<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THE AMERICAN GREETINGS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing fee (Check the appropriate box)
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------
2) Aggregate number of securities to which 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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4) Proposed maximum aggregate value of transaction:
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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:
--------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------
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4) Date filed:
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<PAGE> 2
[AMERICAN GREETINGS CORPORATION LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 23, 1995
----------
The Annual Meeting of Shareholders of American Greetings Corporation (the
"Company") will be held at the Company's World Headquarters, One American Road,
Cleveland, Ohio, on Friday, June 23, 1995, at 2:30 P.M., Cleveland time, to
consider and act upon the following:
(1) Electing four directors;
(2) Approving the 1995 Director Stock Plan; and
(3) Transacting such other business as may properly come before the meeting or
any adjournments thereof.
The World Headquarters may be entered from the private road off Memphis
Avenue, or from American Road off Tiedeman Road. As you approach either the
private road or American Road, there will be signs directing you to the meeting
place.
Only shareholders of record at the close of business on May 1, 1995, are
entitled to notice of and to vote at the meeting and any adjournments thereof.
JON GROETZINGER, JR.
Secretary
May 12, 1995
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND RETURN YOUR PROXY
PROMPTLY. IF YOU ARE PRESENT AT THE MEETING, YOU MAY WITH-
DRAW YOUR PROXY AND VOTE YOUR SHARES PERSONALLY.
<PAGE> 3
GENERAL
The Board of Directors of American Greetings Corporation (the "Board") has
ordered solicitation of the enclosed proxy in connection with the Annual
Meeting of Shareholders (the "Annual Meeting") to be held on Friday, June 23,
1995, at 2:30 P.M., Cleveland time, to consider and act upon matters specified
in the Notice of Annual Meeting of Shareholders preceding this Proxy Statement.
The expense of soliciting proxies, including the costs of preparing,
assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by
the Company. Besides solicitation by mail, solicitations may be made by personal
interview, telephone and telegram by officers and other regular employees of
the Company. Brokerage houses, banks and other persons holding shares in
nominee names have been requested to forward solicitation materials to the
beneficial owners of shares held of record by such persons. The Company will
reimburse such persons for their reasonable expenses.
Shareholders have cumulative voting rights in the election of directors,
provided that a) any shareholder gives notice in writing to the Chairman,
President, a Senior Vice President or the Secretary of the Company, not less
than 48 hours before the time fixed for the holding of the meeting, that he or
she desires that the voting at such election be cumulative, and b) an
announcement of the giving of such notice is made upon the convening of the
meeting by the Chairman or the Secretary or by or on behalf of the shareholder
giving such notice. If cumulative voting is so invoked, a shareholder may
cumulate votes for the election of a nominee by casting a number of votes
equal to the number of directors to be elected multiplied by the number of
votes to which the shareholder's shares are entitled. The shareholder also may
distribute his or her votes between or among more than one nominee on the same
basis. Unless otherwise indicated by the shareholder, where cumulative voting
is invoked, the persons named in the enclosed proxy will vote, in their
discretion, for one or more of the nominees for whom authority was not withheld
and will cumulate votes so as to elect the maximum number of Board nominees.
If cumulative voting is not invoked at the Annual Meeting with respect to the
election of directors, the proxies will vote the number of shares on the proxy
card for only those Board nominees for whom authority has not been withheld.
Under Ohio law, unless the writing appointing a proxy otherwise provides, a
shareholder, without affecting any vote previously taken, may revoke his proxy
by a later proxy or by giving notice of revocation in writing or in an open
meeting. However, your presence at the meeting by itself will not operate to
revoke your proxy.
Under Ohio law and the Company's Amended Articles of Incorporation and
Regulations, if a quorum is present at the meeting, the nominees for election
as directors who receive the greatest number of votes cast for the election of
directors at the meeting by the shares present in person or by proxy and
entitled to vote will be elected directors. Proposal 2 must be approved by a
majority of the voting power of the Company's shares present in person or
represented by proxy at the Annual Meeting. The withholding of a vote with
respect to the election of any nominee for director or with respect to Proposal
2 will have the practical effect of a vote against that nominee or against
Proposal 2. A broker non-vote with respect to any share will not effect the
election of directors or passage of Proposal 2, since the share is not
considered present for voting purposes.
The mailing address of the Company's World Headquarters is One American Road,
Cleveland, Ohio 44144. Copies of this Proxy Statement and forms of proxy will
be first sent or given to shareholders on or about May 12, 1995.
VOTING SECURITIES AND RECORD DATE
As of May 1, 1995, there are outstanding, exclusive of Treasury shares, which
cannot be voted,
Class A Common Shares ("Class A Shares") entitled to one vote per
share and Class B Common Shares ("Class B Shares") entitled to ten votes
per share upon all matters presented to the shareholders. Holders of such
shares of record at the close of business on May 1, 1995, are the only
shareholders entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof.
1
<PAGE> 4
BOARD OF DIRECTORS
The Board of Directors met six times during the fiscal year ended February 28,
1995 ("FY 95"). In addition, the Board of Directors took action without a
meeting on three occasions pursuant to Section 1701.54 of the Ohio Revised Code
and the Regulations of the Company.
The Board of Directors has standing Executive, Audit, Nominating and
Compensation Committees.
The Executive Committee has the same power and authority as the Board between
meetings of the Board, except that it may not fill vacancies on the Board or on
Committees of the Board. The Executive Committee met four times during FY 95.
It also took action without a meeting thirteen times pursuant to Section
1701.63(D) of the Ohio Revised Code and the Regulations of the Company. Members
included Irving I. Stone (Chairman of the Committee), Edward Fruchtenbaum,
Albert B. Ratner, and Morry Weiss.
The Audit Committee is composed of directors who are not officers or
employees of the Company.* The Committee has general powers relating to
accounting, auditing and legal compliance matters. It recommends the selection
of and monitors the independence of the Company's independent auditors. It
reviews the audit plan, the results of the audit engagement and the activities
of the Company's internal audit staff. It considers the audit and non-audit
fees of the independent auditors and directs special investigations. It also
reviews and monitors the Company's various legal compliance programs. Members
included Scott S. Cowen (Chairman of the Committee), Jeanette S. Wagner and
Abraham Zaleznik. The Audit Committee met three times during FY 95.
The Nominating Committee is composed of directors who are not officers or
employees of the Company. The Committee makes recommendations to the Board
regarding the size and composition of the Board and qualifications for
membership. It recommends nominees to fill Board vacancies and new positions,
as well as a slate of Board nominees for annual election by the shareholders.
Members included Abraham Zaleznik (Chairman of the Committee), Albert B.
Ratner and Milton A. Wolf. The Committee did not meet during FY 95. The
Committee would be pleased to consider written suggestions forwarded by
shareholders to the Secretary of the Company concerning qualified candidates
for election as directors.
The Compensation Committee is composed of directors who are not officers or
employees of the Company. The Committee reviews the compensation packages
offered to the Company's officers generally and develops and administers the
compensation plans for the Chairman and Chief Executive Officer and the
President and Chief Operating Officer. The Committee also grants stock options
to certain officers and key employees pursuant to the Company's stock option
plans. Members included Albert B. Ratner and Harry H. Stone (Co-Chairmen of the
Committee), Scott S. Cowen, Dr. Herbert H. Jacobs, Jeanette S. Wagner and
Abraham Zaleznik. The Committee met once during FY 95 and took action without a
meeting twelve times during FY 95 pursuant to Section 1701.63(D) of the Ohio
Revised Code and the Regulations of the Company.
During FY 95 each director attended 75 percent or more of the aggregate of
the meetings of the Board and the respective Committees on which they serve.
*Harry H. Stone is not an officer or employee of the Company, but is the
brother of Irving I. Stone, Founder-Chairman.
2
<PAGE> 5
SECTION 16 COMPLIANCE
Under Section 16 of the Securities Exchange Act of 1934 ("Act"), the Company's
directors and executive officers are required to report their initial
appointment as directors or executive officers of the Company to the Securities
and Exchange Commission ("SEC") within ten days of their appointment. This
same group, along with holders of more than 10% of the Company's Common Shares,
are required to disclose in a timely fashion changes in their holdings of
Common Shares. To this end, the Company regularly reminds this group of their
reporting obligation and assists them in making the required disclosure once
the Company is notified that a reportable event has occurred. The Company is
required to disclose in this Proxy Statement any failure by members of these
groups to report within these time periods.
The grant of certain stock options under the Company's 1992 Stock Option Plan
were erroneously omitted from the Form 5 filing of Henry Lowenthal with respect
to the period ending February 28, 1994. A corrected Form 5 for Mr. Lowenthal
was filed with the SEC on April 13, 1995.
3
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors is comprised of three classes of directors,
each class having a three year term. Class III members are to be elected at the
June 23, 1995 Annual Meeting.
It is proposed that, in accordance with the Company's Regulations, the number
of Class III directors be fixed at four.
It is proposed that the shareholders elect the nominees named below, each of
whom is currently a director of the Company. The term of office to be served by
each nominee in Class III, if elected, will be three years, until the 1998
Annual Meeting, or until his successor is duly elected and qualified.
All Class III directors have agreed to stand for reelection.
The following is biographical information as of May 12, 1995, including
business experience during at least the past five years, with respect to each
nominee for election as a director and for the other six directors whose terms
will continue after the Annual Meeting.
NOMINEES FOR ELECTION TO TERM EXPIRING IN 1998
(Class III)
Scott S. Cowen (48)
Director (1989), Chairman of the Audit Committee, member of the
Compensation Committee
Dr. Cowen's principal occupation is Dean and Albert J. Weatherhead,
III Professor of Management, Weatherhead School of Management at Case
Western Reserve University. Dr. Cowen serves as a director of Premier
Industrial Corporation (an industrial distributor of electronic
components, fire fighting equipment and vehicle repair products);
FabriCenters of America, Inc. (a specialty store retailer); Forest City
Enterprises, Inc. (a conglomerate corporation engaged in real estate
development, sales, investment, construction and lumber wholesale);
LDI Corporation (computer leasing); and Society National Bank
(commercial and consumer banking services).
Edward Fruchtenbaum (47)
Director (1990), President and Chief Operating Officer, member of the
Executive Committee
Mr. Fruchtenbaum is President and Chief Operating Officer of the
Company, a position he has held since March 1, 1992.
From 1986 to January, 1990, Mr. Fruchtenbaum served as Vice President-
Marketing Administration, Group Vice President-Sales, Marketing and
Creative, and Senior Vice President-Marketing for the Company. From
January 1, 1990, until February 29, 1992, he served as President of the
U.S. Greeting Card Division of the Company.
Irving I. Stone (86)
Director (1944), Founder-Chairman, Chairman of the Executive Committee
Mr. Stone's principal occupation is Founder-Chairman of the Company and
Chairman of the Executive Committee. He also serves as a director of
Artistic Greetings Incorporated (specialty mail order) and Liberty
Mutual Insurance Company (a health and life insurance company).
Milton A. Wolf (70)
Director (1981), member of the Nominating Committee
Dr. Wolf served as U.S. Ambassador to Austria and received a Ph.D. in
Economics from Case Western Reserve University. His principal occupation
is President of Milton A. Wolf Investors (private investments) and
Chairman of Zehman-Wolf Management, Inc. (a property management
company). He serves as a director of Huntington Bancshares, Inc. (a
bank holding company) and is a trustee of Town and Country Trust (a
publicly held real estate investment trust).
4
<PAGE> 7
VOTE REQUIRED . The nominees who receive the greatest number of votes cast for
the election of directors at the Annual Meeting by the shares present in
person or by proxy and entitled to vote will be elected directors.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THIS PROPOSAL.
---
Proxies solicited by the Board of Directors will be so voted unless shareholders
specify to the contrary in their proxies or specifically withhold their vote
for particular nominees.
CONTINUING DIRECTORS WITH TERM EXPIRING IN 1996
(Class I)
Herbert H. Jacobs (72)
Director (1984), member of the Compensation Committee
Dr. Jacobs' principal occupation is the management of his private
investments. He is a real estate developer and a consultant to various
companies, including the Company.
Jeanette Sarkisian Wagner (65)
Director (1990), member of the Audit and Compensation Committees
Mrs. Wagner's principal occupation is President and Chief Executive
Officer of Estee Lauder International, Inc., the largest subsidiary of
Estee Lauder Inc. Mrs. Wagner's career at Estee Lauder has included
marketing and general management assignments domestically and
internationally. As President of Estee Lauder International, Inc., Mrs.
Wagner heads an organization that markets the Aramis, Clinique, Estee
Lauder, Origins and Prescriptives brands, and manages affiliate sales
operations in thirty-two countries, and over 50 distributors and
duty-free operations. She also serves as a director of Stride Rite
Corporation (manufacturer of footwear)
Morry Weiss (55)
Director (1971), Chairman and Chief Executive Officer, member of the
Executive Committee
Mr. Weiss' principal occupation is Chairman and Chief Executive Officer
of the Company. He also serves as a director of National City Bank -
Cleveland (bank/financial institution), National City Corporation
(holding company of National City Bank - Cleveland and other banks),
Syratech Corporation (a holding company for Wallace International, a
distributor of silver and stainless flatware and hollowware) and is a
member of the advisory board of Primus Venture Partners (equity
investor in companies requiring growth capital). He also serves as a
director of Artistic Greetings Incorporated (specialty mail
order).(2)(3)
CONTINUING DIRECTORS WITH TERM EXPIRING IN 1997
(Class II)
Albert B. Ratner (67)
Director (1979), Co-Chairman of the Compensation Committee, member of
the Executive and Nominating Committees
Mr. Ratner's principal occupation is Chief Executive Officer, Vice
Chairman and a director of Forest City Enterprises, Inc. (a
conglomerate corporation engaged in real estate development, sales,
investment, construction and lumber wholesale) and an officer of its
various subsidiary companies. (1)
5
<PAGE> 8
Harry H. Stone (77)
Director (1944), Co-Chairman of the Compensation Committee, member of
the Audit Committee
Mr. Stone's principal occupation is President of The Courtland Group,
Inc. (investments, property, and business development and
management).(2)
Abraham Zaleznik (71)
Director (1988), Chairman of the Nominating Committee, member of the
Audit and Compensation Committees
Dr. Zaleznik's principal occupation is Matsushita Professor of
Leadership Emeritus at the Harvard University Graduate School of
Business Administration. Dr. Zaleznik also performs consulting
services. He is a director of Ogden Corporation (various service
businesses), Timberland, Inc. (a manufacturer of shoes and various
apparel items), Le Chateau Stores, Ltd. (specialty retailing) and
TJX Co. (specialty retailing).
DIRECTOR EMERITUS
Frank E. Joseph (91)
Director Emeritus (1991); Director (1944-1991)
Mr. Joseph is retired, but has served as an advisor to various
corporations and foundations. Prior to retirement, he was a partner in
the law firm of Jones, Day, Reavis & Pogue.
- --------------
(1) The Company rents retail store space in various shopping centers
from Forest City Rental Properties Corporation (which is a
wholly-owned subsidiary of Forest City Enterprises, Inc.) and from
Albert B. Ratner's family.
(2) Irving I. Stone and Harry H. Stone are brothers. Irving I. Stone is
the father-in-law of Morry Weiss.
(3) The Company owns an interest of approximately 38% in Artistic
Greetings Incorporated.
6
<PAGE> 9
DIRECTORS' COMPENSATION Messrs. Cowen, Jacobs, Ratner, Wolf and Zaleznik and
Mrs. Wagner each received $30,000 for serving on the Board of Directors during
FY 95. Frank Joseph received $20,000 as Director Emeritus during FY 95. None of
Irving Stone, Morry Weiss, or Edward Fruchtenbaum received fees for serving on
the Company's Board of Directors during FY 95. In addition, Dr. Jacobs was paid
$150,729 during FY 95 for consulting services. The Company reimburses directors
for expenses incurred in connection with attendance at Board and committee
meetings.
EXECUTIVE OFFICERS' COMPENSATION
The following table shows, for each of the last three fiscal years, the
compensation of the Company's Chairman and Chief Executive Officer and its
other four most highly compensated executive officers who were serving as
executive officers at February 28, 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ---------------------------------------
AWARDS PAYOUTS
OTHER -------------------------- ----------
ANNUAL RESTRICTED SECURITIES LTIP ALL OTHER
NAME AND COMPEN- STOCK UNDERLYING PAYOUTS COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION AWARDS($) OPTIONS(8) ($) (1) SATION(2)
- ---------------------- ------ --------- --------- ---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Morry Weiss,
Chairman and
Chief Executive Officer 1995 $500,000 $470,000 $ 0 $ 0 0 $240,000 $25,750
1994 $500,000 $470,000 $ 0 $ 0 0 $360,000 $18,521
1993 $500,000 $470,000 $ 0 $ 0 18,000 $ 0 $17,973
Irving I. Stone,
Founder-Chairman
and
Chairman of the
Executive Committee 1995 $ 40,000 $228,136 $45,915(3) $ 0 0 $252,000 $ 0
1994 $ 40,000 $250,242 $45,091(3) $ 0 0 $378,000 $ 0
1993 $ 40,000 $210,000 $44,574(3) $ 0 18,000 $ 0 $ 0
Edward Fruchtenbaum,
President and Chief
Operating Officer 1995 $370,000(4) $168,000 $ 0 $ 0 0 $168,000 $20,560
1994 $370,000(4) $168,000 $ 0 $562,500 0 $252,000 $18,521
1993 $370,000(4) $168,000 $ 0 $240,000 18,000 $ 0 $17,973
Erwin Weiss,
Senior Vice President 1995 $252,979 $ 73,012 $ 0 $ 0 0 $ 73,605 $22,037
1994 $239,583 $ 89,289 $ 0 $ 0 0 $109,424 $18,521
1993 $193,750 $ 73,238 $ 0 $ 0 10,000 $ 0 $17,973
William Mason,
Senior Vice President 1995 $224,057 $112,541 $ 0 $ 0 0 $ 76,537 $21,283
1994 $204,188 $103,196 $ 0 $ 0 0 $104,960 $18,521
1993 $167,500 $ 70,350 $ 0 $ 0 10,000 $ 0 $17,973
<FN>
-------------------
(1) Represents payout of three year bonus tied to the Company's performance during FY 92, FY 93 and FY 94.
(2) Reflects the amounts contributed by the Company under the Retirement Profit Sharing and Savings Plan as well as
the Executive Deferred Compensation Plan.
(3) The Company purchases an insurance policy for Irving Stone that carries a $500,000 death benefit. Mr. Stone's
compensation has been increased to include the premium deduction and the resulting tax effect of that increase.
</TABLE>
7
<PAGE> 10
(4) Includes $20,000 per year representing forgiveness of a portion of
a loan from the Company to Mr. Fruchtenbaum, as more fully described
below in the section captioned "Certain Relationships and Related
Transactions".
(5) See discussion of restricted stock awards under Mr. Fruchtenbaum's
employment agreement in the Report of the Compensation Committee of the
Board of Directors on Executive Compensation under the heading "Long-
Term Equity-Based Incentive Compensation" on page 12. The value of all
restricted stock held by Mr. Fruchtenbaum at the end of FY 95 was
$851,875. The number of shares of restricted stock held by Mr.
Fruchtenbaum at the end of FY 95 was 29,000. Mr. Fruchtenbaum receives
dividends only with respect to the 11,000 restricted Class A Shares
that had vested as of the end of FY 95.
EMPLOYMENT AGREEMENTS. The Company has an employment agreement with each
executive officer named in the Summary Compensation Table on page 7 (other than
Messrs. Irving I. Stone and Morry Weiss). Mr. Fruchtenbaum's agreement,
initially dated May 18, 1992, provides for a three year term, which is renewed
on a rolling basis for subsequent three year terms. In FY 95, Mr. Fruchtenbaum
received an annual base salary of $350,000 and was eligible for the bonus
amounts more fully described in the Report of the Compensation Committee of the
Board of Directors on Executive Compensation under the heading "Executive Bonus
Plans" and restricted stock awards more fully described under the heading of
the Report entitled "Long-Term Equity-Based Incentive Compensation". Mr.
Fruchtenbaum's agreement provides that if he is involuntarily terminated, he is
entitled to his annual base salary at the time of such termination for three
years after such termination.
The agreements with Erwin Weiss and William Mason are dated July 1, 1984,
are for indefinite terms and contain certain confidentiality and
non-competition covenants on the part of the employees. Erwin Weiss' agreement
provides for minimum annual compensation of $60,000. William Mason's
agreement provides for minimum annual compensation of $68,682. Each of these
agreements provides that if the Company terminates the employee's employment,
the employee will continue to receive his salary at the time of such
termination for not less than three months nor greater than twelve months after
such termination. The number of months that such salary will continue to be
paid is determined on the basis of one-half month for each year of service. As
of the end of FY 95, Erwin Weiss was credited with 18 years of service and
William Mason was credited with 25 years of service with the Company.
DEFERRED COMPENSATION PROGRAM. The Company permits officers and senior
management to defer all or a stated amount or percentage of their compensation.
A participant in this program will be paid the deferred compensation within 30
days after the date on which the earliest of any of the following events occur,
as applicable: (i) expiration of the participant's deferral period, (ii) the
participant's separation from the Company, or (iii) an unforeseen emergency. In
addition, for FY 95 the Company contributed a restoration benefit to the
program to restore retirement benefits lost due to the limitations of Internal
Revenue Code Sections 401(a)(17), 401(k)(3) and 415.
INDEMNIFICATION. Section 1701.13(E) of the Ohio Revised Code authorizes the
indemnification of directors and officers in the defense of any civil,
criminal, administrative or investigative proceedings and the purchase of
insurance against any liability asserted against them in such capacity. The
Regulations of the Company (Article IV) provide for indemnification in terms
consistent with the statutory authority. The Company maintains insurance
covering certain liabilities of the directors and the elected and appointed
officers of the Company and its subsidiaries.
OPTION GRANTS. No options were granted to the executive officers named in the
Summary Compensation Table on page 7 during FY 95. The Company does not have a
stock appreciation rights plan.
8
<PAGE> 11
OPTION EXERCISES AND FISCAL YEAR-END VALUES. Shown below is information with
respect to exercised and unexercised options to purchase the Company's Class
A and Class B Common Shares granted to the named executive officers in FY 95
and prior years under the Company's various stock option plans approved by
shareholders and subject to applicable law:
<TABLE>
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END
OPTION VALUES
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL FISCAL
YEAR-END (#) YEAR-END ($)(1)
SHARES ----------------- -----------------
ACQUIRED ON VALUE EXERCISABLE (E) EXERCISABLE (E)
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- ---------------- ----------- ----------- ----------------- -----------------
<S> <C> <C> <C> <C>
Morry Weiss, 0 0 282,000(E) $5,939,156(E)
Chairman and 264,000(U) $5,756,894(U)
Chief Executive
Officer
Irving I. Stone, 0 0 27,000(E) $ 273,375(E)
Founder-Chairman 9,000(U) $ 91,125(U)
and
Chairman of the
Executive Committee
Edward Fruchtenbaum, 0 0 22,090(E) $ 239,510(E)
President and Chief 9,000(U) $ 91,125(U)
Operating Officer
Erwin Weiss, 0 0 32,300(E) $ 469,603(E)
Senior Vice President 6,500(U) $ 68,156(U)
William Mason, 0 0 16,500(E) $ 169,406(E)
Senior Vice President 6,500(U) $ 68,156(U)
<FN>
- ----------------
(1) Represents the difference between the option exercise price and the
closing price of the Company's Class A Common Shares as reported on the
NASDAQ National Market System on February 28, 1995 ($29.375) times the
corresponding number of shares.
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. A description of the Company's
Supplemental Executive Retirement Plan can be found in the Report of the
Compensation Committe of the Board of Directors on Executive Compensation under
the heading "Supplemental Executive Retirement Plan". At the end of FY 95, the
named executive officers qualified under the Plan included Morry Weiss, Edward
Fruchtenbaum, Erwin Weiss and William Mason. Irving I. Stone was not qualified
under the Plan. The total liability recorded by the Company under this Plan at
the end of FY 95 was $12,659,710. During FY 95, retired officers received
benefits under the Plan aggregating $617,631. Based upon estimates predicated
upon present compensation, at age 65 Morry Weiss will receive $143,584
annually, Edward Fruchtenbaum will receive $74,490 annually, Erwin Weiss will
receive $47,204 annually and William Mason will receive $49,393 annually.
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<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. Albert Ratner
serves as Co-Chairman of the Compensation Committee with Harry H. Stone who
is a former Executive Vice President of the Company. The Company rents retail
store space in various shopping centers from Forest City Rental Properties
Corporation (which is a wholly-owned subsidiary of Forest City Enterprises,
Inc., of which Albert Ratner is Chief Executive Officer, Vice Chairman and a
director) and from Albert Ratner's family, upon terms comparable to those that
would be generally available from unrelated parties. During FY 95, the Company
paid a total of $761,932.94 to Forest City Rental Properties Corporation for
retail store space.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors ("Committee")
establishes, reviews and administers compensation plans for the Chairman and
Chief Executive Officer and President and Chief Operating Officer. The
Committee consists entirely of directors who are not officers or employees of
the Company and who are not eligible to participate in any of the executive
compensation plans that the Committee reviews. Among other duties, it also
reviews the compensation programs for other executive and non-executive
officers of the Company established and administered by the Chairman and Chief
Executive Officer.
STATEMENT ON PHILOSOPHY OF EXECUTIVE COMPENSATION.
The Company's compensation philosophy reflects its belief that the
compensation of its executive and non-executive officers should (i) provide a
compensation program that motivates officers to achieve their strategic goals
by tying an officer's compensation to the performance of the Company and
applicable business units, as well as to individual performance, (ii) provide
compensation reasonably comparable to that offered by other leading companies
to their Chief Executive Officers and Chief Operating Officers so as to attract
and retain talented executives, and (iii) align the interests of its executives
with the long-term interests of the Company's shareholders through the award of
stock options and other stock-related programs. The Company's philosophy is to
pay its officers fairly, which may include offering certain executive officers
total annual compensation exceeding $1,000,000. The compensation packages
offered to the Chairman and Chief Executive Officer and to the President and
Chief Operating Officer, respectively, are based in large part on the
recommendations of the outside consulting firm hired by the Company in 1991,
but are also based on factors that are not easily measured, such as
leadership and strategic foresight. The consulting firm prepared a study based
on several third party executive compensation surveys conducted at different
times which reviewed the compensation of executives at companies with
revenues similar to the Company's (hereafter, the "Compensation Study"). The
group of companies reflected in the Compensation Study was not necessarily the
same group of peer companies set forth in the Performance Graph on page 15.
IMPLEMENTATION OF PHILOSOPHY.
The Company's executive compensation plans include base salary, one and three
year cash bonuses, a supplemental executive retirement plan, stock options and
restricted stock, and a retirement profit sharing plan.
10
<PAGE> 13
BASE SALARY.
Base salaries are established based upon the responsibilities and description
of a given position and a comparison of compensation levels of similar
positions in comparable companies gathered from compensation surveys and the
recommendations of outside compensation consulting firms. The Company's base
salaries for executives are generally slightly below the median of companies
with comparable revenues. Individual performance reviews are generally
conducted at least annually and are used in conjunction with the salary range
for a given position in determining if any increase in base salary is merited.
Such increases in FY 95 were based on the individual's performance as well as
increases described in third party compensation studies (other than the
Compensation Study referred to above), achievement of the Company's profit
goals and return on invested capital.
EXECUTIVE BONUS PLANS.
One Year Bonus - The Company has a one year bonus plan for officers and
certain key employees. Under the plan, the Board of Directors establishes goals
based on earnings targets set by the Board for the fiscal year as to the
Company as a whole and for each division and subsidiary. These goals are
considered confidential by the Company and are not included in this Report in
order to avoid compromising the Company's competitive position. It is the
Board's belief that such earnings targets are the best measure of the Company's
performance. One or more of the profit goals are then assigned each
participant as a target profit goal, based upon which the participant is
assigned a target bonus. In no instance may a participant's target bonus
exceed 48 percent of his base salary. If the participant's business unit
achieves the target goal or goals, he is paid a cash bonus equal to his target
bonus. If the performance is above the target profit goal by a percentage not
more than 10 percent, or below the target profit goal by a percentage not more
than 20 percent, the cash bonus is increased or decreased by a percentage equal
to twice the excess or shortfall. If the performance is less than 80 percent of
the target profit goal,the Company pays no bonus; if it is greater than 110
percent of the target profit goal, the bonus remains at 120 percent of the
target bonus. In FY 95, all of the executive officers named in the Summary
Compensation Table received all or substantially all of the target bonus for
which they were eligible. The Chief Executive Officer's bonus was equal to 48
percent of his annual base salary.
Executive Bonus Plan - The Company also has an executive bonus plan under
which certain officers selected by the Board of Directors, in its discretion,
may receive for each fiscal year a bonus computed by applying against their
basic salaries at the end of such year the percentage by which net profits of
the Company (before income taxes and certain charges) exceed $1,100,000. In FY
95, the Company had net profits of $148,792,000. During FY 95, Irving I. Stone
was the only participant in the Plan.
Three Year Bonus - The Company has a three year bonus plan for officers and
certain key employees. Under this plan a special cash bonus ("Special Bonus")
equal to the sum of 100% of the one year unadjusted bonus for three years
("Base Bonus") is payable if the profit goals established by the Board of
Directors for the three year bonus plan are achieved. If they are achieved in
only two of the three fiscal years, then the Special Bonus to be paid is 60% of
the Base Bonus and if achieved in only one fiscal year, the Company pays no
Special Bonus under the plan. The profit goals for FY 95, FY 96 and FY 97 were
established by the Board in January, 1994, and the new plan was actually
implemented at the start of FY 95.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.
The Supplemental Executive Retirement Plan provides that a participant in the
Plan who retires at age 65 with twenty (20) years of service with the Company
will receive up to 20 percent of final average compensation annually for
life. Final average compensation is defined as the average of the two highest
years of annual compensation during the officer's employment. Annual
compensation is defined as annual base compensation plus the bonus that would
have been paid under the Executive One Year Bonus Plan if the participant had
achieved 100% of his or her target profit goal. Under the Plan, a lesser
amount will be payable in the event of early retirement. Benefits are not
subject to any deduction
11
<PAGE> 14
for Social Security or other offset amounts. Benefits under the Plan will be
payable to the officer's beneficiary, in the event of death, until a total of
180 monthly payments have been made to both the officer and beneficiary.
LONG-TERM, EQUITY-BASED INCENTIVE COMPENSATION.
The Company's long-term equity-based incentive compensation programs consist
of stock options, stock in lieu of cash bonuses and restricted stock, thereby
tying executive compensation directly to shareholder return. An executive
benefits if the price of the Company's shares increases. In addition, since the
right to exercise options and rights in restricted stock vest over a four and
five year period, respectively, the program creates an incentive for an
executive to remain with the Company.
Under the stock option plan officers and key employees of the Company and
its subsidiaries are awarded stock options by the Compensation Committee of
the Board to purchase Class A or Class B Shares of the Company. The options
are granted at 100 percent of fair market value at the close of business on
the last business day preceding the date of grant and generally expire not
later than ten years (or ten years and three months in the case of certain
options for Class B Shares granted to Morry Weiss) from the date of grant. In
general, each option may be exercised to the extent of 25 percent of the number
of shares covered thereby one year after the date of grant and in a like number
after each of the ensuing three anniversary dates. Options granted to Morry
Weiss on January 25, 1988, are exercisable to the extent of ten percent of the
number of shares covered thereby one year after the date of grant and in a like
number after each of the ensuing nine anniversary dates. The number of share
options granted depends upon the level of the position and has generally been
consistent with the number of options previously granted with respect to the
position. The Company has no policy regarding annual option grants, but instead
grants options upon (i) the creation of a new stock option plan; (ii) the
hiring of a new key manager; or (iii) the promotion of an existing key manager.
The 1993 grant of options was in connection with the creation of the Company's
1992 Stock Option Plan.
Restricted stock grants have been awarded to the President and Chief
Operating Officer to retain him, incentivize his long-term performance and
further align his equity interests with those of other shareholders. The
number of annually granted shares is consistent with the Compensation Study.
COO RESTRICTED STOCK PLAN. Under this Plan, the COO was granted 5,000 of the
Company's Class A Shares on February 28, 1993, and an additional 10,000 of the
Company's Class A Shares on June 1, 1993. These two grants (collectively, the
"1993 Grant") became 9,000 and 20,000 shares respectively, as a result of the
Company's September 10, 1993 2-for-1 stock split. (One thousand shares of the
5,000 share grant vested prior to the stock split.) The 1993 Grant vests
pursuant to the terms of the COO's employment agreement with the Company based
on the Company's achievement of its profit goals. Dividends and voting rights
attach only to vested shares.
On February 29, 1996, and on each third anniversary (February 28th or 29th)
thereafter during the term of the COO's employment agreement with the Company,
the Company will grant the COO a block of 30,000 Class A or Class B shares,
which block will vest ratably (on an annualized basis) over a period of five
years (each grant, a "Three Year Grant"). Full vesting of each Three Year Grant
is depend- ent on whether the Company achieves its consolidated pre-tax profit
goal. For each year of the Three Year Grant period that the Company fails to
achieve its pre-tax profit goal (which is the same profit goal used to
calculate the Annual Bonus), 4,000 of the shares granted under the Three Year
Grant will lapse and therefore be unavailable to the COO.
The closing price of the Company's Class A Shares on the NASDAQ National
Market System on May 1, 1995, was $ . per share; there is no separate
public trading market for the Company's Class B Shares.
Mr. Fruchtenbaum's employment agreement is more fully discussed in the
section of this Proxy Statement captioned "Employment Agreements" on page 8.
12
<PAGE> 15
RETIREMENT PROFIT SHARING AND SAVINGS PLAN.
Under the Retirement Profit Sharing and Savings Plan in FY 95, the Company
contributed to a profit sharing trust eight percent of net profits (before
income taxes and certain income and expenses) of the Company and participating
subsidiaries. While the directors may authorize additional contributions, no
additional contribution was authorized for FY 95. The contribution is allocated
to the accounts of the participants upon the basis of their credited
compensation. Mr. Irving I. Stone is no longer participating under this Plan.
It is impossible to estimate the annual benefits that any participant may be
entitled to receive under the Plan upon retirement since the amount of such
benefits will depend upon a number of factors including, among other things,
future net profits, the future credited compensation of the participants and
the future net income of the trust fund. In addition, the Plan allows employees
to have contributions made on their behalf through reduction in their salaries
as permitted under Section 401(k) of the Internal Revenue Code. In FY 95, the
Company matched 25% of the first six percent of compensation deferred by an
employee (subject to IRS limitations), since the Company achieved at least 80%
of its profit goal. The Plan provides for a Company Stock fund, which is
invested in Common Shares of the Company, as well as the following mututal
funds: Vanguard Money Market Reserves Prime Portfolio, Vanguard/Wellington
Fund, Vanguard Index Trust-500 Portfolio, Vanguard/Primecap Fund, and the Bond
Index/IC Fund for the investment of all contributions under the Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION.
Morry Weiss has served as Chairman and Chief Executive Officer of the
Company since March 1, 1992. His compensation plan includes a base salary,
one and three year bonuses, stock options and additional annual incentive
compensation consisting of $230,000 in cash or the Company's Class A or Class
B Common Shares, at Mr. Weiss' election, awarded at the end of each fiscal
year in which the Company achieves its annual goal, as approved by the Board
near the start of each fiscal year. The Company's total annual profit goal for
FY 95 was achieved. The program has remained generally the same since it was
established by the Board in 1992, based on the Compensation Study. It can be
reviewed every three years, and the Compensation Committee and Board have been
reviewing the program for FY 96-98.
In fixing his base salary and target bonus levels, as well as in determining
the number of stock options granted to Mr. Weiss, the Committee and the Board
reviewed the performance of both the Company and Mr. Weiss, as well as the
Compensation Study. Based on the Compensation Study, Mr. Weiss' total
compensation in 1992 (the first full year which implemented the Compensation
Study recommendations) was below the median compensation of CEOs in the
Compensation Study.
Mr. Weiss received a base salary of $500,000 plus bonuses of $470,000 in FY
95. The Committee concluded that Mr. Weiss' outstanding performance warranted
his FY 95 compensation. The Company's FY 95 performance was record-setting.
Net sales, pre-tax income, net income and earnings per share were all at
historic highs. Before the cumulative effect of accounting changes, net sales
were up 5.6 percent over the prior year, pre-tax income increased 8.5 percent,
net income was up 13.7 percent and earnings per share stood at $2.00, up from
$1.77 a year ago.
IMPACT OF SECTION 162 OF THE INTERNAL REVENUE CODE.
The Revenue Reconciliation Act of 1993 amended Section 162 of the Internal
Revenue Code to eliminate the deductibility of certain compensation over
$1,000,000 paid to the chief executive officer and other named executive
officers. In 1994, the Company's shareholders approved compensation plans for
the Company's Chairman and Chief Executive Officer and President and Chief
Operating Officer, thereby allowing the Company to deduct for tax purposes
amounts in excess of $1,000,000 payable to each individual under those plans,
that are performance-based.
13
<PAGE> 16
SUMMARY.
The Committee will continue to review the Company's executive compensation
programs to assure that such programs are consistent with the objective of
increasing shareholder value.
Albert B. Ratner (Co-Chairman) Harry H. Stone (Co-Chairman)
Scott S. Cowen
Herbert H. Jacobs
Jeanette S. Wagner
Abraham Zaleznik
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph compares the yearly percentage change of the
cumulative total shareholder return on the Company's Class A Shares against the
cumulative total return of the S&P 500 Composite Index and the S&P
Miscellaneous Index for the five fiscal years ending February 28, 1995. The
Company believes that it cannot reasonably identify a published index or a
peer group of companies that are in a similar line of business. However, the
S&P Miscellaneous Index is a published index comprised of companies in lines of
business that are not readily identified with other published indices, that
includes American Greetings.
Shareholder returns assume $100 was invested in each of the Company's Class
A Shares, the S&P 500 Composite Index, and the S&P Miscellaneous Index at
February 28, 1990, and that all dividends were reinvested.
14
<PAGE> 17
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG AMERICAN GREETINGS CORPORATION, THE S&P 500 INDEX
AND THE S&P MISCELLANEOUS INDEX
AMERICAN
GREETINGS S&P S&P
CORP. 500 MISCELLANEOUS
<S> <C> <C> <C>
2/90 100 100 100
2/91 123 115 110
2/92 142 133 127
2/93 163 152 147
2/94 193 164 159
2/95 207 174 171
<FN>
(Fiscal years ended February 28/29)
AMERICAN GREETINGS CORP. S&P 500 S&P MISCELLANEOUS
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 1, 1990, the Company made a ten year loan of $200,000 to Edward
Fruchtenbaum, President and Chief Operating Officer of the Company, under a
Loan Agreement and Promissory Note, at ten percent (10%) simple interest per
annum based on the principal balance on March 1 during each year of the ten
year term. The Company agreed to forgive $20,000 of principal at the end of
each fiscal year during such term, beginning February 28, 1991. The Company
also agreed to forgive the entire remaining principal balance, plus accrued
interest, if and when Mr. Fruchtenbaum dies, becomes totally disabled, is
terminated either by the Company or as a result of a change in control of the
Company, or retires or terminates his employment as mutually agreed by the
Company and Mr. Fruchtenbaum. If he terminates his employment without the
Company's consent, Mr. Fruchtenbaum has promised to repay the then current
principal balance, plus accrued interest as of the beginning of the applicable
fiscal year. The principal balance as of March 1, 1995, was $100,000.
The Company has a consulting arrangement with Dr. Herbert H. Jacobs who
serves on the Company's Board of Directors. Dr. Jacobs performs consulting
services for the Company on a project-by-project basis, and invoices the
Company for his fees on a per diem basis. Dr. Jacob's consulting arrangement
does not provide for a fixed term of engagement.
The Company leases certain of its facilities related to its Magnivision
subsidiary from a company in which Magnivision's President, Morton Nyman, is a
principal. During FY 95, the Company paid a total of $100,023 in rent with
respect to these facilities.
15
<PAGE> 18
SECURITY OWNERSHIP OF MANAGEMENT
At the close of business on February 28, 1995, the non-employee directors, the
executive officers named in the Summary Compensation Table and the directors
and officers as a group beneficially owned and had sole voting and dispositive
power (except as otherwise indicated) of the Common Shares of the Company as
set forth in the following table:
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF CLASS
NAME TITLE OF CLASS OF BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------------ ---------------------- -------------------------------- ----------------
<S> <C> <C> <C>
NON-EMPLOYEE DIRECTORS
Scott S. Cowen Class A Common 800 ?
Class B Common - -
Herbert H. Jacobs Class A Common 200 ?
Class B Common - -
Albert B. Ratner Class A Common 20,040 0.03
Class B Common - -
Harry H. Stone Class A Common 962 ?
Class B Common 40,604 (1) 0.88
Jeanette S. Wagner Class A Common 200 ?
Class B Common - -
Milton A. Wolf Class A Common 6,800 0.01
Class B Common - -
Abraham B. Zaleznik Class A Common 400 ?
Class B Common - -
DIRECTOR EMERITUS
Frank E. Joseph Class A Common 30,320 0.04
Class B Common 40,500 0.88
EXECUTIVE OFFICERS
Irving I. Stone* Class A Common - -
Class B Common 2,003,964 (1)(2)(3) 43.30
Morry Weiss* Class A Common -(4) -
Class B Common 608,803 (1)(2)(4)(5) 13.15
Ed Fruchtenbaum* Class A Common 4,205 (2) ?
Class B Common -(2) -
Erwin Weiss Class A Common -(2) -
Class B Common 5,124 (2) 0.11
William Mason Class A Common 1,060 ?
Class B Common - -
All directors and officers Class A Common 96,578 (2)(4) 0.14
as a group (36 persons Class B Common 2,709,713 (2)(3)(4)(5)(6) 58.55
including the above)
<FN>
*Also serves as a director of the Company
? less than 0.01% of class outstanding
</TABLE>
16
<PAGE> 19
- --------------
(1) These shares are subject to a Shareholders' Agreement dated November 19,
1984, which provides that shareholders who are parties thereto will
offer Class B Shares to the other signatory shareholders and then to
the Company before transferring Class B Shares outside of a group
consisting of certain family members, family trusts, charities and the
Company. The Shareholders' Agreement terminates on December 31, 2014,
unless extended.
(2) Excludes the following shares for the following individuals, who under
Rule 13d-3 of the Securities Exchange Act are deemed to be the
beneficial owners of those shares by having the right to acquire
ownership thereof within 60 days pursuant to outstanding stock options:
<TABLE>
<S> <C> <C> <C>
Irving I. Stone Class B Shares 27,000 (0.58%)
Morry Weiss Class B Shares 282,000 (6.09%)
Edward Fruchtenbaum Class A Shares 4,090 ?
Class B Shares 18,000 (0.39%)
Erwin Weiss Class A Shares 17,300 (0.20%)
Class B Shares 15,000 (0.32%)
William R. Mason Class A Shares 1,500 ?
Class B Shares 15,000 (0.32%)
All Directors and Class A Shares 164,524 (0.24%)
officers as a group Class B Shares 439,590 (9.50%)
<FN>
(3) Excludes 200,000 Class B Shares (4.37%) held by the Irving I. Stone
Support Foundation.
(4) Excludes the following shares which under Rule 13d-3 of the Securities
Exchange Act are deemed to be beneficially owned: 2,958 Class A Common
Shares (less than 0.01%) and 8,693 Class B Shares (0.19%) held for the
benefit of certain officers, including 2,022 Class A Shares (less than
0.01%) and 5,942 Class B Shares (0.13%) held for the benefit of Morry
Weiss, as participants in the American Greetings Retirement Profit
Sharing and Savings Plan. Each officer has voting power with respect
to the shares allocated to his or her account, but such officers do not
have the dispositive power or right to acquire ownership of those
shares within 60 days.
(5) Excludes 170,580 Class B Shares (3.69%) owned by Mr. Weiss' wife and
children. Mrs. Weiss and the children are parties to the Shareholders'
Agreement. Mr. Weiss disclaims beneficial ownership of these shares.
(6) Certain of these shares are subject to the Shareholders' Agreement
discussed in note 1 above.
</TABLE>
17
<PAGE> 20
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table presents certain information regarding shareholders who
are known to the Company to be beneficial owners of more than 5% of any class of
the Company's voting securities as of the close of business on May 1, 1995.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF CLASS
NAME TITLE OF CLASS OF BENEFICIAL OWNERSHIP OUTSTANDING
- -------------------------- ----------------- ----------------------------- ---------------
<S> <C> <C> <C>
Irving I. Stone Class A Common - -
One American Road Class B Common 2,003,964 (1)(2)(3) 43.30
Cleveland, Ohio
Morry Weiss Class A Common -(4) -
One American Road Class B Common 616,501 (1)(2)(4)(5) 13.32
Cleveland, Ohio
American Greetings Class A Common 387,961 (6) 0.55
Retirement Profit Sharing Class B Common 1,140,350 (6) 24.64
and Savings Plan
Vanguard Fiduciary Trust Company
Vanguard Financial Center
300 Vanguard Boulevard
Malvern, PA
<FN>
- --------------------
(1) See footnote (2) to the table under "Security Ownership of Management".
(2) These shares are subject to a Shareholders' Agreement. See footnote (1) to
the table under "Security Ownership of Management" above. As a party to the
Shareholders' Agreement and a Trustee under Irving I. Stone's revocable trust,
Morry Weiss' wife, Judith S. Weiss, may be deemed to be a beneficial owner of
more than five percent of the Class B Shares. Similarly, as parties to the
Shareholders' Agreement, Harry H. Stone and each of Mr. Weiss' children (Gary,
Jeffrey, Zev and Elie) may be deemed to be a beneficial owner of more than five
percent of the Class B Shares.
(3) See footnote (3) to the table under "Security Ownership of Management".
(4) See footnote (4) to the table under "Security Ownership of Management".
(5) See footnote (5) to the table under "Security Ownership of Management".
(6) The American Greetings Retirement Profit Sharing and Savings Plan
currently holds these shares for the benefit of the Plan participants who have
elected to invest in Company Stock. These participants have voting power over
the shares allocated to their account. The Administrative Committee of the
Plan has the power to vote any shares not voted by the participants. The
Administrative Committee has dispositive power over plan shares. Plan shares
are held in custody by the Plan Trustee, Vanguard Fiduciary Trust Company -
Malvern, PA.
</TABLE>
18
<PAGE> 21
PROPOSAL NO. 2
APPROVAL OF 1995 DIRECTOR STOCK PLAN
On January 27, 1995, the Executive Committee of the Board of Directors adopted
the 1995 Director Stock Plan (hereafter, the "Plan"), subject to shareholder
ratification and approval at the next Annual Meeting. The following description
of the principal features of the Plan is qualified in its entirety by the
complete text of the Plan, which is set forth as an Appendix to this Proxy
Statement. Proposal No. 2 seeks the approval of the Company's shareholders for
the adoption of the Plan.
GENERALLY.
Only non-employee members of the Company's Board of Directors are eligible to
participate in the Plan, which is intended to afford these individuals
(hereafter, "Directors") the opportunity to share in the future appreciation
in the share value of the Company's stock and to further align their interests
with those of the Company's other shareholders. There are currently seven
current Directors eligible to participate in the Plan, which consists of two
parts: 1) stock options, and 2) payment of all or part of Director fees in the
form of Company stock in lieu of cash compensation.
OPTION GRANTS.
Under the Plan, each Director is granted 6000 options to purchase the Company's
Class A and/or Class B Common Shares ("Options"). The Options become
exercisable at the rate of 1000 Options per year, as long as the Director
remains a member of the Company's Board of Directors and the Plan remains in
effect. A Director has ten years to exercise an Option from the date of the
initial grant. The exercise price for each Option is $26.125, which is the
closing price for the Company's Class A Common Shares on January 27, 1995, the
date of the grants.
STOCK IN LIEU OF DIRECTOR FEES.
Each member of the Company's Board of Directors receives a fee for serving on
the Board. (See section titled "Directors' Compensation" on page 7.) Under the
Plan, a Director may elect to receive some or all of this fee in the form of
the Company's Class A and/or Class B Common Shares, subject to certain restric-
tions on the issuance of Class B Common Shares contained in the Company's
Articles of Incorporation and required by the National Association of
Securities Dealers' interpretation of Rule 19c-4 of the Securities Exchange Act
of 1934. For purposes of this payment, the Shares are valued at the closing
price of the Company's Class A Common Shares on the last trading day of the
prior calendar quarter.
FEDERAL INCOME TAX CONSEQUENCES.
The grant of an Option under the Plan is not a taxable event to a Director for
federal income tax purposes. The exercise of an Option under the Plan generally
will result in ordinary taxable income to a Director and a deduction to the
Company equal to the excess of the fair market value at exercise over the price
at which the Option was originally granted. The receipt of stock in lieu of
Director Fees by a Director is a taxable event to the Director, resulting in
ordinary income to the Director.
NEW PLAN BENEFITS(1)
1995 DIRECTOR STOCK PLAN
Name and Position Stock Option Awards(2)
- ----------------- ----------------------
Non-Employee Director Group 42,000
(Only non-employee members of the Company's Board of Directors are eligible to
participate in the Plan.)
- ----------------
(1)Assuming shareholder approval of Proposal No. 2.
(2)Because it cannot currently be determined what portion of Director Fees
each Director participating in the Plan may elect to receive in the form of
Company stock, only Options issuable under the Plan are listed.
19
<PAGE> 22
VOTE REQUIRED.
Unless instructed to abstain or to vote against Proposal No. 2, the persons
named in the accompanying form of proxy will vote the shares represented by
properly executed and delivered proxies in favor of Proposal No. 2. The
affirmative vote of a majority of the voting power of the shares present in
person or by proxy at the Annual Meeting (excluding abstentions) in connection
with Proposal No. 2 is required for adoption.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ADOPTION OF PROPOSAL 2
---
20
<PAGE> 23
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action, consistent with regulations of the Securities and Exchange Commission.
If a shareholder intends to present a proposal at next year's Annual Meeting,
it must be received by the Secretary of the Company (at One American Road,
Cleveland, Ohio 44144) no later than January 15, 1996, in order to be included
in the Company's Proxy Statement and form of proxy relating to that meeting.
AUDITORS
The firm of Ernst & Young and its predecessors have been the independent
auditors of the Company since its incorporation in 1944. The Company
contemplates no change. Representatives of Ernst & Young will be present at the
Annual Meeting and will have the opportunity to make a statement if they want
to do so. They will also be available to respond to appropriate questions.
OTHER BUSINESS
The management knows of no other matters to be acted upon at the meeting, but
if any such matters properly come before the meeting, it is intended that the
persons voting the proxies will vote them according to their best judgment.
By Order of the Board of Directors
JON GROETZINGER, JR.
Secretary
PLEASE EXECUTE AND RETURN THE
ENCLOSED PROXY PROMPTLY WHETHER
OR NOT YOU EXPECT TO ATTEND THE
ANNUAL MEETING OF SHAREHOLDERS.
21
<PAGE> 24
AMERICAN GREETINGS CORPORATION
1995 DIRECTOR STOCK PLAN
NAME AND GENERAL PURPOSE OF PLAN. The name of the plan is the American
Greetings Corporation 1995 Director Stock Plan ("Plan"). The purpose of the
Plan is to afford non-employee members of the Board of Directors of American
Greetings Corporation (the "Company") the opportunity to share in future
appreciation in the share value of the Company's stock, further aligning the
interests of these individuals with those of the other shareholders of the
Company to maximize return on shareholder investment. The possibility for
sharing in Company stock appreciation is designed to attract and retain supe-
rior Board members. The Plan consists of two components: (1) stock options,
and (2) payment of some or all of a Director's fees in Company stock, in lieu
of cash compensation.
1. OPTIONS ISSUABLE UNDER PLAN. The total number of underlying shares
reserved for issuance in connection with options granted pursuant to the Plan
shall not exceed 42,000 Class A Common Shares, par value $1 per share, and
42,000 Class B Common Shares, par value $1 per share, except to the extent of
adjustments authorized in paragraph 4 of this Plan. Such Class A Common Shares
may be treasury shares or authorized but unissued shares or a combination of
the foregoing. Such Class B Common Shares may be treasury shares or authorized
but unissued shares or a combination of the foregoing, subject to certain
restrictions on the issuance of the Company's Class B Common Shares contained
in the Company's Articles of Incorporation. To the extent that a stock option
expires or is otherwise terminated, cancelled or surrendered without being
exercised (including, without limitation, in connection with the grant of a
replacement option), the shares of stock underlying such stock option shall
again be available for issuance in connection with future grants under the
Plan.
2. OPTION GRANTS. The Executive Committee of the Company's Board of Directors
("Executive Committee") shall grant each non-employee member of the Board of
Directors ("Directors") options under the Plan ("Options") to buy from the
Company 6000 Class A and/or Class B Common Shares. These Options shall become
exercisable at the rate of 1000 Options per year, as long as such Director
remains a member of the Board of Directors and the Plan remains in effect.
Successive options may be granted to the same person, whether or not the Option
or Options previously granted to such person remain unexercised.
3. OPTION PRICE. The option price shall be $26.125, which is the price of the
Class A Common Shares quoted by the National Association of Securities Dealers
at the close of business on January 27, 1995, the date that the Options were
granted. The option price shall be payable in whole or in part, in cash,
Class A and/or Class B Common Shares of the Company valued at the price for
Class A Common Shares at the close of business on the date of exercise, to the
extent permitted by all applicable laws and regulations so long as the
Executive Committee does not determine that the application of any Financial
Accounting Standard Board rule affecting the tender of shares would be
detrimental to the best interests of the Company.
4. ADJUSTMENTS. The Executive Committee shall provide for such adjustments in
the option price and in the number or kind of shares or other securities
covered by outstanding options as is equitably required to prevent dilution or
enlargement of the rights of Directors that would otherwise result from (a) any
stock dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company, (b) any merger, consolidation,
separation, reorganization or partial or complete liquidation, or in the event
of any such transaction or event having an effect similar to any of the
foregoing.
5. EXERCISE. No Option granted under the Plan shall run for more than ten
(10) years from the date granted. No Option shall be transferable by the
Director otherwise than by will and the laws of descent and distribution.
Directors may exercise their Options upon receipt by the Company of such forms
as the Company may require in advance of exercise and the required payment. A
stock certificate may be issued as soon as practical after exercise and
payment. An Option is exercisable during a Director's lifetime only by the
Director, except that, in case of incompetence or disability of a Director, an
Option may be exercised on behalf of the Director by his or her guardian or
legal representative. If, following an Option exercise, the Director sells the
shares underlying the Option, the Director will receive the
A-1
<PAGE> 25
amount by which the sale price exceeds the exercise price for such shares,
after deducting applicable taxes and brokerage fees, but not interest that
might otherwise be paid on an advance of monies to the Director between the
exercise and settlement dates.
6. STOCK OPTION AGREEMENT; CANCELLATION. The granting of Options under the
Plan shall be evidenced by a stock option agreement in the form attached
hereto ("Stock Option Agreement"). Such Stock Option Agreement may, with the
concurrence of the affected Director, be amended by the Executive Committee,
provided the terms of each such agreement are not inconsistent with the Plan.
The Executive Committee may, with the concurrence of the affected Director,
cancel any Option granted under the Plan. In the event of any such
cancellation, the Executive Committee may authorize the granting of new Options
under the Plan in such manner, at such price and subject to similar terms,
conditions as would have been applicable had the cancelled Options not been
granted. The Plan provides for the automatic grant to the Director of
additional Options ("Reload Options") upon the exercise of Options through the
delivery of any class of Common Shares as set forth in the Stock Option
Agreement; provided, however, that the provisions of the Stock Option Agreement
relating to Reload Options may not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code of 1986, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
securities laws and the rules thereunder.
7. STOCK IN LIEU OF DIRECTORS' FEES. The Plan allows each Director, at such
Director's election (communicated in writing by the Director to the Executive
Committee prior to the start of each fiscal year), to receive Class A and/or
Class B Common Shares of the Company in an amount equal to (and in lieu of) all
or part of the annual fee paid by the Company to such Director as compensation
for serving on the Company's Board of Directors. For purposes of the foregoing
described calculation, the Company's Shares are valued at the closing price
quoted by the National Association of Securities Dealers on the last trading
day of the prior calendar quarter. Any fractional shares shall be paid as
cash.
8. ADMINISTRATION. This Plan shall be administered by the Executive Committee
which shall consist of not less than three members of the Company's Board of
Directors who are disinterested persons and who are empowered by the Board of
Directors to exercise all authority otherwise possessed by the Board with
respect to the Company's stock option plans ("Executive Committee"). The Board
may also appoint one or more of its disinterested Directors as alternate
members of the Executive Committee. A majority of the Executive Committee
shall constitute a quorum, and the action of a majority of the members
(including alternate members) of the Executive Committee present at any meeting
at which a quorum is present, or the unanimous written action of the Executive
Committee, shall be considered the action of the Executive Committee.
9. PLAN AMENDMENT; TERMINATION. This Plan is subject to initial approval by
the Company's shareholders, but may be terminated or amended thereafter from
time to time by the Executive Committee. However, no such amendment by the
Executive Committee shall (a) increase the number of Class A Common Shares or
Class B Common Shares that may be issued under this Plan, except adjustments
authorized under paragraph 4, (b) change the designation in paragraph 2 of the
individuals eligible to receive Options, or (c) cause Rule 16b-3 of the
Securities and Exchange Commission (or any successor rule to the same effect)
to cease to be applicable to this Plan without further approval by the
shareholders of the Company. In addition, no outstanding Options may be
cancelled without the prior consent of the affected Director.
10. GOVERNING RULES. This Plan is intended to comply with and be subject to
Rule 16b-3 as in effect prior to May 1, 1991. The Executive Committee may at
any time elect that this Plan shall be subject to Rule 16b-3 as in effect on or
after May 1, 1991.
A-2
<PAGE> 26
[AMERICAN GREETINGS CORPORATION LOGO]
American Greetings Corporation
One American Road
Cleveland, Ohio
44144
[RECYCLING LOGO]
Recycled Paper
<PAGE> 27
X
Please mark your
votes as in this
example.
SHARES IN YOUR NAME REINVESTMENT SHARES
FOR WITHHELD
FOR AGAINST ABSTAIN
Change
of
Address
Attend
Meeting
1. Election of
Directors
For, except vote withheld from the following nominee(s):
2. Approval
of 1995
Director
Stock Plan
SIGNATURE(S) DATE
SIGNATURE)S) DATE
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
PCLASS A
R
O
X
Y
AMERICAN GREETINGS CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for the June 23, 1995 Annual Meeting.
The undersigned hereby constitutes and appoints Irving I. Stone and Morry
Weiss, and each of them, his or her true and lawful agents and proxies with
full power of substitution in each, to represent the undersigned at the Annual
Meeting of Shareholders of American Greetings Corporation to be held at the
Company's World Headquarters located at One American Road, Cleveland, Ohio, at
2:30 p.m., Cleveland time, on Friday, June 23, 1995, and at any adjournments
thereof, on all matters coming before said meeting. Election of Directors,
Nominees: Scott S. Cowen, Edward Fruchtenbaum, Irving I. Stone and Milton A.
Wolf, to a three year term expiring on the date of the 1998 Annual Meeting or
until their respective successors are duly elected and qualified. (change of
address) (If you have a written change in the above space, please mark the
corresponding box on the reverse side of this card.) You are encouraged to
specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but
you need not mark any boxes if you wish to vote in accordance with the Board of
Directors' recommendations. The Proxies cannot vote your shares unless you sign
and return this card. SEE REVERSE SIDE
PCLASS B
R
O
X
Y
AMERICAN GREETINGS CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for the June 23, 1995 Annual Meeting.
The undersigned hereby constitutes and appoints Irving I. Stone and Morry
Weiss, and each of them, his or her true and lawful agents and proxies with
full power of substitution in each, to represent the undersigned at the Annual
Meeting of Shareholders of American Greetings Corporation to be held at the
Company's World Headquarters located at One American Road, Cleveland, Ohio, at
2:30 p.m., Cleveland time, on Friday, June 23, 1995, and at any adjournments
thereof, on all matters coming before said meeting. Election of Directors,
Nominees: Scott S. Cowen, Edward Fruchtenbaum, Irving I. Stone and Milton A.
Wolf, to a three year term expiring on the date of the 1998 Annual Meeting or
until their respective successors are duly elected and qualified. (change of
address) (If you have a written change in the above space, please mark the
corresponding box on the reverse side of this card.) You are encouraged to
specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but
you need not mark any boxes if you wish to vote in accordance with the Board of
Directors' recommendations. The Proxies cannot vote your shares unless you sign
and return this card. SEE REVERSE SIDE
