Press Release

October 09, 2007
Contact: Clark McKinley/Pat Macht
Office of Public Affairs
(916) 795-3991

CalPERS Urges Sara Lee Shareowners To Support Proposal For Amending Company By-laws

SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) has asked approximately 2,500 major shareowners of Sara Lee Corporation to support a CalPERS resolution to give shareowners the right to amend company by-laws.

Shareowners will vote on the non-binding CalPERS resolution, Proposal 5, at the big food company’s annual meeting on October 25, 2007.

The resolution asks for a majority vote standard to amend the by-laws since a supermajority vote can be almost impossible to obtain because of abstentions and broker non-votes.

“As it stands now, the owners of Sara Lee have no way to influence the company’s practices through by-law amendments,” said Russell Read, CalPERS Chief Investment Officer. “Sara Lee is one of the relatively few U.S. companies that deny investors this important right to vote.”

The resolution says approximately 95 percent of other companies in the S&P 500 and Russell 1000 indexes allow shareowners to change by-laws, which typically contain such provisions as the ability to call a special meeting or remove directors, anti-takeover provisions; and director election rules.

“CalPERS is a significant long-term shareowner of Sara Lee, owning approximately 4.2 million shares and seeks your support on Proposal 5,” Christianna Wood, CalPERS Senior Investment Officer, Global Equity, said in a letter to shareowners. “Limiting shareowners’ ability to amend the by-laws has been found to be one of six entrenching mechanisms that are negatively correlated with company performance.”

On March 15, CalPERS named Sara Lee to its 2007 Focus List of underperforming companies. CalPERS cited the company for standing fast on the by-laws issue and supermajority voting requirements pertaining to business combinations, director removal, and shareowners’ ability to act by written consent.

For the three- and five-year year periods ending August 31, 2007, Sara Lee significantly underperformed both the S&P 500 and its Food Products S&P Industry Peer Group.  Performance returns through August showed that the Chicago area company trailed peers by 33.2 percent for the previous three years, and by 37.2 percent for the previous five years.

The CalPERS letter to Sara Lee shareowners can be found in the Press Room of the System’s Web site at www.calpers.ca.gov.

CalPERS is the nation’s largest public pension fund with assets totaling more than $250 billion. The System provides retirement and health benefits to approximately 1.5 million State and local public employees and their families.

Additional Resources
CalPERS Letter to Sara Lee Shareowners  (PDF, 41 KB)

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Dated: 10-17-2007