Conversion of CEO's RSU Grant



  
 Exhibit 10.5 
  
 SARA LEE CORPORATION 
  
 Conversion of CEO’s RSU Grant of 102,340 
 Shares for FY ‘05-’07 from Service-Based to Performance-Based 
  
 Concept: Convert CEO’s FY ‘05-’07 RSU grant from strictly service-based vesting (i.e., continued employment) to
service- and performance-based vesting tied to SLE’s 3-year total shareholder return vs. a selected peer group approved by the Compensation and Employee Benefits Committee. 
  
 Total Shareholder Return Defined: Sum total of stock price growth (or decline), plus reinvested dividends, divided by stock
price at start of period 
  

	 	•	Same calculation method used in stock performance graph in proxy statement 

  
 Measurement Period: July 1, 2004 to June 30, 2007 
  

	 	•	For July 1, 2004 base price, use average closing price for each trading day in June 2004 for SLE and for all peer companies 

  

	 	•	For June 30, 2007 ending price, use average closing price for each trading day in June 2007 for SLE and for all peer companies 

  
 Earnout Schedule: Continued employment and SLE’s relative TSR vs. peer
companies as follows: 
  

				
	 SLE Percentile Rank**

	  	% RSUs Earned**

	 
	 100%
	  	200	%
	 90
	  	160	 
	 80
	  	120	 
	 75
	  	100	 
	 70
	  	90	 
	 60
	  	70	 
	 50
	  	50	 
	 40
	  	30	 
	 30
	  	10	 
	 25 and below
	  	0	 



	**	Full interpolation between percentile points 

  

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 Termination Rules: 
  


			
	 For Employment Termination
 Before August
2007 CEBC
 Approval

	 	 Treatment of Unvested RSUs


		
	 1.      Voluntary quit or termination for cause
	 	Forfeit
		
	 2.      Retirement, death or total disability
	 	Continue to vest by performance; no pro-ration for active service
		
	 3.      Severance Separation
	 	Before 7/1/05 – forfeit; after 7/1/05 – pro-rata vest at end of cycle based on time worked and relative TSR as of 6/30/07

  
 Interim Earnout and
Lockup: At the end of each of the first two years (6/30/05 and 6/30/06), up to one-third of the shares could be earned out each year based on one-year and two-year relative total shareholder return on the same earnout schedule shown on
preceding page. 
  

	 	•	Interim earned shares remain subject to continued employment vesting through June 30, 2007 

  

	 	•	At the end of the three years, the earnout schedule will apply to the full target RSUs with earnout for the third year being total RSUs earned, less those already locked up in the
first two years 

  
 Example: Assume grant for 102,000
RSUs (34,000 per year tranche) 
  
 Year 1 (2005)

  

	 	•	Assume 1 year TSR at 75th %tile


  

	 	•	Mr. McMillan “vests” in 34,000 RSUs, which are still restricted and forfeitable for 2 more years, but are not subject to further performance risk


  
 Year 2 (2006) 
  

	 	•	Assume 2 year TSR at 60th %tile (70% earnout)


  

	 	•	Two-year earnout potential (68,000 shares) times 70% equals 47,600 RSUs earned, minus 34,000 RSUs earned for 2005 equals 13,600 additional RSUs earned; all earned shares now subject
to one-year vest 

  

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 Year 3 (2007 – good year) 
  

	 	•	Assume 3 year TSR at 80th %tile (120% earnout)


  

	 	•	Three-year earnout potential (102,000 shares) times 120% equals 122,400 RSUs earned, minus 47,600 RSUs earned for 2005/6 equals 74,800 additional RSUs earned; all shares earned are
now vested 

  
 Year 3 (2007 – poor year)

  

	 	•	Assume 3 year TSR at 40th %tile (30% earnout)


  

	 	•	Three-year earnout potential (102,000 shares) times 30% equals 30,600 shares which is less than RSUs already earned 

  

	 	•	Therefore, executive vests in no additional RSUs but gets to keep the 47,600 RSUs already earned, which are now vested 

  

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