<PAGE> 1
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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
AMERICAN GREETINGS CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: .......
(2) Aggregate number of securities to which transaction applies: ..........
(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): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] 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.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
[logo] American Greetings says it best
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 1999
--------------
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 25, 1999, at 2:30 P.M., Cleveland time, to
consider and act upon the following:
(1) Electing three directors;
(2) 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 April 29, 1999, are
entitled to notice of and to vote at the meeting and any adjournments thereof.
JON GROETZINGER, JR.
Secretary
May 17, 1999
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND RETURN YOUR PROXY
CARD PROMPTLY. IF YOU ARE PRESENT AT THE MEETING, YOU MAY
WITHDRAW YOU PROXY AND VOTE YOUR SHARES PERSONALLY.
<PAGE> 3
PROXY STATEMENT
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 25, 1999, 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 facsimile 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 two or more nominees 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 nominees proposed by the Board. 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 or her
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.
The withholding of a vote with respect to the election of any nominee for
director will have the practical effect of a vote against that nominee. If a
quorum exists, a broker non-vote with respect to any share will not affect the
election of directors since such share is not considered present for the purpose
of electing directors.
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 17, 1999.
VOTING SECURITIES AND RECORD DATE
As of April 29, 1999, there are outstanding, exclusive of treasury shares
which cannot be voted, 62,725,028 Class A Common Shares ("Class A Common
Shares") entitled to one vote per share and 4,674,894 Class B Common Shares
("Class B Common Shares") entitled to ten votes per share upon all matters
presented to the shareholders. Holders of record of such shares at the close of
business on April 29, 1999, are the only shareholders entitled to notice of and
to vote at the Annual Meeting and any adjournments thereof.
BOARD OF DIRECTORS
We regret to report that in accordance with the Board's Director Retirement
Guidelines, Dr. Herbert H. Jacobs will not be a nominee for re-election to the
Company's Board. Herb has served on the Board with distinction since 1984. We
will miss his experience in the greeting card industry and his "renaissance"
abilities ranging from computer engineering to international joint ventures. We
wish his wife Blanche and him well in the future.
The Board met six times during the fiscal year ended February 28, 1999 ("FY
99"). In addition, the Board took action without a meeting three times pursuant
to Section 1701.54 of the Ohio Revised Code and the Regulations of the Company.
The Board has standing Executive, Audit, Nominating and Compensation
Committees.
1
<PAGE> 4
EXECUTIVE COMMITTEE
Irving I. Stone (Chairman) Albert B. Ratner
Edward Fruchtenbaum Morry Weiss
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 five times
during FY 99. It also took action without a meeting seven times pursuant to
Section 1701.63(D) of the Ohio Revised Code and the Regulations of the Company.
AUDIT COMMITTEE
Scott S. Cowen (Chairman) Harriet Mouchly-Weiss
James C. Spira
The Audit Committee is composed solely 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. The Audit
Committee met three times during FY 99.
NOMINATING COMMITTEE
Herbert H. Jacobs (Chairman) Albert B. Ratner
Harry H. Stone
The Nominating Committee is composed solely 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. The
Committee met once during FY 99. 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.
COMPENSATION COMMITTEE
Scott S. Cowen (Acting Chairman)
Harriet Mouchly-Weiss
The Compensation Committee is composed solely 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 and other forms of equity compensation to officers and certain key
employees pursuant to the Company's stock plans. The Committee met once during
FY 99 and took action without a meeting fifteen times during FY 99 pursuant to
Section 1701.63(D) of the Ohio Revised Code and the Regulations of the Company.
During FY 99 each director attended 75% or more of the aggregate number of
meetings of the Board and the respective Committees on which he or she serves.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Securities Exchange Act of 1934 ("Securities
Exchange 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 ten percent
of the Company's Common Shares, are required to disclose in a timely fashion any
transactions in the Company's Common Shares. To this end, the Company
periodically reminds these persons of their reporting obligations and assists
each of them in making the required disclosures 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 make timely
Section 16(a) reports. There were no known failures to so report in FY 99.
- --------------
* 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
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors comprises three classes of directors, each
class having a three year term. Class I members are to be elected at the June
25, 1999 Annual Meeting.
It is proposed that in accordance with the Company's Regulations the number
of Class I Directors be fixed at four.
It is proposed that the shareholders elect the following nominees: Stephen
R. Hardis, James C. Spira and Morry Weiss. The term of office to be served by
each nominee in Class I, if elected, will be three years, until the 2002 Annual
Meeting, or until his or her successor is duly elected and qualified.
All nominees for Class I directors have agreed to stand for election or
re-election, as the case may be.
The following is biographical information as of April 29, 1999, 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 2002
(Class I)
STEPHEN R. HARDIS (63)
Director (1999)
Mr. Hardis' principal occupation is Chairman and Chief Executive Officer of
Eaton Corporation, (manufacturer of highly engineered products that serve
industrial, vehicle, construction, commercial and semiconductor markets). Before
joining Eaton in 1979, Mr. Hardis served as Executive Vice President of Finance
and Planning for Sybron Corporation (health equipment supplies & services) and
prior to that he was associated with General Dynamics Corporation (industrial
aerospace manufacturer). Mr. Hardis is a member of the boards of KeyCorp
(holding company for Key Bank), Lexmark International Corporation (a spin-off of
IBM's printer business), Nordson Corporation (industrial painting system
manufacturer) and Progressive Corporation (holding company of Progressive
Insurance Company and other companies). He also serves as a director of the
Cleveland Clinic Foundation (hospital) and is a trustee of the Musical Arts
Association (Cleveland Orchestra), Leadership Cleveland, Playhouse Square
Foundation, Greater Cleveland Roundtable and Cleveland Tomorrow (non-profit
organizations).
JAMES C. SPIRA (56)
Director (1998), member of the Audit Committee
Mr. Spira's principal occupation is managing partner and director of
Diamond Technology Partners, Inc., (technology management consulting firm).
Before joining Diamond Technology Partners, he co-founded Cleveland Consulting
Associates, serving as President and Chief Executive Officer from 1974 until
1989. Mr. Spira serves as a director of New Media, Inc. (information technology
consulting) and is a member of the advisory board of Progressive Insurance
Company's National Accounts Division (specialty property-casualty insurer).
MORRY WEISS (59)
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, a position he has held for more than five years. 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) and is a member of the advisory board of Primus Venture Partners
(equity investor in companies requiring growth capital). (1)
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 voted for this Proposal
unless shareholders specify to the contrary in their proxies or specifically
withhold their vote for particular nominees.
In the event of the death or inability to serve of any of the nominees, the
proxies will be voted for the election as a director of such other person as the
Board may recommend. The Board has no reason, however, to anticipate that this
will occur.
3
<PAGE> 6
CONTINUING DIRECTORS WITH TERM EXPIRING IN 2000
(Class II)
ALBERT B. RATNER (71)
Director (1979), member of the Executive and Nominating Committees
Mr. Ratner's principal occupation is Co-Chairman of the Board, Chief
Executive Officer and President of Forest City Enterprises, Inc. (conglomerate
corporation engaged in real estate development, sales, investment, construction
and lumber wholesale) and an officer of its various subsidiary companies.(2) He
is also a director of RPM, Inc. (manufacturer and marketer of protective
coatings).
HARRY H. STONE (81)
Director (1944), member of the Nominating Committee
Mr. Stone's principal occupation is President of The Courtland Group, Inc.
(investments, property and business development and management) and a general
partner in partnerships that own and manage The Residence Inn by Marriott
Cleveland at Beachwood, Middleburg Heights, Rockside and Westlake, Ohio
locations. He is a trustee of the Cleveland Rotary Foundation and is Trustee
Emeritus of Educational Television Association of Metropolitan Cleveland, Jewish
Community Federation of Cleveland and Brandeis University (non-profit
organizations).(1)
EDWARD FRUCHTENBAUM (51)
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 for more than five years. Mr. Fruchtenbaum serves as a
director of Arkwright Mutual Insurance Company (highly protected risk insurance)
and is on the boards of INROADS/Northeast Ohio, Inc., Gilmour Academy, Cleveland
Playhouse and The National Conference Board (non-profit organizations).
CONTINUING DIRECTORS WITH TERM EXPIRING IN 2001
Class III Directors
SCOTT S. COWEN (52)
Director (1989), Chairman of the Audit Committee, Acting Chairman of the
Compensation Committee
Dr. Cowen's principal occupation is President of Tulane University. Prior
to that Dr. Cowen served as 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 JoAnn Stores, Inc. (specialty store retailer),
Forest City Enterprises, Inc. (conglomerate corporation engaged in real estate
development, sales, investment, construction and lumber wholesale) and
Newell-Rubbermaid Incorporated (consumer home products).
IRVING I. STONE (90)
Director (1944), Founder-Chairman, Chairman of the Executive Committee
Mr. Stone's principal occupation is Founder-Chairman of the Company, a
position he has held for more than five years, and Chairman of the Executive
Committee. He also serves as a director of Liberty Mutual Insurance Company
(health and life insurance company).(1)
HARRIET MOUCHLY-WEISS (56)
Director (1998), member of the Compensation and Audit Committees
Mrs. Mouchly-Weiss is founder and managing partner of Strategy XXI
(corporate communications). Before founding Strategy XXI, she was President of
GCI Group International, an international public relations and marketing agency.
She also served as Chairman of Ruder Finn & Rotman International Partners, an
independent public relations firm. She is a director of Viisage Technology, Inc.
(developer of personal security and identification systems), a division of LAU
Technologies, Foundation of the Committee of 200, Friends of the United Nations,
American Academy of Rome, Chinese Foundation of Culture and Arts for Children,
Abraham Fund and Israel Policy Forum (professional, educational and charitable
organizations).
- -----------------
(1) Irving I. Stone and Harry H. Stone are brothers. Irving I. Stone is
the father-in-law of Morry Weiss.
(2) The Company rents retail store space in various shopping malls from
Forest City Rental Properties Corporation (a wholly-owned
subsidiary of Forest City Enterprises, Inc.) and from Albert B.
Ratner's family.
4
<PAGE> 7
DIRECTORS' COMPENSATION. Messrs. Cowen, Jacobs, Ratner, Spira, Harry H. Stone
and Mrs. Mouchly-Weiss each received $35,000 for serving on the Board during FY
99. No fees were paid to Irving I. Stone, Morry Weiss or Edward Fruchtenbaum for
serving on the Board during FY 99. In addition, Dr. Jacobs was paid $130,590
during FY 99 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 Founder-Chairman, its Chairman and Chief Executive
Officer and its other four most highly compensated executive officers who were
serving as executive officers at February 28, 1999 (hereafter, the "Named
Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------ -------
RESTRICTED LTIP ALL OTHER
SALARY BONUS OTHER STOCK PAYOUTS COMPENSATION
NAME YEAR $ $ $ AWARDS $ ($) (2) $ (3)
- ------------------ --------- ---------------- ---------------- ----------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Irving I. Stone 1999 108,626 (1) 210,000 -- -- -- --
Founder - 1998 122,543 (1) 210,000 -- -- -- --
Chairman 1997 85,915 (1) 210,000 -- -- 378,000 --
Morry Weiss 1999 572,000 358,792 (4) -- -- -- 221,472(5)
Chairman & 1998 572,000 464,835 (4) -- -- -- 215,961(5)
C.E.O. 1997 550,000 456,160 (4) -- -- 384,000 214,523(5)
Edward Fruchtenbaum 1999 455,000 317,005 20,000 (6) -- -- 33,664
President & 1998 455,000 643,673 20,000 (6) -- -- 29,514
C.O.O. 1997 437,460 179,884 20,000 (6) -- 289,937 27,310
William R. Mason 1999 292,082 (7) 91,888 -- -- -- 29,128
Sr. V.P. of Sales 1998 284,121 (7) 91,362 -- -- -- 26,539
1997 261,601 (7) 92,002 -- -- 141,039 24,799
Jon Groetzinger, Jr. 1999 274,075 92,192 -- -- -- 29,174
Sr. V.P., General 1998 267,236 96,114 -- -- -- 118,886(8)
Counsel &Secretary 1997 242,990 87,149 16,667 (8) -- 133,372 62,892(8)(9)
Erwin Weiss 1999 272,110 79,674 -- -- -- 29,248
Sr. V.P. of 1998 266,014 93,105 -- -- -- 26,701
Consumer Products 1997 265,161 -- -- -- -- 25,225
</TABLE>
- ------------------
(1) 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 an amount equal to the premium deduction and
the resulting tax effect of that increase.
(2) 1997 - represents payout of the three year bonus tied to the
Company's performance during FYs 95,96,97.
(3) Reflects Company contributions under the Retirement Profit Sharing
and Savings Plan as well as the Executive Deferred Compensation
Plan.
(4) Includes $138,000 of annual incentive compensation described more
fully in the section captioned "Chief Executive Officer
Compensation."
(5) Includes premiums paid by the Company for an insurance policy for
Morry and Judith Weiss. The owners of and the beneficiaries under
this policy are Mr. and Mrs. Weiss' children. Premiums were
$185,000 in FYs 97, 98, 99.
(6) Represents forgiveness of a portion of a loan from the Company to
Mr. Fruchtenbaum as more fully described in the section captioned
"Certain Relationships and Related Transactions."
(7) Includes a special $25,000 annual payment made pursuant to an
employment arrangement described below under the section entitled
"Employment Agreements."
(8) Payments and/or Accruals pursuant to an agreement described below
under the section entitled "Employment Agreements."
(9) Includes earnings on deferrals in excess of 120% of the applicable
federal rate set forth in Internal Revenue Code (I.R.C.) Section
1274(d).
5
<PAGE> 8
EMPLOYMENT AGREEMENTS. The Company has an employment agreement or agreements
with each Named Executive Officer (other than Morry Weiss and Irving I. Stone).
Mr. Fruchtenbaum's agreement, initially dated May 18, 1992, as thereafter
amended, provides for a three year term which is renewed on a rolling basis for
subsequent three year terms. In FY 99, Mr. Fruchtenbaum received an annual base
salary of $455,000 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 (the "Report") under the heading "Executive Bonus Plans"
and cash payments in lieu of restricted stock awards more fully described under
the heading of the Report entitled "President and Chief Operating Officer
Restricted Stock Plan." 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 William R. Mason and Erwin Weiss are dated July 1,
1984. The agreement with Jon Groetzinger, Jr. is dated April 25, 1988. All the
agreements are for indefinite terms and contain certain confidentiality and
non-competition covenants on the part of the employees. Mr. Mason's agreement
provides for minimum annual compensation of $68,682. Mr. Weiss' agreement
provides for minimum annual compensation of $60,000. Mr. Groetzinger's agreement
provides for minimum annual compensation of $115,000. Each of these agreements
provides that if the Company terminates the employee, 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 99, William R.
Mason was credited with 29 years of service, Erwin Weiss was credited with 22
years of service and Jon Groetzinger, Jr. was credited with ten years of service
with the Company.
The Company pays Mr. Mason $25,000 annually pursuant to an employment
arrangement. This amount is considered base pay for purposes of determining the
Company's contribution to Mr. Mason's account in the Retirement Profit Sharing
and Savings Plan and for purposes of his Supplemental Executive Retirement Plan
account, but is not considered base pay for purposes of determining the One Year
Bonus and Three Year Bonus discussed in the section of this Proxy Statement
below captioned "Executive Bonus Plans." The Company had an agreement with Mr.
Groetzinger pursuant to which Mr. Groetzinger received a payment of $50,000 per
year commencing June 1991, which he deferred. In January 1998, Mr. Groetzinger
received payment of the deferred amounts. The deferred amounts earned the
highest rate of return reported under the Company's Executive Deferred
Compensation Plan.
EXECUTIVE DEFERRED COMPENSATION PLAN. The Company permits certain officers
and senior management to defer all or a stated amount or percentage of their
compensation. A participant in this program will be paid the deferred
compensation in accordance with one of the various options outlined in the plan
documentation.
RESTORATION BENEFIT. The Company contributes a restoration benefit to
participants under a program to restore retirement benefits lost due to the
limitations of I.R.C. Sections 401(a)(17), 401(k)(3) and 415.
INDEMNIFICATION. Section 1701.13(E) of the Ohio Revised Code authorizes the
indemnification of directors and officers in the defense of any civil, criminal,
administrative or investigative proceedings and the purchase of insurance
against any liability asserted against them in such capacity. Article IV of the
Regulations of the Company provides for indemnification in terms consistent with
the statutory authority. The Company maintains insurance covering certain
liabilities of the directors and the elected and appointed officers of the
Company and its subsidiaries.
OPTION EXERCISES AND FISCAL YEAR-END VALUES. The option information shown
below relates to options to purchase the Company's Class A and Class B Common
Shares granted to the Named Executive Officers under the Company's various stock
option plans approved by shareholders and subject to applicable law:
6
<PAGE> 9
OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT FISCAL
AT FISCAL YEAR-END (#) YEAR-END ($) (1)
---------------------- ----------------
SHARES
ACQUIRED VALUE EXERCISABLE (E) EXERCISABLE (E)
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- -------------------- ---------------- ----------------- ------------------------- -----------------------
<S> <C> <C> <C> <C>
Irving I. Stone - - 58,500 (E) 159,750 (E)
- - 18,000 (U) - (U)
Morry Weiss 510,000 20,479,622 194,500 (E) 159,750 (E)
- - 154,000 (U) - (U)
Edward Fruchtenbaum 30,500 525,719 9,000 (E) - (E)
- - 18,000 (U) - (U)
William R. Mason 5,000 104,688 7,500 (E) - (E)
- - 10,000 (U) - (U)
Jon Groetzinger, Jr. - - 12,500 (E) - (E)
- - 10,000 (U) - (U)
Erwin Weiss - - 43,000 (E) 179,875 (E)
- - 10,000 (U) - (U)
</TABLE>
- ------------------
(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 New York Stock Exchange (NYSE) on February 26, 1999 ($23.6875)
multiplied by the corresponding number of shares.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. A description of the Company's
Supplemental Executive Retirement Plan can be found in the Report of the
Compensation Committee of the Board of Directors on Executive Compensation under
the heading "Supplemental Executive Retirement Plan." At the end of FY 99 all of
the Named Executive Officers except Mr. Groetzinger qualified under the plan.
The total liability recorded by the Company under this plan at the end of FY 99
was $13,331,658. During FY 99, retired officers received benefits under the plan
aggregating $902,121. Based upon estimates predicated upon present compensation,
at age 65 Morry Weiss will receive $159,646 annually, Edward Fruchtenbaum will
receive $126,990 annually, William R. Mason will receive $73,731 annually, Jon
Groetzinger, Jr. will receive $72,737 annually and Erwin Weiss will receive
$72,497 annually. Irving I. Stone is not a participant in the plan.
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 solely of directors who are not officers or employees of the Company.
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 officers' 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 officers 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
7
<PAGE> 10
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 part on
surveys and/or the recommendations of an outside consulting firm, and in part on
factors that are not easily measured, such as leadership and strategic
foresight.
IMPLEMENTATION OF PHILOSOPHY
The Company's executive compensation plans currently allow for base salary,
one and three year cash bonuses, a supplemental executive retirement plan, stock
options, special cash awards, restricted stock, deferred shares, stock
appreciation rights, performance shares, performance units and a retirement
profit sharing and savings plan.
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 an increase in base salary is merited. Such increases
in FY 99 were based on the individual's performance as well as increases
described in third party compensation studies, 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 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 a good measure of the Company's performance. One
or more of the profit goals is 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 40% of his base salary. If the
participant's business unit achieves the target goal or goals, he is paid a
bonus equal to his target bonus. If the performance is above the target profit
goal by not more than ten percent, or below the target profit goal by not more
than 20%, the bonus is increased or decreased by a percentage equal to twice the
excess or shortfall. If the performance is less than 80% of the target profit
goal, the Company pays no bonus; if it is greater than 110% of the target profit
goal, the bonus remains at 120% of the target bonus. The profit goal for FY 99
was established by the Board in February 1998, and the plan was implemented at
the start of FY 99. In FY 99, each Named Executive Officer earned a bonus under
the plan. The Chief Executive Officer's target bonus was equal to approximately
40% of his annual base salary.
EXECUTIVE BONUS PLAN. The Company has an Executive Bonus Plan under which
certain officers selected by the Board, 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 99, the Company had net
profits of $180,221,809. During FY 99, Irving I. Stone was the only participant
in the plan and waived his entitlement to all but $210,000 of the amount that he
earned under the plan.
THREE YEAR BONUS. The Company has a Three Year Bonus Plan for officers and
certain key employees. Under this plan a special 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 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 98, FY 99 and FY 2000 were established by the Board in
January 1997, and the current plan was implemented at the start of FY 98. FY 98
and 99 profit goals were achieved.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Supplemental Executive Retirement Plan provides that a participant in
the plan who retires at age 65 with 20 years of service with the Company will
receive up to 20% 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 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 for Social Security or
other offset amounts. Benefits under the plan will be payable to the officer's
beneficiary in the event of the officer's death until a total of 180 monthly
payments have been made to both the officer and beneficiary.
8
<PAGE> 11
LONG-TERM, INCENTIVE COMPENSATION
The Company's long-term incentive compensation programs currently consist
of grants of stock options, cash bonuses and stock in lieu of cash bonuses,
thereby tying officer compensation directly to shareholder return. Other
alternatives such as stock appreciation rights, deferred shares, restricted
shares, performance shares and performance units are also available under the
1997 Equity and Performance Incentive Plan. An officer 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 period of years, the programs create
an incentive for an executive to remain with the Company.
Under the existing Employee Stock Option plans officers and key employees
of the Company and its subsidiaries are awarded stock options by the Committee
to purchase Class A or Class B Common Shares of the Company. The options are
granted at 100% of fair market value at the close of business on the last
business day preceding the date of grant or at not less than market value on the
date of grant (depending on plan provisions) and generally expire not later than
ten years from the date of grant. In general, each option may be exercised to
the extent of 25% 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. 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.
PRESIDENT AND CHIEF OPERATING OFFICER RESTRICTED STOCK PLAN.
Under this plan, the President and Chief Operating Officer (COO) was
previously granted options for restricted Class A or Class B Common Shares.
Given the effect of a stock split, these options have vested with respect to
29,000, but not yet vested with respect to 26,000 such shares. On January 5,
1998, the Company and the COO agreed to modify the vesting schedule to provide
that the 26,000 granted but not yet vested shares will vest upon the COO's
retirement, death, permanent disability or termination of employment by the
Company. In lieu of any future stock grants provided under the COO's employment
agreement, he will receive an annual cash bonus equal to the closing price of
Class A Common Shares on March 1st of each year of his employment multiplied by
10,000 shares; provided however, that the multiplier will be reduced to 6,000
shares if the Company has not attained its profit goal for the prior fiscal
year. The Company did not meet its pre-tax profit goal for FY 99 and therefore
the COO was entitled to receive $141,375 in cash. The COO deferred receipt of
the $141,375.
Other aspects of the COO's employment agreement are more fully discussed in
the section of this Proxy Statement captioned "Employment Agreements."
RETIREMENT PROFIT SHARING AND SAVINGS PLAN
Under the Retirement Profit Sharing and Savings Plan in FY 99, 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 99. The contribution is allocated
to the accounts of the participants upon the basis of their credited
compensation. 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 I.R.C. Section 401(k). In FY 99, the Company
matched 40% of the first six percent of compensation deferred by an eligible
employee (subject to IRS limitations), since the Company achieved at least 80%
of its profit goal. For the investment of all contributions under the plan, an
employee may choose a Company stock fund, which is invested in Common Shares of
the Company and/or the following mutual funds: Vanguard Money Market Reserves
Prime Portfolio, Vanguard/Wellington Fund, Vanguard Index Trust-500 Portfolio,
Vanguard/Primecap Fund, Vanguard/Wellesley Fund, Vanguard/Windsor II Fund,
Vanguard International Growth Portfolio, Vanguard Extended Market Fund and
Vanguard Bond Index/IC Fund.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER COMPENSATION
Morry Weiss has served as Chairman and Chief Executive Officer of the
Company since March 1, 1992. His compensation plan currently 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 profit goal, as approved by
the Board near the start of each fiscal year, and $138,000 in cash or such stock
if the Company does not achieve such goal. The Company's annual profit goal for
FY 99 was not achieved 100 percent and therefore Mr. Weiss received the $138,000
in cash. Mr. Weiss' plan has remained generally the same since it was
established by the Board in 1992, except for his right to cash or stock if the
Company does not achieve its profit goal as described above. The Compensation
Committee and Board annually review the plan.
9
<PAGE> 12
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
compensation data of CEO's at comparable companies. Based on that data, Mr.
Weiss' FY 99 compensation was below the median compensation of CEO's at peer
group companies.
Mr. Weiss received a base salary of $572,000 plus bonus of $358,792 in FY
99 which included the $138,000 mentioned above. The Committee has also provided
for a split-dollar life insurance program for Mr. Weiss and his family.
IMPACT OF SECTION 162 OF THE INTERNAL REVENUE CODE
The Revenue Reconciliation Act of 1993 amended I.R.C. Section 162 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 that allow
the Company to deduct for tax purposes amounts in excess of $1,000,000 that are
performance-based and that are payable to each individual under those plans.
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.
Scott S. Cowen (Acting Chairman)
Harriet Mouchly-Weiss
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following compares the yearly percentage change of the cumulative total
shareholder return on the Company's Class A Common Shares against the cumulative
total return of the S&P 500 Composite Index and two Peer Group Indexes* for the
five fiscal years ending February 28, 1999. The Peer Group Indexes take into
account companies with the following attributes, among others, that are similar
to those of the Company: distribution channels, nondurable consumer products,
sales, market capitalization and customer demographics.
10
<PAGE> 13
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG AMERICAN GREETINGS CORPORATION,
THE S&P 500 COMPOSITE INDEX AND A PEER GROUP
[GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------
2/94 2/95 2/96 2/97 2/98 2/99
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Greetings $100 $107 $102 $119 $178 $ 94
- -------------------------------------------------------------
S&P 500 Composite $100 $107 $145 $182 $246 $295
- -------------------------------------------------------------
New Peer Group $100 $ 99 $120 $149 $199 $164
- -------------------------------------------------------------
Old Peer Group $100 $ 99 $122 $156 $222 $226
- -------------------------------------------------------------
</TABLE>
- Shareholder returns assume $100 was invested in each of the Company's
Class A Common Shares, the S&P 500 Composite Index and the Peer Groups Index at
February 28, 1994, and that all dividends were reinvested.
*COMPANIES INCLUDED IN THE NEW PEER GROUP INDEX:
Alberto Culver Co Kellwood Co Premark Intl Inc
Clorox Co Lancaster Colony Corp Rubbermaid Inc
Coleman Inc New Liz Claiborne Inc Russell Corp
Dial Corp New Luxottica Group SPA Scotts Co
Enesco Group Inc Mattel Inc Stanley Wks
Fruit of the Loom Inc Newell Co Sunbeam Corp
Gibson Greetings Inc Paragon Trade Brands Inc Warnaco Group Inc
Hasbro Inc Perrigo Co
The New Peer Group Index has changed since last year. Tyco Intl Ltd was in the
Old Peer Group, but has been omitted from the New Peer Group Index because its
market capitalization was so large that it skewed the results for the Peer
Group. (Tyco represented nearly 30% of the Old Peer Group's total capitalization
at February 28, 1999.)
11
<PAGE> 14
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 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, retires, becomes totally disabled, is terminated
either by the Company or as a result of a change in control of the Company, 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, 1999, was $20,000.
The Company has a consulting arrangement with Dr. Herbert H. Jacobs, who is
retiring from service on the Company's Board. Dr. Jacobs performs consulting
services for the Company on a project-by-project basis, and invoices the Company
for his fees and expenses on a per diem basis. Dr. Jacobs' consulting
arrangement does not provide for a fixed term of engagement.
SECURITY OWNERSHIP OF MANAGEMENT
At the close of business on February 26, 1999, the non-employee directors,
the Named Executive Officers 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>
AMOUNT &NATURE OF PERCENT OF CLASS
NAME TITLE OF CLASS BENEFICIAL OWNERSHIP OUTSTANDING
- ---- -------------- -------------------- -----------
<S> <C> <C> <C>
NON-EMPLOYEE DIRECTORS
Scott S. Cowen Class A Common 3,800 0.01%
Class B Common 5,000 0.11%
Herbert H. Jacobs Class A Common 12,200 0.02%
Class B Common 5,000 0.11%
Harriet Mouchly-Weiss Class A Common --- ---
Class B Common 221 ---
Albert B. Ratner Class A Common 23,040 0.04%
Class B Common 5,000 0.11%
Harry H. Stone Class A Common 3,962 0.01%
Class B Common 45,604 (1) 0.98%
James Spira Class A Common --- ---
Class B Common --- ---
EXECUTIVE OFFICERS
Irving I.Stone* Class A Common --- ---
Class B Common 2,093,782 (1) (2) (3) 44.93%
Morry Weiss* Class A Common 1,643 ---
Class B Common 1,244,798 (1) (3) (4) 26.71%
Edward Fruchtenbaum* Class A Common 30,331 (3) 0.05%
Class B Common 4,500 (3) 0.10%
William R. Mason Class A Common 6,060 (3) 0.01%
Class B Common 2,500 (3) 0.05%
Jon Groetzinger, Jr. Class A Common 5,200 (3) 0.01%
Class B Common 7,500 (3) 0.16%
Erwin Weiss Class A Common 15,500 (3) 0.02%
Class B Common 32,624 (3) 0.70%
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
<S> <C> <C> <C>
All Directors &Executive Class A Common 214,643 (3) 0.33%
Officers as a group Class B Common 3,518,334 (2) (3) (4) (5) (6) 75.49%
(23 including the above)
</TABLE>
* Also serves as a director of the Company
- --- less than 0.01% of class outstanding
- ------------------
(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 200,000 Class B Shares (4.39%) held by the Irving I. Stone
Support Foundation.
(3) Includes 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>
<CAPTION>
<S> <C> <C> <C>
Irving I. Stone Class A Common --- ---
Class B Common 58,500 1.26%
Morry Weiss Class A Common --- ---
Class B Common 194,500 4.17%
Edward Fruchtenbaum Class A Common 4,500 0.01%
Class B Common 4,500 0.10%
William R. Mason Class A Common 5,000 0.01%
Class B Common 2,500 0.05%
Jon Groetzinger, Jr. Class A Common 5,000 0.01%
Class B Common 7,500 0.16%
Erwin Weiss Class A Common 15,500 0.02%
Class B Common 27,500 0.59%
All Directors &Executive Class A Common 144,650 0.22%
Officers as a group Class B Common 376,375 8.08%
</TABLE>
(4) Excludes 146,625 Class B Shares (3.22%) owned by Mr. Weiss' wife
and children. Mrs. Weiss and the children are parties to the
Shareholders' Agreement discussed in footnote (1) above. Mr. Weiss
disclaims beneficial ownership of these shares.
(5) Excludes the following shares, which under Rule 13d-3 of the
Securities Exchange Act are deemed to be beneficially owned:
823 Class A Common Shares (less than 0.01%) and 3,387 Class B
Common Shares (0.07%) held for the benefit of certain officers
(none of whom is a Named Executive Officer) as participants in the
Company Stock Fund of the American Greetings Retirement Profit
Sharing and Savings Plan. Each officer has voting power or right to
acquire ownership of those shares within 60 days.
(6) Certain of these shares are subject to the Shareholders' Agreement
discussed in footnote (1) above.
13
<PAGE> 16
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 five percent of the
Company's voting securities as of the close of business on April 29, 1999:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME TITLE OF CLASS BENEFICIAL OWNERSHIP OUTSTANDING
--------------------------------- ----------------------- ----------------------------- ------------------
<S> <C> <C> <C>
Irving I. Stone Class A Common - -
One American Road Class B Common 2,093,782 (1)(2)(3) 44.79%
Cleveland, Ohio
Morry Weiss Class A Common 1,643 less than 0.01%
One American Road Class B Common 811,939 (1)(2)(4) 17.37%
Cleveland, Ohio
INVESCO, Inc. Class A Common 5,570,920 8.88%
1315 Peachtree Street, N.E. Class B Common - -
Suite 500
Atlanta, Georgia
American Greetings Retirement Class A Common 618,335 (5) 0.99%
Profit Sharing and Savings Plan Class B Common 900,000 (5) 19.25%
Vanguard Fiduciary Trust Company
300 Vanguard Boulevard
Malvern, Pennsylvania
</TABLE>
- ------------------
(1) 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 Common 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 Common Shares.
(2) Includes the following shares for the following individuals, who
under Rule 13d-3 of the Securities Exchange Act of 1934 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>
<CAPTION>
<S> <C> <C> <C>
Irving I. Stone Class A Common -- -
Class B Common 58,500 1.25%
Morry Weiss Class A Common -- -
Class B Common 194,500 4.16%
</TABLE>
(3) See footnote (2) to the table under "Security Ownership of
Management."
(4) See footnote (4) to the table under "Security Ownership of
Management."
(5) 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 accounts. 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.
14
<PAGE> 17
------------------------------------
CAUTIONARY STATEMENT
Certain statements contained in the President's letter, the Proxy Statement
and the Annual Report to Shareholders are forward-looking. Many factors could
cause actual results to differ materially from these statements, including loss
of market share through competition, introduction of competing products by other
firms, retailers' bankruptcies and consolidations, the level of retail industry
sales, competitive terms of sale offered by the Company to customers to expand
or maintain business, lack of acceptance of new products by consumers or
retailers and interest rate and foreign exchange fluctuations. Such factors are
discussed in the Company's filings with the SEC.
------------------------------------
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action, consistent with regulations of the SEC. 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 18, 2000, in order to be considered timely for inclusion in the
Company's Proxy Statement and form of proxy relating to that meeting.
AUDITORS
The firm of Ernst & Young LLP 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 LLP 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 CARD PROMPTLY WHETHER
OR NOT YOU EXPECT TO ATTEND THE
ANNUAL MEETING OF SHAREHOLDERS.
15
<PAGE> 18
[LOGO] AMERICAN GREETINGS SAYS IT BEST
American Greetings Corporation
One American Road
Cleveland, Ohio 44144
[LOGO]
Recycled Paper
<PAGE> 19
AMERICAN GREETINGS CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for the June 25, 1999 Annual Meeting.
CLASS A
P The undersigned hereby constitutes and appoints Edward Fruchtenbaum,
R Irving I. Stone and Morry Weiss, and each of them, his or her true and
O lawful agents and proxies with full power of substitution in each, to
X represent the undersigned at the Annual Meeting of Shareholders of
Y 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 25, 1999, and at any adjournments thereof,
on all matters coming before said meeting.
ELECTION OF DIRECTORS, Nominees:
Stephen R. Hardis, James C. Spira and Morry Weiss,
to a three year term expiring on the date of the year 2002
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. IF YOU SIGN AND RETURN THIS PROXY CARD, BUT DO NOT MARK ANY BOXES
ON THE OTHER SIDE, THE PROXIES WILL CAST YOUR 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
----------------
<PAGE> 20
[X] Please mark your
votes as in this
example.
Election of Directors FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s):
- ---------------------------------------------------------------
Change
of [ ]
Address
Attend [ ]
Meeting
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.
<PAGE> 21
AMERICAN GREETINGS CORPORATION
Proxy Solicited on Behalf of the Board of Directors of
the Company for the June 25, 1999 Annual Meeting.
CLASS B
P The undersigned hereby constitutes and appoints Edward Fruchtenbaum,
R Irving I. Stone and Morry Weiss, and each of them, his or her true and
O lawful agents and proxies with full power of substitution in each, to
X represent the undersigned at the Annual Meeting of Shareholders of
Y American Grretings 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 25, 1999, and at any adjournments thereof,
on all matters coming before said meeting.
ELECTION OF DIRECTORS, Nominees:
Stephen R. Hardis, James C. Spira and Morry Weiss,
to a three year term expiring on the date of the year 2002
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. IF YOU SIGN AND RETURN THIS PROXY CARD, BUT DO NOT MARK ANY BOXES
ON THE OTHER SIDE, THE PROXIES WILL CAST YOUR 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
----------------
<PAGE> 22
[X] Please mark your
votes as in this
example.
Election of Directors FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s):
- ---------------------------------------------------------------
Change
of [ ]
Address
Attend [ ]
Meeting
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.
