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE- MONEY OPTIONS AT
AT FISCAL YEAR-END (#) (1) FISCAL YEAR-END ($) (2)
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
John H. Bryan 1,802,682 10,300,067 1,259,808 1,633,334 -- 2,584,811
C. Steven McMillan 332,516 3,821,404 647,134 816,668 262,501 1,292,412
Judith A. Sprieser 246,570 2,246,866 162,776 402,518 -- 488,589
Frank L. Meysman 5,180 55,049 1,042,236 -- 2,755,520 --
James R. Carlson 130,042 1,364,244 197,196 316,668 -- 449,428
</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 July 2, 1999 (the
last business day of the fiscal year) of $22.28 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 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 950,000 Dutch guilders
(approximately $480,000). Mr. Meysman also participates in Sara Lee's annual
short-term incentive plans, 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's 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. In April, 1998, Mr. Meysman was awarded 100,000 restricted share
units which will remain restricted until April, 2003, at which time the
restricted share units vest, provided Mr. Meysman remains continually in the
employ of Sara Lee.
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.
18
<PAGE>
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
2,500,000 437,500 656,250 1,093,750 1,531,250
2,750,000 481,250 721,875 1,203,125 1,684,375
</TABLE>
As of September 1, 1999, Messrs. Bryan, McMillan and Carlson and Ms.
Sprieser had 25, 21, 26 and 12 years of credited service, respectively, under
the pension plan and Mr. Bryan has additional accrued benefits under a
predecessor pension plan of a company acquired by Sara Lee. Mr. Meysman has 9
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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 1999 fiscal year, various subsidiaries of Sara Lee spent
approximately $960,000 to purchase truck trailers, parts and related services
from Great Dane Limited Partnership, a partnership in which James S. Crown and
members of his immediate family have an interest.
PROPOSAL TO APPROVE THE 1999 NON-EMPLOYEE DIRECTOR STOCK PLAN
Sara Lee's Board of Directors adopted the 1999 Non-Employee Director Stock
Plan on August 26, 1999, subject to approval by the stockholders at the Annual
Meeting.
The Board believes that the ownership of Sara Lee common stock by directors
supports the maximization of long-term stockholder value by aligning the
interests of directors with those of stockholders. The Plan is designed to
facilitate the ownership of common stock by outside directors by providing for
the grant of stock options to non-employee directors, and by permitting
non-employee directors to elect to receive all or a portion of their annual
retainer in common stock, options to purchase common stock or a combination of
common stock and options.
SUMMARY OF THE PLAN
We have summarized the material terms of the Plan below. We have also
attached a copy of the Plan as Exhibit A to this Proxy Statement. You should
read the Plan.
19
<PAGE>
The purpose of the Plan is to promote the long-term growth of Sara Lee by
enhancing Sara Lee's ability to attract and retain highly qualified and capable
non-employee directors with diverse backgrounds and experience and by increasing
the proprietary interest of non-employee directors in Sara Lee. Only
non-employee directors of Sara Lee will participate in the Plan. Sara Lee
currently has 13 non-employee directors.
Under the Plan, each non-employee director will receive an annual grant of
an option to purchase 10,000 shares of Sara Lee common stock (11,000 shares in
the case of each chair of a standing committee of the Board), and may elect to
receive common stock, or options to purchase common stock, or a combination of
both, in lieu of all or a portion of his or her annual retainer. Non-employee
directors currently receive an annual retainer of $65,000. In addition, as
described below, restoration stock options may be granted upon the exercise of
an option. One-tenth of one percent of the outstanding shares of common stock as
of the last day of any fiscal year (approximately 880,000 shares as of July 3,
1999) will be available for the award of shares and the grant of stock options
under the Plan during the next fiscal year, subject to adjustment in the event
of stock splits, stock dividends or changes in corporate structure affecting the
common stock.
If the Plan is approved by stockholders, each non-employee director will be
granted an option to purchase 10,000 shares of common stock, and each
non-employee director who serves as a chairperson of a committee of the Board
will receive an additional option to purchase 1,000 shares of common stock, on
the date of the last regularly scheduled meeting of the Board held in August of
each year beginning in 2000 and ending in 2009. If a non-employee director
begins service on a date other than the date of the annual meeting of Sara Lee
stockholders in any year, the number of shares subject to the option will be
prorated. Each non-employee director may also elect to receive a portion of his
or her annual retainer in common stock or options to purchase common stock. The
number of shares of common stock issuable will be based upon the fair market
value per share of common stock on the date the common stock is awarded, and
will be determined by dividing the fair market value into the amount of the
annual retainer that the director elected to receive in common stock. The number
of stock options granted will be determined by multiplying the amount of the
annual retainer that the director elected to receive in stock options by four,
then dividing by the fair market value on the date the options are granted.
The exercise price per share of all stock options granted under the Plan
will be 100% of the fair market value per share of common stock on the grant
date. For any date, fair market value means the average of the highest and
lowest quoted sale prices per share reported on the New York Stock Exchange
Composite Transactions Tape. The fair market value of Sara Lee common stock on
September 1, 1999 was $22.53. Options granted on or after the date of the last
regularly scheduled meeting of the Board held in August of any year and prior to
November 1 of that year will fully vest on that November 1. Options granted on
or after November 1 of any year and prior to date of the last regularly
scheduled meeting of the Board held in the next following August will vest
immediately. All options will become fully exercisable six months after the date
of grant. Options may be exercised until the tenth anniversary of the date of
grant. Options may be exercised either by the payment of cash in the amount of
the aggregate option price or by surrendering (or attesting to ownership of)
shares of common stock owned by the director for at least six months prior to
the date the option is exercised, or a combination of both, having a combined
value equal to the aggregate option price of the shares subject to the option or
portion of the option being exercised. Each option will provide for the grant of
a restoration stock option if the exercise price and related tax obligations
(calculated as if Sara Lee had tax withholding obligations) are satisfied by
tendering (or attesting to the ownership of) shares of common stock to, or
having shares withheld by, Sara Lee. Restoration stock options may be granted to
a non-employee director up to two times in any calendar year. A restoration
stock option would cover the number of shares of common stock so tendered or
withheld, would have an exercise price of 100% of the fair market value as of
the date of exercise of the original stock option, would be fully
20
<PAGE>
exercisable six months after the date of grant of the restoration stock option,
and would have a term equal to the remaining term of the original stock option.
Shares of common stock will be transferred to a director upon being awarded,
except that shares of common stock awarded in respect of, and prior to, any
one-year period beginning on November 1 of any year will be transferred to a
director after the first annual meeting of stockholders held after the award.
Options granted under the Plan will not be transferable by the director
other than by will or the laws of descent and distribution, unless the
Compensation and Employee Benefits Committee of the Board provides for the
transferability of an option in the stock option agreement.
Upon the occurrence of a "change of control" of Sara Lee as defined in the
Plan, any and all outstanding options granted under the Plan become immediately
vested and exercisable and any and all stock certificates representing shares
awarded to a director that Sara Lee has not previously transferred to the
director will be transferred to the director, together with any dividend
equivalents.
FEDERAL INCOME TAX CONSEQUENCES
The grant of an option under the Plan will not result in income for the
director or in a deduction for Sara Lee. The exercise of an option will
generally result in compensation income for the director and a deduction for
Sara Lee, in each case measured by the difference between the exercise price and
the fair market value of the shares at the time of exercise.
The receipt of shares of common stock under the Plan will generally result
in compensation income for the director and a deduction for Sara Lee, based on
the fair market value of the shares on the date awarded.
ADMINISTRATION OF THE PLAN
The Compensation and Employee Benefits Committee of the Board will
administer the Plan. Awards to non-employee directors who are foreign nationals
may have terms and conditions different from those specified in the Plan as the
Committee may determine to promote achievement of the purposes of the Plan. The
Board may amend or terminate the Plan at any time, but the terms and conditions
of any award or option granted under the Plan may not be adversely modified
without the director's consent. The Plan will terminate on August 26, 2009,
unless terminated earlier by the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE FOR THE APPROVAL OF
THE 1999 NON-EMPLOYEE DIRECTOR STOCK PLAN.
21
<PAGE>
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 July 1, 2000. 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 $7.3 million 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 YOU VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
FISCAL YEAR 2000.
OTHER INFORMATION
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Sara Lee's Bylaws provide that in order for a stockholder to nominate a
candidate for election as a director at an annual meeting of stockholders or
propose business for consideration at such meeting, notice must generally be
given in writing to the Secretary of Sara Lee at the principal executive office
of Sara Lee not later than the close of business on the 60th day nor earlier
than the close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting. Accordingly, a stockholder nomination or
proposal intended to be considered at the 2000 Annual Meeting must be received
by the Secretary after the close of business on July 31, 2000, and prior to the
close of business on August 29, 2000. Proposals should be mailed to Sara Lee
Corporation, to the attention of Sara Lee's Secretary, Roderick A. Palmore,
Three First National Plaza, Chicago, Illinois 60602-4260. A copy of the Bylaws
may be obtained from Roderick A. Palmore, Sara Lee's Secretary, by written
request to the same address.
In addition, if you wish to have your proposal considered for inclusion in
Sara Lee's 2000 Proxy Statement, we must receive it on or before May 23, 2000.
SARA LEE'S FORM 10-K
A copy of Sara Lee's Annual Report on Form 10-K for the fiscal year ended
July 3, 1999, 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.
22
<PAGE>
EXHIBIT A
[LOGO]
-------------------------------------------------
1999 NON-EMPLOYEE DIRECTOR STOCK PLAN
-------------------------------------------------
ARTICLE I -- PURPOSE OF THE PLAN
The purpose of the Sara Lee Corporation 1999 Non-Employee Director Stock
Plan is to promote the long-term growth of Sara Lee Corporation by increasing
the proprietary interest of Non-Employee Directors in Sara Lee Corporation and
to attract and retain highly qualified and capable Non-Employee Directors.
ARTICLE II -- DEFINITIONS
Unless the context clearly indicates otherwise, the following terms shall
have the following meanings:
2.1 "ANNUAL RETAINER" means the annual cash retainer fee payable by the
Corporation to a Non-Employee Director for services as a director of the
Corporation, as such amount may be changed from time to time.
2.2 "AWARD" means an award granted to a Non-Employee Director under the Plan
in the form of Options or Shares, or any combination thereof.
2.3 "BOARD" means the Board of Directors of Sara Lee Corporation.
2.4 "CORPORATION" means Sara Lee Corporation.
2.5 "FAIR MARKET VALUE" means, with respect to any date, the average between
the highest and lowest sale prices per Share on the New York Stock Exchange
Composite Transactions Tape on such date, provided that if there shall be no
sales of Shares reported on such date, the Fair Market Value of a Share on such
date shall be deemed to be equal to the average between the highest and lowest
sale prices per Share on such Composite Tape for the last preceding date on
which sales of Shares were reported.
2.6 "OPTION" means an option to purchase Shares awarded under Article VIII
or IX which does not meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended, or any successor law.
2.7 "OPTION GRANT DATE" means the date upon which an Option is granted to a
Non-Employee Director.
2.8 "OPTIONEE" means a Non-Employee Director of the Corporation to whom an
Option has been granted or, in the event of such Non-Employee Director's death
prior to the expiration of an Option, such Non-Employee Director's executor,
administrator, beneficiary or similar person, or, in the event of a transfer
permitted by Article VII hereof, such permitted transferee.
A-1
<PAGE>
2.9 "NON-EMPLOYEE DIRECTOR" means a director of the Corporation who is not
an employee of the Corporation or any subsidiary of the Corporation.
2.10 "PLAN" means the Sara Lee Corporation 1999 Non-Employee Director Stock
Plan, as amended and restated from time to time.
2.11 "STOCK AWARD DATE" means the date on which Shares are awarded to a
Non-Employee Director.
2.12 "SHARES" means Shares of the Common Stock, par value $.01 per share, of
the Corporation.
2.13 "STOCK OPTION AGREEMENT" means a written agreement between a
Non-Employee Director and the Corporation evidencing an Option.
ARTICLE III -- ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATOR OF THE PLAN. The Plan shall be administered by the
Compensation and Employee Benefits Committee of the Board ("Committee").
3.2 AUTHORITY OF COMMITTEE. The Committee shall have full power and
authority to: (i) interpret and construe the Plan and adopt such rules and
regulations as it shall deem necessary and advisable to implement and administer
the Plan and (ii) designate persons other than members of the Committee to carry
out its responsibilities, subject to such limitations, restrictions and
conditions as it may prescribe, such determinations to be made in accordance
with the Committee's best business judgment as to the best interests of the
Corporation and its stockholders and in accordance with the purposes of the
Plan. The Committee may delegate administrative duties under the Plan to one or
more agents as it shall deem necessary or advisable.
3.3 DETERMINATIONS OF COMMITTEE. A majority of the Committee shall
constitute a quorum at any meeting of the Committee, and all determinations of
the Committee shall be made by a majority of its members. Any determination of
the Committee under the Plan may be made without notice or a meeting of the
Committee by a written consent signed by all members of the Committee.
3.4 EFFECT OF COMMITTEE DETERMINATIONS. No member of the Committee or the
Board shall be personally liable for any action or determination made in good
faith with respect to the Plan or any Award or to any settlement of any dispute
between a Non-Employee Director and the Corporation. Any decision or action
taken by the Committee or the Board with respect to an Award or the
administration or interpretation of the Plan shall be conclusive and binding
upon all persons.
ARTICLE IV -- AWARDS UNDER THE PLAN
Awards in the form of Options shall be granted to Non-Employee Directors in
accordance with Article VIII. Awards in the form of Options or Shares, or a
combination thereof, may be granted to Non-Employee Directors in accordance with
Article IX. Each Option granted under the Plan shall be evidenced by a Stock
Option Agreement. Each Option granted under the Plan shall provide for the grant
of a replacement Option if (1) the purchase price of the Shares subject to the
original Option is satisfied by surrendering (or attesting to the ownership of)
Shares in accordance with Section 8.3 and (2) the Fair Market Value per Share on
the date of exercise is not less than 125% of the purchase price per Share of
the original Option. Each replacement Option shall (i) be an Option to purchase
the number of Shares surrendered (either actually or by attestation), plus the
number of Shares that the Optionee would have surrendered to pay withholding
taxes, calculated as if such Optionee had been obligated to pay such taxes and
had surrendered Shares to satisfy such obligation, (ii) be fully exercisable on
and after that date which is six months after the Option Grant Date of the
replacement
A-2
<PAGE>
Option, (iii) have a purchase price per Share equal to 100% of the Fair Market
Value per Share on the Option Grant Date of the replacement Option and (iv) have
a term equal to the remaining term of the original Option. Notwithstanding the
foregoing, replacement Options may be granted to a Non-Employee Director under
this Article IV not more than twice in any calendar year.
ARTICLE V -- ELIGIBILITY
Non-Employee Directors of the Corporation shall be eligible to participate
in the Plan in accordance with Articles VIII and IX.
ARTICLE VI -- SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Article XII, the aggregate number of
Shares available for all grants of Options and awards of Shares in any fiscal
year shall be one-tenth (1/10) of one (1) percent of the outstanding Shares as
of the last day of the immediately preceding fiscal year.
ARTICLE VII -- TRANSFERABILITY OF OPTIONS
Options granted under the Plan shall not be transferable or assignable other
than by will or the laws of descent and distribution, except that the Committee
may provide for the transferability of any particular Option in the manner set
forth in the related Stock Option Agreement.
ARTICLE VIII -- NON-ELECTIVE OPTIONS
Each Non-Employee Director shall be granted Options, subject to the
following terms and conditions:
8.1 TIME OF GRANT. On the date of the last regularly scheduled meeting of
the Board held in August of each year beginning in 2000 (or, if later, on the
date on which a person is first elected or begins to serve as a Non-Employee
Director), each person who is a Non-Employee Director and who is not the chair
of a standing committee of the Board shall be granted an Option to purchase
10,000 Shares (which number shall be pro-rated if such Non-Employee Director is
first elected or begins to serve as a Non-Employee Director on a date other than
the date of an annual meeting of stockholders) and each Non-Employee Director
who is the chair of a standing committee of the Board shall be granted an Option
to purchase 11,000 Shares (of which number 10,000 shall be pro-rated if such
Non-Employee Director is first elected or begins to serve as a Non-Employee
Director on a date other than the date of an annual meeting of stockholders and
1,000 shall be pro-rated if such Non-Employee Director first begins to serve as
a chairperson on a date other than the date of an annual meeting of
stockholders). If a person is first elected or begins to serve as a Non-Employee
Director after the date of the last regularly scheduled meeting of the Board
held in August 1999 and prior to the date of the last regularly scheduled
meeting of the Board held in August 2000, on the date on which that person is
first elected or begins to serve as a Non-Employee Director that person shall be
granted an Option to purchase 10,000 Shares (which number shall be pro-rated
based upon the date that such Non-Employee Director is first elected or begins
to serve as a Non-Employee Director) and, if that person is the chair of a
standing committee of the Board, that person shall be granted an Option to
purchase 1,000 Shares (which number shall be pro-rated based upon the date that
such Non-Employee Director first begins to serve as a chairperson) on the date
that person first begins to serve as a chairperson.
A-3
<PAGE>
8.2 PURCHASE PRICE. The purchase price per Share under each Option granted
pursuant to this Article shall be 100% of the Fair Market Value per Share on the
Option Grant Date.
8.3 VESTING AND EXERCISE OF OPTIONS. Subject to Article X, each Option
granted to a Non-Employee Director on or after the date of the last regularly
scheduled meeting of the Board held in August of any year beginning in 1999 and
prior to November 1 of that year shall be fully vested on November 1 of that
year; PROVIDED, HOWEVER, that in the event such Non-Employee Director is not a
Director of the Corporation on November 1 of that year, the Option shall be
forfeited. Each Option granted on or after November 1 of any year and prior to
the date of the last regularly scheduled meeting of the Board held in the next
following August shall be fully vested on and after the Option Grant Date. Each
Option shall be fully exercisable on and after the date which is six months
after the Option Grant Date and, subject to Article X, shall not be exercisable
prior to such date. In no event shall the period of time over which the Option
may be exercised exceed ten years from the Option Grant Date. An Option, or
portion thereof, may be exercised in whole or in part only with respect to whole
Shares.
Shares shall be issued to the Optionee pursuant to the exercise of an Option
only upon receipt by the Corporation from the Optionee of payment in full either
in cash or by surrendering (or attesting to the ownership of) Shares together
with proof acceptable to the Committee that such Shares have been owned by the
Optionee for at least six months prior to the date of exercise of the Option, or
a combination of cash and Shares, in an amount or having a combined value equal
to the aggregate purchase price for the Shares subject to the Option or portion
thereof being exercised. The Shares issued to an Optionee for the portion of any
Option exercised by attesting to the ownership of Shares shall not exceed the
number of Shares issuable as a result of such exercise (determined as though
payment in full therefor were being made in cash) less the number of Shares for
which attestation of ownership is submitted. The value of owned Shares submitted
(directly or by attestation) in full or partial payment for the Shares purchased
upon exercise of an Option shall be equal to the aggregate Fair Market Value of
such owned Shares on the date of the exercise of such Option.
ARTICLE IX -- ELECTIVE OPTIONS AND SHARES
Each Non-Employee Director shall be granted Options or Shares, or a
combination thereof, subject to the following terms and conditions:
9.1 GRANT OF OPTIONS OR SHARES. On the day of the last regularly scheduled
meeting of the Board held in August of each year beginning in 1999, Options or
Shares, or a combination thereof, shall be granted to each Non-Employee Director
who, at least ten business days prior thereto, files with the Committee or its
designee a written election to receive Options or Shares, or a combination
thereof, in lieu of all or a portion of such Non-Employee Director's Annual
Retainer for the one-year period beginning on the next following November 1. In
the event a Non-Employee Director does not file a written election in accordance
with the preceding sentence, Options or Shares, or a combination thereof, shall
be granted to such Non-Employee Director on the tenth business day after the
date such Non-Employee Director files with the Committee or its designee a
written election to receive Options or Shares, or a combination thereof, in lieu
of all or a portion of such Non-Employee Director's Annual Retainer. An election
pursuant to the first sentence of this Section 9.1 shall be irrevocable on and
after the tenth business day prior to the date of grant of the Options or
Shares, as the case may be. An election pursuant to the second sentence of this
Section 9.1 shall be irrevocable.
9.2 NUMBER AND TERMS OF OPTIONS. The number of Shares subject to an Option
granted pursuant to this Article shall be the number of whole Shares equal to
(i) the product of four (4) times the portion of the Annual Retainer which the
Non-Employee Director has elected pursuant to Section 9.1 to be payable in
Options, divided by (ii) the Fair Market Value per Share on the Option Grant
Date.
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Any fraction of a Share shall be disregarded and the remaining amount of such
Annual Retainer shall be paid in cash. The purchase price per Share under each
Option granted pursuant to this Article shall be 100% of the Fair Market Value
per Share on the Option Grant Date. Each Option granted pursuant to this Article
shall be vested and exercisable in accordance with Section 8.3; PROVIDED,
HOWEVER, that in the event a Non-Employee Director is not a director of the
Corporation on the date the Option would otherwise vest in accordance with the
first sentence of Section 8.3, the Option shall be forfeited.
9.3 NUMBER OF SHARES. The number of Shares granted pursuant to this Article
shall be the number of whole Shares equal to (i) the portion of the Annual
Retainer which the Non-Employee Director has elected pursuant to Section 9.1 to
be payable in Shares, divided by (ii) the Fair Market Value per Share on the
Stock Award Date. Any fraction of a Share shall be disregarded and the remaining
amount of such Annual Retainer shall be paid in cash. Upon an Award of Shares to
a Non-Employee Director, the stock certificate representing such Shares shall be
issued and transferred to the Non-Employee Director, whereupon the Non-Employee
Director shall become a stockholder of the Corporation with respect to such
Shares and shall be entitled to vote the Shares; PROVIDED, HOWEVER, subject to
Article X, any stock certificates representing Shares awarded in respect of, and
prior to, the one-year period beginning on the first November 1 after the date
of grant of a Stock Award shall not be transferred to the Non-Employee Director
until immediately after the first annual meeting of stockholders held after the
date of grant of the award of Shares and (x) an amount equal to the amount of
dividends that would otherwise be paid on such Shares on or after the date of
the meeting at which such Shares are granted and prior to such annual meeting of
stockholders shall be held by the Corporation until immediately after such
annual meeting of stockholders and (y) such Shares and dividend equivalents
shall be forfeited in the event the Non-Employee Director is not elected a
director of the Corporation at such annual meeting of stockholders.
ARTICLE X -- CHANGE OF CONTROL
10.1 EFFECT OF CHANGE OF CONTROL. Upon the occurrence of an event of "Change
of Control", as defined below, any and all outstanding Options shall become
immediately vested and exercisable and any and all stock certificates
representing Shares awarded to a Non-Employee Director pursuant to the first
sentence of Section 9.1 and not transferred to such Non-Employee Director
pursuant to Section 9.3, and any and all dividend equivalents with respect
thereto held by the Corporation pursuant to Section 9.3, shall be transferred to
such Non-Employee Director.
10.2 DEFINITION OF CHANGE OF CONTROL. A "Change of Control" shall occur when:
(a) a "Person" (which term, when used in this Section 10.2, shall have the
meaning it has when it is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), but shall not
include the Corporation, any trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation, or any
corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of
Voting Stock (as defined below) of the Corporation) is or becomes,
without the prior consent of a majority of the Continuing Directors of
the Corporation (as defined below), the Beneficial Owner (as defined in
Rule 13d-3 promulgated under the Exchange Act), directly or indirectly,
of Voting Stock (as defined below) representing twenty percent or more of
the combined voting power of the Corporation's then outstanding
securities; or
(b) the stockholders of the Corporation approve a definitive agreement or
plan to merge or consolidate the Corporation with or into another
corporation (other than a merger or consolidation which would result in
the Voting Stock (as defined below) of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty
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percent of the combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately after such
merger of consolidation), or to sell, or otherwise dispose of, all or
substantially all of the Corporation's property and assets, or to
liquidate the Corporation; or
(c) the individuals who are Continuing Directors of the Corporation (as
defined below) cease for any reason to constitute at least a majority of
the Board of the Corporation.
The term "Continuing Director" means (i) any member of the Board who is a
member of the Board on August 26, 1999 or (ii) any person who subsequently
becomes a member of the Board whose nomination for election or election to the
Board is recommended or approved by a majority of the Continuing Directors. The
term "Voting Stock" means all capital stock of the Corporation which by its
terms may be voted on all matters submitted to stockholders of the Corporation
generally.
ARTICLE XI -- AMENDMENT AND TERMINATION
The Board may amend the Plan from time to time or terminate the Plan at any
time; PROVIDED, HOWEVER, that no action authorized by this Article shall
adversely change the terms and conditions of an outstanding Award without the
Non-Employee Director's consent.
ARTICLE XII -- ADJUSTMENT PROVISIONS
12.1 If the Corporation shall at any time change the number of issued Shares
without new consideration to the Corporation (such as by stock dividend, stock
split, recapitalization, reorganization, exchange of shares, liquidation,
combination or other change in corporate structure affecting the Shares) or make
a distribution of cash or property which has a substantial impact on the value
of issued Shares, the total number of Shares reserved for issuance under the
Plan shall be appropriately adjusted and the number of Shares covered by each
outstanding Option and the purchase price per Share under each outstanding
Option and the number of shares underlying Options to be issued annually
pursuant to Section 8.1 shall be adjusted so that the aggregate consideration
payable to the Corporation and the value of each such Option shall not be
changed.
12.2 Notwithstanding any other provision of the Plan, and without affecting
the number of Shares reserved or available hereunder, the Committee shall
authorize the issuance, continuation or assumption of outstanding Options or
provide for other equitable adjustments after changes in the Shares resulting
from any merger, consolidation, sale of assets, acquisition of property or
stock, recapitalization, reorganization or similar occurrence in which the
Corporation is the continuing or surviving corporation, upon such terms and
conditions as it may deem necessary to preserve the rights of Optionees and
holders of Shares that are subject to any restrictions under the Plan.
12.3 In the case of any sale of assets, merger, consolidation or combination
of the Corporation with or into another corporation other than a transaction in
which the Corporation is the continuing or surviving corporation and which does
not result in the outstanding Shares being converted into or exchanged for
different securities, cash or other property, or any combination thereof (an
"Acquisition"), any Optionee who holds an outstanding Option shall have the
right (subject to the provisions of the Plan and any limitation applicable to
the Option) thereafter and during the term of the Option, to receive upon
exercise thereof the Acquisition Consideration (as defined below) receivable
upon the Acquisition by a holder of the number of Shares which would have been
obtained upon exercise of the Option or portion thereof, as the case may be,
immediately prior to the Acquisition. The term "Acquisition Consideration" shall
mean the kind and amount of Shares of the surviving or new corporation, cash,
securities, evidence of indebtedness, other property or any
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<PAGE>
combination thereof receivable in respect of one Share of the Corporation upon
consummation of an Acquisition.
ARTICLE XIII -- FOREIGN DIRECTORS
Without amending the Plan, Awards granted to Non-Employee Directors who are
foreign nationals may have such terms and conditions different from those
specified in the Plan as may, in the judgment of the Committee, be necessary or
desirable to foster and promote achievement of the purposes of the Plan and, in
furtherance of such purposes, the Committee may make such modifications,
amendments, procedures, subplans and the like as may be necessary or advisable
to comply with provisions of laws in other countries or jurisdictions in which
the Corporation or its subsidiaries operate or have Non-Employee Directors.
ARTICLE XIV -- EFFECTIVE DATE AND TERM OF PLAN
The Plan shall be submitted to the stockholders of the Corporation for
approval and, if approved by a majority of all the votes cast at the 1999 annual
meeting of stockholders, shall become effective as of the date of approval by
the Board. If stockholder approval is not obtained at the 1999 annual meeting of
stockholders, the Plan shall be nullified. The Plan shall terminate on August
26, 2009, unless terminated earlier by the Board.
As adopted by the Board on August 26, 1999.
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<PAGE>
[LOGO]
Sara Lee Corporation
Three First National
Plaza
Chicago, Illinois
60602-4260
[MAP]
DIRECTIONS TO MCCORMICK PLACE AND THE ARIE CROWN THEATER
McCormick Place and the Arie Crown Theater are located at 23rd St. and Lake
Shore Drive.
FROM THE NORTH:
From the North, take Interstate 94 (the Edens) to the Kennedy Expressway (I-90)
to the Dan Ryan Expressway (I-94). Continue east on the Dan Ryan Expressway
keeping to the right and exit north on the Stevenson Expressway (I-55) to Lake
Shore Drive south. Exit on 31st Street. Turn right and follow the parking signs.
FROM THE NORTHWEST:
From the Northwest or O'Hare Airport, take the Northwest Tollway (I-90) to the
Kennedy/Dan Ryan Expressway (I-94) to the Stevenson North (I-55) to Lake Shore
Drive south and exit on 31st Street. Turn right and follow the parking signs.
FROM THE SOUTH:
From Indiana via the Skyway, take the Indiana Tollway (I-90) to the Chicago
Skyway to the local traffic lanes of the Dan Ryan Expressway (I-94) west to the
Stevenson Expressway (I-55) north to Lake Shore Drive south and exit on 31st
Street. Turn right and follow the parking signs.
From Indiana or the South via I-80/94, take I-80/94 to the Bishop Ford
Expressway to the Dan Ryan Expressway (I-94) west to the Stevenson Expressway
(I-55) north to Lake Shore Drive south and exit on 31st Street. Turn right and
follow the parking signs.
FROM THE WEST:
From the West, take the Eisenhower Expressway (I-290) east to the Dan Ryan
Expressway (I-94) east. Keep to the right and follow signs to the Stevenson
Expressway (I-55) north to Lake Shore Drive south and exit on 31st Street. Turn
right and follow the parking signs.
<PAGE>
SARA LEE CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, OCTOBER 28, 1999
THE UNDERSIGNED HOLDER OF COMMON STOCK OR EMPLOYEE STOCK OWNERSHIP PLAN
CONVERTIBLE PREFERRED STOCK OF SARA LEE CORPORATION, A MARYLAND CORPORATION
(THE "COMPANY"), HEREBY APPOINTS JOHN H. BRYAN, JUDITH A. SPRIESER AND
RODERICK A. PALMORE, OR ANY OF THEM, AS PROXIES FOR THE UNDERSIGNED, WITH
FULL POWER OF SUBSTITUTION IN EACH OF THEM, TO ATTEND THE ANNUAL MEETING OF
THE STOCKHOLDERS OF THE COMPANY TO BE HELD AT THE ARIE CROWN THEATER AT
MCCORMICK PLACE, 2301 SOUTH LAKE SHORE DRIVE, CHICAGO, ILLINOIS, ON OCTOBER
28, 1999, AT 10:00 A.M., CHICAGO TIME, AND ANY POSTPONEMENT OR ADJOURNMENT
THEREOF, TO CAST ON BEHALF OF THE UNDERSIGNED ALL VOTES THAT THE UNDERSIGNED
IS ENTITLED TO CAST AT SUCH MEETING AND OTHERWISE TO REPRESENT THE
UNDERSIGNED AT THE MEETING WITH ALL POWERS POSSESSED BY THE UNDERSIGNED IF
PERSONALLY PRESENT AT 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. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS
INSTRUCTED. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION IS GIVEN, THE VOTES
ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR" EACH OF THE
NOMINEES FOR DIRECTOR AND "FOR" EACH OF THE OTHER PROPOSALS SET FORTH ON THE
REVERSE SIDE HEREOF AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
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<PAGE>
SARA LEE CORPORATION
PLEASE MARK YOUR VOTE IN ONE OF THE OVALS FOR EACH PROPOSAL IN THE FOLLOWING
MANNER USING DARK INK ONLY: /X/
For Withheld For All Except
All As to All as noted
/ / / / / /
1. Election of Directors
01-P. Allaire 02-F. Andriessen 03-J. Bryan
04-D. Burnham 05-C. Coker 06-J. Crown
07-W. Davis 08-V. Jordan, Jr. 09-J. Ketelsen
10-H. van Liemt 11-J. Manley 12-C. McMillan
13-F. Meysman 14-R. Ridgway 15-J. Sprieser
16-R. Thomas 17-J. Zeglis
To withhold as to less than all nominees, strike through the names of one or
more nominees.
For Against Abstain
/ / / / / /
2. Approval of the 1999 Non-Employee Director Stock Plan.
For Against Abstain
/ / / / / /
3. Ratification of the appointment of Arthur Andersen LLP as independent
public accountants for the fiscal year ending July 1, 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
The Proxy holder may vote and otherwise represent the undersigned on any
other matter which may properly come before the meeting or any adjournment or
postponement thereof in the discretion of the Proxy holder.
Each of the foregoing proposals is more fully described in the accompanying
proxy statement.
Dated , 1999
------------------------------------------------------------------
- -----------------------------------------------------------------------
Signature(s)
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,
executor, administrator, attorney, trustee or guardian, or in any other legal
capacity, please give your full title(s) under signature(s).
- -----------------------------------------------------------------------
Detach Proxy Card Here
CONTROL NUMBER
VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY * 7 DAYS A WEEK
SARA LEE CORPORATION encourages you to take advantage of convenient ways to
vote your shares. If voting by proxy, you may vote by mail, or choose one of
the two methods described below. Your telephone or Internet vote authorizes
the named proxies to vote your shares in the same manner as if you marked,
signed, and returned your proxy card. To vote by telephone or Internet, read
the accompanying proxy statement and then follow these easy steps:
TO VOTE BY PHONE
Call toll free 1-888-426-7034 any time on a touch tone telephone. There is NO
CHARGE to you for the call.
Enter your 6-digit CONTROL NUMBER located above.
Option #1: To vote as the Board of Directors recommends on ALL proposals:
Press 1
When asked, please confirm your vote by pressing 1
Option #2: If you choose to vote on each proposal separately, press 0 and
follow the simple recorded instructions.
TO VOTE BY INTERNET
Go to the following website:
www.harrisbank.com/wproxy
Enter the information requested on your computer screen, including your
6-digit CONTROL NUMBER located above.
Follow the simple instructions on the screen.
IF YOU VOTE BY TELEPHONE OR THE INTERNET, DO NOT MAIL BACK THE PROXY CARD.
THANK YOU FOR VOTING!
